Aegon Ltd. New York Registry Shares

Good morning, everyone. I would like to welcome you to this conference call on EGON's second half-year 2025 results. My name is Yves Cormier, Head of Investor Relations. Joining me today to take you through our progress are EGON CEO, Lard Friese, and CFO, Duncan Russell. Before we start, I would like to ask you to review our disclaimer on forward-looking statements, which you can find at the end of the presentation. And with that, I would like to give the floor to Lard.

Yes, thank you, Eve. Good morning, everyone. I will start today's presentation by running you through our strategic developments and commercial performance in 2025 before Duncan will go through the results in more detail. So let me start with slide number two with the key messages for the year. Our results over 2025 demonstrate the strength of our strategy and our ability to consistently deliver upon our ambitions. We have either met or outperformed all our financial targets for 2025. Operating capital generation before holding and funding expenses increased year over year to 1.3 billion euro ahead of target. Our operating results increased by 15% compared with 2024 to 1.7 billion euro. This increase reflected business growth across all units, favorable market impacts, and improved experience variances in the Americas and international businesses. Free cash flow for the full year 2025 was at 829 million euro, consistent with our target. On the back of our strong capital position and financial performance, we propose a final dividend of 21 cents per common share, resulting in a full year 2025 dividend of 40 cents per share, in line with our target and up 14% from 35 cents per share over 2024. Furthermore, we executed 400 million Euro of share buybacks in the second half of 2025. And we are currently executing the first half of our new 400 million buyback program for 2026, as announced at our Capital Markets Day in 2025. Commercial momentum remains strong in 2025. In our U.S. strategic assets, we continue to grow WFT, as well as our new life sales and our retirement plan assets. At the same time, we continue to reduce our exposure to financial assets. The capital employed in this segment was $2.7 billion at year end, ahead of our target. We also reported solid results in our other business units in 2025. Our asset manager delivered net third-party inflows. Our U.K. workplace platform generated healthy net inflows, and our international business continued to perform well. Finally, we are making progress with the preparations for our proposed relocation to the U.S. as announced at the Capital Markets Day. U.S. GOP implementation is still at an early stage, but is progressing as planned. I'm now turning to slide three to run through the commercial performance of the Americas in more detail. As we discussed at our 2025 Capital Markets Day, progress in the Americas remains strong. Starting with World Financial Group, we remain on track to grow the number of licensed agents to around 110,000 in 2027. As of year end 2025, the number of licensed agents amounted to nearly 96,000, an 11% increase on the previous year. Initiatives to improve agent productivity have led to a higher number of producing agents. In addition, producing agents also sold a higher average number of policies and a higher average premium per policy sold. As a result, new life sales increased by 10% compared with 2024, while sales of annuities increased by 6%. The productivity gains at WFG were one of the key drivers of the 30% increase in new life sales in our individual life business. We also recorded strong new life sales of the final expense product that we offer in the instant decision market through a fully digital underwriting platform. Furthermore, we continue to successfully grow our RILA sales. We achieved a 45% increase in indexed annuity net deposits in 2025, thanks to higher gross deposits from further improvements in wholesale distribution productivity. In the savings and investment segment, the midsize retirement plans business reported net inflows in 2025 on the back of our strong positioning in the pool plan space and supported by a large takeover deposit earlier in the year. The level of written sales remains solid, which will support gross deposits going forward. We also generated further growth in both general accounts stable value and individual retirement accounts as we work to increase profitability and diversify revenue streams of the retirement plans business. I'm now moving to slide four for an update on our other businesses. At Agon UK, we continue to be well positioned in the workplace platform business. Net deposits during 2025 were driven by both the onboarding of new schemes and members and regular contributions from existing schemes. For the advisor platform business, net outflows in 2025 reflected ongoing consolidation and vertical integration in non-target advisor segments. As announced at our 2025 Capital Markets Day, the strategic review of the Agon UK is ongoing. In our international segment, new sales continue to contribute to the growth of the book in 2025. Our joint venture in Brazil reported higher new life sales, particularly in credit life products, as did our activities in Spain and Portugal. In China, new life sales were negatively impacted by changes to product pricing to reflect the new pricing regulations and the current economic environment. Agon Asset Management generated positive third-party net deposits during the year in both global platforms and strategic partnership businesses. although at a lower level than last year. In global platforms, net deposits were mostly driven by fixed income products and more than offset outflows from the STUL reinsurance transaction that we did last year. In strategic partnerships, net deposits were driven by our Chinese joint venture, AIFMC. We are implementing the plan for asset management as presented at the 2025 Capital Markets Day. For instance, We recently expanded our CLR warehouse capacity in the US and Europe in line with our ambition to grow our higher revenue margin third party business. Before handing over to Duncan, I would like to take a step back and reflect on the outcome of the plan we presented at the 2023 Capital Markets Day using slide number five. First, as I mentioned, we either met or exceeded our financial targets in terms of operating capital generation, free cash flow, dividend, and leverage. Second, at the same time, we have significantly transformed our business. We finished a year ahead of our target in terms of capital employed for the financial assets at $2.7 billion, and our U.S. strategic assets now significantly outweigh our U.S. financial assets, both in terms of CSM and capital employed. This is quite a remarkable shift. These are not only great achievements, but they also lay strong foundations for the next steps of our journey as we relocate to the United States while continuing to increase the profitability of the group and return capital to stockholders. I am very proud of all our colleagues across our businesses for contributing to our success. Well done, everyone. I will now hand over to Duncan to discuss our financial performance in more detail. Duncan, over to you.

