Hannover Rück SE

Good morning, everyone. Welcome to our earnings call on our results for the first quarter of 2026.

Today's speakers are Clemens Jungsthofel, our CEO; and Christian Hermelingmeier, CFO of Hannover Re. For the Q&A, they will be joined by Claude Chèvre and Sven Althoff.

With that, I hand over to you, Clemens.

Thank you, Axel, and good morning from Hannover. So let's dive into it.

I think it's fair to say that we had a strong start into the year 2026. We've seen a continuation of the positive trends from recent quarters.

Underlying profitability was very pleasing in both business groups and the balance sheet and the resilience of Hannover Re have clearly been further strengthened. This will support sustainable earnings growth and will help to manage volatility going forward.

We are operating in an unstable geopolitical environment. The Iran war with its severe implications for people across the region as well as for global economies is contributing to elevated uncertainty.

The impact on insurance and reinsurance from these ongoing events also remains uncertain. As it is not yet possible to come up with reliable estimates, we have not yet booked any precise amounts as a large loss estimate.

So far, we have received only, I would say, a minimal number of claims notifications from our clients. We do expect to have some exposure.

However, we feel comfortable that any losses that may potentially have occurred will be more than covered by the unused part of our large loss budget in the first quarter. So let me come back to Hannover Re's overall performance in the first quarter 2026 with a group net income of EUR 711 million.

We had a very good start to the year. In P&C reinsurance, the combined ratio of 83.6% is well below our target of 87% and in line with our usual approach, as you all know, we have booked the full large loss budget for the quarter despite actual large losses coming in clearly lower.

Additionally, the strong underlying profitability allowed for a further increase in reserve resiliency. The top line growth in P&C has been impacted by currency effects and a decreased volume in structured reinsurance, which is a bit lumpy, as you all know.

This is mainly driven by the anticipated reduction in the cession rate for some individual large reinsurance programs. In fact, based on our strong relationship, we were able to even increase our share on this business, partially mitigating the underlying reduction in ceded reinsurance volumes.

In the traditional business, the FX adjusted growth was 2.1%. This is slightly below the target range for the full year, supported by strong growth opportunities in the April renewal, our full year growth target does remain achievable.

The slightly weaker growth in Q1 can partly be explained by the impact of IFRS 17 accounting. Changes in commissions and particularly in the structure of profit and sliding scale commissions had a visible impact on the growth, not necessarily on the gross written premium, but on reinsurance revenue.

So here, it is important to mention that the higher amount being directly deducted in the top line does not filter through 1:1 to the bottom line. The impact on earnings is expected to be a lot lower.

The underlying premium growth was approximately 2 percentage points ahead of the revenue growth. The new business CSM of EUR 1.1 billion mainly reflects our successful January renewals and fully supports our planning for the year, and Christian will provide some further details on the new business CSM.

The business performance in Life and Health reinsurance confirmed the positive trends seen in recent quarters. We were successful in growing our portfolio.

The new CSM generation of EUR 249 million increased compared to the previous year. In combination with the reinsurance service result of EUR 254 million, the business group is well on track to deliver on our targeted profitable growth.

The investment performance was very satisfactory. The return on investment of 3.6% is slightly above the target and is based on a strong ordinary income from fixed income securities.

Finally, the capitalization remains strong with a solvency ratio of 254%. This figure includes foreseeable dividends based on a quarterly accrual of dividends to be paid for 2026.

And apart from this, the decrease compared to year-end '25 is mainly driven by market movements and the successful capital deployment for growth with a corresponding increase in required capital. On the next slide, shareholders' equity increased by 7.3%.

Apart from the positive contribution from Q1 earnings, currency effects were also positive. The CSM increased by 9.7%, mainly reflecting the new business generated by both business groups.

And as you know, the new business contribution from P&C is seasonally high due to the recognition of the January renewals. The risk adjustment increased by 5.2%.

This is also driven by new business and some assumption changes in Life & Health. Altogether, the developments on this slide show a continued positive value creation for our shareholders.

And on that note, I'd like to hand over to you, Christian.

Yes. Thank you, Clemens, and good morning, everyone.

