ASR Nederland Aktie

Good day, and thank you for standing by. Welcome to the a.s.r. Half Year 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michel Hulters. Please go ahead.

Thank you, operator, and good morning, ladies and gentlemen. Thank you for joining us today, and welcome to the a.s.r. conference call on our results for the first 6 months of this year. Now on the call with me today are Ingrid de Swart, our CEO; and Ewout Hollegien, our CFO; and Ingrid will kick it off with the progress of our strategy and the highlights of our financial results. Ewout will then talk about the development of our financial capital proposition and solvency position. And after that, we will open up for Q&A.

Now we have ample time planned for this call, but we will stop sharply at 10:30 the latest. Please observe a limit of 2 questions so that everybody has a chance to ask questions. And finally, as usual, please review the disclaimer that we have at the back of the presentation for any forward-looking statements that we may make. So having said that, Ingrid, the floor is yours.

Thank you, Michel. Good morning, everyone, and thank you for joining us. It's a pleasure to welcome you to my first results call as CEO of a.s.r. I look forward to engaging with you as the investment community in building a constructive dialogue with our shareholders and analysts. And together with Ewout, I'm proud to present our strong first half 2026 results. So let's turn to Slide 2, showing our strategic progress.

Over the past years, we have successfully pursued our strategy of profitable growth to create long-term value. following a string of smaller bolt-on acquisitions over some years, the transaction with Aegon Netherlands was transformational and has put us into various leadership positions. On the 2nd of July, the legal merger of the Life entities came through, and this marks the final step and a successful completion of the integration.

At the same time, we've already started the next integration. The acquisition of Bovemij has been closed on the 1st of July. Now I will discuss the Bovemij deal in a minute, but it's clear that this deal is another proof point of a.s.r. as a disciplined consolidator in the Dutch Non-Life market. We also show discipline in the pension buyout market. The market has clearly become more competitive, particularly in larger transactions. But so far this year, we have announced 2 smaller transactions and importantly, only at terms that make sense for us.

The progress we have made across the businesses gives us confidence that we are on track to deliver on our 2024 CMD commitments. Over the first half of this year, we report a record OCC and a record operating result. We also see strong commercial performance with continued growth in Non-Life and Pensions. Together, these results give us confidence in achieving our OCC target of EUR 1.35 billion for this year.

And lastly, we continue to operate from a position of capital strength. That enables us to invest in value-accretive opportunities as both [indiscernible] and the pension buyouts. At the same time, we are committed to offer our shareholders an attractive return. And to that end, we announced the interim dividend per share of EUR 1.39, an increase of more than 9% and we completed the EUR 175 million share buyback, which we announced at the full year results. So we made significant progress so far this year.

Let's turn to Slide 3 and look at the financial performance. Our OCC increased by more than 7% to EUR 773 million. This was driven by a strong performance in P&C, contributions from the pension buyouts completed in 2025 and the continued delivery of cost synergies. These items more than offset the increased investment in new technology and AI. The Solvency II ratio increased by 4 percentage points to 222%. This reflects strong capital generation and the resilience of our balance sheet in volatile market conditions. Our operating result rose by almost 10% to EUR 901 million. And as a result, our operating ROE reached over 15% constantly above our target of more than 12%.

In Non-Life, the combined ratio for P&C and Disability was 91.6%, better than our target range of 92% to 94%. This reflects, amongst others, favorable came experience in P&C. Our organic growth rose 6%, supported by targeted price increases in group disability at the end of last year. In Pension DC, we have seen solid inflows and the annuity inflows showed positive momentum. This was driven by renewed focus on the customer journey and offering attractive retirement solutions. Overall, we remain well on track to deliver our organic growth ambitions for this planned period.

Let's move to Slide 4 and look at our non-financial KPIs and how we continue to create sustainable value for all stakeholders. As this slide shows our investment portfolio is already meeting its targets, both carbon footprint reduction and impact investments. We continue to make good progress in reducing emissions across the portfolio, and I'm pleased with that.

However, I should also mention that the significant decline is primarily driven by improved and updated data regarding the government bond portfolio. Just to be clear, this concerns not our own data, but data from external data providers. Our sustainable reputation improved further in the first 6 months of this year, and we are pleased with the increasing recognition we get from society.

Our other nonfinancial metrics are also progressing well. I'm pleased to see that our customer satisfaction measured through MPSI has already outperformed our 2026 targets. This reflects the investment we have made in both technology and service delivery.

By using AI in customer interactions, we can handle routine tasks more efficiently and give our people more time to focus on what matters most, personal contact with customers and helping them when they need us.

Lastly, our strong ESG profile continues to be recognized by a broad range of international sustainability indices and benchmarks.

Let's move to the next slide and discuss the acquisition of Bovemij. Small bolt-on acquisitions are for many years already a firm part of our strategy to create value. The acquisition of Bovemij is a very good example of how we deploy capital in a disciplined way. This deal strengthens our #3 position in Non-Life and gives us a unique presence in the Dutch mobility sector. Through Bovemij, we gained access to the BOVAG ecosystem. And in addition, we will establish a joint venture with BOVAG for the distribution activities. This gives us a strong and embedded distribution platform in the mobility sector.

Bovemij adds roughly EUR 400 million of annual premiums and further strengthens our #2 position in the Dutch motor insurance market while also reinforcing our leading position in Non-Life more broadly. The deal was closed at the start of July, and we expect the integration to take about 1.5 years. Actually, this year already, we have planned for the lead merger with our Non-Life entity. From a financial perspective, transaction fits squarely within our investment framework. We expect the deal to exceed our 12% return hurdle and contribute around EUR 25 million of run rate OCC after the integration period.

And as mentioned in our press release in January, we expect the impact on our Solvency II ratio to be around minus 3.5 percentage points. And finally, I believe Bovemij is a good example of a broader trend that we may see materialize in the Dutch P&C market in the coming years. Beyond the 3 largest players, which together already account for around 65% of the market, there is a long tail of smaller insurers. For some of these companies, the investments required to remain compliant with increasing regulation, digitalization, data capabilities and AI may become increasingly difficult to absorb on a stand-alone basis. The minimum size for insurers to run their business in an economically viable way just continues to creep up every year.

The Bovemij acquisition demonstrates that we are an active and disciplined consolidator. Over the past years, we have built a strong track record to successfully integrate in acquisitions and realize their full potential. And we have the capital to continue to pursue attractive opportunities.

With that, let's move to the next slide. And let me talk you through our business segments. Firstly, Non-Life, where we delivered another strong performance. Premium income increased by 6%, clearly above our organic growth target range of 3% to 5%. Growth was primarily driven by targeted pricing actions and both Disability as well as new volume. Premium growth is really strong in H1, helped by some single premiums and price increases in portfolios that mainly have annual upfront payments.

So the premium growth in the second half of the year is expected to be somewhat lower. But on an annual basis, we still expect growth towards the upper end of the 3% to 5% target range. Our combined ratio for P&C and Disability came in at 91.6%, exceeding our target range of 92% to 94%. P&C was particularly strong with a combined ratio of 89.9% which benefited from favorable claims development on prior years, and there were also some one-off expense benefits. Weather-related claims increased compared with last year, but we remained within our semiannual budget.

In Disability, the combined ratio came in at 93.3%. This reflects the pricing actions in the second half of last year, particularly in group disability to address higher incidence rates related to psychological absenteeism.

I should also mention that the uncertainty around the challenges remain and the backlog at the employee insurance agency has worsened and it's something that we monitor closely. We will reassess our assumptions as part of the usual year-end review and will not hesitate to take further actions where necessary.

Lastly, Health continued to perform steadily. The combined ratio was 99.6%, while our customer base grew to more than 700,000 customers. Premium volume increased by 10%, supported by both pricing actions and higher benefits received from the Dutch equalization contribution.

With that, let's move to the next slide and discuss our Pension business. In DC Pensions, inflows increased to EUR 1.5 billion in the first half of this year, and we remain well on track to achieve our medium-term target of EUR 8 billion in cumulative inflows. Supported by favorable financial markets or DC assets under management increased by 14% to EUR 34 billion.

Annuities, our pension de-combination product gains momentum. Inflows increased by 38%, driven by growing volume of maturing DC assets and an improved customer journey. Our focus remains on retaining these assets through a high customer satisfaction and competitive pricing. Based on current developments, we are on track to exceed our medium-term cumulative annuity inflow target of EUR 1.8 billion.

In Pension buyouts, we remain highly disciplined. During the first half, we successfully executed the Kring Bavaria transaction, adding over EUR 200 million of assets under management. The Ecolab transaction representing a further EUR 150 million has already been announced for the second half of the year. We will maintain our value over volume approach and will only pursue transactions that meet our return requirements. While competition has increased, we remain confident in achieving our EUR 8 billion buyout ambition, although part of the opportunity may materialize beyond 2027.

With that, let's now turn to our fee-based businesses, where acquisitions and cost synergies supported another strong performance. Fee income increased by 33% and driven primarily by the addition of human total care to our Distribution & Services segment. Human TotalCare operates in the growing market for occupational health and reintegration services. With absenteeism levels elevated, we see attractive opportunities across the broader employability value chain. The Human TotalCare contribution also supported the operating result of fee-based business, which increased by 32% to EUR 150 million.

Next to the acquisition, this was mainly driven by the realization of cost synergies from the mortgage platform migration. In mortgages, production amounted to EUR 3.6 billion. Volumes were lower than last year as we see spreads tightening. Competition is particularly strong from banks, especially at the shorter end of the maturity spectrum. Nonetheless, we remain disciplined in pricing and only originate mortgages that meet our desired spread levels. Overall, our fee-based business continued to demonstrate their value, a scalable capital-led growth platforms for a.s.r.

With that, I will hand over to Ewout, who will take you through our capital generation and solvency position.

Thank you, Ingrid. Great to have you all on the call, and I hope everyone enjoyed a nice summer break. The CFO cannot be more happy when these results are not only strong, but also a very clean set of numbers.

Let's move directly to Slide 10 and start with the capital wheel. This slide shows what we mean by putting the balance sheet to work. We continue to operate from a strong capital position. This gives us room to invest in growth, while the balance sheet remains robust. We deployed capital in a disciplined way that includes organic growth, optimization of the investment portfolio, the Bovemij acquisition and Pension buyouts. And every growth we achieve value over volume is the starting point. Our level of capital generation increased to EUR 773 million. Our business performance gives us good confidence on delivery towards the EUR 1.35 billion target for 2026.

And capital return remains attractive as well with 9% interim dividend per share growth and the completion of the EUR 175 million share buyback announced at the full year results. So in short, the wheel is turning we invest in profitable growth. We grow OCC and we increased capital return.

Now let's zoom in on the development of solvency on Slide 11. As this slide shows, the largest contributor in solvency development is OCC. OCC added 13 percentage points to the ratio. The market and operational movements had only a small negative impact of 1 percentage point, where the positive impact for mortgage spread tightening and real state revaluations were offset by negative impacts such as the downgrade of Belgium government bonds and the growth of the equity portfolio. After capital distributions, the ratio lands at 222%.

Looking ahead, there are 2 relevant items to keep in mind. Those do not differ from what I've mentioned at the full year results. One is the Bovemij acquisition, which is closed in July. Two, is the removal of the DA as part of the legal merger of the life entities. And as you all know, we have chosen not to apply for the DA in the partial internal model for -- of a.s.r. life knowing that the DA has to be eliminated anyway when EIOPA 2020 kicks in, in the beginning of 2027. Combined, the impact of those 2 points is around 7 to 8 percentage points. And then in the first half of 2027, the implementation of the EIOPA 2020 review kicks in, and it is still expected, like by the full year to at around 10 percentage points.

So overall, we remain in a very strong position with ample room to support profitable growth and attractive capital return. Let's turn to the next slide for further detail on our OCC. The main driver for a 7% increase in OCC was higher finance capital generation. This reflects the contribution from the pension buyouts that we closed in 2025. We also benefited from strong revaluation in equities and real estate over the past year, which are compensated by spread tightening throughout the fixed income portfolio. The Non-Life contributed positively with a EUR 55 million uplift.

In P&C, performance was strong with a combined ratio below 90%. Disability showed a solid performance in H1, proving portfolio discipline and at the same time, knowing uncertainty remains given the situation at UWV. Next to the strong business performance, the increase also includes a lower business strain of around EUR 20 million. This was a result of an increased upper limit of our net GAAP cover in H2 last year. And though it does not make a difference for the full year, we see an out performance from H1 to H1 due to this timing effect.

So actually this half year, is a solid base to think of also going forward. Segment asset management shows an uplift of EUR 50 million, mostly driven by the migration of the mortgage portfolio in H2 last year. The increase in Distribution & Services segment mainly relates to the full contribution of [ Harts ], which has been reallocated from holding to distribution & services after we acquired the remaining stake of 55%.

For the Holding and Other segments, we see a couple of elements driving the EUR 22 million annual decrease. Firstly, as you know, we are investing into new technology and AI. Secondly, a modified treatment of the employees' visibility arrangement. Lastly, I had to say this no longer contributes to the holding segments.

And before we head to the operating results. Let's look at the outlook for our full year OCC. The OCC of EUR 773 million per half year 2026, should be your starting point. Then if we add the EUR 594 million OCC from the second half of 2025, you should take into account a few elements. Combined ratio in H2 last year set within our targeted range. Growth of the business, increased investment return and cost synergies should provide an additional uplift -- and those are offset by headwinds from the impact of the introduction of the PIM to Aegon Life, the transfer of mortgages to BAWAG, the timing effect on the SCS strain as just explained, and additional investments that we are doing in AI and other technology.

All of these developments combined should roughly be a wash. So that would keep the OCC for the second half a touch below EUR 600 million and the full year 2026 OCC north of the targeted EUR 1.35 billion.

Let's turn to the next slide and talk about the operating results. Given that the most underlying drivers in the operating results are the same as OCC I will focus on the drivers that are different from the OCC analysis. The operating result increased by 10% to EUR 901 million. The Life segment delivered a strong increase of [ EUR 70 million, ] mainly driven by a high CSM release, reflecting, amongst others, the higher release of CSM due to the capitalization of cost synergies in H2 2025 last year. The Positive experience trends observed in pensions was offset by a lower contribution from associations compared to last year.

And lastly, for Life, we realized a higher investment margin from the 2025 pension buyouts. The increase in operating investment and finance result is higher than the increase in OCC finance capital generation because the tighter that market spreads led to a lower liability liquidity premium and IFRS but does not impact the VA and the solvency.

In Non-Life, the increase in operating results mainly reflect higher investment income. For the insurance results, the business growth is offset by a slightly higher combined ratio compared to last year. and the development of our fee base business and holding are equal to OCC. So let's turn to the next slide and talk you through our updated source sensitivities.

Slide 14. As mentioned during the full year call, we would give an update on our sensitivities that also reflects the removal of the determining adjustments, which now actually already has been removed after the legal merger on the 2nd of July. And as a reminder, the DA was an Aegon-specific mechanism that corrected for mismatches between our own portfolio and the VA reference portfolio via the required capital. And what you now can see in our sensitivities is that they stay benign, and our sole resilience remains strong also after the removal of the determining adjustment. The current sensitivities are actually now more aligned with market practice.

Let me now focus on the fee spread sensitivities since those sensitivities are mainly impacted by the removal of the BA. For government spreads and mortgage spreads, the outcome is quite intuitive. If spreads widen, valuation go down and for both investment categories risk is low and therefore, limited compensation in required capital, netted a negative impact on solvency from spread widening the other way around from stretch tightening. For Credit spreads, the picture is different. Here [indiscernible] widening actually leads to an uplift in the solvency. And there are 2 drivers for that. Firstly, in the European context, our fixed income portfolio has a relatively large allocation to mortgages, the VA reference portfolio as a relative large allocation to corporate bonds.

So when credit spreads widened, the VA reacts more strongly than it would on the basis of our own portfolio. Secondly is the application of the IAS 19 for the valuation of the pension scheme liabilities for our own employees. The IAS 19 discount curve is based on the corporate bond yield curve. So why the credit spreads therefore also have a positive impact on our solvency. So overall, the sensitivities to our balance sheet remain very manageable and in real life, spread movements in [indiscernible], credits and mortgages have historically been positively correlated. That means a different direction in the spread sensitivities also provide a natural offset.

Let's move to the next slide where we discuss our investment portfolio. This slide shows our robust and high-quality investment portfolio with over 80% allocation to fixed income assets, including mortgages, derivatives and cash. The fixed income bond portfolio covering government bonds, credit and alternative is a high-quality and well-diversified portfolio that I'm very comfortable with. We believe that mortgages offer historically a very attractive risk return profile. The average loan to value is around 50% and credit losses remained below 1 basis points.

So from a risk perspective, this is a very strong portfolio. As Ingrid mentioned, new mortgage production was lower. That's mainly due to the current interest rate environment which increases customer appetite for short-term maturities, where there is more competition from banks and resulting in lower spreads. Let's move to real estate equities, where performance was very strong. In the first half year, real estate revaluation were up almost 3%, and this was mainly driven by residential, which was up around 5% helped by the lowering of the transfer tax we discussed in fuller stages and remains the backbone of the portfolio together with our rural portfolio that also continues to show solid performance.

