Good afternoon, ladies and gentlemen, and Ageas colleagues. Welcome on our Investor Day 2023, midway our strategic cycle, Impact24. This slide, of course, I do not have to present to you anymore. We have announced this in June 2021, two years ago. I remember it was a long-term sustainable growth strategy, and at that moment, we said every word matters, huh? That means it is a strategy that does not look next at the current cycle of three years, but that also prepares Ageas for a longer-term future, even up to 2030. What I want to do this afternoon with you is a little bit where we stand today.
Also, how with this strategy, we face a new economic environment, because when we presented this, it was still—I mean, I was alone, and I was in confinement or whatever, and we are still in COVID. Since then, of course, we all know the world have changed, and at the end, I would like to share also with you a few insights towards our future. Remember, Impact24 had different components, starting with the core. The core and the DNA, where we have said we are in a place of strength. We are not bringing a strategy from a crisis situation, even if the world was in crisis, we said we were, we are not.
It was more with the philosophy, how can we continue that sustained performance that I think also under the leadership of Bart, we have been enjoying for so many years. What is the plan to continue this performance going forward, knowing that, of course, we also had the financial and strategic flexibility with the litigation behind us? We had a footprint with leading positions in 14 countries, and the first conclusion was that footprint is good.
We still have a lot of untapped potential in the core that we can unlock in this strategic cycle, and in that area, we had topics about the market development, the market growth as such, the distribution development, the commercial development, excellence and distribution, and also the just pure efficiency, helped by data and tech, which we thought, and we see today, is gonna know a breakthrough also in our industry. And then we looked at what we call these new opportunities, these growth engines, maybe not immediately profit-contributing, but preparing Ageas for the future. And we had identified health, protection, life, which in the context of the COVID environment, I think were very logical growth areas, but also the digital platform world.
We said that our direct digital distribution is still very, very limited, except, of course, the digital tools that we implement with our distribution partners. We are also now developing digital platforms as a distribution channel by itself, and we have added reinsurance. Because we have said reinsurance for us is an optimal way, a flexible way, to diversify, our capital base and the usage of our capital. We reconfirmed our model with a strong core, but with a strong local autonomy, and I'm even more convinced, and that's maybe one update I can give you already, on the geopolitical world, of today, I think that is a very strong model.
That we leave that local autonomy, but that we combine it with an even stronger center, and there we have, of course, created the CDSO office to make sure that all this flow of expertise, of innovation, of knowledge goes in an optimal way. And I must say, since COVID, I have visited now all our operations around the world, at least already two times, and I can tell you the ties and the sharing between the partners, I think, has never been as strong as it is today. And I think the creation of the CDSO office and all the work streams below that has absolutely helped on that. On new opportunities, we believe that we have enough potential organically. So we look at these businesses organically. We have said that we could also consider inorganically the fintech players.
But of course, as I said, there is a new focus on the investor side. It is more about cash, about remittance, about dividends. So we said, "Okay, let's further build these new opportunities out of our own organic capabilities," because this would be long-term investments with probably very late remittances coming to the group. And then we have indeed these options for the new markets. No real change there, so we are still open for in-market consolidation in case our partners would like to do that, or diversification if they are in one business line, and we should go in another one, and you will hear a case about this opportunity today. And of course, we also look at rebalancing of the group, but maybe with that more moderate growth in Asia, it's maybe a little bit less urgent.
While at the same time, we have seen that prices being paid for M&A in Europe are, I would say, sky-high of deals where we have participated, where we also seen going to to other groups. So we are open for this addition to rebalance the group, but with the financial discipline that we are already known for. And it's a little bit same conclusion in reinsurance, in reinsurance as well. We have now a solid team, Joachim has recruited more than 30 reinsurance experts, so we have ample organic potential to develop our own reinsurance activities, and at the same time, helping our reinsurance joint venture with Taiping Reinsurance. So where do we stand today? Well, I'm not gonna talk to you the whole afternoon.
We have three core speakers here who know a lot more about all this than I do. First, we will have Filip, Managing Director, Asia, all well-known to you already, because he will talk about China. We have run an investor's lens over the last few months, and we have really captured the feedback. And one of the most frequent feedback coming is China, question mark. So we have asked Filip to share with you our conviction on the continued growth potential in China. Then we have U.K., another topic that is very often on top of your mind, where we have said we are focused on a turnaround, a focused turnaround on personal lines to make U.K. fully within the core.
Ant Middle is here, our CEO U.K., to share his views, but also his outlook for the coming years with you. And then we have Heidi on stage. Heidi about strengthening, I would say, the core of our core, the foundation of the group, Belgium. Setting up a very big party next year for 200 years celebration in Belgium, and it has gone from strength to strength. And I think Heidi will also share with you, I think, how this role for the group will further evolve. And then there will be breakout sessions. There will be two breakout sessions for you. We are not gonna talk plenary about the growth engines, but we wanna share with you two updates, one on data analytics and AI.
We have Thomas Quirke and Frederic Crecco, which are our, I would say, two experts at that topic, which is becoming really alive in our industry. We have a second breakout session where Joachim Racz will talk to you about what we are doing and how it is going in reinsurance. This is something you also know very well. We started in 2021 with EUR 900 million, and we said we have a plan to come with 6%-8% earnings growth, bringing us up to a profit by the end of 2024 of EUR 1.1 billion-EUR 1.2 billion. Let's not forget that at that moment, we have also quantified that 80% of this delivery would come from the core, from unlocking the intrinsic potential that we are still having in the core.
Our footprint, one country less, we do not call France anymore. France is from now on, only a holiday destination for us, not a business anymore. But you know the reasons. I do not have to repeat the sale of France. So we are today in 13 countries, which is not an ideal number, so we maybe should add a country that we can go back to the 14. But that being said, it is a footprint which is still very strong and which is still able to deliver that core, even in times when we have geopolitical tension, where we have reshoring or friendshoring of global trade.
But we are not in global trade, and the topics within the countries, which is aging population, are even there, and I would say they are even stronger than ever before, because in many of those countries, the governments are more indebted than ever before. So developing these long-term solutions for aging with the private industry, and that's us, mainly life issuers and pension companies, is still very lively. And that is something I wanna say on the geopolitical part. We operate in China, in Thailand, Malaysia, in Turkey, with the Chinese, with the Thai, with the Malay, with the Turkish, in our model of local autonomy, and we develop it for the Chinese, for the Thai, for the Malay, for the Turkish people. So we develop the local autonomy, so we are not subject to all these geopolitical issues on trade and export.
We develop it within the countries, and in many of the countries, believe me, Ageas and finding solutions for Ageas is high on the political agenda. So those countries welcome international expertise that we are bringing to the table, so we are actually very confident that our model can continue to thrive under the current geopolitical circumstances. And here is this element of sharing. One of the questions I read regularly in your report is, yeah, is there synergies in such a model? Is Ageas being able to realize revenues and cost synergies? Well, I'm convinced that we do, and we make local leaders, local players in their market. And it's maybe... Is it cost synergies? Yes, sometimes.
I think, for instance, about when we set up a cloud for all our operations around the group. Sometimes it's revenue synergies when we learn about bancassurance in one country, and we bring it to another country. But I call it mainly management synergies, mainly in expertise and innovation. So all our operations around the world very often can fall back on an innovation or an efficiency improvement or expertise that is already available elsewhere. And that model, we are very much convinced it does have added value, because on the other hand, we say insurance is a domestic business, and the way you implement that expertise and innovation, that is local anyway. And so I think we combine a little bit the best of both worlds. And here you have some of the areas where it is very lively.
Banca is how it started. Yeah, we went to Asia because we had this expertise in banca, and very often we found banking partners to develop that. But we have now added agency to the table because agency is still the main distribution channel in that region. With Sprout, we develop digital solutions because digital platform sales with other third-party suppliers in a partnership model, and when we hear the word partnership, we always love to be active in that business, is something. But even ESG's products, ESG, believe me, it is not a European story only. We share a lot of expertise and insights and developments because this is still, I would say, a steep learning curve with our Asian entities. Technology, here I would like to mention the combination of data and AI and generative AI.
All these people collecting data, I was not really worried about because I rarely saw a company that could really deploy the data into an operating model, yeah. With AI and GenAI, this is gonna change, yeah? And I think a lot of our efficiency improvements, propensity to buy, underwriting, fraud detection, you name it, on an operational level, we will be able to start unlocking that if we can combine those two. And the value, later on, we'll talk to you about this. And this, we develop the expertise to a large extent at group level or in an opco in the lead, so that it is available for everybody. Finance and risk, the last two, is also from the very first days. Risk management, investment management, actuarial, product design, we have shared that to all the opcos.
I think now we have added IFRS 17, to name one, with the support of Wim. We have IFRS 17 for all our key operations around the world. Many of those operations in Asia, their go-live date for IFRS 17 was later than ours. It was sometimes 2025, 2026. Well, those companies, to a big extent, are ready because we have helped them, also for our benefit, of course, to deploy IFRS 17 early in the process. As the investors' lens have shifted to cash generation, capital and performance management is also a topic that has come high on the agenda. What are solutions? I think Philippe will give some great examples when he talks about China on capital management and how, as a group, we can help our partners in that respect. So a model that does deliver real synergies.