I'm now on Slide 7. Our P&C result is based on the strong quality of our diversified portfolio.

And as we booked the full large loss budget for the quarter, the result did not benefit from the benign cat environment in the first quarter. And additionally, the combined ratio of 83.6% includes a further increase in reserve resiliency.

As usual, we do not provide exact numbers for the change in resiliency without the full reserve analysis, which is only available at year-end. But what I can say is that the underlying runoff result was clearly positive and our decision to add additional prudency is the reason why the reported runoff result is negative at minus EUR 48 million.

Therefore, the underlying combined ratio is even better than the reported 83.6%. As Clemens already explained, the reasons for the decline in reinsurance revenue, our mid-single-digit growth target for the traditional business remains achievable.

We continue to see growth opportunities in the current market environment, but we will not pursue top line growth just for the sake of growth. The accounting impact from changes in sliding scale and profit commissions is having an impact on reported growth figures.

But altogether, the likelihood of ending at the lower end of our target range is probably higher than at the upper end. The investment result increased mainly driven by a higher contribution from our fixed income portfolio.

The other result does not include any unusual items. The currency result was fairly neutral.

The main contributor to the P&C service result is the CSM release, reflecting recent renewal trends. Our prudent reserving approach is the main reason for the negative experience variance and also, as explained, the negative runoff result.

Additional prudency for business earned from recent underwriting years is reflected in the experience variance. Additional prudence for prior underwriting years shows up as a negative runoff.

The very low new business loss component confirms that rates remained adequate on a broad basis despite the rate decreases we've seen in recent renewals. The increase in CSM in the first quarter is mainly driven by our successful January renewals with a diversified contribution from different regions and lines of business.

The new business CSM amounted to EUR 1.1 billion. It should not come as a surprise that this number has decreased compared to the previous year as the reinsurance industry and also Hannover Re reported decreasing reinsurance rates for the January renewals.

Furthermore, our volume in structured reinsurance has decreased. Those 2 effects account for roughly EUR 250 million of the decline compared to previous year.

The rest can be explained by currency and also discounting effects. As those factors were largely anticipated, the level of CSM at the end of the first quarter fully supports our targets for 2026.

In Life & Health Reinsurance, we have recorded strong top line growth of plus 15% adjusted for currency effects. Main drivers for the growth are larger deals in U.S.

Financial Solutions and also expansion of business in our Australian subsidiary. Large part of the revenue contribution from U.S.

Financial Solutions is connected to short-term deals. The revenue contribution from these deals may well be lower again in the coming year.

The reinsurance service result of EUR 254 million provides a very good starting point to meet our full year target of EUR 925 million. This result does not include any larger extraordinary items.

The experience variance was clearly positive, whereas assumption changes and the prudent increase in risk adjustment had a negative impact on our results. The investment result mainly reflects the good ordinary income from fixed income, but also includes a negative impact from the valuation of an equity participation.

The currency result was minus EUR 25 million. The 2 latter effects are the reason for a slightly weaker EBIT performance compared to the reinsurance service result.

Looking now at the IFRS 17 components of the service result, the CSM release is the main profit driver and the release in Q1 is slightly above our expected range. We have been quite successful in financial solutions in recent quarters and some of the deals have a rather quick release pattern with a visible impact on the overall release pattern.

The risk adjustment release was in line with expectations. As mentioned, the experience variance is clearly positive based on a diversified contribution across our traditional business.

This mitigates the negative impact from the change in loss component of EUR 133 million. So altogether, a diversified experience compared to initial expectations and not unusual for a diversified portfolio.

The main reasons for the loss component are assumption changes for onerous business and a prudent increase in risk adjustment for morbidity business. Larger part of this can be attributed to critical illness business in China, but also other regular assumption reviews contributed to this overall number.

CSM development on the right side shows that the new CSM generation, which includes extensions on existing contracts and the [indiscernible] are nicely ahead of the regular release, supporting sustainable earnings growth in our Life and Health business group. The contribution to the new CSM generation comes from Financial Solutions and traditional business.

