Nn Group Nv Ord

Good morning, ladies and gentlemen. This is the operator speaking. Welcome to NM Group's analyst conference call on its first half year 2025 results. The telephone lines will be in a listen-only mode during the company's presentation. The lines will then be open for a question and answer session. Before handing this conference over to Mr. David Knipper, Chief Executive Officer of NM Group, let me first give the following statement on behalf of the company. Today's comments are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those projected in any forward-looking statement. Such forward-looking statements may include future developments in an end group's business, expectations for the future financial performance and any other statements not involving a historical fact. Any forward-looking statements speak only as of the date they are made, and NN Group assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason. Furthermore, nothing in today's comments constitutes an offer to sell or a solicitation or an offer to buy any securities. Reference is made to the legal information on the last page of the presentation. Good morning, Mr. Knibber. Over to you.

Yes, thank you, Sharon, and good morning, everyone. Thank you for joining our conference call to discuss NN Group's performance for the first half year of 2025. I'm excited to be here today, and with me are Annemiek van Meyelijk, our Chief Financial Officer, and Wilbert Auberg, our Chief Risk Officer. I'll begin with an overview of the key messages and then dive into the excellent commercial momentum we have witnessed in our growth segments. Next, Annemiek will give a detailed analysis of the strong progression of our capital position and our record financial performance over the first half of 2025. After my concluding remarks, we will move over to Q&A. I see the strong set of results we present today as a great start towards delivering the growth targets we set at the CMD, which once more underpin our attractive investor proposition with compounding returns for shareholders. Annemiek will further elaborate on our capital position and the strong set of OCG results, but I will give you the headlines. Our pro forma group SolveC2 ratio progressed strongly from 195 per the end of April to 205 per the end of June, or 208 on a reported basis. And this is now above our comfort range of 150 to 200%. NetLens Live SolveC2 ratio shows a similar trajectory and came in at 200%. For operating capital generation, for the very first time we report more than 1 billion euros over a semi-annual period. As you remember, at our recent Capital Markets Day we set ambitious growth targets, supported mainly by Europe, Netherlands Non-Life and Japan. I'm particularly pleased about the commercial success these growth segments have shown in the first half of 2025. The value of new business in Europe and Japan increased with 11% and 25% respectively. In the Netherlands, Moonlife gross written premium grew by 6%. Let's dive into the underlying drivers of our financials. As you know, we have a multi-stakeholder approach. Our objective is to achieve customer satisfaction scores significantly above the market average and secure a position among the top three for broker satisfaction in 2028. Customer satisfaction has shown consistent improvement, especially in Europe, where every single unit is above market average in terms of customer satisfaction. This is the first time we earn this great achievement, which will support our growth both from retention and new business perspective. Additionally, our Dutch broker satisfaction score indicate that we are overall ranked number one. Our goal is to maintain an employee engagement above benchmark levels, while we aim for over 40% women in senior management by 2028. We aim to cut greenhouse gas emissions by 45% by 2030, invest over 13 billion in climate solutions, and support 2.5 million people's well-being by 2028. As you can see, progress on all these targets is well on track. Our investor proposition remains attractive and we're well positioned to continue delivering value to our shareholders. I already gave the headlines on capital and financial performance. I do want to highlight the Future Ready program that we introduced during our recent Capital Markets Day. This strategic program focuses on standardization, automation and the implementation of AI to enhance customer experience, to promote growth and deliver around 200 million in annual benefits by 2027. As such, the program is an important cornerstone in our investment case and we are demonstrating significant progress. Let me give two examples. We are making significant progress towards our goal of generating 50% of AAPE from digital leads by 2028, having reached 40% in H1-25, up from 36% in 2024. This growth is driven by our digital marketing initiatives, including the successful launch