NN Group Aktie

Good morning, ladies and gentlemen. This is the operator speaking. Welcome to NN Group's Analyst Conference Call on its Full Year Results. [Operator Instructions]

Before handing this conference call over to Mr. David Knibbe, Chief Executive Officer of NN Group, let me first give the following statement on behalf of the company.

Today's comments are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those projected in any forward-looking statements.

Such forward-looking statements may include future developments in NN Group's business, expectations for the future financial performance and any other statements not involving a historical fact. Any forward-looking statements speak only as of the date they are made, and NN Group assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.

Furthermore, nothing in today's comments and -- comments constitutes an offer to sell or a solicitation or an offer to buy any securities. Reference is made to the legal information on the last page of the presentation.

Good morning, Mr. Knibbe. Over to you.

Yes. Thank you, operator, and good morning, everyone. Thank you for joining our conference call to discuss NN Group's performance for the full year 2025. I'm excited to be here with you today. And with me are Annemiek van Melick, our Chief Financial Officer; and Wilbert Ouburg, our Chief Risk Officer.

I'll begin with an overview of the key messages and dive into the excellent commercial momentum we have witnessed in our growth segments as well as our tangible progress on our future-ready program. Next, Annemiek will give a detailed analysis of the strong progression of our capital position and financial performance over 2025. After my concluding remarks, we will move over to the Q&A.

I'm excited to share that we have not only exceeded our 2025 targets, but also delivered a very strong Solvency II ratio of 220%, giving us an even stronger foundation to deliver on our future-ready growth targets. I am also pleased to see our growth segments deliver significant increases in new business values for international and a growth written premium growth of 6% in Non-life, which is now surpassing the EUR 4 billion mark for the first time.

Next to this, we saw increased DC inflows of EUR 2.6 billion at Netherlands Life. These results demonstrate a continuing shift towards high-quality fee and underwriting income. And we are making meaningful progress on our Future Ready Program, where I will share some compelling AI use cases later. And finally, on the back of our solid business performance and outlook, robust cash generation and healthy capital levels, we are further enhancing our promise to shareholders by stepping up our capital return commitments by EUR 100 million with a EUR 50 million step up in our annual share buyback and a EUR 50 million increase in our dividend, above the regular progressive increase.

As I mentioned, we have exceeded our key financial targets for 2025 with an OCG of EUR 2.1 billion, coming in well ahead of the targeted EUR 1.9 billion and our free cash flow slightly above the target of EUR 1.6 billion, a growth rate of 7% per annum for both metrics. These impressive numbers are further evidence of our ability to deliver on our business plans and a further testimony that we can drive profitable growth, which is good for all stakeholders.

Our capital position has significantly improved as has the underlying quality of capital with several tail risks being addressed as pointed out on the slide. Annemiek will provide the details on our financials later. This strong business performance as well as comfortable cash and capital levels have allowed us to increase capital return by EUR 100 million above our typical progressive dividend, splitting this evenly between a step-up of the dividend and a higher annual share buyback.

Consequently, we have increased the dividend per share with 13% to EUR 3.88 per share, increasing the base level for our continued progressive dividend policy. And we are stepping up our annual share buyback program by EUR 50 million to EUR 350 million. Today's increase marked a continuation of our outstanding track record of capital return to shareholders, having now returned over EUR 11 billion to shareholders since our IPO in 2014. We remain very committed to our capital return promise and to extend this strong track record, which is based on our current market capitalization, still implies an attractive future DPS growth of approximately 7% per annum.

We continue to deliver value to our customers, employees and society at large. And with the Capital Markets Day, we have set new targets for 2028. Let me highlight a few. We aim for the customer satisfaction scores significantly above the market average and secure a position among the top 3 for broker satisfaction by 2028. Customer satisfaction has shown consistent improvement, especially in Europe where all units are above market average. Additionally, we, once again, affirmed our #1 position on satisfaction with the Dutch brokers who play a dominant role in the distribution of our products.

We also aim to be an employer of choice where people enjoy to work with a diversified population. Furthermore, we aim to cut greenhouse gas emissions by 45% by 2030, invest over EUR 13 billion in climate solution and support 2.5 million people's well-being by 2028. As you can see, progress on all these targets is well on track.

With the Capital Markets Day, we took a deep dive into our Future Ready program, our plan to position us for greater competitiveness and adaptability in a rapid evolving landscape. We focus on standardization, automation and reuse of AI with a clear focus to improve customer experience and growth. I'm proud to say we are making significant progress and happy to share that we are firmly on track with the new KPIs that we set at the Capital Markets Day. We now have 236 AI use cases in place and already 42% of our sales come from digital leads. From the EUR 200 million annual target benefits by 2027, we have 40% realized in our run rate for the end of 2025.

Let me just highlight a few of these use cases behind these achievements. First, a breakthrough in claim processing. We can now process third-party car liability claims fully straight through. This enables us to deliver faster service with processing time decreasing from 1 to 3 days to a few minutes as well as reduce manual effort and improve customer satisfaction. And it builds on our existing AI modules and system integrations, it is scalable for other use cases as well.

Second, we are now using AI-powered avatars to train and coach our tied agents, enabling them to practice complex customer scenarios. Data shows that following standardized scripts significantly boost conversion rates, and we are now scaling this across the more than 9,000 agents. The result is a higher sales conversion, improved agent retention through better support and increased customer satisfaction.

Third, our new generative AI tool, AIReply. It drives high-quality e-mail responses using historic interactions and templates. This frees up time for customer service agents to focus on what matters most, delivering value to our customers. We are rolling it out across all Dutch business units with international outgrow to follow. And these are just a few highlights because there is much more to come.

We show excellent commercial performance in our growth business, Insurance Europe, Japan and Netherlands Non-life. Our largest growth segment, Insurance Europe continues to show significant VNB growth with an increase of 16% versus 2024, with both higher sales volumes and increased margins play a part in this success. With the growth from 2025 included, new business in Europe has grown with an average of 12% annually over the last decade, clearly not incidental and showing that our strategy is reaping real benefits.

Japan, our other international growth segment, continues its sales recovery with a significant 25% increase in new business value in 2025 versus '24. When comparing VNB year-on-year from Q2 onwards, the period since the launch of our new long-term savings product, we even see a 34% increase. Our market share has already been improving on the back of this performance. Going forward, we expect gradual sales recovery to continue, also driven by further product introductions. This will help VNB to recover to 2022 levels by '28, as outlined during our Capital Markets Day last year.

Netherlands Non-Life witnessed solid commercial momentum with gross written premium up 6% on year, surpassing the landmark of EUR 4 billion for the first time. This was driven by both indexation and volume growth. While the overall combined ratio remained within the 91% to 93% target range at 92.9%, the combined ratio of P&C was excellent at 90.3%.

And now I'd like to take a moment to highlight some of the business specifics for Europe and Netherlands Life. Our European business continued its impressive growth trajectory, and I'd quickly like to reemphasize our strategy. The focus is on a simple capital-light offering, favoring technical and fee income with a limited reliance on spread income. Our protection products have small ticket sizes, which makes these products accessible for a large pool of people who are increasingly aware of the usefulness of these products.

With these small tickets, high-volume products, the key is getting in front of customers, and this is an area in which we excel. We have a multichannel distribution network, well balanced with tied agents, bancassurance, brokers and direct. The tied agents channel, in particular, is undergoing a digital transformation and is one of the key beneficiaries of the Future Ready program, as can be seen by the success of our digital reach generation.

We took the decision to focus on protection more than a decade ago, and I am pleased to see how well that decision is paying off. With our presence in the highly underpenetrated markets, I have faith this trend can prove to be sustainable. Protection is the key pillar of our growth in Europe. But our pension offering is also a strong contributor. We're one of the leading providers of Pillar 2 and Pillar 3 pensions across Central and Eastern Europe, providing a source of AUM-based fee income, a business model with attractive operational leverage. And in 2025, this business model showed strong growth, also helped by financial markets in those regions.

Moving on to a promising growth opportunity in our home market. We have a leading position in the Dutch immediate annuity market. Even in the new pension framework, it is mandatory that people convert their accrued pension investments into an annuity. This is an attractive market segment because margins are healthy, and we expect the reform to improve our growth prospects.

In 2025, our gross inflow into immediate annuities was around EUR 0.8, up from EUR 0.5 billion in 2020, representing a CAGR of 10%. We expect these inflows to continue to grow, mainly fueled by the increasingly large DC pension funds. We expect to see a CAGR for immediate annuities of 10% to 15% going forward, leading to a potential gross inflow of EUR 1.4 billion in 2030.

This growth was not immediately visible in the growth of AUM. I won't bore you with the details, but this line item also includes a legacy retail portfolio that runs off at about 10% per annum. This runoff will be largely completed by 2030, where we expect the immediate annuity portfolio to have reached EUR 10 billion in AUM.

Together with the strong customer satisfaction, targeted pricing and our market-leading position in the overall DC market, we are confident in continuing this upward trajectory towards more than EUR 65 billion of AUM with an anticipated 15 to 20 basis points OCG margin by 2028.

In conclusion, our investor proposition rests firmly on 3 core pillars. First, our business mix will continue to diversify over time where growth segments will become more dominant in our mix. Netherlands Life will also become a more capital-light business as the mix changes towards DC pensions.

Second, with our Future Ready program, we continue to standardize and automate operations, improving efficiency and scalability across the group and at the same time, improving customer experience.

Third, we remain fully committed to delivering on our capital return commitments. And with safe announcements, we have taken another significant step in strengthening those commitments.

And with that, I will hand over to Annemiek.

Thank you, David, and good morning from my side to everyone listening in on the webcast. I'll begin with our excellent financial delivery of 2025. As you can see on Slide 14, our OCG is up 9% versus 2024, coming in at EUR 2.1 billion. It's a strong trend and testament to underlying business performance, whilst also benefiting from some nonstructural tailwinds. Free cash flow was up 7% versus last year with improved diversification as Netherlands Non-life, Europe and the bank increased contributions. The delivery on both metrics reinforces our confidence in the '28 OCG target of EUR 2.2 billion and our free cash flow target of above EUR 1.8 billion.

Our solvency ratio is strong at 220%. And as David highlighted, it's a significantly better quality since we removed the unit-linked overhang and are less sensitive to market movements and longevity risk. Cash capital increased to EUR 1.8 billion, although this has since reduced somewhat to EUR 1.6 billion following the repayment of the remaining RT1 debt that was called during January. These elements combined have put us in a position to reward shareholders beyond our normal capital return promise. We further enhanced our structural capital return with EUR 100 million, equally divided between dividends and share buyback. As such, we present the year-on-year dividend per share increase of 13% and a EUR 50 million increase in the annual share buyback to EUR 350 million.

Now let me give you some more insights into our capital progression. Looking at the capital bridge for the second half of 2025, strong operating capital generation of EUR 1.1 billion had a 13 percentage points to the solvency ratio, which is rounded 5 percentage points higher than the capital flows to shareholders in the form of dividend. Market variance increased the ratio by 7 percentage points, largely driven by the positive impact of interest rate movements, and decreasing spreads on government bonds and mortgages, partly offset by negative equity variance.

Mortgage spreads at the end of December were around 75 bps. We've previously communicated a normalized through-the-cycle level of 100 bps. However, we currently see tight spreads across basically all asset classes and clearly, mortgages are no exception. The bucket other added 2 percentage points to the ratio. This is mainly due to an update in the way we calculate non-available own funds for Insurance Europe entities, which add up 4 to 5 percentage points. We brought our approach more in line with the market after noting a more conservative approach versus peers. This was partially offset by a number of our model and assumption changes. The solvency ratio of Life showed a strong increase from 200% to 233% as well.

Our 3-pillar capital framework with a focus on: one, a Solvency II ratio comfort zone of 150% to 200%; two, EUR 0.5 billion to EUR 1.5 billion cash at the holding company; and three, a single A financial strength rating has not changed. With the current strong Solvency II ratio, it's fair to say that we're currently sustainably above 200% and that our binding constraint for capital return has now moved from solvency to cash at the holding company. Of course, this could change under adverse scenarios.

Now let me give you some details on our high-quality private debt portfolio before moving into OCG. We're comfortable with our private debt portfolio, which is well diversified by industry and geographically focused on Western Europe with an exposure to the U.S. below 10%. Over half of the book is either collateralized or government guaranteed, around 60% is above investment grade, and there is no exposure to leveraged products. We put a lot of emphasis on manager selection. Our goal is to gradually build the right exposure, giving managers time to put the funds to work. Our enhanced oversight capabilities allow us to properly challenge the fund managers. One example of this is the sample testing that we perform on the credit ratings assigned to individual loans. So while the market has seen some isolated incidents on private credit exposure, we're confident that our credit exposure has a more conservative risk profile.

And let's move to OCG. As already mentioned, our OCG came in at EUR 2.1 billion, up 9% versus last year. This reflects ongoing commercial and business success, driven by our growth segments, Europe, Japan and Netherlands Non-life. The strong underlying trend was further enhanced by some nonstructural elements.

Netherlands Life's OCG grew by 13%, helped by an infliction in experience. Last year was negative, now it's positive and higher investment returns. The main moving part for Life into '26 is the likely absence of positive experience variances, so we would expect a modest decrease in OCG for '26.

For Netherlands Non-life, which grew by 9% on a reported basis, we confirm an underlying rate of EUR 400 million for '25, from which we expect to grow with GDP plus going forward. Benign weather and the positive impact from reinsurance renewals were key reasons for Non-life to overachieve in '25.

Europe's OCG grew by 13%. As David explained, increased sales and higher margins drove it, and we're very pleased with the overall performance. Due to favorable markets, our pension fund service also benefited from performance fees during '25.

Sales recovery in Japan was strong and as such, has put some pressure on OCG as the current framework doesn't allow for deferred acquisition costs, as you know. However, Japan's OCG still grew by 8%, and this was more than offset by the benefits of a reinsurance transaction and favorable claims environment. For '26, we expect Japan to grow OCG benefiting from the move to ICS and continued new business growth. Lower OCG at the bank has a large [indiscernible] effect of NIM compression, which was only partly offset by one-offs. For '26, we expect a roughly stable OCG versus '25.

With the above comments in mind, looking forward to '26, we expect the nonstructural positive contributions in '25 to be offset by underlying continued business growth, leading to a flat reported OCG. As such, we're well on the way to deliver on our '28 OCG target of EUR 2.2 billion in '28.

Now a few words on operating results on Slide 18. Since we steer the business based on solvency metrics, I'll only concentrate on drivers that are different from the OCG analysis. Operating results were up 17%, largely driven by a sharp increase in Netherlands Life. Investment income benefited from the result on derivatives that fall outside of hedge accounting and higher dividends from private investments, especially the first item is rather technical and has no economic substance.

Japan's operating result was down due to a decline in the in-force book. This dynamic should be temporary as new business is rebuilding after the new long-term savings products that we launched in March. Future profits on the IFRS are largely determined by the CSM level. Our organic CSM grew 2% in '25 with high single-digit growth from both Netherlands Non-life and Europe. Japan is now also contributing to CSM growth following its sales recovery.

NN Group's net result decreased due to revaluations on derivatives outside hedge accounting used for hedging purposes. Bond sales and the final accounting results from the sales of Turkey.

Now let's move to our cash capital position. Free cash flow slightly exceeded our '25 target and came in above EUR 1.6 billion in '25, up 7% versus last year. Although free cash flow is lumpy by nature, we expect it to grow year-on-year to our target of over EUR 1.8 billion in '28.

Remittances from business segments were also up 7% and benefited from increased diversification as Insurance Europe, Netherlands Non-life and the bank all showed increased contributions. The bank benefited from additional remittance capacity due to the capital release from Basel IV.

Other includes the impact of increased debt costs and approximately EUR 50 million of Future Ready investments. Capital flows of more than EUR 1.2 billion includes the payment of the final dividend over '24, the interim dividend over '25, and the EUR 300 million share back that has been executed over '25. The change in our debt and loans reflects the impact of the untendered grandfathered RT1 notes, which have been redeemed in January 2026. As such, a pro forma cash capital position per year end '25 was closer to EUR 1.6 billion.

Now that we achieved our 2025 targets, our eyes are set on 2028 and our improved investor proposition. We've increased confidence to deliver on our 2028 targets, which will not only grow but also further improve and diversify our business. We're on track to grow our Dutch Non-life and International segments, and the strong business and financial results of Netherlands Life underscore our commitment of stable and predictable remittances until 2040.

We're on track in creating a highly digitalized Future Ready platform and organization. We have a strong balance sheet to support these key pillars of our investment case. Based on this confidence, we enhanced our capital return proposition today with an additional EUR 100 million on top of our regular progressive dividend policy and annual share buyback.

Going forward, we will continue to return additional excess capital to shareholders, unless it can be used for value-creating opportunities with a continued preference for small incremental steps rather than one-off lumpy returns.

At our Capital Markets Day, we indicated EUR 1.5 billion of excess cash bill potential over the 4 years from 2025 to '28. With today's enhanced capital return announcement of EUR 100 million, we allocate more than EUR 400 million of this excess cash bill to shareholders.

In order to improve future financial flexibility and manage debt costs, we intend not to refinance the EUR 600 million senior debt that was originally raised for the Delta Lloyd acquisition and is set to mature in 2027. Consequently, we expect the residual excess cash bill to be around EUR 500 million over 2025 to 2028, which can be used for value-accretive opportunities for further enhanced shareholder returns.

Thank you all. And with this, I'd like to hand it back to David for the wrap-up.

Yes. Thanks, Annemiek. I'm going to keep it short and punchy. We exceeded our 2025 targets. Capital is strong, our growth segments show excellent and continued commercial momentum, and we further enhanced capital return towards shareholders, and we are ready to continue this impressive track record.

And with these remarks, I would like to open up the call for Q&A. Operator?

[Operator Instructions] and our first question today comes from the line of David Barma from Bank of America.

Thank you for the 2026 capital generation guidance. I wanted to ask you about how disability fits into this. So could you please explain the deterioration in the second half of '25? How much of that was experienced compared to reserve adjustments maybe? And perhaps can you give some color on the measures you're taking in '26 to improve the combined ratio, and so how that is included in your flat OCG guidance for this year?

Then secondly, on Japan. So your new business data really starting showing the relaunch from the second quarter. And you had mentioned NBV growth of 50% year-on-year in that quarter. The second half was strong but has slowed a little bit. Would you be able to talk about the sales trend there, please? And how that's tracking compared with your expectations?

Yes. Thank you, David. Let me just say a couple of things on the combined ratio of the Non-life business, including D&A, and then Annemiek can fill in also the -- on the OCG guidance, and then we'll go to Japan.

Yes, on overall, the combined ratio of Non-life, I think overall, it was in the range of 91% to 93%. It was 92.9%, a little bit better than [indiscernible]. Obviously, P&C was very strong, but disability stood out. And then good to know within the disability book, we are really talking about the disability part of the sickness here, which is the first 2 years of coverage that the book is actually doing well.

What we have seen in this D&A book is that we've seen elevated inflows. I think partially, this is a long COVID. Partially, this is also a societal impact as an increase of mental health concerns.

Unfortunately, we were -- the reporting of the government agency on this claim was relatively late. So that meant that also, we needed to take strong measures in '25 to catch up, and that's what we did. So we've been actively repricing. First of all, we've also increased the segmentation between sectors because we saw quite some differences also in sector performance. And probably most important, even though these are 3-year contracts, the vast majority now of contracts will have the ability to reprice every year. So once a year instead of every 3 years.

Now this was combined with the strengthening of reserve. So all in all, we feel that these are strong measures that we have taken. Also, the solvency was not impacted there. So the remittance pattern will not be affected by this, by the development in the disability book. And we continue to guide 91% to 93%, as the right guidance of the combined ratio and clearly, we're on track to deliver on the EUR 475 million OCG target that we set for 2028.

Yes. On your question on how it impacts the '26 OCG forecast for Non-life, it doesn't, because the disability reserve strengthening doesn't flow through the OCG.

Yes. Then on Japan. Well, developments are very positive. I mean the -- clearly, the VNB was up 25%. I think, I mean, if you correct for currency, it's more in the range of 30%. These are very good numbers. So what has basically been happening in the market is that the overall corporate life market was flat, the short-term market or more the -- tax-driven markets actually went down with 4%. And then the long-term market where we mostly operate grew with 10%. So clearly, we're doing well in this market.

We also expect in this half year to introduce a new long-term product. So we have a unit-linked version out there, and we expect to launch also a more traditional product as well. So that means that next to the good protection product, a unit-linked product, we will also have a traditional life product in there. So that means that overall, yes, we're positive on the development. Japan is clearly on track to get to the targets that we have set. We initially said that we want to get back in '28 at the levels of VNB of 2022 which at that point was JPY 20 billion. And the business is clearly on track to deliver that, which is obviously a positive.

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

The first one, just on the solvency ratio. Are you able to give a bit more detail on the change in non-available own funds methodology? And specifically, what changes you made to bring your methodology closer to peers? And then also what drove some of the offsetting model change impacts?

And then secondly, in Netherlands Life, are you able to give us a sense of the impact of a steeper yield curve on OCG now versus maybe your expectations at the CMD? And also, if you are able to give us any type of sensitivity to yield curve steepening on OCG, that would be really appreciated.

Yes. Thank you, Andrew. Annemiek?

On the non-available own funds. In our European business, we obviously have available own funds. We have solvency ratios that we actually statutory report in those businesses, but we cannot contribute all those available funds to the group, and that has to do with fungibility. We did some peer review also because the European business, obviously, is growing, and we don't like that buildup of nonavailable own funds from a group perspective. And we found out that we had a rather conservative approach there.

Technically, if you would actually sell one of those businesses within 9 months, you would get part of those nonfunds obviously reimbursed, they typically relate to future expected profit. We've now brought that more in line with what our peers do, and that means that we had a solvency build -- additional solvency build of roughly 4 to 5 percentage points out of this nonavailable own funds change. It doesn't change the local solvency ratios because they already included that. It also doesn't change the remittance capacity, but it does prevent group solvency leakage.

In terms of NN Life with the steeper yield curve, obviously, it was helpful for OCG of NN Life to have that -- steepen our yield curve. If you look at it going forward for the target, yes, it's a positive for '26, we would expect Life to be modestly below the '25 result that we had, and that mainly has to do with the absence of positive experience variances. We do recognize that the steeper curve, obviously, has a positive impact, but that's all market driven. So we're not going to change our target there for Life, but there could be some upside to it.

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

When you talked about incremental step-up in capital return, you were referring in the path to the buyback, but you've also added to the dividend. Can you just comment on whether the dividend is now part of the toolkit for incremental step-up, given the amount of surplus cash that you've just indicated to us?

And my second question is on the VNB. So the VNB, from what I can see, I mean you had a really big jump in margin in Netherlands Life and Insurance Europe, which I'm guessing is mix -- business mix improving. Can you talk about how that can continue to improve going forward? And also in Japan, as you're launching these new products, whether you also expect a VNB margin uplift as well as just the sales uplift?

