Earnings Call: H1 2015

Aug 27, 2015

Welcome to the conference call of AZR on its Interim Results 2015. The call will be hosted by Chris Virey, CFO of ASR and Jacques Uhleger, CIO, Financial Markets. Go ahead please. Ladies and gentlemen, good afternoon. This is Chris Verej speaking from ASR. Welcome to the presentation of ASR half year results. As is customary, I'm accompanied by Jacques Huliker, CIO of Financial Markets. And Jacques and I will walk you through the results of ASR. Today, it's Thursday 27th. There are 2 very important events today. First of all, IRAS is playing Jabberdijk tonight. And secondly, ASR is presenting its half year results. And in summary, if Ajax delivers only half the performance of ASR, we're looking forward to a very pleasant evening. With that opening, I'd like to point you to Page number 3, where we summarize the key messages, the key results for the group for the last 6 months. The net result of the group increased to SEK397,000,000 up from SEK171,000,000 last year. The operating result, which is a newly defined result metric, increased from €221,000,000 to €280,000,000 in the 1st 6 months of the year. The main difference between the 2, as we will explain later in the presentation, is capital gains in the course of the 1st month of the year. We adjusted the equity position of the group. To be precise, due to the increase in stock market valuations, the market cap and market value of our equity portfolio drifted up and exceeded the risk management bandwidth. So we basically adjusted the portfolio drift, reduced our equity holdings and with that, we realized a substantive capital gain. There's a main difference between the SEK 280,000,000 operating results and the EUR397,000,000 is a capital gain that was derived from the rebalancing of the equity portfolio of the group. Needless to say, with both numbers at €280,000,000 and the €397,000,000 we are very pleased. Solvency levels, Solvency 1 at 2.97 up 12 points from last year. Solvency 2 standard model estimated at 185%. The ECAP ratio, economic capital model, which is our proprietary capital model up to 2 10%, Those numbers underline and underpin the robust and strong solvency position of the group. In terms of premiums, premiums in non life, stable, basically stable at €1,375,000,000 down 3%, mainly because of the fact that last year we signed a single premium contract in the disability business. If you adjust for that, premiums in Non Life segment were basically stable. The combined ratio in Non Life improved to 92.5, improved to 93.7 to 92.5, below 100 for all product lines. In the Life segment, a strong increase in gross premiums to €1,100,000,000 partially driven by a single premium contract in the pension space. So almost a mirror image of the non life situation where in non life premiums declined versus last year because last year we signed a single premium contract. In pensions, we signed a single premium contract this year. So in that sense, that explains the development of total premiums. OpEx operating expenses at SEK 273,000,000 up a bit from last year, but that by and large is due to the inclusion of recently acquired von Kompenkrupp, a distribution service provider. If you adjust for those additional costs and additional part of the ASR family, cost basically stayed the same. In terms of M and A, you may have seen in spring we announced 2 complementary acquisitions, Aksent and Eindracht, who basically acquired a mortality and a longevity book of roughly equal size in June. And our Real Estate Development business, Hagerovast, Skutkund Wickling has been classified as held for sale, has been valued at realizable sales value as per half year, which means as you can see in the press statement, it is no longer presented as part of the core operations. It is classified as held for sale and we marked down the value of the business back to sales value, which marked down the value of the business by CHF 92,000,000 which is already included in the CHF397,000,000 net profit. With that, I'd like to turn to Page number 4. Page number 4 gives an overview of the accounting and presentation changes. As part of our preparation to return to the private sector ownership, I want to be made a number of statements and indications in our press release. But as part of that preparation to become privately owned, we made a number of changes in our accounting policy and in our presentation policy. In our accounting policy, we valued our real estate portfolio at fair value instead of amortized cost, which effectively means that real estate investments have become part of equity. And in our P and L, we no longer report the capital gains as such. But in our P and L, we report fair value changes and capital gains as far as they exceed the fair value changes. So adjustment of the accounting of our real estate business was we believe in line with industry practice. Secondly, we took out we wrote off the deferred acquisition cost, which are on our balance sheet as for the beginning of the year. So the DAC deferred acquisition cost has been written off, which has a negative impact on our equity and a small positive impact on our P and L because we no longer amortize annually our DAC. The combined effect of those two changes are mostly visible in our equity. Equity as per the 31st last year up by SEK 682,000,000. Effective that's an increase by SEK 800,000,000 roughly from the real estate decrease of SEK 120,000,000 from the DAC, together a net increase in the book equity of SEK682,000,000. Also important to note that these changes did have an effect on our P and L. If we had not pursued these accounting changes in the first half year, our result would have been €45,000,000 higher on a pretax basis. So the combination of no longer amortizing DAC, but also no longer recognizing capital gains on real estate above amortized cost had an effect of depressing pushing down our pretax profit by €45,000,000 Secondly, in terms of presentation changes, we opened up the same segment other into 4 segments: Banking and Asset Management, Distribution Services, Holding and Other and the Real Estate Development, which is classified as held for sale and presented as outside the ordinary activity of the group. And finally, we have introduced and we will introduce the result metric operating results. Basically, it's the group results adjusted for incidental one off investment returns, incidental data losses that are not related to the regular business and accounting changes. With those amendments, we believe our disclosure and presentation is more in line with the industry and helps us prepare further for return to private sector ownership. To dive into that operating result definition, I would like to turn to Page number 5, where we again summarize the definition of operating results. Effectively, it's a profit before tax excluding capital gains, excluding one offs that do not relate to the ongoing business. That result metric up from SEK 2 21,000,000 to SEK 280,000,000 on a pretax basis, which we believe is a sustainable solid set of results unaffected by financial market fluctuations or unaffected by incidentals. And the CHF 280,000,000 operating result to us is something we are as a group are very proud of and very comfortable with. The footnote on the page summarizes the main delta as far as the incidentals. As we explained, the chunk of the impact is explained by capital gains and a few other points which are explained on this page. Predominantly, they look at a set of current account balances, capital gains related to our own the investments for our own pension funds and a number of other elements that we took out last year and they did not repeat themselves this year. But again, up from EUR221,000,000 to EUR 280,000,000 is a strong improvement, a strong increase in the operating results for the year for the group. Before we go deeper to the business then, a summary of the key figures on Page 6. Net results up to SEK397,000,000 the corresponding ROE based on net result 23.7 percent. It's a fairly high number as such pushed up by a series of capital gains. Operating results at €280,000,000 The corresponding return on