But of course, the world have changed. COVID has taken longer in some areas than anticipated, and I look mainly about, of course, the economic recovery in Asia, because the economic recovery in Asia came together with a war, and a war with geopolitical tension. A war that impacted global trade, and that global trade is, of course, impacting the economic recovery of many of the Asian countries, where recovery is fairly short. And we see this, a few elements in this post-COVID recovery that required us to update, to fine-tune, our strategic focus under Impact24. And then, of course, became this inflationary environment.
It came first with supply chain issues coming out of COVID, and then, of course, as a consequence, the uncertainty with the wars and the geopolitical situation, and then interest rates started going up and we got in the situation. Seems to be stabilizing a bit, but we got in the situation where we are today. But here again, it is the strength of our diversified model, yeah? When COVID was hitting in Europe and Asia at different times, we were always able to absorb the effects. When I now look, COVID was positive on the non-life side: less motor accidents, less workmen's comp. But it was maybe rather negative on the life side because investments were significantly under pressure. Now, the world have changed. Inflation is the opposite.
Inflation is negative on the non-life side, but has, with the rising interest rates, giving opportunities on the life side. And it is the balance that we have in the group that has allowed us to give a consistent performance. And so we are a resilient group based on the model that we have and the diversification that we have deliberately constructed in our model. And then at the bottom, and I first said, "Yeah, you put the picture upside down," but that was intentional. In Europe, the interest rates are going up, but in China, the interest rates are low for longer. We do not know yet how long, but at least low for longer.
So sometimes we have to switch our mindset, debates we had with AG, five years ago, are debates we are now having in China. How do you deal with a low-for-longer, interest rates? But where... And that's, I think, one fine-tuning we did, where Impact24 was a lot a story about growth. We said, "Okay, it is also a story about margin improvement and cash remittance of the businesses that we have," because that's how the investor's lens is shifting in this world of no more cheap money. Let me look a little bit about the KPIs, because that's one of the topics you're all here for. Let me first look at the non-life side. Well, strong growth in non-life, yeah? 8% over 2022, but +16%, at constant FX over the first, nine months of this year.
That is a combination of absorbing inflation and rate increases, as well as pure business growth. We were and we'll talk about that in the U.K. section. I think we were a fairly early mover on absorbing inflation in our premium setting. In Belgium, for 2/3, that happens automatically. In the U.K., and we'll talk about. And so we see the benefits of this 16% growth over the first nine months. And a combined ratio Impact 24 scope? Remember, if you follow us in the half-yearly reporting, this is still Impact 24 scope. That means consolidated entities of a combined ratio around 90-91%, in which you have approximately, because I hear you thinking, there is a discounting effect from IFRS 17. Yes, there is.
There is approximately 2.1% discounting effect from IFRS 17 in those numbers. So even if you would add it up, yeah, we are still, I think, well comfortably within the 95%. And also group-wide, and that's including the NCPs, we can deliver a quite solid combined ratio, thanks to strong underwriting performance, anticipating inflation, higher interest rates, but also, but also, business growth, thanks to very high customer satisfaction scores. If I look at life, growth is more moderate. We talk about +3%, and there is a combination of two important trends. The first trend is China. Strong growth in China coming out of COVID.
We have already announced that in the six months result, but we can actually confirm that going forward in the nine months results, even if you know that the interest guarantee has dropped on first of July. At constant FX, we still see +11% growth coming in China. But that is partially offset by two of our home markets, Belgium and Portugal, where bancassurance is less sexy today, not for the client, but for the bank, yeah. The bank makes nice margins on the savings deposits, so the interest to move it to fee business is less. We think it's a temporary issue. Belgium, by the way, has already found some good solutions to mitigate that effect and to drive the investment performance back up.
In Portugal, where also families are more hit by the rising interest rates than in Belgium, we see that there is some delay in the recovery of bancassurance . So there is two, I think, moving elements there in opposite directions. But rising interest rates helps on the margins, so we can deliver attractive margins. We are at 105 basis points for the first nine months. Of course, remember, specifically in Belgium, there is always a little bit of seasonality on the cap gains of real estate. The ambition is 85-95. That is the ambition that we give. And also on the Unit Linked, we are well above the target. And then a question that sometimes is in your mind, I know, is what's coming from real estate?
But I think we have a very resilient portfolio in real estate, which over the years by AG has been well diversified over different activities, so it's not only offices anymore. And do not forget, our real estate is almost not leveraged. Yeah, we are not a real estate fund, yeah. We invest in real estate with the pension liabilities of our customers. So these are the financial KPIs. Strong solvency also helped partially by rising interest rates, but a comfortable solvency on the balance sheet with the 220% under Pillar Two. And we see a holding free cash flow of EUR 965. That is an approximate number. What we have done is the first year, so the remittances over the results of 2022, minus the holding cost of 2022 and half of 2023.
So this is fairly stable outlook, halfway Impact24. So that should be at least half of the total number. Conclusion: this is a number that we are well on track to deliver within the range of EUR 1.7 billion-EUR 2.1 billion. But more importantly, is also at the bottom, where we have said that the cash flow will be supported by capital generation, yeah, so that it is sustainable for the future. And that is also something we can confirm in the old scope, yeah. The capital generation over the same period is EUR 1.076 billion, meaning consolidated entities, and for the NCPs, we take the dividend, yeah. Remember that we have switched definitions. We have implemented the capital model in all our operations. So if you would take full scope, yeah, the EUR 1.076 billion is even a lot higher.
We talk about EUR 1.66 billion, so that means well above the free cash flow that we bring to the group. That has allowed us to also deliver on our dividend commitment with a payment of already EUR 810 million. The result in June results, I mean, in August, we have given you a guidance that's subject to weather conditions that we would aspire to do EUR 1.1 billion-EUR 1.2 billion for the year coming, from EUR 599 million over the first six months. Well, at this moment, almost end of November, I can reconfirm that ambition, yeah.
We have taken into account the effects of the storms, which is approximately EUR 40 million impact for Belgium and U.K. combined, but that is compensated by a very strong non-life performance, specifically in Belgium, where we have very good non-life performance, and also the recovery that we start to feel, the turnaround that we start to feel in the U.K. business. Then we have a tailwind on the reinsurance side in our first year also of external reinsurance. But do not forget, a big block of the profit of reinsurance is still coming from the capital management. And so there we mirror the performance of the opco at the reinsurance level, but we also are looking forward to very attractive reinsurance results for the year.
The operational performance is actually quite solid everywhere in Asia, but specifically, I think, to highlight also Belgium and the effects of the turnaround of the U.K. Conclusion: EUR 1.1 billion-EUR 1.2 billion, we are delivering on our Impact24 ambition one year early, yeah. We have set that ambition for end of 2024. We are now looking forward to realize that by the end of 2023. Let's look a little bit about cash remittance. I said that the world have changed. There is no more cheap money, and you are all looking where the money is and how the money can potentially be distributed. Well, over 2022, so the remittance in 2023, we have given you the number, end of June, of EUR 713 million expected.
Asia is slightly higher, so there is a EUR 7 million extra coming from Asia, so we are now looking forward to remittances of EUR 720 million, yeah? But we also have two exceptions. The top one you know already, EUR 185 million from the sale of France. But we have also asked AG to launch an interim dividend to the group, yeah. Remember that we have started an interim dividend as AG as one year ago, and that brings us with two reportings in June and in December, a little bit of volatility in the cash position, yeah. Because we get all the dividends in before June, we pay half a dividend, so high cash position until June, and then we pay a second half in the second half of the year, but no remittance anymore, so then we drop in the cash position.
We wanna give you a more solid, view, a more stable view on the cash evolution of the group, and that we do by asking, our opcos, Belgium, in this case, to start with an interim dividend. That is something we expect to continue, in the future. And so this week or last week, I think, AG has, upstreamed EUR 200 million interim dividend over 2023 in our cash position. For next year, upstreaming of this year, we expect approximately EUR 750 million-EUR 800 million upstreaming, coming in. Of course, can only be fixed when the full annual results are known.
We have, I think, a very clear pattern to continue that in the future, meaning a progressive dividend, and then, of course, taking into account the holding cost, capable to take the cost as well as the dividend that we pay out to our shareholders. The remittance from Belgium and reinsurance is growing in line with the evolution of their profit. You will also see that the dependency of the non-controlled participation is still fairly low, and that is related to a question you sometimes have on China. If China would pay a lower dividend, well, the overall dependency of NCPs is not all. We are a diversified group in business, but also a diversified group in remittance. So we will not fall apart in case China, for a year, would pay a lower dividend.
Then you see on next year, so 2024, we also have a one-off, that we can already announce to you. There is the internal sub-debt on -lent to AG, which comes at the first call date, in the first half of 2024. AG has today a very strong and solid, solvency, so this funding at this moment is not needed, so we can add that back to the cash position of the group next year. Dividend, I want to tell you something about dividend in the closing, of this, afternoon, but for the Impact24 cycle, I can tell you that at this moment, we are still fully on track to deliver on our commitment, which, as you might remember, we have strengthened. It was EUR 1.5 billion-EUR 1.8 billion.
