Helvetia Baloise Holding AG (HBAN) Earnings Call Transcript

Ladies and gentlemen, welcome to the Helvetia update on IFRS 17/9 Conference Call and Live Webcast. I am George, the Chorus cooperator. [Operator Instructions]. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Miss Annelis Luscher Hammerli, Group CFO, please go ahead.

Thanks, George. So welcome, everybody, to our conference call of the transition to IFRS 17 and 9. This morning, we have published a restated half year and full year results 2022 under IFRS 17/9. On this call, I will give you an overview of the most important impact of the transition on our financial statements and KPIs. The full income statement and balance sheet for both the half year and the full year 2020 are available on our website together with additional information. I am joined here on the call by our Group Chief Actuarial Officer, Beat Muller; and by Marc Brachat with Head of Group accounting, controlling and transformation and co-lead our IFRS 17/9. They will be available for your questions at the end of the presentation. Let's start with our key messages on Page 2. The transition to IFRS 17/9 is an accounting regime change that does not impact the fundamentals of our business. Our financial strength, business strategy and dividend policy are not influenced. The unchanged strength of our underlying business is also visible in the restated IFRS 17/9 figures. The balance sheet now reflects a more economic view. This leads to a more stable shareholders' equity under the new accounting standard. Also, the balance sheet remained strong under IFRS 17/9 with only a moderate decrease of shareholders' equity excluding the valuation reserve for policyholder participation and transition base. Net income for the full year 2022 was CHF 480 million under IFRS 17/9. It was based on a solid underlying insurance turn results in both non-life and life. The lower level compared to IFRS 4 and IAS 39 mainly due to a different accounting treatment of investment gains and losses. The transition also leads to a redefinition of effective financial targets and other KPIs, in particular, the combined ratio, the new business margin and the return on equity. All these performance indicators remain on a very solid level under IFRS 17/9. Now let me give you more details on the key messages on the following slide. First of all, I want to stress again that IFRS 17/9 is an accounting regime change. It does not change the underlying business fundamentals or cash flow. As you can see here, our financial strength is not impacted and remains strong. With IFRS 17/9, the new accounting regime moved closer to the economic solvency framework SST, which is good and aligned financial theory. Equally, our dividend policy remains unchanged. We stick to our target to distribute more than CHF 1.65 billion in dividends or the strategy period between '21 and '25. Now let's have a look at the implications of the new accounting regime for Helvetia on Page 4. As a reminder, the transition affects both sides of our balance sheet. IFRS 9 gives principles for asset classification. It applies to our investment portfolio. Most of our liabilities relate to the insurance business. Here, the new rules of IFRS 17 for insurance contracts are planned. On the following slides, I will walk you through the implications of the transition for our balance sheet, the income statement and key performance indicators. I will do so on the basis of the restated figures for the full year 2022. Let me start with the first section on the balance sheet. On -- you can see a comparison of our balance sheet under the old and new accounting at the transition date on the first of January 2022. On the asset side, investments have been revalued in line with IFRS 9. Other assets have decreased mainly because deferred acquisition costs and insurance receivables are now included in insurance liabilities under IFRS 17. On the liability side, IFRS 17 has introduced a common set of valuation principles for insurance contracts. The evaluation of insurance liabilities is now more economic than before. As a reminder, we are applying the simplified PAA approach in Non-life and mostly the VFA approach in life. The VFA approach applies to business with direct patient features, which represents more than 90% of our Life business. IFRS 17 has also introduced a risk adjustment to account for nonfinancial risks. For business measured under the VFA and PPA approaches, therefore, for our life business as CSM is introduced to reflect expected future profit. The CSM amounted to CHF 4.7 billion on the first of January 2022. The changes in the valuation of insurance liabilities also had an impact on our equity. We will have a more detailed look at this in a minute. First, let me give you some more information on the investment. On slide 7, you can see the split of investments by accounting category at the transition date. Compared to the old standard IAS 39, a higher share of investments measured at fair value under the new IFRS 9 standard. However, it is important that we differentiate between nonlife and life as differing measurement approaches are applied. In Non-life, the share of investments classified as fair value through profit and loss has increased. This is because all direct equity investments, investment funds and alternative investments have been classified through P&L in the opening balance sheet. Previously, these investments were partly valued to OPI in the AFS category. Having said that, the new standard gives the choice to designate direct equity investments in the new category of fair value to OCI under IFRS 9 at the initial recognition. We will assess this option for new direct equity investments. The shift in asset categories in non-life means that our non-life investment result is now reflecting changes in market values to a greater extent than before. This was well visible in 2022, as you know. I will come back to that when discussing the [indiscernible] state 2022 P&L numbers. In Life, the biggest shift is related to mortgages. These were valued at amortized costs under IAS 39. Now under IFRS 9, they are classified as fair value through P&L. Unlike in non-life, the higher share of investments valued at fair value through P&L does not directly impact the income statement for a large cost. This is because in the VFA approach, which we use for most of life business, market value fluctuations are largely buffered in this year CSM. Now let's have a look at the changes in equity at the transition. The introduction of IFRS 17/9 leads to a decrease of shareholders' equity