Thank you, Lad. I will zoom in on our second half 2025 results starting on slide seven. The operating results increased by 11% year on year to $858 million with all of our businesses delivering higher figures. Operating capital generation increased by 8% with strong figures from Transamerica. Free cash flow in the second half of 2025 amounted to 388 million euros, and we received remittances from all units. Cash capital at holding decreased to 1.3 billion euro at the end of 2025, mostly because of capital distributions to shareholders in the form of dividend payments and share buybacks. Valuation equity per share increased by 60 cents, with a positive contribution from both shareholders' equity and the CSM balance after tax. Growth financial leverage was stable at 4.9 billion euros. Finally, the group solvency ratio remains robust at 184%. As announced in May last year, the eligibility of the perpetual cumulative subordinated bonds in our capital stack ended as of January the 1st, 2026, These bonds contributed 7 percentage points to the group solvency ratio as of December 31st, 2025. Now, using slide 8, I will address the development of our operating result in the second half of 2025. Starting with the U.S., the operating result increased by 5% in Euros, or 14% in U.S. dollars, thanks to a combination of growth and more favorable variances. The operating results of strategic assets increased by 10% in local currency and benefited from business growth, notably in the individual life and retirement plan businesses, partially offset by a lower operating margin in the distribution segment. In financial assets, the operating results increased because of more favorable experience variances compared to the second half of 2024. On the other units, the operating results of the UK increased benefiting from business growth and favorable markets, which led to both a higher CSM release and increasing non-insurance revenues in the second half. In the international segment, the increase of the operational result was also driven by business growth and a one-time item in China. Furthermore, the result from China benefited from a true-up related to the local implementation of IFRS 17, which was booked in the second half. Agon Asset Management's operating results improved in the global platforms business, mostly from the impact of favorable markets on revenues and from an improved operating margin. Looking forward, as mentioned at our recent Capital Markets Day, over the 2026 to 2027 period, we aim to grow the operating result of the group by around 5% per year from the 1.5 to 1.7 billion euro run rate in 2025 taking into account an assumed Euro-dollar exchange rate of 1.20. I now turn to slide nine. Here you see our IFRS net results for the second half of 2025. Non-operating items were unfavorable in the period and were largely driven by realized losses on assets transferred in the context of the SGUL reinsurance transaction. These realized losses were taken in the P&L were fully offset in other comprehensive income and therefore had no impact on the development of shareholders' equity. Net impairments reflect an ECL reserve increase from new investment purchases, as well as a small number of downgrades and defaults of bond investments. Fair value items were negative mostly from revaluations of solvency hedges in the U.K., and other charges were mostly driven by various items in the U.S. and U.K., and partially offset by the positive result from the stake in ASR. I am now on slide 10. In the second half of the year, our shareholders' equity grew by 2% and our CSM balance increased by 4% over the same period. The increase in the CSM was largely from business growth in the U.S. strategic assets, which saw a 24% increase in CSM in the second half thanks to profitable new business, favorable assumption changes, and experience variances. The CSM of our financial assets decreased due to the runoff of the book as well as the impact of the SGOL reinsurance transaction. These developments mean that the CSM balance of our strategic assets now accounts for 57% of total America's CSM. Outside the US, the changes to the total CSM balance were limited. Overall valuation equity per share, which represents shareholders' equity plus net of tax CSM, increased by 7 percentage points over the second half of 2025 to €9.06 per share. Moving now to slide 11. OCG before holding, funding, and operating expenses increased