Sanlam Ltd

Ladies and gentlemen, and welcome to the Sunlum 2026 three-month operational update. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the call. If you should need assistance during the call, please signal an operator by pressing star, then zero. Please note that this event is being recorded. I will now hand the conference over to Paul Hanratty. Please go ahead, sir.

Irene, thank you very much, and good afternoon, ladies and gentlemen, and thank you very much for joining us on this call today. I am joined on the call today by our Group Finance Director, Abigail Makuba, our Group Chief Risk Officer and Chief Factory, Milonga Lodzi Mashlangeni, and our Head of Investor Relations, Tikela Milodzi. Earlier today, we released our operational update for the first three months of 2016. I'll provide a very brief overview of our strategic progress and operational performance before we'll open the line for questions. The group is investing in organic growth, and while this puts some short-term pressure on earnings, it underpins future growth. Against this backdrop, I'm going to cover five points briefly, in order, I hope, to assist you in making some sense of the quarter's performance. First off, the group continued to make excellent progress in the execution of strategic priorities in the quarter. We closed the 91 transaction in early February. The MUFG, Capital Injection Industry and Finance, took place just after the quarter end, and we now have more than 50% share in each of the Indian insurance businesses and their economics. We have capacitated the Lloyd Syndicate, Our cloud migration is on track and we're progressing to launch banking services in South Africa just as soon as we've obtained the necessary regulatory approvals. We're confident that our current platform coupled with the growth sectors we're investing in will drive future growth for the group. Second point to make at this time is that the group's capital position remains very strong. Discretionary capital is now around the upper end of our long-term target range following the closure of the Indian insurance transactions. And this stands us in good stead to deal with any volatility that might arise in the balance of the year. Turning to earnings, which is the third area I want to talk a little bit about. In our business, of course, one quarter is no real guide to the full year. And this first quarter saw volatility in both investment variances from ALM hedging and large reductions in underwriting profit with both Suntum and Saint-Lamaliens as a result of large weather-related claims. Importantly, Saint-Thomas still achieved an underwriting margin above the midpoint of their target range despite those adverse weather claims, while Saint-Lamaliens fell below this range. The weather losses in the first quarter were large compared to the prior year, but within the normal range of what we expect in any given period for this sort of event. In judging earnings progress from prior year, one needs to adjust the South African Rand strength, save of the asset management business to 91. These dividends and capital movements will not appear in Sunland's operating profits, and for the restructuring of the group to upweight India while down weighting Sunland Allianz from a profitability point of view. Investment variances included in operating profit were positive for the quarter. For the purposes of determining cash earnings from which we can declare dividends, these investment variances are transferred to the asset mismatch reserve for release to profits in later years, exactly as in the past. The 91 transaction creates different effects across operating profit, headline earnings, and GEV. So quarter-on-quarter comparisons require some particularly special care. Importantly, the transaction strengthens both our strategic position and future dividend check capacity. The investment returns on shareholder funds were lower in the first quarter than in the first quarter of the previous year. Higher bond yields and some stock markets, Morocco in particular, drove lower returns on those assets. As a result, return on equity was a little depressed in the first quarter. The fourth area that I want to focus on is new business volumes and their client cash flows. We're delighted to see overall strong growth in new business volumes and their client cash flows. Overall sales were strong, with particular emphasis on capital-like market-linked sales, with only Sanlam Alian's general insurance and the Indian life sales disappointing. The lower V&V margin primarily reflects product mix rather than a deterioration in underlying economics. And consistent with these bumper sales was good persistency experience. Finally, I'd like to mention a few points regarding the outlook for the balance of the year. Despite the current global volatility, we are optimistic both about the long-term growth prospects for the group and the current year performance. Our clients have weathered the storm so far, And while higher oil prices and inflation will create cost of living pressures in the short term, the group remains well positioned for long-term growth. The weather-related claims in the first quarter are not out of line with our expectations of potential volatility from the source. Parts of the Western Cape have suffered severe storm damage over the last few weeks, i.e. after the quarter end. The extent of the damage has not yet been quantified yet, and we do expect it to have an impact on the results of the year progresses. We have, however, taken a number of actions to prioritise restoring both the B margins and to compensate for the higher claims experienced from weather events in the first quarter. This is across the group. Some of these efficiency initiatives will only be fully realised by the end of the year, so we expect to have second-half earnings higher than first-half earnings, always subject, of course, to weather, global geopolitical environment, and, of course, the normal economic factors and market levels that we are susceptible to. We do, however, see some progress on earnings growth by the end of the first half. In conclusion, the first quarter of 2016 has seen some considerable strategic progress, and we remain confident about meeting the long-term targets we set. for the business over time. There are quite a few moving parts affecting the first quarter's operating profit, but the group remains confident that through its actions it will be able to meet the full year guidance, subject of course to those same unknowns of weather, the geophysical environment and of course various market levels. I hope that those few comments helped us to give you a little bit of insight boundaries around and some guidance on how we saw the first quarter. I will now open up to questions and Abigail, Melinda, Lozi are standing by to help answer your questions. So thank you very much.

Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star and then one on your touch-tone phone or on the keypad on your screen. You will hear a confirmation saying that you have joined the queue. If you decide to withdraw the question, please press star and then 2 to remove yourself from the queue. Once again, if you would like to ask a question, you may press star and then 1. The first question we have is from Michael Priscilla of UBS. Please go ahead.

Hi guys, can you hear me?

Michael, we hear you perfectly. Nice to hear from you. Excellent. Thank you, Paul, and thanks very much for the time. I'll start with three or four questions if I can. I think the main one that concerns me a little bit is the margin, obviously, and I wonder if you can maybe just give us a little bit more colour as to the various moving parts there. You talk about negative margins in India, and I'm just trying to understand what is the trajectory of, say, you know, mass market in SA and middle and upper market in SA relative to the full year number? Yeah. And has there been a sharp deterioration in either of those two? Those are the two that I'm most interested in. That's the first question. The second question is just on the Indian life insurance transactions that were completed, is there going to be any EV write-down impacts for Goodwill? If you can just give us a sense of how big that would likely be for our modelling for half one. Then the third question, the investment management guidance or profit growth, operating profit growth on a normalized basis looked a little bit on the low end to me given how well opening assets should have been higher than the year ago. Can you talk about the impact that stranded costs – are the stranded cost impacts in that 7% or have you normalized that after? I'm just unsure about that, if you can. And then the last question, if you don't mind, is just on mortality for – I know it's one period and one quarter is a very short period. just how is mortality looking? It was really good across the sector end of last year.

Thank you. Okay, Michael. So let's go through those four one by one. Sorry, I should have written them down as you, as I've been listening carefully. So your first one was actually around the V&B margin. And I think you were interested in particularly what has happened to the margin in the mass business and the... the mass business and the... and the affluent business. So, look, you know, I said to you guys, you know, you've got to be very, you know, very, very careful with P&B margin because it's the, it's the weighted average of a whole lot of, you know, very, very, very different, you know, very, very different things. So some products have much higher margins than others. If you take something like MarketLink business, where, you know, you switch from immediate annuities to MarketLinked, actually the VNB doesn't reflect a huge chunk of the profits that you're going to make on that business because it's sitting in your asset management operations. So that's why the margin on those products are lower. When you talk about the mass market, I mean, it is true that actually our spread of costs is not even over the full year. So actually the first quarter of any year, the VNB is a little bit lower in the mass business than in you know, the full year. So that is a little bit lower. The affluent business, you know, it's literally just a huge mixed swing. I think, Melinda, you'll have to correct me if I'm wrong, but I think in the first quarter, the immediate annuities were down to 18%, am I right, of the total? That is correct. Yeah. Whereas, what was the number for the full year last year? It was about 30%, right? Yeah, so you're adding, you know, that change of mix is a big thing, but each individual product still has the same VNB margin inherently. It's not as if the margins themselves are being compressed, if you get my point. India is in a turnaround. I think by the end of the year we'll start seeing positive P&B, but obviously anything that's negative pulls the weighted average down horribly. The second question related to, Michael, just remind me, you asked about the impact.

Any write-downs there?

The impact. So that I think, Melangelo, you know the answer to that.

