ageas Aktie

Welcome to this Ageas conference call. I am pleased to present Mr. Hans de Cuyper, Chief Executive Officer; and Mr. Wim Guilliams, Chief Financial Officer. [Operator Instructions]. Please note that the conference is being recorded.

I would now like to hand over to Mr. Hans de Cuyper and Mr. Wim Guilliams. Gentlemen, please go ahead.

Good morning, ladies and gentlemen. Thank you all for dialing into this conference call and for joining the presentation of Ageas full year 2025 results.

I'm extremely proud to report that we successfully completed the first year of our Elevate27 strategy, a remarkable year where we delivered a continued strong performance and raised our financial targets twice. 2025 was, to say the least, a transformational year for Ageas, giving us many achievements to be proud of. Thanks to the Saga partnership and esure acquisition, Ageas steadily strengthened its position in the U.K. market becoming one of the top 3 U.K. personal lines insurers.

By acquiring the remaining stake in AG, we have full ownership of -- we will have full ownership of our core home market, further strengthening our leading position in Belgium. Both transactions fully aligned with our Elevate27 strategy of focusing on cash generative entities.

In 2025, Ageas delivered outstanding growth across the group, with inflows up more than 9% at constant FX, driven by both Life and Non-Life with Ageas Re adding momentum. This remarkable performance was boosted by a strong growth in Non-Life with inflows up 16%, up in all segments and product lines. The uplift in Belgium resulted from both portfolio expansion and tariff adjustments while Asia benefited from an upward trend in all countries. Europe inflows increased with continued focus on profitability over volume and the U.K. positively contributed despite a softer market supported by esure and Saga business.

The Reinsurance segment delivered an exceptional performance, mainly driven by third-party business, thanks to strong profitable growth in all business lines and aided by the inflows from partnerships. In Life, Europe inflows experienced a significant increase of plus 21%, driven by continued excellent performance in Türkiye and a remarkable growth in savings products in Portugal. Also, Belgium showed a strong performance of plus 6%, driven by excellent unit-linked sales to the bank channel, while Asia growth was realized with strong persistency rates, building on the new business that was sold in previous year in China.

Our continued strong growth in Life translated in the growth of our Life liabilities of more than 6%. Regarding the net operating result, we achieved an outstanding result of more than EUR 1.655 billion above the latest guidance announced last month. This strong result was driven by a remarkable Non-Life performance reflected in the excellent combined ratio of 92.5%, partially supported by benign weather in Belgium. Life performance improved across the group with high margins in Belgium and Europe further supported by a one-off tax benefit in China.

Regarding the recurring cash upstream, we received over 2025 EUR 949 million, and this is notably above guided range of EUR 850 million to EUR 900 million and up 18% compared to last year. And for 2026, we expect a significantly higher cash upstream of EUR 1.2 billion. Following the excellent results, a solid Pillar 2 solvency ratio of 211% and a robust cash position, the Board of Directors has decided to propose a total gross cash dividend of EUR 3.75 per share, a growth above 7% over 2025 and this is fully in line with our commitment.

The interim dividend of EUR 1.5 per share was already paid out in December last year, and the payment of the remaining EUR 2.25 per share will be done in the course of June. Year 2025 demonstrated how quickly economic conditions such as inflation and interest rates can change and how macroeconomic events can influence the business environment. In this dynamic landscape, having diversified operations across regions and products are particularly important.

During this transformational first year of Elevate27, Ageas achieved a more balanced geographical and segment distribution increasing the weight on European cash generative entities. The balance between Life and Non-Life businesses across the world is a defining feature of Ageas as a well diversified group, which keeps a steady growth in performance and a strong solvency even in volatile times.

Before handing over things to Wim, let me share a quick update of our 2025 M&A journey. We closed Saga in July and esure in September, adding the missing pieces to our U.K puzzle. For esure, the integration started already at the end of 2025 ahead of plan, and we are well on track to achieve the announced annual synergies of more than GBP 100 million as of 2028. With the AG acquisition on track to close in the second quarter of 2026, another milestone approaches, further reshaping our group and accelerating our journey towards delivering on our Elevate27 ambitions.

This allowed us to elevate our financial targets twice in the first year of our strategic cycle, upgrading our holding free cash flow to more than EUR 2.6 billion and the shareholder remuneration to more than EUR 2.2 billion while reiterating our average earnings per share growth between 6% to 8%.

With this positive update, I now give the floor to Wim, who will walk you through the segment performance in more detail.

Thank you, Hans. Good morning, ladies and gentlemen, and thank you for joining us.

As mentioned by Hans, the strong net operating result was mainly driven by an excellent insurance result in Non-Life and a solid performance in Life, further supported by a low tax rate in China. This translated into a strong combined ratio at 92.5% and a high Life net operating result of EUR 1.259 billion. Life net operating result rose sharply by 39% compared to last year. As communicated end of January '26, following a tax regime change in China, a Chinese joint venture, Taiping Life, recognized a positive one-off benefit of EUR 300 million in deferred taxes.

We also delivered an excellent Life operating insurance service result, up 4% compared to last year, illustrating the quality of the business in all segments. In Belgium, the Life net operating result was up plus 5% compared to last year, supported by a solid insurance result, as shown by the strong guaranteed margin, of 102 basis points. In Europe, the Life net operating result was up plus 20% compared to last year, driven by an excellent performance in Türkiye.

Asia recorded a solid increase in the Life operating insurance service results, up more than 7%, driven by a higher CSM release and a positive development in expense variance. CSM roll forward showed a positive operating CSM movement of EUR 170 million. This positive evolution corresponding to a 1.8% growth was supported by a significant contribution of new business.

Looking at the drivers of the Life value new business, the present value of new business premiums in '25 was driven by the strategic shift in product mix in China. Belgium showed a significant improvement in the Life business new margin compared to last year, up 110 basis points, reaching a new business margin of 6.8%.

In Europe, the present value of new business premiums showed a strong growth compared to last year of plus 17%, driven by Türkiye. Group Life new business margin stood at 7.9%, a performance influenced by the liability transformation in China to participating products. Participating products are more capital efficient and less sensitive to interest rate movements, but they typically carry lower margins than traditional products. The resulting shift in the business mix impacts the overall margin.

Moving now to Non-Life. The combined ratio reached an excellent 92.5%, leading to a 21% increase in the net operating result to EUR 548 million. The strong performance was driven by all segments. In Belgium, the Non-Life net operating result rose by plus 9%, reflecting both business growth and an improved combined ratio supported by benign weather conditions.

In Europe, the combined ratio improved versus last year, driven by the continued positive trajectory in health profitability in Portugal and better household performance across all countries. In Asia, the Non-Life net operating result increased across all markets, supported by an improved combined ratio. Lastly, the reinsurance combined ratio for the third-party business stood at a strong 76.5% benefiting from favorable claims development and a stable expense ratio.

Regarding the balance sheet evolution. Our comprehensive equity grew strongly compared to full year '24, reaching EUR 17.5 billion. This growth was driven by strong net operating result and the capital increase for the esure acquisitions, which more than offset the impact of foreign exchange volatility and dividend payments. Our current cash position stands at a very solid EUR 1.45 billion, firmly supported by the EUR 949 million of dividend upstreams during full year '25, a strong 18% rise compared to last year. Our cash position was further reinforced by the RT1 issue completed in mid-December.

To conclude, I would like to add a word on solvency and operational capital generation. As mentioned by Hans, the solvency ratio of the Solvency II scope stood at a comfortable 211%, while the solvency of the non-Solvency II scope stood at 244%. The operational capital generation over the period amounted to EUR 1.9 billion. This included EUR 1.2 billion generated by the Solvency II entities, representing a 7% year-on-year increase, while the general account consumed EUR 187 million.

Non-Solvency II entities contributed EUR 892 million, a decrease compared to last year, reflecting the interest rate environment and the lower new business contribution from China, following the strategic shift toward participating [indiscernible] products. Operational free capital generation amounted to EUR 793 million. Within the Solvency II scope, operational free capital generation increased, supported by higher operational capital generation, the operational free capital generation in the non-Solvency II scope was impacted by higher consumption, capital consumption, mainly driven by the increased equity allocation in China.

I've now reached the end of my presentation, and we are ready to answer any questions you may have.

[Operator Instructions] Our first question is coming from David Barma with Bank of America.

Firstly, on Asia, can you update us on where the mix of business is towards your target in terms of participating products and whether the margins in the second half of the year should be fully reflecting this change of mix or whether we should see a bit more pressure in '26? That's my first question.

And then secondly, on cash, with Ageas being full owner of AG, you've talked about the potential for cash pooling that could reduce some of the conservatism in local buffers. Can you give some color on what that means in practice and whether you'd be looking to run with less excess capital in Belgium going forward?

Thank you, David. I think I'll give both questions to Wim, who can give you the technical details.

On the business mix, we've done a substantial change to the participating products. If you look at from a annual premium equivalent perspective, we're at 70% to 80%. But you should know that in that remaining, there's also a sizable part, which is nonparticipating, but they are very short term. They're more than protection business. You can say that we've done a major shift towards these participating products. I can understand your questions on the margins and how we have to look at them going forward? Now there has been a bit of volatility of these margins over the years. So don't take the second half as a reference. I would more look at the full year, what you see there as margins going forward as a good reference because there's a bit of a mix in the duration of the products they will be looking at. Why do I say look at the full year? You've seen that over the last couple of months, the rates in China are a bit more stable. So that has, of course, an impact on the margins you will see going forward.

If they would go up or if they would go down, you know that we have now that automatic interest rate mechanism in China, but that always works with a bit of delay, so that you have to take into account going forward.

Now your second question on cash fungibility, cash pooling has less to do with the excess capital from a solvency perspective. This is more a liquidity management tool, where we can say we can look at the free liquidity from a group perspective and start pulling that together. So that was also the reason why we said you can have a different view on our local -- on our GA liquid asset, total liquid assets. So we don't need to be as stringent as we are as before.

Now your follow-up question will be then, what is the new level you would take into account? As in the past, allow me not to give a clear number on that because it depends a lot on the market circumstances and that is driving what we have. But we will continue having a cash guardrail. But thanks to this cash pooling, we have additional tools at group level now to take them into account to manage that cash liquidity going forward.

Our next question is coming from Farooq Hanif from JPMorgan.

I've actually got 2 questions and one clarification following the answer to David's question. So just to be -- just a clarification first. What you just said, Wim, was that we should continue to forecast cash remittances as normal, but the amount of cash that you need at the holding is no longer as big a constraint. Is that the right way to think about it? So that's a clarification number one.

And then on the questions, on Asia tax, I believe there are still some ongoing effects, if you could just talk about the difference between deferred tax asset, deferred tax liability, what's been recognized and what could be recognized going forward and how we should think about the tax rate for China and Asia generally going forward in the Life business?