of the Agent Digital Office in Poland, which helps agents build an online presence and use digital tools. And this initiative will be expanded to all units with tight agent networks. Secondly, we're also focusing on collaboration and standardization to create scalable, reusable AI solutions. Currently, 191 AI use cases are in production, up from 148 year-end 24, with all business units reporting strong progress. One example is our secure internal platform for generative AI, which allows our teams to build AI-powered chatbots using internal knowledge. This platform is already in use across multiple Dutch and international units. Another important cornerstone in our investment case is our capital return promise, with an attractive progressive dividend per share, complemented by annual share buybacks. Today we announce an 8% increase of our interim dividend. and with a Group Solved C2 ratio now above the 150-200% comfort range, we are well positioned to look for upside to our capital return promise at the full year 25 stage, with a focus on small incremental steps. Our delivery on capital returns since the IPO is impressive, with over €10 billion of capital returned to shareholders. and we remain committed to continue this roadmap, with total capital return to shareholders foreseeing to grow to 15 billion by 2028. As a first step, today we announce €1.38 per share interim dividend in line with our dividend policy. Before I highlight the commercial success we have seen during the first half year, I'd like to remind you of the ambitious targets we set at our Capital Markets Day back in May. OCG is expected to reach 2.2 billion in 2028, while free cash flow should exceed 1.8 billion. Most of the growth versus our 2025 targets is coming from insurance Europe, Netherlands and online, and Japan. As such, I am very pleased that the three units are delivering very strong commercial results. Allow me to elaborate. Insurance Europe, bolstered by our leading positions, is our largest growth segment with a target of 600 million in 2028. We are active in eight countries where we have organically built our business since the 80s and 90s, becoming a top player or number one in markets like Greece, Romania and Hungary for life insurance, and for example Poland and Romania for pensions. Our strategy focuses on high margin capital light protection products and we are well positioned to capitalize on the underpenetrated high growth margin in the region. However, the underpenetration does not matter if you do not have the distribution to tap into this need. And our multi-distribution network is what sets us apart from the competition. In the first half, we saw strong VNB growth of 11% driven by both better sales and margins, and this will translate into OCG growth over time. OCG grew by 10% in the first half of 2025, outpacing the 7% CAGR implied in our target versus 24. OCG came in at €251, not that dissimilar to our achievement in 2020 with the important difference that we now deliver this in six months. Netherlands Null Life is our second largest growth segment with an OCG target of 475 million in 2028. Also here we witness solid commercial momentum supported by strong customer and broker satisfaction. Growth rate and premiums are up 6% year-on-year to 2.6 billion, driven both by indexation and volume growth. Growth primarily came from the SME, direct and bank channels, with fire and sickness insurance showing the highest increases. OCG came in at 175 in the first half of 2025, up 14% versus last year. Netherlands Non-Life Strong Performance is also highlighted by its combined ratio of 91.2% over the first half of 2025 at the lower end of the 91 to 93 target range. This marks a 1% point improvement compared to the first half of 24, mainly driven by lower expenses. The Future Ready program in non-life is paying off in efficiency improvements. Japan is the third growth segment, with an OCG target of 2028 of 160 million. In Japan we see strong signs of sales recovery, with a 25% increase in new business value in the first half of 25. This was mainly driven by our long-term savings product and higher rates, driving better margins for cash value insurance sales. Our new long-term savings product has already taken a 17% share of VNB over the first half of 2025, and we expect this to further increase over time. The new long-term savings product was only launched in March. If we focus on the comparable VNB solely for the second quarter, VNB growth would be more spectacular at 56%. So, Japan is making strong progress on regaining a top three market position now that we have been able to improve our level playing field with the introduction of a first new product in the attractive long-term savings market. And there's more to come. Now I will hand over to Annemiek who will further provide details on our financial performance for the first half year of 2025.

