Good day, thank you for standing by. Welcome to the Aegon fourth quarter 2022 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jan Willem Weidema, Head of Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone. Thank you for joining this conference call of Aegon's fourth quarter 2022 results. Before we start, we would like to ask you to read your disclaimer on forward-looking statements, which you can find at the back of the presentation. With me today are Aegon CEO, Lard Friese, and CFO, Matt Rider, who will take you through the results for the fourth quarter and the progress we are making in the transformation of Aegon. After that, we will continue with our Q&A. On that note, I will give the floor to Lard.
Thank you, Jan Willem, and good morning, everyone. We appreciate that you're joining us on today's call. I wanna start by running you through our achievements on slide number two. The fourth quarter closes out the year in which we accelerated our transformation and the execution of our strategy. During the quarter, we announced a transaction to combine our Dutch businesses with a.s.r., which was a historic milestone for the company. We are very pleased that we have received broad-based support from our shareholders for the transaction at our EGM in January, and we continue to be on track to close the transaction in the second half of this year. Despite challenging market circumstances, we also made significant progress in further strengthening our balance sheet and in improving our operating performance.
At the 2020 Capital Markets Day, we launched our operational improvement plan with more than 1,100 initiatives, together with ambitious but realistic savings and growth targets. The success of this program is evidenced by the fact that the benefit to our operating result has exceeded our target one year ahead of schedule. This year's commercial results underscore the importance of offering a broad range of products to our customers. For example, as a result of the uncertain macroeconomic environment, we saw outflows in asset management and in the U.K. retail channel. In the U.S. Workplace Solutions, we experienced net outflows as a consequence of the departure of one large customer. At the same time, many of our strategic assets are performing well.
Our life insurance sales increased in our growth markets and in the U.S., where Individual Solutions achieved the highest level of quarterly new life sales in the last five years. Furthermore, the workplace business in the U.K. recorded the highest level of net deposits in the past four years, demonstrating the improvements we are making to our U.K. franchise. As a result of the progress we have made, both strategically and financially, we will propose a final dividend for 2022 of EUR 0.12 per common share at our annual general meeting. This brings the full-year dividend to EUR 0.23 per common share, compared with the EUR 0.17 dividend over 2021. Furthermore, we are announcing a 200.
A new EUR 200 million share buyback program for the first half of 2023, which underscores our disciplined capital management and commitment to return surplus capital to our shareholders. Slide three highlights the success of our operational improvement plan since its launch at the 2020 Capital Markets Day. We have now fully implemented almost 1,200 initiatives. This is more than we set out to do. We continue to implement more. The plan was not only aimed at improving the operating performance and propositions to our customers, but also has fundamentally changed the way we work at Aegon. For example, we have embedded a continuous focus on efficiency and operational execution in the organization with accountability clearly assigned, more granular planning, and real-time tracking.
The increased operational rhythm has created a culture of transparency and a focus on developing talent to meet future challenges. On slide number four, we show the financial results of the operational improvement plan. When we launched this program, we targeted an operating result uplift of EUR 550 million by the end of 2023. As of year-end 2022, the operational improvement plan has resulted in an operating result uplift of EUR 627 million, outperforming our expectations and one year earlier than expected. Growth initiatives contributed EUR 262 million to the operating result.
This is well above our target and required approximately EUR 60 million less of additional expenses than we originally envisaged. Compared with the base year 2019, we recorded the benefit from the expense savings initiatives of EUR 366 million, or 92% of the savings targeted for 2023. If you combine this with a lower than expected spending on growth initiatives, the Operational Improvement Plan has actually led to a net reduction in addressable expenses of EUR 280 million, compared with a target of EUR 250 million communicated at the Capital Markets Day in 2020. The overall success of the program, and in light of upcoming changes to the group structure and reporting due to the transaction with a.s.r., we have decided to close out the reporting on the Operational Improvement Program.
