Earnings Call: H2 2020

Feb 18, 2021

Good day, and welcome to the ASR Netherland Investor Call Full Year Results 2020. This call is being recorded. At this time, I would like to turn the conference over to Michel Holters. Please go ahead, sir. Thank you, operator. Good morning, ladies and gentlemen, and thank you for switching to this channel. Welcome to the ASR conference call on our full year 20 20 results. On the call with me today are Joos Bartek, CEO and Annemiek van Meerik, our CFO. As his customer, Yoss will kick off with some of the highlights of our financial results and discuss some of the business performance as we've seen. Alain Willem will then delve into the development of our capital and solvency position after that and then we'll open up for Q and A. We've got scheduled to talk about Sharpe and I think it will leave us ample time for Q and A. As usual, do please have a look at the disclaimer that we have at the back of the presentation for any forward looking statements. And so Having said that, Joss, the floor is yours. Thank you, Michel, and good morning, everyone. Thank you for switching to the ASR call after Having already a busy morning with one of our most beloved competitors in the Netherlands. So hopefully in the future we can prevent You from having 2 presentations on one day on Dutch insurance companies. I hope all of you are Still doing well in these challenging COVID times. Before we get into the numbers, let me just start by saying that I'm really proud Of the way our company and our employees have continued serving our clients in this extraordinary year, the The outbreak of COVID-nineteen and the measures taken to combat this pandemic continue to disrupt our personal lives, The business communities and our society as a whole. And while our first and foremost concern is the health of our employees and customers, We, of course, also care for the well-being more generally as well, including job security and Economic uncertainties for our customers who are entrepreneurs, business and business owners. We generally hope that we can leave this crisis behind us soon. At ASR, we've been able to keep up morale of our employees at a high level throughout the year. Customer satisfaction went up And we have maintained strong commercial momentum in our business as demonstrated by the growth of our business and our financial performance. As we reported, the overall impact of COVID-nineteen was benign, thanks to the mix of our business in non life and life uncertain economic background and has again delivered against ambitious targets. Without further ado, let's turn to the financial highlights And those are on Slide 2. I presume you all have seen the press release which we issued this morning. So I will highlight only the most important developments. As this dashboard shows, our performance in 2020 has been really strong. The 3.2% increase in the operating results to €885,000,000 is driven by higher results in all our segments and includes, as I just mentioned, the impact of COVID-nineteen being a negative of €1,000,000 Operating return of 15.3% is well above our target between 12% 14%. Our Solvency II ratio based on the standard formula is up by 5 percentage points to a solid 199. This increase includes 12% from organic capital creation, which at €500,000,000 landed by coincidence exactly on the medium term targets. Solid contribution from the business, higher excess returns and a higher net release of capital compensated the higher UFR drag due to lower interest rates. The combined ratio amounted to 93.6 ahead of our target of 94% to 96%. This includes a positive effect of 0.6 percentage points out of COVID-nineteen. Our efficiency ratios improved in all business segments despite an increase of €45,000,000 in operating expenses, which was mainly driven by acquisitions, holding costs and growth of our fee based business. Based on the strong performance and in line with our existing policy, we propose a dividend of €2.04 per share. This is an increase of 7% compared to last year. Today, we also announced a share buyback of €75,000,000 which is supported by our strong solvency and OCC. So in sum, we have shown a solid result of 2020. Let's turn to the next slide, slide number 3. Our strategy will continue to focus on sustainable long term value creation for all involved in ASR. We take our role as a sustainable company in society seriously and we are happy to see that international investors aim more and more Our ongoing focus on customer service has led to an increase in the Net Promoter Score of 44 to 49, Already well above the medium term target of 44. One of the drivers behind the increase was the more personal contact with customers during the COVID-nineteen out break when everybody was working from home. Our CO2 footprint has now been measured for 93% of our whole investment portfolio and with over €1,700,000,000 our impact investments have already met The targets for 2019 to 2021. Due to the lockdown restrictions and social distancing rules, our employees have not been able to Any of the activities we typically do for society to protect the health of our employees and the people involved in these projects, We had to cancel our or scale down these activities. In some cases, we have been able to convert the activities into an e version And as soon as social distancing measures are relieved, we of course will scale up these activities again. ESG is more and more an integral part of our product development. For example, the sustainability repair and replacements in insurances, Mortgages for sustainable home improvements, but also in Pension DC with our specific ESG funds. And lastly, I'm very proud of the recognition we receive on our sustainability. In 2020, ASR has been included in the Dow Jones World Sustainability Index. We see this as a recognition of our successful strategy on which we will continue to build Going further. Let's continue with some insight on the COVID-nineteen impact on our business. And that's on Slide 4. In dealing with this crisis, we continue to offer suitable solutions for customers will have been impacted by the COVID-nineteen crisis. After an initial rise in customer requests for deferrals on premium payments, Mortgage payments or rents, we have experienced a decrease in these requests in the second half of the year. Also rent arrears in our real estate portfolio have reverted to more normal levels. The number of requests have been very manageable. For instance, as per today, we have approximately 60 P and C customers with premium arrangement, 400 in the disability area and roughly 45 Corona related mortgage arrangements. So all in all, very manageable. We continue to use a weekly mood monitor to track employee morale and this remained at a very high level. We are focusing on a sense of connection and inclusion of our employees, particularly now we are all working from home. Our approach since 2012 to build one culture based on time and place independent working proved to be a strong foundation for managing the current crisis. And financially the negative impact of €1,000,000 on our operating results consists of a positive €21,000,000 in non life and a positive effect of €4,000,000 in health. Higher claims in disability and strengthening the reserves were more than offset by lower claims in P and C. More on this when we get to the non life slide. In our Life business, the impact was €22,000,000 negative from lower dividend and rental income mainly in the first half of twenty twenty. And finally, our IFRS net result is lower primarily due to the impact from financial markets And goodwill impairments. Also in 2019, we reported a purchase gain from L'Orealis, which of course wasn't there anymore in 2020. Now let's move on to the next slide and talk a bit about how we did in progressing in executing our strategy. I would like to talk about some business developments here. First of all, the last year introduced vitality program is continuous We've currently over 50,000 ks active participants and 10,000 employees at this moment. This is helpful in improving our customer relevance and loyalty. Also, we have brought the reintegration activities of Kiepryn to ASR of which we already owned 50%. This expands our expertise in the field of reintegration and sustainable employability