Thank you, David. On my behalf, a warm welcome to everyone. Let's start with the key financials on slide 12. Our OCG is up 6% and exceeded the $1 billion for the first time for a biannual period. It's a strong print and confirmation we're on the right track to deliver our 2028 target. Free cash flow is down 4% versus last year, mainly driven by a positive one of last year versus future ready investments this year. It's a metric you really have to look at on an annual basis and we're very confident to achieve a free cash flow target of 1.6 billion euros for 2025 and remain on track to meet the 2028 target of exceeding 1.8 billion. Our pro forma solvency ratio came in at 205%, which is above our 150 to 200% comfort zone. Our cash capital position shows an increase from 1.3 billion to 1.6 billion, driven by the untendered RTO1 capital and some net cash bill during the period. Now let me give you some insights into our strong capital progression. Looking at the capital bridge for the first half of 2025, operating capital generation of €1 billion added 12 percentage points to the solvency ratio, which is 4% higher than the capital flows to shareholders. Market variance added 5 percentage points, largely driven by the positive impact of interest rate movements and decreasing spreads of government bonds and mortgages, partly offset by negative equity variance. Mortgage spreads at the end of June are some 10 basis points tighter than are through the cycle expectation. If this were to normalize, it would cost circa 2 percentage points at group level. The bucket Other added 3 percentage points to the ratio, where the positive effects from the implementation of Basel IV and the new longevity deal were partially offset by model and assumption changes. The solvency ratio of Netherlands life increased as well, up from 187% at full year 24 to 200% at age 125. As indicated at our Capital Markets Day, the natural moment for us to consider stepping up our capital return policy is at the full year results. Given our position now, the outlook is promising. As you know, we prefer small incremental steps in our structural capital return promise over lumpy buybacks. We continue to have a conservative asset portfolio, and given that most of you are on holiday or trying to pack your bags, I will not dwell on it this time, but you can find all the usual information on our very safe Dutch mortgage book, et cetera, in the appendix of the analyst presentation. I would like to separately mention though that our key solvency 2 ratio sensitivities on equity, real estate and mortgage spread shocks all decreased compared to the end of 24 as we benefited from increased eligibility of owned funds driven by lower net deferred tax assets. Now let's move to OCG. Asset, a strong print on OCG, up 6% on a not-so-easy comparable base last year. This growth reflects continued strong underlying business performance and growth in insurance Europe and Netherlands non-life, flattered by positive experience in Netherlands life. In the Netherlands Life segment, we witnessed a significant OCG increase due to favourable experience and higher investment returns. Also, new business is seasonally elevated in the first quarter and still benefits from DB sales which will taper off as the pension reform further effectuates. Netherlands non-life came in at 175 million, up 15% versus H1 last year, despite a refinement in business recognition, shifting some OCG towards the second half of the year. Similar to last year, non-life OCG benefited from benign weather, whereas this year we did not see the elevated fire claims that we saw last year. On the back of this benign weather, we would expect non-life to deliver an OCG of more than 400 million euros this year. Europe's increase by 10% OCG is driven by business growth, as David already alluded to, improved persistency and increased investment results. For Japan Life, the underlying APE and VNB trends are very promising, as David just explained. OCG is down 10% versus last year, however, mainly due to normalizing technical results and a higher new business strain due to the strong sales recovery. In banking, further NIM compression in H125, although partially offset by expense reductions, negatively impacted OCG. We expect NIM pressure to extend to the second half of the year. The first half of 25 furthermore included a one-off release of required capital related to a change in collateral recognition. Lastly, the segment other showed some normalization compared to the first half of 24, but NNRE still benefited from positive experience. Now, with the strong H125 OCG results, we do see upside to our previous full-year guidance of flat-ish OCG versus full-year 24. However, we would expect OCG for the second half of 25 to be slightly lower than the first half, as positive one-offs in Netherlands life, and continued NIM pressure on NNBank are expected to be mostly, but not entirely, offset by higher OCG from Netherlands non-life due to the seasonality of new business. Before we go to free cash flow, let me say a few words on our IVRS results. As you know, we steer on OCG, where at the Capital Markets Day we've again outlined ambitious growth targets. Under IFRS, the most important driver for future growth is the organic CSM, as this feeds the future profit margin. Therefore, I'm happy to see organic CSM growth of 2% over the first half of 2025, where Japan became a neutral contributor instead of a drag reflecting its sales recovery. Now, similar to OCG, our IFRS operating result increased as well, largely due to a higher investment result at Netherlands Life. This was mainly driven by higher returns from private debt investments and a more technical accounting asymmetry relating to a portion of our derivatives falling outside of hedge accounting. NN Group's net result decreased due to bond sales, revaluations on derivatives used for hedging purposes, and the final accounting results from the sale of Turkey, which in itself had a negligible capital impact. Lastly, let's move to our capital position. Free cash flow came in at 863 million euros in the first half of 2025, 4% lower than the comparable period last year. This is mainly due to the segment other, where last year benefited from a tax-related one-off, whereas the current period includes future-ready investments. Remittances were actually up 2% year-on-year, where lower contributions from Netherlands Non-Life and NNRI were more than offset by higher contributions from Insurance Europe and the Bank. At the full year results, we already indicated that the Bank's remittance capacity strengthened significantly due to the implementation of Basel IV for 1 January 2025, which we are using to complement remittances this year and the first half of next year. In addition to the Dutch units, we still expect remittances from Insurance Europe and NNRE in the second half of the year. As such, we are very confident to achieve the €1.6 billion free cash flow target for 2025. The change in our debt and loans reflects the impact of the untended grandfathered RT01 notes with a call date in January 2026. and our capital flows include the payment of the final dividend over 24 and a part of the Euro 300 million buyback that has been executed as per the end of June. That concludes the financial explanations, and with this I would like to hand it back over to David for concluding remarks.