In equities, next to positive revaluation. We used the recent geopolitical volatility to expand our portfolio a bit at attractive buying moments. And that is another example, we're having your own asset management and be really on top of the market creates real value.

Let's look at the flexibility of the balance sheet on the next slide. This slide shows that we continue to have ample financial flexibility, and that is really supported by the composition of our balance sheet. Financial leverage is 21%, interest coverage ratio well above our internal limit. And on top of that, we still have significant debt capacity. There is room for more than EUR 2.5 billion RT1 and Tier 2 issuances.

And as you can see on the bottom right-hand side, our debt maturity schedule remains nicely spread over time. So from whatever angle you look at it, the balance sheet gives us significant financial flexibility.

Let's turn to my last slide and end with our HoldCo liquidity. At half year, the HoldCo liquidity position is temporarily elevated, reflecting the cash upstream needed for the Bovemij acquisition. The cash was already remitted before the half year closing date while the actual cash out took place the day after. The additional remittance came specifically from our well-capitalized life entities, and that's also reflected in the solvency ratio for a.s.r. Life, which still remains very strong.

So OCC good, group solvency good, cash at holdco good, legal entities is also good. But could I say more? I think this is a good moment to hand it back to you, Ingrid for the wrap-up.

Thank you very much, Ewout. This brings us to the end of our presentation. Let me briefly close with the key messages. First, we have pursued profitable growth and strengthened our platform. The integration of Aegon Netherlands is now finalized, and the acquisition of Bovemij was completed in July. Those are important steps in creating a leading insurer in the Netherlands. Second, we delivered a solid performance across all business segments. Our OCC is on track to reach the EUR 1.35 billion target in 2026.

Third, our capitalization remains very strong. The Solvency II ratio increased to 222%, reflecting strong capital generation and well positioned to pursue value-accretive opportunities. And finally, we will present our updated strategy and new targets at our Capital Markets Day on the 1st of December of this year.

With that, we are happy to take your questions. Looking forward to answering them.

[Operator Instructions] We will now take our first question from the line of Cor Kluis from ABN AMRO - ODDO BHF.

It's Cor Kluis from ODDO. Congratulations with the results, especially I think the organic growth, the premium growth in Non-Life was quite high, better than expected. Could you elaborate a little bit more on that. So in Disability and P&C, could you split it in price increase and volume. How was the churn and are you satisfied with the price increases in Disability, especially given the VA situation. So that's a question on premium growth in Non-Life organic.

Second question is about M&A. Yes, Ingrid you as new CEO, of course, doing acquisitions has always been an important part of a.s.r.. So you will probably also continue that in the future. Could you give your first views and context and way of looking to M&A is probably a continuing way of doing business, but your own view on that.

And last question is about the VA. I get it -- of course, you were doing a bit Q3. Yes, could you give some comments about what's going on, how the government is acting what your interactions with the government indicate we get the backlog in our , et cetera? So that be my questions.

Thanks, Cor, for those questions. We will -- I will start with answering the question around M&A and then Ewout will take care of the P&C and disability questions that you post. And thanks for the compliments as well, Cor. We're also very happy with the clean set that we presented this morning. So I have been part of this company for almost 7 years, and M&A has been an important part of the strategy and an important source of growth for years. I think that the Aegon the Netherlands transformation of integration and deal was really transformational to a.s.r. And we are really proud that we completed the integration within the 3 years and delivered on all the targets that we promised.

And more importantly, also, we're very successful in bringing 2 cultures together. I'm also very happy that while we have just closed down the integration and really completed it, we have already started the next integration of Bovemij. And I love the blueprint of Bovemij that well fits into what we have always said, that in the Non-Life space, particularly in P&C, there may be opportunities in the coming years because of the 65% that's divided between the 3 biggest players in the market. There is a tail of smaller players. And we see now that Bovemij is, I think, perfect proof point of that it's quite's difficult for a smaller P&C insurer to stay economically viable to do the advances into digitalization and AI and to remain relevant to customers.

And that's why I'm very happy that we were able to have such a nice deal together with BOVAG and Bovemij, and we are very keen to explore additional opportunities. So I would say, as expected, no change here, but looking forward to creating more opportunities. And the same goes for the financial investment return point of view deals, while we also always have looked at life and also funeral. They are also very keen and interested in by portfolios both in Life with back books that have predictable cash flows, but also in funeral.

And we still believe that there is 1 big insurer that we think may come to the market at some point in time. And we will be keen to have a look at that, as you can imagine. And in the last couple of years, we have also required a range of smaller distribution companies, such as also Human TotalCare that we mentioned in our presentation today. And we also of continued interest to add those to our portfolio. So that's how I would look at it, looking forward to all the opportunities feeding forward.

And with that, please, Ewout, can you do the P&C and income.

Yes. So on the premium growth indeed, we were very.

happy with the strong growth in Non-Life that we have shown. So 6% growth and we look underlying, we see a 4% growth in the P&C market. So we were able to grow in the middle of -- actually the target range that we're having of 3% to 5% and at the same time, having a very strong combined ratio, so definitely very happy with that. In disability, we grew even 8%. And what we see there is that the price increases that we pushed through as a result of the developments in group Disability, which I will answer after this question.

Actually resulted in less losing customers than we actually were expecting. And as a consequence of that, we actually saw that the increase in disability rose to 8%. Good to mention is that we see the increase mostly of growing Disability in group Disability and also a bit in sickness leave, but it also means is that we have more customers that actually do annual payments. So we do, as a result of that, expect that, that growth in Disability flattens a bit in the second half of the year. But with the strong growth that we are presenting today, we are having the confidence that we can land somewhere in the higher end of our target range.

Then on Disability, definitely an important topic to answer as well as you all know, improved Disability, I think also the market is seeing in group Disability, we are observing elevated incident rates, which is mostly driven by mental illness and also long coat, a broader market trend and something we also observed last year. That was also the main reason for repricing our business significantly in group Disability for the year 2026. And when we actually look today into our portfolio, we see that the payments that we are doing. So the claims that we are having is actually more or less in line with the actuarial assumptions that we are having.

And this, in a way, proves the effectiveness of our portfolio discipline and also of the repricing. At the same time and Ingrid was already referring to that. We do see that the situation at the UWV so the Dutch employee Insurance Agency is further deteriorating and that their backlog is also increasing. The risk that comes with that is that we might not have the full view on the inflow of disabled people as not everyone is assessed yet.

And the second order effect can also be that reassessments are executed less because of this backlog. And this could mean compared to the past that individuals return less back to work, less often back to work and are also less often reclassified into a group which is not expected to return at all because they are lifetime disabled. And in that situation, actually, the payments are no longer covered by the insurer, but by the government. What we are doing to actually solve that backlog is that we, together with the insurance association are very close contact with UWV and the government of social affairs, and we see definitely solutions there but it might require and we don't know that exactly time and also change in legislation.

What we will do is actually bringing all those developments, the conversations that we are having, the risk that there might be some delay the inflow in the reassessments that we bring that all together as part of the annual review that we are doing on our actuarial assumptions in H2. And we will definitely look at this in a conservative as you know us, in considering further actions. And that's actually the situation where we are looking at today.

We will now take the next question. From the line of Andrew Baker from Goldman Sachs.

First one, just on the Non-Life OCC. I know you touched on this in your comments, but can you just give a little bit more detail on the year-on-year SCR development that you saw in 1 half 26. I guess what drove the differences year-on-year? I think you said the first half is a good base to project off going forward. How do we think about the second half then in '26 versus the second half in '25. So just picking a part of those moving pieces would be really helpful.

And then secondly, are you able to give us a sense of the amount of investment in technology and AI that you're running through the holding company cost line in the first half. What type of investments these are in? How should we think about this level of investment going forward? And I guess when should we expect to see the benefits flow into the results.

Andrew, thank you for your question. As a former CTO, I will take the AI and technology question. You should think about tens of millions. Ewout, can you take the LC question?

Absolutely. Absolutely. So on the -- so we already call it internally the [ nat cat ] question because it's a maybe to start with what we now see in H1 of 2026 is really kind of the normal level of what we should expect. What happened is that during -- given the continued growth that we had in the P&C portfolio, we actually saw in H1 of 2025 that the exposure levels temporarily exceeding the coverage assumptions underlying parts of our [ net cat ] program. As a consequence, we saw that additional consult capital was required during the first half of 2025 until the reinsurance program was adjusted at year-end.

So the subsequent update to that program released this additional solvency capital requirement in the second half of 2025. As a result, we benefit from lower capital strain in the first half of 2026 compared with the prior year period and this created a positive year-on-year effect. But again, the level of H1 is normal. What it does indeed mean is that around, let's say, EUR 20 million, that's around the number. We expect around EUR 20 million less capital release or EUR 20 million higher strain in H2 compared to last year. And that was also part of the OCC bridge that I provided, that is included in that. That's 1 of the reasons that we expect more or less to land at the same level of ODDO -- on OCC of -- in the second half of the year as last year. Hopefully, that helps, Andrew.

Very clear.

We will now take the next question from the line of Michael Huttner from Berenberg.

And I have two, one is on real estate and the other one on reinsurance. On real estate, I saw the -- you said in 3% in residential -- 3% in real estate, 5% residential, I think, and solid in the rule. In your 13% OCC increase, how much of the -- was that from real estate? Or is it somewhere else? And how much more -- could we expect some real estate in the second half?

And then on reinsurance, you just said, you got negatives on or not negative, but the highest strain due to the high exposure numbers. Is there a benefit from buying more reinsurance? Or did you decide not to buy more reinsurance? Just curious.

Yes, thanks for those questions. On the real estate, so what we have as a kind of the total return assumption in real estate is a pretax return of 5.5%. So every revaluation that is actually exceeding that number and the 5.5% is also including the direct yield. So everything that is excluding the other is outperforming those assumptions, it's not part of the organic capital creation, but is part of the market and operational developments. That's why I also mentioned in the kind of market and operational developments, there was some positive effect from the revaluation of real estate.

In the second half of the year, we are neutral in our view on restate. So we see still attractive direct yields revaluation more or less a neutral view. Then the second question in buying reinsurance. So the way we are looking to reinsurance is actually always in 2 ways. One is what is effective from a cost of capital perspective? So we assessed the reinsurance program from a cost of capital perspective. That's one element. And also what we like just as a.s.r. being predictable is that because of our reinsures program, we also have a performance that is -- that if there is kind of [indiscernible] happens that our performance remains also strong in that type of situation. And with those 2 kind of criteria in place, we are actually happy with the reinsurance program that we are having today.

So we don't foresee to further expand our reinsurance product. Maybe you can free up some solvency, but then it comes at a really high cost and from a cost of capital perspective that they're not really interesting.

We will now take the next question from the line of Farooq Hanif from JPMorgan.

Two questions, which may be more for Ewout. But just firstly, you gave that bridge on OCC. It sounds like a lot of the elements that neutralize OCC in 2H are not what you would apply to operating profit. So I'm kind of thinking that the expansion that you had an operating profit will that be more normalized. So if you could talk about some of the one-offs that we should not repeat in 2H for operating profit.

And actually, just digging into 1 really large amount of detail apologies, but the other line in the life result, which went negative, I think that's where you mainly earn your DC fees. So can you explain what happened there and what we should expect in that line going forward?

Thank you. Thank you very much, Farooq for the questions. And I think like you guided already. These are typical questions for Ewout, I would say.

Yes. So I think you're right. So when we talk about the strain in P&C, the benefit compared to last year was not part of the IFRS operating profit that we presented. -- and the fact that will be normalized in H2 will also not be part of the operating profit. So net-net, one could say that, that amount of EUR 20 million is not normalized in an operating profit base. So you're definitely right on that one, Farooq. And I think your other question was also relating to the operating profit and then mostly the other results what we actually see in the operating profit of the Life segment is 2 elements that is worth mentioning.

One is the -- is indeed the lower operating results -- of other results, sorry. And that has to do with the fact that in H1 last year, we had a couple of associations, so participations in the Life segment that's really made a strong performance and then landed in the other result, and that is not there in 2026, that is actually compensated by a positive experience varies. And the mostly on the kind of the experience mostly also have to do with the expense level that we assume on IFRS versus the expense level that we were actually seeing in the Life segment, and that resulted in the positive experience variance.

So there are actually 2 elements that are more or less offsetting each other lower contribution from participations, which was very high last year, with good strong experience variance, mostly driven by a little bit of mortality and the other part is expenses in the experience variance.

And, sorry, just to follow-up as well quickly on that. So in Non-Life you also benefited you in the combined ratio from nonrecurring elements. What's the size of that?

Yes, that was EUR 5 million and the offsetting effect of the EUR 5 million was, by the way, in holding and other. So there was kind of the offsetting effect. So there was EUR 5 million benefit in Non-Life, EUR 5 billion lower result in the holding and others. So it's more or less neutral for the second half of the year.

So you're implying that 1H is kind of a run rate in operating profit.

That's exactly why I'm so happy as the CFO that I not only present strong numbers, but also very clean set definitely yes, true.

We will now take the next question from the line of Benoit Petrarque from Kepler Chevreux.

Yes. So actually, the first one is on the clean OCC. Could you give us kind of the clean run rate for H1? I think you had some prior year's provision release in on Life and also one-off expense benefits. So just wondering how much it is on a clean basis. The second 1 is on disability. So -- if I remember well, last year, you lost clients after the repricing put through in '25. Now the churn is quite limited in H1 '26. So are you kind of reaching a point where clients are becoming less sensitive and you could be more active on the pricing into '27.

And on Disability given all what you said on the backlog and the repricing, do you think you can maintain a combined ratio in the range of 92% to 94% for the Disability business given what you know currently? And just the final 1 on the pension buyout. So you've done 2 small deals. I was wondering how you see the pipeline for the rest of the year on the Pension buyout.

On the EUR 5 million of -- sorry, on the OCC run rate OCC, that was the question. there was -- so the release that was mentioned was only EUR 5 million on the expense side, but we wanted to flag that because you actually see that the expense ratio goes down 1.2% in PBC. And that's a high number. And that's why we want to flag that EUR 5 million was kind of a more -- has to be seen as a one-off. But again, the compensating effect is involving and other. And with that, you can also see this as a run rate number. So the SCR strain is in a run rate number because of the net cap program or the right level, but also this is a run rate number.

So that's on the OCC H1. And then if I understand your question correctly, on the pricing and whether we can push even more price increases to the market and that they will easily accept that. Well, that's -- it would be lovely if the market works like work that. I think in all fairness, we do see that it is a hard market. So you should -- can definitely as the margins that you want to achieve. And at the same time, there's also competition so also corporates can also go to the UW fee to insure themselves. And I think there, you will probably see the most competition out of it. What we have said is we see uncertainty, and as you can expect from us that we will address that uncertainty in a conservative manner and then it's up to the clients to decide whether or not they want to stay with us. That is the position that we are taking when it comes down to this business. Will that keep us in the target range somewhere around 94%?

Well, when we look today, that's actually the case. But again, we have seen that uncertainty that I described on the -- given the backlog at the UWV. And that is something that we will assess in the second half of the year. But definitely, when we look today, we do see that the portfolio is performing in a solid way.

Good day, and thank you for standing by. Welcome to the a.s.r. Full Year 2025 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Michel Hulters. Please go ahead.

Thank you, operator, and good morning, ladies and gentlemen. Thank you for joining us today. Welcome to the a.s.r. conference call on our full year results of 2025. On the call with me today are Jos Baeten, our CEO; and Ewout Hollegien, our CFO.

Now Jos will kick it off with the progress of our strategy and the highlights of our financial results. Ewout will then talk about the developments of our financials, capital and solvency position. After that, we will open up for Q&A. We have ample time planned for this call, but we will stop sharply at 10:30. [Operator Instructions]

Finally, as usual, please do review the disclaimer that we have in the back of the presentation for any forward-looking statements that we may be making in this presentation.

So having said that, Jos, the floor is yours.

Thank you, Michel, and good morning, everyone, and thank you for joining us today. I'm very proud to report that 2025 has been, again, a great year for a.s.r. We made significant progress in executing our business strategy, and we have delivered strong financial performance.

So let's start on Slide 2 and take a closer look at the progress we've made in executing our plans. I'm pleased that the integration of the Aegon NL business has been successfully completed. And we have realized that well within 3 years after closing the deal, a key milestone in the implementation of the Partial Internal Model for a.s.r. Life and as we expected, it delivered an uplift of 12 percentage points in the Solvency II ratio. Additionally, decommissioning of the former Aegon systems has started and after completion, we will achieve our run rate cost synergy target of EUR 215 million.

Secondly, on profitable capital deployment, we've materially strengthened our balance sheet over the past year, enhancing our capacity to be entrepreneurial and seize the right opportunities. In the past year, we have deployed capital in attractive inorganic growth. We've done 3 buyout transactions, and we have acquired the remaining shares of the HumanTotalCare. This strengthened our position in the field of occupational health, services and reintegration.