and strengthens our connection with customer. But most importantly, it helps us to manage and control claims. In the Life department, we delivered on creating synergies by reducing the number of applications and converting the systems to a software as a service platform including the WFEAA and L'Orealis portfolios. This, ladies and gentlemen, completes the migration of all of our own Books and all of the acquired books onto ASR's new platform on time and on budget. Our cost efficiency is illustrated in the life operating expenses, which decreased from 62 basis points in 2016 to 45 basis points in 2020. Our fee based business are doing very well. 3rd party assets under management have increased by €3,400,000,000 to €25,400,000,000 and was mainly driven by growth in our mortgage funds and DC funds. Our mortgage origination was up 40% and amounted almost €5,000,000,000 in 2020. And lastly, we have transferred the remaining accounts in the divestment of ASR Bank to Verlandswod Kempe And have withdrawn our banking license in December 2020. Now let's move to Slide 6 and elaborate a little bit on our non life results. A solid performance in non life with operating results increasing to 241,000,000. In 2020, COVID-nineteen had a positive impact on non life of €21,000,000 This includes headwinds of roughly €71,000,000 in our disability business and tailwinds of roughly €88,000,000 in our P and C business. In disability, we have seen a clear improvement in individual disability in the second half, where we have been able to pick up the reintegration processes and successfully managing the backlogs from the first half of the year. In sickness leave, we have seen some COVID-nineteen related deterioration in the portfolio, particularly As we experienced an increase in claims from customers due to mental and psychological issues. Moreover, these claims also tend to have a longer duration. This is something we are closely monitoring, of course, And we have strengthened our reserves for this development in H2. P and C mostly benefited from favorable claims experience in the 2nd half of the year, this trend has reverted as well as traffic was significantly higher compared to H1. Also reserves have been strengthened within P and C, primarily related to bodily injury, partially driven by a court verdict earlier in 2020. And you know ASR, We tend to take somewhat conservative approach in these matters. And with respect to storms, although 2020 was a relatively calm year, We did record a €9,000,000 hit from Iara. This leads to a combined ratio of 93.6 for both P and C and disability together, beating The target of 94% to 96%, adjusting for COVID-nineteen effects, combined ratio would go up with 0.6 to 94.2 percent still at the lower end of the target range. The cost ratio decreased from 8.4 to 8.1 which is driven by a higher gross written premium whilst realizing cost synergy from the Generali Netherlands IT migration. So all in all, we became even more efficient despite we had to work from home. The organic growth in the gross written premium of disability and P and C amounted 4.6% at the higher end of our range of 3% to 5% per annum. This is hard work ladies and gentlemen. Make no mistakes on this. And for 2021, this is the real challenge given the economic uncertainties in which we operate. And finally, the increase in health gross written premium reflects a strong increase in the new benefit in kind insurance product which we launched at the end of 2019. So far, we have seen this increase to be continued at the start of the health season in this year. Let's move to Slide 7, where I will talk a little bit About the Life segment, some highlights to mention in our Life segments. Operating results Of Life segment increased by €34,000,000 to €730,000,000 despite the €22,000,000 negative impact from COVID-nineteen. This impact relates really to the first half as it is mostly reflected in lower dividends. If you relate this to the total operating results for Life, we believe the COVID-nineteen impact is benign. The increase in operating result is driven by higher investment margin. This is mostly due to a positive effect from our swaption portfolio of €42,000,000 due to the amortized realized gains. Also, we have been optimizing the illiquidity premium and credit risk premium in our portfolio. For example, We have expanded our mortgage portfolio further in 2020, which represents in the meantime 19% of the total investment for own accounts. The decrease in required interest is mostly due to maturing individual life book and the average guarantee declining. I would like to refer to Appendix R and S as well where we have displayed our stable investment margin over time. The decrease in technical result was mostly the result of favorable result on mortality in 2019. There was only a limited Impact from COVID-nineteen on the mortality result given the diversification between our product lines. We have seen a positive impact in PensionDB, partially offset by a negative in pension DC and these pertain to premium paying customers and also having a surviving pension cover. Impact on individual life was slightly positive offset by negative impact on funeral. Furthermore, our cost efficiency improved to 45 basis points, a share of the basic nominal provision, which is equal to the lower end of our target for 2021. So let's now turn to other segments, which performed quite well. And those are on Slide 8. The operating results for the 2 fee generating segments, Asset Management Solutions and services combined amounts to €57,000,000 up from €48,000,000 in 2019. This confirms that we are running ahead of the medium term targets. Asset Management showed the stronger growth €7,000,000 mainly due Strong inflows in mortgage funds and DC funds. Operating result of the Distribution and Services segments increased to €25,000,000 mainly due to small Operating results for the holding amounted to a minus of 143,000,000. The decrease is mainly driven by higher net service costs for our pension plan due to lower interest rates, which amounted to €20,000,000 and the increase in interest expenses of €6,000,000 from the €500,000,000 Tier 2 subordinated liability placed in April 2019. Please note that as of January 21, our pension plan for employees moved to a DC product. This means that going forward, the expense related to the employee pension plan will decrease and become less dependent from interest rates and hence more stability for going forward. Before I hand over to Annemiek for the highlights on solvency and capital generation, I believe we have built a very strong solid track record of financial performance and disciplined and rational allocation of capital. The results published today support our ongoing story of attractive capital return. Since the IPO in 2016, we have been committed to offering shareholders attractive returns in dividends driven by higher operating results and supported by robust balance sheet and supplemented by share buybacks. During this period, ASR has returned €1,600,000,000 of capital to shareholders via dividends and share buybacks, including the one off we announced including the one we announced today. This roughly equals 36% of our market cap. This year, we propose a total dividend per share of €2.04 a 7% increase, whilst remaining at the lower end of our payout ratio of 45% and on top of that we announced another share buyback of 75,000,000. We will continue to allocate our capital rationally. If sufficient capital remains from the targeted OCC of €500,000,000 in 2021 After investing in organic growth, inorganic growth and market risk and as long as we are above The well known thresholds, we will decide on capital returns to shareholders. This way we can grow our business profitably and meanwhile offer an attractive capital return to our shareholders. Now I will hand over to Annemiek for solvency and capital. Thanks, Eos. Let's go to Slide 11. And despite all the uncertainty in 2020, Solvency 2 remain very robust and we ended the year at 199% on a standard model or 208% if you were to exclude the full year dividend and the buyback that we executed in 2020. The share buyback we announced today is not yet included in this full year 20 Solvency Figure. Within the 199%, we absorbed the further UFR decline of 4% points. In total, we added €425,000,000 of unrestricted Tier 1. And if you would exclude the €357,000,000 capital return and the $121,000,000 of our reduction, we would have added around $900,000,000 of own funds, demonstrating our ability to generate capital throughout uncertain times. Our total SER increased by $124,000,000 as an increase in insurance risk And market risk was partially mitigated by increased diversification benefits and an increased liquidity due to the reversal of the lowering of the corporate tax rate. Our legacy factors remain unchanged at 75% for life and 90% for non life. The increase in insurance risk reflects an allocation of capital to growth, both inorganically with the closure of the VVA and the Verorax acquisitions coming in as well as organic organically predominantly in disability and health. And it also obviously includes the impact of lower interest rates. Within market risk, we mainly saw an increase in interest rate risk due to lower rates and equity risk due to increased valuations as well as the impact of some re risking, which we mitigated by decreasing currency risk and market concentration risk. Despite these developments, market risk as a percentage of required capital remained at 44%, which is actually well below our internal limit of 50%. Now all in all, strong solvency level at 199% at a standard model With ample headroom available within the Solvency II framework, EUR 1,000,000,000 restricted Tier 1 and over EUR 500,000,000 Tier 2, Tier 3 headroom as you can see. If we move to Slide 12, we can see the development flow throughout the year. Strong organic capital generation of €500,000,000 or over 12 percent points in solvency as well as a positive contribution of 3% Points from market and operational developments more than compensated a 1% point related to the closing of acquisitions and the increased capital distribution of $357,000,000 versus last year's $267,000,000 which actually took out 9 percentage points. Now if you look at the market and operational development buckets, within that 3% that you see over there, we've included a decrease in the U of R with a negative impact of 4% points. It also includes a minus 7 percent points reflecting both negative market developments as well as re risking, But they were all more than offset by updated non economic assumptions, 8% points and the reversal of the tax rate lowering impacting the LABDT, which is plus 5 percent points. Now the non economic assumption update mainly included updated mortality assumptions, largely driven by the Dutch actuarial association, which came out with new industry wide tables. If we turn to our organic capital creation on Slide 13, You can see the 500, which we're actually pretty happy with. As I said, a little over 12% points of our solvency, roughly the same as last year When it came in at 501, well, we actually had to absorb close to €80,000,000 of increased U of R drag. Now we did manage to absorb the additional U of R drag by both increased business capital generation and an increase in net capital release. Business capital generation came in €42,000,000 higher, mainly due to an increase in excess returns, driven By both rerisking within credits and mortgages as well as some spread increase and an increased contribution of our fee business, which is an important part of our strategy to actually grow that business. The increase in capital release was mainly driven by Increased SCR release due to lower interest rates and the full year impact of L'Orealis on the SCR release. Good to mention there that the group disability business tends to have a high SCR in Q4 when which then releases throughout the year. And last year, we missed 4 months of that release because of 1st 4 months of the year, L'Orealis wasn't part of us yet. Now for 2021, we still have an OCC target out there of €500,000,000 which actually may sound like a piece of cake given that we €500,000,000 today, but it doesn't feel like that. It's actually a pretty challenging target. We'll have to absorb And echo you of our drag of around €37,000,000 the impact of temporary spread widening in 2020, let's say, around €10,000,000 and the impact of the tax reversal on the OCC through LACTITI and also direct taxes, which obviously Would knock out another around €15,000,000 So that would actually lower it down to around €440,000,000 They're always positives. And if we look at the interest rates today, the sting of the U of R echo would already be reduced by half, let's say, €70,000,000 And we will not have the adjustment in our employee pension contract flowing through the OCC, which is currently around 7,000,000 So that leaves around €460,000,000 as a starting point for 2021. We do still see scope for OCC The accretion from rerisking and we'll continue the path that we've set in this year, let's say, around €15,000,000 or so. And the remainder is We really have to kind of live up with through our business by organic growth, cost efficiency and just good underwriting. If we then turn to Slide 14 and have a quick look at the Solvency sensitivities, they haven't really changed that much towards 2019. We still see limited impact Both parallel and non parallel interest rate shocks, sensitivity towards 50 bps parallel decline is limited to minus 3 percent points in solvency And 10 bps deepening limited to minus 3 percent point solvency as well. And in terms of managing the interest rate sensitivities, we have a limit 15% of regulatory Solvency II ratio on 100 bps parallel shocks. So we're actually very much within our limits at this point in time. We believe that for ASR, the optimal strategy for managing interest rate risk is a combination of both cash flow hedging and duration hedging. We applied cash flow matching for the 1st 12 years. And then for the longer maturities, we applied duration matching duration hedging, whereby we hedge the interest rate sensitivity of liabilities including risk margin. For us, it provides a better interest rate hedged and cash flow hedging for those 10 years as it also takes the optionality and convexity into account. Optionality and assets, think about mortgages, prepayments, etcetera, optionality and derivatives, e. G. Swaptions and liabilities, Think about profit sharing. Now all of that optionality is fully incorporated in duration hedging. And on top it also covers the risk of long tail cash flows, from example, our funeral business. As you can see in the cash flow chart, we're relatively cash flow matched at the left part, let's say, up to 30 years. In terms of spread sensitivity, it's good to know that sensitivities we show on the top end chart, For instance, the 75 bps corporate credit spread sensitivities are excluding the expected mitigating impact from the VA. You can see that in a separate chart. The corporate spread sensitivity does include the impact of spread widening on our IAS 19 pension provisioning. So that's all I would say for sensitivities and we can turn to slide 15 There's a quick overview of our investment portfolio. A few words on the gradual shift to higher yielding assets within that as well as the resilience of our portfolio. In 2020, we lowered our exposure to sovereigns by around $500,000,000 and we increased our exposure Retail mortgages by $1,200,000,000 We've also increased our credit exposure by $200,000,000 And Even more importantly, within our credit portfolio, we seek to optimize return on SCR by focusing a bit more on illiquid credits, Either government guaranteed, some private loans and structured fixed income. In total, we added around €600,000,000 to corporate financials there and around €120,000,000 to private structured loans. And we actually decreased our covered bond position by around €500,000,000 We're happy with the resilience of our portfolio. Out of the $53,000,000,000 around 67% is fixed income, contains €14,000,000,000 of sovereigns and €13,000,000,000 of corporates and financials. The average rating is A plus and of the corporate and financials book over 97% is actually investment grade. We have limited to non exposure in the oil and gas and leisure sector. And in general, credit migration risk continues to be very limited in terms of Solvency II impact. We have a real estate book of €4,500,000,000 which constitutes 8% of our investment portfolio, but it's good to note that of that €4,500,000,000 around 1 point €7,000,000,000 is actually related to our rural portfolio, which is a very resilient portfolio. That also gives us a competitive edge And finding attractive investment opportunities to contribute towards the energy transition, such as solar and windmill parts, as the land continues to be very scarce in the Netherlands. Our retail real estate exposure is around €800,000,000 of which €650,000,000 is via the Dutch prime residential fund. Now of that fund around 2 third is actually high street retail based on very strict investment criteria and onethree is related to supermarket district shopping centers who are actually doing quite well in COVID times. Retail vacancies remain low, with 3.7% versus 3.5% last year. Now in total, our real estate portfolio saw a modest decrease in direct income and still yielded around 86,000,000 of indirect investment income as positive revaluations in our rural book, residential book and offices more than compensated for the negative revaluation that we've seen in retail real estate. Such mortgage market continues to be very resilient. There continues to be a shortage in housing And house prices actually increased by 11% in 2020. Most forecasts So although on a more limited nature still an increase in house prices for the next 2 years. 33% of our book is Covered by NHG and the average LTV is 73%. Arrears over 90 days continues to be very low at 4 basis points and credit risk Credit losses remain very low as well. So all in all, we remain very comfortable with our investment portfolio and we do We'll see further room to increase investment into mortgages and we also see further room to further optimize our credit book With some more liquid credits, government guarantees, some private loans and structured fixed income. If we would then turn to Slide 16, a couple of last words on the balance sheet. It remains strong. We still have ample flexibility within there. Financial leverage decreased to 28.3% on an IFRS basis due to an increase in equity. That remained unchanged. Double leverage showed a slight increase to 103.7% due to several acquisitions in the Distribution and Services segment. Interest coverage ratio, which is based on our IFRS net result drop, but it's still well within the target range. And I guess you've all seen the S and P Rating. And then a last word on cash position on Slide 17 before I hand over to Jos again. Holding cash ended at €502,000,000 which is in line with last year and it's really aligned with our policy to put cash at work at the opcos and only upstream cash to the holding to cover holding expenses, coupons and dividends. We also have an unused Reholding credit facility of €350,000,000 liquidity roughly equal than compared to last year. We've up screened cash mainly from Life and a bit from other entities. There was no need to upstream more, But there's also no impediments to do so if we would have wanted to. Our debt maturity profile, as you can see, is robust. Next maturity date is in 2024, And we still have ample flexibility and room to add leverage if we would like to. Solvency for the group is strong, as mentioned earlier. You can also see the ratios for non life and life, which at 163% and 195% are well above our targets. Now with that, I'd like to hand it back to Joss for a final wrap up. Thank you, Annemiek. So to conclude our presentation, you I can imagine we are proud on the results we've presented today. We delivered again a very solid performance in a very challenging Environment and I'm proud of our employees who have been working hard to achieve these results. We showed solid progress Our strategy and demonstrating financial discipline, we continue to build on our track record of rational allocation of capital and attractive shareholder returns. We're very pleased to propose the dividend as mentioned of €2.04 And on top of that, we propose another share buyback of 75,000,000 supported by a robust solvency of 199 on the standard formula, I believe ASR is in a strong position to Continue its pursuit of profitable growth. Looking ahead, direct effects of COVID-nineteen have so far been limited. But let's be clear, we're not out of the woods yet. We're still facing the challenges from COVID-nineteen And we remain cautious for the effects in the longer term. The effect of the virus and the restricting measures that are Being taken to control the virus is noticeable in our businesses and those of our customers. This may well impact us going forward. We believe we are strongly positioned and maintain the medium term targets for 2021. However, given the economic uncertainties, achieving an organic Growth of 3% to 5% for disability and P and C may end up being the most challenging one of all of our targets. So having said this, ladies and gentlemen, this concludes our presentation and I hand over to the operator to take Any questions you might have. Thank We'll now take our first question from Cor Kluis. Please go ahead. Your line is open. Good morning, Cor Kluis, ABN AMRO ODDO. I have a couple of questions. First of all, on disability insurance, that's good to see that The integration process has picked up and improved in the second half of the year. Could you give somewhat feeling on premium increases That you have been doing in the beginning of this year, especially in the sickness leave area and also the reintegration of the Progressing and so stockers are being vaccinated. That might also help somewhat in that process. Yes. 2nd question is on P&C. Year to date, we've seen a lot in the Netherlands. We've seen some snow. We've seen some riots. So no firework, lockdown continuing. It's difficult to estimate. Can you give some feeling on your P and C experience on Line ratio there, so maybe on disability in that respect. And my last question is about M and A. Last Here, you guys didn't do any material acquisitions. Every year you have around €150,000,000 in the chat for acquisitions. So Even a little bit larger at this moment. Could you give a little bit feeding on the progress that you see at this moment in a COVID-nineteen environment? Can You do acquisitions or is it still difficult to do that in such an environment? That's all my questions. Thank you. Well, thank you, Cor. Let me start with the question on disability and premium increases. Over the last year in October, we have increased premiums for individual disability. That was not Due to COVID, but due to the lower interest rates. So we have increased premiums over there since the 1st October. In sickness leave, we increased last year on the 1st Jan 2020 the premiums already. We've done the same in 2020, Pan, due to the developments we've seen there in the Netherlands In general, over the last couple of years, sickness leaves went up with 4% per annum. Last year, we've In the whole society in the Netherlands sickness leaves going up with close to 7%. So therefore, We again increased premiums in the sickness leaf business aiming at a positive contribution At the end of this year, which we will hopefully are able to deliver. In P and C, To your question, yes, we have seen some claims coming in on the weather related issues last We had happily some snow in the Netherlands. We've seen a competitor mentioning a large We, however, up until now have seen not more than 200, I believe 204 is the exact number Of new claims related to that all very small. I believe the largest one we had due to the weather was €15,000 which is Perfectly manageable. The riots we had in the beginning of the lockdown during the evenings, We had some incoming claims. Total of that number was 7, all very limited. We're, of course, helping customers there, but also very manageable. So all in all, those two situations will not significantly impact the combined ratio. And up until now we haven't had any severe winter storms where we had last year Keyara with an impact of €9,000,000 Then on the acquisition side, last year, we, of course, did one acquisition brand new day. And there we actually spent the OCC that we had in mind. It's however difficult to do any predictions on what might happen this year. We are still positive that there are some opportunities out there. COVID is not helpful for that, especially given the lockdowns, etcetera. So to develop relationships, to have the right conversations It's not