by 8% compared to the second half of 2024. OCG from the U.S. increased by 19% or 27% in U.S. dollars over the same period with a higher contribution from both the strategic and financial assets. Mortality and morbidity claims experience was favorable in the second half of 2025 while it was unfavorable in the prior year period. OCG benefited also from a favourable release of required capital from the investment portfolio actions and a reduction in short-term financing. This was partly offset by a higher new business strain from growing our strategic assets. Adjusting for favourable items, the US OCG in the second half of 2025 fell within the guidance of $200 to $240 million per quarter. In the UK, OCG decreased OCG decreased mostly because of the second half of 2024 includes some favorable items, while the international segment reported lower OCG. At Aegon Asset Management, OCG increased due to favorable markets and an improved operating margin compared to the prior year period. Holding, funding, and operating expenses were largely unchanged year over year at 142 million euros bringing the total for full year 2025 to 295 million euros. As a result, OCG after holding funding and operating expenses for the full year 2025 amounted to 992 million. I'm now turning to slide 12. The capital positions of our business units remain strong and well above their respective operating levels. The U.S. RBC ratio increased by 4 percentage points compared with June 2025 to 424%. The increase was driven by OCG from the operating entities applying the RBC framework. This was partly offset by remittances to the holding. One-time items and management actions negatively impacted the RBC ratio by 3 percentage points during the period. The negative impact on the RBC ratio of the SGUL reinsurance transaction was offset by capital investment into Transamerica from the group. Market movements had a limited impact. In the UK, the solvency ratio of Scottish Equitable decreased by two percentage points to 183%. Operating capital generation in the period was offset by remittances to the holding and investments in the business. Market movements here also had a limited impact. On slide 13, you see that cash capital holding has come down in the second half of 2025 to 1.3 billion euros. This development is consistent with our aim to reach the midpoint of the operating range for cash capital holding around 1.0 billion euros by the end of 2026. Free cash flow amounted to 388 million euros in the period and included remittances from all our units, as well as dividends received from our stake in ASR. The full year 2025 free cash flow amounted to 829 million euros, consistent with our target of around 800 million euros for the year. We returned nearly a billion euros of capital to our shareholders through dividends and share buybacks in this period. Consequently, our share count ended 2025, 5% lower than at the start of the year. Capital injections into the businesses amounted to 751 million euros, and mostly related to the investment in Transamerica to offset the impact of the SGL reinsurance transaction. This is funded by the disposal of part of our ASR stake, 12.5 million shares, as indicated at our capital markets day. The remainder mostly related to investments in our international investment management businesses and in Aegon Asset Management. We have already launched a share buyback for the first half of 2026, totaling 227 million euro, and expect this to be completed on or before June the 30th, barring unforeseen circumstances. This share buyback covers both the first half of the 400 million program for 2026 announced at the Capital Markets Day, and 27 million related to share-based compensation plans. After completing this first part, we expect to launch the second half of the 400 million Euro program. I am now moving to my final slide, number 14. To conclude, The results over the second half of 2025 were strong, and we are confident we are well positioned to meet our growth ambitions for 2026 and 2027. As discussed at our 2025 Capra Markets Day, the next time we present our results will be in August with the first half figures. We will also move the timing of our results conference call to 2 p.m. Central European time to accommodate U.S.-based investors. With that, I would now like to open the call for questions. Please limit yourself to two questions per person. Operator, please open the Q&A session.

