Nn Group Nv Unsp/Adr

on its full year results. The telephone lines will be in listen-only mode during the company's presentation. The lines will then be opened for the question and answer session. Before handing this conference call over to Mr. David Knieber, Chief Executive Officer of Anand 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 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 then a 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 an facilitation or an offer to buy any securities. References made to the legal information on the last page of the presentation. Good morning, Mr. Knieber. Over to you.

Yes, thank you, Operator, and good morning, everyone. Thanks for joining our conference call to discuss Enning Group's performance for the full year of 2024. I'm excited to be here today with you. With me are Annemiek van Melink, our Chief Financial Officer, and Wilbert Auberg, our Chief Risk Officer. I'll begin with an overview of the key messages and then talk about some of the business achievements in the past year. Next, Annemiek will give a detailed analysis of our capital position, financial result, and ongoing financial performance. Let's dive right into the key messages. Our business results have been strong, with the operating capital generation for 2024 reaching 1.9 billion, which is already right on track with our 2025 target. Free cash flow is up 8% year-over-year to 1.5 billion, putting us well on track to hit our 1.6 billion target in 2025. Our balance sheet is robust, with a group solvency ratio of 194%, which sits at the upper end of our comfort range of 150 to 200%. Markets and regulatory changes presented material headwind through the year, which we have been able to largely offset via management actions. are particularly pleased to report excellent commercial performance, with the value of new business 20% higher year over year, mainly driven by continued strong sales and margin improvements in Europe, as well as higher defined benefit sales and pension buyouts in Netherlands Life. And our Netherlands Life business saw another 2.3 billion net inflow in defined contribution in 2024. In addition, growth rate and premium for Nedum's non-life increased with 4.5%, driven by premium increases and volume growth. We are very committed to our capital return policy, and we are continuing our attractive capital return trajectory, where we have returned over €10 billion to our shareholders since our IPO in 2014. Today's final dividend announcement leads to a full-year dividend of €3.44. an attractive 8% year-on-year increase in our dividend per share. In line with our capital return policy, we also launched a recurring buyback of 300 million for this year. We believe this year's dividend per share growth is sustainable going forward. We aim to grow the amount available for dividends by mid-single digit. The growth for the dividend per share is then further amplified by the share buyback. Once again, we've made significant progress in achieving our strategic KPIs, which are delivering value for all our stakeholders and are fundamentally linked to enhancing our financial results. Our ambition is to be an industry leader known for customer engagement, talented people and a positive contribution to society, including our efforts to tackle climate change. Allow me to outline some of the progress made. Further improving customer experience remains our focus in all of our markets, with successful implementation of artificial intelligence tools within NN to advance support for both agents and employees. I'm pleased to see that our efforts are working. Our international markets have shown a further improvement in customer satisfaction, reflected through an increasing trend in our relational Net Promoter Score. Nevertheless, life remained on par, but underlying we do see positive developments. In our ongoing commitment to a more sustainable economy and society, we have taken steps through our business initiatives and financial commitments. We aim to achieve net-zero greenhouse gas emissions across our businesses by 2050. We reported significant progress in reducing emissions of our corporate investment portfolio, which according to our methodology have reduced by 31% compared to 2021. We've increased our investments in climate solutions, bringing the total investments to 12.8 billion by the end of 2024. Since 2022, we have supported over 766,000 people through our community investment programs. Our commercial momentum continues to be strong, particularly in Europe and the non-life segments. Insurance Europe has outperformed, driven by profitable protection sales and pension growth. Our strong positions in Central and Eastern Europe have helped deliver a volume growth of 10% and a margin growth of 16% in 2024. This will further bolster our operating capital generation trajectory over time, which already shows a strong historic track record. We have reached the 450 million target ahead of schedule by a year, even with pressure on investment results from reduced rates in non-euro countries. OCG for Netherlands non-life came in very strong again this year at 406 million, benefiting from a relatively high new business contribution. The combined ratio for P&C was strong at 91.9%, where we benefited from benign weather, offsetting large fire claims in the first quarter of the year. May I remind you that 10 years ago, Dutch non-life entities were struggling to make a profit, a concern even addressed by the regulator. Mainly due to consolidation, the pricing discipline has improved significantly and now Netherlands non-life is one of our best performing units. The Netherlands non-life segment continues to show strong performance with approximately 4.5% growth-ridden premium growth compared to 2023. I'm pleased that this strong OCG continues to translate into strong free cash flow. Similar to last year, we remitted more than 80% of the OCG to the group, and we expect this to be sustainable. Our Dutch Life business remains focused on stable, predictable remittances