It goes without saying that improving efficiency and driving commercial momentum remains key focus areas for us going forward. Moving to slide five, we'll zoom in on the progress of our U.S. strategic assets. As you know, in Individual Solutions, we have the ambition to regain a top-five position in selected life products over the coming years. As you can see, commercial momentum remains strong in this segment. New life sales increased by 20% in 2022 compared with 2021, and have accelerated during the course of the year. This was supported by the World Financial Group, or WFG, as an acronym, distribution channel, where the number of licensed life agents grew 20% compared with 2021, and now stands at a record high of over 62,000 agents in North America.
In addition, our market share in this WFG channel has increased from 59% in the fourth quarter of 2021 to 67% this last quarter on the back of improvements made to our customer service experience and continued competitiveness of our products. We recently launched a new indexed universal life product specifically designed for the brokerage channel, which complements our current product that is successfully marketed through the WFG channel. In the retirement business, Transamerica aims to compete as a top-five player in new middle market sales. Written sales were at $7.9 billion in 2022. This reflects the difficult market circumstances with lower equity markets and higher interest rates negatively impacting plan assets.
Net outflows for the middle market segment were driven by one single large multiple employer plan exit and would have been positive for the year, excluding this discontinuance, driven by strong written sales in previous periods. Turning to slide six for the highlights of the performance of our U.K. and Dutch strategic assets. Let me start with the U.K. On balance, it was a positive year for the platform business. On the one hand, the workplace channel generated the highest level of net deposits on record in 2022. On the other hand, the retail channel recorded outflows on the back of weak investor sentiment in line with what we have seen across the industry. Over the year 2022, net deposits on the platform contributed positively to revenues, but were more than offset by the anticipated gradual runoff of the traditional product portfolio.
Despite the unfavorable impact of adverse markets on assets under administration, we were able to keep the efficiency of the platform stable because of the steps we have taken to reduce expenses. Moving on to the Netherlands. Here, we clearly see signs that the housing market is cooling down, leading to lower mortgage sales. Nevertheless, the mortgages portfolio continues to grow and now amounts to almost EUR 63 billion. Our workplace business and bank continue to show consistent growth thanks to the commitment of our Dutch employees, who remain dedicated to deliver a high level of service to our customers in the run-up to the transaction with a.s.r. Let's zoom in on asset management and the growth markets on slide number seven. The challenging market conditions negatively impacted our asset management activities in 2022.
Despite the difficult economic conditions in China, our Chinese asset management joint venture, AIFMC, delivered another year of net deposits. Third-party net deposits in Strategic Partnerships amounted to EUR 3.6 billion. These were more than offset by third-party net outflows in Global Platforms of EUR 3.8 billion as our customers freed up liquidity in our rising interest rate environment. The operating result from Strategic Partnerships decreased by 29%, primarily driven by lower performance fees for AIFMC from elevated levels in 2021. In our growth markets, we continue to invest in profitable growth. New life sales from these markets increased by 15% to EUR 248 million in 2022, mostly as a result of business growth in Brazil.
Summarizing on slide number eight, we remain focused on executing our strategic agenda and continue to maintain a high pace in transforming Aegon. We are closing out the reporting on the successful operational improvement plan. Expense savings initiatives have contributed EUR 366 million to our operating results in 2022. Operating capital generation was solid at EUR 1.5 billion in 2022, above the outlook that we provided a year ago despite difficult market circumstances. Free cash flow amounts to EUR 780 million in 2022. In the last two years combined, we achieved EUR 1.5 billion of free cash flow.
This means that we have delivered one year early on our cumulative free cash flow target of EUR 1.4 billion-EUR 1.6 billion for the period 2021-2023. Our gross financial leverage is in line with the target we set ourselves two years ago, and we intend to further reduce our leverage by up to EUR 700 million using part of the cash proceeds from the a.s.r. transaction. Our proposal for the final dividend brings the total dividend over 2022 to EUR 0.23. For the full year 2023, we target a step up to EUR 0.30 per share, well above the level we targeted at the 2020 Capital Markets Day.
In addition, we are announcing a new share buyback program of EUR 200 million after having just completed last year's EUR 300 million buyback program. On top of this, we still intend to return EUR 1.5 billion of the cash proceeds to shareholders once the a.s.r. transaction has closed. This is testimony of our commitment to offer attractive shareholder returns. Finally, before I hand over to Matt, I kindly wanna invite you to our Capital Markets Day on June 22nd in London, where we will provide an update on our strategy and targets. The focus of the event will be on our U.S. activities and our path to creating value through profitable growth and active management of the in-force business. I now.