equity is 15.8%, which is safely above the target zone. Our target area is 8% to 12%, with 15.8%, we believe the group is outperforming its own ambitions and we're very pleased with this operating ROE. And in terms of capital, EUR 297,000,000 respectively or EUR 185,000,000 So we have been able to achieve a very solid ROE also on a very solid and safe capital base. And it's a combination of the 2 that for a CFO with me makes it actually a very pleasant presentation. On the cost side, Page number 7, continued containment of the underlying cost base. You can see the development of the operating expenses on the left hand side, continuous decline. In the first half of this year, our cost effectively remained stable. The increase that we saw was due to the inclusion of an acquisition. Like for like, our cost base was up by CHF 2,000,000 which is more than explained by the cost related to M and A. And also we absorbed in those cost levels increased investment in Solvency II and increased investment into projects from a regulatory perspective. Especially in the pensions area, insurance companies like us need to spend money on IT projects that relate to regulatory changes and those costs we have absorbed. The underlying cost development is demonstrated and underlined by the development of the internal FTEs. Again, if we strip out the add on of the acquisition, our FTEs declined from 3,500 to just below 3,300 3,400. So a continuous gradual decline in staff numbers and continuous gradual improvement in group productivity. So we believe cost containment is still on the cards and is still an important feature of the DNA of our group. Going into the business segments into Non Life, Page 8, you can see the results and the combined ratios of our Non Life business. Operating results up 101 to 114. Net result also up from 92 to 122. The reflection of that improvement in the combined ratio from 93.7 to 92.5. Our combined ratios are below 100 for all our lines of business. Good to know that if you now take a longer term perspective and multiyear view on our combined, you can see we've been below 100 for a consecutive period of time. Irrespective almost of the economic cycle, we've been able to run this business at combined below €100,000,000 That's why we dare to give ourselves an absolute return type of result or label the result as absolute return type of profits. Visibility, a strong improvement in the combined operating ratio to 88.7 percent in a challenging declining market. However, if we look at the recently published DNB statistics, it appears that we have been able to increase our market share last year. So in a declining market, our market share is up by a little bit less than 1% and our combined ratio is better than last year by about 6 percentage points. Health combined ratio better than last year from 98% to 92.7%, partially due to release of reserves from a review of the government calculations and the equalization system, but relatively small contribution to the bottom line. In P and C, combined ratio up from 90% to 95%, partially because last year as we it was extraordinarily positive, there were no storms last year, no fires last year. The 95% this year is more reflective of the long term opportunity, long term trend. It is good to note that the claims ratio of the group was below 60% for the first half year. And if you look at the individual months from January all the way down to June, there was no month in which the individual claims ratio was over 60%. So, a testimony to continued strong underwriting result in P and C. If you reflect on that P and C performance, we are a little bit more large claims than last year. There was 1 storm in the beginning of the year, a significant storm. And we had a small release of reserves order of magnitude SEK 7,000,000 when we visited the level of reserves that we had. Those were all affecting our in-depth combined ratio. If you normalize the combined ratio to taking out what I would call a surplus storm, taking out a more than expected fires and taking out the reserve contribution, the underlying combined is actually around 92%. So with that, very healthy, very profitable business in the P and C area, combined ratios across the group below 100 percent and all product line very steadily and safely below 100%. Moving into the Life segment on Page number 9. Operating results up SEK 165,000,000 to SEK 222,000,000 Net result up even more, but that is because the capital gain that I talked about basically occurred in the life and pensions and legal entity. Premiums up from €900,000,000 to €1,100,000,000 Technically speaking, that is because the Chevron buyout was booked in the gross within premiums this year. It was already mentioned in the APE, new sales last year and it's in the growth within premiums this year. New production, ASR has been very restrained on new production of life and pensions, mainly because of the exorbitantly low interest rates. As a group, we decided that in a year where the ECB goes out, push down interest rates as far as they can, this is not the time to write massive new business. So we've been focusing on retention of clients. We've been focusing on building a DC business rather than a DB business. And we've been holding back on chasing new contracts. And you can see that in the APE, which actually was a deliberate choice to hold back on writing new business in this area. That's why the cost ratio as a percentage of APE goes up. If you don't write much new APE, then your cost base over APE goes up. If you look at the cost base over premium levels and if you look at the cost base excluding the regulatory costs, basically our cost in life of pensions have been stable and absorbing many of the other investments that are required. So overall, in the Life and Pensions business, operating results up significantly, holding back on new production until market developments, until interest rates are restored. Strategies supported by M and A Transactions, Page number 10. We decided this year that given the macro environment, given the rate environment, actually it's better to grow the business by selective acquisitions than by chasing new volumes. So what we did is we held back on new businesses, but we decided to buy 2 blocks of businesses. Akcent and Eindrift, both transactions were announced within a few days of each other. They were really executed in parallel. They both are closed. We have received declaration of no objective from DNB. Both deals are closed. And effectively, we acquired SEK 3,500,000,000 of AUM in 2 complementary equal sized mortality and longevity books. Needless to say that the ROE of the combination of the 2 is actually very attractive because the net capital consumption from buying a longevity and a mortality book at the same time is very small. So the ROE of Brazil safely exceeds the ROE target of the group. And finally, last year, we acquired Van Campo Group, basically it's a distribution service provider and those numbers are already in our figures. I've said that the indirect will be consolidated in the next 6 months as far as the remainder of the year is concerned. Finally, on non insurance activities, Page 11, we broke down the segment other. The segment other no longer exists in our 4 sub segments: segment Banking and Asset Management Distribution and Services Holding and Other and real estate developments, which is now classified as held for sale and values at realizable market value. The first two segments are still relatively small, but are growing significantly. Our capital light business is where we see future growth. Holding cost, headline cost levels improved a lot from SEK 92 minuteus to plus SEK 50,000,000 basically because the own pension arrangement, the own pension contract, where we effectively booked a capital gain on the assets that were against our own pension fund or our own pension contract and a positive result on a tax situation. We think it's better to look at the holding cost from an operating perspective and there the holding cost basically were stable from EUR 56,000,000 to EUR 61,000,000,000 small increase in the holding cost because of M and A cost because of