Yes, I know the answer to that, Paul. So just for the work we achieve, we write down on the life businesses because the foundations were done at appraisal value, but we value them at GEV. And we take them at about two times GEV. So for the life foundations, there will be a write-down of 50% of the purchase prices. On the general insurance side, there's not going to be a GEV write-down arising from the foundations. But for the light transactions, it's 50% good right now.

It's worth pointing out, Michael, of course, that that GEV right down in the life, the Indian life business is minute compared to the uplift that you would expect to see of the Sriram finance stake and the 91 stake. Yeah, agreed. And your third question was, and actually it's a good question you asked because it actually underlies in a certain sense the flaw in the whole GEV methodology where you ignore the value of goodwill or new business on life business. Your third question related to, I know the fourth one was mortality. What was the third one again?

Investment management. The investment management operating profit growth. Does that include stranded costs?

Yeah, it does, by definition, include standard costs in there. Abigail, are you able to add any colour to that topic?

Yes, Paul. Hi, Michael. From this right, it does include standard costs. So there's 7% that you're referring to for the quarter. That includes standard costs included in there. Overall, for the full year, it did communicate that it's approximately about between $200 to $300 billion of stranded costs that this business was paying to ensure that efficiency on this.

Can I just say one thing, Michael? Is it the answer to why it's only 7% doesn't lie in the stranded costs? The answer lies in... very good, this is why quarters are horrible things, very good performance fees in the prior year, in Q1. And then on mortality, I think mortality is just trending, I mean, Melinda Losey again, I'm sure you'll tell me if I'm wrong, but it's trending along pretty much in Q1, where we, there's nothing unusual about it, it's not elevated and it's not depressed, there's been no bumper profits and no No setbacks. I think you must know this, Michael, is that the winter months tend to be the bad months on that front.

Yeah. Perfect. Thank you very much.

Okay. No worries.

The next question we have is from Faison Locani of HSBC. Please go ahead.

Hi there. Thank you for taking my question. The first should be very simple. Thank you very much. The first is on the project expenses. Can you provide some colour on how that's developed year on year and just give us a reminder in terms of what the guidance is for that line item for this year and next year. The second question is on Sandlam Allianz. It was obviously a tough quarter due to the weather. Can you make us an idea in terms of How much of that poor performance is down to Krishna versus Kat? And what's the realistic time frame for sort of rejigging that portfolio? My third question is a comment you made in there about the weather events being tougher than last year, but broadly in line with where you think they could be within a range. Just want to get a sense in terms of versus sort of best estimate, how was the weather in the quarter relative to expectations? And finally, I just wanted to come back to the same question on the VNB margin. It's very clear from what you're saying in terms of VNB is not a great indicator, given where it sits in different line items. But given how your mix is developed and where the margin is, how should we think about the flow through into the P&L and into capital generation from a solvency perspective?

Thank you. Okay. Okay. That was quite a mouthful. I think there were four questions there. There were four in the end, yeah. Yeah, why don't you just remind us of the first one? Let's just do them one at a time.

Yeah, the first was on the project expenses. Any sort of guidance there in terms of how that's developing?

Abigail, you can provide some guidance on the project expenses.

First of all, thank you. So in the project expense-based assessment, we did guide through the year-end process that we expect the project expenses to remain slightly elevated in 2026 as well, similar levels or slightly below the 2025 levels. And that was mostly as we were inventing the SAE ecosystem in terms of the launching of the traditional banking proposal as well as the rewards and setting up the SAE ecosystem. However, I think like any other business, we are operating in an environment where we're having to deal with the realities of a very tough macroeconomic environment. So this is an area that we are also looking at to see if we can responsibly delay and or reduce some of our project expenditures. So we expect the project expenses for the year to slightly come down from what we had initially guided. I would say that it would be levels below 500 if we're just looking at the project expenses that are not pre-funded. Obviously, we do have the other project expenses that are already pre-funded, and those don't really knock you here now.

Okay. Your second question, Farzul, had to do with, just remind us.

It was on Sandlam Allianz in terms of how much of that experience is down to weather versus traditional, what the timeframe is for that to sort of get back to target sense.