and maintaining a strong balance sheet, which we believe are sustainable at current levels, barring significant real economic losses. Annemiek will provide some further detail on this later on. Management actions reinforced the Sol-C ratio at 180% at the end of 2024. Commercial success in the pension market is highly dependable on brokers. As such, I am pleased to reiterate we have the highest broker score. This will help in both the DC and the pension buyout market. On the DC side, we continue to bulk up on AUM, which grew from 25 billion in 2020 to 39 billion now, which is well above the initial target of 32 billion that we set for 2025. Our net inflow of 2.3 billion in 2024 was further supported by market tailwinds of 4.1 billion. The pension reform will roughly double the addressable DC market, which should positively influence our ability to generate net inflows. The current OCG contribution from DC may be limited, it will increase over time as this is a business model with positive operating leverage. Although we do not need buyouts to sustain the free cash flow for Netherlands Life, we will selectively engage in that market if we can achieve an above double digit. So far we have closed three buyouts with a total of 0.9 billion, which is about half of the buyouts that closed in 2024. In conclusion, our performance in 24 has been strong and we're well positioned to continue delivering value to our shareholders and other stakeholders. Our capital remains robust at 194. I am sure you will recall that last year we took significant steps to optimize and reduce the risk on our balance sheet, including two beneficial longevity reinsurance deals in December 2023 and resolving uncertainties around the unit link portfolio with the settlement this year. Together with a lower UFR benefit on the back of higher rates, this has significantly increased the quality of our capital. Our delivery in 2024 shows that our 2025 targets are realistic and feasible. And today, we continue to deliver on our focus on shareholder returns by announcing a dividend of 3 euros and 44 cents per share, 8% higher than last year, and reiterating the 300 million share buyback. We are excited about the future, on which we will share more details with you at our Capital Markets Day in The Hague on the 27th of May this year. And I look forward to seeing you all there. Now, thank you for your attention, and I will hand over to Annemiek, who will provide further details on our financial performance for the full year of 2024.

Good morning, everyone. Thanks, David. And let's start with our key financial metrics on slide 10. As David said, our business performed very well in 24, generating over €1.9 billion operating capital for the full year. This strong performance reflects a small increase from 23, which benefited from positive experience and is in line with our €1.9 billion target for 25. Free cash flow increased by 8% to €1.5 billion in 2024, with increased diversification between the business units. As such, we're comfortably on track to deliver on our free cash flow target of €1.6 billion for 2025. As David already explained, our balance sheet remains strong, with a group solvency ratio at 194% of strong quality. Adverse impact from markets and regulatory items were nearly offset by strong capital generation, net of capital flows and management actions. Our cash capital position showed a strong increase of 300 million euros during the year to 1.3 billion at the upper end of our half a billion to one and a half billion range. This continued strong commercial and financial performance reinforces our commitment to a capital return policy that includes a progressive dividend per share and a yearly buyback of 300 million euros. The raise of the total dividend per share by 8% is a further sign of this commitment. Now, let me give you some more insights into our capital position. Our ratio ended the year at 194% in the upper end of our 150 to 200% comfort zone. Full-year operating capital generation of 1.9 billion adds 22 percentage points to the solvency ratio, which is 8 percentage points higher than the capital flows to shareholders in the form of dividend and share buyback. Market variance was negative, mainly reflecting wider government bond spreads and negative equity variance. The bucket Other includes quite some regulatory changes, as you may recall from H1, such as the UFR step-down of 15 BIPs, the VOLA reference portfolio update, and the counter-cyclical buffer step-up of the bank, as well as model and assumption changes. We've been able to largely offset these headwinds by management actions. We added two percentage points from an attractive reinsurance transaction on the enforced block of decumulation business. We also added 5 percentage points by accelerating into our SAA by actively reducing our mortgage exposure and, to a lesser extent, our equity exposure. The outlook is positive into 2025, with the Basel IV implementation at Ennenbank expected to add approximately 3 percentage points to the solvency ratio. Now, a few words on real estate and mortgages before we go into business performance. Real estate valuations moved further away from the trough seen as per full year 23. After an 0.6 percentage point increase during 1H24, we saw a stronger appreciation over H2 with 2.5%. Within real estate, residential benefited from solid house price performance, while the Supreme Court ruled favorable on the so-called CPI Plus file. We believe this largely eliminates litigation when it comes to historic rental increases. We also expect continued improvement of real estate into 2025. Regarding Dutch mortgages, we explained before that they have proven to be a safe and attractive asset class with low loss experience, even in financial crisis, for which we provide ample details in the appendix. You know that as such, we take a look-through approach based on a normalized margin of 100 basis points for Dutch mortgages for capital management purposes. We now also manage to secure a valuation improvement for mortgages