Changes in estimates did not have a material impact in the first quarter. Additionally, supported by positive currency effects, the CSM increased by 3% -- the development of our investments was again satisfactory.

The ordinary investment income reflects the continued rollover in the higher yield environment. And as you know, we have accelerated this with active loss realization in 2025, and we are now benefiting from these actions.

Distributions from alternative assets were below average in the first quarter. By contrast, though, the fund valuation for alternative assets recognized at fair value through P&L had a positive impact, hence the P&L contribution in total from alternative assets was very solid.

Realized gains are mainly driven by the sale of some real estate. So all in all, the ROI of 3.6% marks a good start to the year and is slightly above our 3.5% target.

Our investment portfolio is well positioned to deliver a resilient performance in volatile times. Also with respect to private credit, the risk is very manageable.

Our exposure in the narrower end, meaning private credit funds is around 1% of our assets under management and highly diversified, even including exposure to direct infrastructure debt and highly rated CLOs, the total exposure to private debt is in the low single-digit billions. This is not at all a concern from a risk perspective.

At the bottom of this slide, you can see that interest rate movements led to an increase in unrealized losses in our fixed income portfolio. In the next slide, as the annual reserve review by Willis Towers Watson has been concluded, I'm more than happy to provide you with their final view on our reserve adequacy at year-end 2025.

The final number is EUR 3.2 billion and in line with our initial indication provided in March. In relation to total undiscounted reserves and including the risk adjustment, the total resiliency has increased from 7.7% to 8.6%.

Generally, we feel very comfortable with the current reserving position, and there remains flexibility around the level. So going forward, our unchanged reserving approach for new business and the in-force book should fuel further growth in our reserve resiliency in absolute terms, reflecting the increase in business volume.

Considering the generally uncertain claims environment, recently increased risk around inflation trends and the softening market environment, we prefer to be on the cautious side. The developments in 2025 are also visible in the loss triangles for 2025, which we have published on our website today.

The increase in prudency is clearly visible, particularly in the long tail lines. The underlying trends in the development of our loss ratios are largely positive, but specific underwriting years in the liability segment also include an increase in our best estimate reserves.

And now to conclude my remarks, the first quarter 2026 was a good start to the year. We reported strong earnings and strengthened again our balance sheet at the same time.

On that note, I hand over back to you, Clemens, for some comments on the outlook.

Thank you, Christian. So let's start with a view on the April renewals, which you can find on Slide 17.

I think it's fair to say the renewals were characterized by a market environment quite similar to the January renewals. Reinsurers are well capitalized and continue to see reinsurance market as an attractive place to deploy capital.

And as a result, the competition has led to continued price pressure in the April renewals. However, the competition does remain rational.

The rates are softening from attractive levels and reinsurance rates remain risk adequate on a broad basis. In this environment, our strong market position, including our low cost ratio enabled us to act on selective growth opportunities.

The overall strong growth was predominantly driven by our digital business and an expansion of our footprint in India. Furthermore, we grew successfully in specialty lines.

The overall risk-adjusted price change for our diversified portfolio, as you can see here, was minus 3.6%. Rate reductions were most pronounced for loss-free property cat business.

Other areas renewed more stable. In U.S.

casualty and loss-affected nonproportional business in aviation, we could achieve price increases. Overall, the volume weighted growth in '26 renewals is at 5.6%, so in line with the targeted growth for our traditional business.

So based on the business performance in the first quarter and the outcome of recent renewals, we do confirm the guidance for 2026 without any changes. As explained, the growth target in P&C remains achievable.

The strong quality of our P&C portfolio with a combined ratio of 83.6% in the first quarter puts us in a good position to deliver on the combined ratio target of below 87% based on a normal large loss experience, we should additionally remain in a position where we can build resiliency reserves in 2026. Also in Life & Health, we are well on track to achieve our target for the reinsurance service result of around EUR 925 million.

The return on investment is expected to reach around 3.5%. So altogether, we are confident to deliver on earnings growth in 2026 and in the following years.

This concludes my remarks, and we would be happy to answer your questions now. Thank you.