Thank you. As a reminder, to ask a question, you will need to slowly press star one and then one on your telephone and wait for your name to be announced. Please limit yourself to two questions only and rejoin the queue for any follow-up. Thank you. We will now go to our first question. One moment, please. And our first question today comes from the line of Farooq Hanif from JP Morgan. Please go ahead.

Hi, everybody. Thank you. My first question is on the operating profit in the second half of the year, which was kind of at the upper end of your guidance range. Having looked at the detail and discussed with the IR team, it feels like it's reasonably clean number. But obviously, it's towards the upper end. So I'm just wondering about the sustainability of that, given the growth in CSM, the strategic assets that you talked about. So if you could comment on that, that would be helpful. And my second question is on the ASR stake. I know you've been reluctant to really give much update on it in the past. But I was just wondering philosophically, Is this something that you would want to or could or would be happy to own once re-domiciled in the U.S.? And to what extent does the proposed tax legislation in the Netherlands impact your decision around that? Thank you.

Thanks, Farouk. Good morning. Duncan, can you take that?

Sure. No, Farouk, you're right. The second half operating result was fantastic. Once you adjust for favorable and unfavorable items, I think it's a reasonable representation of the underlying figure. It benefited, obviously, from strong markets, which we saw in the second half of the year. But it leads us in a good place with our ambition to hit the targets we outlined at the Capital Markets Day in December. On ASR, no change there. So that's a shareholding which we're happy with. We've given guidance in the past that there are two reasons we would sell that. One is that we feel that it hits intrinsic value and or we have an alternative use of the capital. Our re-domiciliation to the U.S. has no impact on our ownership there. What about the tax? That's something you've considered. Again, there also, I think at a capital market, I said that I didn't see tax having an influence on our ownership. our ownership position with ASR. Okay. Thank you very much.

Thank you. Your next question comes from the line of David Balmer from Bank of America. Please go ahead.

Good morning. Thanks for taking my questions. Firstly, on OCG, which is tracking towards the bottom end of your quarterly run rate in Q4, what conditions do you need to see for you to be closer to the top besides currency movements, and in particular on new business strain, which was particularly strong or high in Q4. What kind of strain are you expecting for the coming years? And then secondly, on WFG, results came down in 2025. I'm looking at the first profits here. And if I look at agent productivity or cost income, they both seem to have deteriorated in the period. So are you able to give some color, please, on the trends there? And maybe if you can quantify the investment program that I think is going on at the at WFG in 25. Thank you.

Okay.

Okay. And the first question on OCG, you know, we had a very strong quarter in OCG. We had a reported OCG was actually very healthy. We highlighted three things in there which supported it in the fourth quarter. The first was we had constant mortality and morbidity variances. As you know, those can move around quarter on quarter, but this quarter it was It was pretty favorable. Secondly, we had high new business strain versus the guidance we gave during 2025. And that reflects that we had a very strong commercial performance on the life insurance side. And then thirdly, we had a high release of required capital, which was high versus prior quarters. Although if you look at our history there over the last two years, you do see that that can move around quite a bit and does tend to spike in the second quarter and the fourth quarter. That's the quarters we pay dividends out of. So net-net, it was a strong quarter. Once you adjust for all of these favorable items and also take into account FX, we think we were at the bottom end of the kind of underlying run rate. And if you go back to our capital markets guidance, which we gave in December, we feel in a good place with achieving that for 2026 and 2027.

Yeah, so on WFG, we have... a lower margin on the back of very strong sales growth and also productivity growth. So there's more producing agents producing also higher premium policy sales. But the reason why the operating result is lower than last year is that we're investing in a business in a number of areas. in leadership and governance of the company as a whole, because the company is growing quite a lot, and don't forget that, from 56,000 agents a number of years ago to 96,000 now. Also technology initiatives to strengthen the sales process, a lot of training that we did to improve productivity and making more agents that are licensed producing quicker, and compliance and field support for the growing number of agents. So that's the reason, that's the investments that we are having in the business.

Maybe just to add on that, so if we go back to the capital markets today, we flagged that we saw our strategic assets in the U.S. growing by around 10% per annum over the coming years. For distribution segments, we flagged also that we expected the operating margin to remain at the lower end and the growth in the profits to be mostly driven by revenue growth.

Thank you.

Thank you. Your next question today comes from the line of Farquhar Murray from Autonomous. Please go ahead.

Just two questions, if I may. Firstly, on the legal settlements, I suspect in terms of magnitude, the most we're going to get is that it's part of the 230 million of charges in the US, which I can understand. But maybe you could give us some color on those cases, where this settlement takes us in terms of the uncertainties around that, and maybe what's the process for finalizing this? And then secondly, on the UK strategic review, if this ultimately does come to a sale towards the summer, could I ask how you will approach any decision between cash and equity within the offers made around it? And is there any preference or what are the criteria and considerations from your side? Thanks.

