Aviva Plc U/Adr

Okay, good morning, everybody, for a pretty full room. Thank you for joining us for our half-year results presentation. So as always, I'll start with an update on our performance and strategic progress, and then I'll hand over to Charlotte, who will take you through our results in more detail. And we'll obviously finish with an opportunity for questions. Today's numbers once again demonstrate Aviva's accelerating momentum. Yet another six months of excellent progress We have fantastic opportunities right across our markets, the UK, Canada, and Ireland. And what you're seeing is a business which is capitalizing on those opportunities and delivering results quarter after quarter. We're executing on our consistent strategy with a unique diversified model. We're growing right across our business and accelerating in capital light areas. And we are delivering for our customers and shareholders with Aviva colleagues at the very heart of our success. And yet, as I always say, there is so much untapped potential for Aviva to go after. So you should expect much more where that came from. So let's get to the results. As you can see, we've had another really strong half. We're growing exponentially. Premiums are up 15% in general insurance. Net flows are up 16% in wealth. And sales are up 12% in insurance, wealth and retirement. We're more profitable. With operating profit and owned funds generation both up double digits, translating into strong cash generation. We're delivering all this by growing our customer base and consistently hitting the mark for our 19.5 million customers. Our transactional net promoter score is up by almost four percentage points in the last six months alone. And we're delivering for shareholders too. In June, we completed another £300 million share buyback. And today, we're announcing an interim dividend of 11.9 pence, up 7% year on year. These strong results further build on our performance track record. They're testament to our resilient business model and our customer-centered strategy. We know that our strategy to be the go-to customer brand across insurance, wealth, and retirement is the right one for Aviva. It builds on the strengths and advantages of our model. We're laser-focused on executing our four strategic priorities, growth, customer, efficiency and sustainability. And this focus is generating results. And because we've never complacent, we upgraded our targets at full year. And we have absolute confidence that we will deliver against them. As I said, there is no shortage of growth opportunities across all of our markets. But I would like to focus on the UK for just a moment, as there's been a lot going on here. There are many reasons to be positive about the UK. Significant wealth, structural growth opportunities, greater political certainty and economic stability, and a welcome focus to accelerate the UK growth agenda. As a leading UK insurer, we are incredibly well placed to take full advantage and expand our franchise. So just to bring this to life for you, We're already supporting pension savers with our number one wealth business. And this market is expected to triple over the next 10 years to almost five trillion pounds. But with four in 10 people under saving for retirement and a growing advice gap, we need to go even further. So we're working with the government to support better retirement provision, open up access to advice and stimulate greater investment in the economy. In short, we are confident in the future of UK financial services and the wider economy. And we have the necessary scale, skills and model to capitalise on this. Our complementary portfolio is a real advantage. It provides resilience and the ability to grow in different market conditions. It also benefits our customers across all of their needs. As you know, our strategy is to accelerate in capital light. And hitting our plans, we'll see this approach 70% by 2026, delivering more growth and higher returns for shareholders. We're achieving this by investing organically and through targeted M&A. So let me give you a little bit more detail on the next slide. To change our mix of earnings over time, organic growth is a key lever. And as you can see, we're already delivering right across the business. We have disciplined growth in retirement and we are winning across the capital light businesses. In wealth, Doug and the team have been cementing our leading position with £186 billion in assets. We've won 249 new workplace schemes and we've driven more than 3,500 qualified leads from Aviva to into succession wealth. And Mark and the team are capturing almost 70% of workplace flows into Aviva Investors, demonstrating the power of our connected wealth proposition. In health, premiums are up 10%. And in protection, we are the clear UK number one player with integration of AIG protection firmly on track. In general insurance, we're delivering double-digit growth across the board. In the UK, Jason and the team have continued to post leading growth in retail and are expanding our leadership position in commercial lines. And in Canada, Tracy and her team are building on the success of our RBC partnership and growing commercial lines with multiple large client wins. This is an incredibly powerful model, and we continue to add new growth opportunities. Now, last time I stood here, we had just announced the acquisition of Probitas, our new Lloyds business. So let me tell you why we believe it will accelerate growth for us in global corporate and specialty. We are now better positioned to serve multinational clients. And we're seeing brokers come to Aviva for even more of their needs. We've more than doubled our distribution opportunity as a dual platform player. And we've further deepened underwriting capabilities across our business, with Probitas' track record of a low 80s average combined ratios. And having strong presence either side of the Atlantic is a real advantage. This global market is highly attractive, with £200 billion of premiums, double-digit growth and strong profitability. And though we will remain disciplined on risk appetite, we see GCS as a significant opportunity to deliver more diversified growth for Aviva. Moving next to customer. A big part of Aviva's growth story is within our customer base. So I know you've seen this chart before, but I want to show it again because it truly sums up the power of our franchise. In the UK, we're operating at a similar scale to the leading banks. And we're growing by almost 700,000 customers since 2022. Most importantly, we have 8.7 million customers who have given us marketing permissions. This means we can contact them directly to deepen relationships and build greater levels of trust and loyalty. And we're doing just that. In the UK... We now have 4.9 million individual customers with two or more Aviva policies. And more than 40% of our new sales are to existing individual customers. So that is really encouraging. But we are only just getting started here. And later this year, we'll host a customer in focus session where Cheryl and her team will give you more insight into these opportunities. Realising our ambition comes down to how we live up to our purpose with you today for a better tomorrow. So we are resolutely focused on delivering the right outcomes and improving experience for our customers. So let me give you a few examples. We're providing affordable insurance with our quote me happy essentials range of products. We're helping people offset emissions with Aviva Zero. We've now sold over 800,000 policies since launch two years ago. Value for money is always front of mind. So we conduct regular product assessments, making sure we're providing the right support in the right ways. And we recently rolled out our next generation My Aviva app. With almost 7 million users, it's a crucial engagement tool for us. And we're making it even easier for our customers to access all of Aviva in one place. Earlier, I spoke about how pension savers is a critical priority for the UK. With the number one workplace business and 4.7 million customers, we can have a real impact here. And we're investing to build new solutions. With our find and combine service, we are using AI to help customers trace their lost pensions in minutes. We're already seeing benefits with over £1 billion worth of transfers into workplace this year. We've launched a hybrid proposition, Aviva Simple Wealth, to make advice more accessible. Fewer than one in ten people pay for traditional financial advice, so this is a clear gap in the market. And long-term asset funds, or LTAFs, which open up alternative assets to investors, are another great example. Our two existing LTAFs have AUM of £2 billion. And our real estate-focused fund was one of the first in the market. We are now planning to launch a new venture and growth capital strategy. Powered by Aviva Investors, this will open up new investment opportunities for our pension customers and could help unlock billions of pounds of investment into unlisted growth companies. To conclude, we've often been asked about how we've managed to consistently deliver strong results like today. And the answer is, of course, our fantastic people, our high-performance culture, and the ability to execute. I'm absolutely delighted that we have a colleague engagement score of 90%, which is well above the financial services benchmark and a step change for us. Everyone at Aviva is unified by our strategy and willing to go the extra mile, which puts us in an incredibly strong position to achieve our big ambitions. And we've invested heavily in leadership across all levels, which is paying off So I just want to take a moment to thank everyone at Aviva, not just for their performance, which is market-leading, but also for their belief in what we're trying to achieve here and for their relentless focus on our customers. It's our 23,000 employees who keep us on the right track every single day. So that's the high-level view of our progress in delivery. I'll now hand over to Charlotte, who's going to take you through the results in more detail.