Yes. Thank you, Farooq. Yes, on the capital, the capital return increased thinking. So obviously, we have continued strong business performance. As Annemiek explained, the cash levels are good and capital levels are strong, also our confidence in the business outlook is positive, and that's why we decided to enhance our capital return. And we indeed decided to do that by splitting this evenly between dividends and an annual share buyback.

We think that the EUR 50 million extra dividend and the anticipated buyback step-up is a good balance also between shareholder remuneration and deleveraging. Typically, we see that a higher dividend, obviously, it compounds over time and the market sees it as the most structural form of dividend.

I think your question is also -- so that was in our thinking. I think your question is also going forward. So our capital framework hasn't changed. We have always indicated that solvency being above 200%. If that happens, then the binding constraint moves to cash, which is where we are today. And we also said our cash, on the cash side, we expect a buildup of EUR 300 million to EUR 400 million per year. So from that point of view, we do expect that we can further enhance capital return in the medium term, but it will continue to have a focus on small incremental steps.

Just quickly, if I may, with respect. I think my question was more about the sort of level of the incremental step-up. I think we sort of had a feeling that it will be EUR 50 million a year, but it was EUR 100 million this year, if you know what I mean. And that's kind of what my question was more about.

Sorry, your question was more about EUR 100 million versus EUR 50 million?

Yes.

Yes. Well, to be honest, I don't have much to add to it. I think the -- we always said we like incremental, we like that if we do something that we can do it recurring, we want to avoid lumpy buybacks. And like I said, given the strong business performance, our belief in -- that we can continue this given where cash and capital levels are, we felt that EUR 100 million is also the right step, given our focus on that it should not only be incremental but also recurring.

Yes, on VNB. Well, I mean, there's a lot of parts moving, obviously, always in VNB. We've seen actually the VNB of Life coming down a bit, but this is normal because we have less defined benefit renewals, in fact -- ahead. So with the shift to DC over time, you will see that these defined benefit renewals will completely disappear, and the shift will be really to the DC space where we measure it in net inflow. So I think that is one dynamic. If you look within and in Life, actually, the margins in terms of the riders and the disability parts that are still part of and continue to be in VNB is there, the margin is positive.

We also -- I already mentioned that the immediate annuity market continues to be an attractive market for us. We look at capital deployment, and this is an attractive market for us to deploy capital in. We did around EUR 800 million. We expect that market to grow 10% to 15%. It's already growing around 10%. But with the effect of the pension reform, we actually expect a bit more of a step-up. So we do expect that we can continue to make attractive margins there.

In Europe, it's really a combination of the APE that is going up, but also our focus on protection. Protection continues to have very attractive margins. And we do expect also going forward that we can maintain those -- that we can maintain those attractive margins because of our strong distribution and as I was saying earlier, the ability, it's not just around the product, but it's also the ability to have the right distribution channels to actually get customers to talk about this. So for Europe, yes, we continue to believe that we can grow the VNB on the back of both volume and while keeping a healthy margin.

Japan, again, also attractive margins. There, we also see that the volume is up, and we've moved from what we call the short-term COLI to the unit linked, which is more the long-term market, which also has a higher margin. The traditional products typically tend to have a little bit lower margin, but also is still attractive.

So going forward, I think also for Japan, it will apply that there is still an underserved market. There's still a lot of SME owners out there. It's a big market that are under protected. So we continue to see the opportunity to grow both in volume and in margin also for Japan and a new product launch next to the repricing that we did of the protection product and the unit-linked product that we launched before summer. The combination of that should give a good platform for the growth of Japan, and we still aim to be in the top 3, top 4 back again in that market in the coming years.

Your next question comes from the line of Iain Pearce from BNP Paribas.

The first one is just on the capital structure. So with the paydown of the RT1 and then the further EUR 600 million deleveraging and then assumes capital build, CSM build, the leverage looks like it's going to come down quite a lot. Just wondering why you want to sort of adjust the leverage picture and sort of if you view that as a more normal capital structure going forward?

The second one was just on Japan. You said you've done a reinsurance deal in Japan. I'm just wondering if you could give some more detail on what that reinsurance deal is, if there's any sort of benefit to remittance on that or capital strain, just trying to think, and is there an optionality to do more of that on the reinsurance side in Japan?

And if I could just ask a very quick third one. Just on the cash and capital now being finally constrained, cash capital at holding. In terms of where that target sits, I think in the past, you've sort of spoken debt holding costs, dividend cost buyback cost plus 1 in 20 shops. I mean with NN Life solvency being so strong, what sort of number should we be thinking about that? Is it the sort of EUR 1.6 billion, EUR 1.7 billion, the right number to be thinking about?

Well, thank you, Iain. Unfortunately for me, these are all for Annemiek.

On your first question on leverage, listen, the EUR 600 million senior note that we intend not to refinance this senior one, that was really -- that was tied to the Delta Lloyd acquisition. It was done at historically low rates and not refinancing it in '27 just saves us probably EUR 15 million or something. It doesn't materially lower our leverage ratio. And it's currently around 17% -- slightly over 17%, and will go to around 16%, if you already deduct the RT1 notes. So it doesn't materially impact that.

And if you look at the -- if you remember, at the Capital Markets Day and what I also said in the presentation, our cash build is roughly EUR 1.5 billion in the next 4 years until '28. And with today's announcement, we said we do the EUR 100 million additional capital return, EUR 400 million in total, then we have the EUR 600 million deleveraging and that then leaves another EUR 500 million in excess cash build. So it's not that we were unhappy with the leverage structure. It's just we don't need the cash, and it was tied to the Delta Lloyd acquisition on a historical rate.

On NN Re, it was a small reinsurance transaction we did -- sorry, on Japan, it was a small reinsurance transaction on the in-force book and the short-term COLI that we did. In general, we've been doing reinsurance transactions on Japan frequently over the last couple of years, and we'll continue to look at it. It doesn't change the remittance forecast that we have on Japan.

Cash capital, we've indeed always said that we hold cash capital to cover our holding costs, to cover debt cost, and we need to sustain a 1 in 20 shock for all the business units that we have. Typically, that number varies between EUR 0.5 billion and EUR 1.5 billion, and that's still the case for the guidance that we have on cash capital.

We will now go to the next question, and your next question today comes from the line of Michael Huttner from Berenberg.

Fantastic. And congratulations. I have one on Life and the other one, I'm kind of hesitating. I guess I'll ask it on AI because it's kind of topical. So on Life, I would say, you're not shrinking, you're growing. And your comments today seem -- this is NN Life, it seem to indicate that with the new figures you've given us on the immediate annuities. Can you kind of flesh that out a little bit? I mean, if I give you the way I'm looking at it, you might say, well, actually you're wrong or this is right. So if I add the DC assets to the Life reserves, this is in your financial supplement, year-end '24, we had EUR 148 billion, year-end '25, we're at EUR 146 billion, EUR 147 billion. So that's a shrinkage of maybe 1% or something.

And I think in the past, you've said shrinkage of 2%, but it feels like we're no longer really shrinking and you kind of alluded to the benefit of the Dutch pension reform coming through, even though you haven't kind of focused so much as some of your peers on pension buyouts. So I just wondered why don't you raise your targets in Life because the business is clearly doing fantastic. I mean, just a solvency of 223% is amazing. So that's -- sorry for the long question.

And the other one is really kind of almost stupid, but because it's so topical. So you gave us these lovely use cases in AI. Could you just say which one is a single biggest thing? My feeling from the way you've been kind of approaching the topic on protection is, it is coming from the fact that your agents are so much more productive once they've been trained with avatars or AI or whatever. If you could give us a feel, that would be magic because clearly, if you can accelerate protection growth, that's a big plus.

Yes. Thank you, Michael. Yes, on Life or NN Life, there is obviously competing things. So the closed book still runs off and earlier, we said it still runs off at around 2%. And that is on the back of basically retail but especially defined benefit books slowly running off.

At the same time, you're right that we do see good growth in DC. Of course, the dynamics are very different from big spread business and capital heavy runoff to growth of lighter. We set a target of EUR 55 billion AUM for the DC business, EUR 10 billion in annuities, and annuity is attractive. We haven't assumed any buyouts in that. So we do think that DC assets indeed will grow, immediate annuities 10% to 15%, we can make 10 to 15 basis points over this AUM. So that's clearly a plus, and then some of it is one-off.

I think for Life for us, it's always been important that stable remittance is very key for us. And also at the CMD, we indicated that we can maintain a stable remittance pattern out of NN Life. So even if OCG goes up a bit, which it has, or it comes down a bit, we will continue to focus on keeping stable remittances out of NN Life and offsetting the let's say, the slow runoff of DB with growth in DC. So from that point of view, yes, happy to see that NN Life is doing well, but there's not a change in the approach or in the guidance here.

Yes. On AI, I think even though we talk a lot about what we say, use cases. So we mean a use case, obviously, is where we have something AI that is really deployed usually in our operations. But the real game, of course, is scaling. So what is very cool, I think about the tied agents is that we see things that are developed in Poland or in Madrid. And then we have the ability to scale that to other markets. And this is a clear advantage of having a multi-country, multiunit platform that if you develop it once, it is with AI and certainly now on the language, it's really easy to scale this across other markets.

So probably a very big one right now is the tied agents, you're right, the 42% of growth, and it's not just the lead generation, it's the AI avatar that we have to coach our agents. It's the connecting AI using connecting the agent to the right customers. So there's a lot of individual AI use cases there and the fact that it's scalable across our 7 tied agent markets is very helpful.

But I also mentioned the claim handling part for Non-life, you can imagine that once you have an agentic AI claim handling module life, you can also scale that to European markets where we do a lot of protection business. And protection, of course, also has a claim handling, same for underwriting. So we now are focusing on trying to get to a 50% automated full underwriting in the retail space in the Netherlands. Again, we do lots of underwriting in the European markets and vice versa.

So my real expectation is that we should only develop AI use cases that are scalable, right? Because we trained everybody, a lot of initiatives come out of the company. And actually, we've been, in a way, almost slowing down the company because we don't want these -- all these small individual cases, we really want scalable cases that we can at least scale and we say scale means at least in 3 markets. So at least in 3 countries or 3 units, it should be deployable, and then we develop it. And so today, it's probably tied agents. Over time, claim handling, underwriting, customer service. I see in all these areas, some real scaling opportunities.

We will now take the next question, and the next question comes from the line of Michele Ballatore from KBW.

Yes. So I have two questions. So the first question is about the Non-life, in particular about property and casualty. In terms of the pricing environment, what are your observations going into 2026? Any sign of softening? I mean anything you can add to this?

And the second question is about the capital. So with EUR 500 million of available, let's say, capital cash beyond the distribution, if we think about, let's say, inorganic growth, I mean if we think about the businesses that you have where your organic -- the pace of the organic growth is satisfying and businesses where you say, well, I mean, some M&A there, some inorganic growth, some action could be beneficial. So can you talk a little bit about your preference there?

Yes. Thank you, Michele. I think on pricing Non-life, well, we've done a lot. And within P&C, you see very different trends. Motor, I would say, trouble always starts in motor and especially in retail. So we've done a significant premium increases in the past year. Our expectation is that we will probably see a mid-single digit depending a bit on the book, high single-digit premium increase. And this is simply also keeping up with inflation of claim cost and other liability costs. But we do think that the bigger premium increases are behind us, but we will continue to have to increase premiums to keep up with claim inflation.

In terms of dynamics, retail motor, always competitive. We might lose some market share. Motor is 25% of our book. It's -- generally, we're underweighted anyway in motor, and we don't mind. We continue to prioritize margin over volume even though, again, I don't think we will be expecting major increases in motor.

I think fire, but also the other books around travel liabilities, a different dynamic, combined ratios are very low. It's a very attractive business. So there also, we are doing less premium increases simply because the portfolio is holding up well. We also want to maintain our competitiveness, and this is the core of our P&C book.

So overall, I expect a relatively good environment for P&C as we have seen in the last year, even though, again, we have to state that we didn't see any fires or -- well, we saw fires, but not very large fires. We didn't have very large storms. So the P&C results also on the fire side were a bit helped by favorable weather.

Overall, I still think it's a good environment that we -- even if we would lose some market share, we continue to prioritize margin over volume. But we don't think it's needed. The business grew 6% and 2% was also volume growth here.

Yes, I think on available cash, obviously, we still need to build all these -- and when we talked about the EUR 1.5 billion, we still need to build the EUR 500 million in cash. But you're right, we do have financial flexibility. But if you look at inorganic, it has been a challenging market. And we continue to see that there's more buyers and sellers, there haven't been that many transactions, certainly not cross-border.

We are very happy with our organic growth path. We said 7% to 8% or 7% CAGR, we think is very attractive. Our businesses are growing well. If we see an opportunity for M&A, we have a very strict financial and strategic criteria. We are actually proud of our track record in M&A. But that also means that we need to be very careful in embarking on M&A unless we have a high conviction on both the financials and the strategic merit. If these opportunities will come, we will certainly take a look at it, but we're also happy to continue on the organic growth path that we have been doing.

If I may, my question was about more like the preference in terms of, if you have to do something, what businesses you will target?

Well, I'm not sure we have to do anything. I mean, what we have to do is deliver on our targets that we set for '28. And we said that we've set our free cash flow and OCG target. We also said that the 7% to 8% CAGR per share is what we've been aiming for. So that is what we focused on. Anything, any opportunities that would come on top of that in terms of inorganic would also mean that, that would have to add to the targets that we have already set.

So from that point of view, it is more opportunistic. If something very attractive comes along, that would be interesting. But our first priority is just to deliver on our targets and deliver on the capital return commitments that we have given at our Capital Markets Day in 2025.

We will now go to the next question, and the question comes from the line of Nasib Ahmed from UBS.

I'm not sure if Nasib can hear us. I will move on to the next question. One moment, please.

And your next question comes from the line of Thomas Bateman from Mediobanca.

[indiscernible] great results. It's great to hear the conversation so much about growth as well. Could you just comment a little bit on the strategy in Greece? I don't want to say too much, but I guess I've observed some movements in the banks there. So any comment you can give on your strategy there would be interesting.

And then the second question is just on government bond volatility in Japan. It seems a little bit immaterial now, so you've got solvency at 220%. But has there been any impact in solvency from Japan year-to-date? And is that tied at all to the realized losses on bonds that you've done in the year? And if not, maybe can you just give a little bit of color on those realized losses?

Yes. Thank you, Thomas. Yes, on Greece. So obviously, there have been developments with Piraeus acquiring Ethniki. When we set our targets, we already took this into account. So we obviously expect to deliver our 2028 target for Europe, irrespective of these potential changes in Greece.

Having said that specifically for Greece, I mean bancassurance is an important channel. So that would have an impact on our business. Today, we see a very strong performance still from Piraeus in '26, and potentially, we also expect that in '27. It is important to point out that this is not our only distribution channel in Greece. We have a very strong and growing tied agent network. That network was also further strengthened with the acquisition of MetLife.

We see today that the digital -- the [indiscernible] Michael already asked on the use cases around tied agents, but that's still relatively low in Greece. And we see opportunities for further digital leads, the avatar training and some of the other things that we can still roll out in Greece. There's a potential development of the broker market and some of the direct business. So we do see opportunities also to further scale. Tied agents grew also with 30% already last year in VNB. And so that will also be important going forward that we continue to strengthen also other channels. But the key message is that when we set these targets, we took already this change into account. Annemiek?

Your question on government bond volatility in Japan, they are less relevant for solvency, but higher yields, obviously helped VNB and OCG in Japan. Obviously, higher interest rates could have some volatility on the solvency, but the solvency in Japan under the current regime is very strong also versus peers, and we would expect it to be the same under the new regime there.

So the realized losses that you see in the nonoperating items of the IFRS result that we called out there, they are not related to any bond [ resales ] or losses in -- of sales in Japan. They were more related to some government bond sales that the Dutch Life company did, actually some sales of U.S. bonds given that under the Solvency 2020 regime, for us, it's just more attractive to hold long-term euro-denominated bonds. And as far as those realized losses, they are concerned, they obviously were already included in the shareholders' equity via OCI, but now we just have to take them in a nonoperating item.

We will now go to our next question, and the question comes from Nasib Ahmed from UBS.

I've got a clarification first off. Annemiek, you said there's a reduction in the leakage from the own funds eligibility change. I remember you had a 1 point leakage every year on the solvency. Does that go away now with that change?

And I guess my 2 questions are, I think you've got a German business as well. How is that going? Is there capacity to increase exposure there? And then finally, on Japan, what does high yields mean for new business lapses? I think you mentioned kind of solvency, but investment returns is higher yields actually negative for lapses, people switching out of these savings products into other products. So just trying to get a sense of that as well.

Yes. Thank you, Nasib. I'm glad you made it. Yes. So let me just start with the German business, and then Annemiek can take the questions on the other ones. Yes. So we entered into Germany, mostly on what we call mandated agent business. It's still relatively small, but it is attractive. So today, the business is performing well. At the same time, growing in Non-life or especially in P&C, always you need to be careful. But it is, so far, it is screening as an attractive opportunity. And it is -- the business is on a growth path today, and that's also in our plans. Annemiek?

Yes, your question on the leakage from the non-available own funds change that indeed will go largely away. And your question on the higher yields for the Japanese business, it is indeed helpful given that the embedded fixed guarantee rate of -- in the COLI products.

Yes. Well, with that, we will now close the call. Well, thank you very much, and thank you very much for everybody on the call for the interest you've shown and all the interesting questions that you asked. And obviously, we look forward to continue to engage with you on the upcoming roadshows and conferences, and have a nice day.

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

Good morning, ladies and gentlemen. This is the operator speaking. Welcome to NN Group's Analyst Conference Call on its First Half Year 2025 Results. [Operator Instructions] Before handing this conference over to Mr. David Knibbe, Chief Executive Officer of NN Group, let me first give the following statement on behalf of the company.

Today's comments are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those projected in any forward-looking statements. Such forward-looking statements may include future developments in NN Group's business, expectations for the future financial performance and any other statements not involving a historical fact. Any forward-looking statements speak only as of the date they are made, and NN Group assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason. Furthermore, nothing in today's comments constitutes an offer to sell or a solicitation or an offer to buy any securities. Reference is made to the legal information on the last page of the presentation.

Good morning, Mr. Knibbe. Over to you.

Yes. Thank you, [ Sharon ] and good morning, everyone. Thank you for joining our conference call to discuss NN Group's performance for the first half year of 2025. I'm excited to be here today. And with me are Annemiek Melick, our Chief Financial Officer; and Wilbert Ouburg, our Chief Risk Officer.

I'll begin with an overview of the key messages and then dive into the excellent commercial momentum we have witnessed in our growth segments. Next, Annemiek will give a detailed analysis of the strong progression of our capital position and our record financial performance over the first half of 2025. After my concluding remarks, we will move over to Q&A.

I see the strong set of results we present today as a great start towards delivering the growth targets we set at the CMD, which once more underpin our attractive investor proposition with compounding returns for shareholders. Annemiek will further elaborate on our capital position and a strong set of OCG results, but I will give you the headlines. Our pro forma group Solvency II ratio progressed strongly from 195% per the end of April to 205% per the end of June or 208% on a reported basis. And this is now above our comfort range of 150% to 200%. Netherlands Life Solvency II ratio shows a similar trajectory and came in at 200%.

For operating capital generation, for the very first time, we report more than EUR 1 billion over a semiannual period. As you remember, at our recent Capital Markets Day, we set ambitious growth targets, supported mainly by Europe, Netherlands Non-life and Japan. I'm particularly pleased about the commercial success these growth segments have shown in the first half of 2025. The value of new business in Europe and Japan increased with 11% and 25%, respectively. In the Netherlands, Non-life gross written premium grew by 6%.

Let's dive into the underlying drivers of our financials. As you know, we have a multi-stakeholder approach. Our objective is to achieve customer satisfaction scores significantly above the market average and secure a position among the top 3 for broker satisfaction in 2028. Customer satisfaction has shown consistent improvement, especially in Europe, where every single unit is above market average in terms of customer satisfaction. This is the first time we earned this great achievement, which will support our growth, both from retention and new business perspective. Additionally, our Dutch broker satisfaction score indicate that we are overall ranked #1. Our goal is to maintain an employee engagement above benchmark levels while we aim for over 40% women in senior management by 2028.

We aim to cut greenhouse gas emissions by 45% by 2030, invest over EUR 13 billion in climate solutions and support 2.5 million people's well-being by 2028. As you can see, progress on all these targets is well on track. Our investor proposition remains attractive, and we're well positioned to continue delivering value to our shareholders. I already gave the headlines on capital and financial performance. I do want to highlight the Future Ready program that we introduced during our recent Capital Markets Day. This strategic program focuses on standardization, automation and the implementation of AI to enhance customer experience, to promote growth and deliver around EUR 200 million in annual benefits by 2027. As such, the program is an important cornerstone in our investment case, and we are demonstrating significant progress. Let me give 2 examples.

We are making significant progress towards our goal of generating 50% of APE from digital leads by 2028, having reached 40% in H1 '25, up from 36% in 2024. This growth is driven by our digital marketing initiatives, including the successful launch of the agent digital office in Poland, which helps agents build an online presence and use digital tools. And this initiative will be expanded to all units with tied agent networks.

Secondly, we're also focusing on collaboration and standardization to create scalable, reusable AI solutions. Currently, 191 AI use cases are in production, up from 148 year-end '24, with all business units reporting strong progress. One example is our secure internal platform for generative AI, which allows our teams to build AI-powered chatbots using internal knowledge. This platform is already in use across multiple Dutch and international units. Another important cornerstone in our investment case is our capital return promise with an attractive progressive dividend per share, complemented by annual share buybacks. Today, we announced an 8% increase of our interim dividend. And with a group Solvency II ratio now above the 150% to 200% comfort range, we are well positioned to look for upside to our capital return promise at the full year '25 stage with a focus on small incremental steps.

Our delivery on capital return since the IPO is impressive with over EUR 10 billion of capital return to shareholders. And we remain committed to continue this road map with total capital return to shareholders foreseen to grow to EUR 15 billion by 2028. As a first step, today, we announced EUR 1.38 per share interim dividend, in line with our dividend policy.

Before I highlight the commercial success we have seen during the first half year, I'd like to remind you of the ambitious targets we set at our Capital Markets Day back in May. OCG is expected to reach EUR 2.2 billion in 2028, while free cash flow should exceed EUR 1.8 billion. Most of the growth versus our 2025 target is coming from Insurance Europe, Netherlands non-life and Japan. As such, I'm very pleased that the 3 units are delivering very strong commercial results. Allow me to elaborate. Insurance Europe, bolstered by our leading positions is our largest growth segment with a target of EUR 600 million in 2028. We are active in 8 countries where we have organically built our business since the 80s and 90s, becoming a top player or #1 in markets like Greece, Romania and Hungary for life insurance and for example, Poland and Romania for pensions.

Our strategy focused on high-margin, capital-light protection products, and we are well positioned to capitalize on the underpenetrated high-growth margin in the region. However, the underpenetration does not matter if you do not have the distribution to tap into this need. And our multi-distribution network is what sets us apart from the competition. In the first half, we saw strong VNB growth of 11%, driven by both better sales and margins, and this will translate into OCG growth over time. OCG grew by 10% in the first half of 2025 outpacing the 7% CAGR implied in our target versus '24. OCG came in at EUR 251 million, not that dissimilar to our achievement in 2020 with the important difference that we now deliver this in 6 months.