helpful. However, we remain active in that area and keep on looking From a more financial perspective to potential life books that need to that can be integrated on our very efficient own life platform And our preference is to do acquisitions in disability, in non life and also in distribution. And whether it will happen this year is to be seen. I'm born in December and most Born in December tend to be positive about the future. So I remain positive. Okay. Very good. I was born in November. Thank you very much. Thank you, We will now move to our next question from Farooq Hanif. Please go ahead. Your line is open. Hi, everybody. Good morning. So just my first question on going back to the combined ratio. You gave the positive impact to frequency benefits from COVID. I'm guessing that that didn't include the disability reserving. So I was wondering if you could just quantify that, so we can get a real kind of underlying picture of where you are. And also in Health, I noticed your strong performance. I'm guessing that's because People aren't using all the services that they could be using during lockdown. So just wondered if you could comment on that. Secondly, on investment margin, I mean, you talk about stability, but Actually, as a percentage, investment margin continues to expand. So I'm kind of wondering whether you can give more guidance on Kind of where you are in your re risking journey and whether we should really sort of factor that in going forward as a continuing trend. And yes, that's it really. Thank you very much. Thank you, Farooq. You want to start on the investment margin and then or shall I take? First two questions first. Okay. Farooq, on your assumption that the reserve financing is not yet included In the combined ratio, it is included in the combined ratio. We already did that in 2020. So hopefully that answers your question. On your second question, our view The relation between the strong performance due to a lower use of services, I think In the non life area in P&C, you're right. We've seen a lower number of claims, etcetera, which impacted ASR positive. That was, by the way, mostly in the first half of twenty twenty. In the second half, We've seen that returning to more normal levels. I think we already talked about visibility. We've seen that Customers used our services to call it services more in last year. Going forward, Up until now, we don't see a really new trend compared to the last half of twenty twenty. So we continue to see actually the same trend In the 1st month of 2021, so some tailwinds in P and C and a lower headwind in disability compared to the first half of last year. Just to come back. I realize that the Yes, you've included the reserving. I was just wondering what the amount was because you gave a 0.6 percentage point Improvement in combined ratio from COVID, presumably there was also a negative from the reserving. I was just wondering if you could quantify that. We haven't disclosed that specific number on the reserving Due to COVID, the total negative impact due to COVID in disability was €71,000,000 €51,000,000 of that was already there in the first half. So in the second half, we actually show an additional negative impact from COVID €20,000,000 And that included the additional reserving. So the additional reserving is included in the €20,000,000 Net for investment? Yes. And your question on investment The margin for obviously, we've seen it increase last year. Three main reasons for that. We had a positive impact On our swaptions, basically result that we made on positive result that we made on swaptions in the past, which actually are now Falling through via amortized realized gains, that's a benefit that we'll continue to have. We also saw an increase by part of the a bit of a rerisking that we did and specifically optimization within the credit risk portfolio. The latter we will continue. And obviously, there was a required interest decrease due to the maturing individual life book. If you look at the investment margin, if you would do it over the basic nominal life provision, we have a slide on that in the appendix, it's actually Slide 40. You see that it has been relatively stable over the last 3 years, 2.3%, 2.3%, 2.5%, 2.5%, And I think we're comfortable with that level going forward as well. Okay. Thank you very much. We'll now move to our next question from David 1st of all, just to come back on OCC, thank you very much for giving So sort of bridge from the end of the year. Can we just zoom in again on sort of levers you see to get to your target beyond the sort of what we've seen already this year, the own pension Switch to the ECB, the interest rate pickup and all of that. How should we see the room you have for The rest of the uplift, especially considering the trends and the normalization you're talking about in P and C And then visibility, which may take a bit longer. And then just on just a follow-up on that on visibility. Can you quantify the contribution in the OCC in the second half? And lastly, just a follow-up on The explanation on the investment margin, in the past you gave an amount for the contribution of The realized gain reserve and the amortization of that, how much should we expect for the coming years? Because I think The previous guidance was until this year. Thank you very much. All right. I'll start off with the OCC. I think you meant what your first question, how we look at 'twenty one from an OCC perspective. If we start off with the U of R drag, we always take the average U of R drag, I. E, the average drag that belongs to 1st Jan versus End of year and then we take the average of that. That would mean that if interest rates would not move would not have moved where they were at the end of December, We would have an echo U of R drag of minus €37,000,000 We've also seen Spread widening in 2020, really related to COVID has come back again. If you would think that temporary spread widening was really temporary, you would have to knock out another 10,000,000 We've seen a positive impact on stock of the lowering of taxes via Leggity Tea, But obviously, that will have a negative impact of by the reversal of the lower lowering of taxes and that will have a negative impact on flow of around €15,000,000 Now if you would deduct the UFR drag, if you would deduct potentially the temporarilyness of spread widening we saw in 2020 And if you would deduct the fact that there is a negative impact on flow from the reversal of the lowering of the tax rate, then you would get to around €440,000,000 as a starting point. If you would look at interest rates where they are today, they've actually come up a bit Since the end of last year, and that would reduce the U of R echo by around €15,000,000 to €20,000,000 We took out some additional we had net current service costs due to a change in our pension scheme of around €20,000,000 in the operating result in this year And that in OCC terms equated to around €7,000,000 because you don't have everything flowing through OCC from that. Now we won't have that €7,000,000 again next year. So that's a positive. Then you would end up at roughly 4.60 as a starting point for 2021. Last year, we did some rerisking, as I said. Now the rerisking we did last year was around 3% points In solvency stock and it added around €15,000,000 in OCC. I would expect us from an OCC perspective To be able to realize something similar this year. So we're definitely looking to add another €15,000,000 or so by rerisking, These are set at €475,000,000 meaning that another €25,000,000 or so we would have to compensate by increased business capital generation. Now as Jos just alluded to, we've done some price increases. So hopefully, we'll get we'll see that coming through our insurance results. We continue to look very hard on cost efficiency, and we also continue to strive for organic growth, both in the non life business, but also in the fee business. So it's really our challenge and also our goal to compensate that by further increase of business capital generation. And that's why we would consider the €500,000,000 as doable, but challenging. And then you also had a question on what the visibility impact is on the OCC. We don't disclose that figure. I think it's fair to say that the life contribution to OCC is relatively stable. It would be