Over to you of our financial performance over the last year on slide 11. The operating result for the year was stable at EUR 1.9 billion. The result was supported by expense savings, benefits from growth initiatives, improved claims experience, and strengthening of the U.S. dollar. This was offset by lower fees due to adverse market movements and outflows in variable annuities and asset management. Operating capital generation before holding, funding, and operating expenses amounted to EUR 1.5 billion for 2022. The increase compared with the previous year reflects similar drivers as the operating result and the benefit from higher interest rates in the Netherlands. Cash Capital at the Holding increased to EUR 1.6 billion at the end of 2022, supported by EUR 780 million of free cash flow for the year.
Our gross financial leverage amounted to EUR 5.6 billion or EUR 5.4 billion based on a euro U.S. dollar exchange rate of $1.20, which is the rate at which we set our deleveraging target in 2020. This means that we remain within our target range. Despite volatile markets, we maintain strong capital ratios with each of our three main units remaining above their respective operating levels. This underscores the effectiveness of the actions we have taken over the past few years to improve our risk profile and to reduce the volatility of our capital position. Transamerica, in particular, has taken several actions to strengthen its capital position and increase the predictability of its U.S. RBC ratio.
This includes setting up a voluntary reserve for variable annuities, achieving additional long-term care rate increases, and freeing up capital by reinsuring the legacy universal life portfolio of Transamerica Life Bermuda, our Asian high net worth business. Furthermore, the dynamic hedging program, which we expanded in 2021 to include all variable annuity guarantees, continued to perform well in difficult markets during 2022. Let me now turn to Aegon's quarterly performance, starting with the operating result on slide 12. In the fourth quarter, the operating result came in at EUR 488 million, up by 4% compared with the fourth quarter in 2021. The operating result in the U.S. increased by 26% or 14% on a constant currency basis to EUR 233 million.
This was partly due to improved mortality claims experience. Favorable mortality claims experience in the quarter amounted to EUR 13 million, a significant reduction from the EUR 83 million of unfavorable experience we saw in the fourth quarter of 2021, as the impact from COVID subsided. Morbidity claims experience continued favorable relative to our expectations and contributed EUR 16 million in the fourth quarter of 2022. In addition, the results of the Americas benefited from recognizing the result from TLB for the second half of 2022 following the reinsurance transaction between TLB and Transamerica that commenced retrospectively on July 1st. There's a commensurate offset in the International segment. In the Netherlands, the 13% increase in the operating result was driven by our online bank, Knab, and our workplace solutions business, supported by higher interest rates and a non-life reserve release.
The operating result of the U.K, increased by 3%. Lower addressable expenses driven by expense savings initiatives more than offset a decline in fee revenues as a result of unfavorable market developments and the runoff of the traditional product portfolio. When adjusting for the impact from the reinsurance transaction between TLB and Transamerica, Aegon International increased its operating result, driven by improved claims experience and business growth in Brazil. Finally, the operating result of asset management decreased by 35%, driven by lower fees in both Global Platforms and Strategic Partnerships. This is a result of lower asset balances due to adverse market conditions and outflows in the Global Platforms. Let's move to slide 13, where we show that the net loss for the quarter totaled EUR 2.4 billion.
Non-operating items totaled a loss of EUR 445 million, mainly driven by realized losses on investments in the Americas. This was primarily from the sale of bonds at the beginning of the fourth quarter to maintain a robust liquidity position consistent with Aegon's strict liquidity framework. Adjustments to Transamerica's interest rate risk profile following the increase in interest rates. Other charges amounted to EUR 2 billion. This was mainly driven by an impairment loss of EUR 1.8 billion that was triggered by the classification of Aegon the Netherlands as held for sale as a result of the transaction with a.s.r. This represents the majority of the previously announced expected reduction in equity as a result of the transaction.