And then my last question is on the reinsurance profits. Obviously, throughout the group, you've had very good result because of weather. But in Reinsurance, the third-party profit has grown a lot as you stated in your presentation is ahead of target. So can you just explain how much of that is sustainable? How much of that might disappear with the Prima quota share? Just want to get a sense of what you think of the Re profit going forward?

Farooq, on the first one, I can be very clear, yes, your understanding is correct. So it's about cash fungibility. And in the past, we looked at the total liquid assets. This has nothing to do with the cash remittance as such. That will follow the normal evolution that you had in the past.

Your second question on Asia tax. I can understand this is, of course, the major update that you've seen with that one-off deferred tax benefit. As you could read end of January, this has, of course, to do with the fact that you know we have been more conservative in the past on these DTAs, which we didn't recognize as the average of the market is. And now it has been clarified with the transition to IFRS 17/9 that that's the tax base and also the transition effect you can take into account in how you calculate the taxes.

So basically, this one-off tax benefit is a bit adjusting the more conservative tax rate that we had in '23 and '24, but it has all to do with deferred tax. From now onwards, we are for tax accounting in an IFRS 17/9 world in Mainland China, that means we take the IFRS 17/9 results and that's the tax base going forward. There's always a bit of an adjustment for fair value to P&L movements on instruments, but that's less relevant for us because we exclude them from our net operating results, so you can put that a bit aside.

Now on that tax base, what is creating the big deductibility is that if you invest in long-term government bonds and in some of the provisional bonds, the coupon you get on these bonds, you can deduct from the tax base. So that means that if you now look at the situation, we will be looking to a tax rate between 0% to 10%. If you ask us to give a number in that range, it will be more than 5% because that's the midrange we have. And that depends on the deductibility that we have on that IFRS 79 tax base.

How will that evolve going forward? That will depend on the evolution of the portfolio, the growth of the portfolio, and of course, to what extent we will have that part of deductibility of long-term government bonds.

On the Reinsurance profits and the weather, and then I will give it back also to Hans. Please remember, of course, that the Reinsurance team has done a tremendous job also to work on the diversification of the portfolio. We're no longer fully dependent on weather. Weather will stay an element in Reinsurance, but we have diversified to other types of business lines and that means that the profit signature going forward will not be only dependent on cuts and that part of the business.

I can add, Farooq, 2 things. First is your question on Prima. You're right, we had EUR 7 million impact result in '25. As you know, we expect that to go on in '26, probably around another EUR 8 million. In the long run, AXA has communicated that it is their intention to take over that business. How that phasing out will happen is not fully clear yet. But I think by the end of the strategic cycle '27, you can assume that, that business will not be there anymore.

On the other hand, we have now an organization that is capable to insure and reinsure these type of partnerships. And we have already, I think, signed a new similar type of partnership for not the same volume, but EUR 130 million. So that is a business that we will continue developing going forward.

Last comment I want to add on Wim is, indeed the diversification. As you know, we started with predominantly property risk. We have diversified, first of all, in casualty. And now the team has done a great job in underwriting expertise for specialty lines. Eventually, the intention is to bring it to roughly to 1/3, 1/3, 1/3 in the 3 segments. So that will, first of all, stabilize results; and secondly, reduce the dependency on weather as such for Reinsurance.

Just one follow-up, if I may. I believe, and I might be wrong, that there's also a deferred tax liability benefit that you could get in Asia, am I correct? So when you give the 5% guidance, that's taking that into account?

Let's take into the -- yes, Farooq, that's taken into account. It will, of course, depend -- that's all based on the projections of results going forward. If that would be a difference, then you could have still a difference in the tax rate also at this point. That's taken into account in the assumption of the 5%.

The next question is coming from Andrew Baker from Goldman Sachs.

First, there's been some headlines around China government potentially planning capital injection into some of the larger insurers, including Taiping Life. If this was to happen, would you anticipate any impact on the dividend capacity from this business? And then secondly, are you able to just give an overview of the rate and claim inflation dynamics that you're seeing in the U.K. right now?

Okay. On your first question, indeed, there has been some rumors about this China government capital injections. Of course, we cannot comment and we cannot act on rumors. What you will see is that actually, our solvency in China remains quite strong despite the fact that we had, I would say, a double impact from the VIR over '25 because, of course, you have the further absorption of the VIR impact, but you also had the impact on the asset valuation because of interest rates that stabilized slightly up.

So that being said, I can say that a big chunk of the VIR impact has been absorbed. We have seen that the gap between the spot rate and the VIR rate as approximately halved over 2025. There is more effect to come, but the solvency is still comfortably about -- above 200%. So for us at this moment, a capital injection is -- in Taiping Life is not on the radar. U.K. claims inflation, it remains high. So in my view, there is, I would say, no room for further softening of the market.

We have seen the market softening in '25. We have not fully followed that. We have put bottom line profitability above top line growth, although, of course, we do see a nice performance in top line, but that's also from absorbing the Saga and the esure business in the portfolio. Our price adjustments have been limited to approximately 2%, both in motor and property, while you have seen the market softening between 10% and 12%.

Towards the end of the year, December, and that's also what we see in the pattern beginning of this year, we've seen it could be that the motor market is bottoming out a little bit, and that [indiscernible] become reasonable. But all this, of course, is subject to further monitoring and how it will go. What we do see now in the strategy of the U.K. team is we have, I would say, more dynamics to play in this pricing market because we have now access to the full, I would say, potential customer base via different brands and different distribution channels from partnership over brokerage, where our pricing used to be a lot more stable because this was about the good relationship with the brokers versus PCW and direct where the pricing often is a lot more dynamic where you immediately act on your positioning in the rankings. But I can assure you that the team is very diligent on focusing protection of the portfolio on the one hand, but definitely also on achieving bottom line performance.

The next question is coming from Michael Huttner from Berenberg.

Fantastic. I have so many questions, but I'll ask 2 and come back. The first one is just a bit more on China. I was really interested by your comment that the gap between the spot interest rates and the VIR is halved and solvency is above. But can you give us a little bit more granularity? It's just -- I'm sure -- just in terms of the gap on the VIR and if it were to fully close, what would it mean in terms of solvency? I mean any help -- and within that, if I may include that as a question, I saw the China cash went up from EUR 80 million to EUR 110 million. And I'm just wondering what you kind of feel for what it might be in your plan for the EUR 1.2 billion in 2026?

And the second question is on Reinsurance. Excluding -- so you have this 300% rise in Prima, I'm assuming that's Prima and Triglav. Can you give us a feel for what the kind of the more normal business, what the growth is there? And in light to that, just a feel for whether at some stage, you'll be considering putting more capital in there?

Okay. Thank you, Michael. There are 2 detailed business questions, so I will give them to the responsible heads of those business, Filip and Manu in a minute.

But maybe first, your question on VIR and solvency, which I give to Christophe, the CRO.

Yes, perhaps to explain the solvency, you can see it a bit in the evolution on the slides that we have shared. If you see our solvency evolution on Page 22, you see that you have a big market movement in there. And obviously, the biggest impact of that market movement is exactly linked to what Hans was mentioning also the VIR impact.

Now in terms of amounts, there is an FX impact in that. So you first need to deduct that. That's about EUR 900 million on the own funds and the whole capital movement that you see there, there's about EUR 300 million is basically a fix related, if you simplify it. So the fix doesn't move that much. The solvency ratio is quite neutral. But it does, of course, impact the own funds and the capital requirements.

I would say most of the rest is actually linked to interest rate movements. We have different things. Hans already mentioned the rates went up during the year. So you have 1/3 of a double hit there. But of course, the equity markets also increased, so that offsets a bit. So we can expect that, given the figures that Hans already mentioned, I think the delta between, let's say, the spot rate of the Valuation Interest Rate and that average Valuation Interest Rate was about 90 basis points at the end of last year and is about 40 basis points today. So we did absorb a large part of that delta during the year. And of course, that means that we expect still a material impact to come in 2026, but by then, it will start to go down a lot.

Upstreaming China...

Yes. Thank you, Michael. On the dividend development that you saw over the last year, of course, it's just not entirely come from China, but China indeed increased the dividend, very much in line with the statements that they themselves made on their dividend policy. So to demystify a little bit the effect of dividend on the solvency is only around 3%, 4%, let's keep that in mind.

That is not a determining factor. CTIH made a commitment and also in their public statement that they are looking at a steadily increasing EPS over time and that is the line they stick to. They also mentioned that they may relook at that as increasing the payout looking forward. But so we expect stable increasing dividend per share coming out of CTIH and Taiping Life being the main feeder of that, you can draw your own conclusion.

So before I go to Manu for reinsurers on upstreaming, you mentioned the EUR 1.2 billion, Michael. Important there is that in the agreement we have with BNP on the stake in AG, we will receive the full '25 -- over '25 dividend of AG already at the level of Ageas. So that should give a lot more comfort on that EUR 1.2 billion that we have stated as upstreaming for 2026.

Now Reinsurance, Manu?

Thank you, Hans, and good morning, Michael. So on Slide 37, you have an overview of the inflow of reinsurance and you see that by the end of 2025, the inflow for the third party is at a level of EUR 905 million, which is including the Triglav Prima deal, and that amount for EUR 630 million. So excluding that EUR 630 million, the inflow end of '25 would have been EUR 275 million compared to EUR 213 million end of '24, which is an increase of 29%.

So I can give you already a quick update on the renewal of 1/1/26 and there, we -- on the business that had to be renewed on January '26, we have an increase of more than 20% of business.

And your question on your capital, you know that over the strategic cycle, we decided to allocate EUR 280 million solvency capital requirement to the Reinsurance third-party business. The EUR 280 million solvency capital requirement was excluding a deal like Prima. Where are we today? Today, we are at a level of capital allocation, Solvency capital requirement allocation to reinsurance of a bit more than EUR 200 million, and it is including the Triglav deal.

And other EUR 200 million, that includes your renewals, right, the 20% rise in January?

Yes, yes.

The next question is coming from Farquhar Murray from Autonomous.

Two questions, if I may. Firstly, on the guidance for net operating profit of over EUR 1.5 billion full year '26 million, can we just walk through the bridge of the kind of full year '25, so I want that EUR 655 million? I'd have the Asia Life's tax steps, it's probably minus EUR 300 million to get to the 25% tax rate and then probably a positive of EUR 137 million to get the 0 to 10% and then a material step up from the AG minority. But I just wondered if you could give a sense of those right steps and what else are you assuming in there?

And then secondly, you commented on the competitive environment in U.K. Non-Life. I just wondered if you could extend your thinking on to the Belgium business and in particular where you might expect any softness to emerge in that business or relatively stable this year?