We have said it will be the upper range of this, and that is also a commitment I can reconfirm to you today. If I then look at the cash, one of those other topics that I occasionally hear in interactions with some of you, well, we have brought these extra remittances in, that I have just showed you, and that means that we have actually replenished the cash after introducing that interim dividend of the group, which was like half a dividend more that we have paid. If you look on an accounting year basis, we have replenished the cash we started at the end of 2022 with EUR 624 million.
We have that EUR 720 remittance, France and the AG interim dividend, minus the unexpected holding cost of EUR 175 for the year, and the dividend we have paid being EUR 540. So that means we will probably end the year between EUR 900 million and EUR 1 billion of cash. Also bringing back comfort, I think, that we have an ample buffer for dividend and holding costs for at least one year. Next year, we think that payout and upstream will be in balance again. So that's why you see a small line from 2023 to 2024, but then we will add the additional EUR 350 coming from the debt on-lent to AG, and that should bring us comfortably above EUR 1 billion, of course, assuming all other things being equal.
So these are my key messages before we go into the deep dives. I think Impact24 was built on a very sound foundation, preparing for our future. Delivery on growth and on earnings, but I wanna add that, that also delivering on the cash remittance, and the biggest part of that is coming from our core business. We have that model of a local winner, local winners with local brands, but having access to expertise and innovation, and that does give us revenue, or that gives them, actually, our businesses and our partners, revenue and cost synergies. And that model is, I think, resilient in a world of growing protectionism and geopolitical tension.
Altogether, when we bring that business then back into Ageas, we have been able to show, I think, a very balanced performance, a resilient performance, based on growth as well as on margin improvement and on cash remittance. That's all I wanted to say you as an opening of this afternoon. I'm happy to give it now to Philippe, who will take you to China.
Right. Thank you, Hans, and, welcome, everybody. I assume this just goes further on to China. I just arrived from China to London. Now, I take you back to China. It's obvious that, China has become a very material part of Ageas, right? And that 2023 has been a very complex year for China as well. So the geopolitical and the macroeconomic situation has been the has colored many debates throughout the year at all types of levels. And from my perspective, it may have blurred even a little bit, the view of investors on what is really happening in the Chinese market. So we chose today to focus only on our core entity, Taiping Life, and, how that is, developing.
So I'm gonna elaborate and allow us to say that after 22 years in China, with China, for China, as Hans said it, we should be able to give you some deeper insights on what we feel that is happening there. So I'll elaborate a bit on the financial performance, first, the commercial, then the financial performance, and I'll spend more time on the solvency situation, because I know that is a lot of questions related to that. And I will give also a bit of an outlook on the longer-term development cycles that we see in that market. Let's kick off with the commercial update, and let me start with saying that coming out of the COVID period, 2023 so far has been a very strong year, actually, for Taiping Life.
Of course, here you can see the main KPIs showing the performance over the first half of the year. All figures I present here will be in RMB, so at 100%. That gives you the best view on how the business is really faring without the distortions of FX fluctuations. All these top-line indicators are in the green with very high, I would say, double-digit numbers for new business inflow, both in terms of volume and value. Now, the context, obviously, is relevant. Interest rates in China, as Hans said, they have evolved very differently from what we've seen across the globe. They stayed at a relatively lower level. Current bond rates, 10-year is zooming and hovering around 2.7%.
First, maybe a look at what we have on the balance sheet there in terms of the book. About 60% of our business in China is participating. That means there, of course, you have some flexibility in absorption of margin fluctuation. And the yield spread versus on the asset side, versus the guarantees that are really offered there on the participating book today is still around 2%. On the non-participating book, which represents about 27% of our balance sheet there, that yield spread is around 1% for the existing book. Now, important event throughout the year, and that was obviously end of...
Beginning of August is the lowering of the pricing interest rate on the non-par book, where the guaranteed rate was, or the pricing rate, because to be specific, the pricing rate was reduced from 3.5% to 3% to safeguard the margins. Now, this led to very high sales, as you may have noticed over the first half, and I'll come back to that. But it was also the expectation of the market that after that repricing, all of a sudden, the market would dry up, right? You say everybody's gonna anticipate a lowering of the interest rate, and then we'll see a dry market afterwards. Now, that is absolutely not the scenario that we saw unfold for Taiping Life at this moment. These are the top lines for the first nine months.
Of course, we have a spike in June, July, but August and September, we see decent growth rates. Of course, there is little or less new business in there. When we look at the new business separately, of course, the spikes 185% and 120% in anticipation of the lowering is very, very substantial. But the drop in September was only 6% in new business in comparison to last year. And there, Taiping Life is doing actually quite a bit better than what we saw come from peers. The reason is, and if you ask me, that for many years, and I've made that point a few times at Investor Days, that Taiping Life, we've been focusing on getting more quality and professionalism in distribution. And that seems to have paid off.
If we look at the distribution channels and how they're currently faring, of course, the main distribution channel remains agency. We have about 300,000 agents at this moment. 50% of the new business comes from that channel. The other main distribution channel, as you know, is bancassurance. It's about 41% of the new business. The other channels marginal, maybe 6%, but growing. There you will find and Hans into the bit of it, the digital platform gains. We sold this year, roughly about 340,000 policies already through distribution partnerships on Ant Financial, on Tencent, WeChat, and a bit less now on telemarketing. That's getting out of fashion, I would say. But the digital platform gains in Asia, not only in China, they get some traction.
We see the same happening in, India, in fact, with the Sprout initiative. Now, the number of agents, and we know that in the industry, has been under pressure in recruitment for quite some years, and COVID has not helped them to convince people to start agency in the middle of not being going out of your house. That was not beneficial. But the decline we saw here was actually, not that much and quite resilient for Taiping Life. I mentioned already that we had this deliberate focus on quality and productivity improvement in that channel, and you can see here actually proof of, of that. Yeah. It's paying off, quite, significantly. The regular premium, first-year regular premium, agents with over CNY 1 billion, call it, the Chinese version of the MDRT type of, concept, strongly increased with 57% over the year.
Of course, helped by the fire sales, but still. And the other point, obviously, their monthly regular premiums went up quite a bit per agent. This in combination, of course, more than offset the, or should I say, the drop in the number of agents. In bancassurance, we have a similar pattern or a similar strategy, focusing more on quality rather than on quantity, but here, the network stays stable. Taiping Group or Taiping Life, in this case, distributes roughly through 70,000 bank branches in signed up agreements. All these bank branches, roughly 10%, is active on a monthly basis because, you know, they circulate. They're serviced by about 12,000 bank agents, what we call banca agents.
Here also, you can see the effort that was put in getting more productivity out of these agents. Yeah. All these increases are, at six months, we're 80% up. That is a lot. And some of you may be aware about upcoming regulatory changes and focus on expense control in bancassurance channels. This will be very helpful in that respect because it will allow us to manage the expense overrun reduction more effectively. So, if we look at the top line growth, of course, it benefited from high new business growth, but there is this other thing where Taiping Life really stands out. The persistency rates are extremely high. Compared to the market, they've always been in the top tier.
We've always been focusing to embed persistency KPIs throughout the whole distribution channel, from the front end to the back end. They all share it. It's a minimum requirement persistency ratio they have to make, otherwise bonuses are forfeited. We're quite vigilant on it. It has paid off. You see a little dip in 2022, I agree, but that's because the agents couldn't go out to collect. But in fact, we've always been running extremely high persistency rates. I would say nowhere seen in the region, and even in China, they are extremely high. Now, that strong growth in inflow, the, obviously translates also in a strong growth on the, the liabilities, right? The balance sheet is still growing at 13%, and this is for the first nine months only. This is not year-on-year.
This is still a young balance sheet. There is still profit growth underlying this for the future. It is not a mature balance sheet. Now, over the year, there's also been a lot of stories and worries, let's call it like that, about quality of assets in China, right? So I wanna just make a few observations, because first and foremost, do not forget that from day one, we have put a lot of expertise from Fortis at the time, from the banking side, actually into Taiping Asset Management, setting up their risk and credit risk models. Even today, still, the CRO of Taiping Asset Management is an AG asset appointee running these models. So we have been able to steer away from too low risk exposures. Most of the fixed income is triple A.
Yeah, be it on a local rating basis, but that's what it is. The segment where everybody's worried about is the local government financing platforms. We've actually not participated in any material way. I think it's less than 3% of the fixed income portfolio. We only focused on the provincial and government central government-related vehicles, so we had no accidents in that area. Second thing, in equity, yes, it's a high percentage, but also there, it has come down a bit. I don't know, some of you may have seen these figures before. It hovered around 18, we have brought it down to 15. There is some de-risking that happened, and a substantial part, and that we, for two years, we already talk about it, is high dividend stock, as more considered buy and hold for the dividend yield.
The other point is we have very little exposure on property. Most of the direct property is actually just owned buildings. It's less than 3% of our balance sheet. In that context, specifically, the concern on not on direct property, but on property developers in general. The overall exposure of Taiping Life to property developers in any form of instrument, whether it's direct initiatives or it's in debt or equity, is less than 4% of the portfolio. Also there, we have not seen any material accidents. We have not been involved on the, any of the major defaults that have been. So the quality of that asset book is actually quite well managed. Now, let's have a look at the new business value metrics. I think that's also of importance.