Yeah, thanks Annemiek. To wrap up our presentation, the Group Solves 2 ratio improved from 195 at the end of April to 205 at the end of June, surpassing the 150 to 200% comfort zone, letting its life also increase to 200%. Operating capital generation exceeded 1 billion euros for the first time over a semi-annual period. Our growth segments in Europe, Japan, and non-life showed strong commercial success, with the value of new business increasing 11% in Europe and 25% in Japan, and the non-life premiums in the Netherlands growing by 6%. Bottom line, we presented another set of strong results today, and this marks a strong start toward delivering the growth targets we set at the CMD, which once more underpin our attractive investor proposition with compounding returns for shareholders. And with these remarks, I would like to open up the call for Q&A.

Operator? Thank you. Ladies and gentlemen, we will now start the question and answer session. To register for the Q&A, please press star 1 and 1 on your telephone. As a reminder, in the interest of time, we kindly ask you to limit the number of questions to two. Your questions will be answered in the order that they are received. Please press star 1 and 1 for your questions or remarks. Go ahead, please. Thank you. We will now go to the first question. One moment, please. And your first question today comes from the line of Andrew Baker from Goldman Sachs. Please go ahead.

Great. Thank you for taking my questions. The first one, just on Netherlands Life OCG, you mentioned some assumption changes. What specifically did you change there? And I guess what was the impact in the first half? And then were these assumption changes considered as part of your 2028 target? And then secondly, just on the longevity transaction, I believe this was for $4 billion of liabilities, but correct me if I'm wrong there. I'm just curious how you arrived at this number and then also how much capital generation you gave up as a result of the transaction. Thank you.

Yeah, thank you, Andrew. Annemiek?

Sorry. To start with your question on the longevity transaction, we did a transaction of $4 billion of liabilities. It continues to be a very attractive market. I think the OCG impact will be less than $10 million of that. And that also means, given that we indicated last year that we roughly would build up $10 billion of liabilities in a period of three years, we would still expect to have roughly $6 billion available in a build-up of two to three years. And your first question was related to the assumption changes in life or non-life?

Life.

Yeah, we made some changes. They were indeed part of the target that we have actually given, and it basically is upping both on real estate and on equity the assumptions with 50 BIPs. So in terms of public equity, we had an old pre-tax figure of 5.7%, and the new return would be 6.2% pre-tax, which is roughly similar as post-tax, given that we have quite some tax exempt stakes there. On real estate, we were at 4.9% old pre-tax. That would go to 5.4% pre-tax.

Great. Thank you.

Thank you. Your next question comes from the line of David Barmer from Bank of America. Please go ahead. David, your line is open.

Good morning. Thanks for taking my question. Yeah, can you hear me? Yeah, we can hear you well. Can you hear me?

Yes, Dave, we can hear you. I'm not sure you can hear us.

Oh, okay. Great. So, yeah, yeah, just with a delay, sorry. So, firstly, on disability, please, the combined ratio keeps being quite a bit volatile and was a bit higher than I thought in 1H. Can you explain whether this is just the accounting noise on the RFRS 17 that you've talked about before or if there's There's a worsening frequency here in 1H. And maybe if you can talk about the premium increases you're doing in disability at the moment as well. And then secondly, on Japan, what would have been the OCG in Japan assuming you were under the new solvency regime, please?

Yes, thank you, David. On Japan.

On Japan, the OCG under the new regime, that's hard to assess. I think what we've said at the four-year results, you know, it will depend on what the sales levels will actually be in 26 when we transition to the new regime, and we would expect it to be a couple of tens of millions there then.

Yes, David, on disability, well, I think overall the – Sorry, can I just add to – Go ahead.

Go ahead, David. David?

Yeah, sorry for the delay here. Yeah, just adding to that Japan point, maybe to put it another way, what's the translation between V&B growth and OCG? I mean, how long does it take to be fully recognized? Thank you.

