Ladies and gentlemen, welcome to the Full Year Results 2023 Conference Call and live webcast. I am Sandra, the Chorus Call operator. I would like to remind you that all participants are in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The Conference may not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Fabian Rupprecht, Group CEO. Please go ahead, sir.
Thank you, Sandra. Ladies and gentlemen, welcome to our Analysts' Conference Call on the Full Year Results 2023. Having joined Helvetia as Group CEO in October 2023, these are my first annual results to present. I look forward to discussing them with you. Within the next 30-40 minutes, our CFO Annelis Lüscher Hämmerli and I would like to give you detailed information on our business development and the key financials of the reporting period. As you can see in the agenda on slide three, I will start by giving you a brief overview of the past financial year. Annelis will then explain the key financial figures and targets. At the end of the presentation, I will summarize the most important points and give an outlook on our current focus areas. Afterwards, Annelis and I will be happy to answer any questions you may have.
Let's move now on slide 4. Let me start with the highlights of 2023. First, we are delighted that the Board of Directors proposes a dividend increase of almost 7% to CHF 6.3 to the Annual General Meeting. We're therefore making very good progress towards our financial target of distributing accumulative dividend of over CHF 1.65 billion to our shareholders by the end of the strategy period. The dividend is based on our core business. In the past year, we generated underlying earnings of CHF 372 million. The result was influenced by exceptionally high losses from Nat Cat and large claims events in the non-life insurance in Switzerland and in Europe. To address these challenges, we put an increased focus on strengthening technical profitability. I will come back to that in more details towards the end of the presentation.
Second, Helvetia continues to build on its great resilience from its financial strength and diversification. This is reflected in our excellent SST ratio of over 280%. Our business mix is a crucial factor contributing to our resilience. The diversified setup allows us to better balance our events affecting individual market units. This is visible in the result of 2023. While Switzerland and some markets in the European segments were affected by Nat Cat, it was a favorable year for specialty markets in terms of claim burden and market environment. Third, we have sized attractive growth opportunities in line with our strategy. The main driver of growth was the non-life business. In specialty markets, we were able to take advantage of a favorable market environment and achieve the currency-adjusted growth of 21%. It is important to me to emphasize this business is very cyclical.
This is not our ambition to grow to the same extent every year. If the conditions are less favorable, we will adjust our underwriting approach accordingly. In non-life business in Switzerland and Europe, we grew above the market average in key market units, especially in Switzerland, in Spain, and in Austria. In addition, we also increased the fee business in line with our strategy. The growth of around 14% is mainly the result of the expansion of our non-insurance business in Spain. Besides organic growth, complementary acquisitions were also a contributing factor. With this, I now hand over to Annelis, who will present to you the financials in more detail.
Many thanks, Fabian. A warm welcome also from my side. This is a very special results publication, as these are the first Full Year Results under the new accounting standards of IFRS 17 and 9. Therefore, please note that all the IFRS figures in our presentation are based on the new accounting rules. The prior year numbers have been restated accordingly. Within the next 15-20 minutes, I will give you an overview of our financial performance in 2023. As always, we use a short version of the presentation for this conference. The full slide deck with additional information is available on our website. First, let's have a look at our key figures relating to profitability and growth on slide five. In view of a demanding market environment, our results in 2023 demonstrate the benefits of our diversified business model, as Fabian mentioned.
Helvetia generated underlying earnings of CHF 372 million compared to CHF 493 million in the prior year. We report on the basis of underlying earnings for the first time. This performance metric focuses on the operational development of our insurance and fee business. The volatility from capital market developments and other non-operating effects are excluded. Therefore, the major components of underlying earnings are technical results of our insurance business. As such, the reduction in underlying earnings compared to the prior year is mainly driven by exceptional Nat Cat and other large claims. In several countries, the whole market has seen an unusual number and intensity of storms, floods, and hailstorms, especially in the Q3 . Switzerland, Italy, and Germany were affected the most. As indicated before, Helvetia recorded an overall net claims amount from natural catastrophes and large claims of CHF 216 million in the third quarter alone.