Netherlands Non-life is our second largest growth segment with an OCG target of EUR 475 million in 2028. Also here, we witnessed solid commercial momentum supported by strong customer and broker satisfaction. Gross written premiums are up 6% year-on-year to EUR 2.6 billion, driven both by indexation and volume growth. Growth primarily came from the SME, direct and bank channels with fire and sickness insurance showing the highest increases. OCG came in at EUR 175 million in the first half of 2025, up 14% versus last year. Netherlands Non-Life strong performance is also highlighted by its combined ratio of 91.2% over the first half of '25, at the lower end of the 91% to 93% target range. This marks a 1 percent point improvement compared to the first half of '24, mainly driven by lower expenses. The Future Ready program in Non-life is paying off in efficiency improvements.

Japan is the third growth segment with an OCG target of 2028 of EUR 160 million. In Japan, we see strong signs of sales recovery with a 25% increase in new business value in the first half of '25. This was mainly driven by our long-term savings product and higher rates, driving better margin for cash value insurance sales. Our new long-term savings product has already taken a 17% share of VNB over the first half of '25, and we expect this to further increase over time. The new long-term savings product was only launched in March. If we focus on the comparable VNB solely for the second quarter, VNB growth would be more spectacular at 56%. So Japan is making strong progress on regaining a top 3 market position now that we have been able to improve our level playing field with the introduction of our first new product in the attractive long-term savings market, and there's more to come.

Now I will hand over to Annemiek, who will further provide details on our financial performance for the first half year of 2025.

Thank you, David. On my behalf, a warm welcome to everyone. Let's start with the key financials on Slide 12. Our OCG is up 6% and exceeded the EUR 1 billion for the first time for a biannual period. It's a strong print and confirmation we're on the right track to deliver our 2028 target. Free cash flow is down 4% versus last year, mainly driven by a positive one-off last year versus future ready investments this year. It's a metric you really have to look at on an annual basis, and we're very confident to achieve our free cash flow target of EUR 1.6 billion for 2025 and remain on track to meet the 2028 target of exceeding EUR 1.8 billion.

Our pro forma solvency ratio came in at 205%, which is above our 150% to 200% comfort zone. Our cash capital position shows an increase from EUR 1.3 billion to EUR 1.6 billion, driven by the untendered R Tier 1 capital and some net cash build during the period.

Now let me give you some insights into our strong capital progression. Looking at the capital bridge for the first half of '25, operating capital generation of EUR 1 billion added 12 percentage points to the solvency ratio, which is 4% higher than the capital flows to shareholders. Market variance added 5 percentage points, largely driven by the positive impact of interest rate movements and decreasing spreads on government bonds and mortgages, partly offset by negative equity variance. Mortgage spreads at the end of June are some 10 basis points tighter than our through-the-cycle expectation. If this were to normalize, it would cost circa 2 percentage points at group level. The bucket Other added 3 percentage points to the ratio, where the positive effects from the implementation of Basel IV and the new longevity deal were partially offset by model and assumption changes.

The solvency ratio of Netherlands Life increased as well, up from 187% at full year '24 to 200% at H1 '25. As indicated at our Capital Markets Day, the natural moment for us to consider stepping up our capital return policy is at the full year results. Given our position now, the outlook is promising. As you know, we prefer small incremental steps in our structural capital return promise over lumpy buybacks. We continue to have a conservative asset portfolio. And given that most of you are on holiday or trying to crack your bags, I will not dwell on it this time, but you can find all the usual information on our very safe Dutch mortgage book, et cetera, in the appendix of the analyst presentation. I would like to separately mention though, that our key Solvency II ratio sensitivities on equity, real estate and mortgage spread shocks all decreased compared to the end of '24 as we benefited from increased eligibility of own funds, driven by lower net deferred tax assets.

Now let's move to OCG. Asset, a strong print in OCG, up 6% on a not-so-easy comparable base last year. This growth reflects continued strong underlying business performance and growth in Insurance Europe and Netherlands Non-life, flattered by positive experience in Netherlands Life. In the Netherlands Life segment, we witnessed a significant OCG increase due to favorable experience. Last year was negative, now it was positive and higher investment returns. Also, new business is seasonally elevated in the first quarter and still benefits from DB sales, which will taper off as the pension reform further effectuates. Netherlands Non-life came in at EUR 175 million, up 15% versus H1 last year despite a refinement in business recognition, shifting some OCG towards the second half of the year. Similar to last year, Non-life OCG benefited from benign weather, whereas this year, we did not see the elevated fire claims that we saw last year.

On the back of this benign weather, we would expect Non-life to deliver an OCG of more than EUR 400 million this year. Europe's increase by 10% OCG is driven by business growth, as David already alluded to, improved persistency and increased investment results. For Japan Life, the underlying APE and VNB trends are very promising, as David just explained. OCG is down 10% versus last year, however, mainly due to normalizing technical results and a higher new business strain due to the strong sales recovery. In Banking, further NIM compression in H1 '25, although partially offset by expense reductions, negatively impacted OCG. We expect NIM pressure to extend to the second half of the year. The first half of '25 furthermore included a one-off release of required capital related to a change in collateral recognition.

Lastly, the segment Other showed some normalization compared to the first half of '24, but NN Re still benefited from positive experience. Now with the strong H1 '25 OCG results, we do see upside to our previous full year guidance of flattish OCG versus full year '24. However, we would expect OCG for the second half of '25 to be slightly lower than the first half as positive one-offs in Netherlands Life and continued NIM pressure on NN Bank are expected to be mostly but not entirely offset by higher OCG from Netherlands Non-life due to the seasonality of new business.

Before we go to free cash flow, let me say a few words on our IFRS results. As you know, we steer on OCG, where at the Capital Markets Day, we've again outlined ambitious growth targets. Under IFRS, the most important driver for future growth is the organic CSM as this feeds to future profit margin. Therefore, I'm happy to see organic CSM growth of 2% over the first half of '25, where Japan became a neutral contributor instead of a drag, reflecting a sales recovery. Now similar to OCG, our IFRS operating result increased as well, largely due to a higher investment result at Netherlands Life. This was mainly driven by higher returns from investment from private debt investments and a more technical accounting asymmetry relating to a portion of our derivatives falling outside of hedge accounting.

NN Group's net result decreased due to bond sales, revaluations on derivatives used for hedging purposes and the final accounting results from the sale of Turkey, which in itself had a negligible capital impact. Lastly, let's move to our capital position. Free cash flow came in at EUR 863 million in the first half of '25, 4% lower than the comparable period last year. This is mainly due to the segment Other, where last year benefited from a tax-related one-off, whereas the current period includes future-ready investments. Remittances were actually up 2% year-on-year, where lower contributions from Netherlands Non-life and NN Re were more than offset by higher contributions from Insurance Europe and the bank. At the full year results, we already indicated that the bank's remittance capacity strengthened significantly due to the implementation of Basel IV for the 1st of January in '25, which we are using to complement remittances this year and the first half of next year.

In addition to the Dutch units, we still expect remittances from Insurance Europe and NN Re in the second half of the year. As such, we're very confident to achieve the EUR 1.6 billion free cash flow target for '25. The change in our debt and loans reflects the impact of the untendered grandfathered RT1 notes with a call date in January '26. And our capital flows include the payment of the final dividend over '24 and a part of the EUR 300 million buyback that has been executed as per the end of June.

That concludes the financial explanations. And with this, I would like to hand it back over to David for concluding remarks.

Yes. Thanks, Annemiek. To wrap up our presentation, the group Solvency II ratio improved from 195% at the end of April to 205% at the end of June, surpassing the 150% to 200% comfort zone. Netherlands Life also increased to 200%. Operating capital generation exceeded EUR 1 billion for the first time over a semiannual period. Our growth segments in Europe, Japan and Non-life showed strong commercial success with the value of new business increasing 11% in Europe and 25% in Japan and the Non-life premiums in the Netherlands growing by 6%. Bottom line, we presented another set of strong results today, and this marks a strong start towards delivering the growth targets we set at the CMD, which once more underpin our attractive investor proposition with compounding returns for shareholders.

And with these remarks, I would like to open up the call for Q&A. Operator?

[Operator Instructions]

And your first question today comes from the line of Andrew Baker from Goldman Sachs.

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

Yes. Thank you, Andrew. Annemiek?

To start with your question on the longevity transaction, we did a transaction of EUR 4 billion of liabilities. It continues to be a very attractive market. I think the OCG impact will be less than EUR 10 million of that. And that also means given that we indicated last year that we roughly would build up EUR 10 billion of liabilities in a period of 3 years, we would still expect to have roughly EUR 6 billion available and a buildup of 2 to 3 years. And your first question was related to the assumption changes in life or non-life?

Life.

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

Your next question comes from the line of David Barma from Bank of America.

Can you hear me?

Yes, we can hear you well.

Can you hear me?

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

Okay. Great. So yes, just with a delay, sorry. So firstly, on Disability, please. The combined ratio keeps being quite a bit volatile and was a bit higher than I thought in 1H. Can you explain whether this is just the accounting noise under IFRS 17 that you've talked about before or if there's a worsening frequency here in 1H? And maybe if you can talk about the sort of premium increases you're doing in Disability at the moment as well.

And then secondly, on Japan, what would have been the OCG in Japan, assuming you were under the new solvency regime, please?

Yes. Thank you, David. Annemiek, on Japan?

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

Yes, David, on Disability. Well, I think overall...

Sorry, can I just add to...

Go ahead.

Go ahead, David. David?

Yes. Sorry for the delay here. Yes, just adding to that Japan point. Maybe to put it another way, what's the translation between VNB growth and OCG? And then how long does it take to be fully recognized?

Well, at this point in time, it takes roughly 7 to 8 years to be recognized. But if we transition to the new ICS, then 85% of it will be recognized immediately and the remaining 50% will go over roughly 7 years or something.

David, let me take the question on this. I think we're all very curious now where you are given the long delay. So you must be in a really nice location. But on the disability of the combined ratio, I think overall, yes, there is some accounting noise in there. If we just look at underlying at the book, the majority of the book is sickness benefits. That is actually doing very well. We did do some premium increases, but overall, we're quite positive on this book. This is also what we flagged at the Capital Markets Day that within D&A, we expect growth in the D&A, but then in the sickness part, that also happened. It's about EUR 500 million out of the close to EUR 800 million that is in group income. The other part, the EUR 300 million is in the disability book. This is more the long tail. There, there's more concerns given the overall trend that we see in society and also some of the backlogs that are with the government.

So we've been doing significant premium increases there, and we expect also that, that will continue to be needed to keep that book healthy. Overall, I think the D&A book is on a positive trend that we expect also going forward. And therefore, we continue to say that 91% to 93% for the overall combined ratio for the total non-life business is the right way to look at this in terms of guidance.

And your next question comes from the line of Nasib Ahmed from UBS.

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

Yes. Thank you, Nasib. Wilbert Ouburg, on the Solvency II reform?

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

Thanks, Wilbert. Then on Japan. Yes. Maybe a little bit of background on Japan. So if we look at the overall corporate life market, it was actually relatively flat or in fact, it was 1% down. What we see is that the shorter-term market or the cash value products was actually down 5% and the long-term market was up 12%. So we launched a product, obviously, in March in this long-term market, and this has also been a driver of our growth. But because of all the engagement that we have with the distribution channels on this product, we've also seen an upward trend in the protection space and also in the cash value product line. So actually, the growth is not just coming from the long-term business, but from all 3 product lines.

Yes, you're right. We said earlier, it will take quite some time to get back to previous levels or to VNB levels of 2022 at some point we guided to. To be fair, I think so far, it's going probably a bit faster than we thought. I mean, if you just look at the quarter, we've seen indeed a 56% uplift. And it's possible that already this year that maybe roughly half of what we lost, we would be in terms of new business that we would recover. Of course, we need to see how the rest of the year will play out. Yes, but it's clearly on a positive trend. And I think it shows the strength of our distribution that we have in this market that -- yes, that is a resilient business that is really on a positive trend now after the lifting of the business improvement order, but also because of the opening of the long-term coding market.

Your next question comes from the line of Thomas Bateman from Mediobanca.

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

Yes. Thank you, Thomas. Yes, on the Future Ready program, well, overall, this is very much going in line with the guidance that we've given also in terms of the free cash flow impact over the first half of '25 and also the expectation for '26. So financially, it's going on track. We also see -- we said we expect EUR 200 million benefits by '27, EUR 180 million in expenses, EUR 20 million in growth of value new business development. That's also going nicely on track. Underlying, we see that the scaling of use cases is progressing. I mentioned earlier, we had at the beginning of the year, 149 AI use cases. It's now at 191. I think good to mention, for example, is the scaling of [ Sana GPT ] which is an agentic chatbot. What we see is now, and we haven't rolled it out in all units, but we see that the long tail or the more complex questions, this chatbot does 60% better than the, let's say, the annoying one that we had before that, but also 33% less referrals to meaning that a human needs to get on the phone to deal with the rest of the question.

This was launched at the pension business. It's now also with the bank, with the mortgages. And these are examples of AI applications that we scale across the company. So yes, overall, I think it's going well, and we're for sure on track to deliver the EUR 200 million benefits that we expect to come out of this program. Yes, on buyouts, yes, I mean, there was around EUR 4.1 billion was closed this year. None of these deals actually met our return criteria. We've been very clear that we want at least an IRR that is above 10%. These deals didn't meet our return criteria. Keep in mind also that we don't need these buyouts to sustain our remittance pattern. As we explained also at the CMD, we -- without doing buyouts, we can sustain that remittance pattern from NN Life up to 2040. Yes, ultimately, I think capital allocation is probably one of the most important things that we do.

And when you have -- we see that applying -- deploying capital in Europe, obviously, in Japan, but also in the immediate annuity market in the Netherlands, all give a lot more attractive IRRs than the buyout business. Buying back shares also would be more attractive than doing these buyouts. But we'll continue to monitor it and to see whether the pricing becomes more attractive. And if it does, we'll certainly participate. I think it's also good to note, I mean, let's not overdo this. I think there was EUR 4 billion done. There's probably a bit more coming this year. But even if we would do half of that EUR 4 billion, that would be roughly EUR 20 million OCG for the life company on -- while the life company typically does more than EUR 1 billion of OCG in a year. So overall, we haven't done it because the pricing wasn't attractive enough. If that changes over time, then we'll certainly be more active again in this market.

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

Your next question comes from the line of Ian Pearce from Exane.

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

Thank you, Ian. Annemiek?

Yes. On Life and OCG expectations and remittances, we really want to have a stable remittance pattern coming out of Life that we can sustain for a very long time. That's why we gave the stable remittance guidance towards 2040. The outlook for Life is a bit better for this year versus the flattish guidance that we gave at the beginning of the year. We also realize that part of it is really structural because it's higher investment returns. That was already all in the target that we gave for Life for '28 of EUR 1.1 billion. In the first half year, there were also some one-offs, the positive experience variances. And there is a bit of a skew on new business towards the first half of the year. So Life will have a good -- probably good year in '25.

We're on track to meet the target for '28, and we stick to the stable remittances and the guidance we gave there before. If we look at the CSM agreed, 2% is probably the highest that we've reported. There is a bit of seasonality there because in the Non-life business on the group income side, these contracts come into IFRS in the first half of the year, OCG in the second half, but IFRS first half of the year, and they tend to really be skewed also to the first half of the year. So I wouldn't expect that to necessarily repeat for the second half. And the outlook on CSM, we're obviously very happy that Japan is now a neutral contributor after having seen a sales pickup in Q2. What the long-term outlook for CSM growth will be also depends a bit on how developments in Japan will be going.

Your next question comes from the line of Farquhar Murray from Autonomous.

Just 2 questions, if I may. Firstly, just a follow-up on Thomas' question on the Future Ready program. Would you have a number on where you stand versus the EUR 180 million cost saving target? Or is that going to be updated annually? And then secondly, turning back to Japan, might you have a sense of how much of the recovery you're seeing the split between the kind of product launch versus the kind of improvement order being lifted? In particular, I just wondered where you're seeing brokers become active again.

Thanks, Farquhar. Yes, in terms of the EUR 180 million cost saving target, no, I think that's too early to talk about that. But we'll obviously, over time, continue to update you on the progress of the Future Ready program. So full year would probably be a first moment to give some indication on it. But as I was saying, the -- what we continue to see is that the IT simplification and standardization on the one part and the application of AI, and this is not only on chatbots, but this is, for example, on the automation of claim handling. We gave this demo on how you can have in a couple of minutes a claim payout. If we expand that to, for example, windows of cars, but also windows of buildings and other types of damages, it's clear for us that with the enormous speed that Gen AI is already generating that this is a huge opportunity for our industry and certainly for us.

So from that point of view, I think we're all positive on that we will achieve those targets, both the EUR 180 million and the EUR 200 million. I think on Japan, it's very tough to split that out. So why exactly are people buying a product. What is clear to us is that brokers were already pre the lifting of the business improvement order were already starting to do business with us again. So that was clearly a positive. We didn't have to wait until the closing of the business improvement order. So 65% of our brokers are independent, and there's another 25% is banks and then 10% is Sumitomo. We've seen different speeds in which brokers, but also bank and Sumitomo have been active. But it's clear that all channels are now -- have been already starting to be very active again in the last few months.

So it was already happening pre-business improvement order. Obviously, the business improvement order was very good news and further supported that. But like I said, if the Q2 number was 56% up, that clearly was already pre-business improvement order sales was going up. So all in all, I think as I was saying earlier, the business is well on track to recover from this and go back to a position where we're probably #5 or #6 right now. And we do believe that depending a bit on how the market will evolve, there will be 3 or 4 big players, and we're convinced that we're going to be one of them.

Your next question comes from the line of Farooq Hanif from JPMorgan.

Just a couple of numbers questions actually. So on OCG, I just want to clarify exactly what you said, Annemiek. So you -- I think you said, look, there are some positive experience variances, capital release, just some positive maybe nonrecurring items in 1H. But in the second half because of the way you're now accounting for the OCG, the loss of those one-offs will be offset. Did you imply completely by non-life -- or is one bigger than the other? So that's question one. And then question two, on IFRS operating results, I just want to go back over what you said about the investment results again, just to understand it. So you've increased your investment margin or your investment income smooth assumption. So presumably, that uplift in investment margin, for example, in Netherlands Life is kind of repeatable?

Farooq, thanks for your questions. Yes, in terms of full year guidance, if you look at OCG, obviously, previously, we guided for a flattish trajectory versus the '24, where we landed at EUR 1.4 billion, where we said we would be flattish there. If you would look at the second half for OCG, we would expect it to be slightly lower than the first half. We would expect a bit lower OCG from Netherlands Life because we did see some positive one-offs there in H1 '25 that we don't think will be recurrable. And we also know that there is a bit of seasonal nature in the DB renewals plus the bank, we're expected to see continued NIM pressure there. And in H1, the bank also benefited from some capital relief. We do expect that the majority of that will be offset by higher OCG coming out of Netherlands Non-life, and that really has to do with the seasonality of Non-life, which is mainly related to when the P&C business is recognized. Now last year, that seasonality was roughly EUR 50 million. We would expect that to be a bit more. So then you would probably be having some numbers to build your model on.

In terms of the IFRS investment result at Life, indeed, roughly half of it was related to higher investment result, mainly private debt related, and that is something that you can expect to be sustainable, yes.

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

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

We will now go to our next question. And the next question comes from the line of Jason Kalamboussis from ING.

A couple of follow-up questions. On the longevity, you did the deal on the EUR 4 billion. I'm interested to know if you had waited to do on EUR 10 billion if you would get a better pricing. And probably a question that can or may not be related. You say that conditions are favorable. I mean, do you find that over the last 2 years, the pricing has become much better for insurers? And the second part is on Japan. If you could elaborate on -- and maybe I missed something on products or new products. Do you plan to have new product to go for approval for new products in '25? And what is the next stage where you will go for product approvals? Where would these products be? And how much time would it take roughly to get the approval so that we have an idea of what new you plan in there?

Yes. Thanks, Jason. Let me start with Japan and then Annemiek can cover the longevity conditions. Yes. Well, -- so like I said, there's 3 groups of products that we offer, which is the protection -- pure protection. Then there is the cash value. It's typically 5 years or at least what we call a short-term product, and then there's a longer-term unit-linked longer-term product. So we have introduced a longer-term product in March. The intention is to introduce another one, another long-term product. The intention is to do that in the second half. But as you might remember, the all products need to be preapproved by the regulator, by the FSA, and this takes time. It actually, to be honest, at times helps us because companies have only limited windows. So if you also have a retail business or other businesses, then you have to really make a choice.

We're only in corporate life. So we can use the 1 or 2 windows that we have for corporate life. Our intention is to another -- introduce another long-term product in that space, hopefully, in the fall. And otherwise, depending on when the approval come, it would be in '26. In any case, we feel already that in the long-term market, it's currently another very crowded space. Sony is there. there's some activity from AXA. There might be 1 or 2 more coming, but it's still a market that is growing. It's supported by the regulator. It's supported by the government that wants the market then the SME owners to do more long-term savings. So we're well positioned there even with one product. But ideally, we'll launch another one in the second half, but that will depend on regulatory approval. Annemiek?

Yes. In terms of longevity transactions, your question on whether the conditions have improved over the past 2 years, I think they've continued to be good over the past 2 years. We also did a transaction at year-end '23 of EUR 13 billion, roughly similar metrics as the current one. So there's still a lot of demand for longevity risk. We currently did EUR 4 billion because we typically do these transactions to a large part on the pension liabilities that are in benefit. And it takes some time for those liabilities to become in benefit and that part of the portfolio to build up. So the EUR 4 billion is what we did now. And then over the next 2 to 3 years, we would expect another EUR 6 billion of liabilities to become in benefit where we could do another transaction on if conditions continue to be favorable.

If I may follow up just on -- my question was more -- I understand that you need more impatient, so that you have another EUR 6 billion to come. My question was more like, is it better to wait and the EUR 4 billion to become EUR 10 billion because then you have more leverage on the pricing? Or at the end of the day, it doesn't matter too much and therefore, doing it by steps or in one go at the end of the day is -- doesn't make a huge difference on the pricing of the deal?

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

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

Thanks, Jason. No, it is really pricing. Like I said, we apply a very strict return criteria. And we do think that doing buyouts at a 10% or lower, we don't think it screens attractive versus all the other capital deployments that we have. So even if next year, the capital situation would be even higher than today, we still wouldn't start doing buyouts below 10%. I think I mentioned earlier, if you look at the immediate annuity market, for example, so people in the Netherlands have to buy an annuity once they retire. We see that the longer people are in D.C., obviously, per ticket size, that increases. Last year, we did EUR 600 million of that. This year, I would expect that we certainly will do more. For example, the IRRs of that immediate annuity business, which you could see as a collection of small buyouts, I guess, IRRs are much more attractive.

So as long as that's the situation, we'll do those, but we will not do the individual large buyouts. So yes, this is all about capital allocation and where we feel that we can make a good return or not. And indeed, on the buybacks, we'll have to visit that at the full year result to see what we will do. The outlook is positive. But as you know from us, we're not looking for lumpy buybacks. We're looking -- if we're going to do something, it has to be an incremental and a recurring step. But that's something to look forward to in the February discussion.