First question is whether you could just help us break down a little more the details in numbers on the reduction in structured reinsurance year-on-year? And how do you expect that to develop as the year progresses, recognizing it's a bit lumpy, but any guidance there would be helpful.

And if there's a materially different margin between structured and traditional? And just on the reserves, forgive me, I've only looked at the total reserves so far and recognize a lot of distortion on the mix, which you highlighted.

It's really evident for me in a way that you tucked away stuff last year, as you said, which goes on top of the $3.2 billion, I believe, because it's presumably the latest year looks to have the highest IBNR to ultimate you booked in that for a decade. Does that ring true to yourself?

And when you discuss that reserve build in the current year, the '26 that you mentioned, is that beyond sort of a book growth level? Is that as a percentage of premium you expect it to grow as well?

Yes. Will it's Sven, I will answer your first question.

On the structured side, we have lost a mid-single -- yes, mid-triple-digit revenue number at the 1st of January renewal. I mean the 1st of January renewal was remarkable in the sense that all the contracts we are aware of where clients are reducing their cession rate are all at 1/1 renewal.

So from that point of view, the reduction in top line revenue is a little tilted. And we are confident that in the remainder of the year, we will have less of a reduction and the colleagues are also working on a pipeline -- so from that point of view, we are confident that the revenue on the structured side will stabilize more throughout the year.

And when it comes to the margin of the business, it's nominally less when you look at revenue. On the other hand, when you look at the capital efficiency, it's very comparable to the traditional business.

Well, then, Christian here again. I would comment on your reserves question.

So for 2025, I think the EUR 3.2 billion are pretty fair view on the resiliency. But as you already said, we tend to have a rather conservative reserving philosophy also in case of events or the younger underwriting years.

So I think it's a conservative view that's correct. Looking forward to 2026 and the first quarter, as I said, I cannot provide precise figures here.

But if you would just remind that we indicated some time ago that the regular runoff release undistorted by reserving actions or other items should be around EUR 200 million or EUR 250 million positive. You have a rough indication of the growth of the resiliency also in 2026 first quarter.

And I think that's rather in line with what we saw as increase last year.

So Solvency today was a little bit softer than I was expecting, and you mentioned that was because of a higher required capital. Could you just walk us through the moving parts on that?

And what was driving that higher required capital? Was that a particular growth area that we should be mindful of for the rest of the year?

And then I know that you've reiterated the mid-single-digit growth guide, albeit at the lower end of the guide for this year. What's really the execution risks for that as we move into the next part of the year?

Shanti, I will take the Solvency II question. So as already briefly mentioned by Clemens, the decline can fully be explained by some market movements, so FX and interest rates.

The operating capital generation was, I would say, quite healthy around EUR 800 million. And as you indicated in your question, exactly the capital was deployed to growth.

It's rather a broad growth. There is a traditional business.

There's also the planned growth in life and health traditional included. So I would say there's not a very specific area.

And you should have in mind that the reserving actions, meaning the buildup of prudency and resiliency has also an effect on the reserve risk. So also consuming a slight part of the own funds here.

And on the revenue side, I mean, when it comes to the traditional business, we have by now renewed more than 70% of the business that is up for renewal this year. The remainder will mostly follow at the June 1 and July 1 renewals -- as you have seen, the growth as measured in premium after the April renewal has increased from 3.3% to 5.6% year-to-date.

And as we also said that when it comes to the revenue growth in traditional business, which was 2.1% for the quarter, would have been 2% higher if it was not for the IFRS 17 features we explained. So from that point of view, those are the numbers I can mention to you.

The execution risk, of course, is uncertain when it comes to potential acceleration of the softening of the market, which we are not seeing at this moment in time, but we have to wait for the outcome.

My first question is coming back to the kind of reserving and how that plays into the combined ratio. From -- I know you kind of -- you're not going to give us the exact number on the kind of amount of resilience you had in the quarter.

But if I take the minus 48 million, I think you said EUR 200 million to EUR 250 million, getting us to EUR 250 million to EUR 300 million resilience in the quarter. Is that the big driver of the discounting hitting 11%?

Or is there something very different going on, on discounting because it's above maybe where I would have expected it to be and above kind of what you've kind of guided to there? The second question is on renewals later this year.