And last but not least, we announced the acquisition of Bovemij at the start of this year, a mid-sized P&C insurer with a strong distribution network in the mobility sector. These deals fit perfectly in our business strategy, but also quite happy with the profitable organic growth that we realize, which will support us in achieving the OCC target of EUR 1,350 million for the full year 2026.

Lastly, we also raised the capital returns to our shareholders. We increased the total amount of dividend by 7% and we announced a total of EUR 280 million in share buybacks over 2025, of which EUR 175 million announced today and EUR 105 million in our participation in the sell-down by Aegon in September last year. The dividend of EUR 3.41 per share is a 9.3% increase. So significant progress in delivering on our CMD plans.

Let's go to Slide 3. Our OCC increased over 10% to EUR 1,315 million, this is driven by business growth, higher investment margin and the realization of cost synergies. The solvency ratio increased with 20 points to 218%, which includes the uplift from the implementation of the partial internal model in a.s.r. Life.

Our operating result rose 12% and came in at EUR 1,637 million. Operating return on equity rose to 14.1% comfortably above our hurdle of more than 12%. In Non-life, the combined ratio for P&C and disability stood at 92.2%, this is at the lower end of our target range of 92% to 94%. The Non-life combined ratio benefited again, I should add from favorable weather, but it also includes provisioning in group disability.

Organic growth in Non-life of 3% is within the target range and in line with our expectation and reflects price competition from foreign players, particularly in relative capital-light products through mandated agents. In Pension DC and annuities, we saw solid inflows and combined with the pension buyout deals we've executed so far, delivering on our profitable growth ambition.

Let's move to Slide 4 and look at how we are progressing on our sustainable KPIs, and we continue to create sustainable value for all of our stakeholders. Our investment portfolio is clearly on track to meet its targets for both carbon footprint reduction as well as impact investments, where we aim to deliver positive impact. I'm pleased to see that our employee engagement increased to 77. This increase comes after a decline last year. The integration of Aegon Netherlands businesses and the merger of 2 corporate cultures and overall FTE reductions adds, of course, an impact on our people. But we are now on our way back up, and our ambition is to achieve a score of 85.

We're also -- we also see very positive developments in customer satisfaction. This is already exceeding the target a year ahead of plan. The higher score in customer satisfaction reflects that we have been able to successfully execute the business integration whilst keeping focus on servicing our customers.

Our other nonfinancial metrics also show good progress, and our compelling ESG profile remains acknowledged by a broad range of international ESG indices and benchmarks.

Let's move to the integration of Aegon Netherlands. Last year, we integrated the Mortgages and life individual businesses. In the meantime, we have disconnected all product lines from the Aegon systems, which allows us to decommission these systems before midyear 2026. This is the final step in realizing our run rate synergy target of EUR 250 million in 2026. The full benefit will show up in '27.

I already mentioned the implementation of the partial internal model, which better reflects the risk specific to a.s.r. Completion of the integration process allowed us to capitalize the remainder of the cost synergies associated with the Life business.

The final step in the legal merger of -- a final step is the legal merger of a.s.r. and Aegon Life. The preparation for this legal merger have been already made, and this is expected to be realized early July. Therefore, I am proud that we have successfully integrated the Aegon Netherlands business within 3 years after closing, a tremendous achievement of the company and an important step in creating the leading insurer in the Netherlands.

Let's dive into other elements of our strategy that we delivered on. At the CMD in June, we presented our targets for the period '24-'26. We delivered on the integration as just discussed, but I'm also very happy to see that we finally closed the unit-linked file. a.s.r's. final settlement solution has provided clarity and certainty for policyholders. Our solution is widely accepted by the affiliated customers, all collective legal claims have been stopped and payments have been made.

Turning to our balance sheet. This has been strengthened significantly in the recent years. The sale of the bank that -- the sale of the bank, the capitalized cost synergies and the PIM. In total, this boosted our solvency ratio by circa 40, 4-0 points, and it enhances our capacity to be entrepreneurial to seize the right opportunities and to deploy the capital for profitable growth organically as well as through acquisitions.

And as we have shown with deals such as Bovemij and HTC as well as the pension buyouts. And lastly, we presented our intention to progressively grow our dividends by mid- to high-single percentage, and we laid out a share buyback program of EUR 525 million, which we already increased by EUR 205 million with the additional buybacks on the back of the sale of Knab and the participation in the first Aegon sell-down in September last year.

Over the year '25, we will return 75% of our OCC to shareholders and 25% was invested in inorganic growth, like, for example, buybacks -- sorry, buyouts. So a very strong delivery.

Let's move to the performance of our segments, starting with Non-life. The premiums received in our Non-life business grew by 3%, which is within our target of 3% to 5%. This was mainly driven by tariff adjustments and higher sales volumes in the P&C commercial lines and group Disability. In Disability, the selective tariff adjustments means not only that pricing better reflects the claim risk. It often also presents an opportunity to clinch the customer base and improve the underlying quality of the portfolio.

We do see competition pick up, particularly in capital-light product lines and primarily from foreign players that offer underwriting capacity to mandated brokers. Of course, we keep an eye on this, but our strategic principle has been for many years, value over volume, and this remains the case. So we will continue to pursue profitability over market share. This is demonstrated by the combined ratio of our P&C and Disability business, which at 90.2% comes in at the lower end of our target range of 92% to 94%.

In P&C, the combined ratio was 90.4% and remain strong and better than targets. Similar to last year, profitability was supported by the absence of weather-related calamities and we experienced a low amount from larger claims. In Disability, the combined ratio went up with 3 percentage points ending just above our target range due to additional provisioning in the group disability portfolio. We experienced adverse claim developments due to elevated incidence rates, especially related to psychological absenteeism and long COVID.

We believe, this is a broader market phenomenon, which has become more challenging due to the significant backlog at the UWV, the Dutch Employee Insurance Agency. Our pricing has been adjusted to reflect this phenomenon and to further restore our profitability to appropriate levels in 2026.

Let's now move to the Life segment on the next slide. The strong commercial performance in our Pension business has continued. DC inflows are up 9%, annuities are up 11% and driven by the pension reform. We executed on a total of 3 buyout deals this year totaling almost EUR 3 billion. Our Pension DC business continued to grow with inflow of EUR 3 billion in 2025. The Pension DC assets under management increased even further as a result of positive market developments.

Annuity inflows are also gaining pace, driven by maturing DC assets. The majority of annuity inflows come from expiring DC assets from our own book. We are right on track to deliver our EUR 1.8 billion cumulative annuity inflow targets.

In the pension buyouts space, we have shown strong deal execution in the first half of the year. Competition, however, more notably from the second half of the year is strong. We continue to believe that the total market opportunity is EUR 20 billion to EUR 30 billion, of which a part is likely to materialize even beyond '28 However, we remain rational and disciplined and will only pursue deals where we can make our minimum required return and you all know that's at least 12% IRR. Nonetheless, the buyout deal so far put us well on track towards the EUR 8 billion cumulative targets.

And finally, we closed a longevity reinsurance deal on the back of EUR 1.3 billion pension buyout liability, which enhances the capital efficiency on the transaction and thus the return on capital. Ewout will talk about a bit more about exploring the reinsurance -- to reinsurance the longevity risk of a part of our back book.

Let's turn to our fee-based business on the next slide. The fee-based business grew by 15.5%, partially driven by inorganic growth. HumanTotalCare is included in the D&S segment onwards from the fourth quarter. In July, we announced the full acquisition of HumanTotalCare, the market leader in occupational health and reintegration services. This deal strengthens our position in the value chain of sustainable employability, with absenteeism on the rise, a tight labor market and a higher retirement age prevention and reintegration are more relevant for the business than ever before.

Our mortgage production remains robust, even while executing a major portfolio migration. This is a very solid achievement of the mortgage team. The operating result increased by almost 25% to EUR 186 million, driven by solid business growth and the realization of cost synergies. Looking ahead, I believe our fee-based business are well positioned for further growth.

So let's move to my final slide before I hand over to Ewout, on our attractive capital returns since our IPO in 2016. As our profits and capital generation grow, we can also increase returns to our shareholders. The total capital return to shareholders amounts to 75% of our OCC in '25. Our dividends per share of EUR 3.41 represents a 9.3% increase compared to last year, and since IPO, our dividend per share has experienced a 12% compound annual growth rate. So 12% over the last 10 years per annum, which is enormous.

Today, we announced a share buyback of EUR 175 million, which is the second tranche of our share buyback program over the planned periods totaling EUR 525 million. The final tranche of our share buyback program, which is EUR 225 million over the full year '26 can be accelerated -- and listen carefully, can be accelerated if and when Aegon initiates further sell-downs of their position in a.s.r. this year.

As you all know, we operate from a capital position of strengths and deploy capital rationally. We are no capital hoarders. So in case, we can't find proper deployments, we will return it to shareholders. As we demonstrated with the additional EUR 100 million to the -- on the sale of the bank and the EUR 105 million additionally with which we participated in the sell-down of Aegon. An update on our capital management policy can be expected at our CMD on the 1st of December this year.

And with that, I'll hand over to Ewout to walk through the financial and capital position. Ewout, the floor is yours.

Thank you, Jos. And you behave well by not doing a wrap today. So thanks for that as well. Good morning to everyone on the call. The results we're presenting today highlight the strong financial performance and the robustness of our capital position, and it confirms that we are advancing well towards our strategic objectives.

Now turning to Slide 12 and kick off with the capital wheel. The capital wheel has been spinning for quite some years already. We are operating from a position of capital strength. Our Solvency II ratio rose to 218%, giving us ample capital to fund our initiatives for profitable growth. We have proven to be successful in dealmaking for inorganic growth, one of the cornerstones of our deployed -- capital deployment strategy.

The OCC benefited again from strong underwriting performance, the absence of large weather-related claims and higher investment returns, and we are well on track to hit the EUR 1,350 million target by 2026. And as Jos mentioned, our capital return remains strong as our dividend per share rose by 9% and today, we announced to execute EUR 175 million share buyback.

Looking at our 2025 delivery, we deployed 100% of our capital generation. 75% was returned to shareholders and 25% was invested in profitable growth. This balanced allocation ensures that our capital wheel keeps spinning.

Now let us zoom in on how our solvency developed in 2025. We have implemented the partial internal model to the balance sheet of a.s.r. Life, which strengthened our solvency position by 12%, which is the upper end of the earlier communicated range. We will discuss the partial internal model in more detail later in the presentation.

We have deployed capital in 3 buyout deals in the first half of 2025, adding almost EUR 3 billion of assets and liabilities and the acquisition of the remaining shares of HumanTotalCare, which combined, had an impact of 6 solvency points. This includes the reinvestments of buyout assets towards the targeted asset mix in the second half of the year. And this solvency impact was partly offset by the execution of longevity reinsurance of EUR 1.3 billion buyout liability.

This year, we also explore if it makes sense for a.s.r. to reinsure the longevity risk of a part of our back book. Just below half of our Aegon Life book is already reinsured and another part of the book is naturally hedged by mortality risk from our funeral and individual life portfolio. With that in mind, about EUR 10 billion of remaining liability is applicable for longevity reinsurance in the short-term, although we would probably aim for a deal size of around EUR 3 billion to EUR 5 billion if the longevity reinsurance remains to be attractive.

The level of capital generation of EUR 1.3 billion contributed 21 solvency points to the ratio. The market and operational movement shows an uplift of 7 percentage points, and this includes a positive impact from the steepening of the interest rate curve, which we already mentioned at the H1 stage and positive revaluations in real estate, especially in residential and rural.

The positive impact from spread tightening in government and mortgage spreads has been offset by 2 specific special items, that is the downgrade of the French government bonds and the adjustments of our mortgage spread methodology, more on the topic in a minute.

Lastly, operational developments also contributed positively to the solvency stock. We capitalized the remainder of our cost synergies, marking the finalization of the Aegon NL integration, and we raised the LAC DT, releasing some conservatism and bring it more in line with market practice. This brings the Solvency II ratio to 221% before any capital management actions. And after deducting the 11 percentage points to the dividend, 4% for the share buyback in the first and the second half of the year and the 12% uplift from the adoption of the PIM to a.s.r. Life, we land at a strong solvency ratio of 218% for the year-end. Truly robust and well positioned in the entrepreneurial zone.

And let's turn to the page -- next page to see what is still in store for the solvency position in the coming years. At our Capital Markets Day in June 2024, we presented the future catalysts for our solvency position, which due to the cash consideration of Aegon NL acquisition stood at that moment in time at 176% at year-end 2023. Some analysts, some of you calculated that we would get to a solvency ratio of 220% in 2026. But as you know, we first want to have clear visibility on delivery before people getting overly enthusiastic.

But today, I'm very pleased that we have reached that number 1 year earlier, increased the solvency position with over 40% in only 2 years and at the same time, invested in buyouts, M&A, and we did EUR 205 million buybacks more than initially planned. Frankly, I'm extra proud because each of these items did not just suddenly happen, but are a result of hard work and dedication from our employees.

For the coming year, I should already mention some expected movements. We will see an impact from capital deployment to support inorganic growth. In early January, we announced the acquisition of Bovemij, which is expected to reduce solvency by around 3.5 points. We are hopeful for further bolt-on deals. In addition, we anticipate on additional buyout transactions over the course of the year. However, as already mentioned, we remain financially disciplined and stick to our value over volume principle.

The expected contribution of the EIOPA 2020 review is mid- to high-single digit. This is driven by a lower risk margin, slightly offset by a different regulatory discount curve and where the benefits of the VA is offset by the elimination of the deterministic adjustment. And just to ensure everyone is on the same page, the deterministic adjustment, DA is an Aegon Life specific element from departure internal model that aims to resolve the mismatch of spread movements between own portfolio versus the EIOPA VA portfolio via required capital. And this has been temporarily allowed for Aegon Life until the introduction of the new EIOPA regime.

As said earlier, there is a lobby going on to allow insurers to report already by full year 2026 under the new regime, but fair to say that I now expect that the implementation date of Solvency II review will be January 2027, meaning that the impact of the review will be reflected in our H1 2027 results. Given the fact that the DA will be eliminated the sooner of the legal merger of life entities as it is not part of the internal model for a.s.r. Life or the EIOPA 2020 review, that could mean a split between the minus 4% of the DA by full year 2026 and 10% in H1 2027 from the review.

Now let's discuss the partial internal model on the next slide. The partial internal model reflects a more accurate view of a.s.r. risk and risk interdependencies. While doing so, we gained EUR 600 million of fungible capital. This strengthened balance sheet and creates additional capacity to pursue opportunities, accelerating the spinning of the capital wheel. Besides releasing the capital, the model enables more efficient and economic pricing, asset allocation and risk retention decision supporting our growth ambitions.

If we take a closer look at the source of the capital relief, we distinguish between underwriting risk and market risk, where the majority of the uplift comes from underwriting risk. Within the internal model, the interaction between longevity and mortality risk is much better reflected. When one risk increases, the other automatically decreases. This is the key improvement of the internal model compared with the standard formula.

Next to that, also the level of the shock and the longevity trend lower and a better reflection in the partial internal model of the Dutch circumstances. The lower required capital also leads to a lower risk margin. And in total, we see an 11% solvency uplift coming from underwriting risk. Within market risk, we see various offsetting effects. Real estate becomes more capital efficient under the internal model where interdependencies with other asset classes are reflected more accurately. In particular, the inflation-linked characteristics of real estate are captured far better in the internal model than under the standard formula.

Spread risk is higher in the internal model, reflecting the inclusion of mortgages, while the standard formula, we sit in the counterparty default -- module and the application of a modest charge to government bonds. Overall, the combined effect across market risk results in a small net benefit, contributing to a total solvency uplift of around 12 percentage points from applying the internal model to a.s.r. Life. At the legal entity level, the contribution is over 30%.

Before we move to the solvency sensitivities, it is important to note that the transition to the PIM creates a small headwind for the level of capital generation. The partial internal model leads to a lower required capital, which reduces the release of capital recognized in OCC. Impact is around EUR 10 million per annum as this is partly offset by a lower capital strain on new business.

Let's turn to the next slide. The expansion of the internal model leads to limited changes in our solvency sensitivities. For interest rate sensitivities, we maintain our hedging strategy aimed at stabilizing the solvency ratio, and we have adjusted our hedge position to reflect the partial internal model. And as a result, interest rate sensitivities remain broadly unchanged.

Also in the spread modules, we observed only limited impact on the sensitivities. Please note, the deterministic adjustment currently has a dampening effect on the sensitivities and will be removed as of H2 2026. And of course, the VA will remain in place and will continue to have a dampening effect on spread movements. At half year stage, we will provide an updated view on our sensitivities.

Equity sensitivities continues to reflect the impact of the symmetric adjustments from the standard formula, albeit to a lesser extent. And the real estate sensitivities increased because lower required capital charge under the PIM provides less mitigation of the impact on own funds.

Let's turn to our level of capital generation on the next slide. The OCC increased by 10% to EUR 1,315 million, in particular driven by the finance capital generation, which is the largest in the Life segment. This is driven by a number of factors, rerisking in the second half of last year, positive equity and real estate revaluation, wider government spreads, contribution from buyouts and the steepening of the interest rates increased the finance capital generation by EUR 118 million.