Well, at this point in time, it takes roughly seven to eight years to be recognized. But if we transition to the new ICS, then 85% of it will be recognized immediately, and the remaining 50% will go over roughly seven years or something.

David, let me... Take a question on disability. I think we're all very curious now where you are given the long delay. So you must be in a really nice location. But on the disability of the combined ratio, I think overall, yes, there is some accounting noise in there. If we just look at underlying at the book. The majority of the book is sickness benefits. That is actually doing very well. We did do some premium increases, but overall we're quite positive on this book. This is also when we flagged at the capital markets data within DNA, we expect growth in the DNA, but then in the sickness part, that also happened. It's about 500 million out of the close to 800 million that is in group income. The other part of 300 million is in the disability book, this is more the long tail. There, there's more concerns given the overall trend that we see in society and also some of the backlogs that are with the government. So we've been doing significant premium increases there and we expect also that that will continue to be needed to keep that book healthy. Overall, I think the DNA book is on a positive trend that we expect also going forward, and therefore, you know, we continue to say that 91 to 93 for the overall combined ratio for the total non-life business is the right way to look at this in terms of guidance.

Thank you. We will now go to our next question. And your next question comes from the line of Nazif Ahmed from UBS. Please go ahead.

Thank you. The first question on Solvency Reform, any update on where that's going to land for you guys, given the update on the Level 2 text? And then the second question on, David, you kind of mentioned that there's more to come in Japan. First, you've got the improvement order lifted, and I think expectation is it takes a couple of years for you guys to start getting product approvals and distribution. But can you give us a sense of, yeah, what is that more to come? You've got the long-term savings model, but what else can we expect from Japan? Thank you.

Yeah, thank you, Nazeem. Wilbert on the Solstice II reform.

Thank you, Nasib. Solvency 2 2020 review is not coming in before January 27. We expect a broadly neutral outcome in relation to this review, where we will be less dependent on management actions in order to achieve this outcome compared to before.

Thanks a little bit. Then on Japan. Yeah, maybe a little bit of background on Japan. So if we look at the overall corporate life market, it was actually relatively flat or in fact it was 1% down. What we see is that the shorter term market or the cash value products was actually down 5% and the long term market was up 12%. So we launched a product obviously in March in this long term market and this has also been a driver of our growth. But because of all the engagement that we have with the distribution channels on this product, we've also seen an upward trend in the protection space and also in the cash value product line. So actually the growth is not just coming from the long-term business, but from all three product lines. Yeah, you're right. We said earlier it will take quite some time to get back to previous levels or to V&B levels of 2022 at some point we guided to. To be fair, I think so far it's going probably a bit faster than we thought. I mean, if you just look at the quarter, we've seen indeed a 56% uplift. And it's possible that already this year that maybe roughly half of what we lost we would be in terms of new business that we would recover. Of course, we need to see how the rest of the year will play out. But it's clearly on a positive trend and I think it shows the strength of our distribution that we have in this market that it's a resilient business that is really on a positive trend now after the lifting of the business improvement order. but also because of the opening of the long-term coal market.

Thank you, Minister. Very helpful.

Thank you. Your next question comes from the line of Thomas Bateman from Mediobanker. Please go ahead.

Hi, morning there. I was just hoping you could give us an update on the Future Ready programme, just in terms of The money that you spent so far and the potential cost savings, is this going faster or slower than expectations? I think it's going quite well. And then the second question, just on pension buyouts, just an update on your thoughts on that market. I guess I'm interested in, you're still doing longevity transactions on the back book, but seem a little bit reluctant to on new buyouts. I'm just wondering what the constraint is at the moment for participating in that market.