The income tax position was impacted by a previously announced one-time tax charge related to the anticipated settlement of a tax position in connection with the transaction with a.s.r. It also reflects the fact that impairment loss I just mentioned is not tax deductible. On slide 14, I want to walk you through the capital positions of our main units, all of which ended the quarter above their respective operating levels. The U.S. RBC ratio increased by 24% points over the quarter to 428%. The main positive impacts were from previously announced management actions. Following the internal reinsurance transaction, Transamerica is now able to recognize its equity in TLB as available capital for solvency purposes. This more than offset the impact from setting up the voluntary reserve for variable annuities.
Additional one-time items include a negative impact from industry-wide updates to required capital for mortality risk. Market movements had a positive impact, driven by higher equity markets and interest rates during the quarter. The Solvency II ratio of the Dutch Life unit increased to 210% due to a positive impact from model and assumption changes, which included the favorable impact of a higher factor applied when calculating the loss-absorbing capacity of deferred taxes. Market movements had a negative impact, mostly from lower real estate revaluations. The solvency ratio of Scottish Equitable, our main legal entity in the U.K., decreased by 10% points to 169%, mostly driven by model and assumption changes, remittances, and market movements.
On slide 16, you can see that Cash Capital at the Holding increased to EUR 1.6 billion during the quarter, which is above the top end of the operating range. This allows us to announce a new share buyback program today of EUR 200 million. In the fourth quarter of 2022, we returned EUR 240 million of capital to shareholders through dividends and the third tranche of the share buyback program announced in March of last year. Free cash flow for the quarter was EUR 318 million, consisting of remittances from the U.S., the U.K., and our international activities. The proceeds from the sale of our stake in the joint venture with Liberbank also contributed positively. Remittances from the Netherlands were not included in Cash Capital at the Holding following the transaction with a.s.r.
Slide 16 summarizes the great strides we have made in recent months in maximizing the value of our financial assets. In the fourth quarter, we continued our track record of successfully hedging the targeted risks embedded in our variable annuity guarantees, achieving a 96% hedge effectiveness. In long-term care, our primary management actions are rate increase programs. We have obtained regulatory approvals for additional rate increases worth $21 million. The total value of approvals achieved since the start of the program now stands at $471 million, exceeding the increased target of $450 million worth of rate increases. We will continue to work with state regulators to get pending and future actuarially justified rate increases approved. The Dutch life business again paid a quarterly remittance of EUR 50 million.
TLB's reinsurance transaction with Transamerica freed up capital and strengthened Transamerica's capital position. Disciplined capital management enabled TLB to contribute EUR 57 million to the free cash flow of the holding in the fourth quarter. On slide 17, I want to go into some of the reporting consequences of the transaction with a.s.r. We continue to expect the transaction to be closed in the second half of this year. Ahead of the closing, we intend to simplify the reporting of Aegon the Netherlands in the context of our group reporting. Beginning with reporting over 2023, the results of our Dutch business will be reported as non-operating results for both IFRS segment reporting and capital generation. Remittances from the Netherlands will not be reported as free cash flow and will not be reflected in Cash Capital at the Holding.
We will reflect these as part of the EUR 2.2 billion net proceeds at the closing of the transaction. After closing, Aegon's strategic shareholding in ASR will be accounted for at the net asset value of ASR. We will include dividends received from ASR in our free cash flow. Obviously, Aegon will cease to report operational and performance metrics for the former Aegon the Netherlands operations. The transaction also has consequences for our reporting cycle. ASR does not currently disclose quarterly financial results. As we need to include the net asset value of our strategic shareholding in ASR into our results, Aegon will adjust its reporting cycle so that we will provide trading updates for the first and third quarters. These trading updates will focus on key performance metrics. The half year and full year disclosures will encompass the full comprehensive set of IFRS financials and performance metrics.
We will also shift our reporting date to around a week later than a.s.r. to allow for inclusion of our share in the net asset value of a.s.r. in our results. This new reporting cycle will start effective immediately, meaning that the 1st quarter 2023 results will be communicated in the form of a trading update on May 17th. Before handing it back to Lard, I want to close out with an outlook for 2023 on slide 18. Let me start with operating capital generation. We expect at least EUR 1 billion operating capital generation from our units outside the Netherlands in 2023. This reflects an expected increase in new business strain as we aim to profitably grow our U.S. business.