Thanks, Amanda, and good morning, everyone. It's lovely to see you all again today and to be in a position to present such great results. As usual, I'll start with a high-level view of the results before going into the business units in more depth. It's been another strong first half for Aviva. We've continued with the growth momentum that you've come to expect from us right across the group. Operating Profit. was up 14% to £875 million. OFG was up 10% to £758 million, with underlying OFG up an impressive 27%, supporting an improved return on equity of 12.4%. We generated £722 million of operating capital, up 17%. and saw strong growth in cash remittances. Our capital position remains very strong, with a cover ratio of 205%. Turning to our business units, they continue to deliver excellent and consistent trading momentum. We achieved double-digit growth in GI premiums, IWR sales, and wealth net flows. And the undiscounted combined ratio remains a very strong 95.4%. modest improvement on Q1. So let's unpack this in a little bit more detail. I'll start with our general insurance business in the UK and Ireland. Premiums were up 18% to £3.8 billion overall. In personal lines, almost half of the 30% premium growth came from pricing actions. The other half was from new business. Mainly in retail, which is mostly sold through price comparison websites and the Aviva Zero proposition. Retail is now more than half our personal lines premium and in line with our ambition to shift the portfolio mix. Commercial lines also saw double-digit growth in premiums, split fairly evenly between new business and pricing impacts. So overall, the UK and I undiscounted core was 95.8%. half a point better than the same period last year. This reflects the impact of pricing actions earning through, the beneficial operating leverage from the business growth and mix shift impacts, weather was favourable to plan, although a little less so than last year, and prior year development on reserve movements was a small headwind. These impacts to the underwriting result, together with higher investment returns, meant operating profit improved by 25% to £287 million. In Canada, top-line trains were similar to the UK. We delivered 10% growth overall, with personal lines up 14% and commercial up 6%. Strong pricing actions were a feature across both segments, with new business growth in personal auto and and in GCS. In auto, we've rolled out more partnerships with repair centres, and we've planned the launch of our first wholly-owned repair centre in Ontario. Now, as anticipated, the undiscounted core of 94.7 was higher than last year. And you may recall, last year we reported exceptionally strong commercial lines results. This year, there have been a small number of commercial large losses, which offset an improved personal lines performance. As a result, operating profit was lower at £216 million. Now let's move to IWR. I'll start with an overview and then walk you through the components in more detail. Top line growth remained strong and accelerated in the capital light insurance and wealth segments. Operating profit was up 9% driven by strong improvements in wealth and retirement. The contractual service margin, or CSM, grew by 10% over the past 12 months and by 1% since the beginning of the year to £7.3 billion. The prior half year included a significant one-off benefit from management actions that did not repeat this half. This was expected as the assumption reviews that feed into management actions typically occur in the second half of the year. So as a result, operating value added of £515 million and OFG of £412 million were lower than the prior year. However, underlying OFG, which excludes the impact of management actions, was 19% higher, reflecting growth in new business and better BPA margins. So again, let me unpack these headlines in a bit more detail. starting with protection and health. We completed the AIG acquisition in April, so protection sales grew 49%. Excluding the impact of the acquisition, sales were broadly consistent year on year. Operating profit and protection was up 31% to £46 million, reflecting growth in the portfolio. For the health business, in-force premiums were up 10%, due to strong new business and pricing actions. Operating profit of £23 million reflected portfolio growth, offset by cost of investing in the business, claims normalisation and inflation impacts. Now, pricing actions have minimised these effects and will continue to earn through. We're continuing to invest in this business and are really confident in reaching our ambition of £100 million of operating profit by 2026. Now let's move on to wealth. We are the largest player in the UK with £186 billion of AUM and a high performing business. Net flows continues to be very strong, up 16% to £5 billion or 6% of opening AUM. Within that, workplace is the largest component, with 4% growth in net flows to £3.5 billion. Net flows into the advisor platform were up a very strong 45%. Q1 was excellent, and inflows in Q2 were higher still, further demonstrating the strength of our attractive proposition with advisors. Wealth operating profit was up 27% overall to £58 million, driven by growth in workplace and platform. Profit from these businesses plus IPP and advice were up 53% to £77 million. This was partly offset by the investments we're making to build our direct wealth business, such as relaunching the proposition with Aviva Simple Wealth. We have big ambitions for wealth. as we drive towards our goal of 280 million pounds of operating profit by 2027. We are continuing to invest to ensure we capture the significant growth opportunity. So now to the final segment, retirement. Book purchase annuity sales were 2.3 billion pounds in the first half. As of today, volumes have reached 4.1 billion pounds. and we have preferred provider status on a number of deals in the market. So this means we're expecting to write full-year volumes of between £7 and £8 billion, in line with our ambition for £15 to £20 billion over the period from 2022 to 2024. Demand continues to grow for individual annuities as yields remain high, but equity release market has seen further contraction. Aviva Investors continues to source high quality assets for the business, originating 1.4 billion this year. And the margin for retirement as a whole was very strong at 3.4%. For the reasons I covered earlier on slide 19, operating value added and OFG were lower than last year. However, Operating profit was up 21% to £347 million, reflecting better investment returns and the growing portfolio. Now, before I go on to talk about the group topics, I'll cover efficiency. As you know, we achieved our £750 million cost reduction target last year. Our ongoing focus is on cost efficiency and operational leverage as we grow. and we have made further good progress here. As I mentioned earlier, group operating profit has grown by 14%, and against strong top-line growth, controllable costs increased by just six. So we are delivering growth whilst opening up the operating jaws. In UK GI, our distribution ratio improved by just over two points, driven by growth in retail. while in Canada, where we're already very efficient compared to peers, the ratio remains broadly consistent. In IWR, the aggregate measure is the cost-asset ratio, and here we continue to see improvement, with the ratio half a point lower, linked to growth in assets under management. And finally, in Aviva Investors, revenue growth together with the resizing of the cost base over the past couple of years increased. supported an improvement in the cost income ratio. There is, of course, still more to go after across the group. The efficiency improvements from business growth, mix shift and ongoing cost initiatives. Going forward, you'll hear us talk more about cost and operating efficiency. It's such an important underpin in driving value for our customers and in growing our profits. Onto OFG, which grew by 10% at a headline level. Importantly, the prior year included £81 million of management actions, and so on an underlying basis, which excludes that impact, OFG grew strongly, by 27% to £768 million. And it was UKGI and IWR that drove the improvement. Overall, the growth in OFG drew of an improved group return on equity of 12.4% for the first half. Turning next to our balance sheet, it remains extremely healthy. Our cover ratio of 205% is strong. We remain well placed to withstand changing economic conditions. And since the year end, the capital used for the final dividend, share buyback and the tier two debt redemption was mostly offset by operating capital generation and positive non-operating items, such as market movements and the effects of Solvency UK reforms. Our defensively positioned asset portfolio continues to perform well. And following the Tier 2 redemption in July, our leverage ratio of 29% is in line with our preference to operate below 30%. Before I finish, I'd like to cover our framework for deploying resources and performance management across the group. And I'm sure you'll remember this slide from the full year presentation. This version shows it working in action, linking what we do in each component of the framework to the numbers I've just talked through. One area I haven't covered is our focus on growing the regular dividend. And the interim dividend we've announced today is 7% up, to 11.9 pence, with cash cost growth of 5% in line with our guidance. Overall, the examples on this slide are clear evidence of the strength of our performance, culture, and grip, and show that our framework for capital allocation supports the delivery of great results from our diversified business model. So on to some final thoughts on Outlook. We're really positive about Aviva's future. We remain absolutely confident in meeting the medium-term group targets that we set out earlier this year. Looking to the second half of this year, we will remain focused on pricing appropriately across our general insurance businesses, and we expect the underlying combined ratio will continue to benefit from the pricing actions taken last year and so far this year. In our wealth and health businesses, we anticipate continued growth in the second half, while growth in protection is expected to moderate. And in retirement, we expect to complete our three-year ambition to write between 15 and 20 billion pounds of BPA volumes by writing between 7 and 8 billion this year. On dividends, our guidance for mid-single-digit growth in the cash cost remains unchanged. and we anticipate further regular and sustainable returns of capital. So in summary, Aviva has had another great first half. We remain confident in the business, and our track record of consistent delivery continues. And with that, it's back to you, Amanda.

