Today, and thank you for standing by. Welcome to the ASR half-year 2025 results conference call and webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question-and-answer session. To ask a question during the session, you need to press star one one on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw a 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 our first speaker today, Michel Hülters. Please go ahead.
Thank you, operator, and good morning, ladies and gentlemen. Thank you for joining us today. Welcome to the ASR conference call on the results for the first half of 2025. On the call here with me today are Jos Baeten, our CEO, and Ewout Hollegien, the CFO. Jos will kick it off with the highlights of the financial results. He will also give a brief update on the Aegon transaction and the integration and discuss the business performance. Ewout will then talk about the developments of our financials, the capital, and our solvency position. After that, we will open up for Q&A. We have ample time planned for this call, but we will stop sharply at 10:30 . Please do observe a limit of two questions so everybody can ask their questions. If we have time left, we can go for seconds.
Finally, as usual, please do review the disclaimer that we have in the back of the presentation for any forward-looking statements. Having said that, Jos, the floor is yours.
Thank you, Michel and the house. Good morning to the crowd. Thanks for joining in. We're going to say it loud. We delivered strong numbers. That's the vibe, no doubt. Strategic plan, discipline, focus, all about. Results on the rise, yeah, growth been strong. Momentum in the business, we keep it rolling on. Targets in our sight, medium-term we aim, performance on the table, we're elevating the game. Take a closer look, see the work we've done, slide number two. Yo, the journey's just begun. Let me start with the integration of the Aegon business because that's been front and center for us over the past two years. As a result of hard work and tremendous dedication from our colleagues throughout the organization, I'm pleased to say that we have achieved all integration milestones so far, and we're now entering the final phase.
We've made significant progress this past half year, especially with the migration of the mortgages and the individual life books. We're fully on track to implement the life PIM by year-end. That puts us firmly on path to completing the integration in 2026 and delivering our strategic targets. Secondly, on growth, we're experiencing tailwinds from the pension reform in our pension book with increased inflows into both accumulation and decumulation products. We've executed strongly in the pension buyout market, closing three deals so far this year, in total nearly €3 billion in assets under management. The margins are solid and comfortably above our 12% hurdle. This comes on top of another strong half year of organic growth in our non-life and fee-based business. Thirdly, we continue to deliver attractive capital returns to our shareholders.
The interim dividend per share is up 9% compared to last year, driven by a 7% increase in absolute dividends and the execution of the EUR 225 million in share buybacks split between H2 in 2024 and H1 in 2025. All in all, a strong delivery on the promises that we have made a year ago. Let's have a look at some other highlights. Our OCC increased close to 10% to EUR 721 million, driven by business growth, higher investment margin, and the realization of cost synergies. Benign weather in P&C and elevated spreads, for instance, in government bonds, have been beneficial to OCC. The Solvency II ratio increased by 5 percentage points to 203%, reflecting the strong OCC contribution supported by market movements, especially the steepening of the interest rate curve.
The 203% ratio also includes the impact of the EUR 125 million share buyback completed in May, as well as the interim dividend. Operating results came in at EUR 826 million, up more than 20%, driven by broad-based business performance and a higher investment margin. Operating return on equity rose to 14.4%, comfortably above our target of more than 12%. In non-life, the combined ratio for P&C and disability improved to 91.0%, ahead of our target of 92% - 94%. Importantly, we achieved this while growing non-life premiums organically by 4.1%, so we are delivering profitable growth. Additionally, we saw solid inflows in Pension DC and annuities. Combined with the four pension buyout deals we've executed so far, we're clearly on track to meet our CMD growth targets. Let's move to slide four and look at how we are progressing on our non-financial KPIs.
As we continue to create sustainable value for all of our shareholders, we're consistently recognized as a sustainable insurer. Our brand reputation score increased to 40%, well within our target range of 38% - 43%. This was further underpinned, among other things, by our new partnership with the Royal Dutch Walking Association. The carbon footprint of our investment portfolio reduced by nearly 7% compared to 2023, and impact investments now represent 8.7% of the total portfolio, keeping us firmly on track to meet our non-financial goals in this area. Employee engagement declined as we expected. The integration of Aegon activities is a massive project, and the merging of two corporate cultures has had an impact on our people. That is quite natural. At the same time, we now see that in the areas where the integration has been completed, employee engagement is rising again.
We also see positive developments in customer satisfaction, as of this year measured through the NPSI, mixing both direct contact and digital contact in the online environment. The improvements reflect that we are able to execute the business integration while keeping focus on our customers. That said, our compelling ESG profile remains acknowledged by a broad range of international ESG indices and benchmarks. All in all, we are pleased with the progress we are making and the value we are creating across the board. Let's move to the integration milestones on slide five. We are now entering the final phase of the Aegon integration and are confidently on track to deliver the EUR 215 million synergy target by 2026. Earlier, we successfully completed the integration of P&C and disability, and we've now finalized the last steps in asset management.
Legal mergers for non-life IORs and the holding entities have also been completed at an earlier stage. In the past six months, our focus has been on migrating individual life policies and mortgages. Around two-thirds of both portfolios have already been migrated, and we expect to complete the remainder in the second half of this year. All new mortgage production is now processed through the SaaS solution on the startup platform. We've also made solid progress on the partial internal model for ASR Life. The formal review by D&B is underway and on track to receive approval before year-end 2025. As a reminder, we expect the PIM to contribute somewhere between 10% and 12% points to our solvency ratio. The final phase will include the legal merger of our life entities and the remaining integration activities within pension.
We will also decommission the remaining Aegon systems, in total 220 different systems, and terminate the remaining TSAs, bringing us to the full delivery of our synergy ambitions. That being said, let's dive into the performances across the different business lines. Let me start with non-life on slide six. Premiums received in our non-life business grew by 4.1%, comfortably within our medium-term target range of 3% -o 5%. This growth was mainly driven by tariff adjustments over the past two years and increased sales volumes in P&C commercial lines and group disability. We do see competition pick up, particularly in certain selective product lines and primarily from foreign players. This makes the performance all the better because our strategic principle has been for many years value over volume, and this remains the case. We will continue to pursue profitability over market share.