Yeah, and I think you also asked, I think somewhat related about, you know, what our expectation is. Now, I think you can appreciate, especially because you live in England and you know a lot about the weather, is that, you know, I wouldn't say we don't budget or have an expectation specifically for the weather in any given quarter of, you know, some periods are dry and some are wet. But we have kind of budgets for what we think are reasonable level of that type of thing over the course of a whole year, right? And you have a feel for it. These are not way outside of our... expectations of what we're trying to say. We have a budget for the year. I don't want to give you what our budget for the year is, but it's not particularly abnormal, whereas the first quarter of last year was actually very good, extremely good. But I mean, you may remember some years ago there were absolutely horrific floods in Morocco. So we had floods again this year, which was a problem, but we had these absolutely horrific things. And actually in that instance, there was not a lot of claims for us because actually the government stepped in and sorted out that they were actually worse, far, far worse, and people's houses were swept away and so on. But a lot of the people who had houses swept away were uninsured people. They were relatively poor people without insurance. So it is a bit hit and miss, but all we're saying is that you don't need to worry. This is not a sort of a Florida floods. kind of scenario. We'd expect by the end of the year for the balance of the year to be relatively benign, but you never know. Storms and that can come in from anywhere, anytime. So that's really all we've guided. You had another question, though, I know, on something else.

Yeah, it's just sort of around the contract VNB margins and how should we think about the overall life that is going through into the P&L capital?

Yeah. I think this is probably your best, your territory.

Yes, Paul. So I'll take an eye sample and I'll speak to you again. Yeah, so the way you think about it, I mean, you mentioned the point about what's been changing in the business mix and as Paul initially indicated earlier on, You know, that mix will shift based on certain external factors, for example, markets and so forth. But the way to think about it from a capital generation perspective is that whilst you are adding lower VNB, covered VNB, because you've got slightly lower margin products, they are also less capital intensive, and therefore, from a surplus generation perspective, your capital requirements are also not growing as much as if you were adding the more capital-intensive products. So what you will see from a capital generation perspective is a reduction in the pace of your capital requirements growing, aligned with the reduction in your generation of your old funds. So you have such an offsetting effect. And what you will then see over time is the level of profitability. You've got slightly lower margin, or slightly lower in random amounts. but your return on capital will still remain healthy. And as Paul indicated, our margins by product still remain very healthy, and they meet our hurdles from a return on capital perspective. You'll just get a reduction in the margin level. So that's how you should think about it from an organic capital generation perspective.

Helpful. Thank you. Appreciate it.

Nice. Irene, are there any other calls? Any other questions on the call?

Yes, so we have a few more questions. The next question is from James Shuck of City. Please go ahead.

Thank you. Good afternoon, everyone. Thanks for taking the questions. I have a couple of real questions and then just three of clarification. I'll start with the couple of kind of real ones. The first one is kind of just... You mentioned in a few places about how investment drag has come through in Q1 and there's going to be certain investments, et cetera, made through the year. Could you just expand on that a little bit, ideally quantifying where that's appearing and how much it is and what the outlook is in terms of that investment drag? That's the first question. And then secondly, I just wanted to ask about the normalized insurance and shareholder investment return outlook. A lot of your metrics that you're measuring yourself on and the new targets you have are all kind of free variants, and therefore you must have an expectation for what 2026 insurance and shareholder investment returns are likely to be. From where I'm sitting, it's very hard for us to model that and have an expectation. So if you could actually give us some guidance over that, that would be immensely helpful. I'll come back to the three clarifications in a second, if that's okay.

Sure, sure. Look, I think your first question, I mean, we can go back to Abigail. I think she has spoken about the project expenses, which is where the investment is going on. I mean, do you want to have another go at it, Abigail?

Of course. In terms of the project expenses, the investments go into, firstly, We're modernizing a lot of our technology. One of the bigger ones that we're doing today is the migration into cloud of our, we currently have legacy on-prem systems. So that's one of the things that we're doing. We're also trying to embed AI into our processes. That's on the technology front, but also from the revenue generating perspective. We are investing in growing some of our branch networks in the South African context, and we are also investing in the rewards program as well as the banking proposition. So there's a few of them that are intended to solidify our position in the South African market, but also just to modernize the organization. We also have other amounts, obviously, typical of when you've got COVID activities. Obviously, some of them are still fading through as far as some of the transactions that have been arising.