Thank you very much. Thank you, Charlotte. So before we turn to Q&A, let's take a moment to bring all of that together and remind you why we believe Aviva is a great investment. Firstly, we're the UK's leading diversified insurer with a complementary portfolio, growing our capital light businesses, and we have fantastic businesses in Canada and Ireland. Nobody in this market can replicate this successful model. Second, we have a consistent strategy, which is working with investment identified for the future. Third, we have strong organic growth in all our markets and we've accelerated through targeted M&A. This is evidence in the numbers we're producing and we are confident that we can sustain that performance. Fourth, we now have a track record of delivery built over the last four years. And finally, we're delivering superior returns for shareholders with growing dividends and regular capital returns. So, in summary, we've had an excellent first half. but there is still much more where that came from. We have a unique platform, we have excellent people, and we have clear focus areas for the next wave of growth. Thank you very much for listening, and we'll now move on to Q&A.

Okay, so as usual, please do wait for a microphone to come to you before speaking, and please state your name and institution for the benefit of those online and for the recording. So let's start with Andy.

Thank you very much. Andy Sinclair from Bank of America. Three for me, please, as usual. First, just a big drop in project spend in H1. Great to see. Is that a sustainable level going forward? Nice to see IFRS 17 costs dropping away, but there's often something that's ongoing. So is that a sustainable level from here? Second was just on the reserve additions in the UK. Is that just a case of you've got really good results, so fixing the roof while the sun's shining or anything to be aware of there? And third was just on global corporate and specialty. It's a huge market, and Probitas, Senseblocks acquisition, but you're still small in the scale of that global market.

corporate and specialty market what is your longer term ambition for aviva in that market do you see aviva long term as being a truly global player across large and small or do you just want to stay focused on certain areas within that market okay thank you do you want to pick up the first two charlotte yeah so look on project spend i mean you can see um the the group center costs are down by 13 percent and it is very much um as you call out you know the the the Long-term project that we've had running on AFRA 17 is coming to an end. We retired the 750 million efficiency program at the end of last year, so all the costs of achieving that have dropped away, and the strategic initiatives too. So I would take that as a decent run rate of looking at that as we go forward. I think it is important to remember that we're still attacking costs. We still have growth initiatives, but they're really very much embedded within the businesses. The only thing I'd probably call out is for the partnership extension. Particularly, we have a restructuring and integration number coming through there. So you'll see that, but it's within the segment so that it won't show in corporate center unless it's something specific to something central. So that's how I would say on there. In terms of of the UK prior development, I mean, it's a couple of points of adverse movement. It is, of course, reserve strengthening, but it's very specific. So there's some specific large losses where we've needed to make some reserve adjustments. Things like the COVID business interruption. We've seen some legal conclusions. So we've we've adjusted those reserves a little bit. There's a little bit of inflation coming through. And we saw some development on prior year subsidence claims. So that's kind of what's driving it. And, you know, look, we always reserve to best estimates. So the neutral, you know, have a neutral outlook on that. So they're very specific, I would say.

On Probitas and entry into Lloyds. So, I mean, we're very excited about it, obviously. We believe it's a top performing Lloyd syndicate and it's got it's not only got a track record of profitability, but also of growth. So we do believe that it represents a significant opportunity, as we demonstrated earlier. We'll have access to international licenses, broader distribution networks. And then you combine that with our existing capabilities. And, you know, we think that that enhances the proposition for the global corporate and commercial customers. I mean, it's literally, you know, hot off the press, I guess, we completed about a month ago. If we think about the longer-term ambition, so for 2024, the growth's going to focus on, the Lloyd's growth, that is, on the classes of business which are already written by Probitas, so that, you know, that's as it is. As we move forward, we look at broadening the product suite, and we'll expand that to the wider Aviva product suite, so marine, accent and health, renewables, etc. So, We think the combination factor of the expertise in Canada and the UK and Probitas will even further enhance the opportunity there. And of course, the relationships that we've got with the big brokers will also make a really big difference. You know, we're not going to set a new target for ourselves today in terms of longer term ambition. But, you know, we wouldn't have committed to slide to it. We wouldn't have done the deal if we didn't think that we felt that this was a sort of big opportunity for us going forward.

Thank you. Who's next? Ria, should we come to you next? Just down, just down here.

Thanks. Three questions for me, please. So first on the bulks piece, could you just talk a bit more about the bulk quotation tool that you've now got running? How much is that contributing to the box that you're writing? What's the outlook for that? Second, on the direct wealth proposition and building, I think the last time you spoke at four-year results, you were talking about building the proposition in-house. So What's the progress there? What are your ambitions in the direct space over the next few years? And then thirdly, in terms of the UK retail and personal lines piece, could you give a bit more colour on home insurance pricing and also what you've seen in terms of the motor pricing for you and your outlook for the rest of the year as well? OK, shall I do the first one? I'll do the second two.