Thanks, Farquhar. Indeed, we gave a guidance of 1.5 -- well above, I would say, EUR 1.5 billion for this year. First of all, in that guidance, we do assume a tax rate for Asia between 0 and 10% somewhere, let's take approximately 5%. You are right that the starting base, of course, is the EUR 1,350 million, which is the right reference to look at.

For AG and the deal with BNP, we assume here closing towards the end of the first half of the year. So we do include half a year of the impact of AG in this guidance. As usual, we also assume a normal cat nat event. So that means the promise to give guidance on combined ratio which is below 93% considering a normal cat nat here. So that means worse it could go above, better like we had last year. Last year cat nat was plus 1% impact on combined ratio, it might be even a little bit lower, but also be aware, of course, that there is already some weather events in January, mainly in Portugal.

But at this moment, we are comfortable to go above the NOK 1.5 billion for the year. And as you know, in these volatile times, it is hard to give this full 12 months in advance. So we will definitely bring an update by midyear.

Then the Non-Life business from Belgium. Well, I think Belgium is, I would say, today in a very attractive situation for profitability, the market as a whole, but definitely Ageas is outperforming that market on the positive side. You have seen that the results were very good, but the impact of weather in Belgium was very low, 0.4, I think, in the combined ratio, that was a very positive cat nat here. So please assume a more normalized cat nat that we always assume for the year. At this moment, no events, I think, in Belgium or no material events yet in Belgium, but the market is profitable, is very competitive, but it is also excellently positioned to compete in that market.

So the sensitivity for the softening in the Belgian market, you cannot compare, for instance, with the U.K. market where your business is immediately impacted in Belgium. The persistency of your businesses are a lot stronger compared to the U.K. market.

What kind of tariffs you bring through at present, just as a follow-on?

Sorry, I didn't -- I missed that question.

Just as a follow-on, what kind of tariffs expectations have you for the year? Are you going to be [indiscernible] still increasing in line with inflation probably or maybe a bit softer than that?

Well, you know that in Belgium, approximately 60% of our business is immediately inflation linked. So there, I think the normal index 2% to 2.3% was inflation? .

Yes, depending on the...

yes, depending on the product that is already absorbed in the tariffication. The rest remains to be seen. For cat nat, I do not expect an increase because it was a very good year last year and the rest remains to be same.

The next question is coming from Michele Ballatore from KBW.

Yes. So 2 questions from me. So the first one is on the Asian business about your comment on the higher exposure to equity. I'm sorry, I thought in the past, you reduced this exposure, probably I missed that, but if you can clarify this point. And the second question is about the overall pricing environment in your European business, I'm talking about Non-life, so what are you observing in, let's say, since the start of the year?

Yes, the first point on the exposure in equity, maybe a few points of clarification. First and foremost, in 2024, indeed, we reduced that exposure gradually and in the course of 2025 that has been rebuilt up to the levels that we had, let's say, beginning '24, plus obviously, you had a sharp market increase. So the equity exposure certainly has gone up.

Also to note that this, in combination with the shift to participating products mostly happened, obviously, in the par portfolio, where the loss absorption capacity for that type of instrument is better. That's the only clarification I can give on that. But that indeed led to a slightly higher risk charge, obviously, on these equities in the solvency ratio.

Okay. If I look at the European continent, well, Belgium, we just spoke about on tariffs in Non-Life. So I don't think I should go a lot deeper there. U.K., we already spoke about as well. I see market analysts being relatively negative on motor in the U.K. I see predictions of combined ratios to 100% to 110% for the market, but be aware that the last few years, we have been outperforming that market and doing way better.

But as I just said in the first question, we have seen maybe that motor business bottoming out a little bit, but that is definitely on watch for the rest of the year. As for the team, it is very clear that it is all about sustaining the bottom line. We have said that esure, we should not expect contributing to that bottom line because the esure brings over '27 will go into integration costs to put the businesses together.

But we assume that we can sustain profitability in the U.K. despite the cycles we will see in tariff. Portugal, very strong recovery last year. There were 2 attention points the year before, the years before, that was healthcare on the one hand and motor on the other hand. Health care, I think we can comfortably say that profitability has been fully restored while keeping a very good persistency in the portfolio. And I think that has all to do with a very strong customer proposition that we have with Medis in the Portuguese market. Motor situation is improving.

I would say we are not yet at the end. We have seen in motor, some negative impact on top line from our pricing discipline. But there, I think the market is still on the path to full profitability. The work is not fully done yet. But again, in summary, Portugal over '25, significant improvement compared to the years before, and we expect that to continue in '26.

And then the last one is Türkiye. Well, you know the situation in Türkiye in Non-Life. It is very difficult with inflation. I think the solvency of that company is stable. We hang in there with that business. But overall, I would say, the profit from AKSigorta is not material in the overall European Non-Life business. And as you know, that is more than compensated by the excellent performance that we have on Ageas Life in the Turkish market.

Ladies and gentlemen, I would like to return the conference call back to the speakers for any closing remarks.

Thank you. Before moving to the conclusions, I want to take a moment to express my sincere appreciation to Filip Coremans for his 20 years of exceptional service at Ageas. Filip has been instrumental in shaping the group's journey and closing the Fortis settlements, which marked a historic milestone for the group.

This leadership has been central to our growth story in Asia and to building the strong and valued partnerships that underpin our presence in the region. I would also like to extend my warm congratulations to Karolien Gielen on her expanded responsibilities, bringing together the Managing Director Asia activities with the business development and her leadership will create new opportunities for Ageas.

To end this call, let me summarize the main conclusions. Next to our continued top line growth, our operations delivered an improved underwriting profitability, a clear reflection of the strength of our underlying business. The net operating result for 2025 was driven by an excellent performance in Non-Life and a solid Life result, further supported by a one-off tax benefit in China.

The strong 2025 results lead to a total dividend per share of EUR 3.75, representing more than 7% growth over 2025 and we anticipate receiving significantly higher cash upstream of EUR 1.2 billion in 2026. The successful first year of the Elevate27 strategic cycle, upgrading our financial targets twice, increasing holding free cash flow targets to over EUR 2.6 billion and our shareholder renovation target to more than EUR 2.2 billion.

And to conclude, 2025 was a transformational year for Ageas, and we are well on track with the integration of esure and the closing of the AG acquisition.

With these closing remarks, I would like to bring this call to an end. If you should have outstanding questions, don't hesitate to contact our IR team. Thank you for your time, and I wish you a very nice day.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for attending. You may now disconnect your lines.

Good morning, ladies and gentlemen. I'm here in the room with Wim Guilliams, our CFO; and Heidi Delobelle, Managing Director, Belgium and CEO of AG Insurance.

Thank you all for joining us on this investor call. Today, I'm very proud that after the acquisition of esure earlier this year, I can announce a second milestone transaction that will reshape our growth. Ageas will acquire full ownership of AG Insurance, the company that lies at the origin of the group that Ageas is today.

I'm equally pleased by the recognition we get from our largest shareholder, BNP Paribas, in support of our strategic focus, both at the corporate level and at the level of AG Insurance. This is illustrated by the step-up of BNP Paribas in our shareholdership, their respect for our autonomy and their commitment to reconfirm the long-term distribution agreement of AG's products in Belgium to BNP Paribas Fortis.

The agreement that I can announce today is setting us on a promising course for future growth for both AG and Ageas, and it accelerates our journey towards delivering on our Elevate27 ambitions.

Let's first take a look at the most impactful part, our agreement to acquire full ownership of AG Insurance as well as the rights to underwrite the existing 25% quota share from 2027 onwards. You may remember that currently, the quota share is split between Ageas and BNP Paribas Cardif in line with the shareholding in AG.

Let me take a moment to reflect on the achievements of AG Insurance. AG is the market leader in the Belgian insurance market, being #1 in life, and since 2022, the leader in non-life as well. We are proud to serve half of Belgium's families and 1/3 of its companies backed by a dedicated team of talented employees.

One of AG's greatest strengths is the unique multichannel distribution approach. As one of the first companies to introduce bancassurance in the Belgian market, the partnership between AG and BNP Paribas Fortis goes back many years. The reconfirmation of the long-term distribution agreement between both companies does, however, not change the multi-distribution model that AG is known for. Consistency is key, and that's why AG leads and outperforms in both the bank and broker distribution channels.

AG's financial performance speaks for itself. Year after year, AG has delivered consistent and profitable growth, outpacing the sector even in challenging times with best-in-class cost and combined ratios, robust solvency and stable margins. In the life book, these are very much defined by the diversified and solid EUR 72 billion assets AG manages.

Taking full ownership of our core home market entity provides us strategic flexibility and strengthens our foundation as a group. This acquisition enhances further our ability to leverage the exceptional distribution, technical and operational expertise of AG Insurance across the entire Ageas Group and will allow to unlock further group synergies.

AG is to Ageas the solid foundation with a stable performance and high cash conversion. Obtaining full ownership strengthens our core with an asset we fully know without any execution risk. This makes the financials even more attractive, and they are also quite straightforward.

Our group net operating result will increase with 1/3 of the current contribution of Belgium, some EUR 160 million to EUR 175 million and 1/3 of their contribution to the reinsurance segment, some EUR 15 million. Thanks to the full ownership of AG, together with the esure acquisition, we will further increase the share of the more mature entities in the group's profile.

We are now in the comfortable position to continue our successful growth story in the Asian segment in the right balance with a solid European-based businesses. Also, in the longer run, we see a contribution to the net operating result of 1/3 from Asia and 2/3 from Belgium, Europe and reinsurance combined. And whereas the benefits of the esure acquisition to our net operating result and holding free cash flow will only emerge after the integration process, meaning as from 2028, the benefits from this transaction will be visible immediately after closing.

This gives also a clear run through to the recurring cash upstream as the net operating result of AG translates one-on-one into cash, and this will be uplifting our recurring cash upstream substantially as from next year. Our Belgian operations will continue to be a reliable foundation for the group's shareholder remuneration and increasing our cash for investments in future growth.

The contribution of the Asia segment would further reduce to 13% until the moment that these companies mature further and they can sustainably increase their payout ratios as well. The transaction enables us to boost our holding free cash flow by 13% over the Elevate27 cycle and our holding free cash flow per share by approximately 7% to 8%.

The acquisition is also capital efficient. The equity placement to BNP Paribas Cardif at EUR 60 per share and the recognition of the minority part in the own funds of AG under Solvency II more than compensate the impact of the EUR 1.9 billion to be paid to BNP Paribas Fortis. This allows in a solvency neutral way to finance a significant part of the transaction with cash and available financing capacity, delivering a very attractive levered return on investment capital of 15% to 16%. So the transaction is solvency neutral and carries no integration risk, ensures stable, diversified and cash-generative results, exactly what we envisioned within our Elevate27 strategy.

