Prudential plc ADR Aktie

Thank you for standing by, and welcome to the Prudential plc 2025 Full Year Results Q&A Audio Webcast Call. [Operator Instructions] I will now hand over to Patrick Bowes. Please go ahead.

Good afternoon, good morning, good evening, everyone. Welcome to Prudential plc's 2025 Results Analyst and Investor Call. Before I turn over to Anil Wadhwani, our CEO; and then Ben Bulmer, our CFO, a couple of housekeeping points.

A recording of today's call will be available from Tuesday next week. Our full results package is available on our website, and I'll refer you to the disclaimers and safe harbor wordings in these documents, and they also apply to this call. Anil and Ben will start the call with opening remarks followed by a Q&A. Also on the call today are Angel Ng, Dennis Tan, Rajeev Mittal and Naveen Tahilyani.

Now let me pass over to Anil, our CEO, to start us off.

Thank you, Patrick. Good morning, good afternoon, and good evening, everyone, and thank you for joining us today. I would like to begin by expressing my sincere thanks to our retiring Chair, Shriti Vadera. Shriti has successfully led the Board through a period of significant change for Prudential through economic and political turmoil and, of course, the challenges of the COVID period. She has been a strong supporter of the management team throughout our transformation journey. I'm very grateful for her leadership of the Board and her counsel to me, and I wish her all the very best in her future endeavors.

I'm also delighted to welcome sir Douglas Flint, as our incoming Chair, who will take up the role at the conclusion of the AGM. Douglas has experience of financial services and strong knowledge of the markets we operate in, and I am looking forward to working closely with him.

Turning to our 2025 full year results. I'm very pleased with the high-quality double-digit growth across our key financial metrics delivered in line with guidance and the increased returns for shareholders. This performance reflects the strength of our multi-market, multichannel business model and disciplined execution of our strategy with a continued focus on writing high-quality new business. Both new business profit and adjusted operating profit after tax per share grew 12%, while gross OFSG and dividend per share were both up 15%. Importantly, we consistently delivered double-digit growth in new business profit in every quarter of 2025. We also successfully completed the IPO of our Indian asset management company and increased our holding in our Malaysian conventional business to 70%. We continue to demonstrate disciplined capital management and a clear focus on shareholder value, and we now expect to return over $7 billion of capital to our shareholders between 2024 and 2027.

Turning to our strategic transformation. We are now three years into our five-year plan and have delivered 18% CAGR in new business profit growth from 2022 to 2025. We continue to strengthen our capabilities and operational execution to deliver consistent and ongoing quality new business and cash generation. First, we are executing with focus across our distribution, strengthening our agency channel while sustaining strong momentum in bancassurance. Agency is our largest channel and building and growing a high-quality professional and advisory-led agency force at prudential scale requires sustained commitment and disciplined execution. Productivity measured as new business profit per active agent improved by 15% in 2022, which I am very pleased with. This has been supported by continued strengthening of our $1 million roundtable or MDRT pipeline. At the same time, we see further opportunity to increase the number of active agents, specifically in emerging markets in ASEAN through quality recruitment, segment-specific propositions and supporting agent activity through technology enablement.

Turning to bancassurance. Prudential has a leading bancassurance franchise in Asia. The channel delivered an outstanding year with new business profit crossing $1 billion mark, representing around 95% of the lower end of its 2027 new business profit objective. Second, we continue to enhance the quality of new business by deepening customer engagement and improving experience across all touch points, unlocking synergies with our in-house manager Eastspring and building on our strengths in health to extend further into protection.

Third, we are driving efficient growth by modernizing our technology as well as embedding analytics and AI across agency health and operations to better support our agency force and deliver simpler, better experiences for customers. And finally, we have continued to make good progress in reducing core business-related variances, supporting the quality and sustainability of our capital generation. As a result, gross OFSG increased by 15%, marking an important inflection point on the path to meeting our 2027 OFSG objective.

While the macro environment remains volatile, our presence across Asia and Africa gives us access to significant structural growth opportunities. The strength and resilience of our multi-market, multichannel model allows us to deliver consistent, high-quality growth and generate sustainable shareholder returns. We will carry the momentum we set for ourselves in 2025 into 2026, and we firmly remain on track to achieve our 2027 financial objectives.

Now I'll hand it over to Ben, our CFO, to walk through our financial highlights.

Thanks, Anil, and hello, everyone. In 2025, we delivered on our guidance, double-digit growth across our key financial KPIs, demonstrating the strength of our diversified multichannel and multi-market business model. We intend to build on this momentum as we work towards and beyond our 2027 objective year. With higher NBP, further growth in our in-force and asset management results, flat central costs and the benefits of our strategic and capital actions, we increased our 2025 return on embedded value to 15%. We continue to see scope to improve this as we progress towards our 2027 financial objective, driven by further NBP growth, a return to positive operating variances and ongoing disciplined capital management. We also reached the inflection points in our capital generation trajectory with gross OFSG up 15% year-on-year, whilst our net OFSG is up 22%. The group's capital position remains highly robust. Our free surplus ratio ended the year at 221% or 204%, excluding the IPO net proceeds, broadly consistent with the 175% to 200% normal operating range we've set out. We were pleased that our financial strength and flexibility was recognized by S&P with its upgrade of our financial strength rating to AA.

We updated our capital allocation framework in August last year. We gave guidance of greater than 10% dividend per share growth each year from 2025 to 2027. The 2025 dividend per share increased 15%. We also announced that shareholders will benefit from additional capital returns over and above the ordinary dividend, starting with $500 million this year and a further return of $600 million expected in 2027. This framework is intended to be enduring, and we thus intend for further additional capital returns in 2028 and beyond. Capital above our established 175% to 200% operating range will be assessed regularly and if deemed excess return to shareholders.

We plan to return all of the $1.4 billion net proceeds from the IPO process to shareholders to be split half this year, half next year. In January, we launched a $1.2 billion buyback to be completed by the end of 2026 and expect to return a further $1.3 billion in 2027. So we're delivering growth in value and what we believe is a highly attractive returns proposition.

We remain focused on growing quality new business with strong underlying capital generation. New business profit grew 12% and the addition to 2027 capital emergence increased by 16%. The NBP margin expanded 2 percentage points to 42%. Further improvements in our agency performance and increasing the proportion of health and protection business continue to provide opportunities to improve margins over the medium term. The management of our in-force book continues to improve, reflecting actions taken in strengthening our health claims management.

We are also benefiting from economies of scale with total costs growing more slowly than revenues. This positive leverage will allow us to continue to invest in our business on a normal course basis. We intend, as we've said, to largely complete our capability investment program in 2026 with an investment of between $300 million and $350 million, and we are very confident of returning to positive variances by 2027.

In summary, we delivered improving financial performance in 2025 with double-digit growth across our key financial KPIs, consistent with our guidance. The consistency of our operating performance also improved. And while there's work to do, we were pleased to deliver double-digit NBP growth in every quarter of 2025. For 2026, we are again guiding to double-digit growth across our key financial KPIs, and we remain very confident in achieving our 2027 financial objectives.

With that, I'll pass back to Patrick.

Thank you, Ben and Anil. I'll now hand over to our conference call operator, Jake, who will provide instructions and then open the lines for questions. Please remember to give your name and organization you represent when asking a question, and you're also welcome to submit your questions online. So over to you, Jake.

[Operator Instructions] Our first caller is Thomas Wang from Goldman Sachs.

It's Thomas here from Goldman Sachs. If I can kind of start with a kind of broad question on growth. There's a few kind of surprises on this set of number. I think China, definitely, I remember in the first half, our guidance was kind of high single-digit MBP growth, but we end up with something close to 30%. Very strong in second half. I just wondering what you see in terms of outlook for 2026? Do you think that we can maintain this momentum into 2026? And secondly, maybe on Hong Kong, slightly slower growth in the second half, maybe not surprising, but I just want to get your thoughts on '26 momentum? And how do you see kind of the base effect? Is that -- how challenging that is, and how confident we are getting back kind of to a double-digit or potential mid-teen growth in Hong Kong? And if I can just -- sort of related to this, I think the '25 growth was mainly driven by bancassurance. Agency channel was just about 4%. I think that's probably tied to Hong Kong as well. Just wondering, can you give a little bit more color on what's kind of initiative to drive that agency growth in 2026?

Thanks, Thomas, for those questions. I guess there are three questions. So just bear with me because I guess it's going to be a slightly long answer as I try to address each one of them. So firstly, let me start with the broader outlook. So we clearly were pleased with the 2025 outcomes. I thought it was a landmark year for Prudential. Our new business profit grew at 12%. Importantly, it was an inflection point for OFSG that grew at 15%. And our transformation execution is getting sharper as well as clearly, our model is underpinned by multi-market and multichannel. And that gives us the confidence to take the momentum that we set for ourselves in 2025 to 2026.

As Ben mentioned in his opening comments that we are guiding to delivering double-digit growth across our financial metrics for 2026 as well. Now specifically coming to China, clearly pleased with the 27% growth on new business profit that we delivered in Mainland China, specifically pleased with the improved trajectory and momentum that we saw in the second half of last year, where both bancassurance and importantly, agency delivered strong double-digit growth.

At the same time, as you know Thomas, we have been working very hard to retooling our business and driving quality growth underpinned with strong risk discipline processes. And you're starting to now see the evidence of that growth come through. We were also delighted with the fact that our par mix is touched to 40%. It was close to 15% in the prior year. And again, that's a step in the right direction and again, underpins as to how we are managing quality growth with strong risk discipline.

I'm not going to give you a market-specific guidance. As I said, the guidance overall is double digit. And clearly, China is going to play a key part in helping us drive that double-digit performance in 2026. Let me shift gears and talk a little bit about Hong Kong. So firstly, just stepping back, I really like the shape of our Hong Kong business. We grew both Mainland Chinese visitor segment and domestic segment. And both our channels, bancassurance and agency grew too. Our focus at all times has been quality, which was illustrated by the 2 percentage points improvement in margin. And our new business profit for full year 2025 grew by 12%. Now as you pointed out, second half was a bit of an unusual period for us in Hong Kong, given the fact that we were embracing a slew of regulatory changes, specifically targeted towards the broker channel.

So for example, the referral fee cap, the spreading of commission, also the changes that came through on illustration [ cap ] led to the growth coming in, in short-term products largely through the broker channel. Now for us, the focus has been quality new business that generates cash at an accelerated pace. So let me give you a couple of proof points on that. One, 95% of our business in Hong Kong were in tenures greater than five years as opposed to an industry average of approximately 40%. We have leadership in Hong Kong on the critical illness business. And in quarter 3 of last year, we established leading position on the health business.

Importantly, our Hong Kong renewal premium growth was 15% year-on-year. Our primary channels continue to be agency as well as bancassurance for obvious reasons because we have a greater influence both on customer experience as well as a higher degree of influence on product mix. And importantly, our agency growth in terms of new recruitment was again greater than 5,000 with our active agent growth in Hong Kong, growing at 12% for 2025. We continue to see demand both across domestic as well as Mainland Chinese visitor segment, be it in legacy planning products, multicurrency products as well as health and protection. And a combination of these factors gives us the confidence that we will grow our agency as well as our Hong Kong business in 2026.

Now to your third question on -- specifically on agency. So clearly, we are not as pleased with the agency growth as we are with bancassurance. Remember, we are a multichannel, multi-market growth engine model. Bancassurance has done exceedingly well for us. Agency clearly came in below expectation.

Now let me step back and just explain and give you a little bit of color in terms of what's going on in our agency channel. So if you look at our 3-year growth between '22 to '25, we have delivered a growth of 18% CAGR over the last three years. This has been predicated on the back of a 19% growth in agency and a 12% growth in bancassurance. And as I said, I like the complementing nature of agency and bancassurance. There have been years where agency has performed better than bancassurance, and there have been years where bancassurance has performed better than agency.

Agency transformation is our #1 priority. And I'll have Naveen, who heads agency as well as some of our ASEAN markets give you a little bit of color. But let me preface it with a few points. So firstly, there are two specific measures that we are pressing forward on agency. First is productivity, as is measured by new business profit per active agent, and I'm very pleased with the growth that we witnessed last year. It was up 15%. It helped us offset the decline of 11% on active agents.

Our active agents was largely impacted by the emerging ASEAN markets of Vietnam, Philippines, Malaysia and Indonesia. And if you go under the hood and look at what the driver of that was, it was largely the new recruitment in these four markets. I'm going to stop there, and I'm going to have Naveen articulate as to what are we doing about it specifically and illustrate that with a specific example in terms of how we are implementing some of the steps to change the momentum on agency. Naveen?

Thank you, Anil. So first and foremost, over the last few months, as I've had a chance to spend time with our top agents and leaders on the ground, I'm very convinced that we have some very high-quality top-notch professionals working with us and our agency quality is right up there in these markets.

Second, when I look at the different initiatives in our agency strategy, I'm fully aligned, and I think we cover all the bases in terms of both the aspects that Anil mentioned, improving the top-tier productivity as well as looking to enhance the activation and recruitment. Now the top-tier productivity initiative is already working well. Anil already shared the data points over there. As far as enhancing activation through quality recruitment, we are focused on creating professional recruitment schemes, which work on the right capability building for the leaders as well as agents, supporting them with the right technology and the right propositions.

One such example is PRUVentures in Malaysia, where this scheme has scaled up in the second half of last year. And for all of last year, this scheme accounted for about 1/4 of our incoming class of recruits in Malaysia. And what is very interesting to see and very encouraging to see is the fact that the retention as well as the productivity of this incoming class through PRUVentures is significantly higher than those coming through other schemes. So for example, particularly on productivity, the productivity of these agents is 6x that of the non-PRUVenture recruits. So our focus right now is to take such professional recruitment schemes with discipline to other markets and make sure we can use that to scale up our recruitment as well as our activation. So that's what we are doing. Anil, back to you with that.

Thanks, Naveen. So just in closing, Thomas, building and scaling our high-quality professional agency force in Asia and that also of a size of Prudential does require consistent commitment and focus on execution. And we are absolutely confident and focused on driving the transformation on agency.

Our next caller is Farooq Hanif from JPMorgan.

Just on the point of agency, can you just explain why you don't just use PRUVentures entirely for recruitment? And then can you also talk about the technology arms race in terms of the digital tools you're giving your agents? My sense was that -- and I might be wrong, but you were kind of behind, you've come along, you've invested.

Do you feel like you're in line or better than your top competitors when it comes to that kind of technology? Second question is understanding kind of the remittances. So the capital position of your subs seems strong. You've remitted quite a lot of capital. Can you just talk about why you've remitted so much capital to the holding given your previous comments that you prefer to keep this as much capital in the subs to earn a higher return? And what's the outlook here? And how will that impact your investment margin going forward? And my last question is will underlying variances, so that's obviously excluding the capability investment. Will they reach an inflection point in 2026? I mean they may turn positive or slightly positive, but what can we model in for that? And how does that differ between sort of free surplus and IFRS?

Thanks, Farooq, and thanks for this question. So let me first take the PRUVenture one, and I'll again have Naveen provide you some greater insights and greater color. And then I will go to Ben on the remittances and the variances question. So firstly, we have seen great success on PRUVenture, for example, in a market like Hong Kong. And the success is what really drove us to now rolling that out in some of the other markets. And again, Naveen has illustrated in terms of the early impact of that witnessed in Malaysia. And our ambition now is to kind of roll that out at a brisk pace across the different markets of ASEAN. But I'm going to stop there and ask Naveen to provide you a greater color both on the extension of PRUVenture as well as the technology enablement.

Okay. So thanks, Anil, and Farooq, thanks for the question. So PRUVentures, as I said, is a scheme which is about encouraging professional recruitment, both at the leader level as well as at the agent level. To build on the example that Anil already shared of Hong Kong, where this scheme has kind of scaled up over the last year, the increase in number of PRUVenture recruits was 43% and 2/5 of the incoming class was actually from PRUVentures. So Hong Kong is an example of a market where we have successfully scaled up PRUVentures.

And of course, we'll continue with these efforts in this particular market. I already illustrated Malaysia, which scaled up in the second half of last year, and we will have the impact of PRUVentures through all of this year in Malaysia. And exactly, as you mentioned, our effort right now is with some customization to take this scheme to the other emerging markets of ASEAN, particularly Indonesia, Philippines, Vietnam, where, as Anil said, we've been kind of looking to improve our recruitment and hence, our activation.

Now each one of these markets requires a little bit of customization, a little bit of change to the scheme, and we have kind of -- we have done that, and we are looking to implement that with discipline as we move forward. So that's on PRUVentures and professional recruitment.

On technology, we think of technology and agency in two loops. One loop is how do we improve the agent productivity as they think about interaction with their customers. So this is about lead management, prospecting, sales, service and claims management. And the second one is what -- how does an agent and a leader improve their own productivity in terms of realizing what their compensation is, what their action should be, and how do they think about improving their income. Those are the two loops in which we think about technology and agency.