in the opening balance sheet as of 1st of January 2022. To a large part, the decrease is related to the so-called valuation reserve for contracts with discretionary participation features. In this item, part of the reserves for policyholder participation was shown in equity under IFRS 4. Under IFRS 17, all these policyholder benefits are considered in the measurement of insurance liabilities. Thus, this reduces equity. In addition, the establishment of the CSM and of the risk adjustment increases liabilities. On the other hand, the introduction of discounting to insurance liabilities to reduce liabilities. And there are further valuation effect in some, all the additional effects lead to a moderate decrease of shareholders' equity of 7%. On the next slide, we compare the development of shareholders' equity over the financial year 2022. On the left, you can see the development of shareholders' equity under the old accounting standards. The walk on the right shows the change in shareholders' equity under IFRS 17/9 for the same year, namely 2022. Clearly, shareholders' equity is more stable under the new accounting standard IFRS 17/9. The reason for this is that the new accounting reflects more closely the underlying economics of our business. This is visible in the change in other comprehensive income or OCI. Under IFRS 4 and IAS 39, OCI reflected changes in unrealized gains and losses on investments. However, the insurance liabilities were not valued economically and therefore, particularly the effect of interest rate changes from the valuation of liabilities was not reflected in the OCI. Now under IFRS 17/9, OCI includes both elements with the fair value reserve for investments and the insurance finance reserves. The loss reflects changes in the value of insurance liabilities from changes in discount rates. Therefore, the net effect of these positions on equity is much smaller now. In addition, the economic variances in the life business on the VFA are now largely absorbed in the CSM. As a result, market value fluctuations has no direct impact on the shareholders' equity for this business. The more economic valuation of both assets and liabilities also brings IFRS closer to the valuation of the economic solvency framework. We can see this on the next slide. This bridge from IFRS equity to risk-bearing capital under the swiss solvency test shows that the introduction of IFRS 17/9 brings IFRS closer to the asset devaluation. The CSM reflects future shareholder profit from the Life business and is loss absorbing. Therefore, the CSM is added to IFRS equity for a consistent view. Valuation differences between IFRS and SST core capital are decreases strongly from previously CHF 5.3 billion to CHF 1.8 billion under the new accounting stance. The two framework, therefore, become more consistent and comparable with the introduction of IFRS 17/9. Let's now move to the income statement and have a look at the figures for the full year '22 under IFRS 17/9. Net income in 2022 was CHF 480 million on the IFRS 17/9 in both business areas, nonlife and life the lower level compared to net income under IFRS 4 and IAS 39 was primarily driven by different accounting treatment of investment gains and losses. Regarding non-life, the shift in the categorization of financial assets is reflecting in the investment results. As we have seen, on one of the previous slides, the share of investments that are categorized as fair value to P&L has increased with the transition to IFRS 9. This resulted in an influence from market on equity and funds. As equity markets have performed poorly in 2022, this [annualized] value changes are now reflected in the P&L to a greater extent under the new accounting standard. Similar to IFRS 4, the technical result in non-life, which is now called insurance service results under IFRS 17 was on a solid level. Compared to IFRS 4, the insurance service results under IFRS 17 benefited from the newly introduced discounting of claims. We will have a more detailed look at the numbers on the following slide. Net income in 2022 in the life business was modestly lower under the new accounting standards. The effect is mainly attributable to the buffering of market value fluctuations in the CSM under IFRS 17. In particular, the life result on IFRS 4 benefited from valuation gains on real estate in '22. Under IFRS 17, these gains have been buffered in the CSM and will only be recognized in the P&L forward time. In addition to that, the one-off gain from the sale of Sa Nostra Vida is somewhat lower under the new accounting due to differences in valuation of the sold assets and liabilities. On the next 2 slides, we will now have a more detailed look at the new structure and main drivers of the P&L in both non-life and life. On Page 13, let's start with non-Life. The new top line is called insurance revenue under the IFRS 17. It is similar to gross or premiums under IFRS 4 with the exception of active reinsurance where reinsurance commissions are now netted in revenue. Going forward, you will see a separate line item for the net results from reinsurance. It includes all positions related to [CD3] insurance, such as [ CD ] premiums or claims recovery. The first the insurance service results reflects the new technical results from the insurance business. This is higher than the technical result under IFRS 4 for 2 main reasons: First, it benefited from the discounting of new claims. This effect on current accident year claims amounted to CHF 108 million in 2022. The second reason for the higher technical results under IFRS 17 is that certain costs that were part of the technical results under IFRS 4 are not considered in the insurance service result under IFRS 17. These are called non-fulfillment expenses. We will still include these costs in the combined ratio where a more comprehensive view of the technical profitability of our non-life business. Let me continue with the finance results, which consists of 2 items: the investment result and the insurance finance results. As before, the investment results include current income from investments as well as gains and losses from market value fluctuations on investments classified as fair value through profit and loss. As I have already mentioned, due to the change in accounting standard, a higher share of investments is now classified as fair value through P&L on the IFRS 9. For that reason, weak equity markets in '22 are more strongly reflected in the investment result under IFRS 17/9 than only the previous accounting rules. In the insurance finance results, the accretion of interest on