Free cash flow will exclude remittances from Aegon the Netherlands, but will include the interim dividend that we expect to receive from a.s.r. in 2023. On this basis, we expect free cash flow to amount to around EUR 600 million for 2023. Over time, our free cash flow per share is expected to benefit from the planned reduction of our share count and an increase in dividends from a.s.r. as synergies from the combination merge. In addition, our funding costs will decrease as we reduce our gross financial leverage. As a reminder, we are targeting a dividend over 2023 of EUR 0.30 per share, EUR 0.05 more than we communicated at the 2020 Capital Markets Day, which is an attestation to the strength of the strategy of the company.
Finally, we have decided to transition to a cash-only dividend as of the final dividend, 2022. This has several benefits for our company, including the fact that it removes the need to buy back shares to neutralize the dilutive effect of the stock dividend. It also provides more room to execute the planned share buyback in relation to the transaction with a.s.r. With that final note, I now pass it back to you, Lard, for your concluding remarks.
Thanks, Matt. In summary, on slide number 20, we have significantly accelerated our strategy execution, and equally important, we have delivered on our financial commitments in 2022. Looking forward, we remain fully focused on executing our strategy. We are continuing to improve the performance of our company. We are investing in profitable growth by introducing new products and expanding our distribution footprint. We are remaining disciplined in our capital and risk management, and we are continuing to provide attractive returns to our stockholders. Therefore, I'm confident in delivering on our financial and strategic commitments for the year 2023 and beyond. Above all, I am very proud of all our colleagues who work hard every day to make our strategy a success and to continue to support our customers' needs. I would now like to open the call for your questions.
Please limit yourself to two questions per person. Operator, please be so kind to open the Q&A session.
Thank you. To ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We will now go to your first question. One moment, please. Your first question comes from the line of Andrew Baker from Citi. Please go ahead, your line is open.
Great. Thank you for taking my questions. The first is just on the new capital generation guidance, the at least EUR 1 billion. Can you just give us some insight into what you're assuming for New Business Strain and how that compares to 2022? Are you assuming anything for mortality within that? Is there anything else worth highlighting in terms of material items that you are assuming within that EUR 1 billion number? Secondly, can you just give us a sense of where you are now relating to your top five aspirations in the retirement plan sales as well as those selected individual life sales that you've highlighted? How much additional New Business Strain would you expect above and beyond the 2023 level to get to those market positions?
Over what timeframe you would expect that to sort of work its way through. Thank you.
Thank you very much, Andrew. Matt, over to you.
Yeah. With respect to the new business strain, all we've really said is that we include an increased level relative to where we ended up in 2022, but I think where you, where you see it, you saw an increased pattern of new business strain during the course of the year. You can think about the, you know, sort of the fourth quarter number as being a reasonable number. As far as mortality is concerned, I would say if you combine the mortality and the morbidity together, you're looking at about a neutral effect. We've had, you know, pluses and minuses in the past due to mortality and morbidity. We're thinking about a neutral effect for 2023.
On the top five positions?
Yeah. Well, I mean, I think that we're doing well on our top five positions. However, I would say that we're going to... I think you asked this question more in conjunction with, you know, if we increase those, what is new business strain going to do for 2023 and beyond. I think there we're going to do a capital markets update, in the second quarter, of 2023, and we can update you further there.
Yes.
Thank you. We will now go to our next question. Your next question comes from the line of David Barma from Bank of America. Please go ahead, your line is open.
Good morning. Thank you for taking my questions. The first one is on the dividend. You guide for, and in conjunction with the free cash flow guidance of EUR 600 million. Including the a.s.r. final dividend in there, you'd be closer to EUR 700. And your 2023 targeted dividend costs will be somewhere nearly EUR 200 million less than that. How should we think about the difference between the two figures? Secondly, on asset management, net flows were quite pressured and market movements didn't help last year. What's your outlook for flows so far in the year?
Can you remind us what sort of uplift earnings we should expect from the different actions you've been taking on costs, asset diversification, the streamlining of the different platforms, et cetera? Thank you.