My assessment of where we are in today in terms of that technology capability, we are right up there with the best in the market. So we have a proprietary platform called PruForce. You may have heard of this name before, which is now rolled out to all the markets, and we are looking to continuously enhance the capabilities in PruForce. But as of today, we are pretty good right up there on both of these aspects. What we are doing now is actually injecting a healthy dose of AI into this in a very practical targeted manner on both of these value loops, the customer value loop as well as the agent and the leader value loop.

An example of that, which I want to share is PruAction, which was pioneered in Singapore last year. And this was an AI-enabled performance management system for our agents and leaders to improve their productivity. As we went through this, we saw an increase in productivity of about 15%, which is quite strong. And we are now looking to take PruAction to all the markets that we have as far as agency is concerned. So that's where the technology focus is, and we'll continue to get better and improve as we move forward.

Thanks, Naveen. Now moving to Ben for the next two questions on remittances and the variances.

Yes. Thanks, Anil. Hi, Farooq. So on remittances, look, I continue to guide you to the 70% ratio in terms of the remittance rate for LBU net surplus generation. You're right, I elected to bring up some stock this year from the Hong Kong business. I do like having a balance of surplus in both centrally and in the businesses.

I said that before, we like to have agility locally. We have stakeholders to manage. That said, I'm not going to leave excess capital in businesses. I will bring that up to center. You're right, it did have a temporal impact on the net investment return in the IFRS result, along with the effects of some China derisking that we did.

And similarly, when you think about earnings, we have a lower sort of central net investment return number as a result of completing that $2 billion buyback from stock. In terms of the underlying variances, I'm pleased with the progress we're making. I think they materially improved year-on-year. And now really, if you remove the investment in capabilities, fairly close to being neutral. I'm very confident that we're going to return to those historic pre-COVID norms of positive operating variances within our objective period. And of course, we're a bigger business now than we were. We're very much focused on continuing to drive underwriting profitability. I think you've seen evidence of that and investing in our capabilities to drive growth and scale.

So ultimately, this is about operating leverage. And I'm pleased to see renewal premiums up double digit once again last year. We will continue to focus on cost containment to also improve that operating leverage, and that gives us the headroom to then continue to reinvest in the business on a business-as-usual basis going forward. I think you asked about differences between IFRS and TEV. There are some differences in geography, of course, between sort of VFA and GMM. The key thing to bear in mind there is that about 2/3 of our investment in capabilities are sat in the CSM unlocking number as opposed to that variance line. So yes, very confident we're going to continue to drive very strong variance performance.

Our next caller is Michael Chang from CGI.

It's Michael Chang here. Can I just check you can hear me?

We can hear you, Michael, loud and clear.

Okay. Yes, I really like the results, especially in relation to the Mainland China business. I think it's very impressive what the business has done, especially on the bancassurance front. So can I just get some more clarity? I understand that Citi has been a great partner as well as SEB. I think they contribute, if I'm not wrong, 2/3 of the APE. It seems that a lot of investors within the China space right now for the insurers, they are quite focused on this wave of maturing time deposits, which the bancassurance is best placed to capture.

So could I maybe get some color on any initiatives you have in terms of further deepening the relationship with CITIC in terms of maybe more branches as well as with Standard Chartered, coupled with any new initiatives in terms of new bancassurance partners? So that's the first one. And I think the second one is primarily in relation to the Asia market, I think one of the key structural themes post the pandemic -- well, sorry, even more so post the pandemic has been the very strong demand for wealth management solutions. In the case of the insurers, there are some, some of your peers who are making the point that maybe third-party channels is a good way to tap this opportunity. Now I know that Prudential is extremely strong in the agent channel and the bancassurance channel. So maybe you can just shed your light -- shed some light on your thoughts about using third-party channels to tap this wealth management opportunity, and why have you chosen to actually be relatively underweight versus your peers on this front?

Thanks, Michael. So let me start with China, and I'll go to Angel, who can probably give you a little bit more color on how we are thinking about the China growth and specifically to your point on deposits and the deposits maturity because you're right in pointing out that the China or the Chinese economy continues to be a very high savings economy, which, in many ways, given the low interest rate environment speaks to some of the solutions that we can bring to our customers. But I do want to start by saying that clearly, bancassurance has been a key driver of growth for us in China.

And it's heartening to see that we are now seeing a significant traction from CITIC Bank, and this is on account of the focus that Angel has brought in terms of ensuring that there is a segment of branches that are exclusively dedicated to selling CITIC Prudential life insurance policies. And that has made a dramatic difference in terms of CITIC's contribution to the overall bancassurance sales and the overall sales in China Mainland as compared to some of the previous years.

I think interesting to note, our margins on bancassurance are pretty healthy in China. And that again underscores the point that I made earlier to Thomas' question that, that is underpinned by the focus on quality, and how we would like to grow our new business profit in China. But I'm going to stop there and turn to Angel to specifically answer your time deposit question.

Thank you, Anil, and thank you for the questions, Michael. You are correct that Standard Chartered and CITIC both are our strategic bank partner, which are also delivering very good growth rate in 2025. Especially on your questions on CITIC Bank, we've launched the preferred branch model last year, with the first 50 branches basically is to aim for increasing our wallet share in those branches by giving them dedicated resources like insurance specialists to help the relationship managers to sell the products better.

So that yields very good results. And into 2026, we are aiming to increase the number from 50 to 100. So basically doubling the number of preferred branch under this model. The other one that we are working on is to increase and diversify our partnership in the bancassurance channel. We are going to focus to work on the top 10 partners in the bancassurance channel so that we can also repeat what we have turned out in the CITIC preferred branch model business. The last point that I want to talk about is your point on deposit maturity.

We are working very closely with all of our bank partners to capture these opportunities. Especially, we are going into a deeper collaboration with the private bank segments of our bank partners with greater engagement with the high net worth customer, which will increase our average ticket size. So I think these will give us a very solid plan going into 2026 to deliver our business target. Getting back to you, Anil.

Thanks, Angel. So Michael, going on to your next question on wealth management brokers and are we planning to do more there? The short answer is yes. While our primary channels continue to be agency and bancassurance for reasons that I articulated earlier, absolutely

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we are engaged on a very active basis, where we are seeing the greater kind of attraction for wealth management offering. But you will see more innovative solutions coming from us in that space. Mind you, one of our key differentiators, and I want to bring this point back is the complementing nature of bancassurance to agency. Bancassurance has done well because it continues to attract a certain level of flows from emerging affluent customers as well as high net worth customers. And that continues to be a great source for us to engage customers through our preferred or strategic bank relationship partners. Some of them, as Angel mentioned, are not only limited to China, but to the broader Asia and Africa landscape.

Our next caller is Andrew Crean from Autonomous Research.

Three sort of numbers-based questions. Firstly, you've given on bancassurance that you're 95% of the way to your -- the lower end of your target. Could you give the same percentage for agency? Secondly, agency active numbers at 57,000, you were targeting 80,000 to 90,000 by 2027. Where do you actually think you're going to land on that? And then thirdly, you talked about improving new business profit margins in the medium term from the current 42%. Could you be a bit more specific as to what medium term is, and where 42% can go to?

Thanks for those questions, Andrew. So you're right that bancassurance is at 95%. So that allows us a significant level of headroom close to two years in advance of the goal or the objective that we had set for bancassurance. Agency on that same count is roughly about close to 2/3 of the objective that we had set for agency. And that also kind of leans in to your second question, which is what are we doing about active agents, and Naveen was trying to articulate that.

And the way we are thinking about this, Andrew, is that we are going to push both the productivity as well as active agents, right? And I don't have a kind of specific kind of mathematical formula for what I would like to kind of get to. As far as either through productivity or through active agents or a combination of that, we still kind of hit the agency, agency number. And that could be different as compared to what we had conceived three years back, but I'm still confident that we will press on both the levers of productivity and active agents to get to the agency outcome that we had set for ourselves for 2027. To your question on NBP margin, I'm going to go to Ben for him to elaborate.

Yes. Thanks, Anil. Hi, Andrew. So look, I do think we have opportunity to continue to improve margins. I'm pleased with the performance, not just last year, but the year before as well. And that opportunity is fourfold really. Firstly, improving our health and protection product contribution in the mix. Secondly, accelerating agency growth, and you've heard that's the #1 transformation priority.

Thirdly, really, it's back to this point on operating leverage and building scale, and we're seeing that scale coming back. And then finally, we'll continue to look to actively reprice propositions, and you've seen activity there. In terms of why medium term, maybe a bit of specific guidance. We talked in China about driving a greater proportion of par business. Our margins in China have come down 3 points year-on-year in 2025. I expect a further reduction in 2026 as we drive a higher proportion of participating business. Stepping back, though, I do think we have -- continue to have ample opportunity to drive overall group margin.

Our next caller is William Hawkins from KBW.

Could you talk a bit more about some of the non-Chinese markets, please, Anil, your outlook for Indonesia, Singapore and Malaysia? I mean are these proportionate contributors to double-digit growth or tailwinds or headwinds? And then secondly, please, the -- there's a 20% increase in required capital for the surplus ratio, I think. That feels sort of slightly outsized to your guidance that it should grow roughly in line with new business profit over time. So I've got in mind that it should be more like a sort of slightly north of 10% growth in the future. So can you explain if I'm right, why was there an outsized growth in required capital? And what's the outlook for that metric in the surplus ratio? I'll leave it at that.

Thanks, Will. So let me start with Singapore, Indonesia and Malaysia. Yes. So yes, we obviously are looking for all the ASEAN markets to contribute. On Singapore, let me give you some texture. Clearly, very strong momentum on sales in the second half of last year. The sales grew by 19%. The challenge that we had in Singapore was more around product mix, which was skewed more towards savings and wealth as well as the demand coming from the government-sponsored medical plan, which is known as Shield, got calibrated because of changes in the co-payment rules.

On account of the steps that we are taking as well as the strength that we have in Singapore, both in terms of the 1.5 million customer relationships as well as the distinct strengths across bancassurance, tied agency and financial advisory channel, we believe that we can grow Singapore to high single digit on new business profit, if not early double digit. Indonesia, very pleased, 11% growth on new business profit.

And mind you, this is the second year that we've been able to deliver new business profit growth in Indonesia, which is what we had struggled to do that in the prior years running up to COVID and even coming out of COVID. So pleased with that. And it also tells you that we are in a much better position to be able to address some of the challenges on medical inflation as well as we distinctly see an opportunity to Naveen's point, in terms of improving our agency momentum.

So I believe that Indonesia will continue to be double-digit growth. Malaysia, again, was a struggle for us in the first half of last year, but did exceedingly well in the second half of last year. And again, it talks to some of the steps that we took on PRUVentures, and how we are retooling our agency. We are seeing that momentum carry forward into 2026 and remain optimistic that Malaysia will come back to deliver double-digit growth as opposed to the 5% new business profit growth it delivered in 2025. I'm going to go to Ben on your second question.

Yes. Thanks, Anil. Hi, Will. So the simple answer is it was down to nonoperating effects. We had very strong equity market performance in a number of our markets, where the local regulatory basis uses economic capital models and also has, as it happens, countercyclical equity risk adjustments. So in periods where you have very strong equity performance, the risk adjustment increases, required capital grows. Of course, your available surplus also grows. But when we look at the free surplus ratio, we take that required capital number over.

But of course, we truncate available surplus of what's actually fungible. So really, it was down to outsized equity performance in a few markets. Going forward, when you think about modeling required capital, I would guide you again to low double-digit growth rates of 12%, 13% in mind.

Our next caller is Kailesh Mistry from Deutsche Bank.

A few questions from me. On numbers, just on China CPL, could you just give us the core and comprehensive solvency ratio post the bond in January? Second one, there's something about a slightly lower CSM release rate in 2026. How much does that go down? Does it go down below 9%, or does it stay above? Or alternatively, you can give us the release rates for Indonesia and China, which seems to be driving that? And then thirdly, just on agency, could you just give a little bit more color about this comment in the statement about revamping agency compensation? Are you changing the incentives, or is it purely about increasing commissions to make it more attractive, et cetera, et cetera?

So I'm going to go quickly to Ben for the first two and then Naveen for the agency question.

Hi, Kailesh. So if you pro forma for that recent perpetual debt issuance, the business is operating at 3x and 2.3x regulatory minimum levels. So more specifically, core is at 150% comprehensive around 234%. As I've mentioned before, we've increased our sources of local financing. And later in the first half of this year, the business will recapture some existing sub debt and replace that with perpetual debt, and that will give a further solvency uplift. In terms of your question on IFRS. Actually, at a group level, the release rate is going to be marginally lower. So in the sort of late 9.4s rather than 9.5s.

Okay. Thank you, Ben. And we're over to Naveen.

So on the question on agency compensation, this is a structured initiative as a core pillar of our agency transformation to encourage the two behaviors that Anil already mentioned. One was improving top-tier productivity and the second one was to enhance quality recruitment.

So what we have done through last year and this year so far is actually piloted this in a number of markets and put these structural initiatives now in place. In fact, we had pretested this with a large number of our agents and leaders. In the pretesting, it was very well received. And now in the markets where we have actually rolled it out, it's also very well received and the implementation has been quite smooth. This is targeted to both agents as well as their leaders who actually recruit them. And as I said earlier, it's totally aligned to our transformation objectives.

Our next caller is Changazi from Kepler Cheuvreux.

Just very briefly on this PRUVenture, which sounds very interesting. In terms of what happened in Hong Kong, 2/5 of recruitment, new recruitment came from PRUVenture. So what was the number of agents in '24 and '25 in Hong Kong? And on the OFSG, just two questions. We have the usual slide where we're looking for 2026 new business profit contributing plus $0.5 billion to 2027 OFSG.

Can I just -- is that assuming some sort of mix shift, which accelerates conversion of OFSG or is just normal new business profit growth? And the last point on the operating variance, I know Ben mentioned positive returning to historic positive levels previously, and you're a bigger company. Previously, you used to give that chart where it was 0.9% of opening EV from 2011 to H1 '24. In '24, it was 1.4% of opening EV. How -- is there any reason not to assume it will be 8% of opening EV, and where should we be landing on that percentage?

Thanks for the question. Let me give it to Naveen to the Hong Kong PRUVenture, and then we'll go to Ben for the two questions on financials.

Sure. So on Hong Kong PRUVentures, as I said, PRUVentures is fundamentally a high-quality professional recruitment scheme in Hong Kong. Very pleased to share that last year, which is in '25 compared to '24, PRUVentures scaled up by 43% and 40% of the incoming class of recruits was through PRUVentures. So that's where we are on Hong Kong, and I already covered Malaysia. And as I said, we will now be looking to roll this out with the right customizations to other markets.

Thanks, Naveen. Let's go to Ben on these two financials.

So on the OFSG production -- projection slide, I think you're referring to Slide 43 on the top right, a, the new business additions. So the -- that is the normal profit signature that you're seeing there. We design our products to be very capital efficient. It's about capital velocity for us. So we're writing business with a fast monetization profile and a short payback period.

Put simply, the cost of writing the business, whether that's distribution, underwriting, admin, capital requirements or so on, comes through in year 1. And then we try to recoup some of those costs through the collection of second year premiums to match revenue to costs closely as possible. So that's why you have a jump there in the release. And thereafter, it's more of a levelized pattern. I'll be brief on variances. You should have in mind north of $200 million in 2027. As I said, we're now a bigger business. We're very much focused on driving scale and cost containment.

Okay. Thanks, Ben. Conscious time runs on. Dominic, do you want to go next? Jay, give you to Dominic, please?

Our next caller is Dominic O'Mahony from BNP Paribas Exane.

I will try to be quick. Three, if that's okay. One is just on your IRRs, I think greater than [ 25% ] is a great number. How does that compare between banker and agency? My guess is that banker is lower, but tell me if that's wrong. The second question is just on the shape of new business surplus emergence, really following up on Farooq's question. Are you expecting any further change in the shape? It's accelerated in '25. Should we expect further acceleration in the shape of emergence beyond this? And then a last question on variances. Very clear, thank you, Ben, for the explicit guidance on the variances in '27.

If you're still -- if you're already growing, frankly, at a very decent clip, I would have thought that you would have already got to the stage where you're getting the benefit of that operating leverage coming through in the variances, which says to me there must be some relatively substantial negatives coming through still in '25, offsetting that to get to your $45 million negative. What are these? What are the sorts of things that are acting against that?

Ben, do you want to take that?

Yes. Hi, Dom. Look, I'll start -- I'll do it in reverse order, if that's okay. In terms of variances without repeating my earlier comments, the sort of residual negative you're now seeing is a mixture of scale coming back, but we continue to, if you like, incubate some of our smaller businesses. So Cambodia, Laos, Myanmar, Africa, for example. Scale is building nicely as renewal premiums compound. We have further actions in train to drive cost containment, just to give you a little bit of color.

So it's not simply about revenue compounding. We are focused on changing or structural changes in the cost base through automation, digitization, tech convergence, investing in processes, using centers of scale and excellence all with the aim of driving lower net costs going forward. So we'll -- we hope to be able to deploy that leverage into reinvestment in the business.