Solvency II costs that were booked at holding. So we hope and believe that with this breakdown, we give everybody much more clarity on segment Other, much more clarity on banking as a management on distribution and holding and clarity on the development of our cost levels. And again, real estate development is now effectively no longer part of the insurance group but reported as a separate separate line item. Then the one that you all been waiting for, namely the discussion on the solvency. Page 12 shows the development of our capital base equity up from SEK 3,700,000,000 to SEK 4,000,000,000. The total equity to start included the contribution of real estate that was booked as part of the IFRS equity base. Again, a significant increase, shareholder equity up to almost €3,400,000,000 total group capital up to €4,000,000,000 Solvency 1 up to SEK 297,000,000 Solvency II up to SEK 185,000,000,000 means that's the estimate based on the standard model. We've put to note SEK 185,000,000 is a standard model, not the airdrop model, both levels that we feel very comfortable with. As is tradition, ASR does report the impact of DUEFR on Solvency 1. We've done it in the past and we continue to do so. Solvency 1 ex UFR is at 2 24%, up from 204%. So a significant increase from Solvency ex UFR. It is important to note that there is various ways to calculate the UFR impact In order to give you the right context, the way we do it is what we believe a very prudent way. We extrapolate the yield curve by keeping the 30 year zero rate as a constant. So the 30 year zero rate is constant, that is extrapolated and that is behind the ex UFR number. We can have a lengthy debate on alternative methods. We believe it's a very prudent conservative method and we want to be very clear about it. And Solvency I ex U of R comes out at EUR 220,000,000 EUR 224,000,000. The multiyear path of solvency on Page number 13, you can see our solvency moves on as one e cap and also we've included the historical estimates of our standard model. We're safely in the range that we as management feel very comfortable with. At a eCAP of 209, 71, almost 300 and S2 SENAMOLO at 185. We've highlighted what we call the emerging SCR management range. Not everything in this field has been cast in stone, but we believe from a management perspective, the numbers on the page are relevant. 1 is 120 percent SCR standard model is the formal ASR risk appetite approved by a supervisory board agreed upon with our regulator. With effective means, if you drop below if we were to drop below EUR 120,000,000 you would expect remedial actions. €140,000,000 is our best estimate of where the cash dividend ability of insurance company starts. It's a number that we feel comfortable with at safely above the risk appetite, but it also comes out of a number of discussions we had with our regulator on various occasions where we got the inclination that 140% is roughly for the standard model where the cash dividend capacity of a group starts. Based on that number, we believe above €160,000,000 is CFO sleeps well range in a sense that if you're above €160,000,000 you are able to pay cash dividends and you have room to invest in your business. So EUR 160,000,000 is where the comfort range is and the 185 number we feel very comfortable with where we are. Also note that increasingly you may expect the regulator to ask questions about Solvency II ex UFR. You may expect that this management range to be complemented with the request to keep S2 ex U of R above 100. So these are the headline figures on the total SCR number. You may expect Solsys to ex U of R to be required to stay above SEK 100. Again, this is not cast in stone, but this is where the discussions in the industry with the regulator with our own supervisory boards seems to gravitate to. For those of you who wish to know the difference between the SCR and the ECAP numbers, what's the difference between our SCR ratio and the ECAP ratio, the models look a lot the same. First of all, we do not apply for internal model. We have not and we will not. We don't think there's any need to do so. Secondly, we use ECAP for our asset allocation and for our own pricing, but not for capital management purposes. The main differences between the 2 are 1, valuations of risks, especially we have proprietary market risk models. We have proprietary cat model, cat risk model. Secondly, source of difference is the treatment of the deferred tax assets. There has been a lot of debate in the industry on the deferred tax asset. In the SCR model, we've assumed that the fiscal unity concept does not exist. We already taken it out last year, Although economically, there is a fiscal unity such a thing does exist. In the SCR world, we've taken out the exemption of fiscal unity. So the 185 is excluding any fiscal unity. Every single entity, every carrier has to stand its own 2 feet from a tax perspective. Although in the ECAP model, we believe the tax, the fiscal unit does exist. Those are two main differences between the ECAP model and the standard model. In terms of what's behind those numbers, Page number 14, you can see development of the IFRS equity and the operating ROEs. You can see the composition of Solvency I capital, SEK 1,500,000,000 of available capital. Basically, it's the IFRS equity plus a number of adjustments, mostly is from moving to market value impact. This group runs at a significant liability adequacy surplus, both on the VFTA level or an IFRS level. That is reflected in the available capital in Solvency 1. Similar on Solvency 2, the required capital of the group is around SEK 3,000,000,000. The solvency ratio is about SEK 185,000,000,000 percent. We've given you the 100%, 140%, 160%, and we leave it to you to do the math to figure out the numbers that are behind us. What we find important is that the ROE of the group is significant. It's 15% or even 25%, I think it's 15%. And this group is running at high solvency levels. It's not an official metric, but if I divide the net income by Solvency II capital, so income over Solvency capital, I get to a number of about 25%. It is not an official metric, but it's an indication of the fact that this group is running both at a robust capital level and at a robust earnings level. And before we move to investments, the financial risk indicators, can see on Page 15, the financial leverage at 22%. The interest cover 24.5 times, Double leverage at 118%. Double leverage is a function of the fact that we keep the capital at the OpCo's. Capital is not kept at holdco, but capital is held at the different operating entities. Were we to upstream the capital to the holding, the double leverage would quickly go back to 100%. That's why the number of 1.18 is something we feel very comfortable about. And our rating has been kept stable. Also note on this page, the hybrid capacity, the headroom easily exceeds €1,000,000,000 We could issue as recognizable additional hybrid capital. With that, I conclude this part of the presentation and hand back to Jacques Schachudeker, who will talk us through the investment portfolio and the investment results. Yes. Thank you, Chris. When we turn to Page 16, that page talks about the investment portfolio and the composition of the portfolio. The economic situation during the last half year was characterized by very volatile interest rates and uncertainty about Greece. At the end of the Q1, interest rates were at the lowest level ever and start rising from there. And we saw also the uncertainty about Greece, which led to widening of spread levels also on spreads on peripheral sovereigns. In that environment, we kept the composition of our investment portfolio stable. The portfolio showed a satisfying performance with equities outperforming. As Chris explained, we have fully incorporated the Solvency II framework in accordance with the regulation of the delegated act in our capital investment policy, and we use the SER model and also a partial internal model, the ECAP model. Our investment results and our investment strategy strongly supported the strong solvency position under Solvency 1 and Solvency 2. And there were four reasons for that. In the