M&G plc

Hello, everyone, and welcome to the M&G PLC Half-Year 2023 Results Presentation. We will now go live to Luca Cagliardi, Director of Investor Relations. Luca, please go ahead.

Good morning, everyone, and welcome to MNG's 2023 Healthier Results. It's a pleasure to have you all here today. As usual, we'll have a short presentation from Andrea and Catherine. They'll take you through that, and then we'll have more than enough time for questions for those in the room and also online. So without further ado, I'll leave it to Andrea.

Thank you.

For you. And welcome to M&G's 2023 after results. It's a pleasure to be here with you today, giving an update on our performance and our progress towards delivering our three strategic priorities. In March, we spoke about what kind of company you want to be. One that uses its differentiated, balanced and integrated business model to deliver better 5,000. Today, we confirm that ambition and how we are achieving it. I was confident about MNG's future when I joined nearly one year ago, and I'm even more confident now. At a time of macroeconomic volatility, we have delivered strong operational and financial results. In the first part of this presentation, I will focus on our financial highlights and business achievements, Catherine will then expand on the financial results, our first under the new IFRS 17 accounting standards. I'm proud to say that our half-year results evidence a strong performance with meaningful year-on-year growth in both adjusted operating profit and operating capital generation. In a short period of time, we have progressed significantly on our three priorities. Financial strength, simplification, and growth. In these six months, we have seen how M&G differentiates its business model, really delivers value to clients and shareholders. So let me take you through the key highlights. It all starts with financial strength, proving we are good stewards of our shareholders' capital. We remain on track to achieve our three-year target of 2.5 billion operating capital generation by 2024, having delivered 53% of it in the first 18 months. Given the progress against this target and the continuous strength of our financial position, I'm pleased to declare today a 2023 interim dividend of 6.5 pence, up 5% on last year's. Let's look now at our second priority, simplification. Having launched the transformation program just six months ago, we are making real progress to become a more efficient organization that can better serve its clients. We have already begun rolling out the new target operating model. We reshaped our leadership team. We are rationalizing our location footprint and we have accepted over 200 applications for voluntary redundancy. We're just at the beginning of a three year journey, but we are confident we are on the right track and we expect to achieve 50 million in run rate savings by year end. Finally, let's talk about growth. In half one, we delivered positive external net flows and re-entered the UK DB de-risking market. This is a key step forward as we aim to maximize the unique combination of the three business units within M&G. Despite facing expected outflows from UK institutional clients, we have successfully expanded internationally and seen traction in high-value segments of the market that offer compelling margins. Proof Hunt. Private assets, wholesale asset management, all these franchises attracted positive net flows. Let's dive deeper now into each one of our priorities. When looking at financial strength, we have good reasons to feel confident. After a meaningful improvement in 2022, operating capital generation continued to grow by 70% year on year. The strength of these results underpin the quality of our dividend, with the interim DPS growing by 5%. Our balance sheet remains strong and of high quality, with a solvency ratio above the top end of our target range. And finally, with good levels of liquidity, both in the holdco and subsidiaries, we have the resources to focus on leverage, as we remain committed to achieve a ratio of below 30% by 2025. Moving on to simplification. In March, we launched a transformation program with three stated objectives. Streamlining the operating model, achieve 200 million cost savings, and reduce the asset manager cost to income ratio to less than 70%. Our work on our transformation program has already started. We are later focused on improving our ability to serve clients, reduce costs, and unlock growth. This year, we achieved a major milestone as we successfully migrated 2 million policies to a modern and stable admin system. This allows us to decommission legacy IT systems to lower costs and to deliver a better client experience. We are also improving digital journeys for our clients, with MyPrue registration up 14% year-on-year. By the end of 2025, we will have streamlined and automated more internal processes, and reduce costs to rationalizing activities. As we strengthen internal change capabilities, we expect to substantially reduce contractor and consulting spend. We are also addressing our office footprint, expanding our presence in lower-cost locations while reducing it in London. As we complete the program, we expect to reduce office spend by over 20%. We have an ambitious plan, which the entire executive committee is fully focused on. We have already made a good start and we are confident in our ability to execute. But as I've said before, the transformation program is not just about costs. It is about becoming a leaner organization which better focuses and delivers on client outcomes. With this goal in mind, we have strengthened our executive team with dedicated leadership for each one of our three business areas. I'm delighted that Clyde Bolton and Caroline Connellan join us this month to lead the life and wealth business respectively. They bring to M&G deep expertise in their fields, together with the drive and commitment needed to fulfill our ambitions. As I said in March, the three components of our business model are balanced and complementary. We lead with the asset manager, the core of our business. It both serves and is supported by heritage and wealth. Working together, all right. Let me be clear. While we now have new leadership in each of our three businesses, Caroline, Joseph, and Clyde will work together to deliver the best possible outcomes for clients and shareholders. Having covered financial strength and simplification, I will now turn to growth. And here I start with the asset manager. We have offset headwinds from UK institutional clients by growing internationally and winning high margin businesses in wholesale asset management and private markets. M&G has building its international presence since the merger for Prudential and the collaboration between the three business units plays a crucial role in this growth. In just over three years, we have added investment capabilities in Asia and the U.S., This allowed us to repatriate over 27 billion of our internal client assets, including a 5.5 billion Asian fixed income mandate earlier this year. Adding capabilities to serve the internal clients has also improved our proposition to external clients. This, coupled with focused deployment of distribution stuff in continental Europe and Asia, has translated into continued external net inflows from international clients. And we are not done yet. We continue to invest in distribution capabilities in the most promising developed markets across Europe and Asia. Another area where we continue to grow is wholesale asset management. As you can see, in 2020, only 20% of our mutual funds performed above median, and we suffered net outflows of almost 12 billion. we believed that this franchise could return to profitable growth. So we brought in fresh talent, tackled performance, and reviewed our proposition and pricing structure. As of the end of June, over 70% of our mutual funds performed above median, and we achieved positive net flows of 1.3 billion. In doing so, we did not rely on a single blockbuster fund. Instead, we leveraged a high-quality offering diversified across equities and fixed income, developed and emerging markets, as you can see on the slide. Despite our positive experience in half one, we are not complacent. We remain focused on delivering strong client outcomes to sustain our performance over time. So the next area I want to touch on is private markets. With 74 billion of assets under management, We are one of Europe's largest investors in this space, offering high-value solutions that deliver attractive margins. While accounting for under a quarter of the asset manager AUM, our private market operations generate over 40% of the revenues at a strong average fee of 55 bps. Here, Joseph Pinto. Our asset manager CEO has simplified the business structure to focus on six centers of excellence, where we are recognized for our market-leading expertise. We have seen positive momentum across all of them in half one. With meaningful wins in real estate, infracapital, and responsibility, our Swiss-based team specializes in emerging markets impact investments. In private credit, a key area of focus for us, where we see increased client demand, we launched our first CLO fund, raising 400 million and adding a new element to our offering. Looking forward, I'm also excited about the prospects for our impact team. So far, it has been serving only the internal clients, who has committed a meaningful amount of seed capital to develop these capabilities. Now, thanks to an excellent track record and a good level of interest from clients, we are getting ready to open their funds to external assets. One more reason for optimism is our capital queue. Roughly 5 billion of commitments across both our internal and external clients. So these are mandates we have already won and which will generate fees once deployed into assets. So let's turn now to our wealth business. Here as well, we have seen operational improvements and growth. With sales of 3.3 billion, TrueFund has delivered the best result in over three years. This is a meaningful increase on 2022 levels, which had already recovered sharply on previous periods. The quality of this proposition and the outcomes it delivers to clients continue to be strong. And at these volumes, it is one of the best-selling investment solutions in the U.K., What we need to do better is in the other elements of our wealth proposition, in particular, our digital platform and advice business. We need to take action to improve profitability. This will require time and effort, but we are already making progress. In May, we launched all proof on solutions on the M&G wealth platform to support sales while improving and digitizing advisor journeys. Finally, this year we have grown our control advisor network to over 500 people through organic recruitment, in-house training, and the completion of the acquisition of Continuum. We have all the elements we need to make the wealth story a success. A skill-advised business, a digital platform, a differentiated investment solutions. Our objective is to combine these capabilities into an integrated proposition, improve efficiency, and drive profitable growth. Last but not least, the life insurance business. This morning, we announced the closing of two BPA transactions for a combined total of over 600 million. These are the first deals we have completed since we closed the annuity book to new business back in 2016. Re-entering the DBD risking market is a key component of the strategy we presented in March. expanding our capital generation capacity while driving flows into the asset manager. And meeting this milestone in just over six months shows our execution capability in action. We have done this from a position of strength, experiencing good levels of client demand and with a solid and resilient balance sheet. While we have capital to invest, we will be extremely disciplined in doing so. ensuring that new business meets or exceeds stringent financial hurdles, and credit risk is actively managed. In the process of completing these deals, we have screened more than 20 billion worth of flows. We pursued only those opportunities which best matched our capabilities, where we could achieve attractive returns and add most value to our clients. Under Clive's leadership, we expect the life insurance business to become a third contributor to M&G's growth next to the asset manager and wealth. Our aim is clear. Generate good returns on capital, drive flows into the asset manager, and better leverage the with-profit funds. So in summary, I'm very proud of the progress we delivered in the first half of the year. At the challenging time for the asset managers, we delivered positive external net flows. This is the third year in a row we achieved this. In doing so, we have expanded our international presence, once again partnering with the internal clients that awarded us a 5.5 billion Asian mandate. As we improve the diversification of our footprint and client base, we continue to build a more resilient business. We have also matched UK institutional outflows with high value inflows in wholesale asset management, private assets and proof fund. High margin solutions that improve our product mix. And we re-entered the DBD risk and space, leveraging our business model to open a third avenue of profitable growth alongside asset management and wealth. Our growth efforts go hand in hand with our simplification agenda. We have already made significant progress on our transformation program with a clear ambition to improve client outcomes and reduce costs. No doubt there is still more work to do. But today's results underscore the financial strength of M&G. Adjusted operating profits, operating capital generation and dividend per share are all up year on year. With that, I will now hand over to Catherine to take you through our financial results in more detail.