The combined ratio of our P&C and disability business improved with 0.8 points to 91.0, outperforming the target range of 92 to 94. The expense ratio has improved 0.7 points from the realization of cost synergies, further strengthening our cost leadership position in the Dutch market. We are delivering on both growth and profitability, striking the right balance and maximizing the absolute amount of profits. In P&C, the combined ratio remains strong and better than target, similar to the first half of last year. Also, in the first six months of this year, profitability was supported by the absence of weather-related calamities. We also continue to see stability in the combined ratio in bulk claims, which further improved in H1 2025. These bulk claims, which are low in amount and high in frequency, are relatively stable, and this represents about 90% of our total claims.
Looking back over the past few years, the impact of bulk claims on the core has never deviated more than 1.5 percentage points from the average claims ratio of around 53%. This is truly our bread and butter business. In disability, the combined ratio improved by 0.8 points, reflecting gradual price increases and a strong business performance. There was an offset between non-repairing benefits from provisioning harmonization and additional provisioning on group disability portfolios. Group disability has experienced adverse claims development due to elevated incidence rates, especially related to psychological absenteeism and long COVID. We believe this is a broader market phenomenon due to the long waiting times at the UWV, the Dutch Employee Insurance Agency, and nationwide development that we monitor closely. For the next year, we will increase prices. Let's move to the life segment on the next slide.
We're seeing strong commercial traction in our pension business, with momentum clearly building across the board. DC inflows are up 16%, annuities are up 8%, and we executed three buyout deals this year, totaling EUR 2.8 billion. Our PensionDC inflow of EUR 1.5 billion benefits from the developments from the pension reform and continues to grow steadily. The Pension DC assets under management increased, although it experienced some negative revaluations from rising interest rates. Annuity inflows are also gaining pace, driven by maturing DC assets. The majority of inflows come from converting expiring DC assets from our own book, supplemented by external inflows. We're halfway through our planned period and have achieved 50% of our EUR 1.8 billion cumulative annuity inflow targets. Really on track. In the pension buyout space, we've shown strong deal execution.
The almost EUR 3 billion in buyouts so far puts us well on track to meet our EUR 8 billion cumulative targets by 2027. Let's dive into the pension buyouts on the next slide. ASR is leading the charge in the pension buyout market. I would like to make clear from the onset that each of the transactions that we've executed meets our 12% hurdle rate. No issues there. So far, around EUR 7 billion of pension entitlements have been transferred to insurers, roughly 25% of the expected EUR 20 million-EUR 30 billion market. ASR has captured about 40% of that, thanks to our compelling pension proposition and strong capital position that ensures financial stability for pensioners, including protection against inflation. Our managers are hands-on from day one, showing clear commitment to drive to execute these deals.
With KKP's top-tier platform, we've ensured smooth transfers to pension entitlements and demonstrated in the four deals already closed. We have the operational capacity and capability to onboard our customers efficiently and provide the service they expect. As mentioned, margins on the deals so far have been attractive and above our 12% hurdle rate. With the average maturity of these buyouts being about 15 years, this is the long-term value driver to our OCC. Returns are driven by bespoke asset allocations geared towards internally managed assets such as mortgages and real estate, which matches really well with the illiquid characteristics of the liability. To us, this also confirms that owning your own asset manager really pays off. We're also exploring reinsurance options for the longevity risk. This appears an interesting capital alternative, which could further enhance the stock flow trade-off and boost value creation from these buyout transactions.
Moving on to the fee-based business on the next slide. In our fee-based business, we delivered a 7% increase in fee income. We've taken further steps to enhance growth going forward through targeted acquisitions. The full acquisition of Human Total Care, the market leader in occupational health and reintegration services, strengthens our position in the value chain of sustainable employability. With absenteeism on the rise, a tight labor market, and a higher retirement age, prevention and reintegration are more relevant than ever before. We expect the closing in Q4, and this acquisition fits perfectly with our strategy of combining organic growth with selective M&A. We also agreed with the pension funds Zorg en Welzijn to split the real estate activities of Amvest per the 1st of January next. As a result, ASR
will independently manage the 7,500 residential dwellings previously overseen by Amvest, while the development activities will be split. The operating result increased by EUR 30 million to EUR 87 million, driven by business growth and the realization of cost synergies. Although there is some seasonality in DNS, which is skewed to H1, the fee-based businesses are performing really well. With that, I'll now hand over to Ewout to walk you through the financial and capital position.
Yes, thank you, Jos. I have to say, Snoop Dogg has to watch his back because competition is on its way. Good morning to everyone on the call. I hope everyone had a fantastic summer. I'm genuinely pleased with the set of results we are presenting today. They reflect the strength and resilience of our financial and capital position and show that we are well on track to meet our ambition. Now turning to slide 11. Let's kick it off with our capital wheel. For yet another consecutive period, it is fair to say that we kept this wheel spinning. We are operating from a position of capital strength. Our Solvency ratio rose to 203%, giving us ample capital to fund our initiatives for profitable growth. We have, in particular, executed strongly in the pension buyout market, one of the cornerstones of our deployment strategy.
The capital generation benefited again from strong underwriting performance, the absence of large weather-related claims, and higher investment returns. Thanks to our disciplined deployment of capital in profitable growth, we are well on track to hit the EUR 1.35 billion target by 2026. Our capital return remains strong. The interim dividend per share shows an increase of almost 10%, reflecting the growth of the dividend base as well as the positive impact from the share buybacks executed at the end of 2024 and in the first half of this year. Now let us zoom in on how our solvency developed in the first half of 2025. Over the past half year, we deployed capital at attractive margin. Despite that, our Solvency ratio still moved up by five points, landing at 203%. Let us look to the key drivers of the development of our solvency.
The three buyout deals in the first half of the year, adding EUR 2.8 billion of assets and liabilities, impacted solvency by four points. As we did not use longevity reinsurance yet, this is about one and a half solvency points lower than anticipated. This is due to the fact that these deals only closed end of Q2 and that the majority of the assets still need to be rebalanced to the targeted asset mix. The OCC contributed roughly 12 percentage points to the solvency, and the market and operational movement shows a net positive impact of two percentage points. This includes a positive impact from the steepening of the interest curve. As you know, in our sensitivity analysis, we only include steepening between the 20 and 30 years point, but we also have experienced 20 bps steepening between 10 and 20 years points.