first place, we reduced our interest rate hedge to diminish the sensitivity to higher interest rates. Secondly, we continued the shift from liquid low yielding assets to less liquid higher yielding assets. And in that respect, we took advantage of an increased market value of the residential markets portfolio. Thirdly, the decision to increase the exposure to U. S. Dollar denominated fixed income turned out to be beneficial. And in the 4th place, Chris explained that already, we sold equities in our portfolio and realized capital gains. So in summary, the asset base remains strong and of high quality and the performance contributed to the strong Solvency I and Solvency II position. When we turn to Page number 17, an overview is given of the fixed income portfolio and the mortgage portfolio. Due to the higher interest rates and the wider spreads, the value of the fixed income portfolio, including the value of the hedges, the derivative hedges went down. And in that environment, we decided to reduce, as I said, the interest rate hedge to become less sensitive to rise of interest rates as we implemented that by shifting from receiver swaps and receiver swaptions to payer swaps and payer swaps. At the same time, we increased the share of less liquid assets in the portfolio to prevent the running yield from dropping too quickly. We increased investments in corporate bonds with €880,000,000 and also invested in residential mortgages. And as a consequence of lower margins on the mortgages, the consumer rates dropped, which meant that the discount factor dropped and that the value of the mortgage portfolio also increased. 85% of our mortgage portfolio is invested in the low risk segments, the lowest risk segments like energy mortgages with a guarantee of the national mortgage guarantee scheme and mortgage with a very low loan to foreclosure value. We also reduced the peripheral exposure under the influence of the uncertainty around Greece, And we increased the dollar denominated corporate exposure to €400,000,000 and that created for us the opportunity to take advantage of the strengthening of the dollar. The risk profile of the financials portfolio improved further. We reinvested the redemptions of Tier 1 bonds and we reinvested the revenues in Tier 2 financials. We foresee an increase of the fixed income portfolio of about SEK3 1,000,000,000 and that is due to the acquisition post closing date of the funeral insurer, Accent and the pension insurer, Interag. The fixed income portfolio of these entities consists almost completely of Dutch and German government bonds. And we want to adjust the composition of these portfolios in line with the group of portfolio. So we can conclude that the fixed income portfolio proved to be resilient in an environment of increasing interest rates and contributed to the strong solvency position, And we continued the movement to less liquid higher yielding assets to prevent the running yield from eroding too rapidly. Let's then move to sheet number 18. With an overview of the equity portfolio and the real estate portfolio. The budget for market risk is directly related to the company's capital adjusted for the UFR impact. And during the Q1, the available budget for equity risk, which is one of the components of the total market risk, went down as a consequence of an increase in U of R impact and that was due to a drop in interest rates. And the consequence was that we sold €500,000,000 of equities to remain within the risk tolerance levels. In the second quarter, this increase sorry, in the 2nd quarter, this decrease in exposure was partly compensated by rising stock markets. And also, we started purchases of equities to start the rerisking of the portfolios of Aksend and the Intact. We continued the policy of dollar protection of the less liquid part of the equity portfolio by a production hedge, and that has been sustained. We have now protected €750,000,000 of our portfolio. And also, we accomplished a further diversification from European Large Caps to U. K. And Swiss corporates and decreased the emerging markets exposure. The equity portfolio showed strong performance, mainly attributable to the 5% participations. And then we come to the real estate portfolio. Also, real estate portfolio has been reduced and mainly due to the 5th placement of participations in the Dutch prime retail fund a Japanese bank. Now in total, 60% of the exposure to retail fund have been placed with external investors. And we also placed 3 tranches of the Dutch core residential funds, which we that manages our housing portfolio with 2 Dutch pension funds. Also, we doubled the investments in rural properties, and that has to do with better market appetite as a consequence of an increase in scale and improved prospects in the farming and dairy farming. The exposure to commercial offices remained very limited. And the refurbishment of our central office building in Utrecht has been almost completed. The poor performance of all real estate asset categories was better than the IPD benchmark And the total real estate exposure is now at the lower end of our target range. Chris explained already that we changed the accounting model. Also important is that, as you know, asset management is one of the core skills of an insurer. And we build a track record we have built a track record in management of investments for our insurance companies, but also we have built a track record in managing of real estate funds for third parties. And also, we founded a fund management company, which manages investment funds on behalf of policyholders and separated accounts. At the end of the first half year, we managed in our fund company SEK 7,000,000,000 and we also managed SEK 2,800,000,000 of these separated accounts. And we extend and we intend to extend also our service with fiduciary management for third parties, particularly in the field of the autoimmune pension funds, the MPF, in the pension sector. So in summary, equity and real estate exposure has been reduced in accordance with the decreasing available market risk budget. Equity showed a strong performance and the performance of real estate was also satisfying. That brings me to the overall conclusions. 1st, the asset base remained very solid and was supportive to the strong Solvency I and Solvency II position. We continued the controlled movement to less liquid assets. We further optimized our interest rate hedge and we reduced the real estate and equity exposure in accordance with the decreasing available market risk budget. Chris, that concludes my presentation. I want to hand over to you. Jaap, thank you very much. Ladies and gentlemen, I'm at Page 19 of the deck, our concluding remark. Now I can reread this page because I think we've gone through these numbers already. So there's no point in repeating myself. In terms of a closing of the presentation, maybe a small personal note. When I came to the office this morning, I got a text message from my wife. She said, Sweetie, good luck today. You have a busy day ahead of you, but I think you're going to have fun and it seems you're well in control. And she couldn't have summarized this presentation better. I guess life with ISR is busy, but we're having fun and we're quite in control. And that is to me the message I'd like to convey around this the first half year. Net profit up to SEK 3.97 million, operating profit up to SEK 280,000,000 and solvency between the highest in the industry. So a confident and proud management team. And with these numbers, we believe there is a solid foundation to return back to private sector ownership and to return to an independent future. With that, my presentation ends. Ready to take your questions. Ladies and gentlemen, we will start the question and answer session now. The first question is from Mr. Cor Kluis Rabobank. Go ahead please sir. Good afternoon. Korklaus, Rabobank. A couple of questions. First of all, about the Solvency II ratios, which have been very strong, of course. Can you give an idea which part of the Solvency II ratio is the ultimate forward rate? And somewhat related to that is those targets which you have been giving, the 