Secondly, the Non-life result increased as a result of higher business and finance capital generation, which was partly offset by a lower net SCR impact mainly related to the new business strain from the growth in Disability. The Non-life OCC includes the provisioning strengthening in Disability. Our fee-based business contributed an additional EUR 27 million to OCC, supported by an improved operating result.

Now looking ahead, how we plan to achieve our EUR 1.35 billion OCC target for 2026. The OCC of EUR 1,350 million for full year 2025 was helped by favorable weather in P&C. Normalizing the Non-life combined ratio to the middle of the range would bring the OCC to around EUR 1,290 million.

Taking this as a starting point, I see a couple of main moving parts to bring us to the EUR 1.35 billion target for 2026. That includes growth of the business, the full contribution of the pension buyout deals closed in 2025, synergy benefits, and this is then partly offset by the negative impact from the lower net capital release due to departure internal model, the transfer of mortgages to BAWAG as part of the Knab deal and accelerations of investments in AI and technology that are currently taking place.

Taking all these items into account, we expect the OCC for full year 2026 to be north of EUR 1.35 billion. The operating result increased by 12% to EUR 1,637 million. The Life segment delivered a strong increase of EUR 183 million, mainly driven by a higher CSM release, reflecting, for example, the full capitalization of cost synergies and a higher investment margin, which is consistent with the uplift we also observed in our OCC.

In Non-life, continued business growth and solid profitability contributed positively to the operating result. However, the result is slightly lower than last year due to the additional provision in group Disability and accounting change, which is not part of the 2024 OCC.

For the Holding and Other segment, the temporary allocation of IT infrastructure charges related to the integration and investments into new technology and AI resulted in a lower holding and other operating results. The longer-term plan and contribution of new technology and AI is something we will talk about on the Capital Markets Day in December.

Let's turn to our investment portfolio. This slide illustrates the strength of our investment portfolio. It is high quality, well diversified and resilient. As mentioned at the half year stage, we have now updated our mortgage spread methodology to reduce the non-economic short-term volatility in the solvency ratio. This volatility stems from slowly adjusting mortgage tariffs on the one hand and volatile interest rates on the other. Under the updated methodology, the mortgage spread is derived using an 8-week average interest rate, reducing volatility in mortgage spreads by roughly 1/3, as you can see on the page.

As a result, the likelihood of mortgage spreads peaking at unusually high or low levels is now significantly lower. Consequently, our mortgage sensitivity scenario has been adjusted from 50 basis points to 25 basis points. For year-end 2025, based on the new methodology, we applied a net spread of 104 basis points, which we consider a fair representation through-the-cycle level.

And finally, let us have a look at the revaluations in the real estate, which have been once again strong this year. Around 70% of our portfolio consists of residential property and rural land, which deliver revaluations of over 7% and almost 9%, respectively. On average, the entire portfolio revalued by 5.7%. Including rental yields, the total return in 2025 exceeds 8%.

Let's look at the flexibility of the balance sheet on the next slide. I truly believe we have a very strong balance sheet with ample financial flexibility. In March, we issued a restricted Tier 1 instrument to refinance the maturing Tier 2 in September of 2025. And by replacing the Tier 2 with an RT1, we have further rebalanced our headroom over Tier 2 and Tier 3 versus the RT1, enhancing our financial flexibility.

As you can see on the bottom right-hand side, our debt maturity schedule remain nicely staggered over time. And lastly, we are very proud that we can present on this slide for the first time since we are listed an A+ rating of our operating entity -- entities. The upgrade confirms that the financial strength, the consistent performance and the leading market positions across products is also clearly recognized by the rating agency.

And finally, let's end with our HoldCo liquidity, which remains very comfortable. As you know, we only upstream cash from our operating entities to cover last year's dividends, coupons and holding expenses. Starting this year, we are including a portion of our unconditional revolving credit facility in the definition of holding liquidity because this allows us to retain more cash within the legal entities where we can achieve a better yield. As a result, the amount of cash required at holding level becomes lower.

Remittance is definitely not hampered by the solvency ratio of our legal entities. Solvency ratio at our Life entities are very strong, peaking at levels above 200%. The a.s.r. Life entity is materially strengthened by the application of the partial internal model, resulting in an uplift of more than 30% points at entity level.

Aegon's Life solvency ratio also increased despite deductions for remittance to the group and capital deployment related to pension buyouts. The continued strong capital position at Aegon Life provides capacity for us to remain active in the buyout market.

In addition, a.s.r. Non-life operates from a robust solvency position of over 160%, which represents an 8 percentage points increase compared to last year, driven by retained OCC. And this concludes my part of the presentation. But before I hand it back to Jos for his wrap-up, I believe it would not be right to just let this moment pass by without noting that this marks -- this call marks your final analyst call.

And Jos, I know you prefer to acknowledge this fact and rest assured, I'm not going to be sentimental and I won't take long, but many in the audience today will remember that our journey on the capital markets started with our IPO in June 2016. Our share price was EUR 19.50, market share kept just below EUR 3 billion, and our capgen and operating profit were not even 1/3 of what it is today.

In almost 10 years, as a listed company, a.s.r. has transformed itself under your leadership into a leading Dutch insurer with a strong earnings profile, a rock-solid balance sheet, high customer satisfaction and recognized in Dutch society by sustainability profile. A company with a strong performance track record, known for under-promise and over-deliver and well positioned for a successful future. And I know you will give credit to the rest of the organization, but you should be really proud of the progress a.s.r. has made and everything that has been achieved.

So thank you for that on behalf of myself, the rest of the organization, but I'm sure also on behalf of the investor community. And having said this all, I would like to hand it back to you, Jos, and hope very, very much that you will enjoy this final wrap-up.

Thank you, Ewout. And I definitely will enjoy the final wrap-up, especially after your kind words, which were unexpected for me because in my feeling, the fat lady hasn't sing yet. So I will continue to deliver until the last minute of my CEO-ship. And wrapping it up, I think we really can be proud on the successful completion of the integration of Aegon NL. On track to realize the run rate cost synergies target of EUR 215 million, and we delivered a 12% solvency points benefit from the application of the PIM to a.s.r. Life.

A solid performance in all business segments, supported by increased investment returns, OCC on track to achieve medium-term target on EUR 1.35 billion in 2026, a very robust solvency ratio of 218%, reflecting very strong OCC and favorable market developments supported by the uplift from expanding the PIM. And finally, proven execution in the pension buyout market. And with the acquisition of Bovemij and HTC, we are confident on delivering on our -- all of our medium-term growth targets.

Now before we take your questions, today, indeed, as Ewout already said, marks a special day as this is, in fact, the last set of results that I will present to you as CEO of a.s.r. At the upcoming AGM in May, I will hand over the helm to Ingrid de Swart, our current COO and CTO, and I do so with full confidence. I truly believe that under Ingrid's leadership, we will continue to grow towards being the leading insurance company in the Netherlands. And with that, the floor is open for your Q&A.

[Operator Instructions] We will now take our first question coming from the line of Cor Kluis from ABN AMRO-ODDO BHF.

Yes, I think, first, the most important part, Jos, thank you very much for all the work that you've done in the last decade basically. I still know you from that you built and was running the Rotterdam unit, a.s.r. and you build it into a huge company, which is now owning 1/3 of the Dutch insurance market. And many thanks for that and the great cooperation with you. Yes, still -- you will still remain around for a while, but many thanks for that.

Then the first question is about solvency, especially the real estate part. I think the solvency was, of course, clearly better than expected. Could you elaborate a little bit more on the market effect, especially on the real estate part? What was the contribution of the real estate revaluation from residential houses, et cetera, and rural on the solvency ratio? And how conservative have you now valued the residential houses in your portfolio? I still think that you have quite some discount on that because house prices went up, of course, in the Netherlands a lot.

And you reflected that in the solvency, but still, I think, have quite some discount there, especially because the Dutch transaction tax was reduced by 2.5% on the 1st of January. So that should also benefit you.

And second question is about buyouts. I know you're very disciplined on buyouts, although there were some deals in the market, but you didn't do anything, and I think didn't do anything either in H2. What's your view on pricing and volumes to come in the coming years? And my last question is about M&A. I think you have done so many acquisitions in the last decade. You just did one. Is there still some more potential to do this year? And what's your view on this -- what you see in the market? That's it from my side.

Thanks, Cor. And also thanks for your kind words. Hopefully, not everybody is going to make me blush. And please stop with that and wait at least until tomorrow evening when we see you all live. For the solvency question on real estate, I hand over to Ewout and I will take the 2 other questions.

Yes. So the contribution to -- so of course, we always expect some revaluation in the level of capital generation as we assume a 5.5% pretax total return on real estate is always a kind of a portion of revaluation that we expect. If we deduct that additional 1 or 2, 1.5 on average solvency points is added from the revaluation that we have seen both on the residential side as well on the rural side. So both asset classes had very strong performance last year. And with that, we are moving a bit towards the -- sorry, there's a call going on here. So with that, we are moving a bit towards the -- well, historical level of [ 80% ] that we have seen.

It is correct that we've seen that the transfer tax in the Netherlands is actually going down per the 1st of January 2026, and it's going down just over 2%. And that is -- you can see that more is a one-on-one upside also in the valuation of residential houses. So that's the -- and with that, we expect also to close further the gap between the -- well, the market value of houses and what we currently have -- how it's currently being valued on our balance sheet. So around 2% uplift in the valuation, what we expect from the lowering of the transfer tax, closing the gap.

Then on your second question, Cor, on the buyouts and especially on the pricing dynamics, we indeed currently see some so-called leapfrogging from competition, let's say, until beginning of last year, actually only Athora and a.s.r. were very active in this market, and both of us were able to win a number of contracts. Since the introduction of Sixth Street at Achmea, we have seen a third player in the market, and that creates more pressure on pricing. And that means that we decided to remain disciplined. The value over volume principle is a hard one within a.s.r.

At the same time, we have looked into the potential pipeline going forward. That's why I said during my presentation that we're still confident that we are able to make the EUR 8 billion, it may take maybe a year longer than initially projected. But if and when we do deals, they have to meet the 12% IRR. So yes, we do see more competition, and we will see how it plays out in the long run, but we remain confident.

Then on your third question on M&A. Actually, what we have said over the last 2 years that we still see opportunities in the P&C area. I think the acquisition of Bovemij is a proof point that there is really opportunity to do so. And we also explained that we still see a tail of, let's say, 15 to 20 P&C players owning roughly 35% of the market. And within that cohort of medium-sized and smaller players, we still expect that there will be necessary for further consolidation due to the investments in AI due to increased regulatory pressure, et cetera.

If you look into the reason why Bovemij looked for new ownership, they couldn't follow up on all the developments in investing in AI and digitalization, et cetera, and we really know there are more players that will face that difficulty in the future. So yes, we do see opportunities there. Secondly, we think that the life market is not yet consolidated, especially the funeral market has to consolidate further. So we expect that there will arise opportunities there. And maybe and hopefully, there will be one more larger life consolidation in the near future in the Netherlands.

So from that perspective, we're optimistic that a.s.r. can do further transactions there. Whether that will be this year, that's to be seen. We never can give comments on the period where something should happen, but we remain very optimistic in that area.

We will now take the next question from the line of David Barma from Bank of America.

Firstly, on OCC, please. Ewout, thanks for the bridge you gave for '26. Can we come back to that and particularly what you're assuming for the contribution of HumanTotalCare, Bovemij and some of the rerisking that I thought would go through together. I would have thought alone, these things would take you above the 2026 target. So if you can give a bit more detail on the assumptions there.

And then secondly, on longevity. So you've announced the longevity reinsurance transaction on some of the pension buyouts done to date. Can you please explain how that impacts the new business strain and the IRR for buyouts, please?

Let's start with the bridge of capital generation and especially the items that you requested for how those are contributing. So what we try to make -- so we have a very strong starting position of EUR 1,315 million. But do you see that the combined ratio is a very strong at the lower end of the range with 92 - 90%.

So if we normalize that to the middle of the range, that would bring us to EUR 1,290 million. And then we see actually coming through the growth of the business, the fact that we see the buyouts that we have executed and won in H2 that we now can recognize for the full year, some rerisking that we have done on those buyouts, but also indeed small benefits, for example, on how to say that, that is actually -- that is contributing to a higher level of capital generation, but there are also some small minuses in it, for example, the lower release capital on the partial internal model, but also the accelerations of investments that we are doing in technology and AI, so that are small minuses.

If you more look closely to the items that you -- and that brings us to the north of the EUR 1.35 billion, David. If you then look more to the elements that you ask, so how is the Bovemij contributing to that, actually, we expect to close Bovemij in -- just in the beginning of the second half of 2026. But you then get a book that is where the profitability on a stand-alone basis is close -- will be close to 0 and we really need to realize the synergies to make it profitable and to bring it to the combined ratio levels that we have for our own portfolio. So that's why we don't expect a lot of contribution of -- no contribution actually from Bovemij in 2026.

And HTC, that will contribute a couple of millions. But please note, we were already for the first 9 months, 45% owner of HTC and that was also already a portion of profitability that was there. So it is only the remaining 55% that you will see for 9 months additional compared to what we have seen in 2025. So that's why only a couple of millions.

So the real benefit comes from the synergies, the growth of the business, the fact that we recognize the buyouts for the full year. And these are small plus in the total bridge. Hopefully, that helps in the explanation.

And then on the question on the longevity deal. So what we have not done until now is take any longevity reinsurance into account when we price a buyout, so for example, the buyout that we won that of dentists where we now have executed the longevity reinsurance deal was actually an additional, an improvement of the IRR with a couple of percentage points, but it's not something that we take into account into our hands when we actually price -- when we price those deals because you never know for sure whether you get the same quotes and we always want to be conservative on this one and not already take into account without having a hard quote actually on what you can achieve with reinsurance.

We will now take the next question from the line of Andrew Baker from Goldman Sachs.

First one, just on the Solvency II review. Are you able to just give us a sense of the OCC impact once implemented. And then just to clarify, the 10 percentage points that you show on the slide, is this before or after the 4 points. So should we be thinking 10 or should we be thinking 6 based on the guidance today?

And then secondly, on the unit-linked settlement, I think at the time, you had EUR 90 million on the balance sheet set aside for individuals that weren't represented by the foundations, is this amount still on the balance sheet? And if so, could you look to release this at some point? And how do you think about timing around that?

Yes. Thanks, Andrew. So the impact on the level of capital generation and please bear with me that is a high level, but when we calculate today, it will be around EUR 10 million to EUR 15 million on the OCC. That's the assumption that we are having today. The solvency uplift is -- so the 10% is gross of the elimination of the DA. So the net amount is, let's say, around 6% maybe a 1% higher, but around that percentage points. So it's -- the net amount is 6%, but if you eliminate the DA earlier, then you will see the benefit of the EIOPA 2020 to be around 10%.

And then on your second question, the provisioning on unit-linked. Indeed, we had still roughly EUR 90 million additionally on the balance sheet. The current stand is that it is around EUR 50 million that will remain on the balance sheet at the closing of 2025, because we're still paying out the people that weren't connected to one of the foundations.

So we expect that it will be at least enough, the EUR 50 million. And if and when there will be a remaining part then it probably will be released summer in the second half or even at the beginning of next year. But we haven't put a number yet on that. But the key message is, it will be at least enough.

We will now take the next question from the line of Benoit Petrarque from Kepler Cheuvreux.

Yes. Thank you, Jos. I think you leave the company in a very good shape. Actually, my first question will be on the CMD. Jos, if you will kind of have an opportunity to advise the new management team on the key topics you want to see on the agenda. Could you maybe walk through the main topics and the main thing you would like to see on the slides in December, obviously, just as a kind of advisory work and just not being too serious on that?

And then the second question is on the capital. You have a very strong stock of capital, now you have the EIOPA review coming in, probably more longevity deals. So you are well above the 175%. So how should we think about the utilization of excess capital going forward? Or do you stand currently on your -- on the possibility to get more top-ups on share buyback, how open are you for that? Or are you more willing at this stage to keep excess capital for potentially a larger deal in Life? And then just the last question will be on longevity reinsurance. I think you mentioned that you are also open to do more deals, what type of timing and impact on Solvency II ratio can we expect?

Thanks, Benoit. Your first question is a nice one, and I may become the adviser of Ewout and Ingrid after I've stepped down, but I'm not yet in that position. But what I should expect on the Capital Markets Day like a.s.r. is doing is further clarity on strategic opportunities, we do see going forward. And I already in answering the question of Cor, I gave already some insight what I should expect that will be part of the messaging by then.

I think a.s.r. has done a lot in terms of investing in AI and is still investing in AI and knowing that Ingrid is very well aware together with the team of the impact of AI, I would expect that there will be an important part on that. Further, capital management will remain important, I think the philosophy, value of volume will not change after I've left so that will be an important part.

But in general, I think it will be about how to continue the successful story of a.s.r. going forward, adopting the new reality in the world, the reality on AI, but also the geopolitical reality. So that would be, for now, my advice and further advises, I will whisper in their ears, and I will leave it to them whether they will do something with it.