Thanks, Andrea. Good morning, everyone, and thank you all for joining us today. I'm pleased to present what is a good set of numbers, particularly in light of the ongoing external macroeconomic uncertainties and inflationary pressures. Despite these challenges, our external net flows were positive for the third year in a row, with strong inflows in wholesale and pre-fund. Both our operating profitability and capital generation improved materially, and we are well on track to achieve our 2.5 billion capital generation target. We've also made a good start on the transformation program and expect to deliver 50 million pounds in run rate savings by year end. And finally, our solvency to ratio remains strong and above the top end of our target range. I'll now turn to the detail behind these highlights. External net flows were positive at 700 million. And within asset management, you had Andrea talk about how we offset UK institutional outflows with international growth and also about the strong performance in our wholesale business. But the real highlight of these six months is Proof Fund, which delivered its best lows since 2019. Its smoothing mechanism and diversified asset allocation are very attractive for clients, particularly in light of the ongoing market volatility we are seeing. Operating profit of £390 million is up 31% year-on-year, reflecting the strength of our diversified business model. Here we saw an improved contribution from Heritage and the Corporate Centre and a resilient performance from both asset management and wealth. Operating capital generation of £505 million is also up by 17% on an already strong 2022. We had good support from both the underlying result, which was only modestly down on last year at £352 million, and management actions, which were up in the period. We finished June with a solvency to ratio of 199%, a strong position considering the current economic cycle. And it's important to note that year to date, we've not experienced any credit defaults and only very low level of downgrades. Let me now deep dive into asset funder management and flows. Adverse market movements of £7 billion and outflows in our heritage books were the main driver behind closing AUMA of £333 billion. Our open business was in net inflows for the third consecutive year, despite a tough external environment and headwinds in our institutional franchise, where we saw 3.8 billion of net outflows here in the UK. These outflows were matched by strong growth with international institutional clients, as we gathered 2.4 billion of net inflows. And as you heard from Andrarian Wholesale, with £1.3 billion of inflows meaningfully up on 2022. Looking forward, the UK institutional market does remain challenged. But at the same time, we have already absorbed the majority of the exceptional redemptions we flagged in March. And we remain confident in the quality of our proposition. We're also encouraged by the strong pipeline in our international institutional business across both Europe and Asia. And as we discussed at full year, we see renewed interest from clients in our fixed income capabilities, which we expect to support flows in the second half. We're, of course, mindful of the challenges faced by all asset managers and continue to focus on investment performance, product innovation and distribution to build on the improvements we have delivered so far. Wealth net flows improved by 700 million pounds year on year, thanks to the proof on sales of 3.3 billion pounds. We are very pleased with this achievement and believe it can be maintained over the second half of the year. Having covered flows, I'll move on now to operating profit, which we report today for the first time on an IFRS 17 basis, which you can see on slide 18. At £390 million, group operating profits were up by 31% year-on-year. The key features of this AOP result are firstly that the asset management business showed great resilience. as it delivered a stable year-on-year result despite adverse markets and a tough trading environment. We took action on costs to offset inflationary pressures and won new business in high margin areas supporting our revenue line. Secondly, wealth continued to provide a meaningful contribution to earnings with an improved proof on performance, offsetting losses in the advice and platform businesses. Thirdly, heritage was up almost 40% on the prior year, providing a solid underpin to the broader business with a strong result from both annuities and traditional with profits. And finally, our corporate center was 18 million pounds better year on year due to higher treasury income driven by the external interest rate environment. Let's now look at the asset management result in a bit more detail. As we've highlighted today, we're encouraged by the resilience shown in our external flows and in our asset management profitability. The financial result included the consolidation of responsibility, which added £20 million to the top line and £19 million to costs versus the first half of last year. So on a like-for-like basis, revenues declined by 3%, impacted by the 5% drop in average AUM, but benefiting from improved margins due to a higher quality product mix. Our overall margin is up to 33 basis points, thanks to our continued efforts to expand the private markets business. And you heard Andrea talk about our focus in this area, where we are excited about the opportunities we are seeing in private credit and infrastructure in particular. Looking at expenses now, once we strip out the impact of responsibility, costs were up by only 2%, demonstrating our continued focus on cost discipline and well below current inflation rates. The resulting cost-to-income ratio is 79%, which includes performance fees, and is primarily driven by these adverse market moves. Given our progress on the group-wide simplification agenda and the plans Joseph is well underway in executing, we remain fully committed to our cost-to-income ratio target of below 70% by 2025. We are determined to control absolute costs and deliver positive operating jaws over time in our asset management business to drive higher profitability. Moving on now to wealth and our pre-fund AOP results. We've already touched upon the strong growth in pre-fund sales, which you can see on the bottom right of this slide. These are up over 30% on H1 last year. And while we don't expect this level of growth to continue, we do believe these current volumes are sustainable. Pre-fund earnings increased by 16% to $119 million, despite the non-recurrence of a provision release relating to new business expenditures that we benefited from in 2022. The main driver of the year-on-year improvement in AOP was the CSM release of 101 million, which was up almost 30% thanks to a higher opening CSM, which benefited from positive market experience last year. I will cover the main drivers of CSM moves in a minute. On this page, it's worth noting the Proof Fund CSM runoff rate. At 12%, it's higher than the 10% we'd previously assumed