Yeah, thank you, Thomas. Yeah, on the Future Ready program, well, overall, this is very much going in line with the guidance that we've given, also in terms of the free cash flow impact over the first half of 2025 and also the expectation for 2026. So financially it's going on track. We also see, we said, you know, we expect 200 million benefits by 27, 180 million in expenses, 20 million in the growth of value new business development. That's also going nicely on track. Underlying, we see that the scaling of use cases is progressing. I mentioned earlier we had at the beginning of the year 149 AI use cases. It's now at 191. I think good to mention, for example, is the scaling of SANA GPT, which is an agentic chatbot, What we see is now, and we haven't rolled it out in all units, but we see that the long tails or the more complex questions, this chatbot does 60% better than the, let's say, the annoying one that we had before that. But also 33% less referrals, meaning that a human needs to get on the phone to deal with the rest of the question. You know, this was launched at the pension business, it's now also with the bank, with the mortgages, and these are examples of AI applications that we scale across the company. So, yeah, overall, I think it's going well and we're for sure on track to deliver the 200 million benefits that we expect to come out of this program. Yeah, on buyouts, yeah, I mean, there was around 4.1 billion was closed this year. None of these deals actually met our return criteria. We've been very clear that we want at least an IRR that is above 10%. These deals didn't meet our return criteria. Keep in mind also that we don't need these buyouts to sustain our remittance pattern. As we explained also to CMD, without doing buyouts, we can sustain that remittance pattern from end in life up to 2040. Yeah, ultimately, I think capital allocation is probably one of the most important things that we do. And when you have, we see that applying, deploying capital in Europe, obviously in Japan, but also in the immediate annuity market in the Netherlands all give a lot more attractive IRRs than the buyout business. Buying back shares also would be more attractive than doing these buyouts. But we'll continue to monitor it and to see whether the pricing becomes more attractive and if it does, we'll certainly participate. I think it's also good to note, I mean, let's not overdo this. I think there was $4 billion done. There's probably a bit more coming this year. But even if we would do half of that $4 billion, that would be roughly $20 million OCG for the life company. Well, the life company typically does more than a billion of OCG in a year. Overall, we haven't done it because the pricing wasn't attractive enough. If that changes over time, then we'll certainly be more active again in this market.

Very clear. Thank you. Good to see so many opportunities to deploy capital. Thank you.

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

Hi. Morning, everyone. Thanks for taking my questions. The first one is just on the increased NN Life OCG. I mean, historically, you've sort of paid out or remitted 100% of OCG from the life company. With that higher OCG, do you expect to see a step up in the NN Life remittance over time? And again, sort of following up from Andrew's question, was that embedded, if so, in the plan that you gave at the investor day? And the second one was just on the CSM growth, the normal CSM growth of 2%. I think that's the best half you've had since we've had our growth, 17. Is that sort of a normal level of growth that you'd expect going forward, or is that benefiting from strong new business that you've shown in your numbers? Thank you.

Thank you, Ian. Annemiek?

Yeah, on life and OCG expectations and remittances, you know, we really want to have a stable remittance pattern coming out of life that we can sustain for a very long time. That's why we gave this stable remittance guidance towards 2040. The outlook for life is a bit better for this year versus the flattish guidance that we gave at the beginning of the year. We also realize that part of it is really structural because it's higher investment returns. That was already all in the target that we gave for life for $28 of $1.1 billion. In the first half year, there were also some one-offs, the positive experience variances, and there was a bit of a skew on new business towards the first half of the year. So Life will have a good, probably good year in 25. We're on track to meet the target for 28, and we stick to the stable remittances and the guidance we gave there before. If we look at the CSM, agreed, 2% is probably the highest that we've reported. There is a bit of seasonality there, because in the non-life business, on the group income side, these contracts come into IFRS in the first half of the year, OCG in the second half, but IFRS first half of the year, and they tend to really be skewed also to the first half of the year. So I wouldn't expect that to necessarily repeat for the second half. And the outlook on CSM, we're obviously very happy that Japan is now a neutral contributor after having seen a sales pick up in Q2. What the long-term outlook for CSM growth will be also depends a bit on how developments in Japan will be going.

That's great. Thank you.

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

Morning, all. Just two questions, if I may. Firstly, just to follow up on Thomas's question on the future rally program, would you have a number on where you stand versus the $180 million cost-saving target, or is that going to be updated annually? And then secondly, turning to coming back to Japan, might you have a sense of how much of the recovery you're seeing there splits between the kind of product launch versus the kind of improvement order being lifted? In particular, I just wondered whether you're seeing brokers become active again. Thanks.