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

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

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

Yes. Good morning, everybody. Welcome to NN Group's Capital Markets Day where we're going to talk about future-ready growth. Welcome to people on the webcast, and welcome to people in the room. It's great to see so many familiar faces with us here today. And I already saw Dennis walking around, and he had to enjoy the brilliant Dutch weather today. So I'm sorry, you had to walk outside to come to the office and get a bit of a pouring down on you. I'm Robin van den Broek. I'm the Head of Investor Relations of NN Group, and I'll be your moderator for today.

So let's talk about the program. First of all, David, our CEO, is coming to the stage, and he's going to outline our strategy. NN IPO-ed in 2014. And since the IPO, NN has delivered consistent growth. And David will outline new targets for 2028 that will further be a testimony of this growth journey. Then David will stay on stage because we know you like him so much. And he'll talk about our Future Ready initiative. Last year, NN added being a digital and data-driven company to its strategic commitments. And David will explain how our Future Ready program embodies that into our strategy.

And he'll call to the stage Tjerrie, our Chief Analytics Officer. And Tjerrie will give his view on artificial intelligence, and he'll show you some use cases that are already live within our company today, and we're quite proud of that. After that, we'll have a 15-minute coffee break because we all need a little bit of caffeine.

And then Annemiek will come on stage, the Chief Financial Officer, and she'll talk about how continued business diversification will improve our growth profile over time. And she will also commit to our capital return policy, which has compounded such attractive returns for shareholders over time, and we will continue to do so whilst keeping flexibility. If you look at our strong net capital build and net cash build, there's ample of opportunity to expect more further down the road.

And today, we're also putting a special spotlight on Europe, which is the strongest growth segment within the organization. And I'm very excited to have 2 local CEOs with us today, Pawel and Kuldeep of Poland and Romania. And Pawel will outline how Poland has been able to integrate the MetLife acquisition and do a digital transformation at the same time to become the biggest OCG contributor of Europe in 2024. And Kuldeep will highlight how Romania has tripled its OCG contribution between 2019 and 2024 and from that higher base will more than double towards 2028. So very impressive growth in those 2 markets.

After this, we'll have a plenary Q&A session with David and Annemiek. After the Q&A session, we'll end the webcast, and the people in the room will break for lunch. After lunch, we'll have 4 rotating breakout sessions, hopefully, in a friendly more of less-formal setting. And one will be with Wilbert, our Chief Risk Officer, about balance sheet management. The second breakout session will be with Frank, and he will highlight how important it is to have an excellent distribution capability at hand to drive further growth within Europe.

Tjeerd will do the third breakout session on Netherlands Non-life and the bank. And on Netherlands Non-life, Netherlands Non-life is really leading the adoption of the artificial intelligence wave, and we think that will create efficiency gains that we can leverage for growth also in that segment. And on the bank, we see a stable and strong remittance pattern ahead of us.

And the last breakout session, but not the least for sure, will be led by Leon and Marius on Netherlands Life and Japan Life. Now Netherlands Life, we're confident that we can continue to remit the stable remittance pattern that we see today. And we also do not see a cliff edge after 2040. And on Japan, yes, we are working on the business improvement order. We're hopeful that we can exit that soon. And after that, we also intend to recapture market share in that market, and Marius will share his views around that.

Now before I hand over to David, I'm sure you see that this is going to be a very informative day. I hope we can also have some fun along the way. And speaking of fun, I do have to reference the safe harbor statement that is at the end of our presentation that you can find on our website.

And let's go. David, over to you.

Yes. Good morning, everybody, and very happy to see you all, especially, of course, the people that made it all the way here. And the people on the webcast, also a warm welcome. Now despite the weather that you had to wrestle through, you'll see that we're all in a very good mood here because we have a lot of good and business progress to share with you, which we're very proud of. So we've made very good progress on all of the KPIs that we set, but we're also very excited about the plans and the targets that we have been setting for 2028.

So let me get into that. So what's new? Well, first of all, what's not new is that we have a very competitive shareholder value proposition. If you look at our, let's say, our recent market cap, then our capital return yield is around 8.4%. And with this plan, you will actually see that it will grow with a CAGR of 7% to 8%. So the dividend yield will grow 7% to 8%, and that includes the share buyback of EUR 300 million. So that makes the shareholder proposition even more competitive.

What is new is the second bullet here. So we're going to be talking about the strategic transformation that we have been running, that we started already thinking about and working on a few years ago, and that is now in full motion. And essentially, what we're doing is we're building a platform for growth. There's obviously a lot happening technologically, AI, so there's a lot of opportunities that are created and that actually works in terms of expense efficiency, in terms of customer scores, but also on growth. And I'm very proud to say that we're at the forefront of these developments in the insurance industry.

Now this transformation obviously comes on top of favorable growth trends that we see in general. So the need for protection products and the awareness that people have on their needs. And there, often the under-protection that they have continues to increase. And we also see an increasing need still for long-term savings in the markets that we operate in. So it's a combination of a digital and strategic transformation with underlying favorable trends that builds this platform for growth that we're working on.

Now this is just not only just talk on trends, we've also translated it into what we think are very ambitious financial targets. So underlying, if you look at the targets, we set a target of EUR 2.2 billion operating capital generation for 2028 and EUR 1.8 billion or more of free cash flow generation in also in 2028. And that both translates into a 7% to 8% CAGR per share growth both for OCG and free cash flow.

Now what is new is that this growth will be mainly coming from Europe, it will be coming from Non-life and from Japan. And actually, that shift is different now. So Europe will benefit from the need for protection products and long-term savings. And as we will come back on today, Europe has some unique distribution capabilities that also enables us to get access to these customers that are currently under-protected.

Non-life will benefit from expense efficiency, trying to control claims, but also is very much at the forefront of applying AI and other tooling to continue to improve risk selection and the results. And we see selected pockets of growth also in the non-life market in the Netherlands. And then finally, Japan as a third growth engine, we expect to recapture, let's say, the market share, the top 3 position that we used to have in this market in the corporate life space.

So this business mix is new because it means that in terms of OCG in 2028, that the majority of OCG will actually come out of these 3 businesses, so out of Europe, out of Non-life and out of Japan. And for free cash flow, you'll see a similar trend. So back in 2020, 75% of the free cash flow came actually out of NN Life. While in this plan, you'll see that less than 50% of the free cash flow will come out of NN Life. And this is not because NN Life is going down because, as Annemiek will also explain, we aim to keep the free cash flow out of Life flat for the coming periods. So it means it's real growth. It's real step-up of the other -- of what the other entities are delivering.

And it kind of also confirms that Robin was talking about the IPO in 2014. And at that point, of course, NN Life was very dominant, and we were often associated with kind of a run-off pattern. And so this also addresses, in our view, the question, are we a run-off company or not? Because with a stable remittance out of NN Life and growing businesses leading to a 7% to 8% CAGR in OCG, in free cash flow and also, therefore, an expected capital return, it also addresses this point that we're really a company that will continue to grow in the markets that we operate in.

Well, then finally, since the IPO, we set a lot of targets, strategic targets, financial targets, but we've always achieved them. And this was often in volatile times. I mean it seems like ages ago, but also then there was a lot of volatility. Unexpected things were happening in the Eurozone, obviously, also COVID came along. And so despite all this volatility and turmoil, we always delivered on our targets.

And you will see today also a team that is very committed to also deliver again on the 2028 targets. And no doubt, there's going to be volatility and a lot of unexpected things that will be happening in the coming years, but you will see that is -- that NN, we have built a platform that is very resilient and can deal with a lot of this volatility and unexpected events. And therefore, we're convinced that also towards 2028, we will again deliver on the target. And I'm sure you'll see the same conviction in the rest of the team that you'll be meeting here today.

Now with that claim that we always achieve our targets, it's probably good then to look at where we are briefly on our targets versus the 2025 targets that we have set. Well, first, let's look at our strategic targets. On the customer side, we're clearly well on track. We now have 7 markets that we're significantly above the competition, and we have 3 markets where we are in line. And we have no markets anymore where we're below in terms of customer satisfaction. And so clearly well on track here. And keep in mind, when you're building a platform of consistent growth, it is very important that you have good retention and new business growth, and this customer score is very important, of course, for this.

Same with people. Increasingly, we see tight labor markets, see a hunt for talent certainly in the digital space and in certain areas. And so having a high engagement and having a culture where you can tap into a larger diversity of group to be able to bring in talent is very important. And therefore, we're also very pleased to see that the engagement is very high in the company. And also on the diversity scores, we score well. And that means that we're very well positioned in a very competitive labor market, often markets that have full employment.

Then on society, positive scores as well. One of the main targets, of course, was reducing our greenhouse footprint in '25 with 25% of our corporate investment portfolio. It actually went down 31%. And we also stepped our investments -- we stepped up our investments in the energy transition to EUR 13 billion. So also on the society side, it's clearly that we're well on track to deliver on the targets that we have set for the end of 2025.

Now let's look at the translation of that of the strategic KPIs into the financials. Now we will deliver on the targets of 2025 that we said on the financial side as well. And we already achieved the EUR 1.9 billion OCG, which was initially EUR 1.8 billion. We later increased it to EUR 1.9 billion, and we achieved that target already last year.

For free cash flow, we then set also an explicit target of EUR 1.6 billion, if you recall, which was EUR 100 million higher than initially thought. EUR 50 million, we put into the dividend. The EUR 50 million, we, at that point, put into an increase of the share buyback. So this EUR 100 million we passed on to you already. And for this year, we also expect to make the EUR 1.6 billion free cash flow for the end of 2025.

Then on Solvency II. Despite all the market volatility and all the debates, and I'm sure we'll be having a debate on left and right some percentages, but the volatility that we have seen didn't mean that our solvency was hampered by it. It actually remained very strong. It was 194% at the end of last year. And that's basically driven by 2 factors: especially strong underlying business performance, we've seen that the business units continue to deliver also on their individual targets; but we've also taken a lot of effective management actions. For example, we now have EUR 30 billion of longevity risk reinsured. But we also settled, for example, the unit-linked case that also helped to reduce the risk profile of the company.

Then finally, on capital return. The strong business performance, the strong balance sheet have also translated into a very strong capital return for our shareholders. Since 2021, our dividend per share has grown 11%, and this is well above the mid- to high-single-digit guidance that we have given. And we've increased our share buyback from EUR 250 million to EUR 300 million. So overall, next to the strategic targets, also a very strong financial track record versus the targets that we have set.

Now probably more than enough of looking back, so let's look at where we are today. Now today, I'm not telling you anything new. There's a lot of things happening. There's a lot of volatility. There's trade wars. There's unfortunately real wars ongoing. We see a lot of conflicts that translate into a lot of volatility, and that is obviously written a lot about. I think what probably less -- gets less attention is there's also a lot of opportunities actually in this environment. And I already mentioned in the space of technology and AI, it's incredible how much advancements are being made. And we're really in a phase from this technology that is there to develop -- that is being developed actually into applying it also into our businesses and then scaling it across markets.

What we also see is that there is a continued need for protection products. Most markets, it was already there, but there's also a higher awareness of people that governments might not always be there for them. Their employer might not always provide coverage. So there's a lot of responsibility shift to individuals, and that also creates an opportunity for us to provide good protection for our customers. And we've also proven to be very resilient and stable in these volatile times.

So let's look at our plans, and we start again with the strategic targets. And we look at the underlying drivers of how we manage our business that then translates into the financials. Basically, also on the strategic side, we aim to beat the competition on all fronts. And that means customer experience, again, we want to beat the competition in customer experience, but also in broker satisfaction. And as you probably know, brokers have a big influence on certainly in the SME space on where business goes to.

Also, we want to beat the competition again in engagement from our own colleagues. Again, very important to have the right talent when you're in such a complex environment where you also want to enable a lot of change. And we want to reduce the footprint of our greenhouse gas, the greenhouse gas emissions of our corporate investment portfolio to 45% in 2030 and increase the investments in the energy transition to EUR 13 billion.

Now let's look at the financial targets then. So the primary goal is EUR 2.2 billion OCG in 2028, which translates into a 7% to 8% CAGR per share. And I was saying this growth mainly comes from Europe. And we'll have later on Pawel and Kuldeep speaking as examples on how they are doing this in Poland and in Romania on how they plan to achieve the growth, and that should give you also a higher conviction that we will be able to deliver on this growth in the European business; on Non-life, where we see selected pockets of growth in certain product range and distribution channels; and the recovery of our Japanese business.

And overall, these 3 entities will then be more than 50% of the operating capital generation. And so the more than 50% will then come out of entities that are growing today, but that we also expect longer term to consistently grow. Free cash flow will then reach EUR 1.8 billion or more also by 2028, which also means a 7% to 8% CAGR per share. Now these targets show strong growth, but it also shows an attractive shareholder proposition for all of you.

Now maybe it's good to zoom in on -- well, to zoom in on growth, and let's start with Europe. So we have a strong European footprint. Now all these businesses were either built in the '80s by NN or in the '90s when the wall came down. And we're mostly in those markets, the top 3 players like Greece or Romania or Hungary, we're even the #1 player. In pensions, we're also often a top 3 player. And for example, in Poland or again in Romania, we're the #1 player. Now this business has already doubled almost since 2020, and it grew to EUR 461 million in last year, in 2024.

Now the strategy for the region is actually very simple and very aligned. It focuses on protection products. And it means that we aim to have selling products that are relatively high margin and they're capital light. And there's 2 key items for growth in Europe that is driving the growth. One is that we've been -- and we've been actually been seeing this for a long time, there's a clear under-penetration in the market for protection products. So on average, in a market -- in OECD markets, you see 8% to 9% is spent on insurance premium, like a market like this is also in that space. But in markets like Poland, like in Romania and Hungary, it's actually much lower. It's often more around 2%, 3% or sometimes even below 2%. So that's one element.

What adds to that is that because of all the uncertainty in the world, we see an increased awareness, and COVID certainly played a role. So customers and people are becoming more and more aware, like what if something happens to me? What if something happens to my family? How am I protected? So that is one macroeconomic trend. But the reality is also, as I was saying, if you look 10 years ago, this under-penetration was also there. So by itself, it's clear that this will not lead to customers buying a lot more protection products. And that's why the second element of growth is so important, and this is our unique distribution capabilities.

So very few people wake up in the morning and think, hey, I'm going to buy a protection product. So you still need actually distribution channels to sit with a customer and not that these products are so complex, but usually the situation of the customer is complex. And they need to figure out what gaps do you have, what do they have already covered maybe via the government, maybe via their employer, maybe they have some protection. What gaps do they have, if anything, and how can I fill these gaps? And that's where you need strong distribution channels that are able to have access to these customers and can -- and help and advise them on the type of protection products that they need.

And you see it on the right-hand side, we have a very multi-distribution platform, as we say it. And what we mean with that is that you see per market differences, but you also see, over time, different trends, right? So we work with over 10 banks. Brokers have been growing quite rapidly, and tied agent has been the largest channel more recently. And -- but these trends differ. So pre-COVID, banks were actually a very large channel. Then COVID hit, banks essentially stopped selling mortgages, and that meant that also the amount of credit insurance that we were selling came down significantly. But you didn't really notice that in the growth numbers of Europe because tied agents were really able to step up during that period.

So the fact that you have multiple distribution channels that can diversify the risk profile is a very important feature of the European business that we have. And it actually led to a 44% increase in growth also if you look from 2020 to 2024, which is a very strong number. So it means that for Europe, we're very well positioned. So we had a target of EUR 450 million, and we're now increasing the target to EUR 600 million, which obviously makes Europe a very significant part of our company.

Now let's look at the next growth engine, which is Non-life. And when we were thinking about the Capital Markets Day, you can also go back in time and quite a few actually, and we're also here. So in 2017, we had a Capital Markets Day, and I was talking about the Non-life business. And I said, we're going to aim for a combined ratio of 95% to 97%, and people overall were kind of looking at me. And then next day, same day, you guys were all writing reports on that's not going to happen.

And so, I mean, this market has gone under a tremendous transition. I mean, even more than 10 years ago, even the DNB was writing, premiums need to go up. This is a badly priced market. Since then, a lot happened. I mean, obviously, pricing discipline has tremendously increased, and consolidation was a big driver of that. We took over, obviously, VIVAT. We took over Delta Lloyd. And that led to a situation where 3 players have, let's say, roughly 2/3 of the market.

And that's why we've been now able to consistently produce good results. And we've always focused on saying we need to get to margin over volume, meaning 91% to 93% as the target that we maintain. But we do see in that market also selected pockets of growth. If you look at our positioning, we're overweight in fire, meaning underweight in motor. And in the disability space, we're overweight in sickness, which is the shorter-duration disability products. And those are actually also the products where we see more growth opportunities. So both in fire and in sickness, we see growth opportunities to further grow.

If you look at the Non-life distribution profile, I would say that's really unique. I mean, if you think about it, the Netherlands is traditionally very much a broker market. So NN Non-life is the #1 in broker business, but also the #1 in customer satisfaction of brokers. And trust me, that is a big driver of your commercial success. NN Non-life, also the #1 in mandated agents or mandated broker agents, and also they're the #1 in customer satisfaction.

And then out of the 5 largest banks that we have here in the Netherlands, 4 are exclusively tied also to us. So if you go to an ABN AMRO branch or you go to an ING branch or you go to an SNS branch and you get an SNS or an ABN AMRO product, it's actually an NN underwritten and administered product from us. And then finally, with OHRA, we have a strong direct brand. So the distribution profile of Non-life is very strong.

In terms of channels, we expect mostly from the bank and direct to expect a bit more growth, while we expect the broker just to continue to develop well as they have been doing, but there's some upside on the direct side and on the -- with our banking partners. And this is combined with strong expense discipline. As I was saying earlier and Robin was saying, the Non-life is really at the forefront of some of the developments in AI. And later on, Tjerrie and I will give some examples of how we actually already have quite of these examples now live, but also it shows how much potential there is also after that. So in conclusion, Non-life has been doing well. We had a target of EUR 325 million initially for up to 2025, and we're increasing this now to EUR 475 million for the Non-life business in 2028.

Then Japan, our third growth engine. Now if you take a step back from Japan, and Marius is also here, so he will be -- you can have a good conversation with him as well this afternoon. But if you take a step back, the overall outlook for Japan is positive. We see some increased interest rates. We see the economic outlook is positive. Inflation is a bit better under control. And this is especially also important for the SME market. The SMEs is by far the largest part of the economy, but it's also a bit more cyclical on average, therefore.

Now we've built -- since 1986, we've been in this market, and we've built a really strong franchise, focuses on the SME market in the what we call the corporate life market. Now Japan, of course, is the third-largest insurance market in the world. So you can imagine that also, therefore, the corporate life market is a very, very large market by itself that we operate in. Now we used to have a top 3 position there. And then, of course, the business improvement order came, and that meant that our sales was roughly cut in half. So we're now in a lower position.

Now since then, we made a lot of progress. A lot of change was implemented and a lot of reporting, and we're now in the final stages of the business improvement plan. So we have filed all the documentation to the regulator, and we're now essentially waiting for the regulator to come back with their verdict. But we do believe that we're in the last -- or in the final stages of this business improvement plan that we have been working on for the past last few years.

It also means that in this plan, we assume that sales will go back up. And what is interesting, I think, there is that traditionally, the Japanese market was selling protection products and protection products that had a what we call a short-term cash value, and the short term meaning probably around 5 years. Now that 5-year product increasingly became under pressure from the regulator, the business improvement order that we received. We were not the only one. There's a couple more that were under this business improvement order.

Now I spoke to most of you earlier on this, we're always saying we do believe that a long-term corporate life market will emerge, and that's actually happening. So if you look at the first quarter, the long-term COLI market actually grew with 17%, while the short-term COLI market actually came down with 8%. And it proves for us that really the long-term market is now developing. So we will continue to have protection products. We will, for sure, have the long-term corporate life products, and there's probably some version of short-term products that will remain.

We were also very pleased that we did get an approval of the first long-term COLI product already in April, and we started already selling. And the first results are very encouraging. We've seen already the sales coming in, in April, also sales that we've been seeing coming in, in May. So it confirmed for us, it is very realistic that we will start growing back this business. It will take time. But ultimately, we do expect by 2028 that we will be back at the VNB levels that we had in 2022, probably in a bit in a different composition with more long-term products and more protection products. But we do expect to reclaim our leading position of top 3 player in Japan. And this also translates into a higher OCG. So the target will go from EUR 125 million, where it is today, to EUR 160 million in the end of 2028.

Now as I was saying earlier, when we achieve all of this, it also means that these 3 entities will be more than 50% of OCG, and you can see that here on the pie chart. So orange is NN Life. It used to be more than 50%, and now these growth entities will be more than 50%. And you see a similar trend in free cash flow, where NN Life was 75% and will be now by itself below 50%. And again, for NN Life, we actually project stable cash flows. In fact, we even talk about 2040 and that we can keep the remittances flat up to 2040, but that's later on for Annemiek to cover.

Now apart from the shift in segment, we also think there's another shift that is important and that we like. So over time, when you see this shift, it also means we become a bit less dependent on spread or on market risk, and actually the amount of fee business and technical margin is increasing. And non-life, obviously, fee business and especially technical underwriting, but Europe with protection is technical margin, but also the growth of the pension book is actually fee business. So the shift is not just between segments, so you see more growth, but we think also a healthy shift between a reduction of spread versus an increase of technical underwriting and fee business.

Now clearly, when we achieve all of this, we have capital to allocate. So -- and we will remain very disciplined in our capital allocation. Obviously, our first priority is to make sure our units are well capitalized and they can have the capital to grow. There's strict criteria on the returns that they need to make. But for the rest, we will give them all the capital that they need to actually grow against these attractive returns.

Now clearly, you still have then capital for dividends and share buyback, and I spoke about the growth in dividend per share that we're projecting also on the back of the growth in OCG and free cash flow. And then we'll still have excess capital where we remain saying, we will also give that back to shareholders unless we see value-creating opportunities. And it's important to keep in mind that when we talk about giving excess capital back to shareholders, that we aim to do this in a recurring -- in incremental steps and in a recurring way. And we do this once the Solvency II ratio is sustainably above 200%, which is today with the 195%, obviously, not the case yet.

Now then finally, since the IPO, if you look at the capital return promises that we've done, we have fulfilled always our capital return promises. We've given EUR 10 billion back to shareholders. And I was saying earlier, we project a 7% to 8% growth of capital return per share towards 2028. And keep in mind that this already comes from a very attractive free cash flow yield of around 11.1% in this period.

So that brings me to the key takeaways of this first part of the presentation. So we've set very clear strategic and financial targets for the group. Our strategic transformation is accelerating. Information technology, artificial intelligence play a big role in further supporting, let's say, the growth that we see macroeconomically in the business, and we will come back on that in the next presentation. And we aim to achieve EUR 2.2 billion OCG or a 7% to 8% average growth per share.