You can see here, and this is on six months, the new business value growth, which was 28%. Yes, and 325 in agency. Agency really leads their charge. In bancassuranc e, it's less. Bancassurance has always been more campaign-driven, you know, and that is also one of the reasons the regulator is cracking down on some of the sales practices there. So we are not against, actually, some of these regulatory changes from that perspective. But nevertheless, overall, 28%, up. There is a little bit of squeeze on the margins because of the low interest rate. Keep in mind here, maybe one or two things. First and foremost, the margin you see here is the first half. The second half in China, margins are always higher, right?
The first half is always impacted by the campaigns of the beginning of the year. Just to give you... It's not on the slide, but the second half of 2022, the full year, the 13.5 you see for the first half went up to 18.7. And this year, obviously, we will have the effect of repricing in August, also coming into the picture for the second half. It may lead to a bit less volumes. That is possible. We will see, we saw the 6% drop in September. We have a similar level of October. The figures have just been released, but it will be offset by margin increase, so we are not too worried about that at this moment.
Other point, and that is more forward-looking. You will be, and I never thought I was gonna say this, thank God for IFRS 17 or the IFRS 9. We are very happy with that, as a group because it allows us to give consistent and information about our activities in Asia on the same basis, the way we report on it for Europe. It will be comparable, and we will have the same metrics. And that is what Hans referred to. We took the effort to really help out the companies who were not yet moving in Asia into that metric, to get ready for it, so they're in the lead. But we will have this information, and this is the whole of the—I think this is the whole of the Asian book, because...
Yeah. No, this is China in itself. I'm so sorry. This is Taiping Life. So you see here the new business, and this is over the first six months, CNY 9.1 billion was added to a CSM of CNY 195 billion. The amortization rate, which is the release, is around 8%. That's maybe of interest to you, but it's about 8% is being released on a yearly basis. And together with the time value, over the first half, about CNY 5 billion of CSM was added. Also, again, keep in mind that the first half of the year and the second half is not the same in terms of margin on new business.
But the message here is actually that we will have better monitoring and will provide investors and analysts with more analytics now coming out of IFRS 17 that are comparable what we have for our European business. It was always a challenge to be more transparent and consistent; this will surely help. So that's my summary takeaways on the commercial development, you see. I trust that I have been able to give you a bit of illustration that the commercial performance of Taiping Life has indeed been quite robust, and that focus on getting quality in distribution has really been paying off this year.
If you compare them with the top tier in the market, these metrics will probably be very much in the top of what you've seen or heard. If you look at some other players, and no names, obviously, but the decline in September was between 4% and 10% on GWP. Here, we still saw a growth of 5%. That's a 9%-15% gap. I really attribute that to that constant focus on performance in the channels. So let's now maybe touch on a few aspects of financial performance. Obviously, for you, maybe even more important than the commercial one. Of course, we're not gonna go into a deep dive on the results, right? I leave that for result presentations.
But I do wanna show a few points related to profitability, but more importantly, obviously, solvency, because I know that that is where most concerns and questions are about. This is shown, by the way, in an Ageas share and in euro. And maybe the two points I wanna share here with you is first, yeah, the operating result and solvency. I'll immediately go to the next slide here. And so, again, here, I could say, thank God for IFRS 17 now. For many years, I've been presenting in every investor call an underlying result to try to explain where the unbalanced impact of valuation interest rates, where it was only optically impacting the liability side and not the asset side, that the dichotomy didn't work, and we've been showing underlying results.
That is, over and done with. What you can see here is the results for nine months. It's a scoop on nine-month results, but, Taiping Group released nine-month results for Taiping Life in their solvency update. The net operating result on Taiping Life was EUR 383 million under IFRS 17. That's in line, actually, with that very strong underlying result we showed last year, right? Very close. But please remember last year, and I refer to end-of-year result announcements, that last year was benefiting from a few things. Among the most important one was, very, very low claims at the outset because of COVID. People didn't go to hospitals. This year, in the beginning of the year, I mentioned it also in the result call, it's a bit in reverse.
There was a catch-up on the health side. We see that moderate and come back to normal levels in the second half, but that is one of the differences. And the other one, undeniably so, is the weakness of the yuan. There is a big effect difference between the two components. But that's not the point of the presentation here. I would say this result is actually quite strong indeed. Now, sorry, I lost it a little bit. Yeah. Right. Solvency. I think this is also extremely important. So we say operating results are solid. Commercial performance is good. So where lies the challenge for China? And then we come to solvency and capital. And here, you note that there is a concern about that drop, you know?
So we are down now to 162% on the comprehensive and 81% on the core. So let me clarify here in detail, maybe the situation. First and foremost, the minimum solvency requirements from a regulatory perspective are 50% and 100%, so there is still quite a bit of margin there. Of course, it has been very volatile, but there is still a buffer. Nevertheless, at the beginning of the year, the 162 was 194, so it has been rapidly rolling down the hill. And so there are actions that management is taking. On the product side, I already spoke about actions that are being taken in terms of focusing on VNB, getting the expense overrun under control, because just operating profit is still the best source of core capital, right?
But at the asset side, we also have been active in real de-risking by trying to accelerate the closure of the ALM gap, but more importantly, also relooking at the risk-return characteristic of the asset mix. I pointed already to a decline from 18%-15% in the exposure on equity. Obviously, and that liberates capital. So we're really looking to the optimization of risk return characteristics of the asset mix to make sure that we have an ex- or should I say, an efficient use of risk capital. The second thing, and that is probably the most important one and material one, is that we are launching the supplementary capital issuance, which is a Core Tier 2 instrument. It's a perpetual debt instrument, and timing is lining up a EUR 20 billion issuance of that instrument.
This will be recognized in core capital, and is hence a very, very effective instrument, given the fact that it will have a double effect because of the value future profit recognition that can be attached to it. The issuance of this EUR 20 billion could happen in two tranches. One may be still this year or the beginning of next year, and the second one in 2024. This program on itself, the two tranches together, would add 80% to the comprehensive solvency ratio and about 40% to the core ratio. So that changes that picture already quite significantly. Now, the C-ROSS framework is still moving. We know that the current cap I was talking about on value of new business being recognized in capital is at 45%.
It will go down further to 40% next year. That move has obviously also impact on these ratios, and there, the impact on the core would between around 7%, and on the comprehensive, around 14%. So of course, the issuance of that instrument will far offset this impact. So of course, the very positive impact of the, the debt issuance, but there is one other important component related to hidden sources of capital in China. And whether it's gonna be immediately unlocked or whether it's gonna be unlocked when IFRS 17 is introduced in mainland, also as the accounting standard remain to be seen. But in the current solvency regime, the unrealized capital gains on this held-to- maturity bonds are not recognized in the core capital, whereas the valuation interest rate applied on the liabilities is.
There is a buffer of, at this moment, about CNY 35 billion unrealized capital gains on these bonds at HTM, which is not in the capital. If you look at the portion of that that is attributable to shareholders, right, but some will be attributed with the Par Fund, about CNY 17 billion of that is attributable to shareholders. And that in itself is another, I would say, 35% potential impact on core and 70% on comprehensive. Whether that will be unlocked in the short term or in the longer term remains to be seen, but it's something that is actively being looked upon. It would bring, obviously, more balance in C-ROSS II recognition of valuation of assets and liabilities.
So to conclude, actually, my main point is that, yes, there are instruments available to the management to go through the cycle we see now, and they are quite substantive. Yeah. But also important, and that is what we're showing here, is the point that Hans made on the operational capital generation. These are figures for the whole of Asia region, but in this room and in many other rooms, we know that most of it, obviously, is driven by Taiping Life. Over the first nine months, the operational capital generated was around EUR 1 billion in Asia region. The capital consumed operationally by the new business growth and various other actions was only EUR 210 million. So we see a very high operational free capital generation.
Now, the reason that the EUR 210 million is so low has something to do with what I mentioned before. There has been some de-risking on the balance sheet, right? So we have been trying to optimize the risk consumption, so the consumption is a bit lower. But nevertheless, if you look at these ratios of operational capital generated to consumed, last year, that was around 300%, and this year, it's almost 500%. What does that mean? Obviously, that there is a substantial operational capital regeneration in case fluctuations of markets and the macro stabilizes, solvency ratios will recover quite fast. And moreover, it also bodes well for longer term, of course, dividend flows. That there may be short-term pressure, depending on how they deploy these extra elements that we talked about on dividends. Okay, we'll see.
CTIH also needs dividends and wants dividends. Let's, I can assure you that we're very much aligned. And what we're also very much aligned on is that given all these instruments, we don't see no reason at this moment why there would be any need for shareholder capital injections here. There is still ample instruments, and the operational regeneration is very strong. So, that is a concern we do not share at this moment, with many of the investors. That is not on the agenda. So these are my main points on the solvency side, and let me just add a few points which relate to our longer-term outlook on that, future market trends. First and foremost, let's not confuse GDP growth and growth of life insurance markets.