While BNP Paribas has agreed to sell us their stake in AG Insurance, they will not abandon the ship. On the contrary, we are forging the long-term bancassurance collaboration between the leading Belgian insurer and the leading Belgian bank with a 15-year distribution agreement. Both parties are fully committed to further strengthen the leading position of AG within the local market, and this duration provides us with a solid time horizon for joint investments. And we will also collaborate more closely on the asset management side.

Next to the existing collaboration in the unit-linked portfolio, AG and BNP Paribas Asset Management are also entering into a long-term partnership, leveraging BNP Paribas Asset Management's new offering for insurance and pension funds following its recent integration with AXA Investment Management. Through the equity placement, BNP Paribas will hold 22.5% stake in Ageas, and they also hold a 1.6% stake to the shares that serve as collateral for cash, thus consolidating their position as our largest shareholder.

With this step-up in our shareholdership, BNP clearly expresses their commitment to our continued development and support our future growth. In line with good Belgian corporate governance principles, we formalized a relationship agreement that will govern the relationship with BNP as important shareholder and business partner.

To be fully transparent towards all our stakeholders, we will publish it when it has received the necessary regulatory approvals, but the key elements of the 5-year automatic renewable agreement are that we will support BNP's candidate for Board representation and that BNP Paribas Group will limit their shareholder in Ageas to 25%, minus 1 share, respecting the autonomy and the growth strategy of the group.

As mentioned before, the benefits of this transaction will emerge already as from closing with no need for any integration efforts or costs to be made. And so this strategically important step allows us to upgrade our Elevate27 financial targets for the second time this year. The additional contribution to our net operating results will lead to an earnings per share of EUR 8 to EUR 8.5 by the end of 2027 compared to EUR 6.8 in 2024, respecting our commitment of a 6% to 8% growth over the cycle.

We increased our shareholder remuneration from over EUR 2 billion to over EUR 2.2 billion, up 10% from earlier guidance, all while keeping our promise of annual 6% dividend per share growth and underpinned by an increase in the holding free cash flow target from over EUR 2.3 billion to over EUR 2.6 billion, up 13% from earlier guidance.

The additional cash flows coming from AG will play a key role in delivering against these targets and further build comfortable free cash position to invest in our future growth. This message clearly demonstrates our confidence and ambition for the next years.

This is the message I wanted to share with you, and we now go over to your Q&A. I propose you raise your hands, and we do it in the right order to be able to give every time participant time to pose their questions.

I see we have a question from Michael Huttner. Michael, could you unmute yourself and put your camera on? Michael? No. He is gone.

Okay, let's move to Farooq then. Farooq, go ahead, put your camera on, your sound, and we can take your questions.

Firstly, I just want to understand the 7% to 8% holdco free cash flow accretion. So you have a 13% increase in the overall cumulative, and obviously, your share count is going up by 10%. So can you talk about the shape of that and whether there's any one-off element? Does that 7% to 8% holdco cash flow sustainable with that accretion in the per share amount?

Secondly, could you talk a little bit about group synergies, what you mean by that? Obviously, I can see that there will be structurally quite a lot of potential synergies. Can you talk about what that is?

And then, in terms of the additional cash that you have, obviously, you're getting a more balanced cash generation in the group. You'll get less questions about the contribution from Asia. What are you going to do with the surplus that you're going to build up? You mentioned that this is better for M&A. So if you could talk about that directly.

Okay. I'll give the first 2 questions to Wim. I'll come back with you on the surplus capital.

Farooq, thanks for your questions. Indeed, we are disclosing 2 metrics. On the one hand, the holding free cash flow, which is a euro amount over the Elevate27 period, so over the 3 years, and we show what this transaction has as a positive impact on that amount. That's a plus 13%. The holding free cash flow per share is an estimated impact for '27. We also wanted to disclose that.

Now, what's going to happen in '27? In '27, we will get the full cash upstream of the Belgium segment. Now, you also will have seen that the quota share is transferring for the first time in the net operating result in '27. So it's contributing in '28. So the effect that we have in the holding free cash flow in '27 is only the cash upstream from the Belgium segment because we wanted to give you a bit of information what's happening in '27.

Of course, we will have some impact of synergies, where Hans will come back to or I can come back to. And of course, we are also financing this part with cash reserves, finance facilities and the flexibility that we have in the debt capital market. So it's also logical that we take that impact of that foregone revenues on cash or that debt cost into account. So if you do that calculation, then on the total number of shares that we will have in '27, that explains the 7% to 8%. The 13% is a cumulative amount over '25, '26, '27 on the holding free cash flow. So that's a cumulative amount on that total that we have.

On the synergies, of course, in the strategic rationale, you see that we were able to create much more strategic flexibility, which Hans has alluded to, what we would -- could do in the future. But today, it's still early days to put a number to quantify that impact. So that we have not taken into account in any calculations. Of course, we have included some synergies, which we could identify at this stage. One of them is what we call this cash fungibility. So that means we are able to have our cash guardrail, managed at the total group level, so not company per company with some cash pooling, and that will contribute an amount.

And the other one is a small amount that we have on cost synergies. At the corporate centers, we have, of course, cost levels, which are linked to the stewardship of the group, which are linked to developing cross-entity initiatives. Those will stay. It's very logical that you don't have synergy benefits, but we have, of course, a bit of operational synergies and some support activities.

What we have taken in the numbers is an amount of EUR 10 million, where 2/3 is coming from that cash fungibility and 1/3 is coming from the cost. But as mentioned, the whole strategic rationale, strategic flexibility, there, it's too early days to see what that will contribute in the numbers.

Okay. Thank you, Wim. And on the surplus capital, Farooq, indeed, we will go to, I think, a more comfortable position between holding free cash flow and shareholder remuneration. And we have some excess there of approximately 15% going forward. The purpose of this capital, I would say, has not really changed. You know that we always remain available for in-market consolidation if there are opportunities that arise in the countries where we operate and where we can move to a top 3, top 5 position.

We also, of course, look at the development of reinsurance. I said in the half year results that for 2027, almost there is no request to further increase the capital commitment for building reinsurance. We have ample capacity available to underwrite what we want to underwrite.

And then last but not least, of course, as you know, if we have excess capital and no immediate opportunity to put the capital at work, then the share buyback remains an option. Here, I can already confirm before we make the relationship agreement public, but in the relationship agreement, we have also subscribed to the commitment by BNP if the company would like to bring a share buyback to the market that they will be supportive. So in that sense, there is no change for the other shareholders of Ageas.

Thank you, Farooq. Michael will try again, and I'll put your camera and your mic on.

Well done for -- it's a lovely deal. Just on the cash, can you remind me the -- up to EUR 2.2 billion and the EUR 2.3 billion up to EUR 2.6 billion, that effectively is only '27, right, if I understand it correctly. Because if the deal closes Q2 2026, you get virtually no cash benefit from Ageas or from AG, and you don't have time to raise your dividend. Am I wrong? In other words, the benefit is -- of your higher numbers is all 2027. That would be my first question.

The second is, I heard you say, yes, we'll have room for more deals. But I'm assuming that Ageas is off the table, that KBC is better placed.

And then the last one is just a kind of a sub-question on reinsurance. I noted that Taiping had reinsured itself. I thought it was a little bit odd, but it may be -- but maybe you can provide us with the kind of number for awful disaster in Hong Kong.

Okay. Maybe Wim.

Yes. On the first question, on the impact on our financial targets, Michael, you have to see it's '25, '26, '27. We talk here about cash. What you will get next year, '26, and so also '27 is a dividend upstream of AG in full. And you will have, of course, a dividend payment on the new shares that are being issued in the market. That's the assumption underlying. So you have 2 years contributing to that difference, that uplift that you see there. So that's explaining the difference between the 2 updated financial targets. So it's 2 years...

Two years, not...

Yes.

Okay. Two years, 2 years. So effectively, in 2026, although the deal closes in Q2, the full benefit flows through in cash both for shareholders -- both for yourself and for your shareholders.

Yes. In cash, yes. Net operating result, it's indeed to take the pro rata of the year into account. So what will happen on net operating result, the closing date -- only from the closing date onwards, we will have the uplift in our net operating results. So that is still a bit unknown because we don't know where it will close over Q2, but that will be the impact on the net operating result. So there's a difference between net operating result and cash impact.

Okay. Michael, on your question regarding Ageas, I would say no change. I would say, on the file itself, the government has not decided formally what the next steps and when the next steps could happen. You mentioned KBC, also Belfius, we know is one of the potential participants in such a process. We, as Ageas, have already expressed our interest to potentially in -- participate in that process. We will now become a top 15 European insurance group.

And I think a country like Belgium in a consolidated European market deserves to have a player in that position. And I believe that potentially in addition of Ageas to the issuance, the main insurance group in Belgium definitely also has important strategic benefits both for Ageas as well as for Belgium as a country. But as such, I would say, no change. Of course, I'm very pleased with having AG as related party, a 100% Belgian company, and Ageas Group, that can with autonomy develop its future growth story.

And then your last question was on the Hong Kong fires. To be clear, as you know, Taiping Insurance is a lead insurer on this fire. We are not -- as you remember, in the partnership with Taiping Insurance, we have partnership with Taiping Life, with Taiping Re, with Taiping Asset Management. Of course, there is some relationship between Taiping Insurance and Taiping Re and consequentially Ageas Re. What I can tell you now on the available information, which is not yet full, but at this moment, we do not expect an impact on the guidance we have given you for the group towards the end of the year.

Okay. Let's move to Nasib. Nasib, I will open your camera and your mic.

Maybe -- I don't think you guys have given a firepower number, and maybe you can give us a range given you haven't said how you're going to fund the remaining EUR 800 million. Just looking for how much M&A firepower you have in terms of debt capacity and equity raise.

Second question on the 15-year partnership. It says on Slide 9, it's 5-year renewables. So I don't think the 15-year partnership is part of that. But just to confirm, what the 5-year renewable relationship agreement is? And what is the 15-year bancassurance partnership?

And then finally, on the holding company cash, you don't have a target at the moment, but given you've got AG 100% ownership coming through, U.K. is 100% owned, so that's kind of the majority of the business you have control over. Would you look to give a holding company cash range going forward, given you've got control potentially coming through for AG as well?

You can take the first and the last one.

Yes. I will take the first and the last one. So on the firepower, we came into the year, and then, we -- at the full-year result '24, we indicated that we had a possibility for a debt capacity of EUR 4.5 billion. Half year, of course, after the issuer, and that's more outlook '26, we guided to EUR 700 million to EUR 800 million. As this transaction is solvency neutral, you can take that amount still into account, EUR 700 million to EUR 800 million. That's before the whole financing of the transaction.