around €450,000,000 if you would look At the total non life contribution, in the OCC, it would be at around €100,000,000 And then obviously, you would have to add the fee business and you would have to subtract the holding and then you would get to the €500,000,000 again. And then you had a last question on the investment margin and the Capital release, the amortization of realized gains that we see in there, and we expect that to be fairly stable going forward. Sorry, very stable, that's the same €300,000,000 level that You've given before. Well, I can't give the exact disclosed figure for this year, but by and large we expect it to be stable. Okay. Thank you very much. We will now move to our next question from Stephen Haywood. Please go ahead. Your line is open. Thank you very much. On your real estate portfolio and In particular, the whole Dutch property market, how do you see the mark to market impacts coming through In the near term, do you see any negative drivers for resilience in the property market here? And when do you do The big sort of valuations within your portfolio here. Secondly, On your on the court case, what was the actual ruling related to on the bodily injury court case. And is this an expected impact for the whole of the industry to take that additional Reserving. Thank you. All right. Let me start with your question on real estate. And I guess you referred to retail real estate there, if I understood it correctly. Listen, we do see some impact of COVID there. But as I said, around 2 third of the exposure we have via the Dutch Prime Retail Fund is actually high street retail business and 1 third is related to supermarket district shopping centers. Now the latter part Hasn't really seen any negative revaluations. It actually went up a bit in the COVID times. Obviously, high street retail there, we did see some negative revaluations. In total, our retail real estate had a negative revaluation of around 10%. In our total real estate book that actually was more than compensated by the revaluation of the rural position, which is far greater than the retail real estate position and also the positive revaluation of the residential position that we have. I'm sorry, can I just follow-up on that in terms of the commercial side of things as well And the offices potentially, do you expect to see any change in their valuations in the future if there's going to be more Working from home going on? Yes. What we've we only have a very small position in offices and we actually There has seen a positive revaluation on the offices space also because we realized some new office buildings That project was still ongoing last year. And within our we call it the Dutch Mobility Office Fund. They are all prime locations Adjacent to the larger city railway stations, they tend to be All multi tenant and we do see that there is still quite some appetite for those locations. I think in the office side, if you would move more to the Peripheral, the rural areas kind of outside of the big cities being Amsterdam, Rotterdam, Utrecht, Then it's getting more difficult for those offices, but we don't have those in our portfolio. So we're really focused on big cities next to the largest most important railway stations, Multi tenant buildings. So to the extent that there is working from home, we tend to see the shifting from large owned buildings more towards renting smaller space in these multi tenant buildings, which have good public transport opportunities in the vicinity. And on your second question, Stephen, the court case I mentioned was the Same one that was already mentioned in the first half where the Dutch court decided on the interest rates you should take into account For future claims, which had to be lowered due to the lower interest In the Netherlands, in the first half, we already took €8,000,000 for that. That was based on how we looked at it after a half year. In the second half, we reviewed Our whole portfolio and we looked into all the ongoing cases and we decided and I already mentioned that We tend to be conservative on those decisions. We took another €17,000,000 So the total additional reserving in non life 20. €25,000,000 And whether the whole industry will do the same, that's up to the industry, but we tend to be Very conservative on that. It was a good year to be conservative there. Thanks for the reminder. And What was the quant or was the actual change in interest rate? Well, in the past, the industry calculated with future interest rates up to 3%. And in the court case, it was decided that it's better to calculate with an interest rate of 0 given what Customers can make on their saving accounts. Yes, that's brilliant. Thank you very much for your help. We will now move to our next question from Fulin Lang. Please go ahead. Your line is open. Thank you. Good morning, everyone. Just a couple of questions. So first of all, thank you very much for a run through the guidance of the OCCE. But I've just reckoned there are a few vulnerability within the whole kind of system. And just for example, You already taken some of the interest rate rise year to date so far into your OCC. And just wondering, are you doing anything else to protect your kind of volatility Q2 interest rate, what if the interest rate goes down from here? And also, I know that you are Kind of hoping that the cost further cost saving will help on the remaining 25 gaps in OCC. And I just wonder whether if the whole kind of back to normal realized from May, June, Will actually some of your cost saving reverse? What you've seen in 2020, will that reverse? So that's kind of one question, how you protect your OCC? And then secondly, it's just again, I think it's probably A bit of detail. So in your UFR drag in 2020, we've seen similar amounts in first half versus the second half. But if you look at the interest rate movements, the second half is much larger than the first half in terms of the interest rate movement. How did you manage it to within Just managed to get the same UFR drag for very different interest rate movements. Thank you. To start off with the last question, Fulin, we average it out. So we take the U of R drag and we calculate the U of R drag for full year based on the 1st January 2020. Then we calculated for the full year based on the 31st and then we average that. So that's the full year you have our drag and that's Also the reason why if interest rates would not change, we would have the echo of another €37,000,000 within this year. So that methodology hopefully explains your last question. And in terms of yes, the UFR drag remains sensitive towards interest rate Changes. So you're right, if interest rates would not go up, we would not have a reduction of that UFR Echo drag. Obviously, it's being dented a little bit by the capital release. If interest rates would go down further, We would also have a positive impact on the capital release. And to give you some feeling around sensitivities here, If interest rates would see 50 bps decrease, for instance, that would probably from where they were at the 31st For December last year, that would roughly equate to around €18,000,000 reduction in OCC, which is basically €100,000,000 of our unwind, but it's €20,000,000 of increased capital release. So yes, we do remain sensitive towards that And covering up €80,000,000 of OCC on top of a U of R drag that's there, that's going to be challenging from a business perspective. If interest rates remain where they are, then we would have to compensate around €25,000,000 from a business perspective. Indeed, there are some levers that we can still pull in terms of cost development. I think we may actually also receive a little bit of Helped by the continued lockdown that we're experiencing in the Netherlands. So from a P and C perspective, the month January Exactly unfavorable. So there are some items that could still help our business capital generation there. And as said, we will continue to look at the rerisking part, specifically within credits and hope to add at least another €15,000,000 there in terms of OCC contribution. Thank you. That's very helpful to run through. Thank you. We will now take our next question from Michael Huttner. Please go ahead. Your line is open. Thank you very much. I had a question on Slide 14, please. I wondered if you