Good morning, ladies and gentlemen. I welcome you to today's Hanoveri Conference Call on the Q1 2021 results. For your information, this conference is being recorded. At this time, I would like to hand the call over to your host today, Mr. Jean Jacques Conchon, Chief Executive Officer.
Please go ahead, sir.
Well, thank you very much and good morning, everyone. Welcome to our conference call presenting our results for the Q1 of 2021. Sorry to those of you particularly who are London based for the inconvenience due to the unusual early time of this call. The reason is, As for last year, the Annual Shareholders Meeting is taking place later this morning at 11 am CET. As usual, I'll start with an overview before our CFO, Clement Schungstotel goes over the financial details Financials in detail.
I'll then comment on the outlook and for the Q and A. I'm additionally joined by my Board colleagues, Claus Miller on the Life Sciences and Men Alco for P and D. I'm pleased to report that Hannoverie had a good start into 2021. In the Q1 of the year, we continue to successfully grow our business and group net income of €306,000,000 is very much in line with our full year guidance. Additionally, at 11.1%, the return on equity is well above our minimum target and gross premium increased by 16.8 percent adjusted for currency effects.
This is mainly driven by our Property and Casualty Business Group, where we have remarkable top line growth of 20% on the back of improving market conditions. In the Q1, technical profitability in P and C returned to normal level. There was some loss activity during the quarter, but large losses stayed within the budget. In addition, our net estimate for COVID-nineteen related losses remains unchanged compared to year end 2020 at €950,000,000 Hence, the combined ratio of 96.2 is not only in line with our planning, but also a good reflection of the improving underlying profitability in the Q1. As expected, the results of our Life and Health Reinsurance business group continues to be impacted by the COVID-nineteen pandemic, In particular, the high number of deaths in January February in the United States also led to losses in our in force portfolio.
Overall, losses connected to COVID-nineteen amounted to €151,000,000 slightly higher than Initially expected, as indicated in March, the restructuring within our U. S. Mortality portfolio led to a positive one off effect of €129,000,000 offsetting a large part of the COVID impact in Life and Health. To be clear, this restructuring for our ING portfolio does not affect the business reinsured by Hanover RE. However, change in the ownership of the leading company allowed for some other changes, in particular with regards to the collateral structure.
Finally, we recorded pleasing premium growth of 8.6% adjusted for currency effects. At 2.5%, the return on investment is fairly well in line with expectations overall And the capitalization according to Solvency II continues to be excellent, confirmed by the very strong solvency ratio of 252% at the end of the Q1, whether by our threshold of 200%. The operating cash flow in the Q1 was a particularly strong €1,700,000,000 mainly driven by attractive Reinsurance growth as well as very solid results on the investment side. On top of that, the restructuring within our U. S.
Mortality portfolio led to a positive operating cash flow of around €640,000,000 Driven by this positive cash flow, Total assets under our own management increased to a record high of €52,500,000,000 This growth was additionally supported by ForEx effect and the issuance of the EUR 750,000,000 in Hybrid Capital in March. This new bond issuance is also visible on the next Slide bringing our total hybrid capital to €3,000,000,000 We still have flexibility in regards to our total hybrid capacity And shareholders' equity was rather stable in the Q1 of 2021. Market movements again had a strong impact in the Q1 and the negative change In unrealized gains due to increased interest rates was stronger than the positive impact from currency translation. Altogether, the net income was enough to bring the balance back into positive territory. On that note, I'd like to hand over to Clement, who will explain the figures in more detail.
Yes. Thank you, Jean Jacques. Good morning, everyone. Moving on directly to the segmental reporting, I will start with the development of our Property and Casualty Business Group. Gross written premium grew by Remarkable 20% adjusted for currency effects.
Based on the January renewals, the growth in our traditional reinsurance portfolio stemming mainly from Europe, although premium volume also increased in the U. S. And in Asia. On top of this, we were also able to successfully conclude a number of treaties in our structured reinsurance. This shouldn't come as a surprise as we had mentioned our healthy pipeline in this area several times.
