Nn Group Nv Unsp/Adr

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.