Cash profile, I'm pleased with all the improvements we made over the last few years. I know you're very aware of those as a result of repricing, so I won't repeat them here. I think we do have opportunities to continue to improve the business. This is -- and we'll look for that from a repricing perspective, but mix, more health and protection, again, accelerating agency will all help with that cash profile.

To be very clear, I'm not reliant on any change in business profile to get to 2027. You shouldn't read that being inferred into these numbers. And that's because we put the hard yards in repricing savings products a number of years back. So we're not reliant on that, comfortable with the 2027 target.

On your IRRs, actually, on -- in terms of the products sold, very similar products sold on. So at a product level, the IRRs by channel are actually pretty consistent. So differences in the sort of channel IRRs overall are more a factor of mix. And as I think you know, the agency channel tends to sell a greater proportion of health and protection. That said, one of the things that has improved our margins and our cash profiles is the success we've had driving health and protection through the bancassurance channel, improving our margins consistently year-on-year. So very pleased with that.

Thank you, Ben, for that concise answer. We've got a chance for a very last question from Nasib at UBS. Jake, you let him through. We'll take a few offline. I can see a few on the list. We'll come back to them from the IR team. But Nasib, do you want to go ahead?

Our next caller is Nasib Ahmed from UBS.

Just two questions from me. Firstly, on Hong Kong market share, I was looking at Hong Kong Association data. 2023, you had about 30% market share. I'm looking at agency and now 2025, you're less than 25%. That's as a percentage of APE. So can you give more color on are you going to grow back to greater market share in Hong Kong in dollar amounts?

And then the second one is on numbers. Ben, you said investment spend is going to be broadly done by 2026. I think if you kind of add up the numbers, you're maybe left with $100 million, $150 million of the $1 billion. Are you expecting to spend less than $1 billion in '27? Is it kind of closer to 0 or 50?

Thanks for those questions, Nasib. So on Hong Kong market share, again, I want to kind of go back to the emphasis on quality growth, right? And that is where our focus has been. Within that, those parameters, yes, we absolutely would like to grow our market share, and we do have plans to do that. But at all times, our underpin will be quality growth as well as cash generation. And again, just to illustrate that point, we did improve margins despite the activity that we saw on different fronts in Hong Kong by 2 percentage points, which is a good illustration. And I gave some other stats to illustrate the point as to the discipline that we are adopting in focusing on quality growth in Hong Kong.

What we are interested, Nasib, is market share of new business profit and market share of profitable growth in Hong Kong as opposed to simply driving sales market share. But as I said, broadly within the construct of quality, absolutely will be driving a greater level of market share. Ben, you want to take the last one?

Yes. Hi, Nasib. So yes, look, it's our plan to largely complete the investment in capability program in 2026. We'll be investing a further $300 million to $350 million. And this investment essentially covers foundational dimensions. I'm not expecting material amounts in 2027. And we're being very disciplined about our spend. As I mentioned earlier on the call, our focus is on driving operating leverage, and that enables ongoing investment in capability in the normal course of business beyond the target period.

Okay. Thanks, Ben, very much. Jake, I'm going to pass back to Anil to close the call. He's just got some very closing remarks.

Thanks, Patrick, and thanks, everyone. Enjoyed the questions. And hopefully, we were able to provide you a greater level of detail and insights. We have made good progress in our transformation journey. And clearly, this would not have been possible without the dedication and the hard work of our people, our agents as well as our partners.

I'm very proud to work alongside them every single day in the way we support our customers, communities and shareholders. A few of us will be on the road, so we will get an opportunity to meet with you face-to-face and would be happy to kind of get into further details and further conversations if we haven't been able to answer some of those points. We look forward to updating you on the first quarter business performance in early May. And as I said, I look forward to seeing you when we are on the road. Thank you, and goodbye.

Thank you for attending. You may now disconnect your lines.

Hello. I'm Anil Wadhwani, CEO of Prudential. Thank you for joining us today. I'm pleased to share our full year 2025 results and update you on the progress that we are making on our transformation journey.

2025 was a year of high-quality consistent growth. We delivered double-digit growth across our key financial metrics, consistent with our guidance while continuing to strengthen our business. We achieved this through strong execution, driving broad-based performance across our markets and channels.

Our strong balance sheet, disciplined capital management and predictable cash generation mean that we can grow and invest as well as return significant capital to our shareholders. We have completed our $2 billion share buyback program, listed our Indian AMC business and increased our dividend per share by 15%. We launched a further $1.2 billion buyback in 2026. Our consistent strong execution produced double-digit new business profit growth in every quarter of 2025. This gives us the confidence that we will again deliver double-digit growth across our key financial metrics in 2026 and that we are firmly on track to achieve our 2027 financial objectives.

Through our multi-market multichannel business model, we delivered consistent high-quality double-digit growth in line with our guidance. New business profit grew 12% to $2.8 billion. Operating profit per share grew 12%, gross operating free surplus generation grew 15% to $3.1 billion, and we grew our full year dividend per share by 15%.

Turning to our new business performance by market. We delivered broad-based growth across the group with all segments and channels growing year-on-year. In Mainland China, we grew new business profit by 27% with bancassurance as the main driver. Our focus on sustainable, high-quality growth underpinned by disciplined risk management resulted in a meaningful shift in product mix towards participating business.

At the same time, we delivered double-digit growth in both new business profit and APE across agency and bancassurance in the second half of the year. Agency transformation is progressing well with a stronger emphasis on quality recruitment. As a result, the number of active agents grew by 9% in the second half.

In Hong Kong, new business profit was up 12%, and I really like the shape of our Hong Kong business. We saw growth across the domestic segment and the Mainland Chinese Visitor segment, which shows the strength and the balance of our franchise. Importantly, both our primary channels, agency and bancassurance continued to grow.

We remain very focused on recruiting high-quality agents, and that is reflected in our performance with active agents up 12% year-on-year. Demand for our innovative proposition also continues to gain traction, particularly where we combine savings with health and protection, for example, through our innovative Encash product.

Taken together, this gives us real confidence in the quality and sustainability of our long-term prospects in Hong Kong. Indonesia delivered 11% new business profit growth. Agency momentum picked up as we implemented our transformation program. This supported an 18% uplift in productivity, and we continue to focus on recruiting high-quality new agents. The bancassurance channel progressed well, supported by a growing contribution from our new bank partnership with Bank Syariah Indonesia, Indonesia's largest Shariah bank.

In Malaysia, new business profit grew 5%, driven by strong bancassurance performance. The agency channel recovered well from the market-wide disruption seen in the first half, delivering double-digit new business profit growth in the second half.

Our agency transformation program is focused on quality recruitment as well as continuing to build our top-tier agent pipeline. I was also pleased that we agreed and completed an increase in our shareholding of our conventional business to 70% in January 2026. In Singapore, new business profit grew 2%, with margins reflecting a shift in sales mix towards savings and wealth and changes in the pattern of demand in our health and protection business. I was particularly encouraged by the strong momentum in agency sales in the second half of the year.

This underscores the benefit of our multichannel distribution platform where we have distinct strengths across tied agency, financial advisory and bancassurance channels. In India, there was a softening of sales, largely reflecting a strong comparator in 2024. Our focus remains on improving margins, and I was pleased to see that retail, health and protection performed well.

A quick update on our stand-alone health business. We are progressing well through the regulatory cycle, and we are preparing to launch in the near future. We also delivered good growth across Taiwan, Thailand and our African markets. And at Eastspring, our integrated asset management business, we grew operating profit after tax by 12%. Funds under management grew 8% from $258 billion to $278 billion, supported by strong external retail flows, continued inflows from our life business and favorable market conditions.

Let me now highlight the progress we are making in our 5-year transformation program. Starting with agency. This continues to be a core driver of our new business profit growing at a CAGR of 19% over the past 3 years. More recently, agency new business profit growth moderated to 4% year-on-year compared with 27% growth in bancassurance. Importantly, productivity continued to improve with new business profit per active agent up 15%, more than offsetting the decline in active agent numbers.

We remain highly focused on driving the acceleration of our agency transformation. It is our #1 priority. Bancassurance, on the other hand, delivered another very strong performance, as I mentioned earlier. Performance was broad-based with 13 markets achieving double-digit growth, driven by deepening of our key strategic alliances and broadening customer access to our propositions.

Margins expanded by 5 percentage points, reflecting the quality of our growth. On health, I am pleased with the establishment of a dedicated health-focused vertical. This has allowed us to embed strong discipline across medical repricing, partner network management and fraud, waste and abuse while scaling the business.

Over the past 3 years, our health business has grown at a 12% CAGR. In 2025, growth moderated to 3% as expected, reflecting the second half normalization following the pricing actions taken in the prior year. A 9% growth in premiums sustained our profitability. At the same time, we focused on reducing claims costs using analytics and AI to cut fraud, waste and abuse by more than $100 million while enhancing our partner network management.

Finally, on customer, we continue to improve customer experience, applying technology and data analytics to deliver stronger propositions and simpler, more intuitive customer journeys. As a result, retention improved by 1 percentage point to 88%, and we now have 6 business units in top quartile for relationship Net Promoter Score, up from 3 in 2022. Looking ahead, we are focused on continuously improving customer experience as we work towards achieving top quartile outcomes across all our top 10 markets.

In 2025, we executed our strategy with discipline and focus, investing in key areas across agency, bancassurance, technology and operations to drive quality growth and improve efficiency. Our corporate actions demonstrated a strong and disciplined application of our capital allocation framework. We divested Eastspring Korea and realized $1.4 billion from the December IPO process of our Indian asset management operation and today hold a 35% stake in the company.

Turning to 2026. Our key focus areas are: firstly, we will sustain the strong momentum in bancassurance while accelerating agency strength and quality. Second, we will continue to enhance the quality of new business by deepening customer engagement, unlocking greater synergies with our internal asset manager, Eastspring, and growing health and protection. Third, we will enable the delivery of more efficient growth by continuing to modernize our technology and digitize our platforms, improve operational efficiency and further embed analytics and AI across our core business operations.

And finally, we remain committed to disciplined capital management and delivering ongoing shareholder returns. Let me expand on each of these points in turn. Prudential is the leading life bancassurance franchise in Asia. The channel delivered an outstanding year. With new business profit crossing the $1 billion mark, bancassurance has already delivered around 95% of the lower end of its 2027 new business profit objective.

Bank distribution remains one of our most significant channels across the region, and our success is built on deep long-standing strategic partnerships with leading banks. We continue to offer relevant solutions to customers across their life stages, for example, with health and protection propositions, which now account for 1 in 2 policies sold through the bank channel.

Let me illustrate how we are deepening relationships across our strategic alliances. With our new partner, Bank Syariah Indonesia, we are rolling out innovative Shariah-compliant products to serve the needs of its 20 million strong customer base. And with our long-standing partner, CITIC Bank, we have accelerated our sales momentum by sharpening our focus on their top 50 outlets, driving stronger execution and productivity.

Our agency channel remains a significant competitive advantage for the group, representing well over half of our new business profit in 2025. Strengthening this channel is a key part of our overall quality growth strategy. We have grown new business profit through this channel at a CAGR of 19% since 2022.

Productivity is highly correlated with agent quality with new business profit per active agent up 15% year-on-year. Our most productive agents, MDRT qualifiers are over 7x more productive than the nonqualifiers, and we have the second largest MDRT force globally. In our developed markets, which contributed to 73% of our agency new business profit, we have seen good all-around delivery in both productivity and activation with both growing at a CAGR of 17% between 2022 and 2025.

While our emerging ASEAN markets are doing well on productivity, up 7% CAGR since 2022, there is an opportunity to improve their activation. This is a key focus area for us. We are accelerating the transformation of our agency with a clear focus on supporting productivity and driving activation.

Starting with productivity, one of our most powerful levers for improving new business profitability is the growth of our top-tier agents. Today, they account for 59% of total agency new business profit, which grew at a CAGR of 27% from 2022 to 2025.

To further lift productivity from existing MDRT agents and build sustained upward momentum for high-potential agents into this tier, we are prioritizing a number of key enablers, including targeted recognition, structured upskilling programs, affluent segment-specific product propositions and AI-enabled digital tools. This includes PRUForce to strengthen lead generation and PRUAction to drive more effective performance management of our agents.

Importantly, the MDRT pipeline takes time to build. Progression up into this tier starts with the recruitment of high-quality new advisers. That is why productivity and quality recruitment are tightly linked in our agency transformation agenda. This leads directly to our second priority, quality recruitment.

Sustainable productivity and activation start with attracting individuals with the capability, commitment and ambition to succeed as professional advisers. To ensure new recruits reach their full potential from day 1, we provide structured end-to-end support, including through our PRUVenture program.

The program provides new agents with the tools, training and coaching required to perform at their best and reflecting an intentional shift towards a full-time professional and productive agency. We launched PRUVenture in Hong Kong, where it has scaled strongly. New recruits enrolled in the program grew by 43% last year and now account for more than 40% of all new recruits.

The results are compelling. In Malaysia, for example, where the program was subsequently deployed, new recruits were 6x more productive in generating sales. Looking ahead, we see a clear opportunity to industrialize the quality recruitment model across emerging ASEAN markets, including the Philippines, Indonesia and Vietnam, where the traditional large agency forces have historically dominated. Alongside this, we are strengthening the broader ecosystem that supports quality recruitment and leader development. revamping compensation to reward quality and progression, upgrading leadership training and enhancing PRUForce with AI-enabled recruitment capabilities.

Our focus is clear and consistent across our markets, building a strong MDRT pipeline, embedding quality recruitment and scaling digital and AI-enabled capabilities. Building a scalable, high-quality professional agency force of the size of Prudential requires persistent focus and execution.

The shape of the agency transformation has been different compared to what we anticipated. I am pleased with the quality focus that has led to higher productivity, but less pleased with active agent numbers, which is where we are focusing our execution.

For us, quality growth underpins the consistency and resilience of our performance. Let me explain more on how we are doing this. First, we are deepening customer relationships with more tailored engagement. Our holistic differentiated propositions are designed to support customers throughout their lives. Enhanced digital tools are simplifying end-to-end servicing and making it easier for customers to interact with us at every stage of their journey.

Together, this has driven a 2 percentage point improvement in retention rates since 2023 and an increase in business units delivering top quartile customer Net Promoter Score. Second, Eastspring. It is a material contributor to shareholder value and a key differentiator that amplifies the value of our insurance franchise. The durable recurring life flows provide scale and continuity through cycles, while third-party flows diversify earnings.

Its 10 market footprint and deep local expertise strengthen the investment outcomes and enable development of innovative bespoke solutions, including in wealth and retirement, which benefits our customers. Third, we are focused on growing health and protection. We remain very excited about the significant opportunity. When you look across our key markets, there's a huge amount of unmet need, an estimated $43 trillion of mortality protection gap.

Today, health and protection accounts for 36% of new business profit. And looking ahead, our focus is on combining the strength of our health business with our established capabilities in protection. We are selectively integrating health and protection with our savings propositions and have seen strong success, for example, in Hong Kong.

To support this, we continue to foster innovation, strengthen training of our agency and bancassurance partners and refine our reward structures to promote even better outcomes in health and protection. We are embedding analytics and AI across the group with a business-led focus on 3 core areas: agency, health and operations, where we see the greatest potential to create value for all our stakeholders.

Across these areas, we are reshaping end-to-end customer journeys from advisory and onboarding through to underwriting, servicing and claims, making them simpler, faster and more consistent. Importantly, our technology stack allows us to embed AI seamlessly into our core systems. As a result, we are measuring and are already seeing tangible economic benefits as these capabilities translate into higher productivity, better customer outcomes and improved efficiency.

For example, we enhanced new business generation with $300 million in APE now delivered through our customer engagement platform. In underwriting, near-instant decisions have reduced underwriting time in Hong Kong by around 50%, improving both speed and quality of customer and agent experience.

We are also making everyday customer journeys simpler and faster, enabling on-demand service that has resonated strongly with our customers and drove 1.5 million interactions on our customer digital platform through services. And in claims, AI-enabled processes are improving efficiency and reducing fraud, waste and abuse by more than $100 million in 2025.

For us, the opportunity now is to industrialize AI at scale. We have put the right foundations in place, strong data quality, a cloud-based architecture, group-wide staff training and a strong risk and governance framework. Together, these foundations allow us to embed AI consistently across the business, moving from isolated use cases to a scaled, disciplined operating capability.

As I mentioned earlier, our technology stack allows us to embed AI seamlessly into our core systems, enabling the improvement of both our customers and our agents' experience. Let me bring that to life with a few examples. Through services, our digital customer platform now handles 90% of its transactions straight through without any manual intervention. operating across 9 markets, it enables seamless 24/7 superior customer service.