under Solvency 2. Under Solvency 2 and IFRS, we need to apply a point-in-time valuation to identify the fair value of mortgages, which theoretically means looking at the spread between the swap rate and the client rate at a period-ending date. As you know, the swap curve reprices dynamically and commercial rates typically need some time to adjust. Therefore, this point-in-time mortgage spread can be distorted and create uneconomic volatility to our Solvency 2 ratio. We've been able to refine the point-in-time mortgage spread by haircutting the movement of the swap curve in the last four weeks, which is expected to reduce the mortgage spread volatility by approximately one-third. Since a large move in mortgage spreads has become less likely as such, we've reduced the published sensitivity to mortgage spreads from 50 pips to 25 pips to reflect this lower expected volatility. Now let's move to OCG on slide 13. As said, business performance remained strong, with OCG coming in at 1.9 billion for the year. Netherlands Life was up 2% year-on-year despite negative experience variances as it benefited from a higher investment result. Last year we indicated that a run rate for Netherlands Nun Life was €370 million plus growth in line with GDP. I am pleased to see that in 2024 Netherlands Nun Life again performed better than this run rate, largely driven by strong new business in P&C and disability. Insurance Europe experienced another strong OCG increase of 9% to 461 million, outperforming its 25 target of 450 million. Growth was driven by higher volumes and a higher margin. I would like to highlight the strong delivery of Poland within this, which is the largest contributor to OCG in the segment Insurance Europe, delivering an OCG of 128 million euros in 24. Japan Life's OCG was broadly stable despite negative currency impacts, and the OCG of banking decreased as the net interest margin has started to normalize during 24, partly offset by a lower capital strain. OCG for segment order decreased due to less favorable experience variances for the reinsurance business, whilst remaining somewhat above run rate levels. OCG for the holding, which includes holding expenses and debt costs, stayed at par despite wage inflation. Despite the strong new business contribution with the Netherlands non-life and the positive experience variances in NNRE, as well as the expected NIM pressure on NN Bank to continue, we would still expect the group to deliver a similar level of OCG in 2025, mainly driven by expected continued strong performance of Europe. Before we go to free cash flow, few words on our IVRS result on slide 14. Similar to OCG, our 24 operating result also increased, largely driven by the same drivers such as strong business growth in insurance Europe. This was partly offset by lower interest margin at banking and a lower investment result at Netherlands Life, mainly related to reporting refinements. The 24 operating result for Netherlands non-life was stable versus a strong 2023, and the combined ratio came in at 93.1%, slightly above the 91 to 93% guidance. We would focus on the combined ratio of P&C, which was strong at 91.9%. For disability, with a combined ratio of 96%, positive business performance feeds into CSM first before it's released into the combined ratio. Having said that, we remain confident on our overall combined ratio guidance of 91 to 93%. The net result for the year increased by over 400 million versus full year 23, which contained a non-operating provision of 360 million euros related to the unit-linked settlements. Now, last but not least, let's focus on cash. As you can see on slide 15, we have delivered a strong 7 percentage point CAGR for normalised free cash flow since 21, up to 1.5 billion in 24. In addition, our free cash flow is becoming more diversified with an increased contribution from segments other than Netherlands Life. Now, remittances of individual countries or business units can be lumpy, as evidenced by Belgium, which paid a special dividend of 120 million euros in 23. In 24, it required a capital injection of 70 million euros and did not pay a dividend, due to the renewal of our strategic bank distribution agreement with ING and the derecognition of a mass-lapse contract following a discussion with the regulator. For this reason, we will not expect Belgium to pay a dividend in 2025 either. I am pleased to see that diversification is paying off and we were and will be able to absorb these impacts in 2024 and 2025 via increased remittances from the bank and NNV. As such, we are well on track to achieve our free cash flow target of 1.6 billion in 2025. Another very positive message is that we believe Netherlands life remittances are sustainable at current levels for over a decade, without the need for re-risking and pension buyouts. In Netherlands life, the book was always strongly skewed towards DB rather than individual life, which helped contain the overall run-off pattern of the book to 3-4% per annum. This positive skew has further improved over time due to new business and renewals, and we also pick up more free yield on our book now that interest rates are higher. As a result, we now see a slower run-off pace of Netherlands Life's assets under management that is expected to be around 2% per annum. With our strong cost management track record in mind, we can continue to offset the run-off pattern via expense reductions for over the next decade to come. This is based on our current best estimate and current regulatory framework. A scenario of severe real economic losses could obviously affect this projection. Based on a stable remittance pattern from Netherlands Life and continued growth from Netherlands Non-Life and Europe, we would expect continued diversification and growth of our free cash flow profile. This will provide an anchor for us to extend our strong capital return policy with a progressive dividend policy and an annual buyback of at least 300 million euros. With this, I would like to hand back to David for concluding remarks.