Thank you very much, David. Let me take the asset management questions, after that, Matt, can you take the free cash flow and dividend question. On asset management, I think, you know, in line with what you've been seeing in the wider industry, the fact that, you know, both interest rates have been shooting up, reducing values of bonds, and corresponding fees obviously. That's one thing. Secondly, having equity markets going down. You know, that entire market backdrop has been, has not been helpful for, let's say, the asset management business in the last year.
When it comes to the Global Platforms, you look at the third party net outflows, this is mainly also because our clients freed up liquidity, you know, as a result of all this volatility. However, it was offset positively by AIC, which is our Chinese asset management joint venture, which was able to bring in EUR 3.6 billion of net positive net deposits over the entire year. That could not completely offset the loss that we had in the Global Platforms in the third party business, but it was something that came quite close. Over the total year, the Global Platforms lost a net positive EUR 3.8 billion, while our Chinese joint venture came in with EUR 3.6 billion. It could not completely offset it, but. That's that.
You know, of course, you know, we're, you know, depending on the market back this year, we will see how the asset management flows and asset management business will continue. The start of the year, if you look at the markets, they've been better, but at the same time, it's early days, so I think it's far too early to call the market on this. What we are doing to improve the asset management business structurally is a couple of things. First of all, we are implementing a new technology platform to support our overall asset management business. This is a very comprehensive change that we are implementing.
We have worked on that for the last couple of years, and we aim to finalize that through the course of this year. After which we expect to be far more efficient and will reduce costs after we've implemented that Aladdin technology fully. That will help to improve structurally the asset management margins. At the same time, we aim to push through obviously in the chosen investment strategies. I also want to remind you that in the context of the a.s.r. transaction, we've been able to strengthen the asset management business by basically becoming a strategic partner of the combined company, especially in particular investment categories like illiquid assets, et cetera, which as we announced at that time, were accretive and are accretive to the overall asset management business.
You know, 2022, it was a difficult year against a very difficult market backdrop. 2023, you know, early days, you know, markets are better now, but let's see how it goes. More importantly, what we have in our control, we are implementing to improve efficiency, reduce expenses, and make sure that we improve the margins. At the same time, we're pushing through with more commercial activity on selected strategies. With that, to you, Matt, on free cash flow and dividends.
On the free cash flow, I wanna do this as a basic overview. If you have detailed questions, then you can come back to IR on this one. In general, what we're telegraphing for 2023 is a EUR 600 million free cash flow that includes the interim dividend of a.s.r. That gets you to about the EUR 600 million. Starting with about a EUR 2 billion share count, slightly underneath that, take into account when you do your math, the fact that we've now announced a share buyback of EUR 200 million, and we do intend to accomplish the EUR 1.5 billion share buyback over the period of 2023.
I think when you do that math, then we're about, you know, maybe we're paying out about EUR 500, and we're getting in about EUR 600. There is only about a EUR 100 million gap. Then, that, and I think that's kind of a normal sort of payout ratio.
Thank you. We will now go to our next question. Your next question comes from the line of Michael Huttner from Berenberg. Please go ahead. Your line is open.
Thank you very much, and well done for achieving in 2022 what you set out for 2023. I had 2 questions, please. One is, you just said, and but I have a kind of close interest in this, that the EUR 1.5 billion you buyback you aim to achieve during 2023. I wonder if you can give a little bit more insight in that. If you were to do it just as normal buyback, I think you'd be accounting if you did it just in six months for like, I don't know, 25% or 30% of daily volumes. I just wonder if you can give a little bit more in your thinking here.
Then, on the U.S. business, which seems to be doing really well with the 428 RBC ratio and, you know, your talk of new business strain, you know, basically investing in growth. There is, and here I'm not very solid ground. I think a negative outlook by Moody's. I just wondered whether you can kind of comment on that given what looks like actually a very strong business with the TLB, you know, boosting capital, et cetera. Thank you.
Thank you, Michael, for your question. Matt, do you want me to take it?
On the buyback program, the intention would be to start the EUR 1.5 billion share buyback program, pretty much as soon as we complete the transaction. At this point, we're thinking that the vast majority is gonna be taking, is gonna be done by share buybacks. That'll take a period of time. I don't think we've disclosed exactly how long we think it would take. It'll be under a year, but as quickly as we can possibly do it, obviously, given the daily trading volumes, that's how we'll try to manage it. You are right. In the U.S. business, we are, you know, we see a high solvency ratio.