Yeah. So the tool Aviva Clarity is specifically designed for smaller schemes coming to market. It gives them access to the Aviva brand and balance sheet and capability. It means that they get from approaching us to quotation really quickly, and it's connected then to the – reinsurance program that we, we have. So it, it provides a very quick process, a very, uh, you know, easy to get the quote and therefore to execute. So we have, I think we've done just short of, um, 40 deals, um, through that platform through the course of, of this year. And, you know, smaller deals tend to have, um, uh, you know, slightly higher margins. And so that's why you've seen the, the, the margin on the business tick up, um, I would still guide you back to 3% for the full year. But, you know, it has and is an important contributor. The outlook that I've talked about is, you know, some more sizable deals. So we do trade in all ends of the market. But, you know, in the specific Viva Clarity point, that's your answer.

On direct wealth... Yeah, we spoke last time about our confidence in the future for that. I mean, we are very excited about the direct wealth opportunity. And we think that with the Aviva brand being as strong as it is, that we are able to make the most of that opportunity. And so hence you're seeing the investment that we've put in here. Our huge customer base, obviously the workplace base of 4.7 million customers, but also our wider customer base is all going to be incredibly helpful here. And we saw the new app launch in the first half. We're already seeing two and a half times increase in downloads of the app if we look at quarter one to quarter two. We've launched Find and Combine. I spoke about it in the presentation, which is the tracing service. We've had 27,500 requests on that tracing service. So we see a really good opportunity there. And we see this as being part of the connected wealth proposition, which Doug and Michelle spoke to you about when we did the presentation. It must have been back last year now. It seems like not that long ago. And what we've recently launched on the 26th of July, 25th of July, is the simple wealth proposition, which is a digital advice proposition on the direct wealth app. So it's got, you know, some human coaching and support available as well. So it is a digital fact find and a risk profiler. And if somebody wants to proceed, they can pay a one off fee, access an optional call with an Aviva money coach, open an ISA and a few taps and it's done. And I mean, you know, this is just step one. And we've done that in-house. We've built it ourselves. You know, we've used the expertise that we have. We know that only one in 10 people in the UK are paying for advice, significant advice gap. So we see the opportunity going on from there. So a lot more to come, I would say, on that. And the team are very excited. But all of this investment, everything is in that 280 million pound profit trajectory you see for the wealth business. So we're in a fortunate position of having the workplace business and the platform business supporting our ability to invest in direct wealth. Oh, sorry. I should answer the other question. I was getting very excited there. On motor, I think you asked specifically about home and then also a little bit about motor. So home, obviously, you will have seen the ABI stats, I guess, earlier this week. And effectively, what you're seeing there is weather events and obviously the cost of supply going up. So we're definitely seeing that new business rates on home. are still going up and, you know, about 14% for us this year in home. The renewal rate is about 22%. So that suggests that, you know, there's still more to come there. In motor, obviously coming off the back of very high rating increases last year, you're seeing that the new business rate is down sort of low single digits. and the renewal rate is up by about 30-something percent. So, you know, slightly different dynamic going on in motor and home, but really good rating adequacy in the book. So I think, you know, we're building off a position of strength there.

Okay. We'll come to Andrew next.

Morning. It's Andrew Crean at Autonomous. Three questions, if I can. Firstly, could you just say in a normal year with all this growth, how much should we expect the SCR to grow? I know it's not really growing at the moment. Secondly, could you unpick for us the wealth target of 280 million between the different workplace and the IFA and the pension business and how you get from where you are now? I mean, is it a straight pull up to 280 or will it be J-curved towards the end? And then thirdly, if we can go on to slide eight, where I think you said that the difference between capital light and capital heavy will move from 45.55 to 30.70. That implies that the capital heavy businesses will actually drop profit from about 0.66 to 0.6 billion, while the capital light go from 0.8 to 1.4. I'm slightly surprised to see the capital heavy businesses dropping, notwithstanding heritage. I mean, you've got annuities which is growing. And then on the capital light side, how much of that growth is actually coming from the M&A that you've currently executed or plan to execute?

Okay. Charlotte, do you want to do the first one? Yeah, so... I don't know if I have a normal view of how SCR develops. It's a function of what's going on in the business. So if I look at the underlying OCG development versus, say, the underlying OFG, you can sort of see that obviously the OFG is dropping down into OCG, but there's some other drivers there. So if I think specifically around... if I think specifically around IWR, you've there seen that we've got a favorable SCR effect of a favorable runoff because we saw the rate movement. So the SCR was larger from an opening perspective than it was in the prior year. So it's running off positively. I think that's probably about a sort of 50 million effect in the SCR this year. But then when I look at the general insurance business, although, you know, bigger volumes and bigger business would sort of intuitively think you'd get higher SDR, actually then the big business mix shift and the profitability kind of goes the other way. And then if I go back to IWR and think of the retirement business and the asset mix, and when I look at the volume and the capital strain, whilst I would say the strain is within the normal range, it's to the lower end, and part of that is particularly in the more liquid side, actually the corporate spreads as they are, we've ended up with more guilt than corporate bonds. And so that's reduced the strength for the volume that we're doing. So you've got a number of different things going along. Then over time, you've got a slight benefit sometimes from the diversification as the business shifts. So the diversification benefits that we see come through both intra and at the group level. So there's a lot of stuff going on. So I don't know that I have a normal view. Clearly, we set the budgets from an OFG and an OCG The retirement business has a capital strain budget. We're all kind of working within that. But in any particular year, you've got a number of different dynamics happening.

So on the wealth targets, you said to pick them, Andrew. So obviously, we're not going to give you pound by pound. But I think I would just go back to the presentation that Doug and Michelle did back last year. So we would expect to get to that 280 million target. predominantly through growth in operating profit from the workplace business and the advisor platform. And you've seen that that is a trajectory which is starting today. We don't think that that's a J curve, really. We see that that has been steady growth in those two businesses. Now, clearly, at the same time, we are investing in the direct wealth proposition. So we don't see that direct wealth will make a significant contribution to the profit over that plan period. But we do believe that, and it is all factored into, the investment is factored into us getting to that $280 million. So effectively, you can see that the growth is going to come from that. The investment will go into direct wealth. And then the growth from direct wealth really kicks on from that sort of 2027, which was which was the date that Doug talked about back last year. In terms of and this is sort of connected, I guess, to your next question around the capital light pivot. So there was quite a lot of stuff in your in your question there. So I'll just try and sort of break it down a little bit. So we expect the business to grow the operating profit 70% capital light by 2026. So that's the sort of ambition that we're setting there. So clearly what you saw today is that we're growing most quickly in the capital light areas. So that's obviously one of the key drivers of that. And you're right, we do expect the contribution from heritage to reduce over time. So that's also going to be a factor. So over the longer term, we'd expect the strongest area of growth in those capital light areas. And we would expect that to keep continuing beyond 2026 for all of those trends that I spoke about earlier. The capital light businesses will drive better returns over time. And obviously, the structural trends will help that. So we're not only growing in areas with better returns, but we're also growing in areas where we've got competitive advantages. So we believe there's an opportunity to outperform the market there. So that acceleration in capital life will positively grow higher return on capital over time, won't have a significant material impact on the solvency position in the near term. And as we transition to capital life, the growth in earnings, capital generation, will outpace the growth in the capital requirements, therefore increasing the return on capital. You also got a benefit from diversification coming through there. And I think you had a question around the retirement business. So I don't think we expect that to – we still expect to be writing bulk purchase annuities, individual annuities. It's just that one is growing more than the other. Charlotte, have I missed anything? The M&A point.