The financing of transaction, we will look at the existing cash reserves. We will look at financing facilities, and we will look at the flexibility that we have in the debt capital market. So the debt capacity is at EUR 700 million to EUR 800 million going for '26.

On the cash reserves as such, we have not given a cash guardrail number. We will not do that neither going forward. But of course, internally, we manage that like any financially disciplined company that we also know that in stress scenarios, we must be able to pay the dividend, we must be able to fund the holding cost.

What is the nice add-on from this transaction is, of course, and that is what we call cash fungibility in the slides. We can, of course, start putting cash pooling in place, which means where in the past, we needed a cash guardrail for AG, we needed a cash guardrail for Ageas, we can start looking at that at a group level at a consolidated level. So that will offer more flexibility on the cash side going forward. But we will not -- if you allow me, not disclose the fixed number as a cash guardrail because I know that I will get a lot of questions going forward, always if it deviates a bit.

Now, for the cash reserves, I think it's important to look at H1 slide, the last slide that we disclosed because the H1 results were, of course, influenced by the whole esure transaction. The fact that we had already some funding in place, we didn't do the closing of the acquisition. But the last slide of the deck gives you a pro forma cash situation, which was after esure and Saga at EUR 1.1 billion. So you have the EUR 1.1 billion, you have the debt guidance that I give you. But be aware that cash fungibility allows us to be much more flexible with the cash reserves going forward.

Okay. I will ask Heidi to give you first some information on the dimension of the bancassurance agreement.

Yes. So as BNP Paribas Fortis will no longer be a direct shareholder of AG, we thought it was very important to reconfirm our long-term nature of the bancassurance collaboration because today, it was -- there was no end to the contract within 3-year pre-notice. So now, we are formalizing the collaboration in a 15 years' renewable bancassurance agreement. And so yes, having that kind of long-term relationship between both market leaders in Belgium at the banking side and the insurance side, it's really a full commitment to further strengthen the leading bancassurance that we have in Belgium. So we are now -- we have drafted a term sheet with the core principles, and then, we will renew the whole bank agreement to be more future-proof for the future.

And the relationship agreement is a 5-year agreement that will also automatically be extended into perpetuity with a 12 months' notice period after the 5 years. So if BNP would like to revisit the relationship agreement, we will know that 12 months in advance. Of course, the relationship agreement can always be reviewed also in the first 5 years, but then that will be subject to the approval of the Board of Directors of Ageas. So I think that is also good in the mindset of the partnership.

Last, I want to repeat that we will make the full relationship agreement public at the moment of closing.

Okay. And then, I see there's still a question from Marcus Rivaldi.

Marcus, I will open your camera and mic. Didn't work.

Maybe he can try himself.

Marcus, it doesn't seem to -- well, according to the system, you are -- your mic and camera are on, but I see it's not the case. Maybe you could try yourself.

Okay. I'm sorry, early Monday morning. But anyway, thank you very much for allowing me to ask a quick question today. So look, congratulations on this transaction. It's really obvious what it does. You're strengthening and deepening the relationships between the 2 organizations. It also clarifies, I think, the relationship quite nicely. So one question I had was in relation to maybe the BNP Fortis -- Paribas Fortis cash transaction, which is still outstanding, which remains a source of, should we say, complexity in the relationship between BNP and yourself. And I was wondering whether as part of this transaction, you thought of addressing that -- those securities as well.

Marcus, at this moment, we have not addressed this as part of this transaction. So -- I mean, of course, we are in constant dialogue, but it's something that needs to be initiated by BNP Paribas because it's on the balance sheet of BNP Paribas Fortis, as you know. We are a linked party because we have the RPN(i), which is linked, which is absorbing the market volatility. But it has not been addressed as part of this transaction.

You're muted again.

We don't hear you anymore, Marcus. No. Maybe you can come back later if you -- yes.

Yes. I'll see that. In the meantime...

Sorry. I beg your pardon. I'm sorry, apologies. So is there any reason why you didn't decide to address this part of a wider relationship? I appreciate you haven't, but any reason why you didn't?

There were already many things to be discussed to arrive at this transaction that we announced. So it's just -- it's focused on the most important things to have cleared out with BNP Paribas.

And I see Farooq has a follow-up.

I hope you can hear me.

Yes, we do.

Perfect. Yes. I just wanted to follow up on a few things quickly. So going back to the 7% to 8% per share holdco free cash flow accretion by 2027, I just want to make sure -- I'm sorry, this is a really stupid question. But if you get -- if you got, for example, 8% accretion, hypothetically, that means your cash has gone up by 18% because your share count is going up by 10%, so the net-net. So is that the right way to think about it? So roughly 17% to 18% increase in the amount of holdco free cash flow as a result of better upstream but also quota share. That's question one.

And then question 2 is maybe related, can you explain what you mean by cash pooling? Does this basically mean you don't really care about the holdco anymore because you have this lack of restriction for your mature businesses? Just want to understand that because obviously, you still have cash flow traps and guardrails around the Asian business and where you have partnerships. I just want to understand exactly what you mean by cash pooling.

Okay. On the first one, maybe it's easier if I also make the link with a few numbers that have been disclosed in the deck. So you have what we see as a net operating result uplift between EUR 160 million to EUR 175 million, which is something that will flow into the cash upstream in '27.

Next, you have a bit, that amount of EUR 10 million of the group synergies, which will have an impact on the cost at the group level. And then, of course, we need to fund this transaction because there is EUR 1.1 billion of shares. That means that there is still EUR 800 million of other funding sources. And on this, as we're indicating, it will be mostly out of cash reserves, finance facilities. And even the flexibility in the debt market, you will have a kind of a funding cost, where I will take EUR 20 million.

If you take that and you divide that due to the -- on the total numbers of shares, then you will come to the 7% to 8% uplift. What you don't have is, of course, the fact that we will have also the quota share from the year '27 onwards, but that will flow in the net operating result. Cash upstream is only from '28 onwards.

So the quota share will create higher holdco free cash flow per share.

Yes, also, but that's not in '27 because that will only run through in '28 because for the running year '27, we will still have Cardif having 25% of that quota share. From '27 onwards, we will take the 25% part. But that's not in that up of 7% to 8% holding free cash flows per share.

And of course, we can't take fully 25% of your non-life earnings because some of -- it didn't include the reserves when you did the deal, but it will be roughly 25% of the earnings, up to.

Yes, it will be -- it's a 40% quota share, so it will be 25% of the 40%. So you could say it's a 10% of the earnings, the insurance service result, that will be run through. But indeed, as you say, there will be a prior year release, which will not be transferred immediately, that will be built up over time.

The idea I think with the numbers, and then, if you take the numbers of shares, of course, we do holding free cash flow on the dividend entitled shares. But there you will also get EUR 18.5 million on top, and that's the '27 numbers -- expected '27. But as I said, both free cash flow plus 13% is, of course, 2 years, '26, '27, created from the cash upstream and the underflows that I mentioned. So that's a euro number.

On your second question, what does cash pooling mean? It means indeed that if you think about cash guardrails, we can now do them also from a consolidated basis because the cash pooling will allow that you can do a stress test combined. And the guardrail is influenced normally by those stress tests. So that means you have flexibility because you can look at from a diversified perspective. So this means that going forward, our internal cash guardrail, which I will not disclose, can be relaxed.

So that means you can -- what we see as your holdco cash balance, what you're saying is that can go really low. It doesn't matter because there's more cash that you pulled.

From a group perspective, that's what that means, cash fungibility, yes.

Okay. And then I see there's another question from Michael. And I hope I...

Yes, yes. It's worked. I had 3, but they're really kind of an opportunity because -- yes, so the first one, can you remind us of the terms of the cashless deal? I wasn't involved originally. I think this dates back to 2009 or something. So maybe just -- because I know there's always this noncash item coming through the accounts at the group level, but I've never looked at the underlying how it works.

And the second, AXA did a kind of deep dive on its various businesses a while back. And of course, Belgium is part of that. And they signaled their interest in growing the life guaranteed business in -- or life traditional business with limited guarantees in Belgium. Can you remind us a little bit of the state of the market and whether that's affected the margins you see or the competitive pressures or anything?

So I'll do first. I will give you the highlights, Michael. If you want to have more details, I think the IR team can give you all the details. It's indeed an instrument of 2009, which was issued at that moment by Fortis. Now, it's an instrument issued on the balance sheet of BNP Paribas Fortis. So balance sheet-wise, you see it as a liability on the balance sheet of BNP Paribas Fortis. But it was as co-obligor. It was also Fortis Holding, which is now Ageas SA/NV. So that's why we are co-obligor of that cash that are outstanding.

Now, this is a bit collateralized. So that is also on the asset side of the bank shares detained of Ageas. But of course, you can understand that they were at that moment at a much higher price than they are today. Yes. And so on the asset side, you will find these collateralized equities shares of Ageas, you will have a bit of a cash part and you will have the RPN(i) because what was agreed at issuing was that the market volatility, which is an accounting volatility was taken on the balance sheet of Fortis Holding, being now Ageas SA/NV, and that's the famous RPN(i), which is taken out of the net operating result. But it starts with being an instrument on the balance sheet of BNP Paribas Fortis. But if you want more details, I think the IR colleagues can explain it in detail and guide you through that. Yes.

Heidi, the life market in Belgium.

Yes. Maybe about our life expectations for the Belgium market and for AG, especially, so first of all, a very important part of our business in life is group life. And there, you see already a natural growth because it's driven by the salary inflation. And it's also promoted by the government more and more, the second pillar. So there we see nice perspectives for the group life business.

For the life contracts in the market of the self-employed clients, there, I think, the growth will be more modest because there were some fiscal uncertainties linked to the Belgium budgetary difficulties. But then, on the life investment market, we are now back in a normalized yield curve, where we can give, again, attractive returns to the clients. So there, we are growing now fast, both in unit-linked and guaranteed. Before, it was more in unit-linked. Now, we see that the guaranteed business is again very attractive. So we think that it can be a bit volatile, but that there are nice perspectives in the growth for life.

And maybe one extra is that we see that aging is going very fast also in Belgium. And it's one of the strategic drivers of our Elevate27 strategy, where we have projects in place to come with new initiatives and product design, customer journey and initiatives to keep the capitals that come into maturity more in-house than that they leave the company. So there as well, we see nice future growth opportunities.

Okay. Ladies and gentlemen, let me give you some closing words. Taking full ownership of AG Insurance is fully aligned with Ageas strategic priorities on Elevate27. We can today announce to you a capital-efficient transaction with a strong strategic rationale combined with attractive financials. And let me sum them up once more for you.