Clearly, kind of renewals at April saw an acceleration in prices coming down relative to January. What do you expect -- and it's probably a question for Sven.

What do you think will happen to Florida? Do you think it gets worse than what we've seen?

Or is there something else to help stabilize prices still down, but not down more than we saw April or Jan?

Kamran, thanks for the question. Let me briefly comment on the discount of the reserves.

So the reserving actions, and it's really a rough figure is around 1% of the change you have seen. So yes, it's impacting the discount, of course.

Yes. And Kamran, when it comes to the Florida-specific renewals, as explained in the past, we are not really a significant player in this market as we are distributing our U.S.

wind capacity mostly to global U.S. nationwide and super regionals.

So from that point of view, the outcome of the Florida renewal is less relevant for our portfolio. But I have no indication why they specifically should see any other trend compared to what we have elsewhere seen when it comes to property cat businesses here.

First one is just really coming back to the resilience reserve. I mean I appreciate what you're saying about continued ability to add some resilience and you've done that in Q1.

But I'm just sort of wondering if you can sort of help me sort of think through how the resilience reserve can change given the degree of softening that we're seeing in the market. I mean, in effect, when should we start to think about you actually drawing down if the profitability of the industry carries on deteriorating, I suppose, current rates?

And then second question, if we can sort of pivot to the life side. The experience variance and the loss component changes sort of broadly cancel each other out, but they're both quite sizable numbers.

And again, you talked about China critical illness. So I was wondering if you could just give a little bit more color on the sort of the key components within those numbers and how close do you think we are to the end of this China CI issue?

So Chris, let me again give some comments on reserving and resilience. So I don't see any limitations to build further resilience like resilience yet.

So we are flexible, as also said in my introductory remarks. I would expect, and I think we indicated this also with the annual results already that if there is no large distortion in the market or any unusual extraordinary large loss situation, we would think that we can again add a substantial amount of resilience reserves at least growing with the business.

And the market environment was already roughly anticipated then. So talking about what could change and Sven indicated already an acceleration of pricing trends, of course, is a risk, but this would mean that we just would not build up that much additional amount.

So we are far from drawing down reserves, so using them. And I don't see this for the near future independent of slight changes in pricing environment.

Yes. And maybe on your question, it's Claude speaking on Life & Health.

You're right, the experience variances and the loss component, they level out pretty much. Obviously, what you don't see in the experience variance is that we have also positive experience variance from Chinese CI business, which shows that our assumptions are pretty, I would say, pretty conservative on this topic.

We're always talking about the best estimate assumptions. So what we have right now is the best estimate case, which means there is obviously a probability that we will see further strengthening, further prudency on the CI business.

But right now, we're on a best estimate basis.

The first one is just on your own cession rates. So I noticed the net insurance revenue fell slightly more than the gross insurance revenue.

If you could just give us some guidance on how you expect that to trend over the year and if that's been impacted by the structured business at all? The second one was just on the new business CSM movement.

Thank you for providing the sort of breakdown between FX discounting and the renewals. Is it possible you could give us a breakdown of the EUR 250 million, how much comes from traditional and how much comes from structured in terms of that decline?

And then if I could just ask a third one as well. On the outlook for the structured business, you sound pretty confident that that's going to improve over the course of this year, but you flagged reducing cession rates from primaries as a driver for the reduction at -- are you expecting that trend to reverse and primary is going to start increasing cession rates again or buying more reinsurance?

Or is there something else that gives a more confident outlook for the structured volumes going forward?

Yes, I'm happy to take your questions. Let me start with the last question.

I mean the number of contracts we are talking about the clients have reduced cessions is maybe 1% or 2% of our entire portfolio. So therefore, I would not read any trend into this fact.

It was just individual cases, which all happened at the 1st of January renewal but it's not a general trend we are seeing that cession rates are reduced across the portfolio we are currently writing. When it comes to your first question, yes, you're right.

The slight change in the net to gross ratio has to do with the reduction on the structured side as we are not buying any reinsurance on our structured business. And therefore, this translates more 1:1 into also reduced net numbers.