In this challenging environment, our diversified setup paid off. While the non-life business in Switzerland and Europe had to cope with elevated natural catastrophes, the global specialty market segment and the life insurance business increased their underlying earnings. Our IFRS net incomes stood at CHF 301 million. Besides the development of underlying earnings, the decrease compared to 2022 was due to two effects. First, we reported a one-off gain of CHF 87 million from the sale of Sa Nostra Vida in the prior year. This gain and Sa Nostra's regular profit contribution of CHF 20 million were not included anymore in 2023. In addition, a one-off impairment of CHF 27 million was booked on the goodwill of MoneyPark in the first half of 2023, as announced before. These effects were partly compensated by a higher investment result due to a better performance of financial markets.
The IFRS result corresponds to a return on equity of 7.5%, which is below our target range due to the exceptional level of large natural catastrophes and the one-off impairment. As you can see in the second box on the slide, fee business continued to grow significantly. This is in line with our strategic ambition to diversify income streams. Fee and commission income increased by almost 14% at constant fixed rates to CHF 391 million. Growth was mainly driven by the expansion of Caser's non-insurance business around health and care services in Spain. Caser has further expanded the fee business with targeted bolt-on acquisitions. For example, it has acquired nine dental clinics and 15 veterinary clinics in 2023. Our fee business again demonstrated its solid profitability in 2023. The fee result increased from CHF 28 million-CHF 33 million before tax.
With this, the fee business contributed more than 5% to the group's IFRS net income. We are therefore well on track with regards to our targets on fee business. Now let me continue with the combined ratio in non-life at the bottom left of the slide. As you can see, the combined ratio was above our target range at 97.4%. This was mainly due to an increase in the claims ratio by three percentage points to 69.9% coming from the segments Switzerland and Europe. To a large part, the increase is attributable to the exceptional number and intensity of large natural catastrophes I mentioned before. The nominal Nat Cat ratio of the group increased to 4.8% from 3.5% in the prior year. Besides natural catastrophes, Helvetia was affected by a few large fire damage claims, especially in Switzerland and Germany.
In addition, to a lesser extent, an accumulation of mid-sized claims within the usual range of volatility, as well as inflation effects in some individual lines of business, had an influence. In view of this challenging environment, the overall non-life business of the group was robust. It benefited from the portfolio's diversification. While Switzerland, Italy, and Germany were affected by the elevated Nat Cats and large claims, the specialty market segment and Austria improved their combined ratio. Specialty markets recorded a lower level of claims from natural catastrophes and large claims events. It also benefited from the rate increases we have seen in this business over the past months and years.
Helvetia continues to see attractive potential in the business fields of this segment as a diversifying and growing part of our portfolio. Now let's move to the cost ratio. The cost ratio, which includes non-fulfillment expenses, remained stable at 27.5%.
An improvement in the admin cost ratio was mainly driven by the scale effects resulting from the profitable growth of the business and cost discipline. This compensated for a slight increase in the acquisition cost ratio from shifts in the business mix, primarily due to the growth of embedded insurance business. Given the challenging market environments in the Swiss and European retail and SME business, Helvetia is continuing to adapt its prices in these segments.
In Europe, we have achieved considerable rate increases in 2023. I will come back to that in a minute when we look at the business volume. Switzerland has also made rate adjustments that took effect at the beginning of this year, so of 2024. Given the high number of intense Nat Cats we have seen in 2023, we have slightly adapted our reinsurance structure to be less exposed to a high frequency of large claims events.
We have initiated additional measures to strengthen technical profitability in non-life. Fabian will say a few words about this later. Based on these measures, we are confident that the combined ratio will improve again this year, and we hold on to our ambition of 92-94% for 2025. Of course, this will also depend on a more normal level of Nat Cat and large claims events and the interest rate environment due to discounting of new claims reserves. Moving to the next box on the slide, the new business margin in life was well within our target range. This demonstrates our successful focus on growth in profitable lines of business in life insurance. Helvetia generated the new business volume measured by the present value of new business premiums of CHF 2.7 billion. The main contributor to the volume of new business were investment-linked products.