120, 140 and the 160 for the Solvency II ratio, whatever the regulator is going to do, would you also consider those ratios on excluding ultimate forward rate basis? So what you presented was including, but let's say that the markets or regulators will focus more on, obviously, to excluding ultimate forward rate, would you still stick to those ratios? Or would you then reduce those targeted ratios? So that's on that item. 2nd item is more oil and commodities. Could you give an idea your investment portfolio on the equities and fixed income side, if you have exposure to that? If so, what kind of size and characteristics we talk? And my last question is about the 2 acquisitions which you have done, Xcent and the Indraht. What was the effect on the Solvency II ratio? Is that already in the presented Solvency II ratios, which presented the half year figures? And did you already take into account the rebalancing of basically the investment portfolios into that SORC ratio? The 3rd questions. Very good. Cor, thank you. I will take questions 1, 2 and 4. I guess Jacques will take question 3. The first questions are around the UFR impact on Solvency II. Our perspective is that the UFR is an integral part of Solvency II. Whereas in Solvency I, one could argue it was an external parachuted phenomenon. In Solvency 2, it's integral part of our Solvency 2 figure. The SEK 185,000,000 is our best estimate of the outcome of the standard model. There is some uncertainty around that number, not too much. I mean, my gut feel is you have a bandwidth of plus or minus 7.5% on either side, around the 1.1.1.1.1. However, if I were to strip down the Solvency II in terms of its underlying components, the uncertainty, the bandwidth becomes bigger and bigger. So that's why I'd be a bit hesitant to communicate as to ex UFR today because there's a fair amount of uncertainty in that decomposition of the S2 number. However, I can assure you the one thing that I'm very comfortable with. We reported a risk appetite of 120%. So to ex UFR, as per the June, safely, safely exceeded that risk appetite level. So instead of giving you the exact number, I can tell you it's at least higher than the 120 than is in our risk appetite. Would you look at revisit your targets if the UFR would be stripped out? Yes, if that would be the case, then you'd have to kind of rebalance the framework. It is my expectation that the UFR is an integral part of the Solvency II environment. The UFR is here to stay. And it's my definition DNB will not strip out the UFR, but will want you to manage a group as to ex UFR above 100. So if you have the ladder of management levels, EUR 120,000,000, EUR 140,000,000, EUR 140,000,000 that we run with, You can add or complement that scheme with Solvency II ex U of R2B above EUR 100,000,000. And I think that's the way the framework is evaluating. The acquisition the 2 acquisitions, Aksent and Eindracht together cost about 5 percentage points in terms of Solvency II. They were not yet in these figures because the deals were only closed as per end of August. They were only signed per June. So the 5% impact you will see in the second half of the year. But needless to say that from a return on solvency perspective, it definitely increased, exceeded 15% in terms of what it cost us. But the 5% will be impacted on the second half of the year. But as far as the UFR, as I said, we believe the UFR is an integral part of Solvency II with a framework for managing Solvency II including UFR 120, 140, 160 under almost the bandwidth, the boundary condition that ex UFR Solvency II cannot drop below 100. With that, Jacques, can you ask the question on the oil and commodities? Yes. Concerning commodities, we do not invest in commodities. And the reason is that we invest in instruments that generate a running yield. The second point is concerning investment in oil. In our, for example, European Large Cap Portfolio, we invest in accordance with the index. We are now underweighted in oil companies. And the reason is that we use very strict SY criteria. And we always we only invest in those companies and they comply with our SORI policy. Okay. Thank you very much. The next question is from Mr. Albert Ploegh, ING Bank. Go ahead please. Yes, good afternoon all. Thank you for taking my questions. First question is on the, let's say, the figure itself, the EUR 160,000,000 that you feel most comfortable with. Yes, that's basically, of course, a blended mix of businesses between Life and Non Life. So can you maybe give a little bit insight and then how you actually arrive at the EUR 160,000,000 figure itself? Your second question is you already mentioned that there are still some uncertainties also around 185,000,000, but the margin is quite small. Yes, is there also any discussion, let's say, on further risk add ons, let's say, a sovereign risk charge with the Dutch Central Bank? Or this is basically already quite certain to what the standard formula will be at this stage? And second the third question is maybe I misunderstood, but I think you mentioned that if you're above 160%, you have flexibility and you're able to pay a full cash dividend, so to speak. But you mentioned it over 140%. That basically gives you the ability to pay a dividend. So what does it mean between EUR 140,000,000 EUR 160,000,000? Is that still a full cash dividend or maybe a partial cash dividend to be sure about that? Thank you. All right. Albert, thanks for your questions. First of all, the level of solvency. Those are solvency levels at group level, right? 120 is a formally stipulated risk appetite that we defined as a group that we agree with their Supervisory Board. That number is derived combination with our ECAP and the ORSAP that the M and A requires us to run. Basically, you run a number of stress scenarios significant stress scenarios. I want to make sure that after stress, you don't drop below 100. So you take 100, add stress and that gives you then the risk appetite. So at 120, we believe this group is able to sustain significant amount of stress. That's where the EUR 120,000,000 comes from. The EUR 140,000,000 is the number that basically gravitates from various discussions with Central Bank. When we look at various acquisitions and we did discuss with them what does it take together declaration of new objectives, how do you look at dividends. It appears that 140 is a number that allows you to pay cash dividends. So 140 pays cash dividends without entering into a challenge debate with DNB. Of course, everything is situation dependent, but it's our presumption that if you are around SEK 140,000,000 you can more or less safely pay cash dividends. At the SEK 160, that's really the first law of FICHE. Basically, it's SEK 140 plus 20 percent and life is not more complicated than that. So if 140% is the limit, the level at which you can pay cash dividends, I'd like to run my business with a buffer, so I can be very sure to pay cash dividends even in a difficult year. And I can pay cash dividends even if we make a significant investment. That's where 20% markup comes from. And in all honesty, there is no more sophistication behind it than that. However, our discussions with the regulators seems that they are comfortable with that number. The next step for us to align and make congruent the solvency levels at our OpCos, different insurance entities. At this point, the minimum level for all the insurance companies that we have is around €130,000,000 €140,000,000 depending a bit on the business. In the next half year, we will work on calibrating the individual capital requirements on opco basis with this group wide letter of intervention, ladder of distribution. But again, the 20% is really, as I said, the first law, if you say it's 120% plus 40%. Okay. And maybe one follow-up is then, yes, I can imagine, of course, that the Central Bank also very closely looks at cash generation basically and also in comparison to the ratios and also your remark about the ex UAVR above 100%. I know you do not run the business, let's say, from a corporate holding perspective and remitting cash, etcetera. But can you give maybe somewhat color on what the cash