Furthermore, the recognition of premium from the underwriting year 2020 was material and also supported the growth in Q1. This effect is generally most pronounced in the Q1 and should therefore not repeat itself in the coming quarters. Renewal. Major loss came in at SEK 193,000,000 slightly below Our quarterly budget of EUR 215,000,000 and just as a reminder, in line with our usual practice, as you know, we have kept The unused part of the budget within our IBNR as a buffer for the remainder of the year. Even more importantly, we did not have any reasons to adjust our net loss estimate for COVID-nineteen in the Q1, While the gross loss estimate did actually increase slightly, this was offset by our retro protection.
The runoff of our reserves was slightly negative in the Q1, but this development is more a one off in nature and does not reflect any general negative trend in our portfolio. However, as we've not changed our conservative reserving approach, I would expect the confidence level of our reserves to be stable compared to year end 2020. Altogether, the 96.2 percent combined ratio is in line with our expectation. Ordinary investment income was stable, while realized gains were lower than in previous years, explaining the decrease in overall net investment income. Nevertheless, the Q1 2021 also benefited from realized gains because we sold some of our listed equities.
Other income and expenses amounted to minus €91,000,000 mainly driven by negative currency effects of €82,000,000 Altogether, the EBIT increased to 324,000,000 thanks to the improved underwriting results. Finally, the tax ratio was below the normal level due to a favorable earnings contribution from lower tax subsidiaries. On the next slide, total net large losses accounted for SEK 193,000,000 in the Q1, again SEK 21,000,000 below the budget. Yes. I think there's not a lot more to say on this slide, so I will directly move on to our detailed large loss overview.
As you can see on the next slide, the largest individual event was the Texas fleet with a net loss of €75,000,000 adding to storm in Spain and the Australian flop. The net impact from Nat Cat was €105,000,000 hardly a severely impacted quarter for Hanoverie. On the manmade side, so the quarter was more active with 1 satellite loss and 4 property claims leading to a net loss burden of €88,000,000 The next slide shows the technical profitability of our P and C portfolio by reporting line. The picture for the Q1 is a mixed one. As usual for an individual quarter, the combined ratio is slightly above the target in some lines or regions, mainly due to large losses and slightly better than the target in other areas.
I see this as a confirmation of the benefit of our highly diversified portfolio. One comment just on credit maturity, which looks particularly good. The government programs to mitigate the impact of the pandemic are still in place and have certainly had a positive impact on the reported numbers. Therefore, good 83% combined ratio is the result Actual loss development in the Q1 and not driven by any reserve releases related to COVID-nineteen. Overall, again, the 96.2% combined ratio is very close to our target.
So let's move on to Life and Health. The pleasing premium growth highlights the fact that our strategic initiatives are bearing fruit given that it's mainly driven by the APAC region and by longevity. The technical result is affected by losses in connection with COVID-nineteen. As in previous quarters, the main impact is coming from our U. S.
Portfolio. Apart from the U. S, the bulk of the losses from South Africa and to a lesser extent from other countries. As indicated in March, the restructuring
Part of
the IG portfolio in our U. S. Mortality book led to a positive one off effect of EUR 129,000,000. So when you look at this effect of the SEK 129,000,000, it might Sounds a bit complicated now, so I will try it because this one off shows up in 3 different lines in the P and L. First, the transfer of some assets as part of the funds withheld led to a positive valuation gain of €86,000,000 The restructuring of the collateral agreements had a positive impact of €58,000,000 in the other income and expenses.
And the valuation effect of the Motco derivative was minus EUR 14,000,000. So as mentioned by Jean Jacques, this adds up to the €129,000,000 offsetting, therefore, a large part of our COVID-nineteen losses in the Q1. The ordinary investment income was in line with our expectations, while the fair value of financial instruments was significantly negative in the Q1. This is driven by the valuation of the derivative embedded in a life reinsurance contract. Unfortunately, this derivative creates some volatility because the Corresponding positive effect of the liabilities is not visible in our IFRS accounts due to IFRS accounting regime.
Taking an economic view, the negative impact is to some extent offset. Other income and expenses are mainly driven by a further increase in the contribution from our Financial Solutions business, a large portion of which is recognized According to the deposit accounting method, currency effects this quarter were slightly positive. All in all, the EBIT of CHF 80,000,000 This is affected by a number of larger individual effects adjusted for COVID losses, the positive one off from U. S. Mortality and the negative Derivative valuation.