insurance liabilities or unwind of discounting is included as an expense. It amounted CHF 26 million in '22. The unwind of discounting was offset in '22 by currency gains on insurance liabilities, which are also included in that line of the P&L. Finally,the position of other income and expenses comprises, for example, fee and commission business and the nonfulfillment expenses. Now let's move to the life business on the next page. In life, IFRS 17 brings more fundamental changes to the P&L. The new structure of the income statement that you see on this slide is not comparable to our previous earnings by sources slide. Beginning with the top line, the insurance revenue, this figure is fundamentally different to the premium volume known from IFRS 4. As such, insurance revenue results from a bottom-up actuary calculation and exclude savings components which were part of the premium volume under IFRS 4. The top line number is therefore lower in the new accounting. Unlike the non-life business, our life business is mostly measured with the VFA approach. Thus, the measurement of life insurance liabilities includes the CSM Contractual Service Margin that reflects future profit from this business. The CSM is released and earned in the P&L over the coverage period, in line with insurance cover and other services provided. This CSM release the main driver of the insurance service results and the net income in life on the IFRS 17. It amounted to CHF 380 million in 2022 and was very stable over the first and second half year. I will come back to that on the next slide. The finance result in the life business shows the most important characteristic of the VFA approach. Market value fluctuations are buffered in the CSM and spread over the lifetime of the contract. The investment result includes current income from investments as well as gains and losses on investments, mostly resulting from changes in market values, but also realization. In the VFA approach, the changes in the market values on assets are neutralized with a corresponding booking entry with the insurance finance results. As a result, market value fluctuations are not directly impacting the P&L for most of our life business. Instead, they are buffered into CSM and will be earned over time. In 2022, this mechanism means that valuation gains on real estate were buffered in the CSM under IFRS 17, whereas they were considered in the P&L under IFRS 4. Finally, other income and expenses, again include fee and commission business and nonfulfillment expenses. In 2022, the one-off gains from sale of Sa Nostra CHF 87 million is also recorded here. This one-off gain was CHF 15 million lower than under the old IFRS 4. On the other hand, the profit contribution from Sa Nostra before its sale was slightly higher on the IFRS 17/9, resulting in a net reduction of CHF 6 million compared to IFRS 4. Given the importance of the CSM of the life business, I would like to give you some more information on this on the next slide. So on Slide 15, you see the CSM walk for 2022. The CSM release is the single largest [profit driver] in life under IFRS 17. Let's have a look at how it is derived and of the CSM stock has evolved over 2022. Through the opening CSM, new business, CSM is added from writing profitable new business in the period. The economic variance at minus CHF 700 million was sizeable in 2022 as weak equity markets increasing risk-free interest rate, especially at the short end and higher credit spreads affected our share of the investment result of the VFA business. In other words, the sizable macroeconomic moves in equity markets, interest rates and credit spreads have been buffered into CSM. Then there was a small change in our consolidation scope. As we closed the sale of the Nostra Vida in the second half of 2022, the respective CSM was recognized. The CSM release is calculated on the CSM stock after taking into account these movements and amount to CHF 380 million. This year, some release is very stable compared to the first half year 2022, both in terms of percentage, the CSM release ratio and in terms of absolute amount in Swiss Francs when the half year number is unrealized. As a result, the P&L in life is pretty stable. This is one of the strengths of IFRS 17. Also larger variances such as the economic variance of 17 million in 2022 are off in the CSM and spread over the lifetime of contracts. Moving on to the KPS and how they have been affected by the transition to IFRS 17. So on page 17, you can see on the left side, our current financial targets for the strategy period to 2025 based on IFRS 4. These are, of course, familiar numbers. 3 of these KPIs are affected by the transition to IFRS 17. The combined ratio, the new business margin and the return on equity. As mentioned at the beginning of the call, our financial strength and dividend policy are unchanged. On the following slides, we will focus on the new definition the 3 affected financial target KPIs and the comparative numbers for 2022. Additionally, we introduced you to our redefined measures for business volume and the rationale behind the new KPI that enables a clear view on the underlying operating performance of our group called underlying earnings. Quarter 3 financial target KPIs affected by the transition, we will disclose recalibrated target ranges with our half year results in September. Now let's first have a look at the new definition of the combined ratio in non-life. The combined ratio will be based on a new methodology under IFRS 17. You see the main components on this slide compared to the previous definition on the IFRS 4 on the left. Starting with the denominator in dark green. Gross insurance revenue according to IFRS 17 replaced its net earned premiums under IFRS 4. As mentioned earlier, insurance revenue is similar to gross earned premium under the old accounting standards. The big change is to move from a net of ceded reinsurance to a gross of reinsurance view in the denominator. One specific comment for active reinsurance where we write reinsurance business instead of seizing it. When active reinsurance pays a reinsurance commission, this is now netted with its revenue and is not treated as an expense, but it was the case under IFRS 4. The numerator still consists of claims and costs. However, we now consider all ceded reinsurance effects in a net reinsurance result in the claims ratio. Before each component was net of the respective part of reinsurance. For example, [C3] premium are deducted premiums under IFRS 4, claims recoveries from claims and reinsurance commissions from expenses. All these