and that we communicated at the IFRS 17 event in July. Return on surplus assets more than doubled to £21 million thanks to high interest rates. So thanks to these strong current sales volumes, the Proof Fund CSM continues to grow, and we therefore expect the current level of earnings to be sustainable. Turning now to heritage. And here, AOP for the first six months was up by almost 40% on H1 2022, underscoring the importance of our insurance operations and the benefits we get from our diversified business model. The same drivers lifting the proof and result also benefit the traditional with profits book, where earnings have grown by 30% to £129 million. And again, a higher starting CSM and rates underpinned the improvement in profitability. At 14%, the traditional with profit CSM runoff rate reflects the greater level of maturity of this book. In annuities, a nearly £50 million improvement in AOP year-on-year to £150 million is due to the higher returns on surplus assets of £110 million, driven by the significant increases in interest rates over the last year. The two BPA deals we were delighted to announce this morning are, of course, not included in this result. And under IFRS 17, they won't immediately impact annuity profits, as you would have seen under the previous accounting standard. What you should expect is an increase in the annuity CSM from new business coming onto the balance sheet. I'd like to now cover the CSM movements in the first half of the year, which we include in our results for the first time. So on slide 22, we show how we think about the CSM, its key drivers, and how these differ across annuities, proof fund, and traditional with profits. At the end of June, the total CSM stood at almost £5.8 billion, showing a sizable discounted future value from M&G's insurance operations, split across with profits fund and annuities. Over the first six months of the year, the total CSM improved by £185 million before market impacts, with interest accretion and expected returns more than offsetting the CSM release to earnings. Looking more closely at each product line, you can see the different numbers across the key drivers on the right-hand side of the page. The annuity CSM remained flat primarily because we had not yet reopened the book to new business. And, of course, market assumptions are locked in, leading to no impacts from market variances. On the other hand, within the With Profits Fund, you can see £50 million from proof fund new business. And you can also see an impact from markets, which, mirroring the approach for capital generation, is split into an expected return, which is added to the CSM interest accretion, and experience variances, which are included in market impacts. Turning now to underlying capital generation, where we saw another strong result of £352 million. Retail and savings once again drove this outcome. We're very pleased by the resiliency of the underlying result of £352 million, as it underpins our confidence in the dividend and, of course, in achieving our operating capital target of £2.5 billion by the end of next year. So the main differences compared to last year are the lower asset management contribution due to negative impact from market movements, the non-recurrence of a £16 million provision release in wealth that we benefited from in 2022, and higher treasury income in our corporate centre. When we think about the remainder of 2023, we expect a similarly strong underlying result. The resilience and predictability of the capital generation from our insurance operations provides strong foundations upon which we can grow our businesses and achieve still greater diversification. I'll now move from underlying to operating capital generation, which you can see on slide 24. Here, management actions led to a 17% increase in the operating result to £505 million, which These management actions of about $150 million were almost entirely driven by what's labelled as asset trading, predominantly in the With Profits Fund and, to a lesser extent, in the annuities book. This positive contribution generated by the With Profits Fund is due to changes in the strategic asset allocation that powers Proof Fund. In light of the current market environment, our investment office decided to reduce the allocation to equities and increase the allocation to fixed income. which led to a fall in our solvency capital requirements. Within other management actions, in 2023, we had a small favourable impact for mortality experience, while in 2022, we had minor headwinds from persistency and credit experience. And of course, as usual, longevity assumptions will be reviewed in the second part of the year. Overall, we are very pleased with our strong operating capital generation, in particular as it further improved on a strong result in 2022, and we are well on track to our 2.5 billion 2024 target. Having covered the operating result, I'll now walk through the other movements in Solvency 2 surplus and the coverage ratio, which ended the year at 199%, flat to the end of 2022. The £505 million operating result more than offset the final dividend for 2022 of £310 million and adverse market movements of £141 million. These market movements were mostly driven by the actual returns generated by the With Profits Fund being lower than the expected rate. In the period, we also experienced a 280 million capital restriction corresponding to a reduction in the solvency ratio of just over six percentage points. Our capacity for tier two and tier three capital is set by our regulatory SCR, which reduced in the period due to the runoff of the heritage business and higher rates. And you can find more details on this in the appendix. Turning now to our leverage ratio, which remained broadly stable over the first half, finishing at 36% due to higher rates reducing our own funds. There was no change to the quantum of debt or servicing costs. We are committed to a target leverage ratio below 30% by 2025, and we will take action to achieve it. As you know, we have a call date in 10 months with an amount that roughly matches the capital restriction. So if we were to call and not refinance the debt, assuming the current position, we would positively impact the leverage ratio without seeing a material impact on the solvency ratio. With the implementation of IFRS 17, we've also shown on this page the IFRS 17 leverage ratio, which stands at 29%, although solvency to leverage remains our main metric. So to summarize, in the first six months of the year, we yet again delivered positive external net flows in a very challenging market. We've made a strong start on our simplification agenda and our 200 million pound savings target. We achieved an increase of 31% in AOP, demonstrating the strength of our diversified business model. Operating capital generation improved by 17% on a strong 2022 result. And we ended the period with a stable solvency to ratio of selling capital restrictions and dividends. And with that, I'll hand back to Andrea to wrap up.