You see here GDP patterns and life insurance growth patterns of the Chinese market over the last years. Come on, all these spikes and fluctuations have nothing to do with GDP. These are mainly triggered by exogenous events, change in regulation, opening of market, distribution adjustments, the pandemic. But the real underlying, and there are quite a few, I want to add that regulatory developments in the pipeline. I see some concerns being raised of how will this impact the market going forward, huh? But if you look at them, and they're all from this year, what is the regulator actually focusing on? They're focusing on initiatives that really drive pricing discipline, that try to prevent aggressive commercial behavior, like in the bancassurance channels, where these margins are really, really thin.
They try to avoid mis-selling and stimulate treating customers fairly and need-based selling, and they try to install more discipline on cost control. How can I not be happy with that? Yes, it may, in the short term, make it slightly different to make the transition, but from a structural professional perspective, looking at the longer-term outlook at this market, I think this is a lot better than what we see today. I think it will lead to more profitable, more disciplined market behavior going forward. But the real drivers are still the same, strong macro underlying.
The real drivers come from the emerging middle class, who have the capacity to save, where we see by 2025, and you see how rapidly to end up, that the class who has access and surplus assets, which we call, in this case, above EUR 6,000, is going to 86% of the population. We also see this extreme high savings rate, always been notorious in China, right? 45% it is now, of GDP, is household savings. This is CNY 1 trillion of wealth accumulation a year that is going to the savings market. And then you have to combine that with, obviously, the reality that property markets are not very popular at this moment, and a lot of money was going in there. You see what has happened, certainly this year, on the investments in real estate problem.
Some of these are clearly going into insurance, and we still have a low penetration rate. So there is still ample room to expand on the life market based on these fundamental macros. And then, obviously, and I, I think everybody in this room knows, there is another driver in the making, the pension challenge. China has entered this area of, I would say, aging, maybe 10 years later than a few other markets, but it is doing it quite fast. And, the One Child Policy is creating in that society another challenge, right? For some families, there is one adult having to take care of two parents and sometimes four grandparents. That's not gonna work. So, the government has started to take initiatives to stimulate the development of the pension market.
They opened up the third pillar, but they're taking a few others, and Taiping Life as one of the companies who has gotten a license to join the pilot in that third pillar. But in fact, like virtually everywhere, there is not one pillar behind the pension market, and the third pillar is in design and is the smallest one. In fact, there are the three pillars, like everywhere, and our sister company, Taiping Pension, is licensed throughout all under pillars. They have a full license for building pension fund solution, pillar one, pillar two, and pillar three, and all adjacent services like trustee.
So combine that with core expertise and that we have in employee benefits, certainly in the second pillar, it is something where we think we can create a new engine for collaboration and growth. We have very strong capabilities in employee benefits. We have very strong capabilities in health and care in Belgium, but also in Portugal. And we're looking how we can put them to work in combination with the access that Taiping Pension has to the pension market. You may be aware or not that there is an auction running on 10% on Taiping Pension. We are participating in that auction, obviously. We don't consider that M&A, we consider that making sure that our product market footprint is gonna be able to access the growth opportunities in the pension market.
Now, to give you comfort, it is a small amount. It's a 10% of Taiping Pension, which is up for auction at EUR 140 million. But it will give us access to what we believe is a strong growth engine for the next phase in China. With a partner we know, we will be well-positioned, and we can continue leveraging our capabilities as we did before. That actually sums up my main messages for today. So to conclude, takeaways from my presentation, I say, first and foremost, despite the challenging macro environment and the uncertainties, we observe, first and foremost, a very resilient operational performance and excellent commercial performance and top line growth. And actually, also, if you look at it, sound margin development, up 28%, which before the repricing.
Secondly, i t's clear that in the channels, the focus has shifted, and that happened before, but now you can see the effect of that from a focus on quantity to quality, and that is paying off, and that is gonna be important for the transition to a more cost-effective channel. What the regulator is driving now in bancassurance, that may also come for other channels. And thirdly, we see the IFRS 17 regime and strong operating profits and a strong operating capital generation being there. They should provide sufficient support for future dividend. And there are enough instruments in place to get us through the current cyclical solvency pressure. And indeed, we are aligned there with our partner, that we are not looking at capital injections and we feel there is still room for some dividend.
May it be a bit less than this year? Yes. But this year, Asia still paid EUR 130 million dividend. It's not that there was no dividend coming. And then finally, I think, we see potential in the life market, that we see a shift and a huge market development in pension health and care, where we can continue riding our value add story. So from our perspective, China's insurance market race is far from run, and we are well-positioned with our partnership and our company. Thank you so much. And now back to the U.K., I forgot.
What an overwhelming introduction that was. Thank you very much for that. I'm gonna need a little bit of that. Fantastic. Good afternoon, everybody. I'm Ant Middle. I'm CEO of our business in the U.K., and I've led our U.K. business since 2020. I'm delighted this afternoon to be able to share with you the progress of our U.K. business today, illustrating the progress of our strategic transformation that we set out on back in 2020. What I'd like to cover this afternoon are four main things. A brief look back at the U.K. business over time. Just a reminder of where we've come from. Secondly, I'll just run you through the really significant choices we made actually in 2020 to reposition the Ageas U.K. business.
Thirdly, I'd look at our progress against those choices, against the strategic objectives that we set for ourselves, and how we're making a step change, as a newly focused business in the U.K. Then lastly, how all of that transformation comes together, and how it's converting into results and an ambition for future years. So that's what I'd like to cover in the next 30 minutes or so. So as I said, first, a quick look backwards. Back in 2020, I guess a change of leadership just gives a natural opportunity to take stock. And on the left-hand side there, I think some pretty familiar characteristics for anybody in the room that tracks the U.K. market. The U.K. market, as you know, has very unique demands.
It's price sensitive, it's deeply technical, rapidly evolving in terms of the regulatory environment, and it's always obviously been highly, highly competitive. And generally, inconsistent returns delivered as well. And to be able to, to, deliver, respectable returns, you really do need to, to outperform. And where on average, people don't, there certainly are, and as we look at things in 2020, we look really closely at those insurers that do outperform and have done so over time. And in particular, looked at the winning characteristics of those, winning insurers. And it kind of, for us, boiled down to, to those three things in the main. Those businesses that win and win over the long term are generally very focused insurance models. Secondly, built on deep, strong technical foundations.
And thirdly, they've got fantastic cost bases, effective, efficient, competitive cost bases, all of that adding together to be able to deliver outperformance over time. Looking back at the Ageas U.K. business over time from that point looking backwards, I think we would reflect now and say that we had become quite a complex business. A business that was operating across a very broad waterfront of business models, distribution channels, products, and brands, and with relatively limited integration. And in terms of results over that time, I think we would describe the results over that period as actually average for the market overall, but clearly at those kind of operating ratios, not good enough in terms of the expectations of a normal shareholder return or what we would expect of ourselves.
So average performance, simply not good enough. Outperformance required to offer the necessary returns. So while there was definitely lots of work to do, we could certainly reflect at that time on some really solid foundations for the Ageas U.K. business. There was already work being done to simplify the business and restructure the business. And we've always had real strengths in a number of areas, and I would just point to these three. Our customer service reputation has always been incredibly strong. We've got a caring and delivery-focused culture in the business, and that certainly continues, and we've got an incredibly strong broker distribution franchise, something that's been built over time and certainly been maintained and built upon in more recent times. So some really strong foundations to build from.
So having taken stock, it was very clear that we needed to make some bold decisions to transform the fortunes of the U.K. business, enable the business to compete and deliver sustainable and attractive performance over time. We needed to sharpen the focus of the business. In particular, we needed to narrow the field of investment, and be able to focus our investment to be more impactful and to be able to create differentiation where that was going to be important to drive results for the future. So as this slide here illustrates, we kind of reflect now in terms of three different decision areas. First, where we would play as a business, which market segments would we participate in for the future? Secondly, just participation clearly isn't gonna drive out performance. Differentiating capabilities will.
So be really clear about what those capabilities are, what should be invested in, to make sure we're in a position to win over the long time, having focused the business in our chosen areas. And then make sure that we are set up and structured to transform successfully. So those were the three particular decision areas. And I'll just take you through each one of those now. The first set of choices were the market segments that we would focus the business on, and here's an illustration of broadly the areas that we were participating in. We considered this performance over time, the prospects for performance in the future, and our own capabilities from which we could build a successful business for the future.
Firstly, I think I'd reflect on probably the toughest decisions we made, which was what not to do. Which business lines would we discontinue and exit from? And the bottom part of the chart here illustrates those three areas where we hadn't performed well enough over time, and we didn't think the prospects for the future were good enough for us to continue to invest capital and continue to operate in those areas. The first was personal lines affinity, and particularly where we were running white label solutions for other brands, where we had built the operational infrastructure and the customer interface. Put simply, that was simply too high a cost base for us to be able to operate successfully and deliver performance over time.
So we decided to discontinue our operations in the affinity arena, where that was the operating model. Secondly, non-standard business in personal lines. This is largely where, in niche areas, authority is delegated to brokers to offer, operate schemes on behalf of an insurer. We had some of that business, and that just was not performing for us. Where we didn't have direct control of all the technical elements of managing performance, and critically, having the data flows to us on a daily or intra-daily basis, as is required to operate successfully in this market, that wasn't working for us, and therefore, again, we decided to exit. And third business area, commercial lines. Actually, what we considered a really good business.