Hi, Farquhar. This is Mark. I'll do both. So let's start with the legal settlements. They are pertaining to two cases which we settled. The detail of that is quite technical, so I will refer to a page, which is page number 269 of the annual report. It's the first two paragraphs under the section Proceedings in which AGON is involved. And if you read those two sections, you will find those are the two cases that we're talking about here. They are indeed included in the other charges of U.S. dollar $230 million, as you I pointed out yourself, so they're included in that alongside other items in that in that bucket. As pertaining to the process, we settled those cases. They now need to be approved by the courts and that's a process that will take a bit longer. Then, when it comes to the UK review. We have launched it, as you know, at the capital markets in the 10th of December. It's early days, so we will not give any comments on this until such time as we have an update for you. We expect that update to happen somewhere before the summer. That's what we aim to do.

Thank you. As a reminder, if you would like to ask a question, please press star 1 and 1 slowly on your telephone and wait for your name to be announced. We will now go to our next question. And our next question today comes from the line of Michael Hutner from Barenburg. Please go ahead.

Fantastic. Thank you. I have two questions. One, in the past, Duncan, you've given us the kind of waterfall to the underlying OCG. I just wondered if you could do that for my benefit. I imagine my competitors are much more clued up than I am, but that would be really, really helpful for the year. And then the second question, which kind of relates to it, but maybe a bit differently. I'm always obsessed by mortality, and there's that lovely Munich re-update, I think this week, on GLP-1s and stuff. Can you talk a little bit about the improvement in mortality? We've seen it's a year-on-year, the variance is better, but is there any trend here we should be thinking about? Thank you.

Okay. Okay, Michael, thank you. So we think that the clean or, yeah, Being 4Q OCG was around 294 million euros for the group compared to the reported OCG of 372 million. And if I break the movement from one to the other down, we had a positive impact of around 47 million euros in the US from favorable items. And within that, there was 36 million euros attributable to favorable claims experience. The majority of that was mortality. 29 million was mortality. 7 million was mobility. So that's good. Against that, we had new business strain, which was 34 million higher than the guidance we gave at the start of 2025. And that's reflecting strong sales. And then against that, we had relatively elevated release of required capital against the guidance we gave at the start of 2025 of around 45 million. And that's reflecting normal ALM activity. And as I noted, we do tend to see that spikes a bit in 2Q and 4Q as Transamerica pays dividends. Then in the other units, we had overall positive favorable items around €31 million, of which about €20 million was in international, split equally between China and Spain, and then around €7 million in the UK and €4 million in agon asset management. On mortality, we saw this quarter favorable to severity. We saw that particularly in younger ages and very old ages. You know that number can move around in any single quarter, given the size of our book. But if I take a step back and look at our mortality experience since we made the updates about a year and a half ago now, we're happy with how it's performing versus our best estimate. Philip, thank you.

Thank you. Our next question today comes from the line of Nazib Ahmed from UBS. Please go ahead.

Hey, morning. Thanks for taking the questions. First one on financial assets. At the CMD, you did the universal life deal, and it seems like you've got the SPV set up. So are you going to chip further away at the 2.7 billion this year? Do you have anything in the pipeline in terms of reinsurance transactions or anything else? Any more color on that, Duncan, would be appreciated. And then secondly, I noticed you're focusing a little bit more on IFRS in the presentation slide. You removed the bridge of the OCG where you show the expected in force and the release of capital. Just wondering why the change. Is it because U.S. cap is closer to IFRS. How should we think about U.S. cap is it more closer to OCD or IFRS? Thank you.

Duncan, two questions for our CFO. Okay.

So on the reinsurance deal, you're right. In December, we announced at the Capital Markets Day, I think, a very innovative transaction on our part whereby we reinsured a significant part of our secondary guarantee universal life exposure in the US, and that brought our required capital down to 2.7 billion. Actually, if you take a step back and look over the last four years, I would argue that we've done a huge amount of management actions across all of our books, and we're actually positioned as one of the more innovative parties in the market. with the recent transaction, I think, giving us even more optionality because we've established this reinsurer. We continue to look for ways to bring down the 2.7 to our targets in 2027. That will be done through a range of actions, management actions we can take ourselves, actions which we engage with policyholders on, and then also potentially third-party actions. I think the main message I'll give you is that we're confident we can hit our targets. And we've demonstrated, I think, that we are at the forefront of innovation in dealing with these legacy blocks. On the emphasis on IFRS, I think we've always placed a great deal of emphasis on IFRS. We've historically run two frameworks, OCG and our accounting framework, which is IFRS 17. We are trying to simplify our communication. We took a step of that with the capital markets day where we have given targets, which I think are simple to understand and simple to track. And so that's how we're going to manage the next two years. You know that we're in the early phases of implementing U.S. GAAP. I'm not going to comment on that, on how that's going or