So when we set the targets the full year, we obviously had announced Probitas and we knew about AIG as well. So those are factored in, but nothing beyond that. So it's the M&A that's kind of within the circle when we set the targets, so therefore part of how we get there. Obviously, if we do anything more, then we'll be outside of that.

Okay. Larissa?

Thank you. Three from me as well, please. First on bulks, the second one on retail annuities, and then the third one on solvency and the use of the excess. On bulk annuities, how do you – I suppose it's a two-part question, but in follow-up of Andrew's question – If you plan to write $7 billion to $8 billion this year, how do you pivot to $70 billion or is that a delayed target? And related to the $7 billion to $8 billion, how do you see the margins evolving over time? The second one on your outlook for retail annuities, we saw very strong market growth and individual growth from one of the other insurers yesterday. You had double-digit growth as well. How long do you see that market continuing in light of decreasing rates? And the last one, you previously mentioned that above 180% solvency, you would consider returning capital to investors. How should we think about that within the context of decreasing rates and also your bulk annuity ambitions? Okay.

Do you want to pick up the bulks? I'll do the bulks and retail annuities. So look, on bulks, Seven to eight billion brings us very much in line with the 15 to 20 that we said that we were going to do over this three-year period. So it's completely in line with the plans. And the businesses really don't work to volume targets. The business works to capital strain. So it is always that that is the scarce resource that they have to solve for. And they do a very good job of that. I think in terms of the margin outlook, what I would say is, you know, going back to Ria's question earlier on Aviva Clarity, what we've seen is quite a lot of higher margin business through particularly the second part of the first half. So, you know, you saw the margin in Q1 was about 2.9. It's about 3.5. for the half year. So you saw that set up. What I said at Q1 was that the margin for the full year would be more back to sort of the three. And as I look at that pipeline that's both, you know, the transactions that drive the 4.1 that we've done by now on the pipeline through to the seven or eight, you know, I would, you know, reconfirm that the guidance on margin is back down towards that 3%. Sorry? Yeah, I mean, going forward is crystal ball gazing, but I suppose what we have seen is that the benefits of the risk margin that came in at the back end of last year and helped elevate the 23 margins have largely been competed away. So I think that's a reasonably good sort of guide for going forward. Then I think You asked about individual annuities. You know, look, the volumes are strong, up 10%, reflecting that sustained customer demand. And the volumes we saw in Q2 were higher than in Q1. We would say that we're still positive about the opportunities in retail annuities as it goes forward. We're pleased and positive about sustained demand. I mean, I think... Trading conditions have been quite competitive. And one of the many advantages of our diversified business model is we've got different opportunities to allocate capital. So we've been disciplined on pricing in face of that competition and looked at all the other opportunities we have for the use of capital.

And on the question, I think, around capital allocation and solvency. So, you know, I think we don't think about this any differently to how we've always thought about it. in that we have an amount of capital to allocate and we've got prioritization around what we do with that capital. So as we sit here today. You know, we've invested capital into the organic growth within the business, and you've seen that demonstrating coming through in the results, you know, the growth across the business, whether it's, you know, we've built new products as Aviva Zero, 800,000 new customers, or we've launched a new app, or we've launched direct wealth, or the bulks business. We've invested in the business, and that is showing good returns. The second area is M&A, and I think we've done targeted M&A, and you've seen us use the capital well for that. the succession wealth acquisition, the Probitas acquisition, the AIG. So either to fill a strategic gap or to give a synergy in capital benefits. And I think, you know, so I think we've been careful about how we've allocated capital. But we've always said, you know, that we're not going to hold on to capital that we don't need. And we've returned over £9 billion of capital to shareholders over the last three years with the dividends and the buyback and the consolidation. Those are big numbers. And also we're increasing the dividend seven percent. So I think the I think we I'm very biased in this, but I think we are delivering for the shareholders. We're using capital well to grow the business profitably. We're returning capital, as we said we would. But we want to also give ourselves some optionality. And, you know, and you would expect us to do that. And I think we've sort of earned that. We've got four years of consistent delivery and we want that optionality to be able to take our ambition for the business forward. There's lots of opportunities.

Should we go to Farouk? Have you still got the mic?

Hi there. Farouk Hani from JP Morgan. Three questions as well, please. So firstly, can you explain what you think is left for the U.K. government to do in terms of legislation or active actions to encourage, you know, long-term growth and saving and productive assets? So, for example, around D.C. contributions, around legislation on private assets in D.C. and where that's going. Second question, you know, in IWR, I think some of the areas where the numbers were slightly higher than what I expected were investment return related. So in annuities, for example. Would you also characterize that subject to yields as being sustainable? So not really any funnies in there. And the third point on debt leverage. So will debt leverage naturally decline on an organic basis? What are your intentions around where to keep that now that you're under 30? Are you happy to let it decline or would you be willing to? raise debt to keep it at the current level. If you could just explain the sort of outlook for that, that would be helpful. Thank you.

Okay, I'll pick up the first one and Charlotte can pick up the funnies and the debt. So on what we think there's left for the UK government to do, I mean, obviously they're a new government, so I guess there's a lot for them to do. Let's break it down into the different areas. So obviously pensions is a well-talked-about topic in many respects. And so we would be strongly advocating on things like workplace auto auto enrolment that the government continue to focus on that. I mean, there have been 10 million people that have benefited from auto enrolment additionally over the last since it's been launched. But we still think there's a need to look at the age at which somebody participates in auto enrolment and bring that down from 20 to 30. to 18. We also think that the contribution rate needs to increase from 8% to 12% to make sure that people are having enough money to retire. 12.5 million people in the UK will not be able to retire well on the basis of current investments because obviously you've got a lot of new savers. that will not have any benefit of DB. So we think that there's a really good opportunity there. And clearly, as a big player in the workplace pension market, 4.7 million existing members of pension schemes, we will benefit from that. But we believe that that's really important for savers, too. So there's a sort of win-win in that. So I think there's a need to look at that. There's also a need to look at advice. And, you know, if we look at whether it's targeted support or simplified advice, we would urge the government to keep focused on that because we do think that individuals do need advice. Less than 10 percent of people take in advice. And you need advice earlier on. You know, they take it, I think, the average age is 59 or late 50s when somebody takes advice. What you need is to take that advice much earlier to know that you've got enough money to retire well. So we think there's quite a lot of work that needs to be done in that space. Again, Aviva, very well positioned there, whether it's with succession wealth, the sort of full fat advice, the hybrid advice or the restricted advice proposition, and now the simple wealth advice proposition. The other areas then are around investment. And this is, of course, two sides of the same coin. Effectively, if you get more people saving into pensions and you get more people saving into growth. infrastructure, real estate, venture capital. You're going to get more growth in the UK economy. You're going to get better returns for the pension holders, so they can retire better. We're a big investor in the UK. We've invested £9.5 billion in infrastructure since 2020. We've got a real estate LTAF. As I mentioned earlier, we've got the climate transition LTAF, and we're just about to launch the VC and growth LTAF. LHFs are not new for us. So we're really excited about the opportunity there. Take the $120 billion of our workplace pension business of AUM and you can allocate, there's already $2 billion allocated to real estate. If you allocate that to growth in VC or unlisted equities, effectively you've then got opportunities for Viva investors as well. So, you know, It sort of all fits nicely together. And these are all things that the government is actively talking about. You know, I'm on the National Wealth Fund working group with the chancellor. We've been actively involved in the pension dialogue. We were at the roundtable a couple of weeks ago talking about that. And we've written papers on how we believe this should happen. So I think we're in really good shape on that. So we are very positive about the opportunities here.