But it hadn't particularly performed for us, but largely because we were subscale in the commercial SME arena. It needed significant investment. It needed scale, and we just simply concluded we probably weren't the best owners of that business, and therefore decided to run the process that we did last year and sell the renewal rights for our commercial business. So, those were the areas we decided to re-remove ourselves from, and that was around about one third of all of the premium that we wrote in the U.K. business from 2020. So where would we focus the business for the future? And that's at the top of the chart here. Areas where we've certainly done very well. And the first of those are absolute heartland personal lines business written via brokers.
The vast majority of our business, always written there. It's where we've performed best over time. It's where we've got the deepest skills, heritage, and critically, data, and that has always served us well. Our products, our pricing, our technical management across the entirety of the insurance value chain and data instantaneously available to us to be able to really actively manage that portfolio. So that absolutely was an area we wanted to double down on, and we have. Secondly, personal lines direct, largely via price comparison websites. Same characteristics of that business. In our direct control, data flows running well. As you can see, it isn't a bright green there. It was a growing business. It was suffering some growth strain, and in particular, we had been investing in marketing, brand strength, and direct marketing.
So actually, the underlying fundamentals of the profitability of that business were sound. We just needed to rationalize, particularly the marketing expenditure, to put it onto a solid footing. So those are the areas we would focus the business on. Personal lines, exclusively via brokers and price comparison websites. That would be the focus for the business, for us to deliver more consistent, sustainable results over time, where we have performed best over time. As I said, just choosing participation arenas isn't good enough. We need to make sure that we're in a position to compete in the market I described earlier, highly competitive, as it is. And we needed to be really clear about the areas where we would need to focus our investment.
These are the four areas that we have chosen and have focused on developing over the last three or four years. Fundamentally, making sure that we've got a fantastic data set of capabilities, a functioning data asset, data modeling, and an analytics capability to support pretty much everything else, actually, on this slide. So that's fundamental because it feeds so much of what we have done and will continue to do as a business. Technical insurance capabilities, having those outstanding core skills, brilliant basics within the business. The second major priority, making sure that we are at least top quartile in terms of our underwriting and pricing, claims, including supply chain management, fraud prevention, actuarial skills. That's the second area of major focus for us, where we have invested heavily over the last little while.
Make sure that we've got the technology to support the business, both core administration platform that is fit for the future, but also a front-end digital estate to make sure that we're serving customers in the way that they want it to be served. What I do consider as a core capability for our business is having an efficient business, truly competitive cost base. That does require investment to deliver it, but making sure that we're driving towards a top quartile position in terms of our cost effectiveness, the fourth of the major differentiating capabilities that we've identified and are developing rapidly. Individually, each one of those four components operating on a top quartile basis actually won't make us, to my view, a differentiated business in our market.
It will, when they all operate at top quartile in combination, that is where it creates a differentiated position for us, and we're well on the way to getting there with our progress so far. So choices made, capabilities very clear for the business. There's a lot of work to do to manage this transition, so we needed to make sure that we were set up for excellent execution. To do that, we engaged a large number of leaders across the business in the development of the strategy. So they were joint architects of the strategy that we were setting out. They were invested in its success, had designed many of the underpinning initiatives, and therefore, were able to get off to a really fast start when we launched the strategy back in 2020.
We established a broad and flat operating structure that gave us maximum control and agility as we went through the transition. We added specific skills to our team to make sure that we could manage the transformation effectively. In particular, a new leader for transformation to make sure that we oversaw the entirety of the program with real discipline and rigor. Secondly, we created a specific function for the non-core businesses, so the affinity business run-off, the non-standard business run-off, and the sale of the commercial lines business. That was dealt with in a specific unit, so that could be focused on and delivered well, while the rest of the business could get on with developing in the areas that we had chosen, our core personal lines business.
And we've got a management team that's steeped in the U.K. market, steeped in the U.K. personal lines market, with decades of experience and a range of deep technical, actuarial, data, transformation, and leadership skills. So I think we were really well-placed, and still are, really well-placed with this team to spearhead the turnaround that we were setting out upon. So this was the strategy. Put really clearly, this is what it all adds up to. I think, a clear, very simple, but incredibly focused strategy that sets a new direction for, for our business in the U.K.
Focused on our historic strengths, targeting much more meaningful capability investment in those four areas I've talked about, and aiming to deliver for all of our key stakeholders, and in particular, turn around our financial performance, creating a baseline for better and more resilient returns by 2024 at the latest. Okay, so with the strategy set, let's just fast-forward to today. I'll just set out now how we're delivering against those strategic transformation objectives. So this is pretty much where we are today. We are a very focused business in those areas that I've just identified with far less complexity. We are just managing those two personal lines products, motor and home, with reach into pretty much the entirety of the whole personal lines market with the distribution channels that we have chosen. Motor is our largest line.
It's about 80% of our business, as it shows there on the corner of the slide. And we do have pretty much full market reach through our distribution, as I say, and we're growing in what have proven to be really resilient distribution channels. I think brokers in U.K. personal lines have been written off for year after year in terms of their ability to sustain a competitive operating model in this market. Well, actually, they've proven to be, as ever, incredibly entrepreneurial, super resilient, and in fact, over the last two years, have been winning market share in terms of U.K. personal lines, and we've been growing in a really healthy way with them. Also, growing in our direct personal PCW business as well.
And then in terms of those specific capabilities, critically, as I said, making sure that we've got a fantastic data foundation for the business was really important. Actually, right at the start of this transformation process, we decided to accelerate the development of our data architecture. We developed a single cloud-based data platform, so one version of the truth from which we can feed all of our other data work and capabilities. We developed the software tools in the cloud to make sure that our data scientists had the right tools available to them to develop and train the models that we needed. We established a data science center of excellence led by Tom Quirke, who's in the room here today, and will run the valley that you'll go to later on.
There, we've corralled together all of the expertise within the business, and added to it in terms of data science, data modeling, and not only have they been able to create their way of working, allowing innovation, allowing freedom of thought, they've also worked brilliantly with the rest of our business to make sure they're enabling a whole host of use cases in the utilization of data, AI, and now GenAI, right the way across the business. We're delighted with the progress we've made there. And we've really engaged the whole business in our data journey. We've got nearly 2,000 people in the Ageas U.K. business, just under.
About 1,000 of our employees now have been through our data literacy development program, so making sure that the whole business is engaged in our data journey, making sure that we're capitalizing on the opportunities that we have here. There's been a number of benefits that we have seen from accelerating our data development. I will just point to one that I'm gonna come back to a little bit later, and that is that thanks to this capability, we were able to spot the inflation acceleration at the start of last year, I think very, very early, and looking at the market, I think earlier than the vast majority of the market.
We had developed our own proprietary model that was able to identify inflation, look through all of the distortions that you can see in terms of claims information to see the really true economic inflation in our portfolio, spot it early, and put the business in a position to act, which has certainly put us on a really sound footing as we've managed our business over the last couple of years. So data really important for us. Continuing and accelerating our investment in our core technical skills, as I said, across underwriting, pricing, claims, and fraud. One area, again, I'll just point to on this slide, while there's lots of examples here of some great work undertaken, particularly in terms of underwriting and pricing.
We've moved to a new phase in terms of our sophistication of deployment of our underwriting and pricing capabilities in the U.K. We'd spent about two years developing a range of machine learning models to add sophistication and precision to our pricing for our business, blending that range of machine learning models, actually, with our more traditional ones. But we couldn't unleash the full power of that to the market in our pricing. We released a new real-time pricing software last year, and that's in motor. That's enabled us to unleash all of that power in terms of our pricing, and we've now got that deployed across the entirety of our motor portfolio. We'll be doing the same in home next year.
In terms of technology, really important that we have got the technology to support the business for the long term. We've taken some important decisions here. We are moving from two legacy platforms to one single cloud-based next-generation digital native platform, and we think that's gonna give us the opportunity to leapfrog competitor technologies, to genuinely digitize our business for the long term. It will allow us to deliver a much broader range of customer propositions, make us fit for the future, able to deploy new propositions for customers, particularly in things like embedded insurance and parametric insurance. That now becomes much more possible and readily able for us to deploy for the future when the system is rolled out, and much faster speed to market as well.
Critically, this is a huge efficiency lever for us. Clearly, removing the duplication gives us a real potential to further improve our cost base. We've also been developing our front-end digital capability, being able to serve customers in the way that want... They want to be served by us. This has been developing rapidly. I won't go through all the statistics here, but just as one illustration of our progress, in our direct business now, well over 90% of all of our new business transactions are entirely digitally transacted. You know, that is what customers want of us. It's clearly helping us in terms of the effectiveness of the way that we can operate really efficiently. So that's working well.
I would say that we still do offer the telephone to any of our customers should they want to, to call us. That's really important when there are more complex queries or when we're looking after our, our vulnerable customers as well. So the range of solutions, but making sure that our digital front end is attractive to use for customers, is driving the ease of use and the efficiency into the business that we need. So on to efficiency. To deliver the top quartile cost base that we need, and we're well on the way to, to getting there, we've already delivered GBP 55 million worth of operational savings, since the start of, of the strategy. We've delivered that through the various areas outlined on, the, the slide there. We've engaged the whole business in, in this effort.