On your second question, to be serious again, I think the key message is we have a very strong capital position, and our key preference is to deploy capital in a way that it will sustain the growth of a.s.r. going forward either through organic growth or through inorganic growth. Having said that, we will combine that with returning a fair share of the OCC that we have generated. And over 2025, we will return roughly 75% of the OCC generated and 25% is spent on inorganic growth like the pension buyouts.

If and when we can't deploy that capital in a rational way, we're fully aware and I don't expect that to change after I've left. We're fully aware of the fact that we then may have to return more capital to shareholders. That's why we made a clear statement in our presentation even when Aegon will decide to sell down further in this year, we're willing to fast forward the EUR 225 million that is now announced for the next year, we're willing to fast it forward to this year. And with that, I think there is significant proof that a.s.r. never has been a capital hoarder and never will be a capital hoarder.

And on longevity, I hand over to you, Ewout.

Yes. Thanks. So no, it was very helpful to do the smaller longevity reinsurance deal on the buyout. What we have seen is that cost of capital was just above 0%, which makes it from a cost of capital very attractive. So when we look to our back book that we see is actually that historically, Aegon almost did 45% of their pension liabilities transferred via longevity reinsurance. And Asia roughly did no longevity reinsurance deals, but 1/3 of the book is natural hedged with mortality. So there is a kind of remaining book to do for -- yes, to do longevity reinsurance for.

When we look to the remaining liabilities and the size of that, it's roughly EUR 10 billion, how we look at it today that we can deploy in the short-term. But we also see that the market favors deals around EUR 3 billion to EUR 5 billion -- and EUR 5 billion and when we take into account the same cost of capital that we have seen in that deal on the buyout, then it will bring roughly 2 to 3 solvency points at group level, and that's mostly driven by a lower risk margin because the required capital release is limited because of diversification that you already see at the legal entity level.

But especially at group level, you see also additional diversification benefit. So let's say, half of the book that we can see in the short-term, the EUR 10 billion, half of that is EUR 5 billion, that would bring with the current pricing roughly 2 to 3 solvency points.

We will now take the next question from the line of Michael Huttner from Berenberg.

Fantastic. Just to the -- firstly, on Disability. Can you talk a little bit about what you've done, the 98% in the second half, how much kind of that is kind of prudential provision, how much is actually needed. And how confident you are that it's not a lingering problem. In other words, more needs to be done or the numbers could get a little bit worse?

And then the second is you spoke about AI, more of a topic for December, but you've also said that there's also quite a bit of AI already in your plans for kind of spending or investment in 2026 in the OCC. So I just wondered if you could give us a feel for that.

And then the -- the last one, I'm sorry, Jos, but -- what you've done is quite a lot in a very short space of time. How confident are we that, I mean if I were working for you, and I'm glad I'm not because I'd never get to sleep, that the pace doesn't slow down when you leave.

Well, a lot of questions. So thanks for that, Michael. Let me start on Disability. We already -- during the first half, we're able to take some provisioning that was by then not that visible because we also had some offsetting items and the provisioning taken in the first half was around EUR 50 million. In the second half, we have provisioned another EUR 50 million combined with significant increase of premiums, we already increased last year the premiums but we did a significant increase in the -- per the 1st of Jan.

We probably will lose some customers due to that, but the customers we probably are going to lose are customers, we are not regretting that we will lose them because they're not bringing any profitability. So from that perspective, based on everything we know today, we think the combination of the provisioning we have done and the significant increase that should be -- do the trick, and that's why I said that we expect that there will be further -- that the combined ratio in Disability will improve further going forward. It decreased 3 percentage points in this year. But due to the provisioning and the premium increases, we are confident that we have stopped that. And of course, we don't have a glass ball. We can't look into the future.

On AI, as said, my advice to Ewout and Ingrid is to spend some time on it in during the CMD. So I don't feel free to put any numbers on that now. Yes, we are already invest -- we're using in almost every business area of a.s.r. we are already using AI, for example, in our bodily injury area, we've implemented an AI model, which is very helpful to the claims handlers to speed up the incoming letters on cases that are already running for 10 or 20 or even 30 years.

So we do see significant benefit from that, but also in our health area, the fact that we were able to keep the costs low in the health area is predominantly due to AI, but we've agreed with each other that, that will be a topic on the Capital Markets Day, and it's not up to me to disclose that already now. But it will be amazing, Michael, as you can expect.

And then to your last question, I already said that I strongly believe a successful company is a company with teamwork. If you look at the success of the Dutch skating team in -- on the Olympics is due to teamwork. And that's how I have always run the company. Yes, I'm the one who's doing the talking towards the investment community together with Ewout. But at the end of the day, it's based on a group of people that are willing to work very hard. And you're right, you better shouldn't work for us if you're a bit -- no, I'm not going to say that. If you need more sleep than average.

So having said that, I'm very confident that there will be no change in the pace and knowing that Ingrid is much younger than I am, she may push the button even harder and speed up a little bit. But we'll have to see that.

We will now take the next question from the line of Thomas Bateman from Mediobanca.

Congratulations on a fantastic tenure-ship, Jos. Just on the CSM, I think we've had some positive experience there in [ CSM again. ] Can you just explain maybe what those are and how recurring this might be going forward?

And the second question is just on competition in P&C. I heard your comments talking about international players in the mandated broker segment. I guess I was just interested because that sounds similar to what you told us before, but I was just wondering if that is a change if competition has increased, if that's something that worries you? Or is it a bit more of the same, and you still maintain your strong market position?

Let me start with the second one, and then I'll hand over to Ewout. Well, it is the same message that we gave before. It hasn't increased, but it is still -- it is still there and -- my personal expectation is it will be there for the next 12 months. It will not significantly harm our market position, but it might limit to be at the upper end of the growth ratio that we projected. So we're now around 3% in P&C, we were at 3.8%, and we expect that also 2026, we will deliver at least 3% growth over the combined entities of Disability and P&C.

So the worry is it is there. It will stay there. And it creates a bit more price competition, but we've said to each other, we will remain to the value over volume strategy. And -- and looking back a bit further than over the last couple of years, we've seen it -- I've seen it earlier also in the '90s, we've seen it in between 2002 and 2010, it was also there, and they come and go.

So I expect that in a couple of years or within a couple of years, some of those players will discover that the promises made by mandated brokers, that it will be very profitable if they do the underwriting that they will have to face some disappointment there and that they will become more rational. And on the CSM.

Then on the CSM, indeed, so we have seen a positive CSM development in both Life and in Non-life. In the Life side, a couple of elements that played a role. One is the capitalization of the cost synergies. So as you know, we have achieved the synergies that we have integrated Aegon and with that have full confidence that we achieved the synergies in Life, you will not see that running through the OCC or through the business capital generation, but what it does is actually it's increase your future profitability, so it lowers your best estimate liabilities. And with that increases the CSM and the own funds on the Solvency II. So that is one element. That's clearly not something that is recurring.

The second element that plays a role is the inclusion of partial internal model. So the partial internal model results in a lower required capital, the lower required capital results in a lower risk margin, but the lower required capital also is related to the risk adjustment under IFRS and it also results in a lower risk adjustment and with that, a higher future profitability, so a higher CSM. Also that one is not recurring.

If you look more to the recurring items. So what we see is on average 5% to 6% is more or less released every year due to the runoff of the book. And we see half of that being taken out by accretion of the CSM but also by the new business that we are making. So then you are more let's say, on average, 2.5% net amount of -- in a normal basis without special circumstances in a release of CSM that you will see.

We will now take the next question from the line of Farooq Hanif from JPMorgan.

My first question was actually on the top line in P&C. So you've clearly benefited from pricing in 2025. And obviously, you're doing more. But even with that, you're at the lower end. I mean, is this something that we may expect going forward with the competitive environment, unless that changes, we might continue to be at the lower end of top line growth in the non-life business generally. So that's question one.

And then question 2 is on the Life investment margin in the IFRS profit. I mean that was a very pleasing jump. Is that attainable? And what's left in the rerisking program that could help that going forward?

The Life investment margin question will be taken out by Ewout. As said, Farooq, so thanks for your question. Yes, we do see a competitive environment, but at the same time, we still see room despite the competitive environment to increase premiums, especially in motor, we already decided that we will increase premiums in motor midyear. And depending on the category that will be somewhere between 5% and 7%, but in some cases, maybe even towards 10%.

So we feel free to increase motor premiums going forward. And at the same time, we are confident that we will be able to grow the top line in P&C with at least 3% at this moment. So if we -- if I look into the multiyear plans of the P&C team, there is confidence that we will be able -- despite all the market circumstances to grow the business organically in -- on a year-on-year basis. So with that, I think I've answered your question, and I hand over to Ewout.

Yes. So indeed, what we -- I think when we look to the investment margin in Life, a strong jump that was driven by actually all the elements that we have mentioned for example, the growth in the investment margin in the level of capital generation, also apply for the operating investment and finance results under IFRS. So I think this is the basis and the starting point -- starting base for 2026 as well.

We always run -- every year, we run a strategic asset allocation study to look, can we further optimize the portfolio. It will not be huge rerisking that we will -- that we foresee for 2026, but we do see some optimization opportunities, and that is mostly related to actually moving a bit out of the credits because as we're very tight at the beginning of the year, maybe move a bit out of certain government bonds, which are also tightening again after steepening spreads -- increasing spreads in widening spreads in 2025.

And we expect to invest a bit more on the illiquid side, for example, in CLOs, which has been reduced in our balance sheet quite significantly during 2025. So we see room to do a bit more there and maybe also some more illiquid credits because we believe we are a bit underweighted there today.

We will now take the next question from the line of Iain Pearce from BNP Paribas.

Just a couple of quick ones. Firstly, just on the update on the cash at holding target. Can you give us a little bit more detail on the RCF and how that benefits and what the new cash holding target is and if there's sort of now quite a bit of excess cash at the holding company?

And the second one is just on the longevity reinsurance topic again. So you said EUR 10 billion is available to reinsure and indicate there's a pretty low cost of capital. I know you're saying the market is only supporting those smaller deals. But is the expectation that you would look to do the full EUR 10 billion over time? And also with future buyouts, will you be expecting to look to do longevity reinsurance on those deals as well given the sort of cost of capital that you're attributing to those opportunities?

Ewout, I think you're the master of cash at the holding. So for every euro that we have in the company.

So no, it's -- so the holding cash at the full year is EUR 956 million. So there's an increase compared to what we have seen in the full year 2024. And actually, the policy on holding cash, did not -- didn't change at all, meaning that we always keep cash at HoldCo level to cover the coupon payments, to cover the holding expenses that we are having and the last year dividend actually. So that is the policy that we are having and that did not change.

But what we also have witnessed is that we have, of course, also for liquidity reasons, quite some facilities in place, which you pay an amount for, but actually do not use. And one is the unconditional revolving credit facility that we are having. So -- and knowing that actually the most -- the higher yields -- that you get higher yields on investments when those -- the cash is at the legal entity level instead of at the HoldCo level, we said, okay, it might be wise to at least capture a small portion of that as a kind of part of the HoldCo cash policy so that you don't have to remit too much and then have cash at the HoldCo that actually is not doing anything for you as -- for our shareholder community.

And that is what we -- that's actually what we have changed and also communicated already by H1. I think the portion of -- that we now include is almost EUR 230 billion -- EUR 230 million of the HoldCo of the credit facility that we actually have kind of earmarked as part of the holding cash.

And then on the -- there's a bit of noise, Iain. And then on the -- no worries. But then on the size of longevity reinsurance that we can do, indeed, so EUR 10 billion is what we see as the potential today. I mean we have more longevity in our portfolio, but you don't have all the data available for those books. So we are also working on further improvement with EUR 10 billion is what we see for the short-term.

What we see in the market indeed is that the most favorable deals can be done around EUR 3 billion to EUR 5 billion. And what we will do is that we will further investigate where the prices are still very attractive. And if that's the case, then we will definitely consider, not because we need the capital, so we will not do any longevity deal because we need the capital. We will only do this because of the fact that cost of capital is on one hand, attractive. And on the other hand, we also can see this as good risk management.

Because when you look to the Life balance sheet, the biggest insurance risk that you have on the Life balance sheet, by end of the day, is longevity risk. So it's also a part of good risk management. And that is how we will evaluate it case-by-case, starting with the first investigation in 2026. So we expect to conclude that in the second half of the year. And if it turns out that it is attractive, we might do the deal. If it is not, we will not do the deal. And if it is -- if we do a deal, we will definitely look into it, whether it makes sense to do another deal, but we will take it when we get there.

We will now take the next question from the line of Nasib Ahmed from UBS. We will now take the next question from the line of Michael Huttner from Berenberg.

Just 2 very small follow-ups. One is on the buyouts, the CSM benefit you said was about EUR 50 million. I expected more from EUR 2.8 billion, but maybe I'm completely wrong. I just wondered if you could remind us of the metrics here. And then the other one is, I think one of your peers mentioned lower reinsurance costs as a benefit, and you haven't. So I just wondered maybe you can give us an update here.

On the first one, I hand over to Ewout and he probably will also take the second one.

So -- on the buyout. So indeed, there's a EUR 50 million additional CSM, we were actually very positive with the fact that you already at day 1 see that those contracts are profitable, Michael. I think we all have seen competitors, 1 competitor that actually wrote the buyout that had a big negative actually as we sort of the buyout. We see that already at day 1, it contributes positive to future profitability, and that's not even taking into account all the excess return that we can make on those buyouts because those will flow through the operating and investment finance result, and that should also be taken into account.

So that's the 2 things where you see back on one hand, the CSM, which will be released over time. But on the other hand, you will also see an increase of the operating investment and finance result. And together, that makes that you actually see that the return over time will be on an IRR basis, that is, by the way, based on the solvency calculation, but on an IRR basis will be over 12%. Hopefully, that please it up.

Yes, indeed.

Then on the reinsurance program, indeed, we see that the reinsurance market has been softening again also in -- for the year 2026 compared to last year. We have seen that -- yes, we have seen attractive prices, which offers us the opportunity to have a somewhat bigger [ Get ] program to keep retention levels at the same level and still pay even more or less the same prices. So when you purely look from a risk coverage perspective, prices has come down in total. We see kind of that we will pay the same to reinsurance in Non-life as we have done over the year 2025.

But you'll keep -- your retention is coming down.

No, the retention is at the same level. The Get program is actually at a higher level. So we have increased the Get program -- and we were able to increase the Get program without paying any euro more.

We have time for one more question. Investor Relations team will contact all the further participants with any answers. Our last question comes from the line of Nasib Ahmed from UBS.

Can you -- hopefully, you can hear me now. First question on just the 75%, 25% split of the OCC. If I take the EUR 1.35 billion guidance, take 75% of that you had more than EUR 1 billion, EUR 750 million is probably the dividend. So already at more than EUR 250 million of potential buybacks on your EUR 225 million. So I guess a question on why not upgrade that.

I think last year, you were at EUR 75 million because you did the EUR 100 million special with the participation from Aegon sell-down. So is that the way we should think about this year as well? I think you made the comment around participating again in a potential sell-down.

And then on the 25%, which is around EUR 350 million, I think you spent EUR 185 million on Bovemij, and that leaves EUR 165 million for, I guess, DB pensions. Is that the main use of that remaining EUR 165 million? And then just quickly on the EUR 600 million fungible capital that you released from the PIM, that's on a group solvency basis, but the real cash is in the entities where you got 30 points of solvency. So shouldn't that EUR 600 million be actually a little bit -- well, quite a lot larger than what you're getting at the group level?

Maybe you can take the second part of the question on the EUR 600 million, I will comment on the first one.

The second part of the EUR 600 million...

So the -- the second question.

Yes. On the EUR 600 million. So in detail, so when you calculate that at the group level, you come to a level of EUR 600 million. But the good thing is when you calculate this at the legal entity level, you really come more or less at the same point. So it's just over 30% of solvency upside if you take kind of -- if you multiply the required capital by 1.6 -- 6x, sorry. That's actually how we are doing that, then you will land also at the fungible capital of around EUR 600 million, Nasib.

So that's really in the same area. This is also the way we are actually looking at fungible capital. So we look at fungible capital at the legal entity level because that determines the [indiscernible] capacity and not the solvency at group level. So that's on that question.

And on your question on the 75%, 25%, the way we've always approached this is that it was our intention to return, let's say, 70% to 75% of the OCC in terms of dividends and potential buybacks. So that is what we've done over the last year. So I recognize the numbers as you have calculated them, and also for this year, at least mentally, we are prepared to do the same 70% to 75% of OCC will be returned.

And that's why we've also set that if and when Aegon will decide to further sell-down that we're willing to fast forward the EUR 225 million of buyback that we have projected for the next year. So consider it not as a hard number, 75%, but consider it as a rule of thumb that we always want to be between the 70% and 75%. And Ewout, do you also want to add on that?

Yes. Then for the year 2026, so indeed, so indeed, you see the -- of course, we already have the deployment opportunity of Bovemij, which we are very happy with. When you purely look to the level of capital generation and the remaining kind of capital that you don't have deployed, you come to the number that you mentioned. But as you can see, we also have a strong balance sheet. So we would be more than happy to deploy over the level of capital that we have generated. That's the good thing about a strong solvency that you have -- that provides you the flexibility to be entrepreneurial. So we would be very happy, whether it's M&A or buyouts to do more.