generation has been? It feels to me maybe around €180,000,000 to €200,000,000 post the whole holding and financing costs. Is that something of an estimate that, that makes some directional sense? Well, we decided to keep the capital in the OpCos. There is no capital held at Holdco. The capital is held at the OpCos. At this point in time, it's remitted to the holding on an if and when needed basis. So when the group pays dividend to our shareholder, which effectively means you, the taxpayer, we take out dividends from the OpCos. When we need to pay taxes or pay costs, we take out dividends. So if and when needed basis. On the agenda for the group as part of the privatization preparations is to develop a more founded remittance policy. At this point, we keep the capital at the opcos. If you look at the amount of fungible capital at the opcos, so what could we safely upstream to the group? Let me formulate it this way. Last year, we paid CHF 140,000,000 dividends. We could at least cover the amount 5 times with the amount of capital that we have in the OpCos, looking at the OpCo capitalization from different angles. We look at S1, S2, E cap per OpCo. We could at least cover last year's dividend by 5 times with the monofilament fungible capital we have at opco level. As far as the operating annually derived or developed capital, the operating income of the group was CHF280,000,000 that is after the subtraction of operating holding costs. The only thing you need to take out there is the hybrid spend. So I think the $180,000,000 you mentioned is on the low end. It's probably more $280,000,000 pretax, take out tax, reduce the hybrid cost and then you have actually really freely generated capital that we have actually developed that you could always even distribute. If you look at the monthly generation of solvency capital in the last 6 months, on a Solvency 1 basis, the monthly creation of solvency organic solvency capital was well above 2%, could even approach 3%. It's my estimate that the monthly generation of Solvency II capital, so standard model SCR between 1% to 1.5% per month is what this group has been generating in the past 6 months. So various ways to answer your question. One is the SEK 160,000,000 is where you can actually pay cash dividends and invest. SEK 140,000,000 where you can pay cash dividends. We believe the fungible capital at the OpCos is more than sufficient to cover a number of years of dividends. And finally, the organic capital creation, metric 1, the operating result of the group is already reflective of holding costs. Metric number 2 is about either 1% to 1.5% or 2.5% to 3% is the monthly capital generation from an S2 or S1 perspective. Okay. That's very helpful. Thank you very much. The next question is from Matthias De Witze, KBC Securities. Go ahead please sir. Hi, good afternoon. I got three questions. First on capital, on Slide 14, you mentioned that required capital required capital under Solvency II would increase to EUR 3,000,000,000 using the standard formula, which is significantly higher than the one required capital of EUR 1,700,000,000. I just wonder whether this is a broad based increase across the different business lines or whether you see some units suffering a higher impact than others in terms of required capital. Maybe just to continue on capital, could you maybe comment on how the Solvency 1 and Solvency 2 ratio evolved in the start of the Q3, which has been particularly volatile. And then maybe to switch on the Life business. Could you comment on or provide some color on margins on new business in both DB and DC? I'm just wondering whether there is room to continue to offset the eroding individual Life segment with writing profitable group business. So how you look at Life earnings going forward? And then lastly, on financial leverage, you mentioned that you have more than EUR 1,000,000,000 hybrid capacity. Just wondering how you arrived at this amount? Thank you. Okay, Matthias, thank you very much. First, on the required capital of SEK 3,000,000,000, the delta between S1 and S2, it's a completely different framework. The biggest increase in capital is, of course, market risk, whereas in S1, additional market risk is not or hardly charged. And as 2 world it is charged. So it's a delta as in market risk. The other one in terms of business it's around the disability business, which is a reasonably longer tail nature. And that long tail characteristic of that business is not recognized in S1 world, but is recognized in S2 world. So those are the main gaps or the main deltas from S1 to S2. And have you got the specific number for the Life business or You're just too quick, Matthias. I was just about to say of the SEK 3,000,000,000, the market risk is slightly above SEK 2,000,000,000 Life business around SEK 1,300,000,000 Total Non Life, 1,000,000 and diversification and counterparty is the rest. That's actually negative, diversification detracts. So it's too little of 2 for market risk, 1.3 for life, 1 for all non life, which is the health P and C and disability together and the remainder is diversification and counterparty with. That's the rough breakup of the SEK 3,000,000,000 How does S1S2 develop in Q3? That's early to say we haven't run the full numbers. We have a weekly solvency monitor, of course. Hard to say, it's too early to give real guidance. One thing I'm pretty sure it's a single digit impact. So nothing major as far as Q3 is concerned, single digit impact, but too early to give the full numbers on that deal. Negative, I see more positive. Slightly negative, single digit negative. It's a stock market development. So I think the market we covered a bit today. So we do monitor these numbers we do monitor on a weekly basis, we don't manage on a weekly basis. In the Life area, the Life book is declining and will decline inevitably. On Life, we do manage the book for what we call unnatural They have been stable at 1.6% for the last 2 to 3 years. So the book is declining as per expiry, which means the book will decline, but will do so gradually. Roughly, if you look at the insurance liabilities, we believe they'll be down by 40% in the next 10 to 12 years. That is a rough speed of decline in the LifeBook expiry. In terms of new business, on the pension side, we really focus on writing DC business. We have an SME DC proposition where we now have more than 1300 customers. We run one of the most effective PPIs. We think we have now about let me say the number right, 33,000 individual customers in that business. So the pension business will be growing and we'll be trying to make up for the Life business. But the Life business declines only gradually, so to speak. In terms of new margins, you will find that any new business in funeral is margin positive. We are market leader in the funeral business. We've got some pricing power there. We don't write lots of new business, but the new business does go at significantly high attractive new business margins. New business margins in new life products are around flat, quite heavy competition, but new business margins are flat. On the pension side, DC margins are positive, although we have to build more scale to be a full fruition. DB margins are still slightly negative. That's why I've been holding back on writing new DB business in this very low interest environment. So from our perspective, the life book will decline. It will happen gradually. We're working hard in building up capitalized businesses. And that will add to the value of the group. But because we scale sensitive businesses, so that will just happen on a year over year basis. Finally, on the financial leverage, the headroom, we look at both the official regulatory headroom, so the rules for Tier 1 and Tier 2 capital. We look at the rules for S and P or the guidance from S and P from hybrid capital recognition. And we look at the most binding constraint from an S2 perspective and S and P perspective. And the most binding constraint determines how much hybrid capacity we have. And I think we have about SEK 1,100,000,000 hybrid capital capacity. And that is under what is the most binding constraints in term of leverage? Is