Thanks, Farquhar. Yeah, in terms of the $180 million cost-saving target, no, I think that's too early to talk about that. But we'll obviously over time continue to update you on the progress of the Future Ready program. So full year would probably be a first moment to give some indication on it. But as I was saying, the What we continue to see is that the IT simplification and standardization on the one part and the application of AI, and this is not only on chatbots, but this is, for example, on the automation of claim handling. We gave this demo on how you can have in a couple of minutes a claim payout if we expand that to AI. for example, windows of cars, but also windows of buildings and other types of damages. It's clear for us that with the enormous speed that Gen AI is already generating, that this is a huge opportunity for our industry and certainly for us. So from that point of view, I think we're all positive on that we will achieve those targets, both the 180 and the 200 million. I think on Japan, it's very tough to split that out. So why exactly are people buying a product? What is clear to us is that brokers were already, pre the lifting of the business improvement order, were already starting to do business with us again. So that was clearly a positive. We didn't have to wait until the closing of the business improvement order. So 65% of our brokers are independent and 25% is banks and then 10% is Sumitomo. We've seen different speeds in which brokers but also bank and Sumitomo have been active, but it's clear that all channels are now active. have been already starting to be very active again in the last few months. So it was already happening pre-business improvement order. Obviously, the business improvement order was very good news and further supported that. But like I said, if the Q2 number was 56% up, that clearly was already pre-business improvement order. Sales was going up. So all in all, I think... As I was saying earlier, the business is well on track to recover from this and go back to a position where we're probably number five or number six right now. And we do believe that, you know, depending a bit on how the market will evolve, there will be three or four big players. And we're convinced that we're going to be one of them. Thanks.

Thank you. Your next question comes from the line of Farooq Hanif from J.P. Morgan. Please go ahead.

Hi. Thank you. Just a couple of numbers questions, actually. So on OCG, I just want to clarify exactly what you said, Annemiek. So you, I think you said, look, there are some positive experience variances, capital release, you know, just some positive, maybe non-recurring items in 1H, but in the second half because of the way you're now accounting for the ocg this you know the loss of those one us will be offset did you did you apply completely by um non-life or or is one bigger than the other so that's question one and then question two on ifrs operating result i just want to go back over what you said about the investment results again just understand that so you increase your investment margin or your investment income smooth assumption. So presumably that uplift in investment margin, for example, in medicine's life is kind of repeatable. Thank you.

Hi, Farouk. Thanks for your questions. Yeah, in terms of full year guidance, if you look at OCG, obviously previously we guided for a flattish trajectory for the 24, where we landed at $1.4 billion, where we said we would be flattish there. If you would look at the second half for OCG, we would expect it to be slightly lower than the first half. We would expect a bit lower OCG from Netherlands Alive because we did see some positive one-offs there in H125 that we don't think will be recurrable. And we also know that there is a bit of seasonal nature in these DB renewals. Plus the bank, we're expected to see continued NIM pressure there. And in H1, the bank also benefited from some capital relief. We do expect that the majority of that will be offset by higher OCG coming out of Netherlands non-live. And that really has to do with the seasonality of non-live, which is mainly related to when the P&C business is recognized. Now, last year, that seasonality was roughly 50 million. We would expect that to be a bit more. So then you would probably be having some numbers to build your model on. In terms of the IFRS investment result at life, indeed, roughly half of it was related to higher investment result, mainly private debt related, and that is something that you can expect to be sustainable, yes.

And just coming back on OCG, So obviously some of this is weather-related. Can you tell us in Euro amounts, because you have in the past, what you think the weather-related benefits have been so far in 1H in your life?

Well, if you compare it to last year, we see it was the same. We had benign weather as well. I think typically if we would have a very, you know, storm, typical storm budget would roughly be 50 million. We haven't seen that.

That's really kind. Thank you.

Thank you. We'll now go to our next question. And the next question comes from the line of Jason Kalambosis from ING. Please go ahead.

Yes, hi, good morning. A couple of follow-up questions. On the longevity, you did a deal on the $4 billion. I'm interested to know if you had waited to do on $10 billion, if you would get a better pricing. And probably a question that can or may not be related, you say that conditions are favorable. I mean, do you find that over the last two years the pricing has become much better for insurers? And the second part is on Japan. If you could elaborate on, maybe I missed something, on products, on new products. Do you plan to have new products to go for approval for new products in 25? And what is the next stage where you will go for product approvals? Where would these products be? and how much time would it take roughly to get the approval so that we have an idea of, you know, what new you plan in there. Thank you.