So looking for funnies, probably going to disappoint you, really. I mean, ultimately, the job that we have is to actively manage the assets with the liabilities that we have and to look for the best opportunities. But it's matching duration, it's matching all of those things. And so, you know, there could be some opportunity for re-risking. You know, I talked about a higher level of gilts at the moment, but that's all going to depend on whether spreads widen and ultimately we're quite well matched on interest rate movements. We do actively manage the black book. We look for opportunities there and we will switch to take advantage of those things but it's all about the long term and value and then again the link back to sourcing the right assets, high quality assets through the Unleaver investors as well. So, you know, there's no funnies in there. Part of our job is to do that. And if you take heritage in particular, there's kind of only two jobs. It is managing the assets under management and managing the investment return. And we're showing good, you know, again, capabilities to do that. In terms of debt leverage, so, you know, we are at just under 29%. in July once we've redeemed that tier two 700 million euro position. And from here, as we said, the main deleveraging has happened and we're into sort of actively managing the debt stack as we roll through it. So, you know, for this redemption, we had issued 500 million pounds back in November. So getting ahead of that. So that's kind of how we'll look at things as it rolls forward. Ultimately, the leverage ratio appetite is very much about maintaining that AA rating. And so just being around and under that 30%, but if we need to tick up it or it goes down, it's around there because that is what really drives the rating agency view So, yeah, as I say, it could tick up again as we get ahead of refinancing and then it will drop back again. But we're comfortable with it just being just under 30.

Come down here to James.

Hey, morning, everyone. James Pierce from Jefferies. So first question, just wondering what impact you think the new UK government might have on the UK motor insurance market? Labour in its manifesto said they'd crack down on rising UK motor insurance costs. So just interested to get your thoughts on how they might go about that. Second one's on just a kind of clarification point on the PYD in the UK. Would you characterise that strengthening as a one off in H1? And I guess what should we expect in H2? Is PYD included in the underlying combined ratio that you said will improve? And then just directionally, what's your interest rate assumptions going forward? in your 2026 targets, and how should we think about interest rate sensitivity in terms of the split between capital light and capital heavy?

Okay, thank you. So on the motor insurance and the Labour government, so... We just talked about how positive we were about the UK. And we do understand the motor is a sensitive issue. So I think, you know, if you put yourself in the shoes of a customer and somebody that needs their car to be able to drive to work, I mean, clearly you've got to be able to afford to insure that car to be able to do that. So we totally get it and set against the cost of living challenges. But I think people have got like quite short memories. And what we need to remember is that motor rates decreased during COVID because frequency reduced. And this market is super, super dynamic, right? It's ultra competitive. And what I don't see is massive profiteering in this market on motor insurance. So, you know, let's cast the memory back to frequency reductions. That was given back in terms of premium. So we set off from a lower base. Then what you need to factor in is clearly supply chain issues, war in Ukraine, increased labor costs, theft increases. And what you see is a market combined operating ratio, I think, in the most recent E&Y stats of 112 percent. So I don't think that that feels like a market that is profiteering. So what you have to do, I think, is. carefully explain the situation around the market, maybe go back to what rates were in 2017, adjust for inflation, bring forward and then have a look really at what the real rate increase actually is. And I think you'd see it's pretty minimal. So, you know, I think that would be that would be our position. We do not believe there's need for intervention. Clearly, we think the market is functioning perfectly well. There are plenty of competitors. It's dynamic. You know, what we what we think is important is that we can offer products to our customers that where they can take out covers. Like, for example, if they don't want windscreen cover, they can take that cover out and reduce the price of that. We've done that. without, quote me, happy essentials brands. So I think the onus is on the insurance companies to basically be able to offer propositions that customers can afford.

Charlotte? So PYD in the UK, I mean, the things that I went through, so the specific adjustments to some larger losses from the past, the COVID BI, inflation, you know, they're all specific to what, when we did the valuation analysis, in the first half of things that we saw. And we do that with a best estimate view in mind so that you have a neutral outlook. So I don't have, I have therefore a neutral outlook as to how that could emerge in the second half. And yeah, I don't know that there's any more to say on that. In terms of is PYD in underlying? No. So weather and PYD are outside. Ultimately, underlying is to do with pricing, efficiency, the mix shift. You know, those type of things are what drive my underlying. And then, you know, I look at my underlying claims ratio and how that is moving. But that's very much kind of general volume rather than anything coming in lumpy form. And then in terms of interest rates, I mean, we set the plans that underpin, you know, getting to the $2 billion profit target and all of that based on a, you know, full structure of yield curve at the beginning of the year. So in the plans to get to $2 billion, for instance, for all the growth things that we've talked about, I would expect my LTIR to drop back as rates are expected to come down in the longer term. So I And factoring that into the way we build the profitability outlook that underpins those targets. When it comes to the balance sheet management, you know, effectively we're well matched. We look, you can see the interest rate sensitivities in the deck. And most of the interest rate risk does come from the more capital intense parts of the business. But that's where we are well matched and, you know, do specific hedging of that exposure. And that's really aimed at making sure that we've got good sort of boundaries around how the solvency ratio moves.

Should we come over to Dom over on this side?

Thanks. Dom O'Mahony, BNP Paribas. I've only got one question, but luckily I've got three subparts. The one question is really just I'm picking the the spectacular growth in capital generation. I mean, 27% increase is not something you see every day. If I think about the components of that, one thing that strikes me is the general insurance increase is nearly 20%. The Europe profit grew about 7% across UK and Canada GI. Can you just help us understand why the capital generation there was so much stronger in because I might have thought the accounting is now quite symmetrical. The other component is, of course, IWR, a new business, which is much stronger. My guess is that given the volume of BPA coming in in the second half and your comments about margin, you wouldn't necessarily expect the same type of print in H2. Is that right, or have I got that wrong? There is a third part, but it's a quick one. Charlotte, just a generalist, this one. So six months ago, you really emphasized that I think don't get ahead of 200 million for management actions for the full year. I know it's an H2 review point. I'm wondering whether you have any any further comments or insight into how that's looking. Thank you.