The result would have been in line with our expectations. At 37.9 percent, the tax ratio is above normal level driven by the taxation of certain business, but I would ask you not to reach too much into quarterly tax rates. On the next slide, for Life and Health, premium development is just one way to measure growth. But what is probably even more important is the value of new business. On the next slide, you can see that we were quite active in our reporting categories And also the pipeline for new business remains very healthy.
By region, North America, APAC and the U. K. For longevity Currently, the most promising, but European markets like Germany and France may also bring some new opportunities. Looking at the indicator for the new business value at the bottom, the Q1 was particularly strong. As you know, transactions in life and have often rather bulky and the value of new business also closely linked to the duration of the business driven.
In any case, I see our Life and Health business group as being well on track in terms of new business production. Next slide, the development of our investments. In the Q1, I think, It was very satisfactory. The ordinary investment income is in line with our expectations. On the one hand, our portfolio Inflation linked bond, as you know, is to some extent still affected by lower inflation.
On the other hand, the return from alternative investment It's back to higher levels compared to the previous year. Around CHF 50,000,000 of the realized gains are linked to the partial disposal of listed equities. The remainder is the result of normal portfolio maintenance in a low yield environment. Listed equities are not really a strategically important asset class for us. Therefore, the realization was rather opportunistic following strong performance of equity markets.
Additionally, we still have our desired exposure to private equity, as you know. Impairments and depreciations are comparable to last year, but still on a really moderate level either. As explained in my comments on Life and Health, the derivative valuation was negative, explaining the majority of the decrease in investment income compared to the previous year. The overall return on investment was 2.5%, meaning that we are well on track to achieve our full year target of roughly 2.4%. Unrealized gains decreased by almost €1,000,000,000 due to the increase in interest rates, but are still on a very high level at about €2,000,000,000 More importantly, The rising interest rates are, of course, positive for the new money yield even if the overall interest rate levels are still very low.
On the next slide, the asset allocation, as you can see, remained rather stable in the Q1 'twenty one. The only notable change I would mention is We slightly increased the share of corporate to 32%. Here, we invested according to a broad based With a focus on developed markets, the mentioned disposal of listed equities is not really visible here in this overview, and the rounded number is still at 1%. The contribution to ordinary investment income is Diversified as usual. It's particularly pleasing to see that the contribution from private equity recovered to strong levels that we have seen before the market volatility caused by the pandemic in 2020.
To conclude my remarks, the overall results for the Q1 2021 does include Few larger extraordinary effects as you can see, but both the reported net income and the underlying business development support our guidance for the full year And back to you, Jean Jacques, for the target matrix and the outlook.
Thank you very much, Clement. On the next slide, you see the target matrix, which confirms that we had a good start to 2021. Growth, as mentioned earlier, is significantly ahead of the strategic targets. And our main profitability target for the group, the ROE, It's well above the minimum target and the industry average. The treaty renewals As at 1st April 2021, we're also successful for Hannover RE.
Both The premium development and the price improvements are very much in line with the trends we saw in the January renewals. In the U. S, we particularly benefited from the underlying improvement in primary markets and were able to generate at double digit growth. In Japan, growth was slightly lower, but overall in line with our expectations. And for the cat business, the reinsurance rate improved further on the back of the heavy loss burden in 2018 2019.
Continued positive trends could also be observed in our aviation and marine portfolios. Overall, our premium in the April renewals increased by 7.4%. The risk adjusted price change was about 5% Looking at only at the non proportional business, the price increase was even higher at 9%. Based on the favorable renewals in January April, we see further opportunities to grow our highly diversified portfolio in an attractive market environment, and I would expect general pricing trends affecting the reinsurance industry to persist in 2021 and to carry on into 2022. Influencing factors will be the amplitude of further COVID-nineteen impact for the industry and also the large loss situation as usual.
We still feel comfortable with our P and C reserving for COVID-nineteen related losses. And currently, we do not expect a material impact in 2021. In Life and Health Reinsurance, growth is expected to be well supported by our strategic initiatives and most pronounced in Longevity and Financial Solutions. In the latter case, this volume indication Also includes business which is booked according to the deposit accounting method and is therefore not feasible in the premium income. In mortality, further losses from the COVID-nineteen pandemic are expected to decrease significantly compared to the Q1, mainly driven by the progress of vaccination programs around the world, but particularly in the U.