the expected outcome of that is but over the coming years we will update the market when we have us gap figures and eventually transition our disclosures to that of a normal us company thank you duncan thank you as a reminder to ask a question you will need to slowly press star one then one on your telephone and wait for your name to be announced we will now go to our next question And our next question today comes from the line of Farouk Hanif from JP Morgan. Please go ahead.

Hi. Thanks for taking my follow-up. So just following on from Naseeb's questions, you mentioned at the CMD that the reserving on a stat basis you're happy with across most of your books, but LTC is the one that stands out. Is your position still that You know, it's hard to find market deals that, you know, that economically make sense to you right now. Is that still your position? And that you can deal with it kind of internally through your internal management actions on pricing. And secondly, this is a slightly kind of open-ended question, I guess, but just, I mean, you consistently have lots of positive and negative experience variances on an IFRS basis, for example. And I see quite a lot of assumption changes again in CSM. I'm just kind of wondering, you know, to the best of your knowledge, do you feel like you're getting closer to dealing with these variances going forward? Or are there any items we should watch out for going forward in earnings that could still remain volatile under IFRS? Thank you.

Both questions to you, Duncan.

Okay. On the financial assets, so what we tried to give at the Capital Markets Day was framework. whereby we said that we look at third-party transactions on an economic basis, and we referenced our valuation equity, and also free cash or per share, so both cash and economics. So that's the framework when we assess transactions. Second thing we gave was we stated that our statutory reserving in aggregate for the financial assets was now comparable to on an IFRS basis, but within that, There are obviously blocks which are stronger and blocks which are lower. And we did indeed say that long-term care was lower. If we look at third-party transactions, actually, I think the binding is more the economic price. And if you look at long-term care, the reality there is that there are a lot of – it's a relatively more sensitive block because it's long-duration transactions. the peak reserves are not until sometime in 2030. And that makes it a bit more sensitive to various policyholder and behavior assumptions. And therefore, we've so far taken the view that we are the appropriate owner of that block. And our approach to managing that liability is through rate increases and other options we give to the policyholder to manage the exposure. And I think that's probably the base case for the coming period. On variances, well, we get a range of around 100 million within our operating profit, which I think should be enough to cover positive and negative variances in any half-year period, both from experienced variances and onerous contracts. There will always be variances. This quarter we had – this half-year we had positive mortality. We have some negative on premium, persistency, and expense on owner's contracts. So there will always be a number. That simply reflects the leverage of the balance sheet to the P&L. But I believe that the operating range we give, which is 100 million range, so plus or minus 50 million, should be enough to cover those variances on a go-forward basis. Thank you very much.

Thank you. Your next question today comes from the line of Ian Pearce from BNP Paribas. Please go ahead.

Hi, morning. Thanks for taking my questions. It was just one. In the presentation, you flagged some impacts from downgrades and defaults. I was just wondering if you could give us Any more details on what this relates to, if there's sort of concerns about further downgrades in the investment portfolio, if it has anything to do with any of your private credit holdings as well? And I assume these are US-related as well. Just any details on what's driving that, because it's not something we've really had flags before. Thank you.

Yeah, I can take that. No, that's a good question. So as you know, under IFRS, we have the ECL, and if you look in our statistical supplement on page 15, you'll see the movement in the ECL, and there you'll see transfer between stages, which we saw some movement from stage one to stage two, and some movement from stage two to stage three, relatively small. I would say still fairly benign, and that was across a range of bond holdings we have, ABS holdings we have, et cetera, but still pretty benign, to be honest with you, not a meaningful number. Yeah, but it is something we track. On our asset portfolio in general, it's performing very well. And you can see that in the movement in the ECL.

Thank you. We will now go to the next question. And your next question comes from the line of Jason Kalambasis from ING. Please go ahead.