At earlier stages, like in 2022 and 2023, we already have seen that steepening between 10 and 20 years is beneficial for our solvency as the U of R converts differently. Secondly, we have seen a tightening of the mortgage spreads compared to the full year level, and finally, positive revaluation in real estate, especially in residential and rural. These pluses were partially offset by equity market movements that led to an increase of the equity dampener, driving a higher required capital. This all brings the solvency ratio to 208% before any capital management actions. After deducting six points from the interim dividend and the EUR 125 million share buyback and factoring in the EUR 500 million RT1 issuance and the partial tier 2 redemption, we land at a solvency of 203%.
Quite some moving parts, and maybe useful to have a look at what we can expect on solvency for the second half of this year. Let me highlight six items. To start with, the first call date of the remaining EUR 88 million tier 2 hybrid is in September, and we already announced to call this instrument. Secondly, in H2, we perform our annual actuarial assumption update process, and we expect to see one or two solvency points contribution from the capitalization of the life cost synergies. Thirdly, we have about 1.5% additional capital consumption from the closed buyouts to invest fully in the targeted asset mix. We might, when opportunities arise, also invest one or two solvency points in re-risking of the general account. As a fourth point, we also mentioned that we will explore the potential benefits of reinsuring the longevity risk of the buyout transaction.
If we execute on reinsurance, it will, of course, provide capital relief and enhance the return on the buyout transactions materially. Fifth, as mentioned during our full year results, we are looking to explore a change in the mortgage spread methodology in order to dampen some volatility driven by timing differences between interest rate change and the subsequent adjustment to mortgage rates. The adjusted methodology will likely result in a slightly higher spread, meaning a small negative impact on the group solvency ratio at implementation date, but a small positive on OCC going forward. In fact, a stock versus flow impact, and on average, less sensitive for spread movements. Last, certainly not least, the impact of the implementation of the partial internal model for ASR Life, which is still expected to add 10- 12 solvency points to the group solvency.
Of course, we should not forget the regular OCC contribution, which we briefly discussed later, and the final dividend that will be deducted at full year, which more or less offset each other. Let's turn to capital generation on the next slide. Capital generation increased by 9% to EUR 721 million, mainly driven by the life segment. Re-risking in H2 of last year, positive equity and real estate revaluation, and wider government spreads pushed the investment margin of segment life up by roughly EUR 50 million. Secondly, in the non-life segment, we saw solid organic growth and improved combined ratio. This led to an increase of business and finance capital generation, which was offset by a lower net impact, mostly related to the new business strain from the growth in health and some growth in the other non-life businesses.
Fee-based business added another EUR 10 million to OCC due to the improved operating result. Holding and other decreased a bit, reflecting temporary allocation of IT integration costs at holding level and higher refinancing costs from the RT1 issuance in H1. Looking ahead to the rest of the year, what's on our radar for the capital generation? Let us start with H2 2024 as the base. Our H2 2024 capital generation was EUR 534 million, which benefited from mild weather and fewer large claims in P&C. Normalizing this to the midpoint of the combined ratio range means a EUR 50 million deduction, bringing us to a normalized H2 2024 OCC of EUR 520 million.
From our business plan, we expect tailwinds from growth of the business, realization of synergies, slightly higher better investment margin, and lastly, the pension buyout, though the impact will be modest, particularly for Q4, as assets weren't fully invested in the targeted mix by end H1, as already discussed. Altogether, we expect a EUR 30 million-EUR 40 million uplift versus the normalized H2 2024 OCC, putting us comfortably above EUR 1.25 billion and well on track for EUR 1.35 billion in 2026. On the next slide, I will bridge the OCC to operating results. I'm pleased to see that the bridge we are showing here tells a consistent story between capital generation and operating result over time. Firstly, business capital generation is higher in the operating result, driven by the CSM release in the life segment. Secondly, finance capital generation is lower in the operating result.
That reflects the higher negative accretion on the balance sheet, specifically the CSM and the LIP versus the volatility adjuster. On average, we see 25 bps higher liability liquidity premium versus the VA in H1. Thirdly, the positive impact from net capital release in OCC doesn't show up in the operating result. I think this is also very much reflected in what we have seen in non-life. Finally, please don't forget the operating result is pre-tax while OCC is a post-tax measure. Let's move to the next slide and dive into the operating result. Operating result increased with 22% to EUR 826 million. Life segment delivered a steep increase of EUR 126 million, mainly driven by the higher investment margin, which we also saw reflected in capital generation, and a less negative experience variance compared to the first half of 2024.
The other result in life benefited from gains related to the contribution of associates. In non-life, as mentioned earlier, we benefit from improved underwriting margins, cost synergies, and higher premiums. The segment added EUR 26 million. For fee-based business and holding and other, the same dynamics apply as for OCC. Before we move on to the investment portfolio, I want to point out two incidental items that impact the IFRS result in the first half of the year. Firstly, to harmonize methodologies of Aegon and ASR , we updated the determination of the liability liquidity premium, leading to a lower average LIP on group level. This has a negative impact on liabilities, hence IFRS equity. However, this will have a positive impact on operating results due to the lower accrual of liabilities. Really stock versus flow dynamics on IFRS basis. Secondly, the revaluation of the own pension scheme.
Positive revaluation of the own pension scheme liability run through OCI, so through equity, and this presents a gap from the interest rates in the IFRS result. Let's now turn to the investment portfolio. This slide shows the strength of our investment portfolio: high quality, well diversified, and resilient. I'll start with the fixed income, then touch on mortgage spreads and real estate. Our fixed income portfolio is solid. Around 95% is investment grade and well diversified from a geographical point of view with a skew to European countries. Our exposure to the U.S. is limited, as you can see, and please note that the fixed income US dollar exposure that we have is fully hedged. Top left, you'll see the development in real estate. Residential property continues to show strong momentum with a 4% positive revaluation so far in 2025.
It makes up about half of our real estate portfolio. The valuation gap slightly closed and remained positive on price development for the rest of the year. Rural property also performed well, increasing by 3%, and this accounts for roughly 20% of the real estate portfolio. Other real estate categories saw smaller but still positive revaluations. Lastly, mortgages. Risk return profile of mortgages remains very strong. Lower REERs, negligible credit losses, and an average loan-to-value of 54%. 80% of the portfolio has a loan-to-value below 65%. I think we need to consider to change Swiss clockwork into Dutch mortgages when we want to express predictability and quality. We currently see in mortgage spread levels of around 100 bps, which we consider as a normal level, though a bit lower than the first half year. As mentioned earlier, on track to adopt the methodology to reduce volatility in temporary spread movements.