S. The premium is expected to be slightly lower, mainly due to the natural decrease in our in force book and our limited appetite for new business in the Most competitive traditional life segments, particularly in the U. S. And U. K.
Markets. In morbidity, the overall development is more stable. As mentioned By Clement, the business development in the Q1 of the year supports our guidance for the full year. On the premium guidance, it even supports a slightly higher growth rate, and we have increased our expectation to high single digit growth rate. We have kept the guidance for group net income unchanged.
On the one hand, of course, the slightly higher assumption for growth will filter through the to the bottom line. On the other hand, the impact from COVID-nineteen was a little higher than expected in the Q1. Finally, I can reconfirm our positive view of the dividend policy and the potential to pay a special dividend The profit targets are reached and the capitalization remains strong. This concludes my remarks, and we would be happy to answer your questions. Thank you very much.
Ladies and gentlemen, we will now begin our question and answer session. And the first question is from Vinit Mahutta, Mediobanca. Your line is now open. Please go ahead.
Good morning. Thank you and hope everything is okay everybody. So my two questions please. One is the Georgak, you mentioned the pricing effect and you mentioned optimistic outlook for 2022 and you mentioned Some factors including COVID. Could you just elaborate a bit?
Is it because you think COVID discussions haven't actually Had the opportunity take place this year and that's why some of these effects could roll over into next year's pricing? So that's my first question. Any other factors I'd like to highlight for next year would be helpful as well. And second question is the mortality COVID In fact, the $151,000,000 total, but only $105,000,000 can I say okay, dollars 105,000,000 in the U? S.
But So the ex U. S, you mentioned South Africa. Could you just elaborate? Is there Some other risks, because so far as a marketplace we've mostly been focused on U. S.
Mortality, partly U. K. And also I mean, in that context, does something like the Indian situation bother you at all in terms of loss risks? So just any comment on ex U. S.
COVID mortality, which seem to be higher than what I would have imagined? Thank you.
Thank you for that. Just on the first question, you have several drivers for pricing. Of course, you have the large loss In the past few years, the interest rates environment, of course, put some additional pressure. On COVID, as mentioned, I think We're of the view that we're well reserved conservatively across the lines of business affected, But there are some uncertainty on client by client basis. And in some instances, this This will still be a point on the agenda as we renew some of the businesses in January.
So I think you still We'll see some impact and some further price pressure on the cedent Given the burden of COVID as of end of last year, of course, we had a much better view on the overall exposure, but this is And this will be very much on a client by client basis. Maybe on the Life and Health ex U. S. U. K, Claus can answer that.
Yes. The COVID claims, excluding the U. S, in our portfolio are mainly from Latin America and South Africa. The worst country in Latin America is Probably right now Brazil, but not in our portfolio. We have hardly any business in Brazil.
But Chile, Colombia, even Mexico to some extent have caused losses in our portfolio. It's just in the double digits, and I don't know how long this will continue. It's nothing what we are really Worried about in terms of our bottom line results. South Africa, the same vaccination has not really started there, And we have a lot of financing business as well in South Africa, which can Absorb a lot of COVID claims, but including the mortality covers we provide. This is also, I guess, single digit, maybe double digit loss in the Q1.
India is of not much importance for our bottom line. I guess the total premium Premium is in the single digit million, and that has absolutely no impact on the bottom line for us. These are the largest markets outside the U. S. And U.
K. Europe as such is Not really a problem so far. Please keep in mind that we have shifted our portfolio to Financial Solutions and long term equity in the last 10 years. To a large extent, this definitely helps in this situation.
The next question is from Michael Haidt, Commerzbank. Your line is now open. Please go ahead.
Thank you very much. Good morning to everyone. Two questions, both on C and C Re. You mentioned the COVID-nineteen related losses that you estimate It's unchanged at €950,000,000 It appears that new COVID-nineteen related losses are fully covered by retro, which is somewhat counterintuitive. Can you explain why this is the case and how the mechanics works here?