And then thirdly, when it comes to the EUR 250 million, the way how to think about that is we renewed roughly EUR 10 billion worth of premium at the 1/1 renewals. As we said before, what we've seen on the rates would indicate combined ratio deterioration of roughly 2%.

So that would explain EUR 200 million out of the EUR 250 million and the remainder would come from the reduced volume written on the structured side.

Just 2 clarifications really on the structure side. Firstly, I think you said that margin less on revenue structured versus traditional, the capital intensity broadly similar.

Does that mean the ROE is lower on the structure side? Or am I misinterpreting what you're saying there?

And then secondly, probably on the structured growth Q1 versus your outlook, are you able just to give us a sense of sort of what the year-on-year growth rate you're expecting for 2026 is given there's a lot of moving pieces there.

On the first question, the structured business is less capital intensive compared to the traditional business. So whilst the nominal margins are somewhat lower compared to the traditional business from an ROE perspective, it's equally attractive.

So that's what I wanted to say. And on the year-to-year growth expectation on structured overall, we have not really guided for that.

And given that this is a very lumpy business, so one single transaction could change the entire situation altogether, good or bad, that is we would continue not to give any guidance when it comes to the top line development.

So most of my questions have been addressed. I would just raise one topic.

The commentary around the April renewals was interesting. If you could just clarify a few more things there.

For example, you mentioned in specialty lines, you found some growth. I can see credit and surety where you're noting an attractive environment.

I can see digital business being noted. Is that cyber really?

Or is it something else? If you could just comment a bit more about the growth elements you saw in April renewals, that will be very helpful.

And I just wanted to just follow up one more thing. The resiliency reserve, sorry to come back to that.

I understand that there's no limitation to build it up more. But I'm just curious about the motivation to do it.

are you -- I mean, is it that you're just using the very strong profitability to weather out the cycle even better or to ensure more growth later on? Or what's the thinking behind that?

That would be also very helpful.

Yes, Vinit, let me start with the first question. So the 2 main drivers for the growth at 1st of April were on the specialty side, the digital business and on the traditional side, our business, which has renewed in India.

So when it comes to digital business, this is not cyber business, which would be a separate specialty bucket for us. but it's a business we are writing behind ceding companies that distribute their business via more an insurtech platform.

So from that point of view, I hope that clarifies. Otherwise, it was a mixed picture on the specialty side.

Aviation saw some rate increases. Marine is still a very competitive environment.

And most of the credit and surety growth really came from underlying growth of our ceding companies. So a mixed picture, but overall, a growing part of the portfolio at this 1st of April renewal.

I think we had the second part.

So Vinit, you asked also on the motivation for building up a more resilience. And I can confirm that our philosophy and view here is unchanged.

So we built this resiliency in hard market times and good profits to mitigate any volatility from our business and show stable earnings growth. So the resiliency next to also our high retro program is there to cover extraordinary events that may happen, but also the reinsurance pricing cycle.

So with stable and solid margins. you should expect that we take away some more resiliency to use it later when we might come to a soft market.

And I would also mention that we always want to have flexibility to step in after any market dislocation to use attractive opportunities that may arise as we have done in the past.

I have one question on the April renewals, please. Apart from prices, the terms and conditions remain broadly stable?

Or do you see any signs of softening here in individual lines of business? That's my question.

No. As Clemens already said, the picture at 1st of April was very similar compared to January.

So terms and conditions are, for the most part, still very stable and the same goes for retention levels. So from that point of view, the market is characterized with competition on mostly price only.

The first question is, those 1% to 2% of clients that reduced cessions appear to have had a large impact to really large accounts. Do you have any visibility on why they reduced the cessions?

And is it surprising to you at all or just a function of the soft market that you sort of expected? And my second question is just on the April renewals.

We're clearly in a softening market, and you grew a lot. So can you provide some reassurance on the mix of that growth?

I mean how much of that is coming from your existing accounts versus purely new business because the figure is just so much higher than what your peers have reported?

Let me start with your second question. You can see from Slide 17 that only a small part of the growth actually came from new business.