In agency, a key priority is to empower agents with robust digital platforms that improve management, productivity and execution. And we are seeing some great results. For example, PRUForce, our AI-empowered agency platform managed nearly 11 million leads for our agents. Additionally, PRUAction, which supports agent leaders with AI-enabled performance management of their agents delivered a 15% lift in productivity in Singapore.

Alongside this, I am excited about our partnership with WeLab, one of the largest digital banks in Hong Kong. This strategic partnership allows us to innovate and scale digital insurance distribution, leveraging modern technologies, including AI. Likewise, in India, through our greenfield health venture, we are building an AI native operating system to reimagine how we acquire and service customers.

This is an important and an exciting opportunity for us. Across all these initiatives, technology and AI are applied with clear intent, strengthening the core of our business today while innovating to build a resilient, scalable platform for long-term growth.

We remain firmly focused on disciplined execution that delivers high-quality growth and strong shareholder returns. Our progress is driving improved capital generation, enabling us to plan returns of more than $7 billion of capital to our shareholders between 2024 to 2027.

Looking ahead to 2027, we are confident in achieving our new business profit and our fee surplus generation objectives. Our aim is clear to deliver compounding high-quality growth that translates into new business profit, gross operating fee surplus and tangible shareholder returns.

We want to deliver both growth and cash for our shareholders as we take full advantage of the structural growth opportunities across the markets of Asia and Africa. Growth opportunities are particularly compelling in Asia, where our strong presence gives us access to the world's fastest-growing insurance markets.

Rising incomes, an expanding middle class and an estimated $43 trillion mortality protection gap in our markets underpin growth rates that are expected to be around twice the global average. Prudential is a premium franchise with leading positions in high-growth markets of Asia and Africa, a trusted household brand and a scaled distribution platform across agency and bancassurance.

Our multi-market, multichannel model positions us to capture the significant growth opportunities in our markets, delivering consistent, high-quality growth and generating sustainable shareholder returns. In 2025, we executed our strategy with pace and purpose, unlocking value across our core markets and making strong progress on our strategic priorities.

We met our 2025 guidance, delivering double-digit growth across our key financial metrics. For 2026, we are guiding double-digit growth once again, and we are confident of achieving our 2022 to 2027 objectives.

In summary, we are delivering high-quality growth, creating value and building consistency, moving Prudential closer to realizing its full potential. I will now hand over to Ben Bulmer, our CFO.

Thanks, Anil, and hi. I'm Ben Bulmer, CFO of Prudential plc. In 2025, we delivered on our guidance, double-digit growth in new business profit, operating earnings per share, capital generation or gross OFSG and dividend per share. We also executed a number of key strategic actions, including the successful IPO of our Indian asset management company, resolving the outstanding litigation in relation to our Malaysia conventional life business and completing an increase in our shareholding to 70%, the early completion of our $2 billion share buyback and launching our new capital management program.

In summary, we're delivering growth in value and what we believe is a highly attractive returns proposition, growing dividend per share greater than 10% per annum in 2026 and 2027, providing additional recurring capital returns, starting with $500 million in 2026, followed by $600 million in 2027. And consistent with reviewing capital above the 200% free surplus ratio, all of the $1.4 billion net proceeds from the Indian asset management company IPO and pre-IPO placement in December, which I will refer to as the IPO will be returned to shareholders. This will be split half this year, half next year. In all, we expect over $7 billion to be returned to shareholders between 2024 and 2027.

Our 2025 operational performance clearly demonstrates the strength of our business model. We intend to build on this momentum as we work towards and beyond 2027. We again guide to double-digit growth across our key financial KPIs of new business profit, operating earnings per share, gross OFSG and dividend per share, and we remain very confident in achieving our 2027 financial objectives.

In 2025, we continue to build our track record of delivering high-quality double-digit growth with new business profits or NBP, up 12%. I'm particularly pleased with the consistency of our performance with double-digit growth in every quarter of the year. This is a testament to the strength of our diversified multichannel and multi-market platform and the progress we are making in transforming the business.

Our growth was broad-based with all of our reporting segments growing NBP. In terms of channels, we again grew bancassurance strongly with NBP up 27%. This growth was diverse across our bank partners and included a 5-point margin improvement driven by favorable mix effects alongside repricing actions. 2025 bancassurance NBP is, as Anil mentioned, about 95% of the lower end of our 2027 target level.

We grew agency 4% and continue to take significant steps to improve performance and transform the agency force into a full-time professional advisory-led channel. Our other channels, largely representing broker distribution in Hong Kong and Taiwan grew 15%. A core pillar of our strategy is to focus on growing high-quality profitable new business, which quickly monetizes. 36% of our 2025 NBP was from health and protection products that typically have higher margins.

A further 50% was from fee-based participating and linked savings products, which limit our direct market exposure. This product mix, alongside previously highlighted repricing actions to our flagship savings products in the second quarter of 2024 resulted in a 2 percentage point increase in our new business margin to 42%.

Further improvement in our agency performance and increasing the proportion of health and protection business continue to provide opportunities to improve our margins over the medium term. We also delivered improved capital emergence with the expected capital addition to our 2027 objective year from new business up 16%, ahead of the 12% growth in NBP. Attractive capital return profiles are embedded across our products.

Overall, new business IRRs at our target capital levels remain in excess of 25% and payback periods were less than 4 years. I will now turn to the key new business highlights for each of our major reporting segments. Our Hong Kong business delivered another year of high-quality growth, driven by our proprietary distribution channels.

NBP increased by 12% to $1.2 billion, supported by 8% growth in sales volumes and a 2 percentage point margin expansion. This reflects our continued focus on high-quality health and protection business and long-term savings products and the benefit of repricing actions. Agency NBP grew 9% with strong recruitment of new agents lifting average monthly active agents by 12%.

The bancassurance channel delivered 25% NBP growth. Margins in this channel grew by 6 percentage points as we continue to improve our product mix. Health and protection products comprise over 60% of new agency cases and about 40% on the bancassurance side. In Mainland China, we maintained our focus on delivering high-quality new business growth, rebalancing to a greater proportion of long-term participating products.

NBP growth was 27% with strong APE sales growth more than offsetting expected margin moderation as the share of participating business increased by 24 points year-on-year to 39% of new sales. Our continued shift to participating business is expected to lead to a further modest margin decline over 2026. Growth was led by the bancassurance channel with NBP up 59%.

All of our top 10 partners delivered double-digit sales growth with a particularly strong performance from CITIC Bank. Agency continued its transformation journey with new recruits up 14% and active agents up 7%. Momentum improved in the second half of the year with NBP up 11% compared with the same 6-month period in 2024.

Going forward, we plan to progress our successful bancassurance strategy and to continue to develop our agency force, underpinned by a focus on prudent risk management. We expect this to support NBP growth in line with the group's double-digit trajectory. Finally, our Mainland China business successfully issued RMB 5 billion of perpetual bonds in January and announced a further RMB 4 billion of refinancing expected in June. This local financing provides a strong base to support the development of the business.

Turning now to our largest ASEAN businesses, starting with Indonesia. NBP was up 11% year-on-year with margins 4 percentage points higher. This was driven by medical repricing and shifting to more profitable traditional products.

On the agency side, NBP grew 6% despite civil disruption in the third quarter. NBP per active agent grew 18% as we continue to focus on quality recruitment and enhancing productivity. The bancassurance channel delivered very strong growth with NBP up 53%.

We saw good momentum in investment-linked products through both SCB and UOB and a promising contribution from our new partnership with BSI. In Malaysia, the business delivered an improved performance in the second half of the year with new business profit up 21%, taking overall NBP growth for the year to 5%.

As previously reported, there was market-wide disruption for agency in the first half following medical repricing. While agency NBP fell 2% over the year, performance rebounded in the second half with growth in NBP of 10% compared to the second half of 2024, driven by targeted product launches, strong recruitment and robust agent activation rates.

Bancassurance performed strongly with NBP growth of 21%. And finally, Singapore delivered 2% NBP growth in 2025, reflecting sales growth of 5%, offset by 2 points of margin compression as a result of a greater contribution of savings and wealth products in the mix of new business. At the distribution level, agency sales momentum accelerated in the second half of the year with new sales up 27%, focused on the savings and wealth markets.

Bancassurance NBP was flat over the year as lower sales were offset by margin improvements from pricing actions and the launch of new products. We continue to build our multichannel platform and remain focused on sustaining the sales momentum seen in the second half of 2025. On the bancassurance side, we entered a new partnership with CIMB in the fourth quarter.

Our growth markets segment delivered 12% NBP growth, driven by a 3 percentage point improvement in margin, reflecting favorable product mix effects alongside stable APE sales. In Taiwan, we retained our position as the #1 foreign insurer where our participating savings product suite remains a core competitive advantage.

We grew APE sales 5%, building on strong prior year performance, supported by both the bancassurance and brokerage channels. In Thailand, we've maintained our continued focus on the bancassurance channel. Overall APE sales were up 9%. In Africa, we saw growth across all our markets with APE up 24%, while in India, although overall sales were 2% lower, we made strong progress in retail protection with growth of 22%.

Finally, in Vietnam, 2025 has been a transition year for the life industry given the new insurance law and other regulatory changes. Operationally, we are focused on delivering quality new business and managing our in-force book. While new sales fell, our NBP margins improved. We remain confident that growth will return as consumer confidence is restored.

Eastspring is an important cash-generative value creator for Prudential. With a broad footprint across the Asia region, Eastspring is positioned to benefit from the significant opportunities ahead, servicing internal insurance funds and external client demand for Asia-focused asset management solutions. This is evident from its mix of funds under management and its capabilities across asset classes. Over 2025, Eastspring delivered positive net flows of nearly $13 billion, $7 billion internally and $6 billion from external clients.

This momentum was supported by improving investment performance. On the key 3-year view, 65% of funds under management outperformed benchmark, up from 61% in 2024. And on a 1-year basis, 74% outperformed. Year-end funds under management reached $278 billion, up 8% despite recognizing a lower share of our India asset management businesses funds under management following its IPO in December.

Operating profit after tax was 12% higher. This included 49% of profits after tax from the Indian asset management business. Following the IPO, we will consolidate 35%. In 2025, the group's embedded value per share grew strongly, reflecting strong operating profit from our continuing focus on quality growth and the benefit of our strategic and capital actions.

Operating profit rose 15%, driven by higher NBP, further growth in our in-force and asset management results and flat central costs. With a lower average share count, group embedded value operating EPS grew 21%, including the benefit of the $1.2 billion buyback and the gain on the IPO, our embedded value per share, excluding goodwill at the end of 2025 was $14.53, up 15%.

Finally, our return on embedded value improved 1 percentage point to 15%. We continue to see scope to improve this as we progress towards our 2027 financial objectives, driven by NBP growth, a return to positive operating variances and ongoing disciplined capital management.

Moving to our IFRS results and the development of our contractual service margin, or CSM, the store of future profit under IFRS 17. Underlying growth of 9% was for the third year in succession at the top end of our guided range. This reflects the attractive nature of the structural life insurance growth opportunity in the Asia region and the strength of our platform.

New business added $2.8 billion to the CSM, an increase of 9% year-on-year. Together with the unwind effect on a normalized basis, we added $4.6 billion to the opening CSM. The release rate was stable at 9.5% with a $2.6 billion release to the income statement. Finally, our closing CSM balance reached $25 billion, up 14%.

Turning to the IFRS income statement. The growing CSM balance led to an 8% increase in the release of operating profit of $2.6 billion. The net investment result was marginally higher year-on-year. This reflected a relatively small increase in overall business unit level owned funds given elevated remittances to the group center and only moderate growth in spread income following asset derisking actions in Mainland China taken in 2024.

The remaining components of our IFRS insurance result combined to a negative $0.1 billion. This includes our experience variances, the largest component of which relates to our ongoing capability investment program and a negative impact relating to interest rate movements.

Overall, operating profit from our insurance businesses was up 5%, but excluding the capability investments in both years and the interest rate effect, we estimate would have been up 7%. In 2026, we expect to maintain strong structural growth in the CSM and the related release, albeit with a slight moderation in the release rate given strong growth in longer-term savings products in markets like Mainland China and Indonesia.

In addition, I anticipate low to mid-single-digit growth in the net investment result. From 2027, I expect our insurance profit growth rate to accelerate with the completion of the capability investment program. Asset management profits were up 9% pretax, and we remain focused on tightly controlling our central costs.

Corporate expenditure was flat over the year. Interest payable on core borrowings increased slightly following our successful Singapore debt issue in May last year. The net investment return and other items declined, reflecting lower interest receipts given the effect of the share buyback on central cash balances and lower interest rates.

Finally, as guided, restructuring costs reduced to $171 million. I expect these to decline further to just under $100 million in 2026. The group's operating effective tax rate was 16%, marginally lower than the prior year. Looking ahead, we continue to expect an operating tax rate at around 17%. Overall, this results in OPAT growth of 7%. And given the 5% reduction in average share count, operating earnings per share grew 12%.

Since the launch of our strategy in August 2023, we have guided that 2025 would mark the inflection point on our capital generation path to our 2027 objective, illustrated with the now familiar chart on the left. So the delivery of 15% growth in gross operating free surplus generation or OFSG in 2025 is an important milestone.

The components of OFSG are summarized in the table on the right. The 2025 expected transfer was $2.7 billion, up 14%. This reflects our return to new business growth post-COVID and the year-on-year addition of new cohorts of profitable new business.

In 2025, total operating variances reduced modestly as a significant improvement in core variances was partly offset by higher capability investment. In combination with investment return on the free surplus and the post-tax asset management result, overall gross OFSG was up 15%. We reinvested just under $0.8 billion in growing profitable new business at very attractive IRRs. This was up 5%, broadly in line with growth in APE sales.

Central expenditure was higher in aggregate, driven by lower interest receipts on central balances. This resulted in group OFSG growth of 22%, a meaningful improvement. In respect of our 2026 capital generation, you will see from our usual monetization disclosures, the expected transfer is $3.1 billion, up a further 15% on 2025.

We intend to largely complete our capability investment program by the end of 2026 with an investment of between $300 million and $350 million. Looking ahead, we remain very confident in achieving our 2027 gross OFSG objective of above $4.4 billion.

We will meet this through growth in profitable new business and completing in-train actions to return to long-term net positive variances. Put simply, were we to repeat 2025 levels of new business in 2026 and neutralize our variances, 2027 gross OFSG generation would be over $4 billion. To this, we then add new business growth, and we have again guided to double-digit levels and a return to positive variances.

This chart on the left will also be very familiar to many of you, summarizing the building blocks of our 2027 OFSG generation. 2025 new business added a further $0.3 billion to the expected OFSG in 2027, up 16% on 2024 levels, increasing the total expected OFSG emergence in 2027 as of the end of 2025 to $3 billion. The addition of profitable new business in 2026 then adds to future capital generation, both in 2027 and beyond. Returning to positive variances is the other key to the achievement of our 2027 gross OFSG.

We've continued to make very good progress with core business-related variances shown in the bottom right-hand chart. In 2025, underlying variances improved to negative $45 million from negative $113 million, reflecting actions taken in strengthening our health claims management. We are also benefiting from economies of scale with total costs growing more slowly than revenues.

This will be supported by further improvement from positive operating leverage as we grow revenue and continue to contain costs through automation and other efficiencies. This positive leverage will allow us to continue to invest in our business on a normal course basis. In respect of capability investments, as I mentioned, we intend to largely complete our program in 2026.

In summary, we are very confident of returning to positive variances by 2027. Growth in capital generation underpins our free cash flow. 2025 saw particularly strong remittances to our holding company of $2.1 billion. While there will always be timing differences, you should continue to expect us on average to remit about 70% of business unit or segment operating free surplus generation to the group.

The movement in the holding company cash balance is shown on the right. Our free cash flow of $1.6 billion represents the remittances received less holding company expenses and the cash cost of centrally funded bancassurance arrangements. You then have the cash costs of the dividends paid and the $1.2 billion to complete the buyback program launched in 2024.

Finally, the $1.4 billion net proceeds from the IPO, along with our Singapore debt raise and various other items collectively added $1.6 billion, lifting the closing cash balance to $4.3 billion. The group's capital position remains highly robust.

Our free surplus ratio ended the year at 221% or 204%, excluding the $1.4 billion IPO net proceeds we plan to return to shareholders over 2026 and 2027. This is broadly consistent with the 175% to 200% normal operating range we have set out.

We were pleased that our financial strength and flexibility was recognized by S&P with its upgrade of our financial strength rating to AA, recognizing the resilience of our balance sheet backed by growing capital generation from writing quality new business. We retain considerable financial flexibility with a Moody's basis leverage ratio of 13%.

Our regulatory position also remains very strong with shareholder and total coverage ratios of 262% and 197%, respectively. The capital management update we provided in August reflected the strength of our capital position and our confidence following the progress of our strategic transformation in driving improved organic capital generation, both points we again reiterate today.

Our enhanced capital allocation framework reflects a move to a total return orientation and is summarized here on the left. We updated our guidance for ordinary dividend per share growth rates and announced that from 2026, shareholders will also benefit from additional capital returns.