Second question, the strong growth in P and C Re 20.1 percent. You mentioned that some of this comes from structured reinsurance. However, I thought that premiums from structured reinsurance are generally deposit accounted. So can you elaborate a little bit how Such as reinsurance lays into this strong growth and whether this strong growth was affected by some large quota share transactions or anything like that.
Thank you. I guess Sven will address both points.
On the COVID side, as Clemens explained, our gross position has only Increased a little bit. So the gross claim grew by approximately 3%. This was coming out of mainly property related, so business interruption related, new loss The prices from our Seating companies, and we saw a little bit of movement on the contingency side. So the property is covered by our resuscitation protection and the small increase From non property related lines, we have eliminated by adjusting other lines Very gradually downwards in order to keep with the overall €950,000,000 which is an overall Conservative number, so we wanted to have stability on that side in the Q1. When it comes to the growth, the run off of the 2020 business It comes both from the traditional business and from the Advanced Solutions business, which we have written at the 1.4 renewals and later last year.
The reason why Advanced Solutions is also significantly contributing in that aspect is that the amount of business We write on a deposit account basis in our T and C structured reinsurance practice is very, very small indeed. So we it would be more the exception than the norm that we have deposit accounted business in our structured P and C business. So they contribute exactly like any traditional quota share, for example, would contribute. And given that we are talking about business that was written after 1.1 last year, as Clement said, This impact will phase out over the next couple of quarters. But to give you a little more detail, when we It's about our growth in Q1 2020.
25% of that number at the time came from underwriting years 2019 and prior. When we are now reporting about our growth in the Q1 of 2021, a remarkable 50% Of that growth is coming from the previous underwriting years. So if you put the growth into the categories, The underwriting year 2020 and prior, it's more than we expected. When we look at underwriting year 2021, the growth we are seeing is very much in line with the premium growth we reported in early February when we talked about our January renewals.
Thank you very much. Very helpful.
The next question is from Andrew Ritchie, Autonomous. Your line is now open. Please go ahead.
Hi, there. I joined the call a bit late, so apologies if you've addressed these The first question was, could you just give us a color as to the FX noise in the other income in Non Life? Why was it so large? How can I forecast that? Or can I?
What are the main sensitivities? And what was driving it? I think you flagged €82,000,000 In the slide. 2nd question. So could you just give us a bit more color on your outlook for midyear renewals?
There's definitely a bit more discussion With the weather, there's an accelerating softening trend or still decent rate correction. Maybe give us a sense how much of your MIBDA renewal is on sort of loss affected business? And the final question, Could you just give us a bit of color behind the decision to raise more debt in the quarter? It doesn't seem like from the outside that you particularly needed it, Given your strong solvency and no imminent refinancing, so what was the thinking? Is it purely opportunistic?
Do you
feel the need to run at a particularly high capital coverage in anticipation of growth or some other metric? That would be useful to give some color on that. That would be great. Thank you.
Thank you, Andrew. And I'll give the question on ForEx To comment and also probably the hybrid capital and then maybe a renewal for Sven.
Yes. Good morning, Andrew. Colleagues are looking at me with respect to the FX effect in P&C because it's Actually an accounting question, so that goes to the CFO because again, it's an accounting one. It's not an economic effect. The reason is the stronger mainly the stronger U.
S. Dollar in the Q1 development of the U. S. Dollar. That's the underlying reason for it.
And as we reevaluate our balance sheet, both on the liability and asset side, all the liability effects Flow through the P and L, that's the currency effect, whereas on the asset side, only so called liquid assets, Monetary assets, as they are classified under IFRS, flows through the P and L and the other effect goes straight into the currency OCI, for particularly our nonmonetary U. S. Dollar assets, for example, our huge U. S. Dollar private equity portfolio.
You will have seen an opposite effect last year where we reported again on the P and C side. So it adds a certain volatility, of course, to our results, but the movements were Quite significantly last year, as you know, in the U. S. Dollar and this year as well. So that sort of flows with the P and L.
However, again, there is a fully offsetting effect in Opiant.
Would you want to address the debt or shall we go first to the midyear renewals outlook?
Yes. What we have seen at 1.4 is that the momentum on the rate side It was relatively unchanged to what we saw at the 1st January renewal, both on the insurance and on the reinsurance side. When you ask about 1st June, 1st July renewed, we expect that positive trends to continue. There is some first signs of slowing down in the momentum, but The direction of travel is still up. I mean, we are not talking about an SP4 kind of market yet.