In individual life, the share of these capital-like products on new business was more than 80%. Despite the decrease in the overall volume, the value of new business increased. Accordingly, the new business margin increased to 5.1%. Besides profitable growth in life reinsurance, where we only underwrite biometric risks, the increase was driven by a favorable influence of the interest rate development on new business in Europe. Finally, on the right side of this slide, you can see the development of business volume. Helvetia continued to grow its core business with a focus on profitable and capital-efficient areas. We achieved a total business volume of CHF 11.3 billion. At constant exchange rates, this is an increase of 7.2%. This growth was driven by the non-life business, which showed a strong organic increase of 10.8% at constant exchange rates.
Specialty markets developed very positively, increasing by more than 20% on a currency-adjusted basis. Growth in this segment was mainly due to increasing new business driven by our focused growth strategy in all three market units, specialty lines, France, and active reinsurance. In Switzerland and Europe, the growth rates of our non-life business were above market, especially in our two biggest country markets, Switzerland and Spain, as well as in Austria. We are thus further strengthening market positions in our core insurance business with retail and SME customers. Increasing prices substantially supported the growth in specialty markets and in the European non-life business. Price increases accounted for almost 40% of growth in specialty markets and even for 60% of non-life growth in the Europe segment. In Switzerland, we have adjusted tariffs at the beginning of this year.
Helvetia is therefore continuously and effectively adapting the pricing of its non-life products to the development of inflation and the overall market environment. In the life business, business volume grew by 1.7% at constant exchange rates. Helvetia continued to focus on capital-like products in this area. We recorded a very successful development of investment-linked products in individual life in Switzerland. The strong growth of investment-linked business compensated for a reduction of business volume in Swiss group life. This line of business was influenced by an ongoing market-wide trend of a shift from full insurance to semi-autonomous solutions. Helvetia is well positioned in this environment with its semi-autonomous products and flat-rate risk solutions. As a result, the number of actively insured persons in Swiss group life increased in total compared to the end of 2022.
In life insurance in Europe, Helvetia increased its business volume on a currency-adjusted basis, even though the contribution of Sa Nostra Vida was not included anymore. Growth was driven by a large contract with single premium that we wrote in Spain. This was partly offset by the influence of the financial markets and interest rate environment on the volume with investment-linked single premiums in the other markets. Finally, growth in life business was supported by active reinsurance, where we are establishing business with reinsurance solutions for biometric risks. Let's now move to slide six and have a look at cost efficiencies, the balance sheet, and our dividend policy. Slide six shows that we are very well on track with regards to our financial targets on cost efficiencies, capitalization, and dividend payout. We have continued to raise cost efficiencies in the past year.
As of 2023, cost efficiencies amounted to CHF 128 million. We have therefore exceeded the target level of CHF 100 million that we have set at the beginning of the strategy period three years ago. There have been two main drivers of efficiencies. First, we successfully implemented measures as part of an efficiency program, for example, in procurement or internal collaboration and organization. Second, the profitable growth we achieved in our core business resulted in efficiency gains from scale effects. Both effects are also visible in the continued improvement of the admin cost ratio in non-life. Moving to the box on the right side, our CSM in the life business has slightly increased compared to the end of 2022. Profitable new business we have written in 2023 contributed CHF 203 million. With the expected investment return, we also showed the contribution of the existing business separately for the first time.