Let us look at the flexibility of the balance sheet on the next slide. In March, we issued an RT1 instrument to refinance the maturing tier 2 in September of 2025. By replacing the tier 2 with an RT1, we have rebalanced our headroom over tier 2 and tier 3 versus the RT1, enhancing the financial flexibility. As you can see on the bottom right-hand side, our debt maturity schedule remains nicely stacked over time. Lastly, it's good to mention that the outlook to the S&P IFS ratio is positive, awaiting a final decision. We are very happy that also S&P is appreciating the progress we are making both strategically and financially, and looking forward to monetize the positive outlook. Finally, let's end with our hold core liquidity, which remains very comfortable.
As you know, we only remit cash from our entities to cover last year dividends, coupons, and hold core expenses. Starting this year, we are now including a part of our unconditional revolving credit facility in our holding liquidity definition to facilitate that we keep cash in the legal entities to get the best yield. Solvency ratio at our life entities are benefiting from the steepening of the interest rate curve. Aegon's Life ratio even held steady despite a 10% deduction from remittances to group and 11% consumed by pension buyouts. The continued strong capital position at Aegon Life provides us the capacity to remain active in the buyout market. Just a quick reminder, solvency ratios for ASR Life and non-life are based on the standard formula.
If all goes according to plan, we will implement the partial internal model for ASR Life in H2 2025, which will further lift the solvency ratio of ASR Life and group. The implementation is progressing well. The formal review phase by the DNB has started and is on track to get the approval before year end. With that, I'll close my presentation and hand it back to you, Jos, for the wrap-up.
Thank you, Ewout. This concludes our presentation. Before we take your questions, let me highlight the key messages. We achieved a very strong performance in all of our businesses, supported by increased investment returns. Our OCC is on track to achieve the medium-term target of EUR 1.35 billion in 2026. Proven execution in the buyout market and further organic growth in all business segments, delivering on our growth ambitions and a solid base for our medium-term targets. A robust Solvency II ratio of 203%, comfortably in the entrepreneurial zone, reflecting our increased OCC and positive market impacts, compensating the deduction for capital return and deployment in the pension buyout market. The introduction of the PIM for ASR Life by year end is on track. Finally, the integration of Aegon NL is entering the final phase, and we are well on track to deliver on the synergy targets.
We are happy to take any questions, and I'll hand over to the operator.
Thank you so much, dear participants. As a reminder, if you would like to ask a question, please press star one one on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star one and one again. Riester and Barber compiled the Q&A rosters. This will take a few moments. Now we're going to take our first question. It comes to the line of Cor Kluis from ABN ODDO BHF . Your line is open. Please ask your question.
Yeah, good morning and thanks for asking the questions. Jos, thanks for your introduction as a rapper. My first question is about capital. The capital is quite good, of course, at 203%. Then you've got the Aegon PIM at the end of the year. Quite high solvency if you also take that into account. Until now, we only have the share buyback of the 175 and the 225 in, I think, most models and guidance. Can you give a little bit more idea of what to do with the capital going forward, especially from next year onwards? Do you see other material acquisition opportunities going forward, for example, or big capital consumption for buyouts? Excess capital situation, maybe we look a little bit, we're a little bit early on that. We have to ask that question at the end of this year, but that's the first question.
Second question, like what Ewout said, is the mortgage spread model adjustment that could have some positive impact on the OCC going forward. Could you quantify that a little bit? What kind of figures do we have to think about for that change? My last question is about pension buyouts. You already said that you, before hedging, have an IRR of above 12% of the pension buyouts. That was a good allocation of capital. Could you give an idea of the IRRs after hedging? I think you said somewhere that it could be quite a significant enhancement of the IRRs. Are we then talking about 13% or 14% IRRs of these buyouts? That looks quite good from a capital allocation point of view. That's it from my side.
Thank you, Cor. Let me take the last and the first question. To the pension buyout, indeed, we are currently in all the transactions we have done exceeding the 12%. I think that's predominantly due to the fact that we have a very efficient operation. As I said in the presentation, we believe that having our own asset management is also helpful in optimizing value in adding the assets to the portfolio. We've done that until now without any reinsurance. We assume that longevity reinsurance could add a couple of additional percentage points to the IRR. We haven't put an exact number on that because you have to ask for quotes per transaction, and it depends on the population of the transaction, whether it will be one percentage point or even more than that. It definitely gives us the ability to increase the IRR on those transactions.
On capital deployment, of course, we are happy with the fact that we also, going forward, see further growth of the capital. That puts us in the position that we can keep on executing the strategic plan that we presented during the capital markets day. First of all, organic growth of the business, including further growth of the pension business. The way we look at it today is we've set a target of EUR 8 billion in buyouts. Let us first get there, but the strong capital position puts us in the position that if the market is larger than the EUR 20 billion -EUR 30 billion and we've reached the EUR 8 billion, that capital will not be the limiting factor to further growth in the pension buyout business as long as the IRR remains above the 12%. That's one. We have the feeling that M&A still is on the table.
We do see some smaller P&C companies that are thinking about their future. If they would reach out to us, then we would definitely be willing to talk with them. Having capital for that is always a strong position. As I said, we believe that consolidation of the Dutch life market is not yet ready, and we're willing to seriously look into that also. Having said that all, realizing that we have a strong capital growth path in front of us, if we can't do anything of that, we're fully realizing that we also should consider higher buybacks than what we have announced up until now. We keep on track on the EUR 175 million- EUR 225 million. If the capital keeps on growing and we can't spend it on profitable and our hurdle meeting investments, we definitely are willing to increase the capacity for buybacks.
With that, I hand over to Ewout for the mortgage spread.
Yes. On the mortgage spread call, we don't know exactly, of course, what the impact will be by the full year numbers, but maybe to give some color on that. Let's assume that it costs 2 solvency points. Then you talk about EUR 120 million of own funds that you lose. The contribution from the OCC, so the flow that you get back from that, you should divide that somewhere between seven and 10. That's the average duration of the mortgage book, and that gives you a flavor on what the contribution of OCC will be. It's also dependent on, by the end of the day, what the impact on the spread will be. You only know by the full year, but we expect a small impact from that.
Okay, very clear. Thank you very much.
Thank you. Now we're going to take our next question. The question comes to the line of David Barma from Bank of America. Your line is open. Please ask your question.