Where we are particularly seeing more pressure is on proportional treaties where Seating companies are arguing That in their business, they have achieved 2 very often even 3 rounds of rate increases. So they are not really prepared to decrease their ceding commissions further due to the fact that the underlying profitability of the business should be significantly better. So That's what we are seeing. The bulk of the business we will renew at 1st June 1st July is coming from the U. S.
And Australia. U. S. Was a heavy loss year, as you know, last year with Hurricane Laura and various tornadoes. And So from that point of view, we see little reason why that business should see a lesser rate Momentum compared to the one business we have written in the U.
S. Australia, on the other hand, had Difficult years in 2019, 2020, a lot of that was already taken into account when we last renewed that business. The last 12 months were not loss free, but didn't experience the same sort of loss burden in Australia. So here I would expect that we still see rate increases, but maybe not as high as we could report a year ago. So overall, the trend is still very much intact, but maybe the rate increases we will be able to report when we talk about Q2 will come a little below what we could now report at 1st April 1st January.
Yes. And just briefly on the hybrid, I mean, It does give us, as you've seen in our Solvency II rate as well, it does give us some buffer, provide some buffer, both in Solvency II but also in our raising capital models. So there is some headroom for us, not necessarily In the Q1, of course, but we thought the market environment was very good. So we took the chance and it was an opportunistic move then in March, Again, to drive us with some buffers to take advantage of the good pricing environment in the market Environment and the opportunities in the market.
And just to respond to also part of your question, Andrew, there is no Different benchmark now when it comes to Solvency II. We're still at the same level And see this as a fairly high solvency ratio, but combined with the opportunistic nature of the debt raising that gives us The photography of the situation is of end of March, but no change in our practice here.
Okay. Thank you.
The next question is from Johann Schmidt, Natla. Your line is now open. Please go ahead.
Thank you. Good morning. I have one question on your ordinary investment income from private equity in Q1 'twenty one. Does this include any specialty dividends or any valuation effect? That's my question.
Thank you. Samuels will address that. Yes. No, it's really just ordinary distributions from our private equity funds. It's a variety of private equity funds.
There's no special effect in there and no evaluation effect. We don't evaluate our private equity investments through P and L. The all goes through the OCI. There are positive effects in the OCI actually, I think it was very pleasing what we saw compared to last year in terms of ordinary investment results from private equity, It's actually in excess of Q3 2020.
Thank you. And the next question is from Kamran Hossain, RBC. Your line is now open. Please go ahead.
Hi, good morning. Just one question for me And apologies if I missed this detail. I understand that you have a parametric covered for your Life and Health business, which kind of helps out in situations, kind of pandemic situations. Just wanted to ask how close are you to triggering this And how much cover does it provide? I guess given the situation elsewhere in the world, the U.
S, the U. K. Seems to be getting a bit better, Does it also include non U. S. Debts?
So color on that would be really helpful. Thank you.
Yes. The cover we have bought is currently at $255,000,000 capacity, U. S. Dollars. And the trigger is defined as a weighted average of the population mortality of 3 countries, the U.
S, the U. K. And Australia. We picked these 3 because they have the highest sunset risk in our portfolio. The weights are about 60% U.
S, about 22% U. K. And about 18% Currently, the trigger starts at 110% of this weighted population mortality, and it ends at 120%, So it's 10 percentage points. And the €255,000,000 mean that Each percentage point in excess of €110,000,000 is worth €25,500,000 Currently, we are Pretty close at or to the trigger point of 110. Not much is expected from Australia in the rest of the year, just normal mortality.
So it will not increase because of Australia. It will probably also not increase further due to UK because COVID claims are Significant to reduce. And the U. S, we have to wait What happens there? Currently, there are still about 500 claims per day.
I don't expect a large payout from that. And hopefully, this is not the case because that would mean that we have the COVID pandemic under control. So this is only linked to population mortality in these three countries.
And the next question is from Vikram Gambi, Societe Generale. Your line is now open. Please go ahead.