This is intended to set a recurring and sustainable basis for returns going forward. In terms of ordinary dividends, we guided to greater than 10% dividend per share growth each year from 2025 to 2027, building on the 13% dividend per share growth in 2024. Our 2025 dividend per share is up 15%.

We said we would commence additional recurring capital returns in 2026 and the capital above our established 175% to 200% operating range will be assessed regularly. If deemed to represent an excess over the medium term, then capital will be returned to shareholders. Being more specific, we completed our $2 billion share buyback by the end of 2025.

In January, we launched a $1.2 billion buyback to be completed by the end of 2026, representing $500 million of recurring capital returns and $700 million of the proceeds from the IPO. We expect to return a further $1.3 billion in 2027, combining $600 million of recurring capital returns and the $700 million balance of the IPO proceeds. This is summarized on the right-hand chart.

Overall, we expect to return over $7 billion to shareholders between 2024 and 2027. We have a strong platform generating attractive margins and are positioning the business to deliver double-digit performance for many years to come.

I would highlight, in particular, our leading positions in the highly attractive markets of Asia and Africa, our focus on high-quality business, delivering compounding growth and predictable cash conversion, our ongoing actions and investments to enhance our capabilities and embed operating leverage and our strong balance sheet and predictable capital generation, facilitating cash returns to shareholders.

To summarize, Prudential delivered improving financial performance in 2025 with double-digit growth across our key financial KPIs, consistent with our guidance. This growth was high quality and broad-based with NBP up 12%. Our NBP CAGR from 2022 to end 2025 is 18%, just above the midpoint of our 2022 to 2027 objective range of between 15% and 20%.

Our focus on growing capital-generative new business, which converts to cash in the near term means we reached the inflection point on our gross OFSG path and our actions to improve our core variances are continuing to deliver. The consistency of our operating performance improved.

And while there is work to do, we were pleased to deliver double-digit NBP growth in every quarter of 2025. For 2026, we again guide to double-digit growth across our key financial KPIs of new business profit, operating earnings per share, gross OFSG and dividend per share and remain very confident in achieving our 2027 financial objectives.

Finally, this confidence in our strategic progress, driving improved organic capital generation is evident from our capital return actions, and we expect to return over $7 billion to our shareholders over 2024 to 2027. Thank you.

Good morning, everybody, and thank you for joining us on today's Prudential Half Year Results 2025. My name is Drew, and I'll be the operator on today's call. [Operator Instructions]

It's now my pleasure to hand over to Patrick Bowes to begin. Please go ahead when you're ready.

Thank you, Drew, and good afternoon and good morning to everyone. Welcome to Prudential plc's Half Year 2025 Results Analyst and Investor Call. Before I turn the call over to Anil, our CEO; and Ben, our CFO, a couple of housekeeping points. A recording of today's call will be available from Tuesday next week, and our full results package is available on our website. Anil and Ben will start the call with opening remarks, followed by a Q&A, as you've just heard.

And just a quick word on recent developments we have shared with the market already regarding the potential listing of our shares in ICICI Prudential Asset Management Company. We published the draft prospectus on the 9th of July. However, we remain under a number of restrictions as to what we can say about this, given the next stage of the process is to undergo a series of regulatory reviews. We will provide you with further updates in due course.

With that, let me pass over to Anil, our CEO, to start us off. Anil?

Thank you, Patrick. Good morning, good afternoon, and good evening, everyone. Thank you for joining us today for our 2025 first half results and capital management update. I'm very pleased with our financial performance in the first half of 2025 during which we delivered both high-quality growth and enhanced shareholder returns. We achieved double-digit growth across our key financial metrics in line with the guidance we gave earlier in the year. We have reached an inflection point in our operating free surplus generation, enabling us to update our capital management program and increase shareholder returns. This demonstrates the strength of our business model and its ability to generate sustainable cash returns.

New business profit and adjusted operating profit per share both grew 12%. Gross operating free surplus generation grew 14% and dividends per share increased 13%. These results reflect strong momentum across our core markets, the sharpness of our execution and our relentless focus on writing high-quality new business, effectively managing in-force and improving our variances. I'm also very pleased that we have now settled the dividend claim in Malaysia. Having reached an inflection point in our capital generation and reflecting our confidence in the future, we have announced today a capital management update alongside an enhanced capital allocation framework, including the completion by the end of this year of our existing share repurchase program, we expect to return in total more than $5 billion to shareholders between 2024 and 2027. Any initial net proceeds from the potential IPO of the asset management business in India will be in addition to this. Ben will cover our capital management update in more detail.

We are now halfway through our strategic transformation launched in August 2023 and are making good progress across our key priorities. We continue to invest to accelerate value creation across our markets, actively pursuing structural growth opportunities as well as addressing areas that need improvement. We have invested $400 million in targeted initiatives, including modernizing our technology, processes and capabilities. Through these investments, we are accelerating our platform improvements, enhancing customer engagement and driving operational effectiveness at scale. They are underpinned by an increased focus on the use of data, predictive analytics and AI across the business. We are investing to make Prudential a stronger future-ready business.

While the macro environment remains volatile, we are very well positioned given our multichannel and our multi-market franchise. This is demonstrated by our broad-based new business profit growth, including 16% growth in our Hong Kong market and 34% growth in Indonesia. We have clear plans to continue to strengthen our performance, including in distribution and addressing areas of underperformance. Our multichannel distribution model is one of our greatest strengths, and we have a good balance between agency and bancassurance. Agency is our primary distribution channel, and we have one of the largest forces in the Asian insurance industry. We see significant value in further strengthening it. Our agency strategy focuses on driving high-quality profitable growth through quality recruitment, career progression towards MDRT and digital capabilities that boost both productivity and activation.

Further developing our agency capabilities and accelerating our performance is a top priority for us, and we are activating bespoke change management programs in our markets. In bancassurance, the continued focus on strategic relationships and training has underpinned our strong performance with 14 markets delivering double-digit growth in new business profit. We have also recently successfully activated our new partnership with Bank Syariah Indonesia. We are also building on the foundation of our health transformation efforts to further accelerate growth in health and protection sales. These efforts will be instrumental in unlocking the next phase of sustainable, high-quality growth. Reflecting on our strategic progress and investments in the growth drivers of our business, we are confident we will carry the momentum in the second half and beyond. This keeps us firmly on track to achieve our 2027 financial objectives.

Today, I'm delighted to be joined on the call by the leadership team responsible for our businesses and would now like to hand it over to Ben Bulmer, our CFO, to walk through the financial highlights. Ben?

Thanks, Anil, and hello, everyone. Our first half 2025 financial performance reflects a positive start to the year as we continue to focus on accelerating growth in value and capital generation in line with our strategy. We delivered double-digit growth across our primary financial KPIs. We're on track for our 2025 guidance, and we remain confident in achieving our 2027 financial objectives. Growth in our in-force profit and the ongoing capital return improved our return on embedded value to 15%, and there's more to come. Net of the dividend payment, embedded value per share, excluding goodwill at the end of the period was $13.24, equivalent to GBP 9.66. We've reached the inflection point in our capital generation trajectory with gross operating free surplus generation or OFSG, up 14% year-on-year. whilst our net OFSG is up 20%.

As we indicated in March, we've updated our capital allocation framework, reflecting both our strong capitalization and our confidence in the strategic progress we're making, which is driving improved organic capital generation.

Let me spend a couple of moments on our capital management update. Our enhanced capital allocation framework reflects a move to a total return orientation in respect of the distribution of our holding company free cash flow. We've updated our guidance for ordinary dividend per share growth rates and announced that from 2026, shareholders will also benefit from additional capital returns. This framework is intended to set a recurring and sustainable basis for returns going forward. In terms of ordinary dividends, our policy is unchanged. We've given guidance of greater than 10% dividend per share growth each year from 2025 to 2027, building on the 13% dividend per share growth in 2024. We will commence additional recurring capital returns in 2026, and we expect a buyback of $500 million in 2026 and a further return of $600 million in 2027. And as we've previously said, capital above our established 175% to 200% operating range will be assessed regularly and if deemed excess, then capital will be returned to shareholders.

Lastly, we expect to complete our current $2 billion share buyback by the end of this year. Overall, this means we are planning to return to shareholders over $5 billion between 2024 and 2027, and this is before assuming any initial net proceeds of the proposed IPO of India Asset Management business. In terms of financial performance in the period, we remain focused on writing quality new business with strong underlying capital generation. Our product IRRs remain above 25%, and our shareholder payback periods are less than 4 years. The $1.3 billion in new business profit added over the period, up 12%, reflects our continued focus on quality, driven by our actions to reprice products and improve mix. The NBP margin expanded 2 percentage points to 38% compared with the first half of last year. As a result, the addition to 2027 capital emergence from first half 2025 new business increased by 27% year-on-year, much faster than APE growth during the same period.

Management of our in-force book continues to improve with variances between actual and expected cash flows before investing in capabilities continuing to meaningfully reduce. Underlying this improvement are a range of ongoing actions, including repricing, enhanced claims management, cost containment and the benefits of a return to higher-margin new business growth. We expect our core operating variances to return to our historic positive levels in 2027.

In summary, as a result of the financial performance and execution to date of our strategy, we remain confident in achieving our 2027 financial objectives.

With that, I'll pass back to Patrick to open the Q&A.

Thank you to Ben and Anil. I'll hand over to our conference call moderator, Drew, who will provide instructions and then open the line for questions. Over to you, Drew.

[Operator Instructions]

Our first question today comes from [ Michael Chang ] from CTSI.

I'd like to say congrats on a very solid set of results. I primarily have 2 questions. The first question relates to the agency business. I really like the chart on Page 10 of the slide pack because it gave an idea in terms of areas of strength as well as areas of improvement and areas of improvement typically means that you do have plans for improving those areas. So if I can just focus on maybe the 2 major markets, say, Mainland China, areas for improvement. What's the outlook on that front? Because I think it was flagged in the results release that there are a number of regulatory changes which are occurring right now. But then it would also flag that in terms of agent numbers, agent growth was actually quite strong in terms of new agency recruits, up 45%. So maybe you can elaborate a bit more on the Mainland China business.

And then in terms of areas of strength, Hong Kong clearly stands out. Agency new business value growth is very solid. And in terms of agency recruitment, it's been strong for a number of years. So maybe you can shed some light on the profile of these recruits and how sustainable is the strong agent growth?

Then my second question would relate to capital management. So capital management, Ben, I appreciate the detail given on the capital management framework, the buyback amount for 2026 and '27. But maybe you can shed some light on how these amounts are determined because Investors, they do focus on sustainability. They actually might like to understand if we were to project going forward because the free surplus generation, the value of in-force monetization that is all disclosed. How should we think about the framework for future buybacks? Is it something like one of your peers who buy 75% of net FSG or other considerations? And maybe also related to that, on Page 6, in that there's a chart on the total capital returns in 2026 and 2027. Does that mean that the Indian AMC IPO, should it go ahead, the capital will be returned over 2 years?

Thanks, Michael. Let me start with the agency question and I will then flip it to Ben to answer the capital management one. So firstly, at a high level, we, as you know, have a significantly strong balance between agency and bancassurance. And within that, we clearly understand that agency is an area of key focus for us given the fact that it continues to be our primary acquisition channel contributing to 55% of new business profit growth. Specifically to your question on Mainland China, we have a change management program that we have instituted in China. You rightly pointed out that our new recruits are up 45%, very much in line with the focus that we have employed on quality recruitment. And we have launched our PRUVenture program, which is our flagship quality recruitment program in China.

I think we are starting to now see some early evidence of that change management program come through with our active agents up 6%. And I believe based on the measures that we are putting in, the agency channel in China will start to complement the strong bancassurance performance that we continue to see in China Mainland, and that's on account of our strong relationships, both with CITIC Bank as well as with Standard Chartered.

With respect to regulatory changes, and again, this is very much in line with what we had expected. I think the regulatory changes are very much focused on ensuring greater retention of agents, ensuring that the agents have a decent source of income, which is kind of spread over a period of time. And again, this is not at -- it's pretty much in sync with what we are trying to do, which is drive quality, resulting into greater activation and greater productivity.

In terms of your Hong Kong question on agency, very pleased, by the way, firstly, with the Hong Kong performance. I like the shape of our Hong Kong performance. Good balance between agency and bancassurance, good balance between domestic and MCV. And if you remember, when I got into my role 2.5 years back, I had flagged off that we would like to strengthen our performance in domestic to complement our MCV. And towards that, our active agents are up 11%. Our productivity -- NBP per active agent is up 4% and our recruitment continues to be on track to deliver greater than 4,000 new recruits in 2025. So very much like the shape of our Hong Kong business and the measures that we are taking and remain highly confident that we will carry the trajectory that we set for ourselves in first half into the second.

I'm now going to flip it to Ben for the capital management question.

Yes. Thanks, Anil. Michael. So in terms of capital management, the update reflects our confidence in our business model. Really, the strength of our balance sheet and also the progress we've made in our strategy means we've reached the capital inflection point. That's enabled us to then pivot to a total return proposition. As I mentioned in my opening remarks, that's funded by sustained annual net capital generation. And you need to remember to apply the 70% remittance to the holding company. There's a few slides in my deck, Michael, that set out the building blocks to enable you to project that. But to keep things simple, we've given numerical guidance to the end of 2027. I think the important point is we provided a durable framework. Sustainability has been very important to us when thinking about this. We're a double-digit growth company, not just in value, but also in the conversion of that value to cash and capital generation. So we expect growing capital generation.

The Board will regularly review the quantum and form of the additional returns to ensure that's in the best interest of all of our shareholders. And as we've said, they'll additionally review any residual capital over and above that 200% free surplus ratio. And if that's deemed excess, that too will be returned to shareholders.

Our next question today comes...

Pardon Drew, we just got one more question.

I think I missed Michael's third question, India AMC returns. So Michael, as you heard at the top of the call, we're under regulatory restrictions as to what we can say about the timing and quantum of those returns. You're right, they've been included in our slides. You should take that as indicative.

Our next question comes from Larissa Van Deventer from Barclays.

Two quick questions from my side, please. The first one on outlook and the second one on margin, which will -- which relates to the outlook. You said that you have reached an inflection point in capital generation, which gives you confidence in your ability to generate sustainable cash returns. What is the key driver of that confidence? And then also, what are the main risks to not reaching your 2027 objectives? Related to that, your margin expanded by 2.3 percentage points, but it is still over 19 percentage points lower than that of one of your key competitors. Recognizing that the geographic footprint distribution would impact the margin, but how much scope for margin improvement do you consider possible that will be derived from scale benefits, product mix, cost cutting and the like, please?

Thanks, Larissa. Let me take the first question on outlook, and then I will flip it to Ben for the margin question. So as I mentioned in my opening comments that we remain highly confident to carry the trajectory of the first half into the second. And the results that we were able to deliver in first half underscores the strength of our business model, double digit pretty much across all the matrices. Our results are obviously are driven by the relentless focus that we are employing on writing quality business as well as the focus on converting that quality business to cash. And we like the balance between bancassurance and agency. I did mention earlier that bancassurance continues to perform quite well. I am not satisfied on agency performance in a few of our markets. Hong Kong, Singapore, Indonesia, stable to growing on agency, but I think we have a potential in markets like Malaysia and Vietnam, where industry-related challenges are not only impacting Prudential, it's impacting the whole sector. And we have a very clear line of sight in terms of actions to be able to change the momentum in these couple of markets.

I've already kind of spoken to the opportunity in China. And again, we have a specific change management program on agency in China that, again, I'm confident will start to show some demonstratable results. And again, a combination of this plus the investments, Larissa, that we are making in the growth drivers of our business, be it expansion of our distribution. Just to give you one example there, we are yet to fully activate the Bank Syariah Indonesia partnership. That's a significant partnership for us in a critical market. And we're just kind of getting started there, focusing on customer experience, growing our health and protection business. And that kind of gives us the confidence that not only will we be able to deliver the 2025 guidance, but it firmly keeps us on track to delivering the 2027 objectives, both on new business profit and on cash. Ben?

Thanks, Anil. So on margins, we continue to see the opportunity to improve medium term. I was pleased to see another 2 points of margin improvement come through at the half year. That's on top of the 2 points you saw last year. And in short, the way we look at this is a fourfold opportunity. Firstly, repricing, and you've seen considerable activity here. And that's benefiting the cash flows and their contribution to 2027 quite visibly. Secondly, I think to your point, operating leverage and building scale. I'm pleased in the first half of the year to see renewal premiums up 11%. And so there's a scalability in growing expense allowables coming back into the platform. And then finally, improved health contribution, health and protection contribution in the mix and an improved agency contribution. So I think plenty of opportunity medium term for us to continue an improving trajectory margins-wise.

Okay. We can go to the next question.

Our next question comes from Farooq Hanif from JPMorgan.