reinsurance effects are now included in the net reinsurance results which is deducted from the claims ratio. As mentioned before, the cost ratio will also include nonfulfillment expenses, which are not part of the insurance services under IFRS 17. Under the new methodology, our combined ratio remains on a very solid level, confirming the quality of the portfolio at 94.3% was slightly better in 2022 than under IFRS 4. The treatment of the insurance commissions, I mentioned before, leads to a lower cost ratio and a higher claims ratio. Additional transition effects include the benefit of discounting new claims under IFRS 17 and offsetting impact resulting from new calculation method I just described and the risk adjustment. We moved to the new business margin on the next slide, Slide 19. We have also updated the definition of the Life new business margin for IFRS 17. The new business margin continues to be the new business value divided by the new business volume. Let me walk you through starting base for the new business value for IFRS 17 is the new business CSM as per IFRS 17. Here, we apply some adjustments as summarized in the chart on the top right. The new business here under IFRS 17 includes, by definition, only new business for products, which are measured on the [indiscernible] and [indiscernible] approaches. As you also write life business with a wider scope, namely investment contracts accounted for under IFRS 9, we add the value for this larger scope. Then we deduct the share of new business needed to reinsurers. And we deduct nonfulfillment expenses related to this new business which are not considered in the new business CSM according to the IFRS 17 standards. For our steering purposes, we consider it relevant to deduct such related nonfulfillment expenses to get a more holistic view of the profitability of the new business we rise. How does this new definition of new business value for IFRS 17 compared with the old definition on the embedded value framework. This is summarized in the chart at the bottom on the right. First, there are measurement differences between the embedded value and IFRS 17 frameworks, such as using deferring economic assumptions. For example, we now use consistent IFRS 17 discount curve. And there are other differences as, for example, contract foundry definition differ between the two frameworks. Second, we add back taxes so that both the new business CSM just and the new business value under the IFRS 17 on a consistent pretax basis. As a result, the new business value is closer to the new business CSM under IFRS 17 and the embedded value framework is discontinued. This simplifies economic measurement and steering. Now let's move to the return on equity on Page 20. The transition to IFRS 17/9 has an impact on both components of the return on equity. As discussed before, the level of shareholders' equity is lower under IFRS 17/9. Therefore, the denominator of the ROE is small. This is more than offsetting the transition impact on net income after tax in 2022, which results slight uplift to the ROE. In 2022, it amounted to 11.6%. Consistent with our previous approach, of excluding unrealized gains and losses from equity and calculating the ROE, we will exclude the fair value reserve and the insurance finance reserves from equity going forward. But the ROE still show some financial market-related volatility from the numerate due to the higher share of assets categorized as fair value through P&L. These were the changes in definitions of our 3 effective financial targets. I would now like to add a few remarks on business volume for the next slide. We will continue to report business volume as a measure of growth and sales effectiveness. However, we will make a small adoption of the definition since there is no IFRS-based figure of gross written premiums anymore. Instead, business volume will reflect premiums received in addition to the amount paid in on deposits. This led to minor differences compared to the old numbers only at active reinsurance, we have a noticeable effect because we deduct the reinsurance commission, it pays from the premiums received. This is in line with the consideration of reinsurance commissions in insurance revenue under IFRS 17. Finally, we will introduce a new KPO -- KPI called underlying earnings, which I discussed on the next slide. As we have seen in the presentation from the 2022 numbers, there are items in our financial statements that do not directly relate to the performance of our core insurance business. But can cause some volatility in the P&L. In particular, I'm referring to fluctuations in market values for business, not measured with the VFA approach. Another example is the one-off gain from the sale of Sa Nostra Vida. These special effects make it harder for external users of our financial statements to assess the underlying operating performance of our group. For that reason, we will disclose a KPI we call underlying earnings going forward. Underlying earnings will exclude the nonoperating items you see on the right side of the slide. This will enable a comprehensive view on the development of our core operations in the insurance business and make it more comparable over time. Underlying earnings will also be more strongly aligned with other operating performance measures, such as the combined ratio. And the new KPI will better reflect our internal financial steering as we will use it in managing our market units among other KPIs. It is important for me to note that underlying earnings will come as an additional disclosure. Of course, all the IFRS-related information will still be available in our result publication in the future. This brings me to the end of today's presentation. Let me briefly sum up the key messages on a fair transition to IFRS 17/9. The change in the accounting regime does not impact our underlying business or financial strength. Our dividend policy remains unchanged. Under IFRS 17/9, our balance sheet reflects a more economic view closer to the asset devaluation, and it remains strong. Net income under IFRS 17 in 2022 was based on solid insurance service results and influenced by different accounting treatment of investment gains and loss. And we have discussed the new definition of KPIs affected by the transition. For the affected financial targets, we will communicate recalibrated target ranges with the half year results of 2023. My colleagues and I are available for your questions. At first, please confine yourself to your two most important questions so that everyone has the opportunity to ask questions. Thanks a lot.