That's a taste of water. Thank you, Catherine. So to conclude. In March, we shared with you our vision for M&G. We are at the start of our journey, but I'm very pleased with the progress achieved in a short period of time. Today's results are good results with higher earnings, operating capital and dividends year on year. They demonstrate the strength of our differentiated, balanced and integrated business model. They also demonstrate progress on our three core priorities. First, financial strength with a strong operating capital generation and resilient balance sheet. Second, simplification as we transform M&G to deliver better client outcomes and more focused organization. And finally, growth with positive net inflows for the third year in a row and having successfully reentered the DB de-risking space. And of course, these achievements would not have been possible without the dedication and expertise of all our colleagues across M&G. I would like to thank them for their hard work and their continued commitment to the growth and success of this business. The external environment might still be certain, but we are confident in our capabilities and in the strength of M&G. With three balanced and complementary parts, our business model gives us the diversification and resilience we need to succeed. We have the right operating model and the right team in place. We will maintain our financial strength, we will simplify, and we will continue to grow this business. Thank you.

What are we doing?

So we already have a couple of questions online, but I would start with those in the room. Well, Ashik was the fastest one. Let's go left to right. At Fulia, we went right to left. Now let's go left to right. I see all the analysts are now sat on this side, so let's swap it around.

Thank you. Just a couple of questions I have is, what is your un-contacted position just like on the platform? If you could...

So, how do we think about this ?

Thanks.

And I'll repeat the question just because I forgot to mention when you ask the question, please pull out the microphone and press the button. So also those on the line here hear it. I'll just repeat it for the benefit of the people that are following us. Virtually, the questions were fundamental too. One is about the sustainability of the underlying capital generation results. And the second question is around leverage and our plans to bring it to below 30% by end of 2025.

I think these are good questions. Obviously, the CFO is more CFO material. What I can say maybe just on the leverage side is... You know, we have a clear capital management framework in place. And by priority, the first one is on financial strength, solvency to ratio, leverage ratio, hold to liquidity. And as you saw in the presentation, we're committed to our target of 30 percent leverage ratio by 2025. That's that's a real priority. And Catherine, go through how we're going to get get there. The second one is obviously continue to pay attractive dividends to our shareholders. Today we showed you that the DPS per share is going up. We want to invest in the third one. We want to invest in the business in order to support the growth. You saw the business growing today. I'm glad to say also we see growth also in the insurance business with the two DPA deals. But obviously, to transform the business and to grow the business, we have to selectively invest. And then if there isn't anything left, we will see other venues to return capital. Our priorities, of course, in terms of priority, is the first one. And clearly, leverage ratio is something we're very strongly committed to. But I hand over to Catherine because they're very CFO related questions.

Thanks, Andrea. And you may remember back in March, we said that we were pretty encouraged by the underlying capital generation we saw yesterday. in our retail and savings businesses continuing in 2022 because, exactly as you said, of the expected returns that we would get. And these have indeed flowed through. So while the 352 is modestly down on last year, as you know, that did – benefit from a provision released last year, and we had the asset management result that was slightly down year on year. So you really did see a very, very strong contribution from proof fund, traditional with profits, and also the annuities business. So when you think about the drivers of that underlying capital generation, you would expect that the expected return obviously is sustainable throughout the year. And clearly, it's the PVST or underlying capital that improved as we guided to in March over the course of 2022. Now, there are slightly different sensitivities in the PBST between traditional with profits, which is less sensitive, and proof fund. But overall, we are encouraged by what we're seeing, and we've given guidance around the second half being broadly the same as the first half. And obviously, annuities is a meaningful contribution to that number, too. And that's clearly benefited from meaningfully higher increase in expected returns on surplus assets that are modestly down. But the expected return definitely more than offset the small reduction in surplus assets. And clearly now we are also reentering in very selective way the BPA market. So I think when we look at the underlying result, it is so important for us to really continue to drive that higher. And when we look at the second half of the year, we think the same numbers we saw in the first half should broadly continue into the second half. And of course, we added to that strong management actions in the first half. And then clearly that delivered the 505 total operating capital generation. So just following up on leverage, and I think Andrea really did make the point that when we stood up in March, we really emphasized that in our capital allocation framework, we were very confident around capital, we're very confident around liquidity, and we really wanted to prioritize leverage. So we've said that leverage is our priority. We now have obviously a leverage ratio that's only modestly up on last year. We've got very strong capital generation, very strong cash generation. We have a call date of 300 million in just 10 months. And I think really importantly, we've got own funds that we certainly intend to continue to grow. So we will absolutely get to the 30 percent leverage ratio target. We do constantly monitor the markets. I think a year ago I talked about our understanding of all the options we have available to us. But we've got time and we know how we can get to the 30 percent. But we continue to monitor all the developments. And I think you also mentioned how we think about the impacts of own funds, which obviously have been impacted industry-wide by market movements. And we spend a lot of time also looking at own fund sensitivity. And clearly, with our strong capital generation, with our strong growth and profitability ambitions we have, we're confident also in the own funds trajectory. Thanks. Okay.