Hi, good morning everybody. It's Vik from SoftGen. I've got a couple of questions. First is on the deposit accounted Greetings contribution, which stands at about $90,000,000 for this quarter versus $85,000,000 Q1 2020. Can you Give us a bit more color if there is a slowdown in the growth that we have been used to in the past or Is it more of because it's a lumpy business?
Q1 was a slightly lower growth quarter and you might expect the Good to pick up in the coming quarters. So any comments there would be very useful. And second was on the cyber insurance. Can you just Explain how the book is shaping up, what were the premiums for the full year 2020 and how The things I'm looking for the current year. Thank you.
John, Financial Solutions Business.
The Financial Solutions business is pretty stable, not impacted by the COVID pandemic right now. And in we have Two countries where most of the Financial Solutions business is coming from. 1 is the U. S, the other is China. The U.
S. It's up to 20 years. So this is more long term. China is significantly shorter, but at least for the next 2 or 3 years, we don't expect significant shifts here. And we hope that we can drive more business in the near future.
So this is something what we see as a stable contributor to our bottom line results.
On
the cyber portfolio, this Continues to be a growing class for Hannavari. So in 2020, we rolled approximately EUR 300,000,000 of cyber As you know, we were able at the 1st July renewal onwards from last year to reduce the silent cyber exposure on non affirmative cyber business, which created some further headroom for us in order to keep growing our affirmative cyber portfolio. And for 2021, we had a successful start to the year where we could either increase shares on existing contracts or even write a few more. So we are going to approach a premium volume near €400,000,000 for the full underwriting year 2021. While the loss experience continues to be favorable in this class, we have seen an uptick in the loss frequency in the last 18 months, but the business we write is still well within the ultimate loss ratio or picks that we had chosen for that business at the beginning when we were writing it.
So from that point of view, we see this as a good contribution to further increase the earnings capability of our P and C practice.
Okay. Thank you very much.
And there are currently no further questions. And the next question is from Emmanuelle Musiou, Morgan Stanley. Your line is now open. Please go ahead. Emmanuelle Musio, your line is now open.
Please go ahead. We can't hear you at the moment.
Hello. Hi. Sorry, I was on mute. Thanks for taking the question. A quick question on the combined ratio.
Can you please give us an indication of where the underlying profitability stands compared to last year? Or maybe You can otherwise give me an indication of what the contribution from prior year developments was This year, is it comparable to 2020? Is it more just some color about that, please? Thank you, Manuel. Sven?
Yes, to the prior year development, as Clemens has said, that It came in a little less good compared to where we were a year ago due to some impacts on our short tech classes. For example, the winter storm in Texas It was mostly resulting from business which we wrote in underwriting year 2020. So this showed some negative runoff therefore for our 2020 Property Business. The run off results for our long term losses, casualty in particular, It was good, it was positive, so no concerns on that side. And as to your first Question, I mean, of course, we are satisfied with the start to the year with our 96.2 combined ratio.
So this makes us more confident that we will achieve our target of 96 or better at the end of the year. But of course, the year has only just started. So there is a lot of exposure on the wind side waiting for us in the next couple of quarters. So at this stage, I would say it's a good start. It seems to reconfirm our guidance on that But we would not be more bullish than that at this stage.
Thank you.
And we haven't received any further questions at this point. So I hand back to the speakers for closing remarks.
Well, thank you very much for joining this early call. So I think we handled the key topics. We wanted to show that we had a solid start into the year with these quarterly results On the back of successful P and C renewals and good momentum in pricing and conditions with strong growth as you've seen And the net corona loss estimate, which is unchanged. In Life and Health, of course, some uncertainties remain, but We believe that with the vaccination programs, particularly in the U. S, things will improve in the coming quarters, but of course, there's some The strong capitalization, we addressed that at the beginning of the year.
And This is reflecting, of course, the hybrid bonds and the outlook is positive. We're quite confident about the guidance. We We changed, of course, the top line guidance reflecting the P and C business. But as Ben mentioned, it's a bit early in the year to Look at it in more detail. There's still some uncertainty.
There's still some nat cat activity, which might be coming later in the next few quarters. But all in all, we're very positive about the outlook for 2021 and feel very comfortable with guidance. With that, I will close the session. Thank you again for joining today and see you next time.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.