I would like to turn the conference back to Jos Baeten for closing remarks.

Thank you very much, operator. And thank you, all of you for joining us. From my side, I enjoyed every minute of it, not only today, but also the 19 earlier conversations we had due to all the reporting we did on half year and full year. I was always inspired by your views and your questions. And what I think is great that we together created an atmosphere also in those calls that we could seriously talk about the execution of our strategy and the successes we have brought, but that we always could do it with a smile on our face and that was accepted by the investment community.

I'm a big fan of Warren Buffett and Warren Buffett once said only when the tide goes out, you discover who's been swimming naked. And I think if I look at a.s.r. and the last 10 years since we were a listed company again, we've seen different phases. We've seen COVID. We have seen volatile markets, but one thing was clear a.s.r. was always swimming fully dressed.

And with that, I think a second saying of Warren Buffett is price is what you pay and value is what you get. And I think that's what we have delivered together on a.s.r.. Thank you for joining us, and see you all tomorrow evening in London.

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

Good day, and thank you for standing by. Welcome to the a.s.r. Half Year 2025 Results Conference Call and Webcast. [Operator Instructions] Today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Michel Hülters. Please go ahead.

Thank you, operator, and good morning, ladies and gentlemen. Thank you for joining us today. Welcome to the a.s.r. conference call on the results for the first half of 2025. On the call here with me today are Jos Baeten, our CEO; and Ewout Hollegien, the CFO.

Jos will kick it off with the highlights of the financial results. He will also give a brief update on the Aegon transaction and the integration and discuss the business performance. Ewout will then talk about the developments of our financials, the capital and our solvency position. After that, we will open up for Q&A. We have ample time planned for this call, but we will stop sharply at 10:30. [Operator Instructions]

Finally, as usual, please do review the disclaimer that we have in the back of the presentation for any forward-looking statements.

So having said that, Jos, the floor is yours.

Thank you, Michel and the house. Good morning to the crowd. Thanks for joining in. We're going to say it loud, we delivered strong numbers. That's the vibe, no doubt. Strategic plan, discipline, focus, all about results on the rise, yes, growth been strong. Momentum in the business, we keep it rolling on. Targets in our site, medium-term, we aim. Performance on the table, we're elevating the game. So take a closer look, see the work we've done. Slide #2 shows the journey's just begun.

So let me start with the integration of the Aegon business because that's been front and center for us over the past 2 years. As a result of hard working and tremendous dedication from our colleagues throughout the organization, I am pleased to say that we have achieved all integration milestones so far, and we're now entering the final phase.

We've made significant progress this past half year, especially with the migration of the Mortgages and the Individual Life books, and we're fully on track to implement the Life PIM by year-end. That puts us firmly on path completing the integration in 2026 and delivering our strategic targets.

Secondly, on growth, we're experiencing tailwinds from the pension reform in our pension book with increased inflows into both accumulation and decumulation products. We've executed strongly in the pension buyout market, closing 3 deals so far this year, totally -- in total nearly EUR 3 billion in assets under management. The margins are solid and comfortably above our 12% hurdle. And this comes on top of another strong half year of organic growth in our Non-life and fee-based business.

And thirdly, we continue to deliver attractive capital returns to our shareholders. The interim dividend per share is up 9% compared to the last year, driven by a 7% increase in absolute dividends and the execution of the EUR 225 million in share buybacks, split between H2 in 2024 and H1 in 2025. So all in all, a strong delivery on the promises that we have made a year ago.

Let's have a look at some other highlights. Our OCC increased close to 10% to EUR 721 million, driven by business growth, higher investment margin and the realization of cost synergies. Benign weather in P&C and elevated spreads, for instance, in government bonds have been beneficial to OCC. The Solvency II ratio increased with 5 percentage points to 203%, reflecting the strong OCC contribution supported by market movements, especially the steepening of the interest rate curve. The 203% ratio also includes the impact of the EUR 125 million share buyback completed in May as well as the interim dividend.

Operating result came in at EUR 826 million, up more than 20%, driven by broad-based business performance and the higher investment margin. Operating return on equity rose to 14.4%, comfortably above our target of more than 12%. In Non-life, the combined ratio for P&C and Disability improved to 91.0%, ahead of our target of 92% to 94%. And importantly, we achieved this while growing Non-life premiums organically by 4.1%. So we are delivering profitable growth. Additionally, we saw solid inflows in Pension DC and Annuities. Combined with the 4 pension buyout deals we've executed so far, we are clearly on track to meet our CMD growth targets.

Let's move to Slide 4 and look how we are progressing on our nonfinancial KPIs. As we continue to create sustainable value for all of our shareholders, we are consistently recognized as a sustainable insurer. Our brand reputation score increased to 40%, well without our target range of 38% to 43%. This was further underpinned, among other things, by our new partnership with the Royal Dutch Walking Association. The carbon footprint of our investment portfolio reduced by nearly 7% compared to 2023, and impact investments now represent 8.7% of the total portfolio, keeping us firmly on track to meet our nonfinancial goals in this area.

Employee engagement declined as we expected. The integration of Aegon Nederland's activities is a massive project, and the merging of 2 corporate cultures have had an impact on our people. That is quite natural. And at the same time, we now see that in the areas where the integration has been completed, employee engagement is rising again. We also see positive developments in customer satisfaction, as of this year measured through the NPSI, mixing both direct contact and digitally contact in the online environment.

The improvements reflect that we are able to execute the business integration while keeping focus on our customers. That said, our compelling ESG profile remains acknowledged by a broad range of international ESG indices and benchmarks. All in all, we are pleased with the progress we are making and the value we are creating across the board.

Let's move to the integration milestones on Slide 5. We are now entering in the final phase of the Aegon NL integration and are confidently on track to deliver the EUR 215 million synergy target by 2026. Earlier, we successfully completed the integration of P&C and Disability, and we've now finalized the last steps in Asset Management. Legal mergers of -- for Non-life IORPs and the holding entities have also been completed at an earlier stage. In the past 6 months, our focus has been on migrating individual life policies and mortgages. Around 2/3 of both portfolios have already been migrated, and we expect to complete the remainder in the second half of this year.

All new mortgage production is now processed through the SaaS solution on the startup platform. We've also made solid progress on the partial internal model for a.s.r. Life. The formal review by D&B is underway and on track to receive approval before year-end 2025. And as a reminder, we expect the PIM to contribute somewhere between 10 and 12 points to our solvency ratio. The final phase will include the legal merger of our Life entities and the remaining integration activities within Pension. We will also decommission the remaining Aegon systems, in total, 220 different systems, and terminate the remaining TSAs, bringing us to the full delivery of our synergy ambitions.

That being said, let's dive into the performances across the different business lines. Let me start with Non-life on Slide 6. Premiums received in our Non-life business grew by 4.1%, comfortably within our medium-term target range of 3% to 5%. This growth was mainly driven by tariff adjustments over the past 2 years and increased sales volumes in P&C, commercial lines and group disability.

We do see competition pick up, particularly in certain selective product lines and primarily from foreign players. This makes the performance all the better because our strategic principle has been for many years value over volume, and this remains the case. So we will continue to pursue profitability over market share.

The combined ratio of our P&C and Disability business improved with 0.8 points to 91.0%, outperforming the target range of 92% to 94%. The expense ratio has improved 0.7 points from the realization of cost synergies, further strengthening our cost leadership position in the Dutch market. We are delivering on both growth and profitability, striking the right balance and maximizing the absolute amount of profits.

In P&C, the combined ratio remained strong and better than targets. Similar to the first half of last year, also in the first 6 months of this year, profitability was supported by the absence of weather-related calamities. We also continue to see stability in the combined ratio in bulk claims, which further improved in H1 2025. These bulk claims, which are low in amount and high in frequency, are relatively stable, and this represents about 90% of our total claims. Looking back over the past few years, the impact of bulk claims on the core has never deviated more than 1.5 percentage points from the average claims ratio of around 53%. This is truly our bread-and-butter business.

In Disability, the combined ratio improved by 0.8 points, reflecting gradual price increases and a strong business performance. There was an offset between nonrecurring benefits from provisioning harmonization and additional provisioning on group disability portfolios. Group disability has experienced adverse claims development due to elevated incidence rates, especially related to psychological absenteeism and long COVID. We believe this is a broader market phenomenon due to the long waiting times at the UWV, the Dutch Employee Insurance Agency, and nationwide development that we monitor closely. And for the next year, we will increase prices.

Let's move to the Life segment on the next slide. We're seeing strong commercial traction in our Pension business with momentum clearly building across the board. DC inflows are up 16%. Annuities are up 8%. And we executed 3 buyout deals this year totaling EUR 2.8 billion. Our Pension DC inflow of EUR 1.5 billion benefits from the developments from the pension reform and continues to grow steadily.

The Pension DC assets under management increased, although it experienced some negative revaluations from rising interest rates. Annuity inflows are also gaining pace, driven by maturing DC assets. The majority of inflows come from converting expiring DC assets from our own book, supplemented by external inflows. We're halfway through our plan period and have achieved 50% of our EUR 1.8 billion cumulative annuity inflow targets, so really on track. In the pension buyout space, we've shown strong deal execution to almost EUR 3 billion in buyouts so far, puts us well on track to meet our EUR 8 billion cumulative target by 2027.

Let's dive into the pension buyouts on the next slide. a.s.r. is leading the charge in the pension buyout market, and I would like to make clear from the onset that each of the transactions that we've executed meets our 12% hurdle rate, so no issues there. So far, around EUR 7 billion of pension entitlements have been transferred to insurers, roughly 25% of the expected EUR 20 million to EUR 30 billion market. a.s.r. has captured about 40% of that, thanks to our compelling pension proposition and strong capital position that ensures financial stability for pensioners, including protection against inflation.

Our managers are hands on from day 1, showing clear commitments to drive to execute these deals. With TKP's top-tier platform, we've ensured smooth transfers to pension entitlements and demonstrated in the 4 deals already closed with the operational capacity and capability to onboard our customers efficiently and provide the service they expect. As mentioned, margins on the deal so far have been attractive and above our 12% hurdle rate. With the average maturity of these buyouts being about 15 years, this is a long-term value driver to our OCC.

Returns are driven by bespoke asset allocations geared towards internally managed assets such as mortgages and real estate, which matches really well with the illiquid characteristics of the liability. To us, this also confirms that owning your own asset manager pays really off. We are also exploring reinsurance options for the longevity risk. This appears an interesting capital alternative, which could further enhance the stock flow trade-off and boost value creation from these buyout transactions.

Moving on to the fee-based business on the next slide. In our fee-based business, we delivered a 7% increase in fee income, and we've taken further steps to enhance growth going forward throughout targeted acquisitions. The full acquisition of HumanTotalCare, the market leader in occupational health and reintegration services, strengthens our position in the value chain of sustainable employability.

With absenteeism on the rise, a tight labor market and a higher retirement age, prevention and reintegration are more relevant than ever before. We expect the closing in Q4, and this acquisition fits perfectly with our strategy of combining organic growth with selective M&A. We also agreed with the pension funds Zorg en Welzijn to split the real estate activities of Amvest by the 1st of January next.

As a result, a.s.r. will independently manage the 7,500 residential dwellings previously overseen by Amvest while the development activities will be split. The operating result increased by EUR 13 million to EUR 87 million, driven by business growth and the realization of cost synergies. Although there is some seasonality in D&S, which is skewed to H1, the fee-based business are performing really well.

With that, I'll now hand over to Ewout to walk you through the financial and capital position.

Yes. Thank you, Jos. And I have to say that Snoop Dogg has to watch his back because competition is on its way. Good morning to everyone on the call. I hope everyone had a fantastic summer. I'm genuinely pleased with the set of results we are presenting today. They reflect the strength and resilience of our financial and capital position and show that we are well on track to meet our ambition.

Now turning to Slide 11. Let's kick it off with our capital view. For yet another consecutive period, it is fair to say that we got this wheel spinning. We are operating from a position of capital strength. Our Solvency ratio rose to 203%, giving us ample capital to fund our initiatives for profitable growth. We have, in particular, executed strongly in the pension buyout markets, one of the cornerstones of our deployment strategy. The capital generation benefited again from strong underwriting performance, the absence of large weather-related claims and higher investment returns.

Thanks to our disciplined deployment of capital and profitable growth, we are well on track to hit the EUR 1.35 billion target by 2026. And our capital return remains strong. The interim dividend per share shows an increase of almost 10%, reflecting the growth of the dividend base as well as the positive impact from the share buybacks executed at the end of 2024 and in the first half of this year.

Now let us zoom in on how our solvency developed in the first half of 2025. Over the past half year, we deployed capital at attractive margin. Despite that, our solvency ratio still moved up by 5 points, landing at 203%. Let us look to the key drivers of the development of our solvency. The 3 buyout deals in the first half of the year and EUR 2.8 billion of assets and liabilities impacted solvency by 4 points. As we did not use longevity reinsurance yet, this is about 1.5 solvency points lower than anticipated. This is due to the fact that these deals only closed end of Q2 and that the majority of the assets still needs to be rebalanced to the targeted asset mix.

The OCC contributed roughly 12 percentage points to the solvency, and the market and operational movement shows a net positive impact of 2 percentage points. This includes a positive impact from the steepening of the interest curve. As you know, in our sensitivity analysis, we only include steepening between the 20 and 30 years points, but we also have experienced 20 bps steepening between 10 and 20 years points. And at earlier stages, like in 2022 and 2023, we already have seen that steepening between 20 -- 10 and 20 years is beneficial for our solvency as the UFR converts differently.

Secondly, we have seen the tightening of the market spreads compared to the full year level, and finally, positive revaluation in real estate, especially in residential and rural, and these pluses were partially offset by equity market movements that led to an increase of the equity dampener driving a higher required capital. This all brings the Solvency II ratio to 208% before any capital management actions. After deducting 6 points from the interim dividend and the EUR 125 million share buyback and factoring the EUR 500 million RT1 issuance and the partial Tier 2 redemption, we land at a solvency of 203%.

Quite some moving parts and may be useful to have a look on what we can expect on solvency for the second half of this year. Let me highlight 6 items. To start with, the first call date of the remaining EUR 88 million Tier 2 hybrid is in September, and we already announced to call this instrument. Secondly, in H2, we perform our annual actuarial assumption update process, and we expect to see 1 or 2 solvency points contribution from the capitalization of the cost synergies.

Thirdly, we have about 1.5% additional capital consumption from the closed buyouts to invest fully in the targeted asset mix. And we might, when opportunities arise, also invest 1 or 2 solvency points in rerisking of the general account. As a fourth point, we also mentioned that we will explore the potential benefits of reinsuring the longevity risk of the buyout transaction. If we execute on reinsurance, it will, of course, provide capital relief and enhance the return on the buyout transactions materially.

And five, as mentioned during our full-year results, we are looking to explore a change in the mortgage spread methodology in order to dampen some volatility driven by timing differences between interest rate change and the subsequent adjustment to mortgage rates. The adjusted methodology will likely result in a slightly higher spread, meaning a small negative impact on the group's solvency ratio at implementation date with a small positive on OCC going forward. In fact, a stock versus flow impact, and on average, less sensitive for spread movements.

And last, certainly not least, the impact of the implementation of the partial internal model for a.s.r. Life, which is still expected to add 10 to 12 solvency points to the group solvency. And, of course, we should not forget the regular OCC contribution, which we'll briefly discussed later, and the final dividend that will be deducted at full year, which more or less offset each other.

Let's turn to capital generation on the next slide. Capital generation increased by 9% to EUR 721 million, mainly driven by the Life segment. Rerisking in H2 of last year, positive equity and real estate revaluation and wider government spreads pushed the investment margin of segment Life up by roughly EUR 50 million.

Secondly, in the Non-life segment, we saw solid organic growth and improved combined ratio. This led to an increase of business and finance capital generation, which was offset by a lower net share impact, mostly related to the new business strain from the growth in Health and some growth in the other Non-life businesses.

Fee-based business added another EUR 10 million to OCC due to the improved operating results. Holding & Other decreased a bit, reflecting temporary allocation of IT integration costs at holding level and higher refinancing costs from the RT1 issuance in H1.

Looking ahead to the rest of the year, what's on our radar for the capital generation? Let us start with H2 2024 as the base. Our H2 2024 capital generation was EUR 534 million, which benefited from mild weather and fewer large claims in P&C. Normalizing this to the midpoint of the combined ratio range means a EUR 50 million deduction, bringing us to a normalized H2 2024 OCC of EUR 520 million.

From our business plan, we expect tailwinds from growth of the business, realization of synergies, slightly higher, better investment margin, and lastly, the pension buyout, though the impact will be modest, particularly for Q4 as assets weren't fully invested in the targeted mix by end H1, as already discussed. Altogether, we expect a EUR 30 million to EUR 40 million uplift versus the normalized H2 2024 OCC, putting us comfortably above EUR 1.25 billion and well on track for EUR 1.35 billion in 2026.