[Operator Instructions] The first question comes from the line of Peter Eliot from Kepler Cheuvreux.

Thank you very much, and thank you for the presentation. For my two questions, the first one, Annelis, I think you finally gave us the CHF 26 million discount unwinding in non-Life for 2022. Just wondering, can you give us what the discount benefit was in '22? And can you give us any guidance on how the discounting and unwinding might develop in the near future given the current interest rate environment. That would be the first question. The second one is, if I look at the life earnings, very helpful disclosure. But I guess a lot of your peers have given us the walk from the CSM release to the life insurance service result. Which I guess helps us in our modeling. I'm just -- it's not very obvious from the disclosure whether we can make that bridge. So I just wonder if you can give us any help there on how we should think of that bridge and how we might see the walk from CSM to insurance service results.

Thank you, Peter. So I will -- I will answer the first question. And for the second question, I will give to Beat, Beat Müller. So regarding the discounting of non-life. On the line of discounting spend for the full year '22, it was, as we have -- as I have said, as we repeated, minus CHF 26 million for full year '22. And discounting benefit for the current accident year was CHF 108 million for full year '22. So as we -- of course, we never really give earnings guidance, but at a rough year for full year '23, for half year '23 at interest rates have increased in '22. It is to be expected that the nonlife discounting benefit of the current accident year will be higher for half year '23 and full year '23. The respective comparative period in '22. Of course, this is only a rough estimate and depends interest rate changes. And in the same way, the unwind of discounting expense is expected to be higher or to be a higher expense, let's say, also due to the higher rate. But be aware that there are also assets effect in these numbers. Yes.