We talk about having real pride in being a low-cost business, and increasingly, everybody in the business is understanding just how important this is. It's not a scary topic, it's one to get excited about, because getting this right improves the competitive position of our pricing. We can reinvest in the business and winning capabilities, and obviously, it also supports our financial performance. So GBP 55 million worth of savings already delivered, and actually, we still haven't rolled out our new system to remove the duplication of our technology estate. That is still to come, and that rollout starts next year. Going through such a significant transformation, obviously, we needed to, and still need, to make sure that we're managing the key skills in the business and the resourcing profile in the business incredibly tightly.
As we've gone through kind of the simplification effort, as we focus the business and as we've developed our efficiency, we've need to to carefully manage all of that and the resourcing profile and reduce. We've been able to reduce our FTE over time as well. As you can see on the slide there, we've managed to reduce overall headcount by about 30% since the start of the transformation. We've done that while still retaining strong employee engagement and also incredibly strong customer service delivery. Really pleased with the way that has been able to be managed. Just to underline that point, I'll just throw a load of statistics at you here. In terms of deepening stakeholder advocacy, we've gotten, as of today, an even more engaged workforce.
Our employee NPS has increased quite rapidly from the number I showed you earlier on. In terms of customer service excellence, our service reputation has only been enhanced over the last three or four years. Our net promoter scores are even stronger than when we started in 2020, and we've got simply more customers, over 4 million of them now. So delighted with what we've been able to do in terms of serving our customers. Our broker distribution franchise certainly appreciates the support that we are offering them.
We've been named the Personal Lines Insurer of the Year in each of the last three years of the British Insurance Awards, and that's a real indication of the support that brokers are giving to Ageas in the U.K., and how much they appreciate the work that we are doing. And also, we've remained steadfastly committed to the sustainability targets and objectives that are set out in the overall Ageas Group strategy Impact24. So, I think we can all be within the business incredibly proud of the transformation we're undertaking but also making sure that we're doing the right things in terms of our key stakeholders. So, what does all of that mean for our results?
I think first, I just wanted to take a step back, actually, and just look at the U.K. personal lines market overall, and I guess this will be stuff that you're very familiar with. But with real pressures in recent history across a range of different market dynamics, I do think there's reasons to be slightly more optimistic now in terms of the outlook. Many of the market fundamentals do seem to be improving. I think we now better understand post-pandemic claims patterns and frequencies, and they are certainly settling. Inflation appears to have peaked, and I think the outlook there is positive. I think the market clearly has been repricing really strongly, particularly over the last year, for the new economic environment.
I think the regulatory expectations are now better understood and are now embedding, and I think that's healthy for the market, and I think the impacts of things like the pricing practices changes will ultimately lead to less customer churn and a more predictable market. And investment returns certainly have improved as well, as you all know. So actually, what have we done in terms of performance? Here's some information in terms of our motor portfolio. This is 80% of our business. We were able to spot inflation really early. You can see on the bottom left of the chart, in spring last year, we could see that things were changing.
We prioritized technical discipline, prioritized profitability over volume, and started to price ahead of the market. These are Pearson Ham statistics on the market tracker. You can see pretty much consistently all through the period. Last year, we were repricing, at least in line with the strongest repricer, and then ahead through the back end of last year and through the early part of this year. Overall, up to the midpoint of this year, we'd added around about 50 points of rate strength. We have continued to rate strengthen over the third quarter as well.
That's put us in really strong position to make sure we've repriced appropriately, and we can look ahead with confidence in terms of the fact that we're writing at the margins we want to be. We've increased average premiums by 28%. You might, for the eagle-eyed of you, you might see the average premiums there are lower than market averages. That's very much a reflection of our portfolio. Lower risk vehicles generally, and more experienced drivers, that's what drives the lower average premiums that we have. We've carefully grown our policy counts by keeping more customers. Our retention rates over the last year have improved by about 5% and clearly winning more customers as well.
Overall, we've grown our motor premium by 42% year-on-year to June. I've talked a lot about being top quartile. How do you prove it? Well, we use lots of benchmarks and tests of ourselves. One of the benchmarks that we look to is the Ernst & Young review of the motor market. They, in their analysis, have identified Ageas in the U.K. as a top quartile performer in terms of motor insurance. Noted as outperforming the market in terms of combined operating ratio, and you can certainly see that coming through over the last two years. The white line being the market average, the purple line being the Ageas U.K. performance.
So great to have been ranked as a top quartile player over the last five years, and I think that's really a testament to the technical capabilities that we have built contributing to that outperformance. I think that... And we can also be confident about 2023. All of that underpinned by a very consistent reserving approach over time that always stands us in very, very good stead. So that's motor. Onto home. Home has been a slightly more challenging market for us and the market overall, actually. Weather events, inflation coming slightly later, certainly demanded strong pricing action. And we've just taken the same approach, actually, as we did with motor last year. Prioritizing technical discipline, making sure that we have got the portfolio priced in the right way.
We have put around about 30 points of rate through that portfolio to strengthen our, our pricing position. And again, average premiums have gone up significantly over, over the last year, September to September. We have sacrificed policy count and premium, but we will always prioritize the technical discipline, making sure that we are managing the business to a reasonable return. So what about the outlook? With all the progress that we've made, with the developments that we've undertaken, the strategic transformation we have delivered so far, I think we are now far better placed with our Ageas U.K. business to offer resilient results, to be far more competitive as an organization, and to be positive about growing profitably for the future.
In terms of our original 2024 targets that we set out in our transformation strategy, I think we can expect to achieve those financial objectives in 2024. We expect to be a far more profitable business, achieving the group expectations. Whilst we'll continue to prioritize margin and technical discipline, I think there is still headroom and plenty of headroom for growth, compensating for the business that we have exited over the last two or three years, and generally just offering a much happier home for capital in the future. And we've also looked out to 2027, and what we should have as an ambition for this business, given the trajectories and the run rates that we have been able to deliver.
And for 2027, the ambition we have as a, as a business, is to exceed GBP 1.5 billion in premiums, to continue to improve our combined operating ratios. These are on a undiscounted basis, just so you can compare to history, but we think there is still room to improve our combined operating, operating ratio. And really importantly, I think, be in a position to deliver over GBP 100 million of profit within the next strategic cycle. So some clear ambitions for the business, building on the progress we are already making, looking out to 2027.
So to conclude the overview of the work we've done to transform our U.K. business and turn around our performance, I think we're now able to confidently say we are moving from the turnaround phase to become a really core contributor to the Ageas Group. We do provide around 25% of non-life premiums, enabling obviously a better balance right the way across the group in terms of portfolio. Our U.K. business, as Hans talked about earlier, is sharing expertise, the expertise that we've built in the U.K., and developed over time.
We're now sharing much of that expertise with our own owned entities, as well as our joint venture partners, and particularly in these areas, in terms of our customer experience, expertise, data management, data and analytics, pricing, machine learning, all areas where we are leading on the sharing of expertise right the way across the group. So I think we can be confident about our short-term delivery, supported by our focus on our chosen markets and the capabilities that we've built. And I think we're very well positioned for longer term, resilient performance, better positioned to offer a stronger return on capital over time. So that's our U.K. story. Thank you very much for listening. I'm now gonna hand to Heidi.
Hello, ladies and gentlemen. In the last 13 minutes before the pause, I will zoom in on the Belgian operating entity, AG, and I hope that the slides will come, or it's... Yeah, it was my fault. So my presentation will cover four topics. First of all, I will share with you the outperformance of AG as a market leader in Belgium, in a mature Belgian insurance market. I will also take you with me to illustrate the strategic fundamentals, what are really the strength behind AG. I will share with you some market dynamics, and at the end, I will share with you that we still have untapped potential, as Hans mentioned before. So first of all, AG is known in the Belgian market as a leading company.
We were already, during several years, market leader in life, with a market share of 28%, followed by the second, only 11%. The market concentration for the top five is 64%, top ten, 88%. But what's new is that in 2022, we are, for the first time, also market leader in non-life. So it's close with AXA, but we are market leader, and the market concentration in non-life is more or less the same as in life. Some numbers. We have less customers than Ant, about 2.7 million customers. Our total inflow at 100% is EUR 6.6 billion, 2/3 is life, 1/3 is non-life. Net profit above EUR 600 million.
Our assets under management, covering our life business, stands almost at EUR 60 billion, high solvency ratio, and our staff, AG Insurance, counts more than 4,000 employees. To give a flavor of our footprint, we are insuring one out of two families in Belgium, one out of four companies in Belgium, one out of seven cars, and you can read on the slide for the others, but we are really present in the Belgian market, of course. In the title, 200 years of expertise, almost, but next year we will celebrate our 200th anniversary. So, if we have a look at the past, we were able to deliver a strong and sustainable growth in a mature market. For non-life, for example, we were at par at the longer horizon with the sector, but since 2019, we are outperforming the market in terms of growth.