it SMP or Solvency II? That's give me a minute, we'll look it up for you. Now let's take one more question and look up which exactly is the most binding constraint for you. Okay. Thank you. And the next question is from Mr. Farquhar Mure, Autonomous. Go ahead please. Afternoon, gentlemen. Just a very quick follow-up on the comments you made on capital generation where you indicated about towards 3 percentage points per month under Solvency 1 and around 1 to 2 percentage points per month under Solvency 2. Roughly, I think the math of that suggests that the capital generation is slightly higher, but not by very much under Solvency II. Could I just check I'm broadly correct in that conclusion? And then could you just outline the dynamics behind that? Because obviously, it's just a bit is there a degree to which that's just coincidence? I'm just trying to understand, given the frameworks are so different, how we can be arriving at roughly similar amounts in both? Thanks. Thank you. Fakar, it's a very good question. It is in an environment where interest rates fluctuate significantly and where especially in an S1 world, UFR then impacts your solvency. You need to take a number of assumptions and different routes, different ways to look at how much what's underlying capital generation because the profit you add and the interest rate impact both play have an interplay. If I look at S1, let me give you a number of indicative calculations. For example, the S-one number increased by 11% from EUR 285,000,000 to EUR 297,000,000 And we paid $140,000,000 of dividends. If you add those 2 up, that would give a plus of 19%, right, 11% growth plus around 5% to make up for the dividend that we actually absorbed. The number ex UFR increased by 20% from €204,000,000 to €220,000,000 Finally, the net profit, €397,000,000 basically all adds up into solvency over capital, it's about 23%. So from various ways you look at it, the amount of capital generation, the increase in solvency is about a good 20% over the last 6 months. Define it by 6%, you get to about 3%. We run the same number on Solvency II. The number increased by about 9%, but we paid our dividends, which gives you about a gross increase about 14%, 15% in the first half year. If we look at the operating income, SEK 280,000,000 that's the number that really feeds into the Solvency II number. Pretax, I take out a tax rate divided by SEK 3,000,000,000 gives me a number about 7%. If I look at the VA, the volatility adjuster, it moved from 21 to 27 basis points, 21 to 127 points. 1 point in volatility adjuster roughly as the second law of FICRE is a rule of thumb is about 90 basis points in Solvency II. So the expansion of the Solvency II figure is for about 4%, 5% driven by an increase in volatility adjustment. So if you add it up, I arrive at about little over 1%, 1% to 1.5% in the organic Solvency II generation. So I think in this field, S2 is probably a bit higher than S1, but it's probably more the interplay of interest rates, where the interest rate effect has significant impact on the S1 world and the UFR than on S2. So the fact that S2 is higher than S1 is probably more a coincidence and a byproduct of rate development than anything else. I would feel comfortable with saying, look, the relevant framework going forward is so what to do. That is how the world will look at it and how we look at the world. Little over 1% monthly SCR generation is probably a good indication of what the underlying earnings capacity of the book is. Great. Thanks for asking, indeed. As to Matthias, your question, we've got the winning answer. Yes. The winning answer is that the Solvency II headroom is the most restrictive and that is the figure that Chris mentioned of 1.1 there's another question from Mr. Roch, UBS. Go ahead please. Hello. Yes, thanks for taking my question. Just a quick follow-up on the interest rate hedging. Can you maybe give a bit more color on how you readjusted your hedging? And then secondly, are you now satisfied with the current status of your hedge positions? Yes. What we did, as you know, we hedged based on the economic curve. That means that when you look to the supervisory curve including U of R that there is always an over hedge. As interest rates were at very low levels, extremely low levels at the end of the Q1, we decided to reduce that hedge as I explained, by investing in payer swaps and payer swaptions. And that means that we moved somewhat in the direction of the curve, including URR and that we diminished the sensitivity to rising interest rates. So we diminished the sensitivity, the negative sensitivity to rising interest rates in that way. So you can say that we are more hedged. So we are now better hedged in an environment including UFR. And you want to keep the current status of this hedge position? Yes. We feel comfortable with the current position. We feel very comfortable with the current position, yes. Okay. Thanks very much. Next question is from Mr. Matthias David, KBC Securities. Go ahead please. Yes, thank you very much to take some follow-up questions. Just wonder on mortgage capital requirements under Solvency II, is there anything you could share on how that exactly works under the standard formula? And yes, what's your targeted allocation to mortgages because there are obviously limits to what insurance companies can absorb? And then maybe one question. I'm not sure whether it was dealt with already, but the disposal of the CRE development activities, Can you provide some insight into why you do this transaction and what the potential impact could be on the Solvency II ratio? And last question I had was regarding reinvestment rates. Yes, how do you look at the low interest rate at this point in time? What are you getting on as a reinvestment rate? And yes, do you expect to be able to keep your investment margin stable in this current environment? Thank you. Yes. Let's say, the charges on the Solvency II are calculated for in the counterparty, Mudula, of Solvency II. Yes, on average, it's always, let's say, a blended average of all the segments where you are invested in. So we have the energy guaranteed mortgage and you have also mortgage in different foreclosure categories. But on average, let's say, the charge is around 5%. And yes, the target in the strategic assets composition of the portfolio for mortgages is, let's say, 20% of the total investment portfolio. And the reason that we kept that at 20 percent is that also you have to take into account that mortgages have an aspect that they generate relative high returns and low capital charges. But on the other side, you have also to take into account the liquidity aspect of the mortgages. And is the DNB in this respect imposing any concentration limits? Or are they looking into the asset allocation? And are they concerned on excessive mortgage exposure or not at all? No, not at a concentration side as long as yes, you have, let's say, perfect collateral under the mortgages, then you have all the individuals that are liable for the let's say for the borrowing requirements. So that means that, yes, it's in the counterparty box of Solvency II. Okay. All right. Matthias, in terms of your following questions on the real estate development business, that was a business that we effectively inherited upon the nationalization of the group in 2,009 simply because the respective governments at the time drew a line at the border is that anything north of the border is ASR, anything south of the border is Raheas or Fortress Holding. And Real Estate Development happened to be north of the border, so it became part of our group. We are not in the business of Real Estate Development. We have a number of projects that we will continue to deliver. We'll live up to our commitments, live up to our responsibilities. But we are not the best owner of a real estate development group. We are an insurance company. And believe given the development of that business, the maturity of the business, the change in the economy, this is the time to start looking for a better owner of that business. What we have done is we marked down the value of all the portfolios to a discontinued sale basis. You could even argue a fire sale, but even a sale basis, a discontinued basis. And that number is already in the profit and is therefore in the Solvency II number. So the business is taking out of core activities. The loss has been taken already reflected in any number that you've seen today. So we believe the further sale maybe some transactional costs hiring the occasional investment banker, but basically no further cost as to the sale of this business. In terms of one question we did not answer, apologies, I'll just ask a question on the capital add ons in the Solvency II world in the Standard Model world. Couple of perspectives I'd like to share. 