I guess the point is that those -- that discounting and unwinding is very difficult for us to model from the outside without the full knowledge of your book and what discounts are locked in and durations, et cetera, et cetera, with millions of variables. So I guess you have a lot more insight than we do in those areas. So any hints you're able to give in the future will be very helpful.

Yes, of course, this is not a -- and as soon as we see additional helpful information as we are ready with that, we would inform you. And for the second question, so the work for the relation of the CSM work to insurance service results, I'm give to our Group Chief Actuarial Officer, Beat Muller.

Yes. Surely, the insurance services, the most important part is the release of CSM, but there are also yet other parts also, for example, release of risk adjustment and operating are and so on like that. With the half year closing, you will see that in that detail in June services if you have questions for that for your modeling, then please ask our Investor Relations.

The next question comes from Nasib Ahmed from UBS.

So the first one is an extension of Peter's question, extending it to the life business as well. So what happens to the life earnings if interest rates rise? And what elements of the P&L are impacted? And also related to that, how would the 8.8% there was no change if there was a rise in interest rates? And then second question also on the life business. Most of the market movements and I guess, both equities and interest rates go through the CSM because most of your business is VFA. But you're kind of matching your assets for income and not for market movements. So for example, if interest rate rise you presumably don't have an issue if the market value is lower, but that's coming to the CSM, is that correct? And is that economic? I guess the question is, does that impact any of your decisions in terms of which assets you invest in, i.e., onto equities?

So let me start with the second question. And then maybe this covers also part of the first question, but I will then ask my colleagues to add additional information. So does anything change in how we manage the assets on the life portfolio? First question. No, nothing changes since the introduction of the solvency test more than 10 years ago, the focus on how to manage insurance liabilities for the life portfolio has been very much an economic one or at least away or an approach driven by with solvency test, which is quite close to an economic view. That means that we have matched duration, duration matching on interest rates, and we have to the largest possible extent, [ hedged FX exposure ]. So what we happily take or what kind of risks do we have to take on this balance sheet, our equity risk, real estate risk and credit risk. There, it is 3 areas we expect an adequate return for the risks we take. That means regarding the movement of interest rates in the VFA [book], yes, they flow through the CFM and the interest rate is hedged. So on a duration gap basis, we are hedged and all the fluctuations on the asset are buffered in the CSM. Now making the bridge to your first question, if we look at the short term, the life earnings over the next 1, 2 years, Life earnings will not be affected by higher or lower interest rates. Because the duration gap is very small. So we do not take operation exposure. However, higher interest rate levels in general make in general life insurance business more attractive, and therefore, we always say independent of IFRS 17/9 that higher interest rates are generally very good for life insurance company because new products also possibly new guaranteed products become more attractive again. Now regarding the 8.8% and additional comments, I would first give the word to Beat. And Marc, if you want to add.

Maybe only one additional comment from me. We also have statutory accounts. And if we increase a lot our risks in the assets, maybe under IFRS 17, it will be buffered in variable fee approach. But locally, with the statutory country could have problems and then we could have problems to pay dividends. I will say we have also on order limit.

And to remark, we are commonly in the process of finalizing the numbers in the details of the transition to IFRS 9 to one part of the inaction are sensitivities, and we will update you with present activities when we are.

The next question comes from Simon Fössmeier from Bank Vontobel.

This is Simon from Vontobel. That's quite helpful. I guess I'm asking the same question that has been asked before in just a different way. Looking at Slide 15 at the CSM work, would you disclose the share of onus contracts? And what would it take for the contracts to actually become onerous. The second question is, I think I'm pretty clear on the CSM release. I'm not so clear on the new business CSM. If you write business on capital-light products. Does that mean that the new business CSM will be below the CSM release? And the economic variance, the CHF 700 million or 693. How am I supposed to model this? Should I just model 700 going forward for the next few years? What are the key drivers for that number to change?