We see the businesses, I would say, particularly the life business, is doing exceptionally well. All the rating agencies like to have that good commercial activity there. What has happened is that when we announced the a.s.r. transaction, we've been put on sort of negative watch by the rating agencies, and they will do their work on this. Even in the event, if indeed we were downgraded, it would not mean anything for our commercial activities or frankly, our business. I thought it was quite interesting on the day that we announced the a.s.r. transaction, we were sort of immediately put on negative watch. What happened to the value of our hybrids and debt, it just went up. The rating agencies have their process.
They will ultimately take us to committee. They will work through it. Even if we were downgraded as a consequence of this transaction, it does not mean much to us commercially.
Brilliant. Thank you.
Thank you. We will now go to our next question. Your next question comes from the line of Nasib Ahmed from UBS. Please go ahead, your line is open.
Thank you. Morning, and thanks for taking my question. First one on the U.S. In the OCG, the quarter-on-quarter OCG sale, but even on earnings, if you even exclude the TLB allocation of $55 million, the earnings improved. What is the difference there? Maybe it's new business strain. I guess related to that, the investment into the U.S. to get to top five, is that all coming from Transamerica, or do you expect some of that to come from the whole scope? I guess second question is on the two strategic assets. Well, three assets, U.K., U.S., and asset management. Can you talk about what kind of learnings you can apply in the U.S. and the.
From the U.S. to U.K. and vice versa. How you think, you're kind of the best owners of both assets, at the same time. Whether the asset management plays into them. Thanks.
Yeah. Let me take the last one and then Matt, if you can thereafter do the first two questions from Nasib. Thanks, Nasib. First on the learnings. The interesting thing is that in the U.S., in the U.K., but also, you know, our long history in the Netherlands, we have been running Workplace Solutions and retirement plan businesses for a very long time. It's quite interesting to see what you can learn from the various geographies and the various, the various markets that you operate. Quite frankly, it starts with the realization that there's a lot of local differences, tax treatments of those retirement plans, and also local preference at, and local different legislation.
There's a lot that is different in these markets, but there is also a lot that is very similar that you can indeed learn from each other. From first of all, in the U.S., in the Workplace Solutions business, we have and you can see that actually in the numbers. We're seeing that the average margin per participant is increasing because the advice center that we have built up and managed advice in which we actively reach out to plan participants and help them plan for the decisions and for instance, consolidation of pension buildups that they have in various pension plans. I mean, that is a practice that is very successfully built and implemented in the U.S., and we're learning from that.
Within the rules and regulations around that in the U.K., we are implementing similar activities. That's one example of it. The other one is that on asset management, you know, in all our products, if you look at across the footprint, we have roughly, Jan Willem, I'm looking at you now, roughly EUR 900 billion at this moment. Roughly EUR 900 billion of assets that are flowing through our products. Our products are basically, and to a large extent, you know, asset accumulation products, be it pension plans or be it, individual products, annuity products, et cetera.
We manage with our asset manager a piece of that, and then we have other asset managers who are external managers who are catering for the choice for our clients because we want our clients to have a full and comprehensive choice. This creates two opportunities. First of all, it creates the opportunity to increase the share that our asset manager can build over time of that pie as a whole. That's number one. Number two, it also underscores how important it is both to have an asset management capability that is strong. We can't be all things to all people with our asset managers, we will always work with a collection of other asset managers as well in the platform.
For our own asset manager, it is making sure that we not only keep the space but also try to expand that over time. At the same time, it demonstrates how important it is that the asset management capability is something that we have in one of our core activities. Let me pause here and hand over to you.
Thank you. On the OCG quarter-over-quarter relative to the operating result, there are a couple pieces, but they're pretty simple. The first is that we saw poor mortality experience on the, let's say, on the IFRS side, on the operating result, but it was a bit worse on the operating capital generation side, frankly, just due to the reserving mechanics under the two bases. The second one is that we did see, new business strain is obviously a component of operating capital generation, and you'll probably see that it has picked up in the fourth quarter, which we like it to do, of course, because we are writing profitable new business, and that's why we.