It amounted to CHF 174 million. Together, the new business CSM and the expected investment return were slightly overcompensating for the CSM release of CHF 372 million. Normalized CSM growth, which includes these three items I just mentioned, was at 0.1%. The economic variance of -CHF 63 million was largely driven by exchange rate effects. In addition, growth of the CSM was supported by a positive operating variance, which includes changes in assumptions and experience variance. As you can see in the bottom left corner of the slide, Helvetia's capitalization remains on an excellent level. Standard & Poor's has confirmed our financial strength rating of A+ in March. The target of A rating is therefore met comfortably. Our regulatory solvency, measured by the Swiss Solvency Test, continues to stay on an outstanding level. We estimate our SST ratio to be above 280% as of 1st January 2024.
Compared to the level at the end of June 2023 of 298%, it has slightly decreased, mainly due to the reduction in risk-free interest rates. The fourth box on the slide relates to our dividend policy and capacity. Despite the unusual level of Nat Cats and large claims we have seen in 2023, Helvetia has a strong basis for its payout policy of sustainably increasing dividends. Our core business is growing profitably. It is well diversified and resilient, and our financial strength is excellent. For 2023, Helvetia's board of directors is therefore proposing a further increase in the dividend to CHF 6.40 per share. This brings the cumulative dividend distribution since 2021 to CHF 939 million. Helvetia is therefore well on track to reach its target of paying out more than CHF 1.65 billion in dividends over the five years until 2025.
To reinforce the resilience of our dividend strategy and to improve visibility of our dividend capacity, we will create what we call free deployable funds in 2024. Helvetia has a strong net economic dividend capacity of around CHF 800 million that backs our dividend policy. This surplus capital is generated by the group subsidiaries and therefore composed of the aggregate capacity of all our legal entities. In 2024, we will transfer most of the available surplus capital from subsidiaries to Helvetia Holding. Besides remitting the regular dividend, our subsidiaries will repatriate CHF 375 million to Helvetia Holding to create the free deployable funds. With this, we will have a buffer of unencumbered liquid assets at holding level, which will increase the fungibility of free capital for the group and our financial flexibility.
Most importantly, it will support our dividend strategy to always pay at least the same dividend per share as in the previous year. With that, I now hand over to Fabian again.
Many thanks, Annelis. In the last part of the presentation, let me share an overview of what we focus on in the near future. Our strategy and financial targets remain a priority. We continue to work on the implementation of Helvetia 2025 with full commitment and a focus on achieving the current financial targets. Technical excellence is a clear focus. I want to underline. We're committed to improve the technical result in non-life insurance. A wide range of measures to strengthen our technical profitability have already been taken in the past in all market units. These measures mainly relate to tariff adjustments, to re-underwriting, to risk selection, and to claims management.
Going forward, these efforts will be further intensified. In terms of tariff adjustments, we have achieved considerable rate increases in non-life. We increased rates by a high single-digit figure at 2024 renewals in lines of business that are exposed to inflation, such as motor or property. In some market units, rate increases in these lines of business even reached a double-digit range. At the same time, Lapses stayed on a very reasonable level, with Lapses ratios remaining more or less stable across market units. This shows that we are able to push through our rate increases. In addition to price adjustments, we focus on further strengthening efficiency and effectivity in claims management. In particular, we took measures to steer more claims via networks, and we increased quality controls.
Finally, we have adapted risk selection, for example, by adjusting portfolios of Nat Cat risks in specific risk zones and by revising conditions in renewals. All market units have a range of implemented or upcoming measures in place. We consider technical excellence to be at the core of our business, and we leverage our international structure and our expertise to increase our standards and enforce best practices. Given inception dates are spread over the coming month, all these measures will take effect over time. The impact on our financial numbers will gradually become visible in 2024 and in 2025. Moving now to operational efficiency. As Annelis showed, we have exceeded our target of raising CHF 100 million in cost efficiency. However, operational efficiency is an ongoing task and will remain key going forward. The fourth focus is on selective growth. We have an international and well-diversified setup.