We can conclude this transaction at a price that will generate a 15% to 16% levered return on invested capital with an immediate impact on earnings that are one-on-one converted in recurring cash upstream and creating more flexibility in cash deployment. It tilts our company profile again a bit more towards consolidated, profitable and cash-generating entities in more mature markets, stabilizing the group's results and making them more predictable. And the benefits are emerging in a really short term, which means that already in the first year of Elevate27, we can upgrade our financial targets for this strategic cycle for the second time.

These financials already put us in a stronger position to deliver on our Elevate27 ambitions. And furthermore, we get support for future growth and autonomy as a group. At AG level, we will further develop the successful bancassurance franchise. This agreement marks an important step for Ageas, highlighting our partnership and shared growth objectives supported by strong financials. With solid fundamentals, a drive for innovation and an unwavering commitment to our clients and partners, we are ready for the future.

Thank you for dialing in. Should you have any further questions, please feel free to reach out to our Investor Relations teams, and I wish you a pleasant day.

Welcome to today's Ageas conference call. I am pleased to present Mr. Hans de Cuyper , Chief Executive Officer; and Mr. Wim Guilliams, Chief Financial Officer.

[Operator Instructions]

Please note that conference is being recorded. I would now like to hand over to Mr. Hans de Cuyper and Mr. Wim Guilliams, gentlemen, please go ahead.

Good morning, ladies and gentlemen. Thank you all for dialing into this conference call and for joining the presentation of Ageas's results for the first half year of 2025. The publication of our half year 2025 results marks the first results presentation under our new strategy, Elevate27, and I'm happy to report that we are off to a strong start. In the first half of the year, Ageas delivered solid growth with inflows up by 4% at constant FX, fueled by an outstanding commercial momentum in Life.

On top of this, Ageas delivered a notably strong net operating results, mainly driven by an excellent combined ratio of 92.1% and low tax rate in China, driven by an adjustment of the illiquidity spread under local accounting. In Life, we delivered a strong commercial performance with inflows growing by 6%, thanks to significant business growth in all segments. In Belgium, we delivered an excellent growth of more than 10%, driven by a highly successful commercial campaign in the bank channel. In Europe, [indiscernible] continued to grow strongly, while growth in Asia reflected a successful strategic shift from nonparticipating products to participating products in China.

Turning to Non-Life, inflows benefited from strong growth across most markets and business lines, driven by both tariff increases and business growth. In Europe, our focus remained firmly on profitability over volume, partially explained by the deliberate choice to reduce exposure in select portfolio segments and continue to withdraw from selected scheme arrangements in the U.K. Reinsurance segment saw a strong commercial momentum after the main renewals and inflows in the third-party business increased with 49% compared to last year.

This continued top line growth, combined with an improved underwriting profitability in both Life and Non-Life translated into a net operating result of EUR 734 million, driven by a strong Non-Life performance supported by lower-than-expected weather impact and a solid Life results helped by low tax rate in China.

When adjusting the net operating result for the low tax rate in China and the favorable weather impact, the net operating result would stand at EUR 665 million, but still up more than 8% compared to last year and clearly showing the strength of our underlying business. Looking ahead to the net operating results for the full year, I'm pleased to say that we are confident to raise our previously communicated guidance to between EUR 1.3 billion and EUR 1.350 billion, including the contribution of esure. This guidance is as usual, bearing the occurrence of exceptional adverse weather and the unforeseen impact from volatile financial markets. As there remains uncertainty on the full year tax rate in China, this outlook is based on the assumption that the effective tax rate ends the year at the corporate tax rate of 25%.

Our strong operational momentum is also clearly reflected in the group's operational capital generation, which reached a high EUR 1.1 billion. Regarding the recurring cash upstream, I'm proud to share that we now expect a significantly higher cash upstream for 2025 of EUR 940 million, and this is well above our earlier expectations of EUR 850 million to EUR 900 million and an increase of 17% compared to 2024. We have already received EUR 725 million during the first half of 2025, with the remainder committed for the second half of the year. In line with our dividend policy, we will distribute a fixed interim dividend of EUR 1.5 per share to be paid early December.

Looking at our cash, we closed the first half with a temporarily elevated cash level of EUR 2.3 billion as it already includes the equity and Tier 2 debt raising, while payments for the acquisition of esure will happen only in the second half of the year. The same goes for our 240% solvency position for the Solvency II scope. As shown on Slide 43, the pro forma Solvency II ratio at the end of H1 2025, including the full impact of the acquisition of esure and Saga would stand at a very resilient 205%, well above our neutral solvency level of 175%. Solvency ratio of our non-Solvency II participations stood at 294%, and this is stable versus the end of 2024. The macroeconomic landscape shifts rapidly with economic trends like inflation and interest rates that vary more and more around the world. Such an environment highlights the importance of geographic and business diversification.

Our balance between Life and Non-Life businesses around the world is a defining feature of Ageas as a well-diversified group, which keeps performance steady and solvency strong even in volatile times. Before handing over to our CFO, Wim Guilliams, I also want to give you an update on the acquisition of esure. We have already received approval from the Belgian regulator National Bank and no objection from the U.K. Competition and Markets Authority, while talks with the PRA and FCA are also progressing as planned. We continue to expect to be able to close the acquisition of esure already by the end of September, and all preparations are on track to start the integration process as soon as possible. As mentioned at the time we announced the esure acquisition, the full financial contribution of esure will only emerge as from 2028 when the integration is completed and the full synergies will run through our results.

However, we already see a reason to upgrade our financial targets as positioned under Elevate27. As shown on Slide 9, we stick to our average EPS growth target of 6% to 8% even after the issuance of some 11 million new shares in the first half of the year, while increasing our holding free cash flow target to over EUR 2.3 billion, thanks to the strong results and positive outlook and increasing our shareholder remuneration targets to more than EUR 2 billion respecting our previous commitment of delivering an annual 6% dividend per share growth during the Elevate27 cycle.

With this positive update, I now give the floor to Wim, who will walk you through the segment performance in more detail.

Thank you, Hans, and good morning, ladies and gentlemen, also from my side. As mentioned by Hans, the strong net operating result was supported by a low tax rate in China and an excellent insurance result in Non-Life, strongly up compared to last year. This translated in a high life net operating result of EUR 538 million and a strong combined ratio at 92.1%. Life net operating result was strongly up, plus 15% compared to last year despite a weaker investment result. Adjustment of the illiquidity spread under local accounting in China positively impacted the net operating result through a reduced tax rate. On top of this, in Life, we also delivered an excellent operating insurance service result, up plus 6% compared to last year, illustrating the quality of the business in all segments.

In Belgium, the Life net operating result was in line with the strong performance of last year, driven by a solid insurance result and a Life guaranteed margin at 92 basis points. Europe, the life insurance result was up 28% compared to last year, driven by an excellent performance in Turkey, thanks to a continued solid result on short-term life. Asia recorded a strong increase in the Life operating insurance service result, up more than 8%, driven by a strong result in short-term life, up 47% compared to last year and a positive development in expense and claims experience variances. The CSM roll forward showed a positive operating CSM movement of EUR 186 million. This positive evolution corresponding to a 3.9% growth was supported by a significant contribution from new business, which was higher than the CSM release.

Looking at the drivers of the Life value new business, the present value of new business premium showed a strong growth, up 6% at constant FX, driven by all segments. Both Life and Europe showed a nice improvement in the Life new business margin compared to last year, with Belgium even up 110 basis points compared to last year, reaching a new business margin of 6.4%. The year-on-year decrease in the group Life new business margin to 8.7% is linked to China's strategic shift in product mix from nonparticipating products to participating products. Participating products carry a somewhat lower margin than nonparticipating products, but are more capital efficient and less interest rate sensitive. So rather than comparing the evolution of the new business margin year-on-year, it is more relevant to compare with the new business margin over the second half of '24 of 8.6%, which already had a higher share of participating products.

Moving now to Non-Life with the excellent combined ratio of 92.1%, translating into a 31% increase of the net operating result to EUR 263 million. This was driven by an excellent performance in all segments. Non-Life net operating result of Belgium was up plus 30%, a combination of business growth and an improved combined ratio supported by benign weather. Europe, the combined ratio improved compared to last year, thanks to the U.K. and Portugal.

In Asia, the Non-Life net operating result increased across all countries, supported by an improved combined ratio. And the reinsurance combined ratio of the third-party business stood at a strong 83.7%, thanks to favorable claims development and a lower expense ratio. Regarding the balance sheet evolution, our comprehensive equity remained broadly stable compared to full year '24 at EUR 16 billion, thanks to the strong net operating result and the capital increase, which offset the impact of FX volatility.

Our current cash position of EUR 2.3 billion is temporarily up on the equity and Tier 2 issuance related to the financing of the issuer acquisition totaling over EUR 1 billion. Shown on Slide 43, the pro forma cash view helps to isolate the impact of esure and Saga. When excluding these transactions, our underlying cash position would stand at a solid EUR 1.1 billion at the end of H1 '25.

To conclude, I would like to add a word on solvency and operational capital generation. Mentioned by Hans, the solvency ratio of the Solvency II scope companies stood at a high 240%, temporarily supported by the equity and Tier 2 issuance related to the financing of the esure acquisition.

Solvency of the non-solvency II scope companies stood at 294% with a negative impact from market movements compensated by the debt issuance and positive impact on the eligible capital of the adjustment of the illiquidity spread in China. The operational capital generation remained strong at EUR 1.1 billion, slightly lower compared to last year. The operational capital generation of the Solvency II scope companies is in line with the strong performance of last year. In the Non-solvency II scope, the operational capital generation was lower compared to last year due to the lower interest rate environment and strategic shift in product mix in China. The operational free capital generation amounted to EUR 713 million, down compared to last year. This decrease is largely attributable to the exceptionally high operational free capital generation of last year, which was supported by asset management actions within the non-Solvency II scope companies. On the other hand, the contribution from the Solvency II scope companies was strongly up with EUR 109 million compared to last year.

I've now reached the end of my presentation, and we are ready to answer any questions you may have.

[Operator Instructions]

Our first question is from Michael Huttner with Berenberg.

Fantastic. Thanks for these lovely results and the upgrades and things. And I had two questions, which sound negative. They're not. It's just I was hoping for even more. So on solvency, the pro forma is 205%, I think going back to the slides, you showed 208% as a pro forma when you first discussed esure. I just wondered if you can explain if there's something here I should be thinking about and maybe it's typing pension or something.

And then the second, and I know it's not relevant so much for today, but you seem to be holding back a fair bit of cash, so EUR 1.1 billion. My guess is EUR 800 million is kind of what you really need. And of course, you haven't canceled the treasury stock. So there's maybe another kind of EUR 300 million lying there. What is this for? Is this for ATS?