Free cash flow, EUR 1.8 billion or above, also aiming at a 7% or 8% CAGR growth, fueled by higher remittances from Non-life, from Japan and from Europe, of course. And all of this is then also a testimony of our commitment to provide stable, attractive capital returns for our shareholders. And that means for our shareholders, we expect also 7% to 8% DPS annual growth. And again, this comes from an attractive yield already of 8.4% versus a recent market cap.

So this concludes the overall part of my presentation. I'm sure you'll have lots of questions if I see the amount of notes that you guys are making, but you need to hold off for that for a while because we still have a couple more presentations before we go into Q&A.

So let's talk about the Future Ready and the digital transformation that we're currently going through. And we thought it was good to do a deep dive on that to give you more background on actually how we're achieving the things that we're planning on doing and why we're, therefore, also convinced that this will help to get us to the targets that we have set for 2028.

I will do this presentation together with Tjerrie Smit, our Chief Analytics Officer, and he has been instrumental with us and has been bothering me since 2015 that I should pay more attention to this. And he was fully right, and it took me some time to learn that. But you will see that Tjerrie has been instrumental in this journey of 10 years of how we have been building our capabilities.

Now let's start with something that you already know, which is agentic AI, GenAI is clearly the latest trend. I mean it's the hype, everybody is talking about it, and it became very mainstream, of course. Now if you look at our industry, the insurance industry, it is very, very suitable for applications of AI. And the reason is it's complex. And mostly because of the complexity, the industry hasn't been very successful to address the expense challenges that we see in the industry.

And second, in our business model, there's lots of risk selection ongoing, there's lots of claim handling ongoing, and both are also very suitable for AI applications. And finally, we have a lot of customer contact. And already, we see in the space of contact and bots and avatars, and there's a lot of upside in further digitalizing our customer contact. So clearly, the insurance industry is very suitable for all the technological advancements that are being made.

But you haven't heard me speak much about these things. So when we had blockchain coming out and the Internet of Things and Lean Six Sigma, there's obviously been a lot of trends already ongoing for a long time, but we haven't spoken much about it. And the reason was always that we -- whenever these elements came out, often it felt like there was some basic intelligence we're missing. We were programming things where we were digitalizing certain processes, and then something would change and the system would just continue to do what it was programmed to do and it wouldn't be able to adapt. And then any colleague of ours would look at the digitalization and say, wait a minute, this is not right anymore, right? Anybody would see that. And the issue was that the system itself could never do that.

And I think with the arrival of AI, it created a basic intelligence function, and it could adapt things and adjust things that wasn't possible quite a while ago. And that has been a big change for us when we saw that, and then Tjerrie has been explaining that to us. And that means also that since then, we've been really been investing. And now I'm talking about since 2015 because since 2015, AI was starting to become more commercially applicable.

So when -- in 2022, when Satya Nadella and Sam Altman came out with ChatGPT, it was therefore also not for us a coincidence that we were 1 of the 16 brands, 1 of the 16 companies that they mentioned and they put on the screen because we had already then for years been actively engaging with OpenAI on large language models, including eventually what led to the launch of ChatGPT.

And we've made a lot of mistakes along the way. I mean it's not an easy journey, made a lot of mistakes. We had a lot of things to fix and redo. But I'm very proud that not only then at '22, but still today, we're very much at the forefront of this. And the reason why I think we're at the forefront is we're not just investing, we're not just having a center of excellence that everybody has, we're not just having proof of concepts, but we actually have use cases that are live and that we're scaling.

It started all with automatic call logging that was developed and then was copied into Spain, into Japan. And so -- and by now, we have multiple cases that are actually live and that we're scaling. So instead of just investing and building proof of concept, we're actually in a phase that we're already scaling AI and even agenetic AI in our company.

Now AI doesn't mean much if you don't put it into a business context. And I think one of the challenges you often have is none of us really grew up in this world. So it unfortunately started with educating ourselves. So we went through an extensive training ourselves, including myself, with the Board, with senior management, with the country managers. And we went through a whole program of over a year at MIT. So this wasn't your, let's do a week at MIT and everybody gets a diploma and then you put it on LinkedIn. This was real suffering. So we had online. We had obviously the business cases, all the technological developments. So we started with educating ourselves, which already we did a few years ago, and we've been continuing to do that. Even recently, we went with a group of 30 people to Seattle to see the latest developments now in agenetic AI.

So one is the education. But we ended up putting it into a business context, which is what we call the NN Future Ready program. Now of course, any consultant or business school you deal with, you always get 4 quadrants, I don't know. So here you go, we have 4 quadrants. But the reality is that most insurance companies, and we were no exception, the back end is very much what we call silos and spaghettis. And that means you have lots of applications. I mean we talk about we're transferring from 2 applications to 1, but there's a whole world of applications around these core systems.

So we've been running a program for years now on IT simplification and further standardizing or, as we call it, moving here to the right, meaning we're transforming and making the company more industrialized, simplifying the landscape, having very clear data governance, which is crucial to do anything in this space, ultimately with the goal that you end up in what we call a future-ready state, which is obviously at the right top, where you not only have a more standardized data readily available, but you also see, therefore, much higher customer scores and probably even more important, what you don't see here on the slide, much higher employee engagement scores.

It's just an easier, more fun company to work in if data is readily available, systems are standardized and you can, when you have ideas, you can immediately apply it yourself. And that's the journey that we have been on. And it's not just around the business case, but it's also around that you build a company that is much better prepared for whatever the world is going to throw at us because we all know that the world is fairly unpredictable. So in order to get your house much better in order, prepares you also much better for an unpredictable future.

Now I'm not going to bore you with all the details of the program; trust me, we do. We have steercos and we steer on all of these. But I know most of you also love numbers, so let me give you some numbers on this program that we're doing. So we started this program officially in 2024, and we invest EUR 450 million over the period between '24 and '27. And we expect a benefit of EUR 200 million recurring out of this. So that's a remarkable short payback period of around 2 years.

Now these numbers obviously are incorporated into our targets. So when we -- when I was earlier talking about our 2025 targets or the other CAGR targets that I spoke about, obviously, these are incorporated in the targets that we have given. In fact, if you look at capital, the majority of these investments have already been taken in 2024. So that means that only in -- for '25 and for '26, we expect at the holding level a EUR 50 million impact on free cash flow for '25 and for '26, but it doesn't jeopardize our EUR 1.6 billion free cash flow target that we set for '25.

Now if you look at the benefits, as I said, there's EUR 200 million benefits: EUR 180 million is expenses and around EUR 20 million is growth. And this is actually part of the journey you go through. When you start with AI, you think of all these cool cross-sell things and all these cool and next-best actions. But the reality is in a complex industry like us, there's a lot to gain from just simplifying and reducing your cost and becoming more competitive. I do expect over time, if you go long term, that, that mix will shift a bit. But for now, the vast majority is expense savings and then there's EUR 20 million of growth in there.

Now this might all sound a bit high level, so let me give you 2 examples of what we're actually have live and what we're scaling across markets. The first one is our digital lead program in Europe. And as is often the case, this is a collection of smaller AI use cases. And this one is particularly geared to tied agents. And tied agent channels always have a couple of challenges, which is usually the retention of agents. So how do you train them, but how do you also keep them onboard? After they've sold to their friends and family, how do you keep them in a -- how do you keep them that they make enough money to consistently keep selling, especially in the protection space because protection typically are relatively cheap, small ticket size products? So you can also imagine that, therefore, the commission is lower, and it means you need to sell a lot more than if you're selling big endowments or big unit-linked savings type of products.

So what do we do? One, and Poland is actually a very good example, we generate a lot of online content on protection. That means that if customers are online, there's a good chance that they'll end up in an environment because we generate a lot of content around protection products, and that means there's a good chance that they will end up in our environment after that.

One of the other things we do then, based on everything that we know from customers, we link the profile to the right profile of the agent. To be honest, when I heard it, I thought a bit, is that a big deal? But the people that have been explaining to me said, well, this agent is going to be serving you for the coming years, and it matters. Finally, I understood it when they said, so we would never give you an agent that is not also able to talk about football. And then I thought, okay, now I understand. So it's really important that you get a good connection between the customer and, let's say, the agent.

Now next, we are in Europe, which means there's an enormous amount of regulation. I mean you wouldn't believe the amount of documents that an agent or anybody has to sell -- when you're selling a product has to show to the customer, talk them through, explain, get them to sign. So what we have actually built is our internal ChatGPT environment. And that means that in a way, this agent has now the smartest, nerdiest colleague always with him that can help him with any of these documentation. Any questions, any things that he had, he can type it in and ChatGPT, the NN version of it, will provide him with the right answers and also make sure that everything is done in a compliant and in the right way. And it creates an enormous amount of efficiency because, to be honest, the average tied agent, not so interested in compliancy and in documentation, is often much more interested in engaging with people. So it's a tremendous help.

After the conversation between the agent and the customer, another version of ChatGPT actually analyzes the conversation. And it will tell the agent, this is where you deviated from the script. This is the opportunities that you might have missed. This is potentially the next best action for this customer. And it will provide statistics on it. And Tjerrie will later on show a bit more detail on it. But again, this is very, very valuable. When you're dealing with thousands of agents, you need to continue to train them. They need to -- the efficiency needs to go up. And a version like this that is very personalized will then do a tremendous job in actually helping to train and improve this agent.

And then finally, based on all the activities, another AI bot will tell them, this is the amount of commission that you're going to be getting in the next few years. And you actually versus others spend a lot of time on retention maybe or you spend a lot of time on sales. So this is how you can optimize even to get further increase your income. And again, this is very important because a lot of agents leave at some point because they think, I'm not going to make enough money on this and I'm going to do something else.

So there's a lot of these AI use cases just to support a tied agent channel. Now let me share some results. We've already seen that the number of active agents since we've been doing this in the last few years has grown with 26%. So we have 1,400 more active agents now. And active agent means that they sell 2 products per week or more. So you often see statistics on tied agent channels, but actually active agent is usually more important than the number of tied agents that you have.

Another data point, which I think is very impressive, is we now see that within Europe with the tied agents, 36% of their sales actually comes out of this digital lead program. And what is very interesting about this 36% is that markets like Romania and Poland, where this started, they're actually above 50%, while Greece is around 20%. Now Greece, obviously, was very busy integrating MetLife, and so they've been focusing on other things. But it shows the potential when you're scaling this across markets that there's still a lot of room for units, not only for Poland and Romania, to further increase, but also the other ones to catch up and based on the learnings that they have. So that's one example.

Now let me cover another short example in the Non-life space, and this is around claim handling. Now unfortunately, I personally had to test this one or actually my daughter. She borrowed my car, and it looked a bit different after I got back. It wasn't serious. But -- so what's very cool is that you make a picture, you send it in. And very quickly in that process, you immediately get a response saying, this is how much it will cost. This is where you can repair it. And if you repair it there, you won't have a deductible. And this is the impact on your premium. And you can immediately, as a customer, make a trade-off between, am I going to pay this myself or am I going to have NN pay this? And then, of course, it will come out of, hey, your premium will increase. And as a customer, you can immediately make that trade-off.

What I thought was even cooler is that if you have -- and this is now for windows, if you break a window of your car, again, you make a picture. And we now have -- and this is actually the first version of agentic AI that we have live, meaning that an AI agent starts working on this. So one AI agent starts analyzing the picture. So you basically go from unstructured data to structured data, it will analyze, yes, this window is broken. Another AI can actually make an assessment on, what is the claim amount? Is this a reasonable amount? Is it too high or too low to fix this? There's another AI agent that will actually check the policy conditions, will check, is this covered or not? Check the license plate, is there something else suspicious?

Now if all of that happens in parallel, and it means effectively that we've now had many cases where within 5 minutes, the claim is paid out. And so in fact, one of the brokers actually called and said, you guys made a mistake because I just filed the claim and the money is in the account. And so that means that if there's no red flags, it means immediately the money is paid out. So within a few minutes actually, the payment was in the account of the customer.

Now you can imagine this is now for a window shield. You can imagine that you can do this for other type of damages on the car. You can do this for windows of buildings, very large fire insurance for homes. So you can imagine that we're only at the beginning of this, and you can continue to scale this across many other type of damages because, in a way, the process is often very simple. Now these are just 2 examples that we believe will help transform our business and will support also the targets that we have given.

Now there's a whole world, obviously, under that, that is a lot more complex than I make it to be. So therefore, I think it's very good that Tjerrie will also take you along on the journey. Tjerrie?

Thank you, David, and good morning, everyone. I started doing full-time AI back in 2015. And back then, it felt like often, I was the only one pushing for what we today call AI, completely different than it is today. Today, I'm on stage mostly 2, 3 times a week presenting on AI. And last week, I was in a professional studio where I recorded a digital copy out of myself, an avatar that I can use in the future to present on behalf of me.

And a few years ago, I could not have imagined that I would be doing something like this, let alone that the quality of the AI technology that we are using today here at NN would be this good. And this is because the developments in AI technology, they are really at a record pace. David already said it's almost impossible to keep up with it. But this is actually good for companies like us, companies that are early adapters and operating at the forefront of this new AI technology.

And today, I will show you how we execute AI at scale here at an NN. And for our employees, we quickly opened up all kinds of GenAI tools to make sure that they can work in the most efficient way, but also so that they can experiment safely with our GenAI tools. And for instance, we opened up our NN ChatGPT Playground in less than 3 months after the release of ChatGPT. And we have now more than 9,000 employees working in this environment today. And for efficient coding, we have more than 1,300 engineers working with our GitHub Copilot environment so that they can be more efficient in writing code.

And we are making significant progress in implementing GenAI technology. We are implementing AI not only in pilots and POCs, but we are implementing it at the core of our business processes. And we can see clear proof points for a fundamental business transformation with the help of AI. Our focus is to scale on -- our focus is to -- is on scalable and successive AI use cases. We have AI use cases that contribute both to process efficiency as well as use cases that contribute to our top line commercial growth.

And before I dive into the use case applications, I want to share with you our AI setup. We have adopted a hybrid setup, where we have a center of excellence here in the Netherlands and Czech Republic, complemented by many, many local data scientists embedded as close as possible to the business. And this is really important because a long time ago, we learned that having data scientists in the business is crucial for a successful implementation.

Designing AI use cases together with the business is the most effective strategy for us. And what we want to do is we want to develop standards centrally, develop reusable components that then the local data science teams can apply in their business. And this approach not only helps us to scale AI, but it also makes sure that whatever we put out there is safe and reliable.

Like I said, AI is developing at a record pace, and it's getting better really fast. I think, David, you also touched on that point. Everyone can build a pilot or a proof of concept. Executing AI in production 24/7 is really a different game. Doing this at scale, I think, is even harder. And this is because this requires different skills, but it also requires experience. And this is where our early investment in AI really pays off. We made a lot of mistakes in the beginning, but we also learned how to play this game. I think everyone needs to go through the same learning curve.

Like I said, our focus is on scalable and successive use cases. And at-scale use cases are kind of like real road tracks. It requires time and craftsmanship to build it. But once you have the track there, you can run many trains on it. And our focus is, therefore, to copy and paste the really good use cases throughout the companies of NN Group and to benefit from our economies of scale.

Now let's dive into some exciting use cases. And I selected these use cases because they are scalable throughout NN Group and they act at the core of our insurance processes. First, I will share with you how the personal expert assistants are improving our customer experience and also improve our efficiency. Secondly, I will show you how commercial AI assistants are helping our sales agents to become better at converting leads. And third, we will see how we enable our customers and partners to interact with us at any time with AI-powered chat that actually works.

Well, let's have a look at the first one. This is about the personal expert assistant. This is a RAG technology solution and, of course, everyone knows this stands for retrieval-augmented generation. And this means that we are grounding our own knowledge documents to a large language model. Basically, this means that our employees can talk to ChatGPT, but for the answers, we only use our own context and knowledge.

And the results are really, really good. Applying the AI expert assistant in one of our bancassurance channels here in the Netherlands resulted in an almost instant uplift of the contact center performance. And this means a 25-second less call duration, 8% less hold time and even a 30% fewer transfers to senior employees. And if you are familiar with contact center statistics, I'm sure you will appreciate these numbers. They are huge.

Let's see how this looks in practice. On the screen here, you can see that I asked the expert assistant if a damage caused by flying a drone is covered under the liability insurance. And it will clearly state to me that the damage is covered in case the drone is less than 25 kilos in weight, if it's flown in the EU and no other liability policy will cover it. And in the bottom, you can see the links, deep linking to the original knowledge documents that were used to create this answer. This is because maybe I want to check or in case I need more information.

And you could ask, why does this matter? Well, the insurance industry is a very knowledge-intense industry. Policies, legislation, procedures, they change all the time. And we have literally thousands and thousands of knowledge workers where we can apply this. And with the personal expert assistant, we put the right expertise at the fingertips of not only the novice employees, but also our experts. I want you to think of the most brightest, knowledgeable person in a department. This is like having that person helping you all day.

And we do this at scale. We have this operational now in 35 implementations in production, not only for our employees, but also for our tied agent network. In NN International, here, we use the same technology. And by the end of the year, we expect to have more than 100 of these personal expert assistants to be live in production. Having such an expert helps us to increase the customer experience, but it also improves consistency and quality. Next to that, it's more efficient. I think this is a perfect example on how we apply AI use cases at scale throughout the companies of NN Group.

And the next example I want to show you is about the AI commercial assistant. Like I said, we have use cases that contribute to personal -- to process efficiency, but also use cases that contribute to our top line commercial growth. And this example is in that last category. It's from NN Romania, and it's all about sales lead conversions. Here, we use speech-to-text technology together with LLMs, that is large language models, so that with that, we can help our agents to become better at converting their leads.

Let's see how it works. As an agent, I can see clearly an overview of all the calls that I did together with the overall performance and statistics. Here, you can see, for instance, the speak time of myself versus the speak time of the customer. But more importantly, I also get an insight on how well I followed the call structure. And you can see that in cases where I followed the call structure, I have a 4.3% better conversion rate than in cases where I didn't follow the call structure.

And this may look very simple on the screen, but let me assure you, there's a lot of AI technology driving this in the back. And by the way, it also proves that following our call structure actually works, fact-based. Imagine if we could enable all of our 9,000 agents with this technology, and this is exactly what we are doing, we are rolling out to other countries in NN Group. And on the technical side, we are also adding more features like next best actions and real-time agent assist.

And the next topic that I want to talk to you about is AI agents because you can't have a presentation these days on AI without speaking about AI agents, right? And this is because AI agents are really powering our AI transformation. AI agents or agentic are the biggest thing after the introduction of ChatGPT. And for companies like us, AI agents are more impactful than ChatGPT itself.

And let me explain in the shortest, most easiest way possible what are AI agents. AI agents can perform tasks and act on your behalf, basically AI that can actually do stuff. AI agents or agentic are a good fit in situations where you have complex decision-making, where you have difficult-to-maintain business rules or in situations where you rely heavy on unstructured data. And this is why agents are such a big deal for us because in most core insurance processes such as claims underwriting, but also mortgages, we rely heavy on unstructured data.

It requires multiple documents like photos, e-mails, scans and other inputs that we need to interpret it to come to a -- and validate to come to a decision for a customer. And frequently, those documents are incomplete or not delivered in the right way. And the problem is still customers expect a fast and frictionless experience from any digital company nowadays. And we think this can all be enabled by a combination of human experts and AI agents. And a good example was already shared by David on our windscreen fully automatic claim handling, where we are able to validate and come to an automated interpretation and payout for most of the claims. And this afternoon, in the workshop of Non-life, you will see a demo of that use case.

Now next, let's move over to agentic chatbots, the next generation of chatbots. And this is another example where we apply AI agents in the core of our processes. And let me also be really clear about chatbots, they do not have a good reputation. People do not like traditional chatbots. And often the most frequently asked question is, can I speak to a human, right? You all know it. And this is really because traditional chatbots can only answer 10, maybe 20 most frequently asked questions, but they are terrible at answering long-tail questions. And this is where agentic or AI chatbots are really different.

A good agentic chatbot requires 3 things: a good knowledge base to ground the data, a good retrieval engine to interact with the customer and good quality questions. And here is where the difficulty starts because the first 2, of course, we control, but a good quality question is asked by a customer. And we, as humans, are not used to be very complete and provide a lot of context for questions.

So let's look how we fix this with our new chatbot, Sanne. And here, you can see on the screen that I'm using the chatbot to ask a question about my pension. But the first question I asked is very short and very vague. I do not provide a lot of information, combine pensions. As you can see, our chatbot will then start the conversation with me to get more information about the topic that I'm asking a question about. I respond, but still my response is very short and not too clear.

After that goes on for a few rounds, I provide the information that I have already a pension plan with NN. Then Sanne asks me, do you want to combine it? And as you can see, the conversation that Sanne starts started in a very natural way with me. And only in a few steps, Sanne collects all the additional context that is needed to answer this question really well. And the great thing is that none of the questions or the answers were preprogrammed in our chatbot. All of this is done by the help of AI agents.

This is now live in NN pensions here in the Netherlands, and we will roll out to other units in 2025. And this is important for us because this new agentic chatbot is 60% better at answering long-tail questions, and that's a big deal. And we are confident that we can scale this to other parts of NN, basically to all of the contact centers that we operate. And since the start of our Future Ready strategy, we can already see an 11% shift towards digital channels like chat, for instance.

And one more thing. What if we could apply even more functionality to such an agentic chatbot? What if we could add even more AI agents that can actually do stuff for our customers, perform actions on behalf of them, not only answering questions? Or what if we could add voice for that matter? What if we could talk to Sanne? And that's exactly what we are working on. And today, I'm able to give you a live demonstration of a look into the future of our voice bots.

Are you there?

Yes, I'm here. How can I assist you today?

Well, I'm here together with David, and he told me that we are going to take a trip. And I would like to know, can you help me with a quotation for travel insurance, please?

Of course, I'd be happy to help with the travel insurance quotation. Could you please provide me with a few details to get started? What is the desired start date for the travel insurance...

I'm sorry to interrupt, but there's a lot of people waiting here for me and I'm kind of in a hurry, and I already know what you're going to ask. So we are leaving June 1, coming back June 7, traveling with 2, and we're going to Spain.

Thank you for the information. Based on your details, here's a quick quote for your travel insurance. Start date, June 1; end date...

I'm sorry, but David is just signaling me, he wants to stay longer, the weekend also. Can you add 2 more days for me?

Certainly. Extending your trip by 2 days would change your return date to June 9. So the new dates are: start date, June 1; end date, June 9. For the additional 2 days, the cost will be EUR 15 per person, totaling an extra EUR 30 for both of you. So the updated total will be EUR 60. Would you like to proceed with this updated insurance?

EUR 60. I think I have to consult with David because this is definitely above my pay grade, right?

I understand. It's always good to discuss these details. Feel free to take your time, and let me know if you have any more questions or if you're ready to proceed. I'm here to help.

Thank you. Well, you can see how it works. And I'm really excited about this because I think this is really the future of how chatbots will work. You could see that -- or I should say you could hear that I interrupted this chatbot on multiple occasions, but it didn't break and it felt quite natural. It was almost like talking to a human.

And we believe in the future where the customer can choose whether he or she wants to use a human channel or one of our digital channels. For instance, imagine that you just came out of a night shift, then you probably want to use one of our digital channels. But for more high-impact situations, you probably want to talk to a human. As a customer, we think you should make that decision and choose for yourself.