Good morning. Thanks for taking my questions and apologies for my lack of a good West Coast flow this morning. Firstly, on OCC, thanks Ewout for the 2025 bridge. Can you give us a similar color for 2026, please, because you're pretty much tracking in line with 2026 already. We got more cost synergies to come, more re-risking benefits, more buyouts, maybe a bit of uplift to OCC if you do these longevity reinsurance deals. Is there any reason we shouldn't expect you to outpace your target next year? Secondly, on non-life, on an earned basis, top line is down in disability and only slightly up in P&C. First, can you maybe give us a bit of color on the bridge between the organic growth and the earned numbers? If you can update us as well on pricing trends for these two lines of business.
I'll listen to Michel and stick to the two questions. Thank you.
Thanks, David. Shall we also discuss the 230 OCC? No, just kidding. Let me try to give some direction of travel. I think what we expect for 2026 is more or less the same elements as we have seen in 2025, but you see that there's a kind of a shift more to what becomes more material. In 2026, we will expect further contribution from the synergies that we are realizing, even more than we have seen in 2025. What we also expect in 2026 to come through more is the buyouts. As I said, we closed most of the buyouts just before Q2. The re-risking hasn't been done a lot for those buyouts. That will be done in Q3 and remain the portion in Q4. That also means that you only have kind of a real one-quarter really benefit in 2025 OCC from the buyouts.
That will definitely contribute also more in 2026. Thirdly, we also keep on growing the business, so also from that area, you can expect an improvement. There was a small offsetting element that we expect from the introduction of the partial internal model for life, which reduces the required capital and will also reduce the SCR release for ASR Life. All in all, that brings us in a level, as we have said earlier, that we expect to do roughly EUR 100 million more, EUR 80 million-EUR 1 00 million more in 2026 compared to the normalized level of 2025.
On the second question, David, as said, we do see a bit more competition in the P&C and disability area, predominantly from foreign insurance companies focusing on capital light business like fire and sickness leave. With that, we have said we will stick to our philosophy, value over volume. For that, the growth of 4.1% represents roughly 75% of price increases, and 25% of the growth comes from real organic growth. That is what we see going forward as the trend. Price increases will remain important. What we already know, and I think I've said that also in the presentation, we see, particularly in the VIA business, a need for further price increases, and we already took the decision to increase prices for that. That is actually a disability group business for taking over the risk after two years of sickness.
There, we also already decided to increase premiums, and that will impact our competitor position as the market is not following. What we do see is that this is a market phenomenon. We expect that we, as a market leader, if we increase the premiums there, others also will follow. In motor and P&C, at this moment, we don't see any large additional increases of premiums. Of course, we have the regular indexation. Premiums will go up anyway due to the clause in the products that we, on a regular basis, will index the prices there. Hopefully, that answers your question.
Thank you.
Thank you. Now we're going to take our next question. The question comes to the line of Andrew Baker from Goldman Sachs. Your line is open. Please ask your question.
Great. Thank you for taking my questions. The first one is just coming back to the sort of 12% or greater than 12% hurdle rate for the buyouts. Obviously, as you said, it goes up to sort of a couple of points potentially from the longevity reinsurance. That seems really strong. We are also hearing, though, from one of your other peers that they sort of don't see pricing as that attractive in the market, and they can't get to their double-digit return. I hear you on what you're saying in terms of your efficiency in owning your own asset manager. Is that enough to sort of bridge from, I guess, below 10% return from a peer to what you're seeing as sort of 12% - 14%? Is there anything else going on there?
Secondly, just on the longevity transaction, how should we think about the size of any potential transaction? Is it linked explicitly to the buyout business that you're writing, so they're close to EUR 3 billion, or would you do anything in terms of the backbook as well? Thank you.
Thank you, Andrew. I think I already mentioned the three important elements why we are able to gain traction in this market at profitable returns: a very efficient platform, a very strong capital position on a holding level and in the life entity, and at the same time, the ability to pick and choose your assets in the illiquid space in a way that, from our perspective, it increases the profitability. The better question might be giving David a call and asking him why he's not able to reach more than 10%. I think we're comfortable with this. As already for a long time, we don't do anything that is not delivering at least 12%. The key statement we want to make today is the return on the first four transactions is even without reinsurance already above the 12%.
Beautiful thing is also that we, today, in the H1 numbers, we already have the buyouts in our books. We can also make a comparison on what we have put into the pricing and what we see in the reporting. You see actually that that is matching. That also gives us the comfort that we are doing the right things. On your question around the size of the longevity reinsurance that we are considering, what we also have said during the full year call is that we want to test the longevity reinsurance market because we don't need it from a kind of capital perspective. We do that, we see that as some kind of way to optimize the IRR of buyout deals and maybe in the future also the capital structure of the company. We want to test the longevity reinsurance market by doing it for a buyout.
We have used the EUR 1.6 billion buyout, so the biggest buyout that we announced, to test the reinsurance market. When we look today and the quotes that are coming in, especially the appetite that we see from reinsurers across the ocean, do give us the comfort that there is the possibility to enhance the IRR material by doing a longevity reinsurance trade. That might also trigger the question, yeah, will you then also consider that for the portfolio that you have in force? I think if indeed it is attractive enough, we should definitely look into it. What we also will do is take into account the fact that when we look to our portfolio today, we also have mortality risk in our book. I think that distinguishes us from other Dutch insurers.
We will take into account that we bring ASR Life to an internal model, which already makes longevity risk more capital efficient than under the standard formula. We will also take into account the EIOPA 2020 review, where you see that the risk margin will be lower than it is today. That will also have an impact on the attractiveness of longevity reinsurance deals in the future. Having said that all, if we see that it is material improving the IRR of the buyouts, we will assess whether we can further improve also the capital structure of the company.
That's great. Thank you so much, both.
Thank you. Now we're going to take our next question. The question comes to the line of Michael Huttner from Berenberg. Your line is open. Please ask your question.
Fantastic. Thank you. My first question is on what I would call burnouts. You highlighted this, Jos, in your opening remarks, talking about the employee satisfaction and things. The speed at which you're operating is almost unbelievable. Not only are you beating your targets, 185 raised to 215, and it feels like you're a little bit ahead even over 215 now. On the integration, it also feels like you're a little bit ahead of plan. You're doing more growth than your peers. Is there a risk here that everybody becomes so stretched and so tired that they kind of say, "Oh, I'm giving up now"? I don't know how you can answer the question. Maybe you give us another wrapper. On the 12% IRR, can you help me with the numbers, Ewout? Because I get to numbers which are way higher, but I'm obviously wrong.