Can you hear me? Yes. So it seems that your international business and the net flows have really bailed you out of a tricky situation in the UK, but you're still growing. So I'm just wondering where you see those net flows going short term, long term. It seems to me that if you are building new businesses and attracting assets, that number could grow. So if you give a sense of and the long-term vision for international assets is the potential of the group, maybe in 10 years' time, maybe. That's question one. Question two, I think you had some sort of gain in your asset management business because seed capital, if you give us a number, that would be useful. And then question three was, clearly you're interest rate sensitive in your earnings because of the volatility of CSM and internal surplus assets. Do you have somewhere in your pack a sensitivity analysis that we could use, or could you give us a guide to, let's say, if we were 50 bits down in yields, what that might do to earnings, or just a rough direction of travel?

Thank you. So maybe shall I take the last one first? So do we have earnings sensitivities to rates somewhere in the pack? The short answer is no, and I think it would be inappropriate for us to try to kind of answer it on the spot, but we can get back to you on that one offline. And then I guess to the question of asset management. Yeah, I'll take that.

So we are very pleased, of course, when we look at the first half of how we have delivered on the asset management flows. We showed it. We had some headwinds in the UK. We already flagged that in the full year results due to the mini-budget. But on the other hand, we saw significant inflows on the institutional side across Europe and selectively also in Asia. And I would say it's a combination of those flows are a combination of A, of having the right investment capabilities that are of interest for clients. So clearly we've seen some more interest into credit in general, both on private credits and public credits where the rates are. And we've seen some institutions reviewing their asset allocation, moving away in some cases from equities to fixed income. I think also that's what we have been doing also ourselves to a certain extent. but also selective interest in private assets, in particular on the impact side. So overall, I think it's a question of really having the right investment capabilities where there is demand. We have also, I would say, invested in making sure we have more resources on the ground to support that. So we have increased our distribution efforts in institutional. We have increased added resources, one in the Middle East, in Germany, and also in Asia, where we have appointed a new country head with institutional background in Japan, and also Korea, which are big institutional markets. And as you know, also there, because of the Solvency II implementation for insurers, we are well-placed in order to support that. Very pleased with the diversification there, and it's something that we want to continue to see. I mean, I would like to also talk about the wholesale asset management because I think that's an important one because, as you saw, we had 1.3 billion of net flows. Those flows were in a market where generally today retail investors are putting most of the money in money markets and cash due to the high rates, in particular in continental Europe. And I'm very pleased with what we've done here in the U.K. where we've seen significant inflows. We actually have gained market share. And that's all due to the quality and investment performance we had on the S-Man side. You saw the numbers. They're behind me. I thought they were going to be here. The screen is not working. The screen is not working. Okay. But the numbers are rather unique. And once again, it's also very important to see that it's not just one unique blockbuster fund, but it's very diversified. So looking forward, how do we see the next half? I mean, I would be cautiously optimistic on where we can go. But if you think about the macroeconomic environment and the demands that we see with clients, clearly there is interest in credit. And we're a strong credit house. So we see there significant, I would say, movement and interest from institutional clients. We have a capital Q, which is a strong one at 5 billion. And, of course, we also have some unfunded wins. So I would say we see a diversified momentum going forward. On the asset management side, on the wholesale asset management side, strong still in the U.K., A little bit more difficult in Europe. European retail investors are more risk-averse, and I would say the European governments are doing everything they can to have them to invest in their government debts. Italy is a good example. They just came out with BTP Valores, so then it's a question of whether you want to invest in that, but that's a different question. But there also, I think we will see potentially probably more towards next year, some movement again. But I think overall, when you look at the different investment capabilities we have, the diversity where we are in different countries, the Middle East is another one we should not forget. We see a lot of interest into the UK, into private assets, into credit in the Middle East, from Japanese, from Korean countries. So, yeah, I think we are pretty well placed in order to get momentum there.

The second question was... The final question, I guess, Catherine, we have it in the appendix, but maybe you can give a couple of words on... Yeah, you spotted that we, I guess, overall, as Andreas said, we thought the profitability performance of asset management was really resilient, given the revenues were much less impacted than market movements and costs stayed well under control. So there was an increase of £11 million in investment income to £13 million in the first six months of the year. You said on the sea capital, essentially reflecting the market environment. So, yes, that was an improvement year on year, given the external market developments we saw in the first half.

Andrew Green from Autonomous. So I've done the intro for you. You can go straight to the questions now.

I just wanted to talk firstly about liquidity. I think the 0.8 billion buffer is where you want it to be and that's where you are. The 0.8 billion buffer is where you want to be and where you are. Could you talk a bit about what the restructuring costs are going to be and also the commitment to the DB market? Because if you've also got to pay down 300 million in debt, is that buffer under threat? And then secondly, could you talk a little bit about your DB ambitions? What is the redemption out of your annuity? So how much do you need to write in order for annuities to be balanced? And what is the strain of writing it?

Okay, so I'll take the last one.

Yes, do you want to start at the last one, and then I'll go back to the top?

Yes. So I always said we re-entered the DB, the risking space, because we saw an opportunity because the market obviously widened, and we wanted to re-enter in a very selective way, and we always said that we wanted to utilize this opportunity to top up the natural runoff we had, which is between 1 and 1.5 billion, to respond to your question. So once again, when I say selective, we want to reenter this utilizing particularly investment capabilities on private assets and credit we have. So our ambition here is not beyond that. We're not going to compete on the big deals you see out there. It's going to be very selective. and it's really not to go beyond the sort of natural runoff that we have. Now, in terms of economics or strain here, obviously we cannot give you any information because we only have done two deals commercially sensitive. But what I can tell you is we follow a rather stringent framework, and those two deals have delivered double-digit IRR. So, I mean, we are – We are very, very careful in how we write these businesses.