I'm looking at slide, which shows your capital generation converting to free cash flow. And obviously, you're not sort of giving a payout ratio guidance here. You're looking at your situation every year to work out what your recurring buyback will be. But it seems to me that you're going to have a big jump, obviously, in 2027 in your net free surplus generation because you get to your targets, you don't have investment cost anymore, which will then drive very high or a big jump in free cash flow, I'm hoping to the holdco. Does that mean in 2028, there's a potential here for a leap in what you are able to pay in your buyback?

My second question is, I mean, looking overall, correct me if I'm wrong, but it looks like your active agents are sort of flattish to down, but your productivity of the agents is up a lot at 10%. Can you give us kind of a guide to where that's going, those 2 metrics in the future, but what's driving those? And then very quickly, what's driving your banca margin improvement? And is there scope for further margin improvement in banca?

Thanks for your question. I'll flip it to Ben to start with the first question on OFSG conversion, and then I'll come to active agents and banca margins, if that's all right. Ben, do you want to?

Yes. So you're right. I mean, growing capital generation translates into materially higher growing holding company free cash flow. As I mentioned in my video, that acceleration in gross OFSG between '24 and '27 means we're broadly doubling holding company free cash flow over the period. The total returns we set out are funded by sustained annual net capital generation. And we are paying out the majority of the flow. As I mentioned earlier, we've not given numbers beyond 2027, but I think provided an enduring framework and the building blocks to help get that.

Thanks, Ben. Farooq, if I may go to your question on active agents. So the way we think about growing our agency new business profit is through 2 levers, right? One is to drive active agents and the second one is to drive productivity. And you're absolutely right in pointing out that the 10% new business profit per active agent gain that we saw offset the decline that we saw in active agents. Now I did refer to some of the measures that we are putting in place to energize our active agents and specifically in the ASEAN markets like Malaysia, like Vietnam, like Philippines, I think these are large agency markets that require and have the opportunity for us to drive greater activity. Again, the focus areas are very much what we had referred to earlier, which is quality recruitment, ensuring that we are investing in our technology platform, both to drive activity and productivity as well as uptiering our agents to MDRT. We are the second largest MDRT force globally. And our MDRTs increased by 3%.

So we will press both the levers, active agents. And as I said, I'm confident that the measures will start to show an improvement on active agents. But we also, on the other hand, have the productivity lever to be able to, as I said, drive both these to the goals that we have for 2027. Banca margins, again, yes, Banca again, doing very well. And in my view, Banca targets probably will be achieved well in advance of the 2027 guidance that we've given. So that, in many ways, kind of creates a little bit of a headroom and an opportunity for us. The margins were driven by a few factors: one, product mix. Second is we have referred to some of the pricing actions. So they were applicable both on agency and bancassurance. So that obviously translates to a better outcome. And then the geography mix, right? Hong Kong obviously had a bigger share or a bigger contribution in the first half. So a combination of these factors, Farooq, led to the Banca margins being higher.

Our next question comes from Nasib Ahmed from UBS.

Firstly, on the perimeter of the business, you had the exits in Africa. Is there anything more in terms of the geographies that you would like to exit in Africa or elsewhere? And then related to the perimeter, you've got the Malaysian dividend issue resolved, but you still don't own 50% of the business, roughly 50%. Is there a way to get that back onto the books and pay the third party? That's kind of around the perimeter. Second question around variances. Ben, you mentioned you want to get back to the historical positive levels. In 2020, I think it was more than USD 200 million. Is that kind of the level that we're thinking of in 2027?

And then finally, on the $1 billion capability investment, you're halfway through the plan and you've only invested $400 million. I think I know you mentioned in the past, you won't -- if you don't need to, you won't spend the full $1 billion, but it seems like the run rate is a little bit lower than the $1 billion. Is that the right way of thinking about that one?

Thanks, Nasib. Why don't we take the variances question first, and then I'll come back to the perimeter question as well as the Malaysia one. Ben, you want to get us started on the...

Yes, happy to do that. So you will have seen in our results that setting aside investment in capabilities, our business as usual variances have more than halved. And as I said earlier, I'm expecting to return to that historic pre-COVID norm of positive variances within our objective period. you're broadly right in terms of your quantum. I'm confident we're going to get there. We're continuing to focus on driving underwriting profitability across the business. We're now seeing much improved claims experience, thanks to a lot of management actions. We're continuing to invest, as you know, in capabilities to drive both growth and scale. And to that end, renewal premiums are growing very strongly. And finally, we have opportunities around cost containment and operating leverage. And one example of that, if you like, is the positive jaws between net OFSG growth rates and gross OFSG growth rates because we are containing central costs, and we'll continue to do that going forward. So I think we've got plenty of opportunity -- confident we're going to get back to our historic strong positives in 2027.

Thanks, Ben. Nasib, coming to your exit in Africa, in terms of the Francophone market, yes, so that is also a good illustration of the focus that we are employing on deploying shareholder capital where we believe we have a more than fair chance to win and scale. And we did see that opportunity in the Francophone markets. The Anglophone markets are doing well. In fact, in the first half, those markets still continue to grow north of 20%. And as I've said that as the businesses evolve and get more matured in Africa, they provide us the potential to complement the growth profile of the markets and that we have in Asia. And that is something that, again, the management team is quite focused on in driving forward.

To your Malaysian question, yes, so we are happy with the settlement of the claim. We will look at opportunities, but I can't speak too much to it. Needless to say, they have to be commercially viable and in the interest of shareholders. But as I said, I can't comment further on that topic.

Okay. Drew, we can go to the next question. Maybe you should just remind the audience how to send questions online in case they've got a bad connection or anything. I've got a couple of questions that have come in already, but perhaps you could just explain to people how they should submit questions online.

[Operator Instructions]

Our next question comes from Dominic O'Mahony from BNP Paribas.

I've got 3, if that's all right. The first is just on new business and any impact you're seeing at all on appetite for U.S. dollar-denominated product. I had thought maybe there would be some disruption from some of the geopolitics and the currency movements. Actually, the MCV business has been very strong. Just any reflections on what you're seeing in terms of appetite. The second is, thank you for the disclosure on the 2027 contribution from the new business, the plus 27% is super strong. I wonder if you might just unpack it a little bit. It's clearly well ahead of the new business profit growth we're running forward a year, which gives you a small positive as well. But what else is going on in there? Is it that the shape of the service emergence is coming forward in time? Anything else you could do to unpack that would be great.

And then the last question is just a clarification really on dividend policy specifically. You've been very clear that, that's -- it's unchanged, but maybe I misunderstood it before. If we just flow through the OFSG net of strain and central items, you have a very, very large increase through to 2027. And I think consensus and I have EPS growth in excess of 20% last time I checked. Should I be a bit more nuanced in the way I think about this? So for instance, a big contributor is the change in the variances from negative to positive. Should I be looking through that? Or actually, would you say, no, no, go back to the headline net FSG and that's a good guide for the dividend?

Thanks, Dominic. Let me start with the new business question, specifically on MCV and whether the attraction has faded away in terms of U.S. dollar products. The short answer is no, and we continue to see strong demand. The traffic flows on MCV in the first half grew 10% as compared to same period last year. I think the core demand drivers continue to be intact, whether that's the propositions that we offer in Hong Kong, the multicurrency options, including the U.S. dollar as well as there is a natural attraction for the health and protection infrastructure that Hong Kong has to offer. So we continue to see that demand continue and haven't kind of seen any of the volatility that you alluded to impact the customer demand coming through in the MCV segment.

To your second question, I will flip it in a moment to Ben. So yes, the 27% improvement in terms of cash contribution to 2027 objectives for the cohort of business that we wrote in '24, again, underscores the focus that we are employing on quality new business that accelerates to cash. And I think that's an important differentiator. And this comes on the back of the improvement that we saw last year of 36%. I'm going to stop there and kind of flip it to Ben to see whether he has any further comments to give you a little bit of color on that and then to the dividend policy.

Yes. Thanks, Anil. So pleased really to see the 27% increase on the back of the 36% increase a year ago. This is driven by repricing. It's driven by repricing of some health products, but largely savings products. And the importance of repricing savings products essentially makes this channel agnostic, if you like. It benefits both channels. And it's repricing that's driven a lot of margin improvements last year and this year. And as Anil touched on earlier, is driving margin improvements on the banca channel. There's a little bit, Dom, in terms of the changing of the timing of cash flows, but also the absolute level of profits to the shareholder from some of these products.

Clearly, we need to look at things carefully to balance shareholder returns and policyholder returns. But thus far, I'm pleased with the progress we've made. And we'll continue to look for opportunities for repricing. I think one of the key things, Dom, to take away is the confidence the repricing has given me in terms of our 2027 OFSG objective. And in short, that means whilst there's opportunities looking forward to continue to improve our business mix, more H&P, more agency, I'm not reliant upon that as a result of the savings repricing that we've done.

To your question on dividend policy, I think the short answer is yes in terms of the look-through to your specific point. Really, you should view that guidance in the context of the total return proposition that we've set out. So in short, growing annual net capital generation supports a minimum level of growth in total ordinary dividend per share across '25, '26 and '27 and then the $1.1 billion of additional returns over and above that. There is no change to the group's dividend policy. And in a nutshell, that's to grow broadly in line with net OFSG over the medium term. So we've looked through the upswing, if you like, you get in the acceleration of capital generation as a result of variance switching to positive in the interest of a prudent and sustainable dividend path. That guidance we've given in terms of growth rates is intended to build on the 13% the Board declared last year.

Our next question comes from Andrew Crean from Autonomous.

Coming back to a question which I don't think you answered, which was what is the timing of the remaining $0.6 billion of investment in the business as to how that hits '25, '26 and '27 was one question. The second question is around the active agents. Could you say what the fall in the active agent numbers was in the first half '25? And also what you expect the growth rate in active agents to be in '26 and '27, please?

Thanks, Andrew. So let me give you a little bit of color on the $1 billion investment program that we announced 2 years back when we announced our new strategy. So as I mentioned previously, we've invested $400 million to expand our distribution to enhance our customer experience capabilities to modernize our technology platform as well as we successfully have now been able to stand up the health business, and that's kind of putting us in a position of strength, both in terms of growing our health business, Andrew, but also being able to successfully mitigate some of the challenges that we are seeing on account of the regulatory changes that are impacting the health business.

You could expect another $100 million to $120 million by the end of this year. And for 2026, we are expecting to invest another about $200 million to $250 million. And that is really what we wanted to aim for because the majority of the investments we wanted to book in by 2026, so that you then kind of start to see the flow-through impact in '27 and beyond '27. As we get into '27, you will see some reductions kind of come through. But as I said, at all times, we are very conscious of the fact that we are building capabilities that are going to give us enduring returns over a period of time. And to the extent that we can meet our 2027 objectives more efficiently, then that kind of opens up optionalities for us.

In terms of your active agents, our active agents was down 7% year-on-year. As I look to '26 and '27, we are looking at a growth rate of about 7% to 10% is what we would kind of gun for on a year-on-year basis. And by the way, as I said, based on the measures that we have taken, we expect that to improve in the second half of this year going into '26 and then further going into '27.

Okay. Drew, I'm going to go to the online questions I've had, and it's from William Hawkins at KBW, who has 2 questions. One is -- he got 2 parts to it. The first part is, is there any seasonality in terms of the split between agency and banca that we expect for 2025, given that there was some seasonality in 2024. And therefore, will the 2025 H1 figure change in any way as you go through to the rest of the year? And then secondly, are there any particular key drivers by market or product or distribution channel that will influence the growth momentum from now until the end of the target period? And then the finance question, which is, how do you think about the remittance ratio? And are there any ways that you feel that you can affect the remittance ratio? Are there any particular actions that you're imagining that you're going to be able to undertake? So those are the 2 questions from William.

Thanks for those questions. And let me start with the seasonality question. So again, the short answer is yes. We typically kind of see first half skewed towards bancassurance. And as we kind of transition to the second, the skew kind of changes more towards agency. We saw that last year. I don't believe you're going to kind of see a different trend this year. And again, as I said, to my mind, that's kind of unique about us because we have scale both on bancassurance and on agency. And importantly, we have been able to demonstrate that we can deliver respectable margins on bancassurance, including the 6 percentage points that we saw in terms of margin improvements on bancassurance in the first half of this year. Key drivers, yes, there is both distribution as well as new product ideas. Just to kind of illustrate one example of that, I did refer earlier that we still -- we haven't still activated the Bank Syariah Indonesia partnership fully. Bank Syariah Indonesia is one of the largest bank and the largest Syariah bank in Indonesia, 230 million Muslims, clearly underpenetrated.

We see that as a significant opportunity to drive sustained momentum in an important market in a strategic market like Indonesia. Likewise, I did make reference on the fact that we are focused on driving quality agency recruitment. And we are again seeing some good traction under our PRUVenture program, which now contributes to 7% of the total new recruits. And as we keep rolling out these to different markets, I believe there is an opportunity for us to improve the mix of the quality recruits. And I think that's important for us because the productivity of these agents are to the tune of about 4 to 5x as compared to agents that don't come through this program. And I think that's again going to be an important driver of growth as we kind of think about the second half as well as '26 and '27.

And again, on product ideas, I again made a reference specifically in Singapore. We did launch multiple products focused on health and protection and high net worth. We did see the traction. as we kind of closed out the second quarter. And we believe that, that traction will continue into the third quarter. And that's why my confidence that Singapore will come back in the second half of this year. And likewise, we have new products in Indonesia. We have new products in Hong Kong. And again, as I said, it takes a little bit of time to get to maturity, but remain confident that both on distribution and product, we have enough ideas to be able to drive our momentum forward.

I'm going to go to Ben on remittance ratio.

So William, in terms of how we think about the total return proposition and the key levers to drive that. I mean, ultimately, it comes back to focus on shareholder value creation and accelerating holding company free cash flows. So the building blocks being, of course, quality new business, management of the in-force book and capital discipline, exactly the same building blocks that I expect to accelerate our return on embedded value. Once you've used those building blocks and allowing for that operating range, as we've said, 70% of that capital generation comes to Holdco. The returns are then the majority of this flow. And as I said earlier, this is an enduring framework. We're a double-digit business. Sustainability is important to us. So I think really, they are the key drivers.

Drew, should we go to the next question?

Our next question comes from Michelle Ma from Citi.

This is Michelle Ma from Citibank. So congratulations on a very solid set of results. So my first question is about Hong Kong. So Hong Kong in the first half growth rate about 15%, and it's already achieved double digit in the first quarter. So we try to back out the second quarter trend. It seems like it's around like 20% something. It's a little bit against our observation on the ground because the whole Hong Kong life insurance industry is really booming in the second quarter. So I just want to understand, is there any like technical reasons behind this a little bit slower than my expectation growth for Hong Kong? Is that because the underwriting process takes time and some of the June policies maybe will be counted in July. So yes, the first question is I want to check on the Hong Kong second quarter trend. And also after the change of illustrative rate cap, how is the momentum in the third quarter? So have we experienced some notable drop in the demand, especially for MCV business? And how is the new product margin versus the pre-change version? This is the first question.

The second question is to John. So Mr. John joined the company, I think, about 3 months of time. So I just want to get your initial thoughts on your view how you compare PRU with your previous industry experiences. And according to your observation, what's the strength of PRU? And what are the areas you believe you will particularly focus on?

Thanks, Michelle. Allow me to first answer the Hong Kong question, and you had multiple questions within the Hong Kong question, and then I'll go to John and ask him to provide his perspective and his observations. So going back to where I started on Hong Kong, I like the shape of our Hong Kong business. I like the balance between agency and bancassurance. And remember, Michelle, 90% of the mix on new business profit in Hong Kong is delivered through agency and bancassurance. And that's important for us. Why? Because it allows us to control the customer experience. Importantly, it allows us to control the margins, which improved by 1 percentage point. And as I said, I also like the balance between the domestic and MCV, which was one of the key objectives that I had to be able to provide the counterbalance on the strengths that we have on MCV by boosting our volumes in the domestic segment. You're right to point out and your math is correct, that our quarter 2 new business profit improved to 20%.

And there is one important factor that I would like to leave with you, and we mentioned that previously, is that our focus continues to remain on quality new business that converts to cash on an accelerated basis. And towards that, overall, the cohort of the business that we wrote in '24 -- in '25, sorry, contributed to greater than 27% as compared to the cohort of business that we wrote in the first half of 2024. So I think that balance is important for us and something that we intend to keep as we go into the second half as well as into 2026. The illustration caps, you're right. I think it's a healthy step and a step in the right direction by the regulators. And again, we haven't kind of seen impact of that come through as we've kind of transitioned to quarter 3. And on product margins, as I mentioned earlier, we don't see an impact as well in the second half. Our product margins are -- continue to be quite robust. And as I said, it improved by 1 percentage point in the first half of this year.

I'm going to kind of quickly turn to John, John, any comments that you might have?