Yes, hi, good morning. Two quick follow-up questions. The one is, in the US, plus 14% on local currencies is above what you're indicating as guidance. Do you think that this was supported mostly by the stronger markets we saw in the second half? Or do you find that there is a good momentum that could be carried in 2026? And also, so incidentally, I mean, if you could comment on the fourth quarter, how was it compared to the previous three quarters in the US in local currencies? And the second thing is, just for my understanding on the UK sell process, I understand that you are not going to comment on it, but I was looking just to understand how it works. So you are looking at bids for the whole of the UK, but within it, do you also take or do interested parties show an interest for part of it and give a price or they have to actually look at it as one piece and if you want afterwards to sell it in two different pieces for example because you're not happy with the price you get for the whole piece then they have to resubmit and you start discussions on that kind of second process essentially the two stage process or is the second one folded partly in the first one. So I would be just interested if you could share any thoughts on this. Thank you.

Yeah, Jason, this is Lart. I will do the UK piece, and then I'll hand over to Duncan for your first question. On the UK, as I mentioned, you know, the strategic review that we launched pertains to the insurance business and pertains to the platform business. It does not pertain to the asset management office that we have and business that we have in the UK. So that's something I want to make sure it's clear for everybody. Secondly, it's in the early stages, and we aim to give an update when appropriate, and we hope to do that before the summer of this year.

On the operating profit in the second half, what tends to drive, what drove a lot of that growth, Jason, was the variances. So in the second half of 2025 for the U.S. on a U.S. dollar basis, We had a positive experience variance on claims of 129 million linked to the mortality and morbidity comment earlier. Whereas last year in the second half, that was only 33 million. So there's a big swing from variances, which are always going to occur, but hopefully should be captured in our range. If we look forward, the guidance we gave at the Capital Markets Day was that we would expect the operating result run rate to go around 5%. driven by around 10% growth in strategic assets and shrinking profits in financial assets. As you know, the strategic assets profits are driven mostly by CSM progress and then our non-insurance profits. You see that our CSM is progressing really nicely. So our CSM on protection solutions ended the year at 4.3 billion dollars and at half year it was 3.6 billion. So good progress there, which I think is supportive of the growth ambitions on the insurance side. And I just flagged earlier that on distribution, we expect a continued lower margin, but good revenue growth. So that should support the overall roughly 10% growth in strategic assets. Against that, the financial assets will continue to run down. You note there that the CSM ended the year at $3.2 billion, began the year at $3.8. So as that runs down, there'll be a lower release from CSM and hence shrinking operating profit over time. And the dynamic of those two things should get you the roughly 5% growth in operating profit. Thank you. Great.

Thank you. We will now go to the next question. And the next question comes from the line of Michael Hutner from Barenburg. Please go ahead.

Fantastic. Thank you. It was on the net inflows. What I noted from speaking to your excellent IR, but I wanted to have some comments on how you see it developing. In the second half, net outflows in retirement plans in the U.S. of 0.6 billion. I think that's the retirement baby bonus. I just wondered what the outlook is there. And then in the U.K., we had 273 million net inflows in H2, which is well below what we had in H1, I think 1.9 billion or something. So I just wondered how you see the run rate there. And then finally on asset management, 1.3 billion net outflows, I think, again, second half. And I just wondered how you see that developing. Thank you.