Okay. Michael, great to hear you. I give in a minute the question on Solvency to Christophe , but let me come back first on your second question about the cash position. You see indeed that we assume that after esure, we still have a comfortable cash position above EUR 1 billion, around EUR 1 billion, just above EUR 1 billion. But you also know that when we announced the esure acquisition, that one element in the financing was also to keep sufficient firepower for the future development of the group. So the cash position that we will be after the esure acquisition will be very much in line with what we have historically seen as a comfortable cash position to remain active in our expanding of the group if there is the right opportunity.

One of those opportunities that you mentioned is ATS. We have been, I think, very clear that we definitely have an interest to further strengthen our position in the Belgian market in case ATS would come to the market. ATS business is very complementary to us. It is focused on public sector, while our current activity is predominantly in the private sector. But also from a distribution point of view, it is even further diversification for the very strong position that AG is already having today.

With that, I'll give the solvency question to Christophe.

Well, the link with the 208% is that 208% was based on the end of '24. So as you might have seen in the communication we had, we still have the similar impact on esure. So it's minus 10% due to esure. And on Slide 43, you see the impact of esure, but also Saga. So the 208% did not take Saga into account.

And Taiping pension, where is that?

The Taiping pension is not yet taken into account here. It's a pro forma basically at the end of June, only taking into account, let's say, the 2 biggest ones, which is esure and Saga. So if Taiping pension happens before end of the year, that will be around 4% solvency impact.

And our next question is from Nasib Ahmed with UBS.

Perfect. Firstly, on the China tax impact, you're saying full year tax rate should be back in line with 25%. Do you expect the illiquidity premium to reverse out in the second half to give a higher effective tax rate in the second half of '25? And then just related to that, I think the expectation is to get back to the historical level by '26 of 15%. Is that still expected to come through in 2026? And then on kind of the 2026 earnings guidance, if you can give some color around where do you expect 2026 net profit to land with a potential decrease in the China tax rate, if that's still happening?

Yes. On the first one, the China tax impact, it's like you mentioned, it's the update of the illiquidity premium on the local accounting. It's very important to stress that. So that's not impacting the IFRS results. And as you know, the local accounting drives the tax rate that is being calculated. So thanks to this, we reverted in the local accounting to a profit situation. And so a low tax rate, very close to 0%. And then on the difference with the IFRS results, you take the 25%, and that explains the result that we have.

Liquidity premium is a more stable metric than driven by the market movement as such. It's a comparison with what peers are doing. And historically, Taiping Life was lower than peers, and there has been an interaction with the regulator to adjust liquidity premium. So that's always a discussion that they have with the regulator at this moment. So at this moment, our best estimate assumption is no update in the liquidity premium and then reverting back to the country corporate tax rate of 25%. So that's what we have included in the guidance that we set out there.

Situation for '26, that will depend, of course, a lot on the VIR development, the valuation interest rate development, how that will evolve over time. And when we, in the past, disclosed -- when we thought that, that would go down the tax rate and even to, again, 15% historically or lower rate depends on how that evolves and how that impacts the local accounting result. And the driver there will be how the interest rates are evolving. And so we're very pleased to see an uptick in the interest rates because that will help then also how that average, 750-day average will evolve over time. But to give an idea yet on '26, we will have to see the full development over the year.

Yes. So why is the second half '25 tax rate increasing, right? So effectively, 9% -- 40% in the second half, 9% in the first half gives you an average of 25%.

It's a mechanical explanation because at this moment, the valuation interest rate effect is still running through the local accounts, not in the IFRS, and that creates a negative monthly result. So the local result will go to a negative area and then bring up again the tax rate at an IFRS base because that's 25% on the difference between the local accounting result and the IFRS result. So you should see that, that VIR effect will run through local accounts in the second half of the year.

And we'll now move on to our next question from Benoit Petrarque with Kepler Cheuvreux.

Just wanted to go on the Life CSM, which was down quite a lot due to FX in H1. On the specific FX impact, how much do you expect of negative kind of in the release in the second part of the year and also maybe for '26, roughly how much impact that will be on earnings? And then on the holding free cash flow guidance upgrade, where does that come from? Where do you see better remittances? Is that broad-based or coming from specific businesses?

Okay. I'll give the first question again to Wim, I'll come back to you on the guidance.

Benoit. So FX, as you know, FX plays in different ways in the results and the balance sheet items. Everything which is a result of flow concept like OCG, OFCG, you have, of course, the average FX. So you always have to compare FX year-on-year and how that will run through this flow concept. Everything which is a balance sheet concept, which is CSM, you will use the spot rate at that moment to show the value in equivalent euro terms and then the difference shows the FX in the roll forward as you can see that. It's also important to mention that everything which is cash upstream is, of course, translated at the spot curve.

So also the cash upstream that you see is with the current FX and that you have to have in mind. In the guidance that we are giving, EUR 1.3 billion to EUR 1.350 billion, we have taken into account the current FX of the moment. So you have to imagine, you take the current FX and how that will influence the averaging -- the average in the second half of the year, and that has an impact of EUR 20 million with, of course, some differences between the countries because, as you know, we have a diversified mix of businesses. But what has been included is the EUR 20 million.

For your information, in the first half of the year, we had an impact of EUR 10 million. So you see that, that will, of course, have an impact in the second half of the year, but also already in this year. What will be the impact for next year will depend on the evolution of that FX and then the averaging year-on-year. So there is a bit of an averaging over time of FX, how you have to look at.

Okay. Thank you also, Benoit, for your second question because it might require a small explanation. So indeed, we increased our commitment on the cumulative holding free cash flow over the Elevate27 cycle from EUR 2.2 billion to EUR 2.3 billion. Well, first of all, we do keep our EPS ambition, and we have 11 million more shares outstanding, of course, compared to the moment that we have announced Elevate 27.

But there are 2 reasons to upgrade. The first one is the intrinsic quality of our business. We see how the quality, including the diversification and the insurance service results of our business is continuously improving. You have also seen that holding free cash flow this year is well above what we expected at the beginning of the year and also what we expected when we designed Elevate27. So to summarize, again, I want to confirm that esure contribution is not part of this revision. When we have announced esure, we have said there will be a positive impact of 10% on holding free cash flow from '27, '28 onwards.

So that is not part of the increase during this cycle. So this is fully thanks to the quality of the business and a very good start this year coming from holding free cash flow.

And we'll now take our next question from Farooq Hanif with JPMorgan.

I just want to come back on the -- my first question on the cash remittance. So you've alluded to the fact that we used the word sustainable when you talked about the EUR 940 million. So can you talk about kind of what's increased and why and why that's sustainable? So I noticed, for example, Europe is better, a good growth rate. Asia is also -- so China has also, I guess, grown. So can you just talk about sustainability of that number? And then in the context of that, why there's only an increase of EUR 0.1 billion in the guidance, if you think when you're moving from EUR 800 million to EUR 850 million to EUR 900 million and you're now kind of well over EUR 900 million. Surely cumulatively, if that's sustainable, you're being a bit conservative there. So if you can comment on that.

And then my second question is what allowance have you made for esure in the numbers? Because If you look at your increased guidance, I guess you're kind of -- you've had an impact because of the better than normalized weather and tax rate impact that helps you. So if I take that kind of beat in the first half and then moves up to EUR 1.35 billion. Can I kind of deduce what you're on for esure in the numbers? That's kind of my comment question 2.

Okay. Several questions. I will try to answer them in the best possible way, in a structured way. So why sustainable? Why do we feel comfortable going forward? It's a bit the same that we explained when we introduced the Elevate27 strategy. You remember that we there gave a message that we're comfortable on the growth rate of the consolidated and the nonconsolidated entity, both of 6% to 8%. So you should see the move to EUR 940 million as an improvement. And then take the same expectation that we had going forward on what we expect that the net operating result contribution will be.

So the continued strong performance of Belgium, the continued contribution of Europe, which you already see it at a much higher level, and we still see potential there going forward. And of course, the very strong performance of reinsurance and the confirmation of the cash upstream that you see from Asia. So that's a bit the base that we had, what we had last year, where you see that growth going forward and also the evolution in the holding cost. Why EUR 100 million, you should, of course, take into account that similarly, we have issued more debt. We have issued the Tier 2 debt, and we have issued a senior unsecured pound debt, which we will be having to pay also during that period. So you have the positive performance, the one-off, and you have that financing cost, which come on top, which will have a negative impact going forward.

Esure, we confirm all the numbers that we had at the moment that we announced the transaction. So you should remember, we always said the contribution in holding free cash flow will come beyond '27. Why does it come beyond '27? Because you have the contribution in your net operating result of esure as we also explained when we announced the transaction. You remember the amount of GBP 80 million that we said. But similarly, we have integration costs. We want to integrate the activities over the Elevate27 period, and that has a negative impact of GBP 130 million, which is mostly cash, cash outlays that we will have to do. That's taken into account.

And then, of course, we have EUR 1 billion debt that we have issued. And on that, we will have to pay. So that's what's happening in '26, '27. What's happening beyond '27, beyond '27, you lose, of course, these integration costs and you get that contribution at that moment, and that will support then the net operating result and will support the holding free cash flow. So that's a bit what's happening in the dynamics in '26, '27, which is especially linked to the integration. And that's also why Hans is saying, the upgrade of the targets, it includes esure, but esure is not contributing because that has a 0 impact over that period.

And our next question comes from Jason Kalamboussis with ING.

Yes. Sorry to come back on the Asian remittances because clearly, this was a relatively big surprise. I remember asking questions some time ago on if we would see numbers above EUR 100 million remittances. Here, we have EUR 99 million, a big increase over the EUR 80 million we had last year. So can you give us a bit related more to the results and to the change and shift you have in the product mix and how we should see that evolving because clearly, that was a big gap up.

The second thing is on ATS. If you're looking -- I mean, some of the other companies bidding or that would like to bid if this was to be for sale, have the -- notably banks -- have the Danish compromise capital advantage. Can you give us your thoughts? And do you think like peers that the decision is going to be for early next year? And if I may add to it, what do you think is your current firepower or war chest going into potentially a deal that could come in early 2026?

Okay. Maybe Wim can continue on the Asia remittance. I will maybe come back on the final question.

And true in the excel, you see an amount of EUR 99 million coming from China, but we have also shown in the slides that we're expecting EUR 110 million. So that's EUR 10 million still in the pipeline for the second half of the year, bringing you closer to the amounts that you were expecting in the past of above EUR 100 million. Again, maybe good to stress, this is at current FX. So that gives you already a view on what's happening.

What is the change in the product mix? The change in the product mix is a deliberate choice, of course, to improve the quality of the business. Philip has in the past explained that there were many actions done to work on that. And this is the next step in that evolution in which you get more participating products, which are more capital efficient and also have a lower interest rate risk, which is important to stress. But of course, the downside is a bit that if you have a participating product, you share part of the upside also with the clients. So your margin is lower. So that will have, of course, an impact on the net operating result evolution going forward.