We want to leverage this positioning for further selective growth with a focus on profitable areas in line with our strategy. On the last slide, slide eight, I would like to highlight why Helvetia is well positioned to progress on these ambitions. We built upon a strong core business, an excellent capitalization, and a diversified setup. Helvetia benefits from a strong positioning, which is evident in many ways. We have a broad customer base and a wide-ranging sales network in the retail and SME business. Our competitive positioning can be seen in the growth achieved in the past years. It allows us to effectively react to changes in customer needs or the market environment, for example, by adjusting premiums for inflation. We have recognized expertise in specialty insurance, a segment that has grown substantially in the last year.
And we can take advantage of a strong brand position sorry, a strong brand proposition and the high level of identification of our employees with Helvetia. I consider both factors to be central to our success in the market. Annelis has already elaborated on our excellent capitalization. Another important aspect is cash generation from our core business. This is particularly essential to our ability to pay substantial dividends and sustainable dividends. Despite the high level of Nat Cat and other large claims last year, we were able to increase cash remittances. As already mentioned, the 2023 results demonstrate the advantages of our diversified setup. It allows us to selectively pursue attractive growth opportunities and to benefit from specific market conditions in different business fields. We aim to leverage these strengths to serve our shareholders, customers, partners, employees, and other stakeholders in the best possible way.
In order to do so, we have initiated a strategy review that will be conducted this year. On 12th of December, we will present to you the outcome at the Capital Market Day. This brings us to the end of our presentation. Thank you for your attention. Annelis and I are now available to answer all your questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Questions on the phone are requested to use only handsets and eventually turn off the volume of the webcast. In the interest of time, please limit yourself to three questions only and then re-enter the queue.
Anyone with a question may press star and one at this time. The first question comes from Peter Eliot from Kepler Cheuvreux. Please go ahead.
Thank you very much, indeed. My three questions, please, were the first one I hope you can hear me okay. It's a very crackly line in my end, but hopefully, you can hear me. Yes, it's okay, Peter. Okay. Okay. Perfect. So the first question was on PYDs. I noticed your comment in the presentation saying a lower level of reserve releases in view of the current market environment. So I guess it sounds like you've been more prudent than usual. I was just wondering if you could elaborate on that a little bit. The second question was the combined ratio in Germany in the second half of the year looks to have been about 111%.
I'm just wondering if you could help us understand the main drivers behind that. And the third one was on slide 36 of our pack, you have in the other activities, you show another operating result of CHF -190. I guess that's a fairly large proportion of the total group net profit of CHF 300. So I was just wondering if you could give us a little bit more sort of steer on the drivers of that and how we should think about that going forward. Thank you very much.
Peter, thank you so much. As I guess, most of those questions go to Annelis because they are financial nature, so.
Yes, I'm happy to take them. So let's start with the first one. So the previous year development, which was in 2023 -4%, so a bit smaller than in 2022. And of course, decrease reflects a lower reserve release.
We have not experienced major effects on the PYD resulting from inflation. So this is just, let's say, normal fluctuation in our ongoing prudent reserving. So there is no really any special effects in there. We have been comfortable with the reserving we had for inflation in 2022 and previous years. So it's just a normal inflation variation. So on the combined ratio in Germany, of course, we are also not happy with the combined ratio in Germany being over 100%. Germany was hit by two effects. So first, Nat Cat, large Nat Cats, especially in the third quarter with weather events hitting not only Italy but also Germany, south of Germany. And then we also recorded a few large fire claims. So this was exceptional in 2023 and large fire claims. There is no reason why this should not be an exception.
Now on the operating other result, let me just check my notes to give you the full picture. So there are, as always, various effects in there. So in the operating other result, there are positive effects as well, not only negative ones. So there are the earnings of the fee business in there. But there's also a bit of special or a new effect in there. We also already commented in half-year 2023, which is the rate we pay on intercompany loans. This rate is determined in Switzerland for the Swiss intercompany relationships by the Swiss Tax Authority. And due to rising interest rates, they have increased this rate, which has been for a long time at 25 basis points to 1.5%. So this is an effect you see in other activities, which is actually leveling out then in the non-life segment.