I think we've done a very good job there during the course of the quarter and the full year. With respect to the need of the U.S. to fund, let's say, the need of the U.S. for holding company cash to be injected. With a solvency ratio of 428%, first of all, they're in very good shape. It's nice to have buffers that we have in the holding company. It is always a good reminder that we are still in restructuring mode.
At the group level, we wanna maintain our cash at the top end of the range, and to the extent that there are in-force management actions that we would want to do in the U.S., then we have a buffer that is sitting there in the holding company. Strictly speaking, we don't necessarily need it to fund growth. Insight into this when we do the Capital Markets Day in the second quarter of this year.
Perfect. Thank you.
Thank you. We will now take our final question for today.
Sorry. The last but one question for today comes from the line of Stephen Howard from HSBC. Please go ahead. Your line is open.
Good morning. Thank you. One question, one clarification here. The model and assumption changes that have occurred in your Solvency II ratios in both the Netherlands and the U.K., can you give a bit more detail on these, whether they are company-specific or industry-specific as well? A clarification, my line went a bit fuzzy when you were talking about the EUR 1.5 billion capital return. Can you say what timescale this is done over? Thank you.
Thanks, Stephen. Matt, wanna take over?
On the first one, the model and assumption changes, they're really company specific. We talk about our annual review of all assumptions that are especially the most important ones, including expense, mortality, longevity and the like. These are ordinary course of business. We do these assumption updates every year, and we run them through the fourth quarter for the Solvency II countries. On the EUR 1.5 billion return of capital, again, as I mentioned before, it's gonna be vast majority of it through share buybacks. We'll start immediately after we close the transaction. We'll get it done as quickly as possible. It'll be under a year to get it done. Depending on daily trading volumes, we get it done as quickly as we can.
Yeah. Thank you very much.
Thank you. We will now go to our last question for today. One moment, please. The question comes to the line of Robin van den Broek from Mediobanca. Please go ahead. Your line is open.
Good morning. Thank you for taking my question. Just one clarification question. I think you mentioned in your answer to the EUR 1.5 billion return that you'll be paying out EUR 500 million, and you're getting in EUR 600 million. I hear the EUR 600 million only includes the interim dividend of a.s.r. I guess if we look for. You mentioned that that is a normal payout ratio. I was just wondering if we move towards 2024, is there an automatic ticker basically on the dividend when also the final dividends of a.s.r. will be included in the free cash flow for 2024? That's my first question.
The second question is more on a like-for-like OCG run rate. I'm not sure whether that has been addressed because my line got cut off during the call. Can you make a comparison on the run rate on a like-for-like basis within your guidance? Thank you.
Hey, Robin. Sorry to hear that, your line, you had problems with the connection at a certain point. We'll help here. Matt, can you take both?
With respect to 2024, we're effectively giving you a guidance for 2023. I think when we get to our Capital Markets Day in the second quarter, we'll give you more updated guidance on the out periods. I think if we leave it for them to give new targets at that point. With respect to the OCG run rate, I guess if you want to do it on a, let's say, We do it on the fourth quarter. We did overall EUR 370 million in OCG for the fourth quarter. There are some puts in there.
If you sort of, if you add back the poor mortality, and let's say the poor mortality experience primarily, and then you, and then you sort of make adjustments for some of the good guys that we got during the course of the quarter, including some one-time releases, in the U.S. and in the U.K., also in international, that gets you to a clean number of EUR 350 million. If you look forward to the guidance, you think about EUR 350 million as a clean number. Now, take out what we did in the Netherlands during the fourth quarter, which was about EUR 100 million.
Now you're at 250x four , gets you to about EUR 1 billion. Yes, there are some other currency movements and various things you can talk to IR about, but in general, that's a clean number.
All right. That's very clear. Thank you very much.
Thank you. I will now hand the call back to Jan Willem for closing remarks.
Thank you very much. This concludes today's &A session. On behalf of Lard and Matt, I want to thank you for the lively interaction. Should you have any remaining questions, please do get in touch with us in Investor Relations. We're here to help. Have a good day, and thank you for your participation in today's call.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.