EUR 40 million is, I think, the figure in the slide in terms of additional contribution from the deals just done on an annualized basis. 5% is the cost in terms of capital. I never know whether you should apply this to the owned funds or the SCR, but I get a roughly average figure of 200. 40 divided by 200 for me is 20%, but I'm obviously getting this wrong. Any indication here would be great. Thanks.
Let me take the first question. A question I really like, Michael. Thank you. I don't see that trend that people become too tired to keep on performing. I think what we should realize, an integration is not one small group of people doing that, but it is the full 7,000 people that actually were involved. If the P&C business is ready, they can continue to go back to business as usual, develop the business further and growing further. We measure on a weekly basis, we measure how our employees are feeling and are doing. We follow the outcome of those measurements very closely. On average, over the last six months, we are above 7.5%. We are on the upper quarter of how people are doing and feeling.
If we do see in some areas that people, and we've seen that, for example, the last half year in the pension business, where it was very, very business, we're willing to invest in additional help and in additional people to lower the pressure on the workforce. We fully are aware of the fact that we shouldn't burn out or burn down our people. I think ASR in the Dutch society is also known as a good employer. We take care of our people. If we need to invest more in workforce, we definitely do. Or if we can help them out with investing in further technology, which we are also doing, we're spending, of course, on AI. We do see a lot of benefits from AI already in our operational cost. That's also going to be helpful. Thanks for the question. No worries there.
We're on top of it, and we're managing it quite close.
Yeah. Thanks, Mike, for the question on the IRR and whether it is not higher when you do the MET. I think the invested capital way we're referring to, let's say somewhere between 4 and 5 points, is somewhere between EUR 250 million and EUR 300 million. When you indeed divide EUR 40 million with that, let's say that the return on invested capital is somewhere around 15%. We do look at this from an IRR perspective. That means we also take into account the time value. You see that you first invest capital and that the flow is coming thereafter. You take into account the fact that the strain is coming, that, yeah, the strain is coming actually before you get the flow. That brings us to an over 12% IRR.
Brilliant. Thank you very much.
Thank you. Now we're going to take our next question. Just give us a moment. The question comes to the line of Thomas Bateman from Mediobanca. Your line is open. Please ask your question.
Hi. Good morning. Thanks for taking my questions. Thank you for the wrap again, my highlight of the day. Could you just touch a little bit more on the growth in health? I guess there's an assumption that that SCR strain won't be recurring. Could you just give us some indication of the underlying drivers of why the health growth was so strong? The second question on the Solvency II review. You alluded to it there. I might have missed the details. Can you just, any other guidance you can give on the potential benefit from the Solvency II review? Thank you.
Thanks, Thomas, for your question. Welcome in the ASR analyst community. You may not know it already, but I think you're joining us at lunch tomorrow. Every newcomer has to do a wrap before we start, so maybe you can prepare for that.
Thank you. You're very welcome.
Let me go into your question. Health business in the Netherlands is a specific type of business. Dutch people only once a year are able to choose their insurance company for the next 12 months. That's always in the period between the 12th of October of any year and the 31st of December. We are always very strict on pricing in that area. In the commercial year 2023 and 2022, we actually lost quite some customers because we were stricter in our pricing than some of our competitors. Last year, in the commercial year 2024, for the portfolio of 2025, we were able to remain within our return requirements and were able to gain back a little bit of the portfolio that we lost in the years before. We grow a bit more due to the fact that we've lost in the years before.
That created an additional strain in the OCC. Actually, it is financing the growth going forward. That is the main reason why the OCC in the non-life business not fully did meet the expectation of the analyst community that we had a larger strain in the health business. Actually, it is financing the growth of that business. The second question.
Yeah. On the Solvency II review. Thanks, Thomas. Nice to have you on the call indeed. On the Solvency II review, I think for ASR, there are three elements that are important in the Solvency II review. One is the change in the calculation of the VA. When we look today, that does not really impact the solvency position versus today. Secondly, is the risk margin. What we see is that the risk margin will be lowered to a level of 4.75% coming from 6%. Also, the way you actually calculate the required capital of the insurance risk in the years to come is done in a different way called the lambda factor. That is also beneficial, how that calculation is changed going forward. The risk margin positively contributes to the solvency position compared to today.
The third element that plays a role is actually changing the way you have to discount your liabilities. Today, it's done with an ultimate forward rate at the 20-year point. You move towards the UFR from when the EIOPA 2020 review kicks in. Then it's not an ultimate forward rate, but it's the first moving points where you also take into account the observable market rates at the 30-year point, at the 40-year point, and at the 50-year point. That is a small negative compared to what we see today. When you bring that all together, by the full year numbers, we saw that it would bring roughly a mid-single-digit benefit into our solvency ratio. Today, that changed slightly positively, driven by the fact that the lambda factor is even more positive compared to what was proposed. Secondly, by the fact that you see a steepening of the curve.
We now expect that when we look to the H1 numbers and the calculations that we have done with the new legislation, it will bring us a mid to high single-digit benefit in our ratio. The moment of introduction is officially by end of January 2027. There's still a debate going on whether or not you already should recognize that by the full year 2026 numbers, given the fact that the introduction date is somewhere between you actually close your books and do the reporting to the outside world. There's still a debate going on whether an official introduction by end of January 2027 actually should mean that you already should implement it by year end 2026. Have to see how that evolves. At the end of the day, we are positive on the contribution the EIOPA 2020 review will have on our solvency ratio.
Thank you very much for the details and the correct thank you again. Good set of results.
Thank you. Now we'll proceed to take our next question. It comes to the line of Benoît Pétrarque from Kepler Cheuvreux. Your line is open. Please ask your question.
Yes, good morning. The first one is on the pension buyout. I just wanted to get an update on the pipeline you see on the market. I mean, you've reached a very strong 40% market share in the deals I know so far. What do you see in the rest of the year? Do you see an evolution on the return on capital or the IRR? Basically, any evolution favorable or less favorable versus the first deals we've seen? Also, could you maybe provide a bit more detail on the share of illiquid assets you expect to put in front of the liabilities? You talked about the bulk being in mortgage and real estate, but how much of it is roughly in illiquid? The last question is on the EUR 215 million cost synergies, how much you've realized roughly at the end of June?