So, shall I go back to your question on liquidity and I guess also around restructuring costs and how we feel about leverage too? We've talked before about how we have a very strict capital allocation and internal capital management framework. So Andreas talked about our priorities of financial strength, how we think about liquidity, solvency and capital, and also, of course, leverage. So the $835 million of holdco liquidity is absolutely something that we look at. And we want to maintain always good levels of holdco liquidity. What's quite important, which I'm sure you know, is that when we think about the cash remittances we get from the subsidiaries, which came in at the first half of $333 million, We choose to keep capital in our subsidiaries if it makes better economic sense. We are very strict in terms of ensuring we've got the right capital metrics across the group, but we will only upstream that as and when it's needed. So we monitor the Holco liquidity. We've got plentiful levels of capital that you've seen in liquidity in our subsidiaries, and we clearly have plans to reduce our leverage, as we talked about, by 2025. but have also got this bond that's callable in just 10 months' time. So, obviously, planning for a potential call of that, we need to go through the regulator, is obviously something with our forward planning that we want to make sure we've got the ability to do. So, the capital positions, and you can see the positions with profit, certainly, in the presentation, are very strong, and similarly, the liquidity positions. So, When we think about the savings we're generating, the 200 million, and obviously we've got a 50 million impact in terms of the run rate reduction already for the end of the year, we guided at full year to about one to one and a half of cost to achieve. Now, one to one and a half. So that will be mostly front end loaded. So you can see in our results announcement some restructuring costs that are slightly up on last year. But clearly when we think about the CTA needed to deliver these savings, we of course factor all of this into our overall capital position, our liquidity position, and are very confident that we've got already good progress across these savings. You'll start seeing it flow through the numbers in the end of this year and into 2024. But, you know, very, very good start. And obviously, this will clearly also deliver greater financial profitability, which also supports and strengthens our overall capital liquidity metrics. So I think you asked, apart from what the runoff was of the book and how our volume intentions might play out on BPAs, it is interesting on BPAs because, if anything, I think you might see a modest increase in capital requirement, which will come through the strain in the second half of the year, will obviously create a little bit more capacity for our offside capital. So Obviously, the SCR reduced a little bit more in the heritage book than outside in the first half of the year. So actually, a modest increase in capital requirements is something we've been planning for with these selective deals that we're doing. And it will create a little bit more capacity also for capital. But as we said, if we were to call the bond next year, it will have very little impact on our solvency, which remain very, very strong. And obviously, it will help us get much closer to the 30 percent leverage ratio.

And Andrew Baker from Citi.

Sorry, can you hear me?

Try to press it.

Yep. Okay, great. Thanks for taking my questions. Andrew Baker, Citi. So, sorry, one more on Leverage. Just curious, you base your leverage ratio on shareholder-owned funds, whereas your peers base it on regulatory-owned funds. So what's the decision behind that? Because obviously you would look a lot more favourably if you used the regulatory-owned funds view. And then secondly, are you able to say anything on consumer duty, how you've sort of thought about that, any impacts there from the business that's already under consumer duty and how you're thinking about that going forward for the business that's not? Thank you.

Why don't I take the consumer duty one? So on consumer duty, I mean, we don't foresee any impact. We have been, since many years, doing value of assessment. And we, I think it was two years ago, we reprised some of our funds.

Three years ago. Yeah.

That was not two years ago, two, three years ago. So we don't see any real impact on us. Obviously, we're monitoring it. But once again, you know, you go and look at, How we perform in terms of investment performance, that puts me in a pretty relatively safe place. I mean, when you have that sort of investment performance with 44 of our funds in the upper quartile, I'm not saying you should charge more. But, I mean, I think, you know, we are, when we check versus others, we are where we are. So I don't foresee any issues from consumer duty on the business.

And on the leverage ratio, clearly there are multiple different ways of looking at leverage. And you look at the various rating agency approaches. Obviously, one of our peers is following one of the rating agency approaches. And we've given the IFR 17 29% leverage ratio. We feel the right ratio for us is on Solvency 2.0. And it's how we look at the business when we think about all of the capital metrics and the capital allocation framework across the group. We do feel that solvency to leverage is the right one for us. You probably saw in the slide, clearly our cold code debt is completely unchanged. We're very comfortable with that, comfortable with the servicing costs, got plenty of capital generation you can see coming through. And we've also reflected, I guess, or clarified that it's unrestricted owned funds. So we haven't got that $300 million coming through in owned funds. But we do have nominal value of debt. Again, I know others take market value of debt. We've got nominal value. So... We've spent quite a bit of time thinking about leverage. It is a core strategic priority for us. We've got the call date in just 10 months' time. We know all the other options that are available to us at any time. As we said, we constantly monitor the markets, but I'd highlight the call date and the fact that we're in a very strong position. So, yes, I think perhaps over time others' thinking may evolve on leverage, but we're comfortable with the metric that we are choosing to manage the business.

Let's go with Dom Omani from BNP Paribas or Exxon BNP Paribas.

One of the two, yes. Dom Omani, BNP Paribas, Exxon. So I've just got two questions left, if that's right. So I may have just missed it, in which case, sincere apologies. Have you published a PVST number for the contribution to capital? And then just on the defined benefit ambition, just to provide some challenge, I suppose, you've been very clear you want to be selective on this. I'm just wondering why and why not be more ambitious? You have a scale book. I'm wondering whether this is – I'm trying to understand whether this is driven by – your view on your operational capabilities that, you know, there are competitors who have been doing this for longer. They have the asset sourcing and the deal teams in size, or whether this is more a view on strategy, capital allocation, shape of the business, what shareholders want from your business model. Thank you.

Okay. And again, I might take the first one on PVST is not included in the slides, but we can share it. There's no particular difference.

Let me take the one on the ambition. First of all, I explained why we reentered. And we reentered because the market became larger. We have always said that we are committed to see our capital light business grow more. We had a target of 50% capital light versus capital heavy. The reason why we saw this as an opportunity to explain and want to be selective is because we want to utilize the capabilities we have, the investment capabilities we have. But clearly, since we have not been writing any business since 2016, we had to invest a little bit in order to get pricing team, we got some origination team. I don't think we should go and be much more ambitious and go and compete on pricing versus some of the larger players. They have the setup since a long time. My focus, I always said, is I want profitable growth. Ideally, I want capital-like growth. Asset management is at the center, wealth management also. And indeed, with the integrated business model, I think by utilizing the strength of asset manager, there is a space for us to play within the DB, the risking space. And we want... we want to utilize our capital in a smart way. So, you know, I don't foresee that we want to go, it would be contrary to what we just said, go heavy on capital, heavy business and increase that even further. Having said that, there could be opportunities for us to write this business also in a capital light way, but those two first years were plain vanilla business. So I think it's linked more to focus where we want to really grow and putting those efforts into those businesses. And as I said, Asset management, big, big one. We really believe we have the right to win there and we can grow profitably in the coming years. And wealth management is another one beyond proof fund. Proof fund obviously is an amazing, amazing solution, but beyond proof fund. Okay.

Nazib, Rea, and then Larissa, so.

Thanks. Naseeb Ahmed from UBS. So first question on the last target on the last slide that you presented. That's still on IFRS 4. It's a greater than 50% earnings. What would the equivalent be on IFRS 17 if you have that number in mind? And also, if it's still on IFRS 4, you're growing your insurance business. So that's front-end loaded on IFRS 4. It means you have to grow asset management even more to get to the 50%. So are you comfortable with that? Second question on the internal pension scheme. How much more can you do? What's the funding level? And then finally, your management actions guidance was $200 million. You've done $150 million already, so it seems like this year, the longevity releases, you're going to exceed that. Is that kind of the correct thinking?