So on the total bottom line, it has no impact, this effect of the interest rate expenses of intergroup accounts. And yes, these were the main effects in this line operating other result.
Okay. Thank you very much. I guess if we look at the second half of the year, I think that amount was -CHF 113. It sounds, from what you were saying, like it's a sort of sustainable level. Is that the right interpretation?
The operating other result, yes. I mean, these interest rate expenses on intergroup accounts, they will change or the tax authorities will change them if the interest rates change again. But let's say they do not change them every quarter or so. They are quite constant for a while. So as long as they stay constant, you can assume that this is more or less a run rate, let's say, this operating other result.
Okay. Thank you very much.
As a reminder, if you wish to register for a question, please press star followed by one. The next question comes from René Locher from KBW. Please go ahead. Mr. Locher, your line is open. You may ask your question.
Yes. All right. So I'll mute myself. Yes. Good morning, all. Sorry. I want to start with slide 16. I mean, when we take a look at the combined ratio, these 3 percentage points for exceptional high Nat Cat and large claims. Now, I could challenge you and say, "Well, if we go for a more normalized high Nat Cat and large claims ratio, the combined ratio in 2023 would have been at around 94.4, and with that, above your target range of 92-94%." So perhaps just a comment on this. And then just for the modeling, Peter discussed the PYD.
If I go for the Nat Cat ratio, was it 4.8 percentage points in 2023? Now, if I deduct the 3 percentage points so we should go for a normalized Nat Cat ratio of roughly 1.8 percentage points. Just, yeah, a clarification here. So that's the first one. Perhaps on slide 22, I have discussed that before with IR department. I mean, you still have quite a high amount of subordinated debt. And I was wondering, how do you think about this high amount? Is there one or the other callable? Do you intend to call subordinated debt? Because I believe a company like Helvetia does not need an SST ratio of above 280%. So from that point, you could manage a little bit the financial leverage. And yeah, perhaps on slide six on the dividend, I'm just a rough calculation. Dividend distribution, you're now at CHF 939 million.
So you need another CHF 750 million to end up above CHF 165. So that means if I take then the 750 divided by 53 million number of shares, then I end up at 14, slightly above 14, Swiss franc dividend for the next two years. Is this a reasonable calculation? Thank you.
Okay. Thank you, René. So I suggest I take the question on the combined ratio, the question on subordinated debt and the dividend, I would then leave to Annelis. And we'll start with the combined ratio. So if I got your question right, is whether the combined ratio from your point of view without Nat Cats would as well be out of the range? And here, the answer is that indeed, Nat Cats were a strong contributor to the Nat Cat ratio, but we have as well effects from higher frequency of medium-sized claims.
And we have the effects of inflation, which contribute as well to the fact that we are above our range. Please keep in mind here that I just announced or I just explained the measures we have already been taken, in particular, the strong tariff increases, which we have done at the beginning of the year, and many other measures, in particular, on the with our networks. And we think that these effects will contribute to a strong improvement in 2024 and 2025. That's an effect over time because of the different inception dates that are not all on January 1st. So with that, I hope I answered your question on the combined ratio. And of course, our ambition is, as we said, to go back to the range by 2025. Now, I hand over.
Yes. No, makes sense.
Yeah.
I hand over now to Annelis for the other two questions.
Yes. So let me comment on the second one regarding the hybrids and/or subordinated debt. So the capital structure and the timing and development capital structure is part of the normal business of capital management within my department. And for example, two years ago, we also had a hybrid with a call date, and we replaced it by a senior, as an example. So we have always different options. Of course, we could not replace it. We could replace with a hybrid. We could replace with a senior, or we could pay back. So these options are always evaluated. And the SST ratio, the S&P rating, and the costs, and of course, the market environment, they all play a role in these considerations.
And the same will happen this year when we also have a hybrid with a call date arriving. Your third question, René, is my answer is the same as every year in the sense that we stick to our dividend policy of steadily increasing the dividend with the option of keeping the dividend stable in exceptionally bad years, such as, for example, the COVID year of 2020. And second, of course, we confirm the dividend target for the strategy period of CHF 1.65 billion. And now, you do the math what it needs to arrive there.