Yeah, these are different business lines to go one by one. First of all, our plan assets in the U.S. have gone up by 13% year on year. And the net outflows you're reporting, so the business itself is in very good shape. And especially when you look at the written sales, the new plans, the pool plans that that we're getting actually the retirement business is doing very well. The outflows are indeed something that is in line with what the market sees overall in the US, which is baby boomers taking some of their money out, but also given where the stock markets are, people taking a little bit of money out. That's what you're seeing there, nothing else driving it. If you look at the UK, the outflows we're seeing there is stemming from the same trend that we've been seeing for a longer time, which is a combination of a couple of things. And in the second half, there was one additional thing that I want to mention as well. So first of all, we target, as you know, a target segment of 500 advisors. Beyond that, in the non-target segment, there's quite a lot of vertical consolidation. And that drives where people are buying buying platforms and the results move assets away from it. So we've seen that for quite a number of quarters and that has not changed. What we also saw in the second half of the year, there was quite some jitters in the UK on the budget. It's now settled because the budget is clear. But before that, there were concerns and as a result, clients took some money out because there were rumors that the tax-free pickup of of pension money would not be possible anymore. And as a result, that led to a little bit of that. We have good progress, actually, on the technology improvements that we're making with targeted advisors providing positive feedback on that. But unfortunately, the commercial result of that is not yet visible. If you look at the AUM flows, so first of all, third-party flows were up. So they were worse than last in 2024. 24 was a record year, by the way, for that. But they were much lower than 2024, but they were positive. So we have positive flows driven. So both on global platforms, which is our own platform, as the strategic partnerships. And we saw, in terms of the outflows, we saw two main things happening. One client in the U.S. redeemed from our U.S. high yield fund. And then we had the ASR, they had some allocation changes in their general account. And as you know that we have a partnership with them on that, we noticed that in our asset management results. That is what we've been seeing. However, bottom line is the retirement business in the U.S. is doing very well, as is demonstrated by the set of numbers here. And the U.K., the workplace business is also in a very good place. It may not have been as high as the previous year because that was like a record year. This one is the second best year that we had, so it's still in a very good place. And on the advisor platform, I gave my views. And on AUM in total, sorry, on asset management in total, we had positive flows, as I mentioned earlier. Brilliant. Thank you very much. I also want to point to the margin improvement that we saw, by the way, in the asset manager. It nearly doubled this year to 17%.

Thank you. Thank you. We will now go to the next question. One moment, please. And the next question comes from the line of Nazim Ahmed from UBS. Please go ahead.

Just one question. Lad, you mentioned the legal proceedings on page 269. I had a look and there's a paragraph, the third paragraph, which has been there for a while around distribution. Just wanted to understand what that's related to. Is that WSG related or is it something else? Thank you.

Well, the first, the two that I was referring to are the cases that, so one is about, had to do with an old block of business and bonuses that were paid on that in universal life policies. Again, it's more eloquently described in the first paragraph of that section in page 269. And the second one had to do with the topic of the MDR, so the monthly deduction rates that were increased, and also that is described more wholesome in page number 269. Those two cases have been settled. That's good news. And now we await the confirmation. Now, then what you're referring to, the third paragraph, let me, they're not WFG related. So the first two cases, so the cases I mentioned that we settled are not WFG related. Hello? Yes.

Sorry, I was asking about the third paragraph where it says there's some legal action going on around agents that might be considered independent contractors as opposed to employees. So I was asking about that one, whether that's WSU-related.

We'll follow up with you on that, but I think you're referring to a case that we mentioned half a year ago already. in our half-year disclosure. We'll follow up. IR will give you a ring. Okay, perfect. Thank you.

Thank you. We will now go to the next question. And the next question is a follow-up from Michael Hutner from Barenburg. Please go ahead.

Thank you. Sorry about that. On the number of advisors at WFG, the total number is up, which is wonderful. The dual or the multi-ticket number is up, but it's kind of much slower growth. Can you talk a little bit about that? I think it was a question a couple of years ago, and I think the implication was it didn't worry you too much. But the multi-ticket is obviously the higher value part, I don't know. Any comments would be helpful.

You may recall in many of the discussions last year that we wanted to improve productivity, right? And I've mentioned in a number of earnings calls that we were running programs to indeed improve that productivity. Now, what has happened is that through our training and through our field support, we have been able to make more agents, because the agency sales force has grown quite a bit, So the agents that become fully licensed agents then also need to learn and to get productive and to become sellers. And that's what you're actually seeing in the numbers. We were able to improve the number of producing agents. Then the second thing that happened is they also sold insurance policies with a higher premium amount. And that also drives the metric of productivity up. That's all good news. So the agency network has become stronger, has become bigger, has become more productive, and that bodes well for the future, and we will continue to strengthen the network. I mentioned that we are doing investments, supporting the field force training, all these good things to ensure that that massive sales force that we have, which is the second largest in the U.S., and that goes to the underserved mainstream American family class and help them with their protection and retirement plans, et cetera. So, yeah, it's a good progress that we're making there.

Thank you. Thank you. We have no further questions. I would like to hand the call back over to Yves Cormier for closing remarks.

Thank you, Operator. This concludes today's Q&A session. Should you have any remaining questions, please get in touch with us at the investor relations team. On behalf of Lardin Duncan, I would like to thank you for your attention. Thanks again and have a good day.