But I think it's fair to say, Abigail, we're not going to give you a list of every project we have and the amount we expect to spend on it. I think that would be a you know, a level of overkill. On the subject, your second question pertained to and sorry, just remind me, your second question was on I wasn't quite sure if you could hear me because I think I got cut off for a little bit.

The question on investment wasn't so much the project expenses. Okay, yeah, yeah.

It was more about the investment. You asked what our expectation was, yeah.

No, no, no, sorry. Can you hear me okay? Just checking you can hear me. You can, yes. Okay. Sorry, if I go back to the first question, the question was less to do with project expenses and more to do with investment expenses that are occurring within the operating profit line, like things like investment in India and I think there was something else mentioned elsewhere in the release. So it's within the operating profit. If I've got that wrong, There's nothing really dragging on that, and that's fine. The second question was on the normalised expectations for investment.

Okay, okay. Okay, okay. No, look, I think in a place like India, I mean, yeah. So, Abigail, I think the question is in a place like India, how much are we investing in growing that retail distribution? you know, channel. And I don't think we're, James, we're not disclosing that sort of level of detail at this point in time. I think it's something Abigail will have to go and think about whether she wants to, you know, get down to, you know, to that. You know, in terms of the investment return, I mean, Melinda Losey, I think it's, you know, good for you to answer this question. I think, you know, we clearly do have an expected return, you know, over the year. and the rise in interest rates obviously was hammered things. But I think a lot of that has actually already come back since the quarter end. But maybe you could answer that.

Yeah, thank you, Paul. I mean, I can answer that. So we do have an expectation of the investment returns. So for the full year, we're expecting to earn around, say, 8% to 9% after tax. And the reason for or that level of return is that more than 50% of the assets that are affecting our capital portfolios are in fixed interest tax investment, and another quarter in equities and the balance in other assets. So, what has happened in the first quarter, particularly what caused the drag was mainly the rise in interest rates, as Paul had indicated in the first quarter. Some of which has now reverted. but also it was, you know, the equity performance in our more open business where a large component of our equity exposure is held. So when we look at the remainder of the year, is our expectation will be based on what happens to equity markets. But I mean, I think Philadelphia will be able to disclose a lot more information around the asset allocation for the shareholder capital portfolio, as well as the expected returns for the different asset classes. But if we are looking at the expectation in the first quarter of this year, the return that we achieved was lower than the expectation because of the rise in interest rates, as well as the underperformance in equity markets, particularly in Morocco.

Okay, and that's the return on shareholder fund reserves, right? You were talking about the 8% to 9% checking session. Okay, maybe I'll come back to it.

Are you talking about on shareholder funds, not on the shareholder fund reserves?

Yeah. Okay. Just some clarification points. The credit spread widening you mentioned as being a drag, can I just check that isn't included as part of the investment variance MCM kind of adjustment? So it looks like it's included actually in the pre-adjustment like-for-like number. So do you not normalize for credit spread widening? No, not at all.

No, we don't. We don't normalize for pre-spring widening. So our normalization principles have really been mostly for emanativity as well as currency. The rest is rather, it forms part of the overall conversation, but it's not normalized at all. To the extent that there are investment variances or investment returns impact from the M&A activity that would then be part of that normalization. Yeah.

I think, Abigail, just let Melangelo clarify the credit spread and the treatment of investment variances around it.

Yeah. So, I mean, I think there is maybe two things to consider. So, in the credit spread widening, it is treated, a component of it is treated as an investment variance. So we assume that 50% of the spread-widening effect is an investment variance, and the remaining 50% is treated as an indication of particularization in true credit quality. So that's how it's treated from an investment variance perspective. What Abigail was covering was when it comes to the normalization of operating profits, for example, to get to a like-for-like comparison, in that particular normalization, you know, you don't adjust for the spread warning specifically because it is treated as an investment variance. So, that's the two aspects. So, I think, James, for normalization purposes where you're allowing for structural changes, you don't normalize for the spread warning in that normalization.