Okay. Thank you.
We have a follow-up question from Peter Eliot from Kepler Cheuvreux. Please go ahead.
Thank you very much. The first one was on the CSM economic movement. I guess it was -CHF 0.4 billion in the second half of the year. Can I just clarify?
I'm guessing that's probably the sort of different interest rate curves in different currencies rather than pure FX because the sensitivity you show to FX is quite low. But I was wondering if you could just talk about that H2 movement in isolation. The second one was the normalized CSM growth. So you've shown that at 0.1%. Just wondering if you can comment on your ability to grow that faster in future. Are there some levers that you can pull there?
And the final one is thank you for the additional disclosure on slide 23 of the free deployable funds. You've talked about upstreaming that additional CHF 375 million. I'm just wondering if you could talk about the benefits of that additional flexibility or how you think about that. Thank you very much.
Okay. Thank you. So we have three questions. I suggest that the first two, I give to Annelis.
I will take the one on the free deployable funds. So on the free deployable, and I will start with that. On the free deployable funds, the fact, so indeed, that we moved up CHF 300 million or that we are going to move up CHF 375 million, that gives us more fungibility and flexibility in terms of capital. So different from holding the same cash in our business units, it is available for all business units at any point of time. And therefore, additional benefit compared to what we did up to now, which was our economic dividend capacity, which you remember. And we think that this is now a much better way to treat that. So I hand now over for the first two questions to Annelis.
Yes. So thank you. Let's start with the question on CSM and economic variance.
So in 2023, our economic variance, so for the whole year, was CHF -63 million. The important here to note is that for the first time, we separated the economic variance in a part of expected investment return and economic variance, so the rest. Now, as you are already familiar with when thinking about SST sensitivity, these sensitivities are always a parallel shift of the, of the variable. In case of equity markets, this is no problem as this is a point measure. But in the case of interest rates, we move an interest rate curve, a whole curve. We make a parallel shift. Of course, this is never the way these curves really behave because they may have twists or turns or inversions. Especially in the first half year of 2023, we could see quite interesting and funny-looking interest rate curves.
So not textbook interest rate curves, but also strange interest rate curves. What do I want to say with that is that the sensitivities, they give you a good view on, let's say, a sort of duration gap we have in the CSM. But I mean, how then the interest rate curves actually moves? This is highly complex. And this is also interacting with different currencies and different curves from different countries. So the movement there is highly complex in the economic variance. But what you see from our sensitivities is that we have hedged, in that sense, the interest rate curves and the FX effect to a large extent. Therefore, also, the sensitivities are small in case of a parallel shift. Now, the comparison with half-year is a bit difficult because in half-year, we didn't separate the economic variance from the expected investment return.
But what we can say for the full year 2023 is that the different market effects or the different movements in the markets, let's say, in credit on rates, on equities, they largely compensated each other in the economic variance. They were also not very big. And what you see is basically the effect of the FX translation of our foreign currency, CSM, into Swiss francs in the economic variance. And regarding the normalized CSM growth, so your second question, so the composition, of course, is new business CSM, expected investment return, and then a CSM release. And yes, it's slightly positive at 0.1%. And the development, the long term, is clearly dependent on the strategy. So clearly, if we would now only write traditional business again, the new business CSM would increase, of course, because we would write the balance sheet business to the high extent.
However, if we write a lot of very capitalized business, then the new CSM is, of course, not increasing as much. So it's basically a reflection of the strategy.
Yeah. Exactly. If I can add on that. So we just don't want to grow the CSM with non-capitalized business. So I think it's really a reflection of the way we think and we're.
Once again, to ask a question, please press star and one on your telephone. Star followed by one. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mr. Fabian Rupprecht for any closing remarks.
So thank you very much for your questions and for your attention. And looking forward to working with you in the future. Bye-bye.