Thanks, Anil. First of all, I won't comment on our competitor, but when I come to Prudential, what I think, first of all, we have very strong brand in Asia. And we have one of the largest agency in Asia, second largest MDRT. So that's the 3 foundation we're going to build up. But as you know, for agency, we are not looking for magic. We're looking for basics. So what we're going to continue to drive is driving further productivity and further activation ratio. We're going to continue to drive our MDRTs and then we're going to continue to drive our quality recruitment. So I'm very, very excited in the market now, very low penetration. So it means a lot of opportunity for us to grow. In the meantime, our customers still prefer a face-to-face agency to -- as a choice of purchasing. So that's the huge opportunity for us.

Michelle, just one additional comment to your earlier question on Hong Kong. I should have mentioned that while we have significant strength in bancassurance and agency, we are also looking at building our relationship with quality set of brokers, but at the same time, also being very watchful of some of the regulatory changes that are likely to impact the broker channel. So for example, the referral fee cap that's likely to get in force as of October 1 as well as the spreading of commission that's likely to come in force in January. I thought I would probably add that to just give you a little bit of extra color.

Thank you Anil. Drew, I'm just conscious of time. We've got a few more questions to come. Maybe we'll go to the next one online, please. Sorry, on the conference call.

Our next question on the conference call comes from Andrew Sinclair from Bank of America.

Three for me, please. First on capital management. You talked about the potential additional returns in excess of 200%. But it looks to me that even with what you've announced today, even if the dividend grows well in excess of 10%, you're still going to be miles above the 200% top end of that range for the foreseeable future. So what is the time scale and plan to get into that 175% to 200% range that you said is the right place to operate? Second, just on the new business margin seasonality. I think you said it should improve kind of quarter-on-quarter through the year. Just any color in any particular regions where you think there should be material changes in margins where we shouldn't expect any margin improvement through the rest of '25? Or just any color there?

And third was just on Mainland China. Good to see the mix evolving towards par products. Just can you give us a little bit of a reminder of where we are kind of on the back book of, I guess, non-par? Where is the earn yield? Where is the reinvestment rate? And what's the average guarantee on that book today would be helpful.

Thanks, Andy. I'm going to kind of flip it to Ben. And then if there are any additional comments that I might have, I'll come on the back of that, Ben?

Andy, maybe I'll go in reverse order, if you like. I think your third question was on China. Actually, CPL used to sell a lot of par business in China many, many years ago. So when you look at the general account assets, and there's that snapshot slide in the appendix to my own slides on that, about 40% of that actually backs par business. In terms of cost of liabilities and where we are today, both actual and expected returns are sufficient to cover cost of liabilities. As you'll appreciate, because it's par, you can vary that cost of liability through time. The business has done a lot of repricing over the years. And I think backing up from a capital management perspective, again, confident that there will be no need to put any further contributions into CPL in 2025. They are continuing to look at actions to drive further resilience on the balance sheet on top of derisking and repricing. And we were pleased that they've been recently awarded status to enable them to issue perpetual debt locally, and that will count to their core and comprehensive solvency.

On margins and ability to drive margins going forward, it's basically the 4 points I alluded to earlier. There is, I think, to your point, a seasonality thing. We typically see a greater proportion of bancassurance in the mix. Bancassurance having a very healthy margin and improving year-on-year, but still lower than agency. So as we progress through the year, I think you'll start to see a more positive channel mix come through. That will benefit margins on top of the repricing actions we've taken. And of course, as I said, there's opportunity on the health and protection side as well. We've been pleased with growth in the health space, 16% compound 2024 through 2027. So we'll continue to focus strongly on that.

In terms of, I think your first question then was capital management and potential returns in excess of 200%. I mean, as you're seeing, we've not changed that target corridor of 175% to 200%. That reflects both risk appetite and the nature of our business. I'm expecting to operate slightly above the upper end of that on the back of today's announcement. And there will be a practicality element to this as well, Andy, in terms of needing to earn stress and remit surplus up to group to fund then shareholder commitment. So there's always an element of timing. In terms of the 200% pre-surplus ratio review trigger. I mean that's something the Board will regularly review. And what they do there is to look at sort of capital over and above that ratio over the medium term, and we'll think to opportunities to reinvest, but look to market conditions as well. I think today was about returns from flow. In terms of returns from stock, the most obvious example will, of course, be the IPO, a corporate event. But the Board will review capital over and above that 200% ratio, as I say, on a regular basis.

Thank you, Drew. We've just got 2 more questions, I think. If you just bring them in.

Our next question comes from Abid Hussain from Panmure Liberum.

I've still got 3 questions left, I think. The first one is on management actions. So really good to see that the new business profit growth and margins improving. And it feels like you've delivered that despite all of the businesses yet to fire on all cylinders. I think you called out some of the actions that are left to take. But I'm just wondering if you can sort of call out the actions or any additional actions that you're yet to take, but specifically the impact that, that will have on the margin improvement or scale or both of new business going forward? So that's the first question on management actions.

And the second question is on the net OFSG. Good to see that the cash conversion from new business is improving. And so I think we should expect faster growth in the net operating free surplus generation number relative to the gross number. But I'm just wondering what sort of delta are you expecting between the gross and the net growth? Is it sort of a material delta? Or is there something else that we need to consider in that mix? And then the final question is on capital distributions. I suppose at what share price would you stop a share buyback? At the current share price, it makes sense to me that you continue with the share buyback. I think you're still trading below embedded value and sort of whichever the metrics you're focusing on. But if the stock moves up another 50%, it's moved up some 50% year-to-date, but if it moves up over your time frame, another 50%, does that shift the thinking?

Thanks, Abid. So Abid, let me start with the first question, and I'll flip it to Ben for the second and the third one. So on management actions, clearly, pleased, right? And as you can tell, this is a big focus area for the global executive team to be able to drive the right quality -- and towards that, I mentioned it, Ben referred that as well, that some of the repricing actions that we have taken both across savings and health and protection products are starting to flow through, interestingly, both in the agency channel as well as in the bancassurance channel.

I think if you look forward, just to kind of keep things simple, as we see greater traction on agency and agency being higher margin than bancassurance, that would be a good driver. And if we get a better balance between -- or I should say, a higher proportion of agency versus bancassurance, that will have a knock-on impact on health and protection mix as well. So there is where the engines of margin improvements lie. And that's really what we are trying to kind of focus on in addition to some of the repricing actions that we alluded to in the previous part of the conversation.

Ben, net OFSG and capital distribution.

So in terms of net OFSG, Abid, yes, I'm pleased with the geared effect that you see coming through. In short, that represents lower growth rates in central costs. And as I mentioned earlier, we're going to continue to contain central costs. Of course, you got in this period, a lower growth in terms of new business strain versus that gross OFSG. When you project forward, I guess, in terms of the building blocks, there's obviously the acceleration of the gross number to our objective. required capital, I'd guide you to early double-digit growth. On strain, giving you the other components, that's going to increase broadly in proportion to our new business volumes. And I'd guide you to H1 '25 strain as a percent of APE to being a pretty sensible jumping off point. And then as I say, central costs remaining fairly flat.

The third question on capital distribution.

Price all we start. I think we're a long way -- long way off that.

Okay. Thank you, Drew. Let's go to the last question for this afternoon.

Our final question comes from Thomas Wang from Goldman Sachs.

A couple of questions, hopefully short ones. Firstly, sort of first half agency NBP, I think, up 4%, mainly -- so growth was mainly driven by bancassurance. I think Hong Kong agency is up double digits. So I just want to understand which market kind of showing kind of weakness in agency channel in the first half. The second point, on the -- I think I'm looking at Page 52 of this presentation, the required capital actually up about -- looks like about 10% in the first half. Just want to understand how we should think about this required capital growth over the next couple of years because 10% just in a 6-month period looks relatively fast, which might put some constraint to your free surplus given the 200% ratio. So any color here would be helpful.

Thanks, Thomas. So going back to the agency point, and as I mentioned earlier, you can't kind of paint agency performance with a single brush. We believe that Hong Kong, Indonesia, Singapore stable to growing. And again, you can see the quality of that business as well as some of the actions kind of result into some high-quality outputs for us on agency. I think the markets that have been challenging for us have been Malaysia and Vietnam on account of some of the industry-led changes that's impacting the entire sector, and you can see that more broadly reflected in the entire industry. And we have, again, action plans and feel confident that we will be able to convert that momentum.

It will take us a couple of quarters, specifically in these 2 markets of Malaysia and Vietnam. In China, we have a change management program that I alluded to. We are striving very hard to make agency complement the strong growth that we continue to witness on the bancassurance channel. We are starting to see some green shoots. So for example, our active agents in China was up 6%. Our recruitment was up by north of 40%. And that kind of gives us the confidence that we are on the right track because, again, China continues to be an important focus area as we manage the balance between quality growth and prudent risk management.

I'm going to stop there and go to Ben for the last question.

Yes. Thanks, Anil. Thomas, so on required capital growth, when you think about modeling going forward, I suggest you use very early double-digit growth rates.

Okay. I think that takes all the questions. I just -- Anil, do you want to just do a closing comment, and then we'll call the call.

No, firstly, thank you for joining us, and thank you for the questions. Ben and I are going to be on road shortly. So we will be seeing many of you in person, and we look forward to continuing the conversations. But thank you very much for joining us today.

Thanks very much, Drew. You can close the call.

Thank you all. That concludes today's call. You may now disconnect your lines.

Hello. I'm Anil Wadhwani, CEO of Prudential. Thank you for joining me today. I'm delighted to share our half year 2025 results and update you on the progress of our strategy now 2 years into our transformation journey. We have delivered another period of strong consistent performance with double-digit growth across key matrix. We reached a clear inflection point in our capital generation, driven by the strength of our businesses in our core markets. Despite the ongoing market volatility and geopolitical uncertainty, we continue to deliver high-quality growth and strong shareholder returns, demonstrating the strength of our business model. Our presence in high-growth markets of Greater China, ASEAN, India and Africa, positions us well to meet the rising demand for health, protection and retirement solutions. We are making good progress across our strategic priorities by executing with discipline and decisiveness, actively pursuing opportunities and at the same time, addressing areas that need improvement. Through targeted investments in our capabilities, we are enhancing customer engagement and driving operational effectiveness, building Prudential into a stronger, future-ready business. Alongside our core achievements, we have made notable progress in the first half, including progressing the setup of our Indian health business with license applications and approval processes [ and ] train. Expanding our bancassurance distribution in Indonesia through our Bank Syariah Indonesia partnership and settling the dividend claim in Malaysia. We are on track to achieving our 2025 guidance across all our key metrics and remain confident in meeting our 2027 objectives.

In addition to driving quality growth, we are focused on providing shareholders with attractive cash returns through an enhanced capital allocation framework and updated multiyear capital management program. Our performance was strong in first half. New business profit was up 12% to $1.3 billion building on the strong momentum we have generated in the previous years. Our margins expanded by 2 percentage points to 38%, reflecting the quality and efficiency of our growth. Operating profit after tax per share grew by 12%. In line with our guidance, 2025 marks the inflection point on our path towards 2027 capital generation objective.

Gross operating free surplus generation, our key operating measure of capital generation grew by 14%. This enabled us to deliver a 13% increase in dividends per share to our shareholders for the first half of this year, in addition to the $850 million of share buybacks as of 18th of August. We expect the remaining $360 million to be completed by the end of this year. We remain firmly focused on creating long-term shareholder value through high-quality sustainable growth and consistent delivery of shareholder returns. First, we are guiding to greater than 10% dividend per share growth each year from 2025 to 2027. Second, we are commencing additional recurring capital returns from 2026 onwards. We expect to return $500 million in 2026 and $600 million in 2027. Notably, both the ordinary dividend and the additional capital returns are sourced from the rising annual capital generation from the business. Third, as we have guided before, the capital above free surplus operating ratio will be assessed regularly with potential for further returns of excess capital to shareholders. On completion of the capital management update announced today and the existing $2 billion share buyback program, we expect to have return in total more than $5 billion of capital to our shareholders between 2024 and 2027. This is before considering the returns to shareholders of any initial net proceeds from the potential IPO of our Indian asset-management business.

This slide provides an update on our progress since the launch of a 5-year strategy in August 2023. It clearly illustrates how we are delivering quality growth and value creation through 2027 and beyond. In the first half, we executed our strategy with speed and purpose, delivering strong progress across our key priorities while remaining on track to achieve our financial guidance for 2025.

We have strengthened our distribution capabilities across both agency and bancassurance. In agency, we are advancing our transformation program, focusing on building a digitally enabled and high-quality professionalized agency force. In bancassurance, the continued focus on quality and training has underpinned our strong performance, and we have successfully activated our new bank partnership with Bank Syariah Indonesia. Over the last 2 years, we have invested in building senior talent across the organization, including strengthening our group executive team. This provides us with a strong leadership platform to drive our next phase of growth.

Turning to our market performance for the first half in more detail. In Hong Kong, new business profit rose 16%, driven by broad-based double-digit growth across both agency and bancassurance channels. Growth came from domestic and Mainland China visitor customer segments. We are focused on writing quality new business that converts to cash on an accelerated basis, and we are looking to enhance our relationships with quality brokers to complement our existing distribution channels. We remain optimistic about our Mainland China business as we have prioritized quality growth and effective risk management. New business profit grew 8% driven by our bancassurance channel. The growth is in line with our expectations, and we expect a similar outcome for the full year. The execution of our strategy continues to progress well with a clear focus on quality new business, a sales shift towards higher mix of participating, and health and protection products and the ongoing transformation of our agency force.

Singapore's new business profit grew 5% in the first half. While we experienced market-led volatility impacting our investment-linked products, we quickly pivoted to new products focused on health and protection earned high net worth in the second quarter. Given the strength of our multichannel distribution, including our prudential financial advisers, bancassurance and tied agency, we are confident in building our trajectory in the second half.

Indonesia delivered exceptional new business profit growth of 34%, sustaining strong momentum from the second half of 2024 into 2025, driven by double-digit growth in new business profit from both agency and bancassurance. Growth is expected to normalize in the second half given the strong prior year comparator. We officially launched our new Sharia bancassurance partnership with Bank Syariah Indonesia, one of the country's largest banks with 21 million customers. In Malaysia, bancassurance performed strongly through effective collaboration with our key strategic bank partners, while agency was impacted by industry-wide factors. However, we did see signs of improvement in the second quarter with agency new business profit sequentially increasing over the first quarter and agency recruitment up double digit in the first half.

Across our growth segment, new business profit was up 11%, driven by strong underlying performances from Taiwan, Thailand and African markets, partially offset by Vietnam. And our asset management business, Eastspring, saw underlying profits grow by 8%, in line with growth in average funds under management of 8%. Net flows from both third-party and life remains strong and margins remain steady.

Let me now share an update on the operational progress we are making across key areas of our business. Agency saw momentum quarter-on-quarter with underlying second quarter new business profit up 7%. Productivity measured by new business profit per active agent rose 10%, offsetting a decline of active agents to 58,000. We remain focused on quality recruitment, training and career progression. MDRT qualifiers grew by 3%, reinforcing our position as the world's second largest MDRT force. Transforming our agency force remains a top priority, and I will share more on our progress and plans shortly.

Next, Bancassurance, delivered a very strong performance with 28% increase in new business profit. Growth was broad-based with 14 markets achieving double-digit growth, resulting in a 6 percentage points improvement in margin. In health, we are making good progress with new business profit and earned premiums, both rising by 13%. Our growth is fueled by innovative product development, strengthening hospital provider relationships and applying best practices in smaller health markets. These efforts helped us attract over 300,000 new health customers in the first half of this year. Meanwhile, the setting up of our India health joint venture with HCL Group is progressing well, laying the groundwork for future growth. Looking ahead, having strengthened our health business, our next focus is on improving our protection sales across both agency and banca channels through better training and newer propositions. Initiatives to improve customer experience and create tailored, data-driven propositions helped us acquire nearly 1 million new-to-Pru customers in the first half, now generating more than 55% of our APE. Retention rates improved 1 percentage point over the first half of 2024, and 5 business units are in the top quartile for relationship Net Promoter Score.

Our multichannel distribution model is 1 of our greatest strengths and we have a good balance between agency and bancassurance. Customers continue to greatly value face-to-face interactions and long-term relationships with their agents. Agency is our primary distribution channel, contributing 55% of new business profit in the first half. We have one of the largest agency forces in the Asian insurance industry and see significant value in strengthening it further. Our agency strategy focuses on driving high-quality, profitable growth through quality recruitment, career progression via MDRT, enhanced professionalism and digital platforms that boost both productivity and activation.

We are seeing encouraging signs on our transformation journey. PRUVenture new recruits are now 7% of total intake and 5x more productive than other new recruits. MDRT qualifiers grew 3% in the first half reinforcing our position as the second largest MDRT force globally. Productivity rose with new business profit per active agent up 10%. In ASEAN markets, we see opportunities, specifically those with large agency forces to accelerate the shift from part-time agents to full-time professional advisers. Thousands of customer queries are now handled every month by AI chatbots and 5.7 million leads were generated through our digital agency platform in the first half for agent follow-up and conversion.