Okay. Hopefully, this will get clearer at 1H. I'm conscious other people have questions. Just one more quick one from me. Can I just ask what the operating profit before variance baseline was for 2025? I know you have the target that you've reiterated today. I'm not entirely clear what the 2025 absolute base number is that that refers to. Thank you.

Just so I understand, is that for 2025 for the first quarter or the full year?

For the full year, 2025. Is it just the 407 I need to adjust? For the full year.

Your operating profit is using investment variances for the full year was 13,853. 13,853.

Thank you. I'll pass the mic over to someone else now. Thank you so much.

Thanks, James.

Thank you. The next question we have is from Baron Nkomo of JP Morgan. Please go ahead.

Hi, guys. Just one or two questions from me. I think some of them have been answered. But can you maybe just comment on the outlook for persistency for the rest of the year, given the potential impacts I guess, of inflation. And then, maybe just to clarify on San Lamalians, the guidance for the full year, is that your underwriting margins return through the target ranges? What was the official guidance?

Okay, so let's just talk about persistency to begin with. If we talk about You know, each of us on this call will have different expectations about what's going to happen to inflation for the balance of the year. But I think, you know, most all of us, we probably managed to agree that we see the expectation of inflation, or the expectation that inflation, you know, will rise. The only issue is to what extent and, you know, precisely what it impacts. So we do expect it to have some impact on, you know, people's cost of living. and therefore on disposable income. And that could well have some pressure, put some pressure on persistency. So all we have said is that at this point, persistency is well under control. Of course, the longer we're into an upward, you know, inflation trend, cycle, the higher the risk becomes. And particularly if that is coupled with relatively weaker growth and higher unemployment. But the other thing about inflation, of course, is it's going to have a big bearing on claims costs in your general insurance businesses right across the board because it will put upward pressure on costs of repairs and replacement of things. So, you know, if you ask us what exactly do we think is going to happen, we don't know. Probably any better than anybody else does. But, you know, it's a definite downside risk rising inflation to both persistency and, of course, to sales as well. Sales persistency and GI claims costs and therefore underwriting margin. And then, Baron, your second question was around

Just remind me, it was on... Yes, I was just clarifying the guidance for the year on the underwriting margin. Is it your expectation?

We set the underwriting margin to be within their range for the balance of the year, but not to retell what they've lost in the first quarter. Instead of picketing violence, they're not going to pick up the run rate that they've dropped in the first quarter, but you'd hope that they'd be on the original expected run rate for the balance of the earnings. Yeah. Okay. Okay. Thank you. So we have to make that up from elsewhere, which is why, you know, Abigail wins a bit of detail around some of the efficiencies that we're pushing through all over the place.

Thank you. The next question we have is from Tapelo Mokonyane of Investec. Please go ahead.

Good day. Thank you for the opportunity. Just one question. Can you please clarify your full year earnings guidance? You specifically mentioned that you're confident that you will meet that guidance. Just please clarify, what was your guidance?

So our guidance was that for earnings purposes, we expect that for 2026, we're going to have South African CPI plus 3% for 2026. region to 2030 or through the cycle diet is 55 plus 6% through the cycle. So we did plan when we came out with our full year 2025 results that we expect that for 2026, given some of the investments that we're putting into the business that there would be a bit of a drag for 2026. But a lot of it was also linked to the structural changes that we were seeing in the business between 25 to 2026 as we bedded down some of the productivity. Some of the main ones that impacted, I think James quoted a drag as well, a bit of a drag was that we know that we have launched from a runtime perspective in our GI business. They've always syndicated. And we expected that that, obviously, in its first year of operation would be in a loss-making position or in more like an early startup J curve. Then we also saw, again, in the stand-time business that 2025 was what we called abnormally benign weathering events. Yeah, because we didn't really have many big events in terms of weather last year. And already in 2026, we are seeing that normalization as we had indicated at the timeframe. And then you also have, obviously, a bit of a structural shift as far as the percentage shareholding that we had between the different businesses that was included in that guidance. But a long answer to say that our guidance was CPI plus 3% for 2020.