Good. Sounds like very CFO questions.

I'll just take again the first one on the 50%. Clearly, there's a business planning process that M&G goes through and is in the second half of the year. And obviously, we have just implemented IFRS 17, so we need to translate the business plan into IFRS 17 language. So I guess what we're trying to say is... We kept it here for now because we are still committed to that type of effort at full year when there's going to be a revised business plan. We'll translate that into a new high-precision team percentage.

So I'll take the question on the internal BPA transaction that we announced this morning and also guidance around management actions. So you can see in our results, Pat, not in the slides, obviously the details of the various schemes we have. We're not appropriate to comment on anything else that we might choose to do. So you can see which scheme in the announcement this morning that we did this buy-in with, with Pat. But, yes, it's probably not appropriate to talk more about other internal opportunities. As Andrea said, we have got a huge amount of interest externally in this, as you know, given the amount of activity in the market. And we're just being very selective, choosing those deals that really suit our private assets capability and lead to these strong impacts on our asset management business. And so in terms of management actions, yes, the first half did come in at a very good level. I would say that the asset allocation SAA decision at the beginning of the year to get equities and inter-fixed income did drive a pretty meaningful amount of the management actions. We did see some favorable mortality experience come through in the first half as well. I think seen by one of the peers, which was good. We had some adverse expense experience. And we had some improvements year on year versus last year. So you're absolutely right. We did guide to 100 to 200 million in management actions. I'd certainly expect us to be at the top end or more than that in the second half. Obviously, we do review longevity in the second half. But you'll remember last year we did do a really meaningful release because we did a huge amount of work with an external expert panel around all of the trends on longevity, COVID impacts, and all the sort of industry-wide data. But, yes, we do have a line of sight to a good second half of the year also in management actions.

Thanks. Ria Shah, Deutsche Bank. Two questions. So the first one around wealth. Andrea, you mentioned that you want to make this more profitable over time and work on it. Could you just give some color on this on timeline of profitability and also how much more or what growth do you want from the advisors? So there are 510 at the moment. Where do you want to get to and over what period? And then secondly, around the cost savings. So what should we think about the phasing of the remainder of the cost savings across 2024 and 2025? And then equivalently, what does that mean for restructuring costs as well?

Yes, I want, you're right. I mean, when you look at the numbers on wealth, you saw that indeed proof on great, but there was some strain in particularly from the advice and particularly on the platform, which have taken down the profitability, I think by 29, the numbers are 29 million. And clearly we want the business to be profitable. We should not forget we acquired the different components of, in the years and we're still working on integrating some of them, particularly making sure that we are utilizing technology in order to give hybrid advice to clients, but also improve the way the advisors can work from an administrative perspective. Clearly, Caroline, who's just joined, one of her key tasks is going to be to accelerate the integration, but also to review how we can drive further efficiency there. Very pleased, of course, of having 500 advisors. But I think, once again, we have the wealth business not only to sell proof fund, but also to provide solutions to our retail customers. which are coming from M&G, which are good, of course, which are either, whether it is our amazing mutual funds or other thing. And of course, we will look also how we can do that through the modal portfolio MPS. uh ideally we want to drive more flows we want to drive efficiency but um i think you know with with with caroline now coming on board uh we will update fully probably when when we uh full year results in march uh with more guidance i think uh it's great to have caroline we're all there to help her uh to drive profitable uh business in in for wealth going forward and as you know i'm very much committed to the two capital light businesses which i want to see to growing so more to come.

I'm sure you spotted just one final comment on wealth. There was a small one-off in the numbers. We had a £7 million intangible write-off in the period as well. So that partly explained the year-on-year movement in profitability. So addressing your question on cost savings and the likely sequencing and when you'd start to see them coming through the numbers, and also the restructuring costs to deliver those savings. So clearly we've made a very good start. We've identified the 200 million across the group. We've highlighted that we've got 500 million in run rate savings coming through at the end of the year. Now these, sorry, 50 million.

Sorry, getting excited. If not, they're all going to go.

Yeah, put it in their models.

They all leave.

So, and that's, we've got the VR tailwinds coming through that we did earlier this year. We've got some property exits that we talk about that's coming through and some technology savings. So those are where the early savings are coming from. Now, there's also savings coming through in asset management, as we talked about. Joseph has taken very early action in asset management. He's restructured private assets, which is an area that we're also looking to grow. So I think it's, Looking at the asset management trajectory, clearly we've had the main impact in the first half being from the 5% down in markets. We were very disciplined on costs. So the savings in asset management will also start flowing through in 2024. And then obviously we want to really mitigate the revenue headwinds, which is why our margins being up to 33 basis points is so important for us and continuing to grow in our private assets business. So when I'm answering the question on asset management, cost of income, which is clearly also one of our main targets. So those benefits will start flowing through next year. I would say that the results of the overall savings program, Group-wide, we'll start coming through next year, but probably in the second half of next year. The spend is definitely concentrated in 2023 and 2024. And clearly what we want to get is a position across the group where at the end of 2024, we're really looking very good as we come into 2025 to deliver the $200 million. I think it's really important to say that this simplification program is not just about savings. We really are about simplifying the company, streamlining it, really strengthening it, getting it close to the client across the business, both asset management and wealth. And we do want to – obviously, it's a growth savings target. We want to create as much capacity with these savings to allow the investment in the core businesses where we do want to grow. But I think you'll start seeing the savings come through at the end of 2024 and into 2025, and the costs will be more front-loaded. And we'll obviously update on that at the full year.

And let me add to that, as you said, the simplification or transformation program, it's not – about cost savings. Yes, that's a byproduct. It's really about improving the way we're organized in order to serve our clients better, get a better client outcome. And I'm glad to say, although we've done this transformation, which we are doing, our net promoter score has gone up You saw investment performance has been resilient, actually improved. And of course, we had positive momentum in terms of flow. So I really think you should see this from two angles. You should see, are we improving client outcome? Are we also then delivering on savings? But please focus on both, not only the cost savings. But we will deliver on the cost savings.

Hi, from Barclays. Three quick questions, please. The first one, on the run rate on the CSM going down from 12% to 10, that suggests that the duration has gone from 10 to 8.3 years.

Can you speak up a little bit louder?

Try again. That's better? Yeah. Sorry, so first question. On the run rate of the CSM, you mentioned that it's now 12% versus 10%. That suggests that the duration has gone down from 10 years to about 8.3%. Can you help us understand why that is? The second question you mentioned, double-dated IRRs on the bulk annuity transactions. Can you give us an indication of the margin and the runoff period so we know what to put into the CSM? And then on leverage, just from the comments previously, should we understand that with the $300 million that's coming up for redemption or for call next year, that the combination of that plus an increase in own funds will get you to the leverage ratio, or would you need a bigger redemption fund?