I showed you 4 examples on how we are applying AI at scale here at NN in the core of our insurance processes. Today, I showed you how we translate the fast-moving developments in AI into our Future Ready strategy. I hope I was able to show you some concrete examples on what Future Ready is for us.

And with that, I would like to give the floor to David.

Yes. Thanks, Tjerrie. Fun that we're going to Spain actually. Yes, yes. So let me be clear, the technology is there. So in our view, this is really a management problem, right? The technology will continue to evolve, more and more will be possible, but the real challenge is a management problem on how do you roll this out in larger organizations.

And that's why we've set very clear KPIs. I mentioned already ahead, the EUR 200 million benefit that we're aiming to get, but we have also underlying KPIs that we set here, for example, that we want 300 AI cases live in 2028. And currently, we're still below -- clearly below 200. Our digital interactions, and Tjerrie was just showing, today, we're roughly at 60%. We want to go to 80%. And often the last part is the hardest part because the more complex parts today are not done in a digital way. And as you can see, there's a lot of opportunity to do this. And I'm personally convinced that, over time, more and more people will actually prefer the digital solution, but we'll see how customers deal with that. But we want to go to 80%.

And then last as an example of an important KPI is the digital lead program that I spoke about earlier from the tied agents in Europe, today at 36%, and we want to get on average to 50%. So in the example of Greece and all the other entities, we think there is a good step-up to be made in terms of further professionalizing our tied agents, which will then tremendously support the growth profile. And obviously, the growth of Europe in OCG is very much driven by new business contribution coming out of these type of programs.

So obviously, as I was saying, this is a management problem, and we spend a lot of time on this to support -- have the technologies to support our overall targets. And that means that we also continue to train. So currently, we're training another 1,500 managers within NN. After training senior management, we're now in the process of training another 1,500 managers. And we've committed to train to the last employee within NN in this digital area because the only way we can get this to work is that we don't have a center of expertise coming up with things, but there's a lot of push coming out of the units with new ideas, new concepts that we can continue then to decide, implement and scale. And that's why the education part is really, really important.

Now in conclusion, so we've spoken about the underlying growth of our business, obviously, in Europe, through the protection gap that we see and our unique distribution capabilities, the growth of Non-life that we expect to come and the recovery of obviously Japan. Now by itself, all of these trends will not bring the 7% to 8% CAGR that we have been talking about because we also need to offset slowly a runoff of the Life company, which fortunately is now only at 2%. But the combination still requires more. And that's why with these Future Ready programs, we're convinced that we will get to the 7% to 8% as a group, not only for now, but we also believe that there will be benefits after 2028.

Now if you look at the last period, in general, we've seen that most stakeholders, and not just shareholders, but stakeholders have been satisfied with the overall progress of NN. And what that means is that when that is happening, that's exactly also the time you need to transform your business. So when things are maybe a bit more calm outside, this is exactly the time to do a big internal transformation that prepares you not only for everything that is coming, but certainly also will help you prepare for everything that we don't know that is coming. And that is exactly what we have been doing in the past few years, and this should give you an insight into some of the things we have been doing underlying to make sure that you see that we will deliver on these targets that we have set.

And with that, I think you guys earned a coffee break. So we'll see you back in 15 minutes.

[Break]

Welcome back all after the coffee break. I really hope you enjoyed Tjerrie's presentation about Future Ready. I'm actually pretty proud of what we're doing here, and it also gives a lot of energy to the company.

I'm so proud that I even asked Tjerrie, who we internally refer to as TjerrieGPT, I'm sorry for that Tjerrie, to build an agentic AI chatbot or, even better, an avatar of David and myself to take you through the Q&A later on. I thought it was a very good idea. And Tjerrie said, that was by all means possible. But then Robin spoiled the party because he said the market would not yet be ready for that, and you would really still like to have a personal touch. So here I am presenting to you the financial component of our new strategy and our targets. And David and I will do a live Q&A afterwards or after we've also had the CEOs of our Polish and Romanian business present.

Now let me get straight into the new messages that we are bringing today. We target an OCG of EUR 2.2 billion and a free cash flow of over EUR 1.8 billion for '28. This would represent a CAGR of 7% to 8% for both OCG and free cash flow based on the full year '25 target share price of May 19 and the buyback of EUR 300 million per annum. Growth for both OCG and free cash flow is primarily driven by Insurance Europe, Netherlands Non-life and Japan. And with a higher share of wallet coming from grower businesses, we will ultimately improve the growth profile of NN Group over time.

Moving to 2 positive messages on Life & Pensions. Our remittances are sustainable until 2040 without the need for re-risking or without the need for further buyout. We also don't see a so-called cliff edge anywhere in the runoff pattern. We don't see that before 2040. We also don't see that for the period after 2040.

Now lastly, on solvency, interesting topic especially in these very turbulent markets, we've actually been able to weather these turbulent markets very, very good lately. A few things come to mind here. We have an underexposure to the U.S. We've seen the trough in negative real estate revaluations. We have a very safe mortgage book with an average LTV of roughly 50%. And we've also have a skew towards sovereigns and towards investment-grade debt. So we do have a high ability to avoid defaults.

We demonstrated that resilience by a pro forma solvency ratio for April, which came in at 195%. Now this is at the top end of our comfort range, but still below the sustainably above 200%. However, if our net capital build of 8% would come through, we would expect to get there in due course. And if we get there, we would favor small incremental steps on our capital return promise because this would both enable us to grow the capital return promise whilst, at the same time, also further improve the solvency ratio. We have ample of net cash buildup per annum to make sure we have a very strong cash position and keep ample financial flexibility.

Now before we go to the future, let's have a short look back. We have shown continued OCG growth over the recent years, supported by strong underlying business performance. From '21 to '24, we achieved a 7% CAGR on OCG, where we have a target of EUR 1.9 billion for '25. We achieved a similar CAGR for free cash flow, where we have a target of EUR 1.6 billion for '25.

Strong business performance in Netherlands Non-life and also in our international businesses have really been instrumental in driving this OCG and free cash flow growth and, therefore, also instrumental in driving a consistent increase in dividend per share, which reached a CAGR of 11%. That was obviously also helped by the consistent buyback of currently EUR 300 million that we have in place.

We're committed to expand this track record of strong capital return to our shareholders. Now the basis for doing that is obviously continued solid growth in OCG. Having a diversified and sustainable business that also includes growing businesses to offset the slow and gradual decline of the Life & Pension business is key to that, and that's exactly what we've been laying the ground for over the last couple of years.

You can also see that in the chart. On the left-hand side, you see that from 2020, where OCG was EUR 900 million, we expect to grow to EUR 2.2 billion in '28. We also expect that OCG to become far more diversified with over 55% coming from the international business, from Non-life and also from the bank.

Now we've tried to illustrate the benefits of improving -- of an improving business mix also for the long-term indication of our OCG trajectory. This all assumes current markets, obviously. If you look at that trajectory, you see a slow but gradual decline of Life & Pensions. And again, I don't see any cliff edge here. I also don't see that after 2040. You can also see that, that decline of Life & Pension can easily be absorbed by growth of the other business units, most notably international, biggest part coming from Europe, but also Japan and Netherlands Non-life. With this continuously improving business mix, as said, we will gear the company towards a higher growth profile in the future.

From a per-share perspective, this OCG growth is further amplified by the continued buyback that we're doing, which on the current promise of EUR 300 million would, as I said, lead to a 7% to 8% OCG per share CAGR versus the '25 target. Now we obviously also like to see that OCG convert into cash and to convert into free cash flow growth, and we actually do.

Our free cash flow target of over EUR 1.8 billion represents a 5% CAGR on an absolute basis and also the 7% to 8% CAGR on a per-share basis versus the '25 target. Similar to OCG growth, also free cash flow growth is primarily driven by the international business and by Non-Life, and that also means that we have a very natural diversification geographically for this cash. As such, free cash flow will become less dependent on Life & Pension. And you can see that in the pie charts, it was over 75% in 2020, and it will be below 50% in '28.

Let's move to our business units where I'll first focus on the biggest contributors for this OCG growth. So I'm going to start with our European business, which we expect to grow to EUR 600 million of OCG by '28. Now roughly half of VNB is driven by protection products, so that's term life, disability, critical illness. These products fulfill a real need. They are not driven by tax incentivations. And we see that, that need really expanded due to COVID, and we also see an impact of the geopolitical tensions on that need.

Now the good thing is that in both CEE, but also in Greece, an increasing part of the population actually has the financial capacity to fulfill that need and can, therefore, address the still prevalent under-assurance that we see in those segments. Now this is really a great basis to continue our growth strategy, but you're not there yet. As David said, you really have to be in front of the customer here, and you need to have a multichannel distribution network that can write all trends.

And here, I'd specifically like to highlight the very strong tied agent sales force that we have and our highly advanced digital capabilities there that Tjerrie and David already gave some examples on. This really enables us to not only increase the number of leads, it also increases the lead conversion. It also increases retention. And this is all instrumental for further growth of Europe in the protection business.

We don't only have protection business. We also have pension services in Europe. This is more a fee-based model, which is really driven by AUM accumulation. We would expect these markets to continue to grow. We would expect inflow to grow. We would expect AUM to grow. Hence, a higher part will also come from this pension business that we have.

Now given that we've had such a high focus on digital in Europe over the last couple of years, we're convinced we can deliver this growth at 0 incremental cost by just leveraging the platforms that we currently have. So despite a growing book, we target flat expenses and are, therefore, outpacing inflationary pressure. All in all, that would result, as I said, in a EUR 600 million OCG target for Europe, which is a 7% CAGR. And we would also expect to see free cash flow grow in line with the growth that we see in OCG with some scope to improve the conversion ratio versus historic performance.

Given the size and the contribution of the European business, I wanted to give a few words on both VNB and income diversification within this business. In a thriving European business, we would expect VNB to grow by 50% towards '28. And '24, we actually did a VNB of EUR 254 million. Now that VNB growth has an impact on OCG beyond the '28 target. As you can see on the left hand of that slide, the actual VNB only translates for 30% initially in OCG, that has to do with the long contract boundaries, and it takes 8 years before it's fully reflected into OCG. So out of that VNB growth also in the years after '28, there will be a natural source of OCG growth to come.

We also wanted to give some insights into which countries are the more dominant growth countries within Europe, but we're convinced that all of our markets will continue to have strong growth in Europe, except for the Belgian market where we would, given the mature nature of that market, would expect modest growth. I'd also like to specifically mention Pawel and Kuldeep, who are our CEOs of both Poland and Romania, who will after my presentation give some more insights on how they would expect Poland and, respectively, Romania, to deliver on this growth.

Moving to Non-life. David already highlighted the very strong foundation we have there both in terms of composition, 2/3 is P&C, a large chunk is in Life; as well as in distribution, we have the #1 broking -- broker network in the Netherlands, plus we distribute using 4 out of the 5 largest banks. On this very strong foundation, rapid progress in the digital transformation really adds another layer of potential to this business as we are implementing AI at scale, as Tjerrie just alluded to. And this is very important to us. It enables Non-life as a primary beneficiary of this Future Ready program to really lower expenses. The lower expenses, NN Non-Life will use to selectively gain market share in SME fire and in sickness. It will also use them to absorb the further inflationary pressure, and it can use them to absorb a potential softening of the non-life market.

Versus 10 years ago, the non-life market in the Netherlands has become far more rational. David alluded to that already a little bit. For the next couple of years, we could expect some softening there. But the Future Ready program we will have in place will really allow us to absorb that. And as such, we expect to maintain a very strong combined ratio for the Non-life company between 91% and 93%. All in all, this leads to an OCG of EUR 475 million for the Non-life company, which is a 4% CAGR versus '24. And you have to bear in mind that '24 still had some positive experience variances. So the run rate is actually slightly below that figure for '24. On free cash flow, we reiterate the message for Non-life that we also get full year a conversion rate of over 80% should be possible for this business.

Let's move to Japan, another area of growth. First of all, we are working very hard to finalize the regulatory improvement plan, and we're confident that we can return to 2022 VNB levels by '28. In March, we launched a new product in a fast-growing long-term savings market. First 2 months of sales are very positive, and we have multiple product generations in the pipeline. Remember, there are only a limited amount of product approval windows every year, and we use all these for our SME business. Our larger competitors have to use them for their retail business as well, which is the bulk of their business. That means that we have a very solid position in this SME market. And to give you an example, in this long-term savings market where we just launched a new product, we only have 2 competitors.

We're also expecting a positive impact of the new solvency framework called ICS in Japan on OCG. Under the current solvency framework, which is more like Solvency I, not that economical, higher sales hamper OCG because there is no deferred acquisition cost recognition. That will change under ICS, which will become more economical. And that means that under ICS, increasing sales will not have a negative impact on OCG.

Free cash flow will continue to be restricted to 5/6 of Japanese GAAP. Japanese GAAP doesn't recognize deferred acquisition cost. But as David already alluded to, and Marius, our CEO of Japan, can give some more detail in the breakout session, we would expect the recovery of Japan to be gradual. And as such, we would also expect both OCG and free cash flow to show a gradual incline, and we would expect remittances to grow in line with OCG.

Now turning to our stable but certainly not boring Dutch Life & Pension business. Starting with the bases, NN Group has always had a much stronger focus on DB than on individual life. With recent sales and a lot of renewals in DB, we actually now have a book that consists for 80% of DB and only 20% of individual life. And that's important because the DB part runs off much slower than the individual life part. Higher interest rates also enable us to pick up a bit more yield.

Now the strong starting position with the higher interest rates means that the slow -- that the runoff of that book is slower. It's roughly 2% per annum now. We have a really strong track record in cost reductions at Life & Pension, and we're convinced that we can make that runoff of 2% also come through in our cost reductions.

We see 2 pockets of growth for Life. First, we would expect a continued growth in DC, helped by the pension reform, adding roughly EUR 45 million of OCG in '28. And secondly, as already said at the full year results, we would expect some balanced risk-taking towards private credit, adding a couple of tens of millions as well to OCG in '28. All in all, we would expect a modest growth to EUR 1.1 billion for the Life & Pension company in '28. Now for remittances, as you're used to, we expect a stable pattern for NN Life. Note that our remittance capacity is a bit above OCG because we release the SCR at a 100% basis. So in reality, probably remittances would roughly be EUR 100 million higher than OCG on an ongoing basis.

A few words on pension reform. We see 2 main benefits: growing DC business, which is really the sustainable part of the benefits; and the pension buyouts. Firstly, on DC, the addressable market on DC will continue to grow. So we would expect more inflows. And with market developments over time, in general, we would expect a higher assets under management there. This is expected, as I said, to increase the DC contribution to OCG by EUR 45 million in '28.

Longer term, by 2040, we would expect a larger impact of this, of roughly EUR 200 million of OCG. So that means that in 2040, roughly 20% to 25% of Life & Pensions OCG will come out of the DC business. Now this will mainly come out of the decumulation business because on that part, we earn a higher spread. And it's good to bear in mind that in the Dutch pension reform, if you reach retirement date, it's mandatory to buy an annuity, which is a DB-like product.

Second benefit are obviously the pension buyouts. We do want to engage if the IRR is clearly double digits. Every EUR 1 billion of AUM roughly adds EUR 10 million of OCG, assuming that we do a longevity reinsurance on the incoming liabilities. If we would use longevity reinsurance to fund it, that OCG of EUR 10 million will roughly be reduced by 1/3. Overall, we would think the contribution of buyouts is relatively small from a group perspective and it's also unpredictable. So we have not included that in our Life & Pension target nor in our overall group OCG targets. Leon, who's sitting over there, will have a breakout session on Life & Pensions and, obviously, can give you more information on both DC, but also on the buyout market in the Netherlands.

Over to the last business unit, NN Bank. NN Bank is a digital-only bank. It has a very simple balance sheet. It has savings, it has retail, wholesale funding and, at the other hand, we have mortgages on the balance sheet. We also have fee income. We get the fee income by distributing insurance products by originating and servicing mortgages. And recently, we also started a payment function for our clients.

The bank has a -- probably has a finalization of some large projects to come through, which actually means that we would expect some cost reductions to come through at the bank, also driven by the Future Ready projects that we're actually doing. We would also expect a modest balance sheet growth from mortgage origination and some expansion of the fee income. However, versus '24 and even more versus '23, we would expect continuation of NIM decline given the way where interest rates have been moving, and we would expect that to more than offset the cost savings, the modest balance sheet growth and increase of fee income. Hence, we have a slightly lower OCG target for the bank of EUR 110 million versus what we realized in '24.

From a dividend perspective, though, things look better for the bank. By now, we have ended the cycle of countercyclical buffer raises that we've had over the last 2 years. So we would expect going forward that the bank can be a more stable source of dividend towards the group than it has been in the recent past. We also transitioned to Basel IV on the 1st of January, which actually provided an uplift in capital for the bank as it reduced the risk-weighted assets for the bank, which would enable the bank to this year pay a strongly elevated dividend.

Now we could get some further RWA optimization from moving to an ARB model. But bear in mind, it's a very simple balance sheet, a lot of mortgages. So ultimately, the leverage ratio will be curtailing any capital benefit that would come from that because the leverage ratio would ultimately become leading.

Now this concludes the business part of the presentation. Let's move to solvency. Our balance sheet continues to be strong with a resilient solvency ratio, a low leverage ratio, as you can see, a very comfortable cash capital position at the top end of our range and over EUR 1 billion tiering headroom. That provides us with ample financial flexibility. In March this year, we also proactively managed our refinancing risk by issuing a successful EUR 1 billion of Tier 1 capital. We also included a tender on the outstanding Tier 1 capital, which is grandfathered until the 1st of January '26, which had a pickup rate of 75%.

Now this resilient solvency ratio is not something we take for granted. We really actively monitor it, and we also act on it. As you can see on this slide, we've been able to weather very sizable market and regulatory headwinds since '21 by strong capital generation ahead of our capital return promise and also by management actions. Market headwinds mainly consisted of negative real estate revaluations and widening government spreads. Regulatory headwinds consisted of multiple UFR reductions, countercyclical buffer at the bank and various VOLA rebalancings. As said, we've been largely able to offset that by our strong net capital build, which is roughly 8% per annum, and we would expect that to be sustainable.

We also included various management actions, which was an acceleration into our SAA, where we reduced emerging market exposure a bit, mortgages a bit, equities a bit. We'll transfer that into private credits, plus we've been very active in the economically very beneficial longevity reinsurance market. And that market actually continues to look very attractive at this point in time. So we take a very active approach here.

Obviously, the basis for a strong solvency ratio starts with a very solid investment portfolio. And as you can see on the next slide, roughly 80% of our investment portfolio is in fixed income, which should already provide you some comfort. The core of our portfolio consists of Western -- mainly Western government bonds rated AAA to A. Our corporate and financial portfolio largely consists of 85% of investment-grade credits, is well diversified by sector and has a focus on Western Europe.

During the great financial crisis, 20% of the corporates in general experienced a 1-notch full-letter downgrade. In such a severe scenario, we would only expect roughly 4% impact on the solvency ratio, which is by all means manageable. And on Dutch mortgages, I think most of you can dream that by now because we've said it many times, but we really think it's a safe asset class. We have an LTV of around 50%. Customers are generally locked into long, low fixed interest rates. So there is little refinancing risk.

The personal bankruptcy laws are such that there is a huge incentive for people to continue to service on their debt. Loan losses during the crisis were very minimal. And bear in mind, the great financial crisis, when we entered it, LTVs were almost double. It was close to 100%; now it's at 50%. And in addition, 1/4 of the book is guaranteed by the Dutch state. So we really consider this as a safe asset class.

Now we have a high-quality investment book. It doesn't mean that we do not have any sensitivity, obviously, in solvency. But if you look at the sensitivity that we have on solvency, you really have to take into account that 80% of the book is fixed income. And for fixed income, we have a stock-and-flow principle on our sensitivities. And that stock-and-flow principle applies to the full 80% of the fixed income portfolio.

As you know, we have an ALM policy that cash flow matches are long-duration liabilities with assets. As such, we intend to hold our fixed-income assets until maturity to pick up the notional. The negative impact from, for instance, wider government spreads on solvency will, over time, be fully earned back in OCG. So intermediate spread movements on these assets are economically less relevant for us.

Moving towards interest rate sensitivities by our ALM policy and management actions, we also reduce them. Changes in interest rates do impact the benefits we incorporate from the UFR extrapolation. Lower interest rates increase the UFR benefit and lower the OCG and vice versa. So also on interest rate, there is a stock-and-flow dynamic, and we're not economically that worried about that unless, obviously, we would go back to a 0 for long environment.

Now finally, equity and real estate markets may give some real economic impact, but these tend to be attractive asset classes with a through-the-cycle attractive return, which typically also recovers. And that's exactly what we've seen at a real estate portfolio that we hold where we, from midyear '22, actually lost 15% of valuation from half year '22 until the end of '23. And that loss was mainly that the negative revaluation was largely driven by higher interest rate, which pushed up cap rates and hence led to lower valuations of the real estate book. The underlying fundamentals were always very strong. We were able to largely price through inflation. We still had high occupancy rates.

Full year '24, where we all in all saw an increase of 3% to us really indicate that we've seen a trough in this real estate book. We have 42% of our exposure in residential, a large part in Dutch residential housing where there is still the expectations that prices will go up due to the scarcity of housing in the Netherlands. Industrial, 26%, is the second largest contributor of this book. That's mainly logistics. And in this sector, we've continued to see a lot of liquidity also when prices were moving down. And we obviously see very strong characteristics of this sector at the moment. So to sum up, we would expect positive revaluations on our real estate book.

After covering business, balance sheet, let's go to our capital return policy. You're familiar with this sheet. It has featured in consistently in presentations over the last couple of years. Our 3-pillar capital framework remains unchanged with a comfort zone of between 150% and 200% of solvency. If we're sustainable -- sustainably above the 200%, we will improve our sustainable capital return with small incremental steps rather than large lumpy buybacks. This will put us in a position where we can both enhance our progressive capital return and improve our solvency ratio at the same time given our strong net capital build of roughly 8 percentage points per annum.

Now let's have a look at the recent group solvency developments. We navigated well through turbulent markets, and our April solvency remains at the top end of our comfort zone between 150% and 200%. It came in at 195% if you would filter for the untendered grandfathered R Tier 1 that will become ineligible on the 1st of January due to the grandfathering; or if we would decide to call that, it would become obviously ineligible at the moment that we would send out the redemption note.

In terms of movements, as you can see on the left hand, OCG, net of the full share buyback of EUR 300 million plus a pro rata interim dividend, added 1 percentage point. Markets had a negative of minus 1%; and other, which included the positive impact of Basel III and Basel IV at the bank, actually had a positive impact of 2%, which gets you to a pro forma ratio of 195%.

Now we're at the top of the range of our comfort range, but we're not yet at 200%. However, if under normal circumstances, our 8% net capital build would come through, we would expect to get there in due course. A natural moment to reassess this and then reassess the capital return promise will be at our full year '25 results.