That would be interesting to see where you are on that. Thank you.
Ewout will go into the illiquid part of the investments behind the buyouts. I will take the first part of your first question and the second question. Pipeline is actually developing quite well. As said in my presentation, we expect, and I phrased it like I wouldn't be surprised that we could announce another transaction this year. Further on, we see a pipeline in different phases already. We explained that in the past, it also always starts with a first request for proposal. Then it's getting more serious, and they want to have more serious quotes. You end, most of the time, up in exclusive phases. If I look at the current pipeline, we are confident that we will be able to at least meet the EUR 8 billion that we have projected for the full four years.
That's why I always also mentioned that if and when there would be an ability to do more than the EUR 8 billion, capital will not be the limiting factor. Some positivity based on the pipeline we're seeing, whether that will influence
The IRR, we keep on making offers that at least meet the 12% IRR. Given the fairly limited number of insurance companies that are willing to do really this business, I don't think it will be a challenge to keep on meeting at least the 12% IRR. Actually, the lesser providers, the better the ability to increase the IRR going forward. Also positive on the developments there. For the time being, we stick at at least 12% that we are delivering right now. On the 215, it's progressing quite well. We've decided not to put any number on it for the half year. I think at the end of the year, we will bring out some numbers where we are by then. If you have listened carefully and knowing you, you've listened carefully, we're very positive on getting to the 215. We're really on track.
I said in the past, we even wouldn't be surprised that there will be some additional synergies that will kick in in the year after we finalize the trajectory. I said we have to close down 220 different IT systems from Aegon, and the benefit from that could even be additionally in 2027. Then the...
The portion of illiquids in the buyout mix, Benoît, it's roughly 40% - 50%. Please bear in mind, illiquids is not illiquid credits like private debt, etc., it's mortgages that we invest in and real estate that we invest in. That together is a total of 40% - 50% that we use in the buyout mix.
Great. Thank you very much.
Thank you. Now we're going to take our next question. The question comes from Farquhar Murray from Autonomous Research . Your line is open. Please ask the question.
Morning all, and obviously, thanks for running the business in poetry and describing it in rap, but sadly, I can only ask questions in prose, I'm afraid. Two questions from me then. Firstly, just on real estate. Might you give us a sense of what you're seeing in terms of rent developments and valuation into the end of the year? Specifically, in terms of the gap between in residential between rental and private, is that now normal from here? Secondly, is there anything worth noting from the upcoming election from your perspective? In particular, might that cast a shadow on the rental market again? Thanks.
Yeah. Let me start with the first question, Farquhar, and Jos will then say something about the election and also related to the residential market. What we have seen is that indeed the residential real estate that we have in the portfolio developed very well. Positive revaluation. We also have seen that house prices in the private market also went up, but the value gap closed slightly. We see now, and also what we assumed is that the value gap of, let's say, around 10%, that is now just below a quarter of that has now been closed, still leaving upside at the table in the, let's say, in the coming one and a half to two years, also to our sole superposition.
To your second question, predicting the outcome of the elections is very difficult.
What we see today is that almost every political party in their programs are addressing the need to develop more houses and to solve the issue in being short currently of 100,000 houses, growing to 400,000 houses. If any new cabinet and any new parliament will change laws, etc., and it's more of a personal expectation, I expect that it will be beneficial for the investments in the retail housing market because there is a significant need for more houses. I think the politicians are becoming more and more aware that for that, you need the private market to invest, Dutch investors, but also international investors. Without having the famous glass bowl, we expect that if there is any change, it will be beneficial.
Thank you. Now we're going to take our next question. The question comes to Farooq Hanif from JPMorgan . Your line is open. Please ask your question.
Hi, everybody. Thank you very much. My first question is on the lowering of the liquidity premium, which obviously hit your kind of non-operating items. Can you give us a guide to what that might do to your investment margin and your operating result going forward in life? Just to explain what the payback would be from that. My second question is, if you look at the holding expenses, they were very high. I just kind of wondered, are you a non-recurring element from that? Because my questions are so small, just one very small mini additional question. I just want to get to what your message is on the combined ratio because clearly, the weather is a benefit in P&C. In disability, it sounds like the underlying is just better because there's no kind of net one-off.
I'm just kind of wondering in that 92% - 94% range, how are you feeling about it? Thank you.
Let me do the first one. The changing the liability, so the liability liquidity premium impacted the IFRS profits with EUR 250 million. When you then look to the duration that we have in the portfolio, I should divide it by somewhere between, let's say, 15 - 20 years. That gives us, that makes an impact also of EUR 15 million-EUR 20 million. I would say that would be my best guess, around EUR 50 to, yeah, around EUR 50 million-EUR 75 million benefit coming from actually the lowering of the liability liquidity premium.
Your second question was on the increase of the holding expenses. That was a temporary impact because we decided, for example, if different business lines are on one system and the first business line has put their business on the ASR system, the last business line on that system would have significant costs to carry. That is why we decided that the IT costs of the IT systems of Aegon that we will switch off in a later phase, we will bring that over to holding costs. That is the predominant increase in the holding cost. It is clearly a temporary increase of that cost. Hopefully, that answers your question on holding cost. Your question on combined ratio, whether the development up until now will bring us to a sharper target than the 92% - 94%, we still feel comfortable with the 92% -9 4%.
Yes, we're doing better right now. If we can keep on doing better, then we definitely will. We are also aware of the environment where we're working in. It is competitive. Keeping the balance between profitable growth and a strong combined ratio, we feel that the 92% - 94% is still the target range where we should work from.
Yeah, thanks very much. Thank you for that.
Thank you. Now we're going to take our next question. The question comes from the line of Jason Kalamboussis from ING. Your line is open. Please ask your question.
Yes. Good morning, gentlemen. Hopefully, you can hear me. I have some small follow-up questions, if I may. First of all, on the combined ratio, how much was the NADCA benefit in the first half? The second small follow-up is on the OCC from the buyouts, the benefit, the EUR 40 million that you mentioned. Should we pencil in 50% basically in 2025 and 50% in 2026? The third quick follow-up is on health. Could you give us, I know it's probably for the strain, would be for first half next year, but do you find that we are more likely to continue to see that growth where you are recovering your market share? Again, having a strain in the first half of 2026. One question I have, the main question, is on the longevity.