But again, from a return on capital perspective, it will be a better position. Is this journey finished? No, this is a dynamic market. So they will still look for other improvements. It's kind of continuously improving. And if feasible, also work further on the duration of these products and see how they can position that. So net operating result will have, of course, a lower margin, will then depend on the volumes that can be distributed, but you've seen that the growth of the present value of new business premium at constant FX was plus 6% in total, with an even higher contribution of China. So you get a good volume growth going forward, and that will then support the evolution that we have. That's on the Asia going forward. On the firepower, maybe Hans?

Maybe I'll comment a bit on the product mix Asia, which was your question also related to the potential future upstreaming. Well, on China, we have already spoken a lot. There is a very successful conversion going on from purely nonpar business to par business, which is already more than 80% of the volumes. And for the next period, we will continue developing that par business, but also look at the duration of the liabilities and see how we can also shorten the duration of the liabilities as always to keep control of solvency and performance in a low interest rate environment.

As you know, the upstreaming of China is mainly defined by the solvency level. It's less by profit and retained profits, but it's solvency that is driving. And we are fully aligned there with our partner who has declared that they are planning for a stable to growing this upstreaming for the coming years, facing this transition of the low interest rate environment. Also be aware that in China, we have now that automatic adjustment of the guaranteed rates in the new legislation. There a new trigger has happened. So we will go again for new pricing rates. It will be 2% for nonpar coming from 2.5%, 1.75% for par coming from 2% and 1% for Universal Life coming from 1.5% previously. So I must say there is a very careful and disciplined management of the low interest rate environment in China.

Last comment for Asia is that we see, of course, a similar trend in Thailand, where also interest rates are falling. And there, I would say, same story. There is a very diligent view on repricing products timely. So -- and there, I think we are also managing the transition. And then your last question is on firepower. Well, we have still a debt capacity of approximately EUR 750 million. We have already spoken about the cash position. So I think we still have adequate firepower as well as a strong balance sheet to participate in attractive M&A opportunities. I cannot comment too much on ATS. To be very honest, I don't know when the file will come.

I propose if you want to know that you call the 3 Belgian governments because they will jointly have to decide what will happen to this file. And of course, there is a Danish compromise in the market. We know that Belgian banks are also interested in this opportunity, but I'm confident that we also have strong cards to participate in that process if it ever comes to the market.

[Operator Instructions]

And we'll now take our next question from Nasib Ahmed with UBS.

Sorry, I just wanted to ask about the U.K. Non-Life business. How have you managed that book in the first half given pricing headwinds in the motor business? And then the second quick one is, what is your expectation in terms of solvency benefit from the solvency reform?

Okay. The solvency question, I will give to Christophe. Let me comment a little bit on U.K. We have already, I think, announced in the full year results in February that we saw the market softening on pricing. That is something that we have seen continuing. The market in motor premiums for the market has dropped approximately by 8% for household, more or less 6%. We have kept the household premium levels more or less flat.

In motor, I think we have followed the market partially, not to the full extent. That being said, we see that inflation is persistent in the U.K. market. We see both in motor and in household claims inflation continuing 5%, 6%, 7% in that range. I see that, that is a number that also our main peers in the U.K. market have communicated. But I also see, I must say, slowly a little bit more pricing discipline coming into the market, and that is supporting improved retention of the book. And the pricing discipline, I think, will be driven by 2 phenomena. First of all, market consolidation, consolidated market in that sense is always more disciplined. And of course, we have been part of that story.

But also, of course, the new pricing regulation that has come into the U.K. market, I think, will also help to eventually make this market more price discipline. To conclude, looking forward, honestly, I joined my colleagues in the U.K. market, whom I have heard saying that we hope that the premium or the cycle is bottoming out relatively soon. I think it is needed because claims inflation continues to be a tension point. So we expect the price evolution to go on for a little longer, but we hope by the end of the year that, that is bottoming out. If not, then I think we will have to pay attention on the evolution of combined ratios in 2026. Christophe on solvency?

Yes. Well, on the Solvency II review, I think we mentioned in the past, we expect on our Pillar 2, mainly an impact of the risk margin that is more favorable to us. It's offset by -- or partially offset by some other changes in the Solvency II review. So we expect this to be neutral, slightly positive on our Pillar 2. On the Pillar 1 ratio, it's actually quite different because we expect to have a significant uplift there. I would say it's too early to share definitive numbers, but more in the range of 10% to 15%, which is aligned with the sector due to the updates in the volatility adjuster.

And our next question, a follow-up from Farooq Hanif with JPMorgan.

Apologies to ask this again, but I want to follow up on Nasib's earlier question on tax in China. I don't think I really understood why there would be a higher tax rate in the second half to get to 25%. But If you could just go through the logic again, that would be helpful.

Okay. So you should imagine you have a local accounting situation, which drives the current tax rate. If you have profits in the local accounting, the tax rate will turn to 0 because you have that deductibility of the government coupons. So that's a bit the situation that you have. So in the local situation, if you have profit, you turn to a tax rate which is 0. What's happening when you have the VIR. The VIR is bringing the result negative because you're only revaluing the liability side, you don't take into account anything of the asset side. That's what we explained in the past.

If you have a negative result. You have, of course, a result before tax, which is equal to a net result after tax, which is a bit the same. What is IFRS requiring? IFRS requires that on the difference between that local results, which is negative and the IFRS result, which is positive, you apply a 25% tax rate. So if the local result is positive, your tax rate will be lower than 25% and turning to that 0%. If your local result is negative, you go to a tax rate, which is higher than 25%, the situation we had last year.

What we have now in H1 is that we have a positive local accounting result, thanks to that adjustment of the liquidity spread. So the local result becomes positive at a 0% tax rate. On the difference, you apply the 25% tax rate, which translates into a tax rate of 9% in the China situation. But we expect now if there's no other updates, if everything stays the same, you will still have that valuation interest rate adjustment running through the local accounts, not IFRS results, running through the local accounting results and creating a monthly negative result. So that's bringing the local accounting result closer to 0 -- turning to 0. So what's happening then? You have a local accounting result of 0, you have an IFRS result. And on that difference, you apply the country corporate tax rate of 25%.

So you go back to 25%. But that means indeed, if you look at it H1 to H2, your effective tax rate in H1 is 9%. Your effective tax rate in H2 will be above the 25%. So it's a mechanical calculation because you have to apply the corporate country tax rate on the difference between local accounting and IFRS results.

Okay. That's a lot clearer. So when we get to a situation -- if we get to a situation where VIR is neutral or actually positive, the tax rate will be below 25%?

Yes. Would be below 25%. And if there would be no impact anymore, you can get even the full benefit of the deductibility of the coupons on the government bonds, which will bring that tax rate to 0%. That's also what we said. In the future, you will have a positive evolution of that tax rate, assuming that the VIR effect levels out. So averaging goes and stabilizes, correct.

And our next question, a follow-up from Michael Huttner with Berenberg.

On the nat cat beat so the low combined ratio, can you say what the figure was relative to budget was in H1? And what are you assuming in your EUR 1.3 billion to EUR 1.35 billion guidance? And then on the holding free cash flow, I'm really sorry, I understood the cash of EUR 940 million. I'm not sure where we are on the holding free cash flow. And I want to understand how to think about the EUR 2.3 billion,-- over EUR 2.3 billion increased guidance, whether it's actually an uplift to what we're seeing at the moment.

Okay. First question, Michael, on cat nat, we have an impact on combined ratio of 1.2% for the first half of the year. And we always develop a budget with approximately 2% to 3% impact on a yearly basis. So that means we are in a more favorable position in the first half. But I think it would be prudent for us to say that we keep for the full budget for the year to be consumed. And there is still autumn and early winter coming, and that is another cat nat and wind season specifically in Europe. Holding free cash flow, Wim?

Yes. Holding free cash flows, indeed, Michael, you have on the one hand, of course, the cash remittances minus the holding cost that gives you the holding free cash flows. Now in holding costs, there's 2 elements. There is the expenses, the cash expenditure that we do, both at corporate center and regional office Asia. But that's, of course, also the investment income we make on the liquid assets that we have at our disposal. And so if we take also additional financing in consideration, these need to be paid out of that net interest margin. So the EUR 940 million is one element.

Last year, for the holding cost, we had EUR 150 million. On expenses, you can take a bit that run rate that we said during Elevate27 strategy growth of 4%. Of course, the net interest margin will now be more erratic because what you have on the one hand is short-term rates are coming down. And of course, we will have more financing costs. This will already have a negative impact this year on these holding costs, and that will have a full impact next year. So you will have to do a projection, which is not a plus 4%, but taking into account that financing cost that increases over the year. So if you look at our debt that we've issued, we have issued debt of almost EUR 1 billion at a coupon between 4.5% to 5%. So you can already start calculating what that has as an impact and then the timing of the year.

So you should take into account the good performance of the cash upstream. That's what we're projecting in that new target that we put forward, but of course, offset by the additional financing costs, and that gives you the uplift going from EUR 2.2 billion to EUR 2.3 billion, more than EUR 2.3 billion.

Okay. It's much clearer. I still -- I'll have to check with you [indiscernible] on the actual numbers. May I ask just one more question, please. It's on the U.K. You talked in the opening remarks about the -- some change in businesses or something which you weren't happy with. I lost that bit. Sorry.

No, I think the -- well, we used the word change was about Asia products. So I'm not sure the link in the U.K. No change in products. Of course, we will widen distribution in U.K. going forward. Maybe you might refer to the 2 elements of the reduction of volume. So one indeed is pricing adjustments, and we spoke about that already. The other one is a little bit of pruning portfolio. So there were certain business segments that we decided not to renew because of profitability reasons. That's maybe what you referred to.

That's all the time we have for Q&A. I would like to return the conference call back to the speakers.

Ladies and gentlemen, thank you for your questions. And to end this call, let me summarize the main conclusions. Next to our continued top line growth, our operations also delivered an improved underwriting profitability, a clear reflection of the strength of our underlying business. This positive start of the year gives us confidence to raise our full year net operating result guidance to a range between EUR 1.3 billion and EUR 1.350 billion, including esure.

In 2025, we expect to receive EUR 940 million cash upstream from our insurance entities, and this is a significant increase of 17% compared to last year. In line with our dividend commitment, an interim dividend of EUR 1.5 per share will be paid early December. And last, but certainly not least, we have upgraded our financial targets as positioned under Elevate27, increasing our holding free cash flow target to more than EUR 2.3 billion and our shareholder remuneration target to more than EUR 2 billion.

With these closing remarks, I would like to bring this call to an end. If you should have any outstanding questions, don't hesitate to contact our IR team. Thank you for your time, and I wish you a very nice day.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for attending. You may now disconnect your lines.