1 is there's a debate in the industry on the fiscal unity. We have presumed in the standard model that there is no such thing as a fiscal unity. We know there is, but in the world of Solvency II, there is not. We effectively had already taken that impact last year, anticipating this would be a hefty debate. So the fiscal unity has been let go already in the S2 numbers. We did a test in the first half whether our tax assumption would be prudent or aggressive. It appeared to be fairly prudent, the presumption that we've taken around tax recoverability. I could see some further upside from that in our Solvency number, but it's too early to realize that for this moment we keep as it is and there is no fiscal unity. As far as a capital add on for sovereign risk, there is no formal debate on that. There's no guidance on that. But if you look at our investment portfolio, for example, on Page 17 in our document, you can see the bond portfolio. I would find it hard to see a capital add on for home country bonds. I would find hard to see a capital add on for German government bonds. Anything be it but AAA rated home country bonds, that is a portfolio of SEK 2,800,000,000 roughly. You could debate on what a capital add on would be, but it would not have a very meaningful impact. It would be unlikely to have a meaningful impact on our capital ratio. So we'll add 50 basis points to 75 basis points capital add on for SEK 2,800,000,000 COVID portfolio. That would move the needle a lot on the standard model, the SEK 3,000,000,000 required capital. So even if that were to happen, I don't think the impact would be very major. To our perspective, we have a very robust set of assumption around the capital model and have a policy to preempt and take any adverse impact as early as possible. As per the reinvestment rate, Jacques can comment on that. Yes. We run a portfolio, let's say, at an average running rate of about 2.9% and including release of the share accounting provision of about 3.3%. Yes, important is to understand that our policy of increasing the illiquid part of the portfolio of the part of illiquid assets in the portfolio is driven by the fact that we want to avoid eroding of and rapidly decrease of the running yield. And when you look to our portfolio, we have a long duration portfolio. And that means that the process suppose that interest rates would stay at and remain at the low levels as current that this process of decreased running yields would be a process, a very slow process, a very gradual process, a very long term process. I think as a matter of fact, the result that we've done, we did an analysis I think in April. We had what if we reinvest the future cash flows at the current forward curve, the forward curve as per last April when yields were really low. That analysis showed the investment yield would stay above 3% until beyond 2021. So if we reinvest cash flows at the forward curve as per April, a couple of months ago, and still the reinvestment yield would say about 3, 4, at least until 2.21. So we believe that if rates would that would give us sufficient time to further adjust our book and would give us sufficient time to further make decent distributions to our shareholders. Great. Thanks a lot for the opportunity. Thank you. The next question is from Mr. Stephen Haywood, HSBC Bank. Go ahead please. Hi there and good afternoon. Just have one question on the difference between your standard formula and the ECAP model. Can you highlight the main differences that increase the ratio between the 2? You mentioned the fiscal unity before, but if there are any other big deltas, could you let me know, please? Stephen, thank you. The main difference between ECAP and NS2, well, the biggest one is the assessment of risks, the modeling of market risks. If you look at the standard formula, there are actually a few odd phenomena when it comes to, for example, correlation matrices or correlation matrices change upon shift up or shift down. Now there's no point in fighting EIOPA, that is just reality. In our world, we've taken, however, in our ECAP model what we believe is a more reasonable approach in terms of shocks. So the main reason the main difference is actually the market risk. The capital requirements for market risk and for SCR is different. It's about SEK 300,000,000. So the ECAP market risk is about SEK 300,000,000 less than the ECAP for SCR. 2nd dividend is the cost of capital. Standard Model DNB prescribed a cost of capital 6%. Now our insurers have some leeway to deal with that and have other numbers. We've moved the SCR to 6%, which I think is best practice of DNB. I believe some others may not be there yet. We moved to 6%. For the ECAP model, the impact we use 5%, so that impact is very limited. And then there is the tax assessment, which is about 6 percentage points difference between ECAP and SCR. So block 1 is market risk, euros 300,000,000 block 2 or small block E is actually the cost of capital between 5% or 6% And delta number 3 is the fiscal unity assumption, which is at around 6 points. Excellent. Thanks very much. There is another question from Mr. Robert Montagu, ECM Asset Management. Go ahead please sir. Yes. Good afternoon. Just a quick question on your hybrid bucket. You say you got $1,000,000,000 or $1,100,000,000 headroom. Tapping that bucket anytime soon? Robert, into tapping the hybrid capital markets, you appeal to my entrepreneurial nature. We don't need more capital as such with 185% S2 or 209 ecap, we have a fair amount of capital. At the same time, given where yields are today, given where spreads are today, it may be very attractive moment to pick up capital. If you look at the debate we've had in our investment committee, this may not be the time to have more market risk. If you don't want to add market risk, you got to take market risk, right? There's value on one side of the equation. So yes, we may tap the hybrid capital markets. We always like to be ready to do that. We believe the numbers are strong enough to convince investors. We don't need to, but we may. And it depends a bit on market circumstances. Our recent hybrids have performed relatively well. If you look at the performance versus peers, they've done well. They've been received well. So yes, we may come to market for a hybrid in the coming months. But frankly speaking, we don't need to. So we will be depending having it dependent on capital market developments. But sometimes, opportunity is too good to let pass away. Does that answer your question, sir? That's fine, yes. Thank you. Thank you. There are no further questions at the moment. Mr. Fiehret, back to you please. Yes. Ladies and gentlemen, thank you very much for your attendance. And as always, my wife is much better at predicting how things will go. This was a busy call. It was a fun call. And I think we show we've been fairly much under control as it is the situation for ASR. I'd like to thank you very much for your participation. Thank you very much for your well informed and well articulated questions. And we look forward to meeting you either in person in the coming months, coming weeks or talking to you again at the full year conference call in February next year. And in the meantime, if you've got any questions, you will know where to find us. Thank you so much and have a good day. Thank you. Have a good day. Bye. Ladies and gentlemen, this concludes the ASR conference call. Thank you for attending. You may now disconnect your line. Have a nice