Yeah, thanks, Jason. Let me start with Japan, and then we can cover the longevity conditions. Yes, so like I said, there's three groups of products that we offer, which is the protection, pure protection. Then there is the cash value. It's typically five years or at least what we call a short-term product, and then there's a longer-term product. unit-linked longer-term products. So we have introduced a longer-term product in March. The intention is to introduce another one, another long-term product. The intention is to do that in the second half, but as you might remember, all products need to be pre-approved by the regulator, by the FSA, and this takes time. It actually, to be honest, at times helps us, because Companies have only limited windows, so if you also have a retail business or other businesses, then you have to really make a choice. We're only in corporate life, so we can use the one or two windows that we have for corporate life. Our intention is to introduce another long-term product in that space, hopefully in the fall, and otherwise, depending on when the approval comes, it would be in 2026. In any case, we feel already that in the long-term market, it's currently not a very crowded space. Sony is there. There's some activity from AXA. There might be one or two more coming, but it's still a market that is growing. It's supported by the regulator. It's supported by the government that wants... the markets than the SME owners to do more long-term savings. So, you know, we're well positioned there, even with one product, but ideally we'll launch another one in the second half, but that will depend on regulatory approval. Annemiek?

Yeah, in terms of longevity transactions, your question on whether the conditions have improved over the past two years, you know, I think they've continued to be good over the past two years. We also did a transaction at year end, 23 of 13 billion, roughly similar metrics as the current one. So there's still a lot of demand for longevity risk. We currently did 4 billion because we typically do these transactions to a large part on the pension liabilities that are in benefit. And it takes some time for those liabilities to become in benefit and that part of a portfolio to build up. So the $4 billion is what we did now. And then over the next two to three years, we would expect another $6 billion of liabilities to become in benefit, where we could do another transaction on if conditions continue to be favorable.

Thank you very much for Japan. Annemiek, if I may follow up just on the, my question was more, I understand that you need more impatience so that you have, you know, another 6 billion to come. My question was more like is it better to wait until, you know, the 4 billion to become 10 because then you have more leverage on the pricing or at the end of the day it doesn't matter too much? And therefore, you know, doing it by steps or in one go at the end of the day doesn't make a huge difference on the pricing of the deal.

It doesn't make a difference. There's so much demand now that we can just, you know, we can look at it opportunistically. And if it's attractive, we can just go.

Okay, fantastic. Can I just add a quick one? Is it fair to say that, you know, from both of what you said and David, that at the end of the day, you are just stepping, you know, you're looking this year at the buyouts and saying, look, at the end of the day, it's probably better to go towards the direction of share buybacks because you have also Solvency II that now is comfortably above 200 or up 200 at the end life. and that you could be looking at the buybacks next year or the year after only if the pricing becomes better, or it's something that this year it's more privileging the share buyback, and next year you will see which direction you go. It looks like it's not only pricing, but it's also how you manage the one versus the other one.

Thanks Jason. No, it is really pricing. Like I said, we apply very strict return criteria and we do think that doing buyouts at a 10% or lower, we don't think it screens attractive versus all the other capital deployments that we have. next year you know the capital situation would be even higher than today we still wouldn't start doing buyouts below 10 percent I think I mentioned earlier if you look at the immediate annuity market for example so people in the Netherlands have to buy an annuity once they retire we see that the longer people are in DC obviously per ticket size that increases you know if last year we did 600 million of that this year I would expect that we certainly will do more For example, the IRRs of that immediate annuity business, which you could see as a collection of small buyouts, I guess. IRRs are much more attractive. So as long as that's the situation, we'll do those, but we will not do the individual large buyouts. So, yeah, this is all about capital allocation and where we feel that we can make a good return or not. And indeed on the buybacks, we'll have to visit it at the full year result to see what we will do. The outlook is positive, but as you know from us, we're not looking for lumpy buybacks. We're looking if we're going to do something, it has to be an incremental and a recurring step. But that's something to look forward to in the February discussion.

Fantastic. Very clear. Thank you both very much.

Thank you. There are no more questions. I will now give the call back to Mr. David Kniver for closing remarks.

Thank you very much, Sharon, and thanks, everybody, for the interest and the interesting questions that you have asked us. Obviously, as I was saying, we remain committed to our capital return policy, which includes a progressive dividend and a recurring share buyback of at least 300 million. Obviously, we look forward to further engage with all of you in the upcoming roadshows and conferences that we have planned. I know it's been a very busy week for all of you, so I hope that from now on you will have maybe a couple of nice days off, and I hope you have a very nice holiday. And I look forward to seeing you after that in the rest of the year. And have a good day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.