could talk a little bit about The basic life provision, which is actually growing, it's not falling. You say on the side, if you do nothing, it would fall by 2.7% a year. I have three questions. The first one, how does this chart compare with your expectation, which I think you published in For 2018, the book would reduce by 50% or so over a period of years. The second is within that SEK 20 €5,000,000,000 or €24,900,000,000 figure, how much is the individual life? And over You mentioned that your preferred M and A is more in non life and services. So does this mean that you're You'd be quite happy. I mean, you have no objection to the slice this Provision figure actually declining going forward. Shall I start just with the question On the I believe on Slide 40, if we look at the best estimate liability, We said that we see a CAGR of minus 2.7 for the upcoming 10 years, meaning that in around 10 years, we would have Seeing a reduction. We expect to see a reduction there of around 25%, which basically mainly comes Through the individual life book, which we would expect from a belt perspective to around half within that period, We do expect pensions and funeral to be relatively stable in there. The numbers may have changed versus 2018 given the fact that we've also added quite some acquisitions since then. So I don't have the exact line by line comparison on what the acquisitions will have done, but those will have obviously Change those numbers. And the chart that you see on the left hand side is the basic normal life provisions. That's not the best And to your second question, Michael, when we made a statement On M and A, we were not trying to say that we don't that we wouldn't like any live M and A anymore, but live M and A will be More seen as a financial transaction and we will more decide on whether it adds value To the book and less from a more strategic point of view. From a strategic point of view for the longer term, we would prefer to do More non life, more disability and more distribution. But if and when we do see any opportunity to add Life reserves to the life book to protect the in force costs going down for the future then we definitely will do. But we will judge those transactions more from a financial point of view and less from a strategic point of view. And on that sorry, I just asked a follow-up. You have a big competitor who says they look at their life book On a financial basis, and you're using the same language, but talking of acquisitions, when do you think you could meet? Well, as you can imagine, those kinds of questions are difficult to answer. But our view in the past has been and It continues to be going forward that we have a slight preference for smaller and medium sized transactions because we were able to integrate them in a very swift way and how market developments and coalitions Will evolve in the future. That is in the future I think. Brilliant. Thank you very, very much. And thank you for putting that slide up. We will now move to our next question from Colm Kelly. Please go ahead. Your line is open. Yes. Thank you for taking my questions. First one is just on the illiquid asset strategy. Obviously, you've mentioned you're moving more into Credits, so just private placements and structured loans. So the asset allocation, obviously, the risk profile is kind of gradually changing. To what extent as that's been discussed with the DNB, is the DNB overall comfortable with the direction of travel with respect to the liquid asset portfolio And the type of assets that are increasingly being put into that. And that's first question. 2nd question is on the economic view of solvency. And you which is obviously key to your capital return strategy. The long term returns previously had been assumed to be 2.4% On the investment portfolio, has there been any change to those long term return assumptions post COVID? And then just lastly on Non Life Solvency, so the non life business hasn't remitted much this year. As you can see, the solvency was flat year on year. There were pluses and minuses in the underlying results. So what I'm trying to get a sense of is what is the actual operating Capital creation in the Life and the Non Life business to fund remittances going forward? Or should we expect the remittances will Almost all will be driven by the Life business over the next couple of years. Thank you. All right. Let's start off with your first question on rerisking. We're not exactly Usually expanding the total credit portfolio or really looking towards optimizing a little bit within that portfolio in a Solvency II Optimal way, so to speak. And part of the liquids that we're moving into is really government guaranteed, think about EIB or other type structures like that. In total, our for instance, our market risk Hasn't changed and we don't really expect that to change. I think it's relatively an optimal way of looking at it. As I said, we added around it was around 3% point, slightly over €70,000,000 of SCR that we added Due to the re risking that we did last year and looking for something similar this year to do. And in terms of moving a little bit more into the illiquid Given that we have liabilities also on the funeral business that tend to have a very long duration that actually Matches pretty well with the slightly more liquid credit as well. Then in terms of the remittance, For quite some years, we didn't actually remit that much or nothing at all out of the Non Life business. Last year, we did do remit EBITDA out of non Life, but it was only €18,000,000 So even last year, we actually up screened most of it from the Life business Given that that's also running off, so it's kind of it seems a natural place to do the remittances from. We don't rule out to remit from the non life business this year or next year. It's Comfortably above the threshold that we see. So there are no impediments to remit out of it, but it's also an area where we do want to continue to have some organic growth. So if you combine the organic growth targets, plus if you think about the remittance This year in a COVID time where on the Life side it was pretty clear early on that there wouldn't be So much impact specifically this year of COVID. On the non life side, we obviously have quite some moving parts with BUC doing very positively, Disability taking a hit in H1. So we really wanted to see get a bit more feeling about the uncertainty there, Leave the cash in for any organic growth and support there. So we just didn't take it out, while we could have taken it out. So there is no underlying change in our Strategy there. In terms of economic view, I believe, I'm just checking which slide it is, but we do continue To give the sensitivity, it's Slide 29. And there you can see what the sensitivity would be. If it would be around 2.5%, if it would be 2%. And you would obviously see the corresponding positive impact on the OCC flow. And that's just A pretty mathematical calculation. We still feel very comfortable with both the rates on a UFR basis, but also if we look at lower rates, which The sensitivity slide shows on Slide 29 were very comfortable. Yes. No, the slide 29 is very useful. I suppose it's the base case economical U. F. 4 is still 2.4%. I think that's the bit that's missing from the slide. Yes. I think we've taken a different approach Because we used to just use the 2.4, but then look at it from an economic framework and not make any changes to all the other Parameter that you would also have to look at if you truly look at it from an economic framework. If we would look at it now, I guess we would lower the 2 point Forward to a lower level, but actually also make some other changes because if you look at it economically, there are also other elements that you would have to take on board. And if we would look at the new economic framework case, which we're currently developing, which would contain a slightly lower interest rate, Looking at the new economic framework, we would actually end up higher than the 2.5% that we that's for instance on this slide in the old economic framework. Okay. I suppose to the extent of that 2.4 Presented your long term view on the returns on the investment portfolio. Has there been any change in terms of your view on the long term return assumption on that investment portfolio? Just