Lastly, on solvency, it's also good to remember that we actively reduced sensitivity. Last year, we changed the valuation method we have for mortgages, which lowered the volatility that we have towards mortgages in terms of solvency. And the year before, we actually reduced the steepening risk. So we have reduced sensitivities over the last couple of years. We also continue to have strong levers to improve solvency at economically attractive terms. And there, especially longevity transactions come to mind where in roughly the next 3 years, we would build approximately EUR 10 billion of liabilities that would be eligible.

Now we've referred a lot to our ability to generate capital ahead of our attractive capital return promise. But obviously, it's also very important to look at it from a cash perspective, and this actually looks quite good. Historically, we've been able to add roughly EUR 300 million of cash to have a cash build of roughly EUR 300 million per year, and we have no reason to see this deteriorate. That means that in the next 4 years, we would expect over EUR 8 billion of remittances coming out of our businesses. We would expect to return EUR 5 billion to shareholders without assuming a further step-up in the buyback.

Based on our cash flow expectation, that means that we will accrue over EUR 1.5 billion of cash. And this really provides us with ample flexibility, cash and financial flexibility for value-enhancing organic or inorganic growth. Or if these options would not be available or if they would not be attractive and would not meet our hurdles, we could increase the return promise to our shareholders. As such, we feel we have ample flexibility to continue our progressive shareholder return policy.

Now let me wrap up and conclude. We have delivered long-term growth, and we expect to continue this trajectory. We have an OCG target of EUR 2.2 billion for '28, and we have a free cash flow target of over EUR 1.8 billion for '28. Future growth is largely driven by Insurance Europe, Netherlands Non-life and Japan and, therefore, improves the overall business mix of our company towards a higher growth level.

We have a proven resilient balance sheet with a highly -- high-quality diversified investment portfolio that enables us to weather volatile markets, as demonstrated by our group solvency ratio, which came in at 195% and is at the top end of our range in April. And, and this is really important to me, we have a proven ability to generate both cash and capital, and we would expect to do so, which will allow us to consistently deliver both on a progressive shareholder return policy as well as still maintaining the financial flexibility that we would need.

With that, I would like to thank you for your attention, and I would like to hand it over to our CEO of Poland, Pawel. And I trust that by the time that he's done, you will be as much in love with our Polish business as I am after Pawel is done with his presentation. Thank you.

Thank you. Good morning, everyone. Poland has been quoted today a few times already during the morning presentations. And I have the privilege now to really share with you a little bit of the details about our transformation program. But before I dive into the, I would say, key components of the program, let me first introduce shortly myself.

So I joined the company in the beginning of 2019. Since then, I am leading NN Poland efforts on our transformation program. And before that, I spent a number of years working in the health care insurance industry and automotive industries. And as you can imagine, these industries are very mature and very competitive. But they have one common, I would say, impairment in both, and that is you either transform or you're left behind.

So very quickly, after my arrival to NN Poland, we made through the assessment of our position with my team, and we clearly discovered that we are not different. We have to change. We have to embrace the new consumer trends and settings. We have to embrace on the new technologies which were creating for us the unique opportunities. And we have to capitalize on our very strong position as a starting block.

With that said, I would now move to the situation in Poland because I think it's very important to also see that we have started with a very, very solid place. NN Poland is a top market player across all our key business lines we are present. We have very diversified distribution capabilities. 60% of our annual production comes from our tied agents. The remaining 40% is equally split between the bancassurance partnerships and brokers.

As you can see, this is a large economy with 39 million people and very progressive GDP growth over the last 30 years. And that converted, of course, into purchasing power of our population overall on the national level. Having said that, we've also seen that Polish people are very trendsetters. They like to use different technologies. They like to use different applications. And therefore, our transformation program originally has been set around digital programs such as in creating technology tooling, which is, on one hand, supporting customers in all our interactions and, at the same time, supporting tied agent channel.

In parallel to that program, which was very much boosted around increasing tied agent productivity by approximately 40% during the 6 years, we have also decided to acquire, when the opportunity came, the MetLife operations in Poland. This acquisition was already executed at the moment when we had a lot of technology already built in-house. And therefore, very quickly, we realized and took a decision that all ex-MetLife or the vast majority of ex-MetLife systems will be decommissioned.

The one-off expansion of the MetLife -- of our network, tied agent network, will be immediately put from the moment of the legal merger of these 2 entities into our product portfolio and our processes and our technologies. And again, we were able to convert them quickly within the period of 2 years to our state-of-the-art productivity levels.

This integration was also well executed when it comes to the timing, integration budget. But more importantly, we also executed or even far exceeded original, I would say, base case assumptions when it comes to the level of synergies. When acquiring MetLife, we were assuming EUR 11 million annual savings coming from the cost synergies. The actuals were at the EUR 60 million. And that was very much thanks to the things I mentioned just earlier about moving entire MetLife into our technology platforms.

Now how these journeys have converted into the actual numbers, the numbers which you are most likely interested in. First of all, during the last 6 years, we had increased phenomenally our overall customer base. As you can see, that growth was well above 150%. At the same time, we had a significant step-up in our OCG numbers at the country level. 25% of this growth, what you see here, has been actually derived from the ex-MetLife operations. 75% of that growth is our organic efforts. And I think that has created a very solid confidence about our ability to transform and lead and stay in the market-leading position going forward.

One, I would say, element which integrates both of these KPIs, customer growth and step-up in the OCG, also comes from our product strategy. In 2014, we took a very bold decision as a market leader in Poland to actually move away from the unit-linked sales and move to the protection. We were really the first company in Poland who came with the first initial products already in 2015 on the market. And since then, what you see, we have been able to drive our production, our sales with the annual -- current annual growth rate at 13%.

I think that is astonishing result, and it only shows that we have properly understood and we really nicely hooked our product offer and distribution and platforms with the growing customer needs and future profiles. Recently, we also tapped into the health care insurance, which is expanding our position. But we are doing this, of course, via the partnerships with the health care providers, and we believe that this is going to fuel our growth going forward.

If I now look at the 3-years ahead plan, so if we could see what are we going to do, I think first of all, Poland is going to immensely benefit from the Future Ready program run by the group. So we'll be benefiting in extracting the know-how, the competencies, the use cases, which Tjerrie was sharing with you on the AI. We want to plug them in into all our 3 major blocks of activities, so into the leads generation by really doing even more on the digital marketing front and providing even more matching processes between the adviser and the potential customer.

We want to also increase the option for customers to not only start online search for the product, but also be able to finish online sales for some of the categories or go for the adviser with the prefilled information which adviser is receiving. That would clearly increase our conversion rates. And we also want to use AI to further increase our self-service platform, which already is in place. Currently, in Poland, we have more than 1 million users of our self-service platform. So that creates immense opportunity going forward when it comes to the personalization of the interactions going forward.

These all elements should convert into the significant increase of our key financial parameters, namely in the OCG, but also in the number of customers. We truly believe that we will be crossing 2 million customers number in 3 years from now and also improving our annual production by EUR 50 million.

Before I hand over to my colleague from Romania, Kuldeep, and he will take you through Romania journey, let me share with you a short demo, which will be sort of visualizing to you what our end state will look like within the next 3 years and how we intend to connect the customer, the adviser, but also our self-service platform in one omnichannel journey.

Thank you very much for your attention, and let's enjoy the movie. Thank you.

[Presentation]

Thank you, Pawel. It's always inspiring to hear about the ambitious plans of Poland. 3.5 years back, I was sitting with David here in this building, and he was talking to me about Romanians, the fact that Romanians are the second-biggest cohort in NN Group contributing to the success and growth of the group.

And today, I would like to take you on a journey where I want to show, building on our scale in Romania, building on our strong distribution capabilities in Romania and building on the scaled data, digital and AI capabilities in Romania, how Romania -- NN Romania is starting to contribute to the growth of NN Group. I'm Kuldeep Kaushik, CEO for the businesses in Romania, and I'm really excited to share this journey of Romania with all of you today.

So let's dive right in. NN is the largest life insurer in Romania. Also, we are, by far, the market leaders in terms of pensions, both in terms of Pillar II and Pillar III. And what is even more impressive is the fact that we have grown these businesses organically, policy by policy, customer by customer, to be the market leaders that we are as we stand today.

5 years back, based on our scale and the trust that customers in Romania have on NN, we decided to step into the fastest-growing health insurance market as well. And I'm really proud to say that today, we are fourth-largest player in Romania. And based on our strong risk selection and reinsurance strategy, I can confidently say that in terms of profitability, we are by far the market leaders in the health segment that we operate in.

Distribution has been a unique strength for us in Romania. We have the, by far, most professional workforce that we have in Romania, more than 1,200 active agents that are spread all across the country and obviously taking the NN brand forward. We also have a strong distribution partnership with ING that we renewed in 2024. So it gives us a strong diversified distribution capability in Romania.

In the last years, we are focused on growing our protection book. We're focused on making sure that our customers are interacting with us with life products, with health products, and you see an impressive CAGR growth in that protection portfolio over the last decade of 25%. Our pension portfolio is also in an accumulation phase. So as you would see, we have a CAGR of 12% in terms of asset under management growth over the last decade. And as we close 2024, we have more than EUR 11 billion of asset under management in Romania, and that contributes to a strong fee revenues as we move forward.

Now that scale that we have, the unique position that we have in Romania, combined with our strong distribution and the fee revenues that we have in the pension business, has enabled us to grow our OCG, to triple our OCG between 2019 and 2024. However, as you would see, the market is really underinsured, under-penetrated, and we have a massive opportunity as we move forward to be able to grow in that market.

Why do I say the market is underinsured and under-penetrated? More than -- we have in Romania more than 19 million inhabitants, out of which only 11% today have a life insurance product. If you were to look at the insurance penetration, insurance penetration in Romania is around 1%, which is significantly behind OECD average of 9%, but we are also lagging behind the competitive CEE countries as well.

Now if you were to look at the under-insurance, under-penetration, underdevelopment in the insurance market against a country which has been growing quite significantly, there has been a lot of economic growth in the last decade. If you were to look at the GDP forecast for the future as well for the next years, everywhere, it's clear that Romania will grow strongly in the next 5 to 7 years and will grow ahead of the European average as well.

And I wanted to share this specific graph on purchasing power, which tells a story about Romania, that tells a story about the affluence, the growing affluence in Romania. If you were to look at the EU average in terms of purchasing power and you see the journey of Romania from 2015 to 2023, the purchasing power of Romanians have grown from 50% in 2015 to 74% in 2023. And what is even more impressive is Bucharest, which has more than 2.5 million inhabitants, the purchasing power of Bucharest is at 164% of the European average at the end of 2023, and that number has grown to 190% at the end of 2024. So underdeveloped market, a growing affluent population, which is highly digital and urbanized.

And that takes us to what we want to showcase as the plan for the future. So if you were to look at the growing affluence in Romania, the under-penetration in terms of insurance and the unique position that NN has in Romania, we think it offers us a strong opportunity to grow in the next period. And that growth is reflected in our numbers that we have shared with you today. We will attract more than 200,000 net new customers. We will have our new business sales, our APE grow from EUR 125 million to EUR 235 million by 2028. And that would result in an OCG growth to EUR 70 million as we stand end of 2028.

And the plans are clearly ambitious. So you might ask, what is driving that growth? And there are 3 big engines that are driving that growth as we move forward. First one is our continuous focus on offering the right value propositions to our customer, growing that protection portfolio that we have been working on, using the strong distribution that we have available in Romania.

The second, as I talked about, our pension book. The pension book is in accumulation phase. As I said, we closed 2024 with an asset under management of EUR 11 billion. That will grow up to EUR 20 billion by 2028. So that will continue to provide us with a strong fee revenue growth in the pension space. And lastly, the Future Ready program that we have been speaking about since morning, that would enable us to deliver efficiencies by the business transformation that is already underway.

So let me highlight a few of the key initiatives under the Future Ready program that we've been working on. First, we talked about our strong consultant tied agent network that we want to continue to invest in. So you saw an example that Tjerrie shared this morning of automated call logging, but we have been building a lot of capabilities under the Future Ready program to digitally enable the sales network going forward and also empower them with the data and AI capabilities that one of the examples you saw in the morning, but we have many more in terms of matching the right lead to the right agent, allocating the orphan portfolio to the right agent as well and many more that we want to test. The ambition for us is to grow this tied agent network by 20% in terms of absolute number and to grow the productivity of each of these agents by 20% as well by 2028.

You heard about the leads generation. Romania has been very successful in the last year in ability to attract digital new customers. So the acquisition via digital channels has been a massive success story in Romania. We have, at the end of 2024, generated more than 100,000 digital leads. And out of those 100,000 digital leads, we've been able to convert 13% of that business.

And let me underscore that number. In any other business, a conversion rate of 5%, I would give my left hand for. So to have consistently delivered 13% conversion on more than 100,000 leads is an impressive achievement. And what we are starting to do now is to making sure that we can add some of these data and AI capabilities that we talked about in improving the quality of lead, in having hot calls that Pawel spoke about in Poland as well. So ensuring that 13% number stays, but we want to also make sure that the remaining 87% that we are not able to convert, we're starting to attract and gain a lot more from that 87% as well.

I talked about the growing affluent population in Romania. Inspired by Poland, we launched a critical illness product last year, and that product grew 4x more than the sales that we had in our plans. And that product still continues in '25 to deliver strong growth for us in Romania as well. And the success of that product, we've taken it now to Hungary as well. And earlier this year, we have launched the same product in Hungary as well. So a good example of share and reuse, the whole concept of Future Ready, where you build once, and you're able to deploy in different countries as well.

Lastly, Romanians are mobile first. The country is highly digital. The customers want you to engage them in digital channels. And through our Future Ready program, we've been investing heavily in building our sales and post-sale capabilities to be fully digital. So the ambition is that we have more than 80% of our business of our transactions of our interactions with our customers go through digital channels. By 2028, we want to be more than 80% digital in terms of interactions with our customers.

And lastly, we talked about our customers who are digital native, who are highly urbanized and want to engage with you in digital channels. We have our NN Direct app, which is the self-service app that we have offered to our customers. As we stand, end of '24, we have more than 55% of our customers engaging with us on that app. So they are active, they come and they do transactions on that app as we stand today. And our ambition is to, by 2028, have more than 80% of our customers interact with us on that mobile app. And that app in the financial services industry is right behind Revolut. So in terms of the appreciation for that app, we are competing with the best of the best.

So let me summarize with where I started. If we were to deliver this ambitious plan, Romania will more than double its OCG by 2028, and as I said, will start to contribute to the growth of NN Group, to the growth of NN Europe. Thank you.

Thank you, Annemiek. Thank you, Pawel. Thank you, Kuldeep. Well, while the stage is being set for Q&A, there's a minor issue is that we've given you 15 minutes more information than planned. So we can do 2 things, shorten the Q&A or shorten the lunch. I'm guessing the preference will be to shorten the lunch. It's not going to be a cheese sandwich, you're going to have a better than typical Dutch lunch, but I do think 45 minutes will suffice to do the lunch.

So David, Annemiek, if I can invite you to the stage, then we can start the panel Q&A. I already see hands going up. I would like to ask you to mention your name, mention your company and try to limit yourself to 2 questions, which is always a challenge. Where shall we start? Farooq, maybe?

I just want to start on an IFRS topic. So I mean, a lot of the things that you're talking about are very IFRS positive. So you're talking about new business growth, you're not talking about rerisking. Can you just maybe steer us about what are the differences in the development of OCG versus IFRS going forward? I mean, for example, is there a VNB timing issue? What about Japan ICS, does that change how we should think about converting to IFRS? So that's kind of topic area number one.

The second one is kind of around inorganic topics. So what your latest thoughts are on disposals versus areas you think you really could strengthen? Because it feels like you've got a reusable kind of technology in Europe. It feels like there are more markets you could probably do that in. And then lastly, just exactly what do you mean by incremental increases in capital returns? Does that mean step up and then plateau or small step ups? Just give us an idea of how we should model it. Sorry, that was 3 questions.

It's very good that you did not shorten the Q&A, but you shortened the lunch, Robin. Well, to start with IFRS. First of all to take a step back, we really steer the company on Solvency II, right? Because that drives the solvency creation, it also drives the way that we're regulated and ultimately, that will drive capital returns as well.

We do look at CSM. And obviously, over the last couple of years, we have already seen a positive CSM development. So we do have an organic CSM growth. That was a bit subdued. Last year, it was 0.5% from the top of my head, but that's also because we have the improvement order in Japan, and we obviously don't have a lot of new business there. As Japan picks up, we think that structurally we'll have a positively growing CSM basis. And that's more dependent on Japan actually rekick-starting sales rather than the change in ICS that we would get there. And yes, in general, as I said, we're really focused on OCG conversion into free cash flow to steer the company. Disposal?

Yes, yes. Disposals. So I think in general, if you look at these plans, these are all based on, let's say, organic growth of the business. So we haven't assumed any disposals or any M&A in any of these targets. I don't know if you want to put buyouts under M&A, but also, buyouts are not -- the potential buyouts are not included in these numbers. Now that doesn't mean that we're not going to be actively looking. I think we've shown in the past that we continue to do portfolio analysis. So when we see -- we screen on financial criteria, new business contribution, 2% or more return on funds criteria is one part and the other one is strategic fit. And I think in the past that led to some of the divestments in Bulgaria and Turkey, and also NNIP, our asset manager.

So we'll continue to evaluate Belgium. I think in the past, we did a sale of the back book. So if we see some opportunities there, we'll certainly do it. And the same on M&A. I think the experience of MetLife, Aegon, Czech Slovakia in the past, also here in this market has been positive. At the same time, we're very attached to our strong track record here. I mean it needs to meet strategic criteria, financial criteria, and we don't want to ruin, let's say, the track record that we have. And frankly speaking, there hasn't been a lot out there in the market either in terms of M&A deals. So all this is based on organic growth, but you can count on us that whether it's portfolio valuations or M&A, if something -- we see an opportunity, we'll certainly act on it.

On incremental increases in capital return, we really like to have a sustainable, progressive capital turn. And with sustainable, we mean that if we take a step, we really want that to be sustainable. So I think the best way to think about it is when we have the full year '23 results. Obviously, there was a lot happening. We just did the unit-linked settlement. We improved the quality of the underlying capital, et cetera. But there, we raised it with EUR 50 million, which seems like a right step.

So that doesn't include recurring steps as well, I will add to that. Cor?

Thanks for the presentation. Cor Kluis, ABN AMRO ODDO. A couple of questions. First of all, a question on the pension buyouts. We've seen quite a lot of parties doing pension buyouts. I think NN has been quite cautious in that sense, and you have not included any pension buyout in your budget, which could be a plus. Could you give your view on the pension buyouts? Because you're probably not satisfied with the returns which you see in the market, as you would have done more. And also the dynamics, why is this? What are other parties doing which you are not doing? So that's on the pension buyout.

Then on M&A, apart from possible divestments and more focusing on acquisitions. You've done, of course, nice acquisitions in the past, especially in Eastern Europe. Where do you see opportunities? Is something pending? A lot of these cases in general, no names obviously, but where are you looking for? Is it really Eastern Europe? Or do we have to look to other countries, regions as well?

And last question maybe on solvency, you gave the solvency at the end of April. I think stock market did a little bit better since then. Yes, could you give a little bit, it's already 1 month later update on what it is today, but probably is high...

27 days later. How much more detail you want to ask for...

You thought Farooq takes three, I'll take three as well. Let's start with buyouts. Yes, if you take a step back, so we've always said we believe that the whole pension reform will be back end loaded and actually, that's happening. So last year, there was EUR 2 billion of deals done, depending a bit on how you count. We're at EUR 4 billion today in, let's say, year-to-date in this year. There's another EUR 3 billion, EUR 3.5 billion of RFPs out there. It doesn't always materialize, but it's possible that a few of those will also land this year. So that -- so the combination of that might take you to probably, at least, let's say, EUR 6 billion in total, plus a few, so maybe EUR 7 billion, EUR 8 billion total in 2 years. And so if you go back and do the EUR 25 billion, that indeed means it's back end loaded, so you would expect much more transactions than in '26 and '27. If you want to get through the to the EUR 25 billion, meaning EUR 8 billion, EUR 9 billion a year, maybe could be possible.

You're right, we have been very disciplined in our pricing. We want a double-digit return or double-digit IRR. Now there's a bit of debate on what exactly -- how you calculate this. You take 100% solvency into account, your commercial capital and spread assumptions. So it's not a very comparable metric always, to be honest. But we haven't seen very attractive deals, maybe that are well above the double digit in the way that we calculate it.

So therefore, we've been careful in engaging it. We don't think it actually adds then a lot of value given all the other deployments of capital that we see. It could change. I mean if pricing improves and which we do expect over time, if volumes become bigger, it's very possible we'll do a bit more buyouts, assuming that they're going to be attractive. It is also why we haven't put it into the plans. It's lumpy, right? You can have a bigger buyout or a smaller buyout. And it's so -- that's why we haven't assumed it in the plan. And what is a very important message is that also we don't need buyouts to sustain the cash remittance out of NN Life towards 2040. So it would be an add-on.

Maybe if I can add one more point to that. I think -- I mean, there's a lot of questions always about buyouts, which I think is understandable. I would also point out to, let's say, the immediate annuity development market. I mean, if you look at last year, there was about EUR 2 billion in the market. We did EUR 700 million. And the way the Dutch system, of course, works is that once you retire now in DC, you mandatorily have to buy an immediate annuity. This market by itself has been growing around 5%. And we do expect a real step-up of that market potentially growing to around 10%. And the reason is that you have your normal growth, people are in DC for a longer period, it means that they accumulate more value and the account value is bigger.

But when pension funds go through the transition and they go to the DV -- they choose a D.C. version, a shopping right is there. So that today, a lot of the capital will remain within the pension funds, and when people retire, pension will provide an annuity. But this will change. And that means that people can start shopping, and that means it's also a market for us.

Now this market, you can call it a collection of small buyouts. So last year, we did EUR 700 million. The IRRs have been a lot more attractive in that market than in a large buyout. So that is certainly part of our plan to continue to be active in that space as well, especially since that EUR 2 billion, we do significantly expect to grow during the pension reform.

In terms of acquisitions, yes. I mean we've never ruled it out. I think I mean, Farooq's was asking the same thing. I am convinced we're building up some real capabilities that are scalable, and you've seen the examples. So there is capabilities that are scalable and that is potentially a bit new. We have capabilities already where we felt we do a good integration. We might, in the AI space, build capabilities that are scalable and that could play a role in actually extracting more synergies than another owner of this company could.

Likely, it's usually still in the markets that we operate. Most of the markets, Romania, a notable exception or the Netherlands, we're not in a position where we cannot grow from antitrust reasons. So often, these deals work better when you have inbound synergies than having to go into a new market where you have limited synergies, but we're not fully ruling it out. But like I said, it's a bit theoretical because the M&A market is relatively slow. There seems to be a lot more people willing to buy than to sell lately. So -- but that could change over time.

And then solvency. On what is it today, the 27th of May, we don't have that figure, Cor. We've just been giving '28 targets. So we've given the April solvency and now to give an intermediate, we don't. I think equity markets always have improved a bit versus the 30th of April. But then we have this mid-cap portfolio, so we really have to look at how all those companies did.