On the next slide, I will bridge the OCC to operating results. And I'm pleased to see that the bridge we are showing here tells a consistent story between capital generation and operating results over time. Firstly, business capital generation is higher in the operating result driven by the CSM release in the Life segment.

Secondly, finance capital generation is lower in the operating result. That reflects the higher negative accretion on the balance sheet, specifically the CSM and the LIP versus the volatility adjuster. On average, we see 25 bps higher liability -- liquidity premium versus the VA in H1.

Thirdly, the positive impact from net capital release in OCC doesn't show up in the operating result. I think this is also very much reflected in what we have seen in Non-life. And finally, please don't forget the operating result is pretax while OCC is a post-tax measure.

Let's move to the next slide and dive into the operating results. Operating result increased by 22% to EUR 826 million. Life segment delivered a steep increase of EUR 126 million, mainly driven by the higher investment margin, which we also saw reflected in capital generation, and a less negative experience variance compared to first half of 2024. The other result in Life benefited from gains related to the contribution of associates.

In Non-life, as mentioned earlier, we benefit from improved underwriting margins, cost synergies and higher premiums. The segment added EUR 26 million. For fee-based business and Holding & Other, the same dynamics apply as for OCC.

Before we move on to the investment portfolio, I want to point out 2 incidental items that impact the IFRS result in the first half of the year. Firstly, to harmonize methodologies of Aegon and a.s.r., we updated the determination of the liability liquidity premium, leading to a lower average LIP on group level. This has a negative impact on liabilities, hence, IFRS equity. However, this will have a positive impact on operating results due to the lower accrual of liabilities, really stock versus flow dynamics on IFRS basis.

And secondly, the revaluation of the own pension scheme -- positive revaluation of the own pension scheme liability run through OCI, so through equity, and this presents a gap from the interest rates in IFRS results.

Let's now turn to the investment portfolio. This slide shows the strength of our investment portfolio, high quality, well diversified and resilient. And I'll start with the fixed income and then touch on Mortgage spreads and Real Estate. Our fixed income portfolio is solid. Around 95% is investment grade and well diversified from a geographical point of view with a skew to European countries. Our exposure to the U.S. is limited, as you can see, and please note that the fixed income U.S. dollar exposure that we have is fully hedged.

Top left, you'll see the development in Real Estate. Residential property continues to show strong momentum with a 4% positive revaluation so far in 2025. It makes up about half of our Real Estate portfolio. The valuation gap slightly closed and remain positive on price development for the rest of the year. Rural property also performed well, increasing by 3%, and this accounts for roughly 20% of the real estate portfolio. Other Real Estate categories saw smaller, but still positive revaluations.

Then lastly, Mortgages. Risk return profile of Mortgage has remained very strong, low arrears and eligible credit losses and an average loan-to-value of 54%. 80% of the portfolio has a loan-to-value below 65%. I think we need to consider to change Swiss clockwork into Dutch mortgages when we want to express predictability and quality. We're currently seeing mortgage spread levels of around 100 bps, which we consider as a normal level, though a bit lower than first half year. As mentioned earlier, on track to adopt the methodology to reduce volatility in temporary spread movements.

Let us look at the flexibility of the balance sheet on the next slide. In March, we issued an RT1 instrument to refinance the maturing Tier 2 in September 2025. By replacing the Tier 2 with an RT1, we have rebalanced our headroom over Tier 2 and Tier 3 versus the RT1, enhancing the financial flexibility. As you can see on the bottom right-hand side, our debt maturity schedule remains nicely stacked over time. And lastly, it's good to mention that the outlook to the S&P IFS ratio is positive, awaiting a final decision. And we are very happy that also S&P is appreciating the progress we are making both strategically and financially and looking forward to monetize the positive outlook.

And finally, let's end with our HoldCo liquidity, which remains very comfortable. As you know, we only remit cash from our entities to cover last year dividends, coupons and HoldCo expenses. Starting this year, we are now including a part of our unconditional revolving credit facility in our holding liquidity definition to facilitate that we keep cash in the legal entities to get the best yield. Solvency ratio at our Life entities are benefiting from the steepening of the interest rate curve. Aegon's Life ratio even held steady despite a 10-point deduction from remittances to group and 12 points consumed by pension buyouts.

The continued strong position -- capital position at Aegon Life provides capacity to remain active in the buyout market. And just a quick reminder, solvency ratios for a.s.r. Life and Non-life are based on the standard formula. If all goes according to plan, we will implement partial internal model for a.s.r. Life in H2 2025, which will further lift the solvency ratio of a.s.r. Life and Group. The implementation is progressing well. The formal review phase by the DNB has started and on track to get the approval before year-end.

And with that, I'll close my presentation and hand it back to you, Jos, for the wrap up or the rap up.

Thank you, Ewout. This concludes our presentation. And before we take your questions, let me highlight the key messages. We achieved a very strong performance in all of our businesses, supported by increased investment returns. Our OCC is on track to achieve the medium-term target of EUR 1.35 billion in 2026, proven execution in the buyout market and further organic growth in all business segments, so delivering on our growth ambition and a solid base for our medium-term targets.

The robust Solvency II ratio of 203%, comfortably in the entrepreneurial zone, reflecting our increased OCC and positive market impacts, compensating the deduction for capital return and deployment in the pension buyout market. The introduction of the PIM for a.s.r. Life by year-end is on track. And finally, the integration of Aegon NL is entering the final phase, and we are well on track to deliver on the synergy targets, so we are happy to take any questions, and I'll hand over to the operator.

[Operator Instructions] And now, we are going to take our first question, and it comes from the line of Cor Kluis from ABN AMRO - ODDO BHF.

And Jos, thanks for your introduction as a rapper. My first question is about capital. The capital is quite good, of course, at 203%, and then, you got the Aegon PIM at the end of the year. So yes, quite high solvency if you also take that into account. Until now, we only have the share buyback of the EUR 175 million and the EUR 225 million in, I think, most models and guidance. Can you give a little bit more idea what to do with, yes, the capital going forward, especially from next year onwards? Do you see other material acquisition opportunities going forward, for example, or big capital consumption for buyouts? So excess capital situation, maybe we look a little bit -- we're a little bit early on that. We have to ask that question at the end of this year, but that's the first question.

Second question, like what Ewout said is the mortgage spread model adjustment that could have some positive impact on the OCC going forward. Could you quantify that a little bit? What kind of figures do we have to think about of that change?

And my last question is about pension buyouts. You already said that you before hedging have an IRR of above 12% of the pension buyout. So that was a good allocation of capital. Could you give an idea of the IRRs after hedging? Because I think you said somewhere that it could be quite a significant enhancement of the IRR. So are we then talking about 13% or 14% IRRs of these buyouts? Because that looks quite good from a capital allocation point of view. That's it from my side.

Thank you, Cor. Let me take the last and the first question. To the pension buyout, indeed, we are currently in all the transactions we have done exceeding the 12%. I think that's predominantly due to the fact that we have a very efficient operation. And as said in the presentation, we believe that having our own asset management is -- asset manager is also helpful in optimizing value in adding the assets to the portfolio.

We've done that until now without any reinsurance, and we assume that longevity reinsurance could add a couple of additional percentage points to the IRR. We haven't put an exact number on that because you have to ask for quotes per transaction, and it depends on the population of the transaction, whether it will be 1 percentage point or even more than that. But it definitely gives us the ability to increase the IRR on those transactions.

Then, on capital deployment, of course, we are happy with the fact that we also, going forward, see further growth of the capital. That puts us in a position that we can keep on executing the strategic plan that we presented during the Capital Markets Day. First of all, organic growth of the business, including further growth of the Pension business.

And the way we look at it today is we've set a target of EUR 8 billion in buyouts. Let us first get there. But the strong capital position puts us in a position that if the market is larger than the 20 to 30, and we've reached the EUR 8 billion, that capital will not be the limiting factor to further growth in the pension buyout business as long as the IRR remains above the 12%, that's one.

Secondly, we have the feeling that M&A still is on the table. We do see some smaller P&C companies that are thinking about their future. And if they would reach out to us, then we would definitely be willing to talk with them. So having capital for that is always a strong position. And as said, we believe that consolidation of the Dutch Life market is not yet ready, and we're willing to seriously look into that also.

Having said that all, realizing that we have a strong capital growth path in front of us, if we can't do anything of that, we're fully realizing that we also should consider higher buyouts than what we have announced to -- sorry, buybacks than what we have announced up until now. So we keep on track on the EUR 175 million, EUR 225 million. And if the capital keeps on growing and we can't spend it on profitable and our hurdle meeting investments, we definitely are willing to increase the capacity for buybacks.

And with that, I hand over to Ewout for the mortgage spreads.

Yes. So on the mortgage spread, Cor, we don't know exactly, of course, what the impact will be by the full year numbers. But maybe to give some color on that. So let's assume that it costs 2 saucy points, then you talk about EUR 120 million of own funds that you lose. The contribution from the OCC, so the flow that you get back from that, you should divide it somewhere between 7 and 10. That's the duration of -- or the average duration of the mortgage book, and that gives you a flavor on what then the contribution of OCC will be. But it's also dependent on, by the end of the day, what the impact on the spread will be, and that you only know by the full year. But we expect a small impact from that.

Now, we are going to take our next question, and the question comes from the line of David Barma from Bank of America.

And apologies for my lack of a good West Coast flow this morning. Firstly, on OCC, thanks, Ewout for the 2025 bridge. Can you give us a similar color for '26, please? Because you're pretty much tracking in line with '26 already. And we got more cost synergies to come, more rerisking benefits, more buyouts, maybe a bit of uplift to OCG if you do this longevity reinsurance deal. So is there any reason we shouldn't expect you to outpace your target next year?

And then secondly, on Non-life, on an earned basis, top line is down in Disability and almost slightly up in P&C. So first, could you maybe give us a bit of color on the bridge between the organic growth and the earned numbers? And if you can update us as well on pricing trends for these 2 lines of business? And I'll listen to Michel and stick to 2 questions.

Thanks, David. Shall we also discuss the EUR 230 million OCC? No, just kidding. Let me try to give some direction of travel. I think what we expect for 2026 is more or less the same elements as we have seen in 2025, but you see that there's kind of a shift more to what becomes more material. In 2026, we will -- we expect further contribution from the synergies that we are realizing, even more than we have seen in 2025.

What we also expect in 2026 to come through more is the buyout. As said, we closed most of the buyouts just before Q2, so the rerisking hasn't been done a lot for those buyouts. That will be done in Q3, and the remainder portion in Q4, but that also means that you only have kind of a 1 quarter really benefit in 2025, as you see from the buyouts. So that will definitely contribute also more in 2026.

And thirdly, we also keep on growing the business, so also from that area, you can expect an improvement. There was a small offsetting element that we expect from the introduction of the partial internal model for Life, which reduces the required capital and will also reduce the SCR release for a.s.r. Life. But all in all, that brings us in a level, as we have said earlier, that we expect to do roughly EUR 100 million more -- EUR 80 million to EUR 100 million more in 2026 compared to the normalized level of 2025.

On the second question, David, as said, we do see a bit more competition in the P&C and Disability area, predominantly from foreign insurance companies focusing on capital-light business like fire and sickness leave. With that, we have said we will stick to our philosophy, value over volume. And for that, the growth of 4.1% represents roughly 75% of price increases, and 25% of the growth comes from real organic growth. That's what we see going forward as the trend.

So price increases will remain important. What we already know, and I think I've said that also in the presentation, we see -- particularly in the RIA business, we see a need for further price increases, and we already took the decision to increase prices for that. That is actually the Disability Group business for taking over the risk for -- the risk after 2 years of sickness. There, we also had already decided to increase premiums, and that will impact our competitive position as the market is not following. But what we do see is that this is a market phenomenon. So we expect that we, as a market leader, if we increase the premiums there that others also will follow.

In Motor and P&C, for this moment, we don't see any large additional increases of premiums. And, of course, we have the regular indexation, so premiums will go up anyway due to the clause in the products that we, on a regular basis, will index the prices there. So hopefully, that answers your question.

Now, we are going to take our next question, and the question comes from the line of Andrew Baker from Goldman Sachs.

The first one, just coming back to the sort of 12% or greater than 12% hurdle rate for the buyout. And obviously, as you said, it goes up to sort of a couple of points potentially from the longevity reinsurance. That seems really strong. And then, we're also hearing though from one of your other peers that they sort of don't see pricing is that attractive in the market and they can't get to their double-digit return. I hear you on what you're saying in terms of your efficiency and owning your own asset manager. But is that enough to sort of bridge from, I guess, below 10 percentage points of return from a peer to what you're seeing in sort of 12% to 14%? Or is there anything else going on there?

And then secondly, just on the longevity transaction, how should we think about the size of any potential transaction? Is it linked explicitly to the buyout business that you're writing, sort of close to EUR 3 billion? Or would you do anything in terms of the back book as well?

Thank you, Andrew. I think I already mentioned the 3 important elements why we are able to gain traction in this market at profitable returns: a very efficient platform, a very strong capital position on a holding level and in the life entity, and at the same time, the ability to pick and choose your assets in the illiquid space in a way that, from our perspective, it increases the profitability.

So the better question might be asked -- giving David the call and asking him why he's not able to reach it more than 10%. So I think we are comfortable with this. And you know us already for a long time, we don't do anything that is not delivering at least 12%. And the key statement we want to make today is the return on the first 4 transactions is even without reinsurance already above the 12%.

Beautiful thing is also that we today in the H1 numbers, we already have the buyouts in our books, so we can also make the comparison on what we have put into the pricing and what we see in the reporting. And you see actually that, that is matching. So that also gives us the comfort that we are doing the right things.

Then on the size -- then on your question around the size of the longevity reinsurance that we are considering. What we also have said during the full year call is that we want to test the longevity reinsurance market because we don't need it from a kind of capital perspective. But we do that, we see that as some kind of way to optimize the IRR of buyout deals, and maybe in the future also, the capital structure of the company. But we want to test the longevity reinsurance market by doing it for a buyout. We have used the EUR 1.6 billion buyout that we -- so the biggest buyout that we announced to test the reinsurance market.

And it gives us -- when we look today and the quotes that are coming in, especially the appetite that we see from reinsurers across the ocean, do give us the comfort that there is the possibility to enhance the IRR material by doing a longevity reinsurance trade. That might also trigger the question, will you then also consider that for the portfolio that you have in force? I think if indeed it is attractive enough, we should definitely look into it. What we also will do is take into account the fact that when we look to our portfolio today, we also have mortality risk in our book. I think that distinguish us from other Dutch insurance.

We will take into account that we bring a.s.r. Life to an internal model, which already makes longevity risk more capital efficient than under the standard formula, and we will also take into account the EIOPA 2020 review, where you see that the risk margin will be lower than it is today, and that will also have an impact on the attractiveness of longevity reinsurance deals in the future. Having said that all, if we see that it is material improving the IRR of buyouts, we will have -- we will assess whether we can further improve also the capital structure of the company.

Now, we are going to take our next question, and the question comes from the line of Michael Huttner from Berenberg.

My first question is on the, what I would call, burnout. You highlighted this just in your opening remarks talking about the employee satisfaction and things. The speed at which you're operating is almost unbelievable, not only you're beating your targets, the 185% raised to 215%, and it feels like you're a little bit ahead even over 215% now. Your -- on the integration, it also feels like you're a little bit ahead of plan. You're doing more growth than your peers. Is there a risk here that everybody becomes so stretched and so tired that they kind of say, I'm giving up now? I don't know how you can answer the question, maybe you can give us another rapper.

And then on the 12% IRR, can you help me with the numbers, Ewout? Because I get to numbers which are way higher, but I'm obviously wrong. So EUR 40 million is, I think, the figure in the slide in terms of additional contribution from the deals just done on an annualized basis. 5% is the cost in terms of capital. And I never know whether you should apply this to the own funds or the SCR, but I get a roughly average figure of EUR 200 million. Now, EUR 40 million divided by EUR 200 million for me is 20%, but I'm obviously getting this wrong. So any indication here would be great.

So let me take the first question, a question I really like, Michael. Thank you. I don't see that, that trend that people become too tired to keep on performing. And I think what we should realize an integration is not one small group of people doing that, but it is the full 7,000 people that actually were involved. And if the P&C business is ready, they can continue to go to -- back to business as usual, develop the business further and growing further. We measure -- on a weekly basis, we measure how our employees are feeling and are doing. And if I -- and we follow the outcome of those measurements very closely.

And on average, over the last 6 months, we are above 7.5. So we are on the upper quarter of how people are doing and feeling. And if we do see in some areas that people -- and we've seen that, for example, in the last half year in the Pension business, where it was very, very business. We're willing to invest in additional help and in additional people to lower the pressure on the workforce. So we fully are aware of the fact that we shouldn't burn out or burn down our people.

And I think a.s.r. in the Dutch society is also known as a good employer. So we take care of our people. And if we need to invest more in workforce, we definitely do, or if we can help them out with investing in further technology, which we are also doing, we are spending, of course, on AI. And we do see a lot of benefits from AI already in our operational cost, and that's also going to be helpful. So thanks for the question. No worries there. We're on top of it. And we are managing it quite close.