Turning to market performance. Our agency businesses in Hong Kong, Indonesia, Africa and Singapore grew, while performance in other markets was mixed. Malaysia and Vietnam were impacted by structural developments affecting the whole industry, and we have clear plans to rebuild momentum and strengthen our position in both markets. In China, we are already undergoing a change program and starting to see some early signs of active agent growth. Across the organization, we are strengthening agency talent both in market and at the center to drive long-term sustainable agency performance.

We have started to see momentum improve with underlying new business profit up 7% in the second quarter, and we expect this momentum to build as we go into the second half of this year. Since launching our strategy in 2023, we have invested $400 million in modernizing our technology processes and capabilities across the business. Of this, 45% has been directed towards upgrading our technology, data and AI capabilities, including enablement of distribution, customer and health capabilities. These investments are enhancing productivity, scalability and operational resilience.

Let me give you a few examples of critical capabilities that we have deployed since 2023 and their impact in the first half. In agency distribution, we have increased APE sales generated from leads by 43%, equivalent to around $130 million versus the prior year through upgrading our lead management systems and processes. In health, we are on track to secure $87 million in 2025 in annualized cost savings through renegotiating contracts and implementing performance-based rewards with high-quality providers, leveraging advanced analytics and data insights.

In our customer pillar, we generated $100 million of APE sales via our new customer engagement platform, which provides timely communications tailored towards customer preferences across 8 markets.

In technology and operations, we have also made significant progress in accelerating the digital transformation of our business. addressing historical underinvestment and building a more resilient and scalable prudential. Our upgraded technology is delivering tangible results. Major incidents are down 90%, and we are operating at near 100% uptime, providing greater stability and reliability for both our customers as well as our agents. We are also focused on deploying AI at scale with 60 AI and machine learning solutions in production, supporting more than 140 use cases, which we are targeting and driving growth and greater efficiency in our organization. Some examples include improving the speed of underwriting, managing customer queries and enhancing fraud management capabilities. Looking forward to 2027, we are confident in achieving our new business profit and free surplus generation objectives as we are committed to a continued focus on: Firstly, writing high-quality new business, particularly for health and protection and longer-term products that deliver higher cash signatures; second, effectively managing our in-force. This includes repricing our product portfolio and improving our customer Net Promoter Score and our operating model; and third, improving our variances through completing our 2023 to 2027 investment program and capturing economies of scale.

As I shared during the full year 2024 results, the long-term growth fundamentals in Asia and Africa are reasserting themselves, creating significant opportunities for Prudential. We are responding with disciplined execution of our strategy focused on unlocking value across our core markets. I'm confident that Prudential is well positioned to capture this growth backed by a powerful premium franchise that includes a strong presence in high-growth markets, a trusted brand with a nearly 180-year history, scale distribution across agency and bancassurance and a unique integration of life insurance and asset management capabilities.

In the first half, we executed our strategy with speed and with purpose, delivering strong progress across our key priorities. We achieved double-digit growth in our key financial metrics and have reached an inflection point in operating free surplus generation. We are on track to hit our 2025 guidance and are confident in achieving our 2027 objectives as well. We remain focused on creating and returning significant value to our shareholders and launch the next phase of our multiyear capital management program that is expected to return in total more than $5 billion of capital between 2024 to 2027. Importantly, our capital management program provides a strong endorsement of our business model. One, that consistently delivers quality growth and enables sustainable shareholder returns. In short, we are delivering growth, creating value and building consistency moving Prudential closer to realizing its full potential.

Finally, I would like to thank our people, our agents and our partners for their continued dedication and focus throughout the first half of 2025. We are looking forward to sharing further updates in November.

I will now hand over to Ben, our Chief Financial Officer.

Thank you, Anil, and hi, I'm Ben Bulmer, CFO of Prudential. Our first half 2025 financial performance reflects a positive start to the year as we continue to focus on accelerating growth in value and capital generation, in line with our strategy. We delivered double-digit growth across our primary financial KPIs. We're on track versus our 2025 guidance and confident of achieving our 2027 financial objectives.

The group's new business profit grew 12%, reflecting the strength of our broad-based multi-market, multi-channel platform. This plus growth in our in-force profit and ongoing capital return improved our operating return on embedded value to 15%. Our operating earnings per share on an IFRS basis grew 12%.

As previously indicated, we have reached the inflection point our capital generation trajectory with gross operating free surplus generation or OFSG up 14% year-on-year, whilst our net OFSG is up 20%. Our free surplus ratio pro forma for the payment of the first interim dividend and the balance of our current $2 billion buyback program was 211% at the end of the period. And in line with our dividend policy, the Board has declared a first interim dividend per share of $0.0771, up 13%.

As we indicated in March, we have updated our capital allocation framework, reflecting both our strong capitalization and our confidence in the strategic progress we are making which is driving improved organic capital generation. Our key priority remains investment in high-quality organic growth at attractive returns followed by investment in enhancing our capabilities, driving sustained growth in value and capital generation. Enhanced capital returns reflect a move to a total return orientation in respect of the distribution of our free cash flow.

We've updated our guidance for ordinary dividend per share growth rates and announced that from 2026, shareholders will also benefit from additional recurring capital returns covered by the annual flow of capital generation. Taken together, this means we will deliver what we think is a highly attractive shareholder total capital return proposition. Annual growth in DPS of at least 10% each year over 2025 to 2027, building on the 13% growth delivered in 2024. The and additional recurring capital returns funded from annual capital generation starting in 2026 with an expected buyback of $500 million and a further return of $600 million in 2027.

Finally, as previously communicated and consistent with reviewing capital above the 200% free surplus ratio, we intend to return the initial net proceeds of the potential IPO of our India asset management business or India AMC, to shareholders. Overall, before considering the potential IPO, we will return over $5 billion to shareholders between 2024 and 2027.

Our diversified footprint and distribution model has underpinned our momentum, delivering 12% NBP growth in the period. All but one of our life segments reported new business profits growth. And at a market level, 13 out of 19 life markets grew NBP. Hong Kong continued to deliver high-quality broad-based growth with NBP up 16%. We've seen a strong performance from Indonesia with NBP up 34%, benefiting from our ongoing transformation. This growth is flattered by a relatively weak prior period comparator. And so we expect a more normalized performance in the second half of this year. Nevertheless, we remain very excited about the opportunity in Indonesia with its favorable demographics and low level of insurance penetration. Malaysia was the only segment with a decline in NBP in the period, reflecting the balance of strong growth in bancassurance offset by a lower agency contribution. In terms of our channel performance, bancassurance again generated strong growth with NBP up 28%. The agency channel delivered NBP growth of 4%, reflecting progress in agent productivity, partially offset by a fall in average monthly active agents.

In our larger markets, we delivered double-digit agency NPP growth in Hong Kong and Indonesia with more modest growth in Singapore. We continue to see an opportunity to unlock significant further value through improvements in agent quality, activation and productivity. Our broad-based NBP performance reaffirms our confidence in achieving our 2022 to 2027, group NBP growth rate objective. The $1.3 billion of new business profit added over the period reflects our continued focus on quality. 33% is driven by health and protection business and a further 52% by participating in unit-linked products with limited direct market risk. We remain focused on writing quality new business with strong underlying capital generation. Our shareholder product IRRs remain above 25% and payback periods are less than 4 years. Driven by our actions to reprice products and improved mix, the NBP margin expanded 2 percentage points to 38% compared with the first half of last year. As a result, the additional capital emergence added to the 2027 objective year from new business written this year is 27% above the 2024 first half equivalent and meaningfully above the 5% growth in sales in the period.

Our embedded value performance highlights the successful execution of our strategic objectives: growing high-quality, profitable new business; improving in-force management; and managing our capital with discipline.

Embedded value operating profit is up 16%. Embedded value per share grew 5%. Net of the dividend payment and including the benefits of the share buyback, embedded value per share, excluding goodwill at the end of the period was $13.24 equivalent to GBP 9.66. The negative nonoperating effect reflects the impact of lower interest rates in a number of markets under the TEV framework and revaluation of our own debt. In addition, there was a $0.5 billion impact in our Mainland China business from the application of a more prudent valuation interest rate used to discount local statutory reserves and from further actions to derisk our asset portfolio. This was partially offset by favorable FX movements.

Finally, higher operating profit and disciplined management of our capital base led to a 2 percentage point improvement in our return on embedded value to 15%. We continue to see scope to improve this, driven by growth in new business profits, cost containment and ongoing return of excess capital.

Turning now to our IFRS performance. And as a reminder, the CSM acts as a [ store ] of future profit. So growing this through quality new business and managing in-force development is key to delivering sustained earnings growth. Structural growth in the CSM comprising new business additions, normalized unwind and net of the release to the income statement was $0.9 billion, an increase of 8% on an annualized basis. The release to the income statement of $1.2 billion equates to a release rate of 10.2%, similar to that in the prior period.

Our insurance result, up 6%, was driven by the 12% increase in the adjusted CSM release, partially offset by the net investment result, which was down 6%. The lower net investment result reflects the impact of reduced asset balances in the insurance business as a result of remittances to the group center last year and various portfolio actions taken within the Mainland China business which started in the beginning of the second half of 2024. We expect the full year 2025 net investment result to be broadly stable year-on-year.

The underlying asset management result was up 8%, in line with the growth in average funds under management. After including a reduced contribution year-on-year from seed capital gains, however, reported operating profit grew 2%. Central expenditure continues to be tightly managed and was flat year-on-year. Net interest payable and other items increased to $111 million, reflecting stable interest costs, but reduced interest income on central balances, reflecting our ongoing buyback program.

The operating tax rate of 17% was similar to the prior period, and we continue to expect an immaterial impact from the introduction of global minimum tax rates. Overall, operating profit after tax or OPAT was up 7%, allowing for the 5% reduction in average share count as a result of our ongoing buybacks. Operating EPS grew 12%.

Turning to our capital generation performance in the period. The group has now reached the in-force capital generation inflection point. Gross OFSG grew 14% largely driven by a higher expected transfer from in-force business, reflecting our return to new business growth post-COVID and our focus on quality. The $1.4 billion transfer over the first half of 2025 shown in the table on the right is in line with the $2.7 billion release. We expect over the 2025 year as a whole. This, combined with improved operating variances, the return on net worth and asset management profits resulted in gross OFSG of $1.6 billion. Of this, $0.4 billion was reinvested in writing high-quality new business at attractive IRRs and short payback periods. The small increase in new business strain reflects changes in business mix. and with relatively stable central costs, overall group capital generation or net OFSG was up 20%.

Management of our in-force business continues to improve. Variances between actual and expected cash flows before investing in capabilities continue to reduce, as shown in the red bars on the left-hand chart. Underlying this are a range of ongoing actions, including repricing, health and savings products, enhanced claims management, cost containment and the benefits of a return to higher margin new business growth.

We expect our core operating variances to return to our historic positive levels in 2027. This will be driven by: firstly, a sustained positive operating leverage, a function of growth in our portfolio with in-force premiums up 11% year-on-year, combined with ongoing cost containment actions; and secondly, completing our one-off capability investment program. We deployed nearly $100 million over the first half of 2025, taking our overall investment to date to circa $400 million.

We continue to make strong progress towards our 2027 capital generation objective of greater than $4.4 billion driven by robust growth in the capital contribution of new business and reducing variances. This chart shows the key building blocks I presented at our 2024 full year results in March. I said then that if you assume the franchise simply repeats 2024 levels of new business in 2025 and 2026, i.e., it doesn't grow, and you assume only the 2024 level contributions from return on free surplus and asset management and a return to neutral variances, we would deliver nearly $4 billion of gross OFSG in 2027.

Our half year 2025 progress surpasses this. Taking each building block in turn, first, as of the end of 2024, we expected our in-force business to generate free surplus in 2027 of $2.6 billion. Of this, $2.6 billion, $0.3 billion was added by new business written in 2024. As I mentioned, the transfer over the first half of 2025 is in line with the release we expect over the 2025 year as a whole, demonstrating the high-quality and predictable nature of our in-force cash flows. Second, profitable new business written in 2025 and 2026, illustrated in the second bar will further add to the level of capital emergence in 2027. The addition to 2027 capital emergence from first half 2025 new business increased by 27% year-on-year, much faster than APE growth during the same period. Third, on top of the higher life contributions to OFSG in 2027, you need to add the asset management results and return on free surplus.

Finally, our core operating variances continue to improve as we focus on cost containment and claims management, supporting a return to positive historic levels in 2027. Taking these together and considering our continued growth over the first half of 2025, this reinforces our confidence of reaching gross OFSG of at least $4.4 billion in 2027.

The group's capital generation drives holding company free cash flow. Over the first half, gross OFSG of $1.6 billion funded $0.4 billion of investment in profitable new business, resulting in segment OFSG of $1.2 billion. Timing differences mean that remittances were elevated versus capital generation. Looking forward and for modeling purposes, while the remittance ratio will fluctuate from year-to-year, I'd refer you to our directional guidance of about 70%.

At the holding company, shown on the right-hand chart, these remittances net of central costs and recurring bancassurance resulted in free cash flow generated of $1 billion. After allowing for the ordinary dividend, the ongoing buyback and our recent debt issuance, holding company cash increased to $3.4 billion. Reflecting this very strong financial position, I will now turn to the final section of my presentation, our capital management update.

I've earlier explained why we are confident of reaching our gross OFSG target of above $4.4 billion in 2027. As the chart on the left highlights, this represents a material step-up in the group's level of annual capital and resulting cash generation, which is close to doubling between 2024 and 2027. The very strong growth rate this implies is flattered by the swing we expect from negative to positive variances by 2027. Given our opportunity set, strong positioning across the growth markets of Asia and Africa and our ongoing strategic execution. We expect the business to continue to generate double-digit growth in capital generation beyond this point. Growing capital generation illustrated by the chart, mechanically translates into materially higher and growing holding company free cash flow. Enhanced capital returns reflect a move a total return orientation in respect of the distribution of our free cash flow with 2 components: firstly, we intend to deliver a growing ordinary dividend, reflecting an unchanged sustainable dividend policy with growth in dividend broadly in line with net OFSG growth over the medium term; secondly, we have now committed to an additional recurring capital return. Finally, and as we have said before, capital over and above our free surplus operating range will be assessed regularly and if deemed excess will be returned to shareholders. This illustrative chart shows the generation and subsequent allocation of capital in terms of the development of our free surplus ratio with net OFSG to the left and the 3 components of capital return to the right.

Net OFSG is the outcome of gross OFSG, reinvestment in profitable new business and the payments of central costs. This annual flow of group capital generation drives our ordinary dividend and capacity for additional recurring capital return. Then to the right, as I just mentioned, capital over and above our free surplus operating range will be assessed regularly and if deemed excess will be returned to shareholders. As we move across the objective period, as I've said before, I'm expecting to operate at the upper end of the free surplus ratio, range we've given, allowing for the dividend and capital return policy. When thinking about modeling out the free surplus ratio, it's important to be conscious of the growth in regulatory capital as renewal premiums and new business build and also the $1 billion investment capability program. In terms of modeling required capital, I would expect low double-digit growth going forward through to 2027. The enhanced framework results in shareholder returns of over $5 billion between 2024 and 2027 before considering the return of any initial net proceeds from the potential India AMC IPO. In terms of ordinary dividends, we have guided to greater than 10% dividend per share growth each year from 2025 to 2027, building on 13% dividend per share growth in 2024. We will commence additional recurring capital returns in 2026. We expect a buyback of $500 million in 2026 and a further return of $600 million in 2027. Thirdly, as we've said previously, capital in excess of our established 175% to 200% operating range will be assessed regularly with excess return to shareholders. Lastly, we expect to complete our current $2 billion share buyback by the end of this year. And again, we intend to return any initial net proceeds of the India AMC IPO.

Finally, I wanted to take the opportunity to remind everyone why Prudential's model generates a highly predictable and growing capital flow, supporting sustained growth in shareholder returns. This rests on a continuing focus on high-quality new business. Referring to the left-hand chart, almost half our in-force business is health and protection. And most of the rest is participating and Unit-Linked savings products. This means more than 90% of our cash flows have no or limited exposure to direct market risk. Secondly, our business is recurring premium in nature with compounding new business growth adding to our sizable in-force book, growing our stream of future capital generation. In 2024 for example, new business added 12% to the value of our in-force book. The outcome is a growing predictable, high-quality compounding capital generation trajectory around 70% of which is remitted to the holding company. This underpins sustainable growth in shareholder returns.

In summary, our first half 2025 financial performance reflects a positive start to the year with double-digit growth across our primary financial KPIs. We are on track versus our guidance for the year. We've reached the inflection point in our capital generation demonstrating the progress in executing our strategy. And as a result, we're able to enhance our capital allocation framework, which will deliver attractive growing total capital returns to our shareholders. This will see over $5 billion return between 2024 and 2027 before any return of initial net proceeds from the potential IPO of our Indian asset management company. Finally, we remain confident in achieving our 2027 financial objectives. Thank you.