Well, so let's unpack the capital generation. So. as you say, IWR is a big contributor of it. So it's 120 million. And of that, you know, it's the OFG, which was about 67. Then it is that SCR favourable runoff, which has given us, you know, effectively an additional 50. It is then, you know, also related to the capital strain coming through as well, being lower for the margin that we're writing. In the GI business, it's coming largely from the UK. And there, I think what we're seeing is that for the growth in the portfolio, which you would therefore expect a bigger capital strain to come from, because of the mix shift and the overall profitability of it, it's kind of working in the opposite direction. And then you're getting some additional diversification benefits coming from the different components in the way the SCR is calculated. I mean, I then got... is largely OFG and in fact if anything at the corporate centre level I'm seeing some negative diversification effects and then I look at the international businesses and actually they've generated decent capital this period because they are quite capital intense but they do drive big margins so it's coming from across the piece really and I don't I think it has been a particularly good period because of all of those things coming together, and I wouldn't necessarily expect any of those to repeat. And what was the other thing? Management actions. So I would guide you to the 200 again. I mean, last year we were definitely – we saw, you know, the longevity effects were quite considerable, and then we had the effects of announcing the partnership extensions – which came through as well. So I would encourage you to keep with the 200 guidance.

Can we come to William?

Thank you. I'm William Hawkins from KBW. Genuinely, just the one question. There's quite a convergence in the combined ratios between Canada and the UK going on. Three points better back in 2022. Now we're down to one point. I appreciate there's a lot of moving parts in that. But can you just remind me what structurally should be the difference between the Canadian and the UK combined ratios, if anything, and how wide should that gap be? Thank you.

So, look, I think when I look at what's driven the core movements this half, it has been, you know, that really good strength in. personal lines in the UK and good progression in commercial. And what we saw last year in Canada was, you know, a really strong commercial lines business performance, sort of untypical level of large losses coming through in the first half last year. This year they've been, you know, more stable and, Or more normal. But so, I mean, I think over time, you know, we go back to, you know, are we trending medium term towards the sub 94? And, you know, what we've had in Canada is quite a big component of it being sub 94. And, you know, we don't expect it. You know, we've seen it tick up this time, whereas in the U.K., The pricing actions, the efficiencies are driving it down. But, you know, there's still work to be done on price adequacy in home in the U.K. There's still work to be – more work to be done, I think, in price adequacy and personal lines in Canada. So, you know, I think overall we're trying to get medium term to this, you know, so far elusive sub-94 for the whole portfolio. And I would expect that's more about the U.K. continuing to improve. then it is, you know, and therefore closing further the gap between the two.

Okay. We come to Nasib, just in the aisle.

Thank you. Nasib Ahmed from UBS. So first question on the Solvency UK four points benefit that you've got in 1H. I think in the text you're saying there's a review in the second half and the PR is going to look at it in the first quarter. Is there a risk that that reverses out? And second subpart to that question, is there more to do there? And third subpart, sorry, is that an on-funds loss and an SCR gain? The way I read the text, it seems like that is the case, that there's an on-funds loss and an SCR gain that's driving the four points. Second question on AIG stroke protection. You grew 49%, but given that you're a number one player, you've just done an acquisition. Do you expect to lose some market share? And related to that, how much? What distribution overlap did you have with AIG in the first place? And then finally, on Ogden rates, what kind of sensitivity do you have to the balance sheet and profitability for the rate going up? And what do you expect the market – well, how do you expect the market to react if the rate goes up? Thanks.

Okay. Interesting. Ogden. Ogden. What did you say?

Ogden, yeah.

You said Ogden, yeah. Okay, so – If you want to do one and three, I'll do AIG.

Yeah, so the consultancy reform – I don't know if you remember, but we took about a six-point benefit at the full year end last year, and that was all around the risk margin change. So that was six points. The four points now is now that the regulator has landed all of the changes to the matching adjustment. And, you know, it was really those two were the big kind of two big buckets of, And we've been highly engaged with the regulator through the development and ultimately the rules coming through. So the four points comes from three main areas. So they've removed the cap on sub-investment grade assets. So that's given a little bit of benefit. They've removed, we've got a notching now on the way the fundamental spread. So it's not full credit rating, you can look at the notches. So those are kind of two benefits. But then there was another piece almost working in the opposite direction, which is where you have to make an adjustment to your fundamental spread, where you've got assets that you think have risks that perhaps aren't obvious or fully reflected in the credit rating agency. And that's a kind of That's a bit of a one-way. You can do that on the negative. You have to do that on the negative. You can't do that on the positive. So we've wrapped all of those through together in that four points. So that gives us an overall benefit of the 10. We're largely done. You know, the formal attestation doesn't happen until Q1 25. So, you know, frankly, as we draw up the year end balance sheet and get ready for that attestation. And obviously the balance sheet will have moved by then. You know, we could see some change, but we feel like we're in a good place and hence wanted to get this all behind us. The things that are still to be done, you know, changes to internal model governance, some changes, simplification on the transitional arrangements and Again, none of those expected to be anything material. So we do feel comfortable in what we've done. And of course the big benefit to go after is that we will now be able to invest in assets that have highly predictable cash flows and get the matching adjustment treatment on those. So our focus has really been let's get this done, let's move forward and then focus on that but as I say obviously that attestation when we draw the full year balance sheet is still out there to be done but don't expect any movement and it's mostly in the capital requirements so it's in the SCR that it's coming through with a tiny or a small loan funds hit from the add-on on the fundamental spread

Would you want to do AIG protection? Yeah, okay. So on the AIG deal, so what it gives us is 1.3 million individual customers, individual protection customers, and 1.4 million group protection customers. So the combined business is obviously a very, very strong business, and there is quite a lot of good opportunity. So the AIG business had a really good – SME and high net worth proposition. And, you know, so what we've done in the last couple of weeks is announced what our product set is going to be. I think that was this week, Doug, or last week. I mean, clearly, we would not expect for the new business levels to be the same for both organizations, add them together and that to be the number that that's clearly not going to happen. But because the distribution is There are some partnerships within the AIG business which are great. So, yes, we would expect there to be some normalising out of that new business. But, you know, this deal was as much about getting these additional product sets, but also the synergy on both cost and capital. So a combination of all of those things. So, yeah, we're very happy about how it's progressing so far.

And then on Ogden, I mean, there's really no new news. You know, we're monitoring the development. We're kind of in a good place with our current assumptions. You know, frankly, the range of where it could land is uncertain. So I wouldn't want to speculate. But we expect conclusion to come out early January 25. So that's, yeah. That's where we are on October. Okay. No. No. Good answer. Okay.