Yes. Then thanks, Mike, for the question on the IRR and whether it is not higher when you do the math. So I think the invested capital where you're referring to, so let's say, somewhere between 4 and 5 points is somewhere between EUR 250 million and EUR 300 million. When you indeed divide EUR 40 million with that, let's say, that the return on invested capital is somewhere around 15%, but we do look at this from an IRR perspective. And that means that we also take into account the time value. And you see that you first invest capital and that the flow is coming thereafter. So you take into account kind of the fact that the strain is coming -- yes, the strain is coming actually before you get the flow. And that makes -- that brings us to an over 12% IRR.

Now, we are going to take our next question, and the question comes from the line of Thomas Bateman from Mediobanca.

And thank you for the rap again, highlight of the day. Could you just touch a little bit more on the growth in Health? I guess, there's an assumption that the SCR strain won't be recurring. But could you just give us some indication of the underlying drivers of why the Health growth was so strong?

And then just a second question on the Solvency II review. You alluded to it there. I might have missed the details, but can you just -- any other guidance you can give on the potential benefit from the Solvency II review?

Thanks, Thomas, for your question, and welcome in the a.s.r. analyst community. And you may not know it already, but I think you're joining us at lunch tomorrow, and every newcomer has to do a rap before we start. So maybe you can prepare for that.

Let me go into your question. Health business in the Netherlands is a specific type of business. Dutch people only once a year are able to choose their insurance company for the next 12 months, and that's always in the period between the 12th of October of any year and the 31st of December. We are always very strict on pricing in that area. And in the commercial year '23 and '22, we actually lost quite some customers because we were stricter in our pricing than some of our competitors.

Last year, so in the commercial year '24, for the portfolio of '25, we were able to remain within our return -- in our return requirements, and we're able to gain back a little bit of the portfolio that we lost in the years before. So we grow a bit more due to the fact that we've lost in the years before, and that created an additional strain in the OCC. So actually, it is financing the growth going forward. So that is the main reason why the OCC in the Non-life business not fully did meet the expectation of the analyst community that we had a larger strain in the Health business. But actually, it is financing the growth of that business.

And the second question...

Yes, on the Solvency II review. So thanks, Thomas, and nice to have you on the call indeed. So on the Solvency II review, I think for a.s.r., there are 3 elements that are important in the Solvency II review, one is the change in the calculation of the VA. And when we look today that it is not really impacting the solvency position versus today. Secondly is the risk margin. What we see is that the risk margin will be lowered to a level of 4.75% coming from 6%. But also the way you actually -- yes, you calculate the required capital of the insurance risk in the years to come is also done in a different way, we call the LAMBDA factor, and that is also beneficial how that calculation has changed going forward. So the risk margin positively contributes to the solvency position compared to today.

And the third element that plays a role is actually changing the way you have to discount your liabilities. Today, it's done with an ultimate forward rate up at the 20 years points and move -- and then you move towards the UFR from when the EIOPA 2020 review kicks in, then it's not an ultimate forward rate, but it's the first moving points where you also take into account the observable market rates at the 20 -- at the 30 years point or the 40 years points and at the 50 years point. And that's a small negative compared to what we see today.

When you bring that all together, by the full year numbers, we saw that it would bring roughly a mid-single-digit benefit into our solvency ratio. Today, that changed slightly positively driven by the fact that the LAMBDA factor is even more positive compared to what was proposed. And secondly, by the fact that you see a steepening of the curve, so we now expect that when we look to the H1 numbers and the calculations that we have done with the new legislation, that it will bring us a mid- to high single-digit benefit in our ratio.

The moment of introduction is officially in -- by end of January 2027, but there is still a debate going on whether or not you already should recognize that by the full year 2026 numbers given the fact that, yes, the introduction date is somewhere between you actually close your books and do the reporting to the outside world. So there's still a debate going on whether an official introduction by end of January 2027, actually should mean that you already should implement it by year-end 2026. It has to be seen how that evolves. But by the end of the day, we are positive on the contribution of the -- that EIOPA 2020 review will happen on a solvency ratio.

Now, we proceed to take our next question, and it comes from the line of Benoit Petrarque from Kepler Cheuvreux.

So actually, the first one is on the pension buyout. I just wanted to get an update on the pipeline you see on the market. I mean, you've reached a very strong 40% market share in the deals announced so far. But what do you see in the rest of the year? And do you see an evolution on the return on capital or the IRR? Basically, any evolution favorable or less favorable versus the first year we've seen?

And also, could you maybe provide a bit of more details on the share of illiquid assets you expect to put in front of the liabilities? You talked about the bulk being in mortgage and real estate, but how much is this roughly in illiquid?

And just maybe the last question is on the EUR 250 million cost synergies. How much you've realized roughly at the end of June? And that will be interesting to see where you are on that.

Ewout will go into the illiquid part of the investments behind the buyouts. I will take the first part of your first question and the second question.

Pipeline is actually developing quite well. As said in my presentation, we expect -- and I phrased it like, I wouldn't be surprised that we could announce another transaction this year. And further on, we see a pipeline in different phases already, and we explained that in the past. It also -- it always starts with, first, a request for proposal, and then, it's getting more serious, and they want to have more serious quotes. And then you end most of the time up in exclusive phases.

And if I look at the current pipeline, we are confident that we will be able to at least meet the EUR 8 billion that we have projected for the full 4 years. And that's why I always -- also mentioned that if and when there would be an ability to do more than the EUR 8 billion, capital will not be the limiting factor. So also some positivity based on the pipeline we are seeing. Whether that will influence the IRR, we keep on making offers that at least meet the 12% IRR.

Given the fairly limited number of insurance companies that are willing to do really this business, I don't think it will be a challenge to keep on meeting at least the 12% IRR. And actually, the lesser providers, the better the ability to increase the IRR going forward. So also positive on the developments there. But for the time being, we stick at, at least 12% that we are delivering right now.

On the EUR 215 million, it's progressing quite well. We've decided not to put any number on it for the half year. I think at the end of the year, we will bring out some numbers where we are by then. But if you have listened carefully, and knowing you've listened carefully, we're very positive on getting to the EUR 215 million. We're really on track. And as said in the past, we even wouldn't be surprised that there will be some additional synergies that will kick in, in the year after we finalize the trajectory because, as I said, we have to close down 220 different IT systems from Aegon, and the benefit from that could even be additionally in '27.

And then the...

Yes. The portion of illiquids in the buyout mix, Benoit, so it's roughly 40% to 50%. Please bear in mind, illiquids is not illiquids credits like private debt, et cetera, but it's mortgages that we invest in and real estate that we invest in. And that together is on a total of 40% to 50% that we use in the buyout mix.

Now, we are going to take our next question, and the question comes from the line of Farquhar Murray from Autonomous Research.

And obviously, thanks for running the business in poetry and describing it in rap, but sadly, I can only ask questions in prose, I'm afraid. Two questions from me then. Firstly, just on real estate. Might you give us a sense of what you're seeing in terms of rent development and valuation into the end of the year and specifically in terms of the gap between -- in residential between rental and private? Is that now normal from here?

And then secondly, is there anything worth noting from the upcoming election from your perspective? In particular, might that cast a shadow on the rental market again?

Yes. So let me start with the first question, Farquhar, and Jos will then say something about the election and also related to the residential market. So what we have seen is that indeed the residential real estate that we have in the portfolio developed very well, so positive revaluation. We also have seen that house prices in the private market also went up, but the value gap closed slightly. So we see now and -- also what we assumed is that the value gap of, let's say, around 10% that is now -- just below a quarter of that has now been closed, still leaving upside at the table in the -- let's say, in the coming 1.5 to 2 years also to our solvency position.

And then to your second question, predicting the outcome of the elections is very difficult. But what we see today is that almost every political party in their programs are addressing the needs to develop more houses and to solve the issue in being short currently of 100,000 houses growing to 400,000 houses. So if any new cabinet and any new parliament will change laws, et cetera, my -- and it's more of a personal expectation, I expect that it will be beneficial for the investments in the retail housing -- in the housing market because there is a significant need for more houses. And I think the politicians are becoming more and more aware that for that, you need the private market to invest, Dutch investors but also international investors. So without having the famous glass ball, we expect that if there is any change, it will be beneficial.

Now, we are going to take our next question, and the question comes from the line of Farooq Hanif from JPMorgan.

So my first question is on the lowering of the liquidity premium -- illiquidity premium, which obviously hit your kind of nonoperating items. Can you give us a guide to what that might do to your investment margin and your operating results going forward in Life, just to explain what the payback will be from that?

My second question is if you look at the holding expenses, they were very high. Just kind of wondered is there any nonrecurring elements in that.

And because my questions are so small, just one very small mini additional question. I just want to get to what your message is on the combined ratio because, clearly, weather is a benefit in P&C. But in Disability, it sounds like the underlying is just better because there's no kind of net one-off. So just kind of wondering in that 92% to 94% range, how are you feeling about it?

Let me do the first one. So the change in the liability -- so the liability illiquidity premium impacted the IFRS profits with EUR 250 million. When you then look to the duration that we have in the portfolio, I should divide it by somewhere between, let's say, 15 to 20 years. And that gives us -- that makes an impact also of EUR 15 million to EUR 20 million, I would say. That would be my best guess, around EUR 15 million to EUR 17.5 million benefit coming from actually the lowering of the liability illiquidity premium.

And your second question was on the increase of the holding expenses. That was a temporary impact because we decided -- for example, if different business lines are on one system, and the first business line has put their business on the a.s.r. system, then the last business line on that system would have significant costs to carry. And that's why we decided that the IT costs of the IT systems of Aegon that we will switch on -- switch off in a later phase, that we will bring that over to holding costs. And that is the predominant increase in the holding cost. But it is clearly a temporary increase of that cost. Hopefully, that answers your question on holding costs.

Your question on combined ratio, whether the development up until now will bring us to a sharper target than the 92% to 94%, we still feel comfortable with the 92% to 94%. Yes, we're doing better right now. And if we can keep on doing better, then we definitely will. But we are also aware of the environment where we are working in. It is competitive. And keeping the balance between profitable growth and a strong combined ratio, we feel that the 92% to 94% is still the target range where we should work from.

Now, we are going to take our next question, and the question comes from the line of Jason Kalamboussis from ING.

Hopefully, you can hear me. So I have some small follow-up questions, if I may. I mean, first of all, on the combined ratio, how much was the NatCat benefit in the first half? And second small follow-up is on the OCC from the buyouts, the benefit, the EUR 40 million that you mentioned. Should we pencil in 50% basically in '25 and 50% in '26?

And the third quick follow-up, it was on Health. So could you give us -- I mean, I know it's probably for -- the strain would be for first half next year. But do you find that we are more likely to continue to see that growth where you are recovering your market share? So again having a strain in the first half of '26.

And one question I have -- main question, is on the longevity. I mean, could you give us an idea of -- if you are to reinsure all the buyouts you have done so far, what the impact would be on the Solvency II, roughly? And on the longevity in the long run, I mean, I appreciate you've got capital and you don't need to do anything. Is it something, therefore, that we should expect more in 2027, i.e., that you're thinking as far back, if you want? Or am I wrong in this?

Let me take the third question out of the four you asked. On Health, our Health strategy is to stabilize our market position like we have today. So we're happy with that market position. We're not focusing on further significant growth. It could happen if your price position is stronger than the rest of the market, but that's not what we are focusing on going forward. So would be happy with keeping within the current market position.

And I think the other questions are for you, Ewout.

Yes. I hope I get them all right. I think, for 2025, you could expect 25% roughly because we still have to do most of the reinvestment of the cash that came in. That will be done mostly in Q3, meaning that we see the real benefits of that in Q4. So I should divide that by -- the full amount by 4. And I think for 2025 -- sorry, 2026, we expect to get the full amount out of it.

Then, on the fourth question, I think the fourth question was, if I understand it right, what could -- what was the -- how much solvency will it cost when we do the EUR 8 billion of buyouts in total, so the EUR 5 billion that still needs to come, the rule of thumb that we always use is that that's EUR 1 billion of buyout will cost us on average 1.5 solvency point average, meaning half of it using reinsurance. So when we do another EUR 5 billion of buyouts, that would cost us on average 7.5 solvency points.

With your question regarding the longevity reinsurance, now we are really testing now for the deal that I already mentioned, whether the longevity reinsurance can really improve the IRR. And we will use the outcome of that also for the thinking on that in the years thereafter. In the calculations that we can -- that we will do, we will also take into account the partial internal model, the EIOPA 2020 review, because we know the outcome of both of that. So we can also take that into account to assess also the attractiveness of longevity reinsurance deals in the future. So it's not -- we do not say hereby that it will be kind of back-end loaded, to use that term. Back-end loaded longevity reissues deals, we will just look how attractive they will be to do that at a broader scale than only one buyout.

And then the first question is EUR 20 million pretax based on the H1.

Now, we are going to take our next question, and the question comes from the line of Nasib Ahmed from UBS.

Two for me. Firstly, on the investment-related incidentals, Ewout, I think you're saying the EUR 500 million is roughly half the liquidity premium and half is the in-house pension scheme. Interest rates haven't really moved that much. So why is there a EUR 250 million from the pension scheme negative below the line? And related to that, is there any way you can derisk that pension scheme that you have, your own pension scheme?

Second question on the holding company cash and the change in the policy there. Can you tell us why you're kind of changing the policy? It seems like you've got enough holding company liquidity of around EUR 800 million.

Yes. On the investment -- on the IFRS investment related stuff, so the pension scheme, so the way it works, and it has nothing to do actually with rerisking whatsoever. The way it works is that when you have a rate movement, and that can be either positive or negative, but in this case, the rate goes up, then you see -- on one end, you see kind of the -- that the liabilities on your IAS 19 liabilities goes down, but that flows through equity, while the related assets flow through P&L. And that is actually why there is a negative impact from the -- on pension. So it's nothing to do with rerisking or derisking. The only thing that you see is that IAS 19, and this is the beautiful world of IFRS 17 that IAS 19 is then treated differently, then you have to treat the assets that are related to that. Well, that's why we always focus on -- more on the operational results side of things. Hopefully, that makes it clear.

Then, on the holding cash policy, yes, so we always have said that we want to have as much as cash in the legal entities because it yields better there than it yields at the HoldCo. Because at Holdco, you can only invest it in short money market funds, coffees and that type of things, which has very low yield, while in the legal entities, it just make better yields. What we have seen is that the amount of holding cash over the last couple of years significantly increased. And we want to ensure that we do the best with the money that we are having on the balance sheet. And that's why we said, okay, let's for a maximum of 25% can use the unconditional holding of a credit facility that we are having to capture the HoldCo cash level. We still have enough real cash at the HoldCo, but this is beneficial for the return that we are making as a company.

Just on the pension -- the old pension scheme, I was just thinking, can you derisk it like you're doing for the other pension schemes, like the EUR 2.9 million that you've done to fix the mismatch? Or that's not an option?

So it's -- this is not in a kind of an option that you have, and this is just the way you work when you have a fair value through P&L methodology that we apply. That's why we always say look at the operating -- the OCC, look at the operational profit, that is where it is all about. This is kind of accounting first. We should not focus on that.

Now, we are going to take our next question, and the question comes from the line of Michael Huttner from Berenberg.

It's just a numbers question, please. On the solvency, you're very kind, you listed all the points, but I was very slow. I come to a number which is a little bit lower than I expected. So I just wondered whether maybe you can help me a little bit. So on the hybrid, I'm assuming that's 7%. Then you've got the actuarial review, I'm assuming, plus 2%, so that's minus 5%. From a normalized level -- I'm using normalized so I don't have to think about the pension buyouts, reinvestments and the rerisking, so normalized of EUR 200 million -- I mean, EUR 195 million.

Then longevity, I'm assuming it's small. I mean, you're testing so I'm assuming plus 2%. Then, we've got the dampener, which is minus 2%. So I'm still at EUR 195 million. And then OCC and the capital management, kind of equals, they're still at the 195%. And then, I had the 10 to 12 from the partial internal model. I get -- I'd like to get to 215%, but I'm only getting to about 205% to 207%. Can you just maybe indicate where I might be wrong?

Now, I am slow following you, so sorry for that. But it's -- I think what we mentioned is that when you start with the 203%, it costs you 1 solvency point to -- for the -- let's say, for the hybrids. We have an actuarial assumption update that relates to capitalization of the loss -- of the cost synergies, bringing you 1 to 2 solvency points. I think the rerisking of the buyout is more or less offset by the -- so those 2 are offsetting each other. Then the rerisking of the buyouts that we want to target as a mix will be more or less offset with the longevity reinsurance. If we can do that, then you are still at the same number. Maybe some 1 or 2 solvency points from the normalization of the methodology, and then, you have the internal model. So I think that, that will bring you back to the -- I'll say, around the 210% level that you were starting with.

Dear speakers, there are no further questions for today. I would now like to hand the conference over to Jos Baeten for any closing remarks.

Thank you all for joining us. And hopefully, we will see many of you tomorrow when we have our analyst lunch, and then, we can continue the conversation after having listened to the raps of the new people at the table. So thanks for joining us, and we see you tomorrow.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.