Who else? Maybe you upfront, Ian.

Ian Lapey from Gabelli Funds. Congrats on the great financial results in the last couple of years. Two. First, what would be the major risk to the stable remittances from NN Life? Would it be lower interest rates? Or what else do you track that could change that?

And second question, on the AI, you mentioned mistakes along the way. Maybe you could give examples and what is the risk? What type of risk do you monitor if there are further mistakes, bad information provided to potential customers, et cetera?

John, if you can give the mic to David, then we can continue with David afterwards?

Yes. I think to start with your question on Life and on the stable remittances, obviously, if you look at it from a solvency perspective, interest rates are fairly hedged, right. We have limited sensitivities there. And we've also explained the stock and flow principle, which is on 80% of the book. I think the thing that could really hamper their solvency, if there would be actual real losses. So that would be real defaults or real losses come through, which currently, we would not expect. And if you would look at it from an OCG perspective towards the future, than having -- going back to a 0 interest rate environment for a very long period would obviously be negative. But just based on the sensitivities that we have out there, you would really have to think about severe default scenarios, who could trigger something.

Yes, I think on AI. Yes, you have a minute? So I think there's a lot of learnings here that we had. So when we had a Center of Excellence and [ Cherry ] was running around, we hadn't educated the business unit. So these guys would come up with all such use cases and the business unit would say, great, but I'm really busy right now with something else. So I think one part was that we didn't properly educate ourselves on this, and we let it way too much on a center of expertise.

Data governance is not a cool topic, but it's a real problem. If your data definitions are not aligned and you haven't clearly defined, how do you expect to scale things across AI applications if your data governance is not in order. I think another one is, and I mentioned it already briefly, there's all -- you can come up with all these cool cases, but if they're not scalable, then it's very cool to show in a setting like this. But if you cannot scale it across units, then you won't be able to monetize on it.

And I think we're very disciplined now on monetization. So we come with the case of what is the business case and it cannot be cost avoidance or something. If we do this, we avoid that for something, it has to be real monetization, and I think that was also a learning. I think what is going forward remains very important is the ethical framework that we have. I mean, we have a framework, a criteria that we ask each other. So -- and there's a couple of questions that we debate with each other. And one is, of course, can we technically do it? Then you get also a question, is this legally allowed? And there's a lot of regulation, obviously, in Europe. And then the third one is that we want this. I mean, can we explain this? If this goes into the newspaper, how would customers feel about it, which is a much more difficult threshold usually than is it legally allowed.

And we monitor. So we monitor anti-risk selection. Is there things happening that we consider unwanted. And so this ethical framework is something that remains very important. And of course, we still have humans at the end of the day taking a lot of these decisions and back testing some of the AI developments that we have. And that gives us at least a good foundation to have the internal debate on even if you technically can and even if it's legally allowed, you might not want to do it. And I think those are the debates we have internally.

Does that answer your question, Ian? David, over to you.

David Barma from Bank of America. Firstly, on remittances and cash conversion. So the plan is mostly based on remittances growing in line with OCG. Especially for Dutch non-life and Europe, what sort of conditions or environment do you need to see to grow that faster? The conversion ratio is still quite a bit below the group average for those 2 units. So that's my first question.

And then secondly, on the OCG target for non-life. That's quite an impressive growth from the 2024 kind of underlying OCG base, 5%, 6% in a market that's now premature and with pricing slowing down and the combined ratio target, that's stable. So can you talk a little bit about the building blocks to get to the OCG target in non-life? And I'll be a good guest, I'll stick to 2 questions.

You can pass it out, unless you don't want to have lunch.

If you -- starting with non-life. Non-life actually was close to an 80% conversion ratio, free cash flow into OCG already last year. And we would expect that it can be and it can sustain an 80% or slightly higher conversion ratio. It has a solid solvency base, and we would expect it's a short-tail business. We don't expect to need a lot more capital there than we already have to sustain the growth. So there, we're very comfortable.

On Europe, obviously, last year, the reported free cash flow into OCG was a bit lower, but then we also had some of the -- we had a capital injection that we did into Belgium and Belgium didn't pay a dividend. If you would correct for that, we would be at a higher base. And I think going forward on Europe, probably, the conversion would roughly be around 60%, 70%.

It's always a bit -- there are many countries, and there can always be some regulations that either are related to tax or that are related to dividend restrictions. We've seen them in the past. But by now, we've diversified the European business so much. And all of the components are actually growing. So we're really confident that within this diversified base, we can still make the remittances that we are projecting. And as such, we would expect remittances of Europe to really grow in line with our OCG with some potential for further conversion there.

Yes. I think on non-life, yes, there's a couple of building blocks. Obviously, we always said, we feel that this business should be able to grow GDP plus. So a couple of elements I think are important here. I mentioned products, we do see more opportunities to grow in sickness products and in fire, which typically also have attractive combined ratios. So you're right that we don't aim to further go down in combined ratio. I think there's also a trade-off between value for customer and a good return for us. But we do see some of those products further opportunity to grow.

We see opportunities in, let's say, the channels, the banks that we work with and the direct business [ OVA ], which both can write attractive business and we see growth there. We talk about expenses. So quite a few of the items you've seen in terms of expense discipline, digitalization means that we should be able to really control the expenses also in the non-life business very well, too. So that should also add to some of the offsetting trends where you see clearly wage inflation, claims repair cost going up. And there's just the general premium increases. We see overall, the business growth, GDP growth and so the overall book will also therefore, grow. And obviously, if you keep your combined ratio then in check, that will also increase your OCG. So I think those are important elements that should enable us to further grow the non-life business to the EUR 475 million target that we get.

It's good to see that you think it's impressive. Nasib?

Nasib Ahmed from UBS. So firstly, on the Annemiek on your slide 20, the cash position that you're building up to EUR 1.5 billion. I believe that's above the top end of the range of EUR 1.5 billion. So if I kind of bring it down to the midpoint, you're at more than EUR 2 billion. Why do you remit so much when you get better returns in the business units, why kind of get to that EUR 1.5 billion to EUR 2 billion? And then you put deleveraging as a potential use, but I thought you're happy with leverage. So why is that an item as a potentially use for the EUR 1.5 billion?

And then second question on Japan. I mean you mentioned that there are certain windows in which others can actually put in product approvals. There's 2 competitors at the moment. Do you expect there to be more competition in the long-term savings product. And what's the IRR on this business? You said double digits, but I think previously, you said 14% on some products. Is it kind of towards the top end of the teens?

Can we pass the mic on to Andrew, please.

Shall we first do these questions before we also take on board Andrew's questions. Well, the cash buildup. Indeed, if the cash buildup would come through, we would obviously be above the top of the range. And what we currently see, we leave sufficient cash and capital in the businesses to sustain their growth. And they can actually deliver it with the current capital that they have and with the remittances that we have projected. If they will come to us and say we have a strong organic or inorganic opportunity that has an attractive return, we'll support that. There is no issue there. But what we have now in the plan is all based on what the current capital bases and on the remittances that we have, and that already offers significant growth.

Deleveraging, we'll look at it opportunistically if we would do so, but maybe there will be some organic or inorganic growth opportunities that would actually have a higher return, and then we'll look at that. It's just really nice to have that cash flexibility.

Yes, on Japan. Yes, if you take a step back, so the overall, we used to or mainly compete here with Nissay Nippon and Daido and ourselves were the top 3 in the market. And then you had, let's say, MetLife, AXA, Sony, Meji Yasuda. Specifically in the long term, corporate life is primarily Sony and also AXA. And we've now entered also into these markets.

Now our expectation is that over time, we will see more entrants. But especially when you talk about the larger players like Nippon or Daido, they need to make trade-offs on, am I going to introduce a product here? Or is it going to be a retail version? They have to make more trade-offs because, like I said, the windows to introduce a product and get preapproved by the regulator is limited. So -- but realistically, we're going to see more entrants and probably, we will introduce more products as well in the long-term space because it's not just one product over time. I think we will introduce more products, but it makes us positive on the growth of that market.

In terms of returns, yes, you're right. I think in terns of scale, it would come down a bit. But for this, we will also expect returns around 14% is reasonable to assume also in this long-term COLI space. And that's only assumption that this business starts growing again, which we're convinced that we can do because the market growth is there, and we've really shown that we're very capable in managing distribution channels. And we don't have a tight agent channel there. 65% actually comes through what we call independent agents, insurance agent, tax advisers. We have around 25% with banks. And then Sumitomo, also another 10%.

And so we've been -- the business has built a very strong track record in managing these independent agents and these channels because it is not that easy. To sell a protection products in the SME space, requires a lot of training, a lot of education, and this has actually become our core competence. And now that this market growth is there, yes, we should be able to build the volume again, including the IRR of 14%. And it keeps Japan interesting because it's EUR 100 million that we can deploy against 14%, which as great as Romania, is you cannot deploy EUR 100 million of capital there.

Andrew Baker from Goldman Sachs. So the first one, again, on Japan. The international capital standards next year, what benefit are you expecting to the stock of capital, both for the local entity and group from that? And then secondly, on the Future Ready, the payoff of the EUR 200 million that you mentioned, are you able to give a sense of which divisions benefit from that the most? And then maybe on the free cash flow. So can you help me with the bridge there a little bit? So you've got EUR 1.6 billion this year, now it's EUR 50 million or so of investment in the Future Ready. So EUR 1.65 billion. If you then get a EUR 200 million benefit coming through, doesn't that get us already to EUR 1.85 billion before you talk about growth? I appreciate offsetting some of the runoff. Just any sort of bridge there would be helpful.

So what do you mean with the EUR 200 million benefits on free cash flow?

Future Ready benefit.

Exactly.

To start off with Japan, obviously, ICS will have an impact on OCG. It will be beneficial. We will not see an uptick on sales time for OCG anymore. We would expect it to be beneficial for the solvency ratio in Japan. On the group, it could potentially have a small negative impact on the solvency ratio, but we'll have some management actions to address that. So that's related to ICS. And I think on Future Ready, on the benefits, you want to take it?

Yes, sure. Yes. So ultimately, all these units should benefit. And I think you've seen some of the examples when you talk about they're more than chatbots or some of the other elements, all of the units benefit. In the short term, you should expect certainly the non-life company, as we mentioned, but also the bank. Europe clearly not just on the expense side, but also on the growth side. As you've seen some of the examples are units that benefit. But some of the Future Ready benefits are also in keeping the cost per policy on the life company flat, right? If you can really increase your customer servicing, you get more digital interactions, it saves you also on cost and business runs off at 2%, but you still need to run down the cost, therefore, also in line. So it also contributes to keeping the cost per policy flat.

If you then look at the EUR 200 million of benefits that we see, roughly half of that would actually come through in OCG and that would be primarily in the non-Life and in the bank area because those are the shorter-duration products. We would see roughly EUR 20 million in VNB, which obviously will come through over time. And then the remainder will obviously gradually feed through in solvency. And that's primarily into the European business and into the life business.

Now all the targets that we set today, so the EUR 2.2 billion of OCG and the over EUR 1.8 billion already incorporates all of the benefits of Future Ready. And then from a cash perspective, obviously, as David said, it was EUR 450 million of investments. We already started this program last year, so EUR 70 million of the investments, we already did. We already took them last year. That means that we still have roughly EUR 350 million to go. This will not impact the remittances that we get out of our business units. It will probably impact group by roughly EUR 50 million for '25 and '26 in terms of cash impact. All the progress that we have are already incorporated by Future Ready.

Yes. So don't deduct it from the EUR 1.6 billion.

You added the EUR 50 million to the EUR 1.6 billion, which is -- it's an investment, right? Michael, so it's going to you naturally already.

Michael Huttner from Berenberg. I had 2 questions. The one is on Slide D4 and the other one is kind of make us dream kind of question. On D4, there's a bump.

Slide D4 again. Can someone put it on?

In slide D4 in the Life, there's a little bump, speed bump maybe, but it's actually -- it means you're flat, you're not going down. Can you maybe talk about the profile of the Life OCG over the next 2, 3 years, I guess? Because it looks nice. It looks nice than we'd have thought. .

And then the other question, which is make us dream question and you might say, why should I make you dream? Historically, you've actually grown much faster than the numbers you're showing here, right? So I don't have all numbers, but DPS is 11% and you've got total OCG growth now of 5%, but previously, it was 7%. So clearly, there's a bigger engine within NN than we've seen in the past. And I'm just wondering which bit of it is the conservative bit? I guess some of it is you're not putting all the benefits of the annuity growth, and you talked about immediate annuities. But my guess is you put none of that in there. And I just wondered whether you could kind of flesh it out a little bit?

Well, let me help you a bit here. We did actually have higher growth. If you look at it for the last couple of years. Now I think there we had a 7% absolute growth also on CAGR, absolute CAGR, 7% on OCG, whereas now it would be 5%, but then on a per share basis, it will be the 7% to 8%. You do have to bear in mind that over the last 4 years, we also included some acquisitions. We had the MetLife acquisition. And we also had some years where we saw record interest rate increases, which was beneficial for the European business, it was also beneficial for the non-life business. So we were helped there a little bit by inorganic growth, but also by this year, where we have a rapid increase of interest rates. So it may happen again, but we're not banking on that one to give you something.

Now on the OCG for Life, I think the bump is a little bit an impact of that we actually forecast that by our business plan and then afterwards, we run with a kind of a steady growth rate, but we do foresee for Life, the OCG to grow by roughly EUR 50 million because we now have a target out there of EUR 1.1 billion. And that's a combination of a little bit of a tailwind because last year, we had some negative experience variances which we wouldn't necessarily expect to continue in the future, slightly offset by lower value of new business, new business contribution because that was still a bit elevated last year. And then combined with the DC buildup, combined with a bit of the rerisking that we still have and that we're expecting for '28, that would then get you a little bit to that bump. And then after that period, we would expect the status quo investment portfolio. So you also wouldn't have that tailwind from a bit of a rerisking.

Thomas Bateman from Mediobanca. I just want to understand a little bit on the longevity deals that you could do? Because I think you alluded to the fact that could fund buyouts in the future. So what's the kind of internal calculation you're making in terms of the cost and what you might be giving up in terms of the OCG there?

And the second question is just on the non-life side of things. You alluded to the market softening there. What's giving you that kind of outlook? I still see pricing going up in motor at the moment? And maybe if you can just tag on to that as well, the regulators investigated margins for loyal customers. How do you think that might impact the market and where does NN stand there?

Yes. To start off with longevity deals, we obviously look at the trade-off between capital and expenses for OCG. So what will be the cost for OCG, we look at the cost of capital of these transactions. And quite frankly, the cost of capital has been extremely low for these transactions. And that's really driven by a huge demand from U.S., but also European insurers, but the last few rounds really also with U.S. insurers for longevity risk as they have so much mortality risk. And the Dutch very long liabilities on a very neatly administrated coherent book, it's just are very appealing to them.

There is also a bit of a notion potentially of a different perspective on longevity and the lingering impact of COVID on that on both sides of the Atlantic, which if you would then use that and recalculate that, that would make those deals from our perspective and on our assumptions, even more attractive. So we really look at it on the metric of cost of capital, and we clearly look at what is the capital benefit, but also doesn't it come too much as an OCG expense. Non-life?

Yes. We didn't mean to imply that the marketing is softening. I think some of the things we're doing are preparing ourselves also in case the market is softening, and that's why expense discipline and risk selection will play an important role because we cannot assume that things always stay the way they are. If you look at what's happening today, then clearly, motor is under pressure. We actually -- we've been increasing premium significantly ourselves. Most of the market is, not everybody. The interesting thing about motor is that any trouble in the P&C market, it always starts in motor, and certainly in retail motor. And so we've been quite vigilant in increasing premiums. The majority of the market is doing that, but not everybody. And that's a fact of life. That's why we don't get very bothered by that we're -- if we would lose some market share on motor, if it's not attractive. I think today it's still running well, but some of the other products, we do less premium increases than on motor.

So yes, if you look at then from a regulatory point of view, we're comfortable with the 91% to 93%. I think it's a good balance between, let's say, a good return that we make but also a good return for customers. Otherwise, we wouldn't also be giving this guidance for over a longer period, but we believe that this is the right combined ratio to steer the company on.

Benoit Petrarque from Kepler Cheuvreux. So 2 questions on my side. So the first one is on the 200% solvency ratio at group level. So do you want to be relatively close to that number, I guess, above that number, but relatively stay close to that number over the period? Or would you not mind to be running at a higher level, in line with some peers?

Question number 2 is also on the capital side, could you update us on the local ratios in Europe of the kind of units where there is a capital constraint? And also on the Dutch Life ratio, 185%, 190%, is that going to be a decent range also for the coming years?

On the group capital ratio, we obviously wanted to be sustainably above 200%. And as I said in my presentation, if we look at the net capital build that we have of roughly 8% per year and you combine that with small incremental steps of an increase in the capital return policy, that would really allow us to both increase that return policy, but also have a bit of an increase in the solvency ratio. So that's where our thinking is on the group solvency ratio.

Local ratios of Europe, I don't think we've disclosed them, but we, at the moment, do not see any constraints in any of the European countries to actually get the remittances out that we have in line with our plan. For NN Life, well, it was at 187% at full year results, still also very much at a strong level. So nothing more to add to that.

Jason?

I think that side is getting a anxious.

Jason Kalamboussis, ING. The first question is on the Dutch Life. In 2040, what are the assumptions for the accumulation of the margins you're assuming versus the ones that you can see now? And at what level do you think they will be? Because the idea is that normally, they should be increasing quite a lot along the way. So interested to know what you have baked in?

The second is on the longevity. You have EUR 10 billion that you will accumulate in 3 years. Where do you stand now? Should we take the buyout, the EUR 900 million you have done? Where do we stand there? And is most of it going to be coming out of buyouts?

Please limit to 2 because we have limited time left and there are still...

Yes, quite a bit of -- just on the same, is just it is -- the market has done so far EUR 6 billion, correct? Is that what we assume?

Can you pass the mic on to Hadley?

Sorry, I got distracted. Whether the market so far has done EUR 6 billion, yes. So last year, EUR 2 billion, and now we've done -- or the market has done EUR 4 billion. And there's still some RFPs out there. So it could be that it's a bit more.

Yes. And I think in terms of operating margin on the DC business, we've always said that we would be looking at 15 to 20 bps there. Obviously, the accumulation part is at a much -- is at a lower level. And the decumulation part is at a much higher level. And in the prospects we gave you where we would expect that in 2040, contribution of DC towards the OCG would be roughly EUR 200 million. We've taken into account that then the composition will have changed and there will also be a bit more decumulation in that figure.

And you also asked a question on longevity, I think. On longevity, we said we would build up roughly EUR 10 billion in 3 years. And that first year for the 3 years is already this year. So that's roughly EUR 3 billion per annum that we would build up. And the last transaction that we did was actually on the decumulation business. So that's not part of this EUR 10 billion, which is more on the back book.

Hadley?

Hadley Cohen, Morgan Stanley. A couple of very quick -- just checking a couple of things. The -- firstly, the Japan solvency, you said that the -- and the ICS impact, they have a negative impact on the group level but you'll look to offset that with management actions. Can you just explain what those management actions might be, please? And then secondly, around the EUR 200 million cost savings. Apologies if I missed this, how much of this actually flows through to the bottom line? What's the actual number that's in the EUR 2.2 billion? And then my second question is around -- Sorry.

I thought Japan is one question.

But hopefully, it's very quick anyway. But the -- I mean you're equipping all your tied agents now with lots more data and AI and technology and what have you. I'm just wondering if their sort of incentivization or remuneration structure has changed at all on the back of that?

Yes. I think to start off maybe with the first question on Japan, if there would be a negative impact, we would always -- and we have done that in the past, and we will continue to look at risk transfers for our reinsurance transactions for the Japanese entity. And you could also think of it further, you could also think about including the Japanese business on the internal model than we have at NN Group. So there are various ways that we could actually be dealing with them.

On the question on cost savings. Out of the EUR 200 million benefit of Future Ready, we said roughly EUR 180 million is expense savings, and then that EUR 20 million is VNB. Out of the EUR 180 million expense savings, roughly half or near EUR 100 million of that will actually flow through OCG because that's more the short-tail business. The rest will ultimately be captured in solvency ratio as far as it relates to NN life and pension and to the European business.

Yes, unit cost assumptions solvency. Remuneration structures, well, I mean, to be honest, remuneration structures constantly change with tied agents. But it is possible that over time, if we manage to get the efficiency much more up, meaning that they are so enabled that they can sell a lot more, that also the commission structures will come down. So that will be a trade-off on how effective we will be.

But agent retention is also very important. Historically, I mean, agent retention was shocking, 70%, 80% of the agents in general, in Central Europe are gone after a year. So a lot of effort is now put into keeping them, training them. But yes, I think the possibilities are that -- are a lot. So over time, you could see a change in remuneration structure because of all the support that we're giving as well.

Show of hands? Farquhar? Last question. I think we can leave it there.

Farquhar, Autonomous Research. Just 2 very quick questions then. Just coming back to the Future Ready program and AI more generally. I just wondered if you could give us a sense of how many FTEs work that is doing for you at the moment and where you expect that to go? And then secondly, a little bit of follow-up to Hadley's question about the cost saves and the EUR 200 million. The element that's going into the Solvency II revenue ratio in terms of capitalization, should I think of that as keeping you at pace with the cost assumptions, i.e., not really additive to Solvency II net-net?

Yes, I think on FTEs for AI, so when we say it's EUR 180 million of expense savings, and indeed half will go into the solvency assumptions and half into OCG, but it doesn't really matter in terms of -- yes, there will be FTE impacts, clearly. I mean there's other savings as well, but part of it will be FTEs that we're really steering, let's say, on the total expense savings. We're also hiring people, but there will be obviously job losses.

To be honest, it's nothing new. I mean if you go back 10 years, every year, we have -- digitalization has been ongoing. We incorporated Delta Lloyd and VIVAT and the overall FTE numbers have continued to trend down. So we do this. But when you get to the numbers, this is what you discuss with the union, with the workers council, you get into a social plan and that's when you also talk about the actual FTE numbers. So -- but it's not something we steer separately on. We really steer on the monetization through euros, not so much on FTEs.

Yes. And on the question on the capitalization of the FR expense. For Life, you would really use it to keep the unit costs flat and in line with the runoff of the book, similar to Europe, although there maybe at some point if you can prove that your assumptions are actually that you can yield the results, then there could be some room. But it's mainly used to keep the expenses in line.

Thanks for the question. I mean, we still have 4 breakout sessions coming later this afternoon, where you can ask a lot more questions. I think David, you want to wrap up for the webcast?

Yes. So yes, certainly, I think that for people on the webcast, we still have a very interesting and exciting program that will come offline, unfortunately for all of you, but I want to thank you very much for participating. Obviously, we're proud to present and come out with these targets, the growth that we're seeing, the change in the profile of the company supported by underlying positive trends but also by, let's say, all the technological advancements that we see.

So thank you very much for joining. We will now have a lunch break for all of us, and then we'll be back to go into the deep dive sessions and the breakout sessions. And for people on the webcast, I hope -- we will be on the road a lot, starting travel tonight. So hopefully, we can also meet in person in the coming period. Thank you very much.