On the first one on the CSM runoff rate, it's not that the runoff rate has increased. It's that when we did the results in the presentation in July, our best guess at that point in time as we were going through the economics, so to speak, is that the runoff of the CSM with Profit Fund was about 10%. As we improved and refined the working, as we got closer and closer to publishing number, we realized that the runoff rate is 12%. So we also restated that. the 2022 results. So it's not that it went up from 22 to 2023, but we simply, you know, you'll have to forgive us. It's the first time that we're doing it. And we realized that that was the more accurate number to put through. And I guess it's comforting to see that despite having a higher runoff rate, the overall system still increased since the beginning of the year because of, you know, good new business on proof and a good interest accretion dynamics. Yeah. Then there were two questions, one on the bulk IRR. Catherine, do you have something to add?

You saw obviously we've had, when we put the CSM drivers out, I think that we're encouraged with the annuities result, but obviously there's no new business element there yet, which will come through in the second half. So I think, again, it's a little bit too early to guide, but at 1.2 billion, it's a good amount of CSM and we do monitor and like to see that CSM growing. So as we give a little bit more color at full year around the profile of the BPA deals, we can't really give anything else at the moment in terms of the financial metrics, apart from just reinforcing what we said, which is we've got a very disciplined approach. around the hurdle rates that these deals need to have. We've highlighted that they're double digit IRR and we just continue to want to play quite selectively, but with these very strict financial metrics. So and again, we've got plenty. We've got meaningful capital clearly at the moment as well. As Andrea said, there are also other capital options that we can look at. So we'll update on that at the full year. And we hope you found the CSM driver's guidance across the whole book, both with profits and annuities, helpful. And back to leverage, as you said, we do have a bond tier two subject that's callable in just 10 months of 300 million. That does remain obviously subject to PRA approval, but clearly that would reduce our leverage ratio halfway towards the 30%. We can all figure out the math in terms of what our own funds would need to do for us to get naturally to the 30% target by 2025. We're very confident in our ability to grow own funds, given the numbers you've seen today, which again, strong underlying capital generation, real confidence in the momentum we've got in asset management. So we are confident in our own funds position. As I said, we've also done quite a bit of work looking at own fund sensitivities. However, if owned funds does not move, we would need to do more than the $300 million to hit the target. We've got plentiful liquidity. We've talked about at the Holdco, $835 million. We've got plentiful liquidity and subsidiaries. We're very capital and cash generative. We are very aware. We monitor the markets. We know what's achievable. We've We've been doing that for many, well, I remember being asked about it a year ago, but we're not in a rush. We're very confident around our ability to hit that target. But yes, we're only plans not to move. We'd have to do more than the 300.

And maybe just one point to add on the double-digit IRR. That's kind of the life insurance business per se, so it doesn't account in a way that business needs to be sustainable and attractive on its own right. Then obviously what happens is that that also drives flows into the asset manager, where obviously you'd make and capture additional margins, right? So the double-digit IRR is purely on a life insurance perspective.

Mandip? Hey, morning everyone. Mandip Jack, RBC Capital Markets. Just one last question for me, please. On asset management flows, what's the outlook for UK institutional going forward?

Okay. Well, I think if you compare to the first half where you had significant outflows from the pension funds, we will still see some pressure in the second half If you look at institutional, however, overall, we see interest from insurance companies and the local authorities. So I would say if you look at those three different institutions, I would say the latter ones, we see interest both on credit, both public and private, and selectively on private assets, of course, not private equity, but infrastructure and mainly real estate's a bit probably under pressure. So I would say if you took the numbers, we had minus 3.8 billion first half of the year on institutional in the UK. Second half, we will not see as much outflows from the pension funds. So it's sort of easing a little bit, but still under pressure.

So I think we are through the questions in the room, unless there's anyone else. There are a couple of questions online that were submitted at the beginning of the section. So I'll read them out just because Fahad then from Medibank and Sinead from HSBC could not be here today, so... to be fair to them, I read them out, but I think most of the ground has been covered already. Um, so Fahad from Medibanka asks, uh, around, uh, color, uh, on retail investment appetite in wholesale, given the interest rate environment. So that's probably more for you, Andrea. Yeah. We'll respond to that. And then, uh, question on new business stream for BPA, which I think we cover. So probably that, that one we don't need to answer. And finally, um, Why is asking – a little bit similar to Andrew, but not exactly identical. Why on the definition of the leverage ratio we are focusing in the numerator on – nominal value of the debt and not market value of the debt, which obviously would be favorable by about 10% at this point in time, given where bonds are trading. So do you want to say towards on kind of sentiment?

Yeah, with the sentiment, I mean, I think we responded, but clearly when we look at wholesale asset management with the high rates in continental Europe, it is, we see Client retail investors going into cash and going into money markets. As I said before, there are some governments which are pushing as much as they can to get their citizens to invest in the government debt sector. However, when I look, for example, at the UK and when you look at our number, we had significant inflows here in the UK, and I think that's due to really the great investment performance. So I always look at retail investors in the UK are less risk adverse than the continental European ones. So I would expect us to continue the momentum that we have had in the first half, although Obviously, I cannot predict the market's uncertainties, and I say that because of the great investment performance that we have on different strategies, and that makes a difference. And once again, we have gained market share in the U.K. market. I mean, most other players have suffered, and we have positive net inflows of 1.5 billion in the U.K., slight outflow in continental Europe. Looking forward, hopefully in 2024, continental Europe is going to come back, I hope. But that all depends on where rates are going. I cannot predict that.

Thank you. And Catherine, on the nominal versus?

Yeah, I guess as I answered before, there are multiple measures of leverage that are used in the market by all the rating agency and a number of different approaches by our peers. And some, I think, do use market value, not nominal value. Look, I think this is what we feel is the appropriate measure for us. It is a little bit more conservative because we know where our bonds are trading, but we're comfortable that it's nominal value of debt and the unrestricted loan funds. And as I said, look, this is a priority for us for 2025. We've got a call date in 10 months. And you can look at and do your own different leverage measures, but we're very comfortable in the basis of PrEP that we're using.

Perfect. So I guess no more questions online, no more questions in the room. So with that, I'll just thank you all for joining us today and see you in six months.

Thank you.

Thank you. Thank you very much. See you soon.