Could you give us an idea of, if you are to reinsure all the buyouts you have done so far, what the impact would be on the Solvency II ratio, roughly, and on the longevity in the long run? I appreciate you've got capital and you don't need to do anything. Is it something, therefore, that we should expect more in 2027, i.e., that you are thinking as far back, if you want, or am I wrong in this? Thank you.
Let me take the third question out of the four you asked on health. Our health strategy is to stabilize our market position like we have today. We're happy with that market position. We're not focusing on further significant growth. It could happen if your price position is stronger than the rest of the market, but that's not what we are focusing on going forward. We would be happy with keeping within the current market position. I think the other questions are for you, Ewout.
Yeah, I hope I get them all right.
What is the benefit?
One I have.
Okay.
I think for 2025, you could expect 25% roughly because we still have to do most of the reinvestments of the cash that came in. That will be done mostly in Q3, meaning that we see the real benefits of that in Q4. I should divide that by the full amount by four. I think for 2025, sorry, 2026 we expect to get the full amount out of it. On the fourth question, I think the fourth question was, if I understand it right, what will, how much sourcing will it cost when we do the EUR 8 billion of buyouts in total? The EUR 5 billion that still needs to come. The rule of thumb that we always use is that EUR 1 billion of buyouts will cost us on average 1.5 sourcing points, average meaning half of it using reinsurance.
When we do another EUR 5 billion of buyouts, that would cost us on average 7.5 sourcing points. With your question regarding the longevity reinsurance, we are really testing now for the deal that I already mentioned, whether the longevity reinsurance can really improve the IRR. We will use the outcome of that also for the thinking on that in the years thereafter. In the calculations that we will do, we will also take into account the departure and turnover model, the AOPA 2020 review because we know the outcome of both of that. We can also take that into account to assess the attractiveness of the longevity reinsurance deals in the future. We do not say hereby that it will be kind of back-end loaded, to use that term.
Back-end loaded longevity reinsurance deals, we will just look how attractive that will be to do that at a broader scale than only one buyout.
The first question is EUR 20 million pre-tax based on the H1.
Okay, that's great. Thank you very much.
Thank you. Now we're going to take our next question. The question comes from Nasib Ahmed from UBS. Your line is open. Please ask your question.
Hi. Morning. Thanks for taking my question. It's two for me. Firstly, on the investment-related incidentals, Ewout, I think you're saying the EUR 500 million is roughly half the liquidity premium and half is the in-house pension scheme. Interest rates haven't really moved that much. Why is there EUR 250 million from the pension scheme negative below the line? Related to that, is there any way you can de-risk that pension scheme that you have, your own pension scheme? Second question on the holding company cash and the change in the policy there. Can you tell us why you're kind of changing the policy? It seems like you've got enough holding company liquidity up around EUR 800 million. Thank you.
Sure. Yeah. On the IFRS investment-related stuff, so the pension scheme, the way it works, and it has nothing to do actually with re-risking or whatsoever. The way it works is that when you have a rates movement, and that can be either positive or negative, but in this case, the rates go up. You see, on one end, you see kind of the liabilities on your IAS 19 liabilities go down, but that flows through equity while the related assets flow through P&L. That is actually why there is a negative impact from the on-pension scheme. It has nothing to do with re-risking or de-risking. The only thing that you see is that IAS 19, and this is the beautiful world of IFRS 17, that IAS 19 is then treated differently than you have to treat the assets that are related to that.
That is why we always focus more on the operational result side of things. Hopefully, that makes it clear. On the holding cash policy, we always have said that we want to have as much as cash in the legal entities because it yields better there than it yields at the holdco. Because at the holdco, you can only invest it in short-term money market funds, coffers, and that type of things, which are very low yield. While in the legal entities, it just makes better yields. What we have seen is that the amount of holding cash over the last couple of years significantly increased. We want to ensure that we do the best with the money that we are having on the balance sheet.
That is why we said, "Okay, let's for a maximum of 25% can use the unconditional holding of a credit facility that we are having to capture the holdco cash level." We still have enough real cash at the holdco, but this is beneficial for the return that we are making as a company.
Thanks. Just on the pension scheme, I was just thinking, can you de-risk it like you're doing for the other pension schemes, like the EUR 2.9 billion that you've done to fix the mismatch, or that's not an option?
This is not a kind of an option that you're having. This is just the way you work when you have a fair value through P&L methodology that we apply. That's why we always say look at the operating, the OCC, look at the operational profits. That is where it is all about. This is kind of accounting first. I should not focus on that.
Okay. Thank you.
Thank you. Now we're going to take our next question. The question comes from Michael Huttner from Berenberg. Your line is open. Please ask your question.
Fantastic. Is this a numbers question, please? On the Solvency, you're very kind. You listed all the points, but I was very slow. I come to a number which is a little bit lower than I expected. I just wondered whether maybe you can help me a little bit. On the hybrid, I'm assuming that's 7%. Then you've got the actuarial review, I'm assuming - 2. That's - 5. From a normalized level, I'm using normalized, so I don't have to think about the pension buyouts, reinvestment, and the re-risking. Normalized 200. I'm at 195. The longevity, I'm assuming it's small. I mean, you could test things, so I'm assuming + 2. We've got the dampener, which is - 2. I'm still on 195. Earning OCC and the capital management kind of equals, so still the 195. I add the 10 to 12 from the partial internal model.
I'd like to get to 215, but I'm only getting to about 205, 207. Can you just maybe indicate where I might be wrong? Thank you.
I am slow following you, sorry for that. I think what we mentioned is when you start with the 203, it costs you one sourcing point for, let's say, for the hybrid. We have an actuarial assumption update that is the capitalization of the loss of the cost synergies, bringing you one to two sourcing points. I think the re-risking of the buyout is more or less offset by those two, so those two are offset from each other. The re-risking of the buyouts that we want to de-target asset mix will be more or less offset with the longevity reinsurance if we can do that. You are still at the same number, maybe one or two sourcing points from the normalization of the methodology. You have the internal model. I think that will bring you back to, I'll say, around the 210 level that you were starting with.
Lovely. Thank you so much. That's super helpful.
Thank you. The speakers are on no further questions for today. I would now like to hand the conference over to Jos Baeten for any closing remarks.
Thank you all for joining us. Hopefully, we will see many of you tomorrow when we have our analyst lunch, and we can continue the conversation after having listened to the reps of the new people at the table. Thanks for joining us, and we see you tomorrow.
This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.