So EUR 83 million out of the EUR 250 million -- EUR 350 million of growth and the bulk really came from existing client and contract relationships where we managed to increase our shares at still attractive terms and conditions. So from that point of view, not that much new business.

And when it comes to the reasons why we have seen reduced cessions on the structured side was basically 2 main reason. One had to do with merger and acquisition, where the new entity buying the expiring client of ours did not see any need to buy surplus relief quota share any longer.

And the second reason is improved capitalization of the existing client itself. So after a number of years of very attractive terms and conditions also in the primary space, of course, some clients have also accumulated net retained earnings.

And therefore, the reason -- the main reason why they did buy the contract originally, i.e., surplus relief was less relevant compared to previous years.

I just wanted to ask just on the April renewals. In terms of the price movement, I was maybe slightly surprised there wasn't a bigger negative effect maybe given the nat cat in the mix compared to the January renewals.

Was there something else going on there? Is that due to the price rises that you saw in U.S.

casualty in particular? And looking forward, could you give a comment as to how you see the inflationary environment developing generally kind of post the Iran war?

Are you looking to kind of price for that? Do you think that's being captured adequately in the kind of pricing environment in some of the longer tail classes globally?

Well, on the first question, again, I mean, we have a very diversified portfolio. So the weight of the property cat business in itself is meaningful, but it's only a fraction of what we are renewing.

So from that point of view, it's one of the -- or the main driver why the rate development is as negative as we have shown. But we also have a lot of other business, the bulk of the business, indeed, which is renewing at much more stable prices and terms and conditions compared to what you see in the headlines when it comes to property catastrophe business.

And when it comes to inflation, we have adjusted our inflation adjustment -- inflation expectation when it comes to the pricing of the business, -- but of course, we have to wait and see whether the increase in expected inflation we have taken is going to be in line with reality at the end of the day that we have decided to be more conservative in light what we are seeing resulting out of the conflict in the Middle East.

Can I just return to the P&C new business CSM. I heard your explanation earlier that EUR 250 million or so was from margin and volume and you rationalize that by 2 points price on EUR 10 billion of volume given EUR 200 million and the rest due to the reduction in structure volume.

However, the EUR 10 billion kind of is a January number. If I include April, then I get EUR 12 billion.

And the price reductions that you posted in excess of 3 points. So.

I'm kind of looking at 3 points on EUR 12 billion to give you EUR 360 million, which is difficult for me to then bridge to what the impact was from the reduction in structure. So perhaps you can just help me with some of the math there, that would be helpful, please.

And then secondly, I know the run-off result that you normally expect is in the region of EUR 200 million to EUR 250 million. Would you mind telling me what the risk adjustment release was and the run-off result in P&C Re in Q1?

And does that EUR 200 million to EUR 250 million include the risk adjustment release as well?

Let me start with your first question, James. I mean, the Q2 impact, you will, of course, see also in our Q numbers from the April renewals.

When it comes to your math, of course, the rate reductions you need to apply to the underlying loss ratio rather than the full combined ratio. That's why the impact is not 1:1.

-- to the combined ratio impact. But when it comes to the traditional business, given that it's now EUR 12 billion, we have to expect that there is also some element of lesser new business CSM compared to what we saw previous year.

And Christian here again on your question on the runoff result. And yes, the risk adjustment is part of this figure and the release was within our usual expectation of 6% to 8% release.

Yes. So just to conclude and round up the call a bit.

So you can sense we still see and view this as an attractive market environment. And the Q1 results, particularly when you look at factors like the loss component or the resiliency build that we've been able to build in the first quarter is an indication of the underlying profitability.

Christian alluded to it, when you look at the runoff result versus an expected runoff result, you get an idea of the potential resiliency that we've been able to build. So we do remain confident that we can build resiliency going forward, that we can, as Christian also said, manage volatility but also manage earnings growth and manage the cycle to manage earnings growth throughout the cycle.

We still look at the strong pipeline, both in traditional business and in structured as well as in Life & Health, and we are confident to pursue that growth potential cautiously as we look forward. Thank you for your questions, and speak soon.

Have a good day.