to have the question clear, Karl. Did you said on the assumptions that we have on returns on the various asset categories or Could you Yes, so you could tell the economic of Euro 4 of 2.4 percent. And as an implied long term assumed return on the investment portfolio or something close yet. So I just want to get a sense, has there been any change either in the economical U. S. Or your long term assumed return on your investment portfolio? No, we don't have any changes there in the scenarios that we run. Okay, perfect. Thanks, Helen. We will now move to our next question from Robin van den Broek. Please go ahead. Your line is open. Yes. Good morning, afternoon, everybody. Thank you for taking my questions. First of all, I think the bridge that you've given to us is very clear. Thank you for that. I was just wondering when you say adjusted for current rates, is that rates for today or is that rates of 10 days ago? Because It feels to me that 30 bps and maybe some headwinds from the average VA in 2021 versus 2020, Only reducing €15,000,000 to €20,000,000 seems a little bit on the low side. So I'm just wondering, is that conservatism? Or is there maybe Secondly, when I think about residual COVID impact, I mean, for banks, it's very clear that there could be defaults in the SME space and maybe consumer finance, what have you. For you, that balance sheet risk, of course, is very limited. But I guess there could be implications Some defaults for your gross written premiums and as a result of that, your results could still be impacted. I was wondering if you have done any assessments Around that and how big those impacts could be. And lastly, I think your capital promise has been very clear that you basically stick €75,000,000 as long as you're above, was it €180,000,000 you're well ahead of that. I was just wondering if there's anything that could happen that would add Make you add to that €75,000,000 buyback or you're just going to write this plan out on that basis? Thank you. Shall I start with your first question on the lesser UFR drag, etcetera. In terms of OCC, those were actually based on beginning of last week rates. So there is probably a rate difference if you would refer As of today's rate, if you look at the your question related to the €75,000,000 buyback and us being well above 180%. Given all the uncertainty around end markets, we would Stick to the $75,000,000 for now and the capital return policy that we've actually communicated lost. And Rolle, to your second, sorry. So sorry, just one follow-up on the UFR. Is it fair to assume that one basis point is €1,000,000 roughly per OCC? Around if you lower the if you would have a 50 bps interest rate impact, you would have around €18,000,000 in OCC impact. Okay. And it's a combination of combined and the capital release. You have to take both two elements into account. And to your second question is whether we run scenarios going forward, we have run some scenarios Based on the assumptions of the Dutch Bureau of Statistics, taking that Kind of scenarios to the top line is very difficult. Up until now, we have based our view going forward On the subset of our portfolio and we are not that large In the areas that are hit mostly currently and the statement we've made on the top line going forward is more Based on it is difficult to predict how the economy as a whole will be hit By the moment that the Dutch government decides to stop financial support, If I look into the arrears in all kind of areas, it's very, very low. If that is a basic signal going forward, Then one might be positive, but if there are a number of type of business that End up being bankrupt going forward, then it might be more difficult to meet that target. So it's hard to predict. But based on the scenarios From the Dutch Bureau of Statistics, it's all looking quite good. But you know us, Robin, we in general tend to be a bit more careful on those kind of statements. So we might be too conservative and let's hope for that. To your second question, whether if the solvency remains At the level of where it is today, whether we would consider to give more capital back to investors. In general, ASR tries to stick to a plan. And if we promise something to the market, We tend to deliver on that. So for the time being, it is the 3x75000000. And how that will develop going forward is going to depend on how we judge for the target setting for the year after 2021. And we've always been clear, if and when we are not able to use the capital in a positive way To grow the company or to re risk the business sorry to re risk our investments, We're not capital hoarders and then we will look at the most efficient way to return it to shareholders. But for the time being, it's our aim to deliver on the promise made last year to do at least 3x75 And this is the 2nd year where we deliver on that target. That's very clear. Thank you very much. Okay. Thanks. We only have room for one final analyst to ask questions. We'll come back to any analysts that have questions for a later moment. So operator, can we have the final analyst for questions please? Certainly. We'll now take our final question from Andrew Baker. Please go ahead. Your line is open. Hi. Thanks for taking my questions. And I'm now feeling the pressure of being the last, so I'll try and make it quick. So the first is just on the EIOPA 2020 review. I appreciate you've previously given an update on the expected impact on the stock of capital. Can you give us a sense of the impact you're expecting on the ongoing capital generation once it's implemented? And then secondly, I know many of your peers have undertaken Longevity Reinsurance Transactions. Is this something that you guys are still exploring? Thank you. Thanks, Andrew, for your question. I was already thinking why does no one asks a question on the JOKA review. But yes, we did publish the results actually on stock, which basically is if it Would be implemented in 2024 and it would be implemented without the phasing in, we would have a minus 10 Percentage point solvency impact actually with the phasing in that is probably plus 1 at that point in time. If you do the that minus 10% impact on stock, that would correspond with roughly €25,000,000 of OCC In 2024. So that's the without phasing an impact on it. And your last question was related to the can you repeat the last one again? Sorry. So just if you're still expecting that, you're doing longevity reinsurance? Yes. We do look at it. We do continue to look at it. But obviously, in terms of any capital transactions, we kind of look at both the necessity and whether it makes economical sense. And if we would look at the longevity swap, it would indeed be kind of mid single digit release of capital that would flow through. Having said that, that's based on the old mortality tables. We really wanted to wait until the new mortality tables came in. They clearly came a little bit our way as you can In terms of stock and given the fact that we have a funeral business, Positive benefit of longevity swap will also diversify away a bit. So that's why it's for us, it would be kind of mid single digit to execute such a trade and it will obviously have a negative impact on capital generation on flow going forward. So if we really need the capital or if the economics of it would improve, we will definitely look into it, But we're not in a hurry to do such a transaction. Great. Thank you very much. Great. Thus, would you wrap it up? Well, thanks everybody for joining us. Hopefully, the answers given to all of your questions were helpful. If and when there remain any questions, please find one of the colleagues of IR. As we already said in the introduction, we're quite proud On the delivery of our results, we remain working hard to keep on delivering on our promises. And as said, The challenge to do so remains also very, very big, mainly due to Circumstances we can't influence that much. Having said that, thanks for joining and let's hope that we We can meet you in person at least when we present the half year numbers and that we can have our regular dinner to discuss in-depth On the numbers of ASR. So stay healthy and enjoy the rest of the day in writing all those reports on those two nice That's insurance companies. Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.