Right, let's come down to Abid, and then we'll finish with Mandeep and Stephen before we close out.

Thank you. It's Abid Hussain from Panama Libre. I think I've still got three questions, actually. One is on the earnings mix long term. Do you anticipate if even investors to still be part of the mix in three to five years' time? Second question is on BPA volumes. You're set to hit the three-year target. Is it worth resetting the target beyond 2024 in terms of? volumes. And then also, can you just give us any colour on funded RE? Is that an important play for you? And the third question is on equity release. What's the outlook in 2H and beyond, given the reduction in base rates?

Okay. So, So the three to five year question on Aviva Investors is, of course, it's going to be part of the business. I mean, I think we talked earlier about the huge role that the Aviva Investors team and the IWR team play together. I remind you, 1.5 billion of asset origination, which has been originated by Mark's team, which contributes to the margin that you're seeing on Doug's BPA business, where the profit comes out. That's like for us to manage. You know, effectively, what we want is for the two businesses to be working together really, really well. 70% of the wealth flows are going into Aviva Investor products. And the long-term asset fund, the Venture and Growth Fund, plays completely into the pensions changes and the UK investment opportunity. And Mark's team... What's their expertise? Real assets, multi-assets. So I think that that plays, you know, that all fits together really well. On BPA volumes, we're not going to set a new target today. Thank you. It was nice of you to ask, though. You know, we said 15 to 20 billion. We will achieve that. You know, I think Charlotte talked about the way that we're now looking at this is around the capital strain and setting the capital. I think that's probably a better way of looking at it. And no, we're not going to say that today either. But, you know, Doug and the team will manage that. On funded RE, our exposure is relatively low. I think it's about 5% of the... Let me pick that one up.

So the funded RE is relatively modest. It's about, you know, 5% of the MAP assets. And it's always transacted with highly rated reinsurance counterparties. We've done minimal funded REIT this year, but it is part of our toolkit. So, you know, as you, I think, are alluding to, the regulators had quite a lot to say on funded REIT. And, you know, we, as on all topics, we engage extensively with them. They set out their expectations in the recent policy statement accompanied by a, you know, dear CEO letter. And, you know, you need to now do a gap analysis of what they're setting out in there to your program. Ultimately, you know, we've been looking at that when it was in the disclosure draft form and we're well advanced on our sort of formal plans. gap analysis, but we really don't see challenges with compliance and we don't see it affecting the way we do our program. But as I say, it's a relatively minor component, but it's still an important part of the toolkit. On equity release, look, I mean, you know, the higher rate environment makes it generally, you know, less an in-demand product. We would hope to grow volumes and market share in the second half of the year. You know, we've made some changes to the way we look at the LTVs and taken some pricing actions. But it really is, you know, so we want to be competitive, but it really is dependent on the prevailing economics.

Okay. Hand back to Mandip.

Good morning. Mandip Jagpal, RBC Capital Markets. Two questions from me, please. Mostly just follow-ons. First one is on the 70% of flows that went into Aviva Investors. What is the average fee margin on these flows? And then related to that, you've mentioned a couple of times that you have a number of LTAFs. Are these currently included in your workplace default strategy? Some of the workplace offerings now include access to private assets as a default. And the second one, a follow-up on CSM. A large benefit from the substance changes in the second half of last year. You talk about your observation, what your... Can you talk about what your observations are heading into the longevity review this year and maybe what you can expect from that?

Okay, so we don't have the fee margin, so we won't go into that. In terms of the current LTAFs, they're not part of the workplace default at the moment, I don't think. The real estate and the – or are they, Doug? I don't know. Real estate is, but the new LTAF that we will launch, which will be the Venture and Growth Capital, clearly we would look to to make that part of that default. But that is not always a decision for us. That could be a decision for the employee benefit consultants or for the people administering the pension schemes. But obviously, if it's an attractive proposition with good returns and we're seeding 150 million of our own venture capital into that fund, so it's got a track record in terms of venture performance. then we would expect that to be part of that going forward. And if you then take that 120 billion of our workplace schemes, then there is a real opportunity there, which we are excited about, the CSM.

Yeah, so I think you're saying, I think that your question is around assumption changes expected in the second half of the year. So, you know, I've guided on sort of the 200 million management actions, and that's a solvency to definition, but actually there's a significant amount of overlap between the way the CSM treats assumption changes and the same sort of number is relevant for both. When you specifically ask around longevity, I mean, we saw sizable release on longevity as we made a step change in the tables and the outlook. I wouldn't expect anything, you know, significance but all of that work takes place in the second half of the year as we assess the tables that come through combined with our experience and our profile but again I would expect some positive assumption change effects in the second half of the year both from a solvency 2 perspective and going into the build of the CSM but they won't always be the same just because the definition of what is one and what is another is different between the two codes.

Okay. Final question from Stephen.

Thank you. Stephen Hayward from HSBC. Just two questions. Mainly on sort of guidance, if you can. Your 94% combined ratio target, can you be more specific about when you think you might achieve this below 94%? And then on the full year 2024 group operating profit, Can you provide some growth rate guidance here? You know, should we be expecting a similar 14 percent to what we had in the first half? Or are we back to the sort of, you know, mid to high single digit growth levels?

Thank you. Look, I think, you know, I'm going to be sounding a bit repetitive, I think, here. But, you know, in terms of the medium term core below 94 percent, you know, we're very clear that it remains the right midterm aiming point. And, you know, we really are continuing to make progress there. You know, the underlying core is continuing to improve with the rating discipline. The portfolio mix shifts that we've done really focus on disciplined underwriting and building the growth on increasingly scalable platforms are all the big drivers. And we hold the underwriters to very high standards and keep that discipline momentum. I think, though, you know, as again, to sound repetitive in the higher rate environment, you know, we consciously balance then underwriting margins, underwriting profits and overall operating profit. So. It's very much the right aiming point for how we think of the mix shift and all the underwriting actions. But economically, you know, if it makes more sense to be slightly above 94 for longer because of the other benefits to operating profit and capital generation, then we do. So I'm not going to put a data time, a day of the week on it. I think it's clearly not this year. And I don't anticipate it being next. But, you know, all the right action is carrying on. And then in terms of operating profit, I mean, I think I probably, you know, in the previous era of IFRS 4, you'd get certainly the IWR profits for the retirement business and anything assumption related would have a sort of second half that was higher than first. I mean, I think the momentum of the business is good and strong. We've got a good grip and line of sight of what we're doing. So I would expect that, you know, the second half to be another strong operating profit delivery, you know, similar percentage increase for the full year as you've seen at the half year.

Okay. And with that high point? Thank you very much. Gosh, it's 10 o'clock. And we really, really appreciate all your questions. I guess that shows that there's nobody else reporting today. And we took nearly three questions from everybody. So really, really appreciate that. Obviously, the IR team are around to follow up on any more detailed questions. But thank you very much for coming in. Appreciate it.