Abigail, probably the most important thing to say to Bella is that that excludes investment variances because that's outside of everybody's. A, control, and B, guesswork.

Oh, thank you so much. Makes sense.

Thank you. The next question we have is from Morag Bam of RMB Morgan Stanley. Please go ahead.

Good evening, Paul. I've got three. I'll just start really on the same topic, just in terms of your guidance for 2026 on operating profit, which excluded investment variances. In this release of the first quarter, you did highlight what investment variances did for certain line items, but are you able to disclose what it did for actual operating profit if you were to provide an equivalent metric to your guidance for the full year? What did the first quarter do? Second question is on Manion Rupee, obviously a meaningful headwind. in the period, came through in a variety of places, but I just wanted more clarity on what the quantum of the Indian rupee hedge, the loss that you incurred in the first quarter, that won't repeat. If you could just highlight what the quantum of that loss was. And then lastly, you highlight the Morocco equity markets, and again, there's some differences that are coming through from that. If I look at some of Morocco's share price, That's up 42% year-to-date. I understand you've made some progress there on merging with Allianz business, and perhaps the share price is a function of that, but just trying to get a sense of what progress you've made there, what does the regulator agree to, what is the impact of that share price movement to group equity value, if anything. Thanks.

Okay, two good questions. So, Abigail, off you go there. It sounds like the first two are yours and the last one, Malone DeLozzi.

On the operating profits, including investment variances, the percentage would be minus 7% for the first quarter. And then the hedge loss quantum was $103 million for the first quarter.

And Melinda Losey, on the on the impacts of that valuation on GEV?

Yeah, so, I mean, we do have a look at the valuation of the share price. From a fundamental valuation perspective, we value our Moroccan business based on discounted cash flow basis. And it's quite a very thin float, that stock. So we value it on a DCF basis. And to the extent that there are fundamentals that are driving the valuation, it will be reflected in our DCF. So what you've seen in the share price, you know, might at different times deviate from what we see from a DCF perspective. but we do check it against the valuation of that share price. So, what I said in the improvement in the valuation would work in the LRTCF in the first quarter of the year. It has been a positive performance, apart from the negative equity performance that we referred to earlier, which comes through in the operating profit line.

I think it's a very sort of simple rule. If the businesses are really big, like Sunterm and Liquid, then we tend to use market price. But this is a very tightly held stock, to be honest with you. I can't even remember what is the free float on that stock. I need you to know it's 20%, even 20%. So the market value is... not very helpful. So for all those kind of things, we tend to just use a more fundamental valuation. And it's only really when the price is lower than our fundamental valuation that anybody's actually jumping around looking at it.

Maybe I could just add a little bit of colour around what's been agreed around the merger with Allianz in Morocco and what the regulator has allowed you to do.

Okay. We've got Heini, I think, on the call. Heini, why don't you just add a bit of detail, because you're in the detail. This has been a long negotiated thing, Warwick, as to what exactly we need to do, and we've been through those steps now. So, Heini, do you want to just talk about the branches we sold and so on?

All the regulatory process is nearing completion. We're targeting final approvals, regulatory approvals, end June, early July, and hopefully to have the special EGM then for final major approval in July. It took a very long time, as Paul says, because we, about two years, we were to dispose of certain sales points, we were to reduce certain product lines that adhere to the competition commission concerns, but everything is on track. I want to say for hopefully, if nothing comes, if nothing happens, that we should do the full measure in July.

Thank you.

Irene, back to you if there are any more calls.

Thank you, sir. We have no further questions on the line and I will hand back to you for any closing remarks.

Irene, thank you very much, and thanks for being a good host to us. So, everybody, thank you very much for making the time to join us. We always appreciate your support. We enjoy the interaction, and we look forward to seeing you in September to go through the half-year results, and I think hopefully we will improve some of the disclosures, particularly around... how the NAVs are invested and the kind of investment returns that you can expect over the long term coming out of those. So, yeah, thank you very much to everybody and we wish you all a very good evening. Thanks a lot. Irene, you cannot terminate the call.

Thank you, sir. Ladies and gentlemen, that does conclude today's conference. Thank you for joining us. You may now disconnect your lines.