5% annual growth, compared with 4% for the market. For the inflow in life, there we were all this year at par in, on average with the sector, but we were growing at double speed in Unit Linked. That's for the inflow. For the technical liabilities, most important driver is... For life insurance, the most important driver is more the technical liabilities. For the same horizon of time, we doubled over, we outperformed the market with the double of the growth of the market in terms of technical liabilities. Growing faster than the market is not difficult, but growing in a profitable way, that's the spirit. And if you have a look at the slide, you can see before 2014, we had a Combined Ratio above 100%.
Since then, we are structurally under the 95%, with an exception for 2021, but that was, of course, linked with the floods in Belgium. Also, very stable Life operating margin for Unit Linked, you see very stable margins, also in guaranteed high margins. Even despite a low-interest rate environment, we were able to generate stable markets. Our net profit was growing with 2% on an annual basis. If we remove the impact of the capital management action, the quota share, it's even an annual growth of 4%, and since 2016, we are upstreaming 100% dividend. We put a lot of effort to invest in efficiency, leading to top best-in-class cost ratios in Life and in Non-Life. So what are now the strengths of AG?
So first of all, it's very important that we have a diversified portfolio, product mix, but also our investments. The multi-channel distribution, also very important. We were very consistent in our strategy towards the brokers commitments we did, and we supported them, but I will come back on that, and we have also a strong capital positions. So first of all, and the diversification of our company with all the products, I said already, the inflow 2/3 Life, 1 /3 in Non-Life. If we zoom in on the inflow for P&C, 1/3 home, 1/3 motor, 1/3 accident and health, so very diversified. For our Life business, we have 35% in Group Life, the supplementary pension plan. 44% of the Life retail inflow is coming from the bank, and 21% is coming from the broker channel. We have also a unique multi-channel distribution approach.
We keep really the focus in keeping all the time the channel piece. It's very important, and we are able to outperform in both channels. So let's have a look at the market distribution in Belgium. You can see for Non-life, that the market distribution is very stable, with a dominant position for the brokers. Brokers have 60% of the market. Maybe also important to stress that direct insurance in Belgium is not evolving. It was 20% in 2010, and now it's more or less the same. For Life insurance, there you see that brokers are still gaining market share, so the bank is decreasing, and direct is more or less there, stable.
AG is selling products in both of the channels, all the products are available, and for direct business, we are allowed by our distribution partners to go direct. So for the large corporates, and for healthcare, and for supplementary pensions, we go directly to the larger corporates. But we try also to test small products to invest in capabilities, digital capabilities, but also marketing capabilities. If once the distribution model would change, that we are ready to go a step further. But that is only done with small products that we offer also to the bank and the brokers, but where they are not so interested to sell them. Here you can see what is the market share that we have in the segments. In broker, we have 22% in Non-Life, and in bank, we have a market share of 32%.
You can see for Life, it's surprisingly, surprisingly, the same. So we have a dominant, dominant position in each channel, so if distributions would switch a bit, we can further grow without any problems. And that's linked with our organizational structure. So our organization is structured towards the distribution. We have three business lines, one for the distribution with the bank, one for another for the distribution towards the broker, and then one for employee benefits and healthcare. Of course, we cannot double all the capabilities, so there we have some synergies where the development for the Non-Life product is done, but for bank and broker, by the broker channel and the opposite for Life. And of course, all the transversal functions, investment, finance, risk, HR, IT, et cetera, are done in a transversal way. And we are really known in the market for our expertise.
Our strategy is, of course, aligned with Impact24 at Ageas level, and so we have three important strategic priorities. We want to outperform the market, and I will come back to it later, by offering a great customer experience. For AG, that was a stretch because we are a B2B company, so we don't have a natural relationship with the end client. So to be able to serve the end client, we really had to set up a program and train our employees to acquire these capabilities. The third strategic priority is sustainability, but I will come back to it as well. There, our ambition was at the end of 2024 to be in the top quarter. To be able to deliver on these three top priorities, we had, we have three important levers: people, tech and data, and partners.
People are very important, of course, and so we want to be a growing, a learning organization, invest in our people to train them on their capabilities, to be able to follow all the evolutions, because the world around us is changing very fast. We want to be the, the reference as an employer. We have very motivated people, and we were also glad as well, to see that our Net Promoter Score in the employees was increasing this year, and that we are again in the top quartile. Tech and data, I will come back on it, and partners, we are not a direct insurer for the most of our products, so we ... We are used to work with partners, not only for our insurance products, but also for the more beyond insurance, this extra services that we deliver to our clients.
We have clear ambitions to further strengthen our leading position, and we see that there is still potential to do so in non-life and in life. For non-life, we will continue to outgrow the market by detecting new brokers. We see still brokers where we don't have our natural market share, so we approach them to see how we can improve our relationship. And that is the case for retail, small enterprises, and and bigger enterprises. We will also strengthen bancassurance retail clients and business. There we see that for non-life, there is still untapped potential, a lot of cross and upselling possibilities at the banking side. And so we give support to our partner to be able to increase the non-life in this segment.
Enterprise segment was also a bit untapped because we were not present in the corporate business in non-life anymore, and so we are now building up again these capabilities, and there we see that there is also already a very nice growth, but we can go forward, go further for the future. For life, there we have some difficulties in the retail market, linked, of course, with the higher interest rates and certainly with the inverse yield curve. So there we see that the inflow is going down a bit, but on the other hand, with the large, the high inflation, salaries are going up. That is giving a boost in our employee business. So our technical liabilities are more or less stable, thanks to, again, the diversification in our portfolio with life retail and employee benefits.
Employee benefits has a very large position in the Belgian market, and they are a global pension player, so they are adding as well other services to the client, where we see a lot of potential as well. That's for the pure insurance, but of course, we are investing in innovation and other services to build some building blocks and ecosystems. But the lesson that we learned was, if you do so, you have to stay close to the core. If you want to be successful, you have to add services that are close to the core. And so we are developing a lot of services in several domains: mobility, health, home, save and invest, self-employed and SME, and pension.
I don't have the time to zoom in, of course, but more and more, we offer products, services that we start to integrate in the insurance product as well. For disability, we provide return to work, and we offer now also wellbeing programs in the prevention, as a prevention, but we integrate it in the insurance comp, product. So that's first, yeah, easy to scale up, and on the other hand, it's less easy to compare prices. So that's the way we are going forward. Then we, in the mobility domain, we acquired Touring in the first of July this year. And Touring is a very strong brand in the Belgian market, in the mobility sector, and that will certainly increase the credibility of AG in the mobility domain.
So we will have boots on the ground in the servicing of assistance products, so the services that we can add to our insurance product. And I don't see anything. Yes. Okay, it's solved. And so here you see some numbers. So it's a quite big company, with more than 500 FTEs, with a lot of annual interventions, so their footprint is very big in Belgium as well. The third strategic priority that I mentioned earlier was sustainability. We want to be top quartile in the Belgian market at the end of 2024, and therefore, we took a holistic approach in the different roles that AG can play. As an insurer, an investor, an employer, and as a responsible company. For insurance, we adapted our products to stimulate our clients to opt for a more sustainable behavior.
The target was to reach 25% of the products. We are already at 28%. We are also the biggest institutional investor in Belgium, and we want to put forward an example, and we came with the ambition to invest at least EUR 10 billion in sustainable assets. We are already at EUR 10.5 billion. We subscribed as well to the Net Zero Asset Owner Alliance, and there we committed to the market to decrease our CO2 emission towards 2030 with the half. As an employer, we have already for the eleventh time the label of top employer, and for the Glass Ceiling Index , we are now at 68%. The aim is to reach 70%, and there we have to catch up to do.
As a responsible company, we are now very proud to have the golden label of EcoVadis, a label that is very important for our corporate clients, and since 2019, we are also CO2 neutral. Maybe one thing still to mention for these slides is, I said, we want to have a holistic approach, so we want to take all our stakeholders in this journey, also our brokers. So we launched a platform, Go for Impact, where we give to the brokers a platform where they can measure their CO2 emission and take actions to decrease it. And it was a big, big success and really appreciated by the brokers. Tech and data, very important. Last year, we did a replatforming project where we migrated more than 80 million lines of code from our mainframe to Windows servers.
That, together with another project, our new data platform, where we are moving all the data to a new platform. These two projects will give us a totally new IT architecture that is more open, more, it will be more easy to do the link with new technologies. So we are there for the replatforming, the migration to the data platform will end at the end of this year, and then we really built the foundations for to become a data-driven organization. Of course, cyber risk is very important for us to be measured and actions are taken. We have already the ISO 27001 certificate since 2019, and it is renewed each year since.
I said that also our organization is geared towards distribution partners, so we are very intimate and our proximity towards the partners is very strong. For bank channel, there we are main partners, BNP Paribas Fortis, and there they had a lot of reorganizations, and each time we adapt our organization to be able to support the partner. Also, we train them, we give all the support they need in order to motivate them to do more business for us. More or less the same for the brokers. There, we have a decentralized organization. We have seven commercial centers because the strength of the brokers is their proximity towards the end client, and end client, the same counts for us. The proximity with the broker is so important if we want to outperform the market.
For employee benefits and healthcare, their strategy is client intimacy, so they know their clients. They have a dedicated account manager for each client. So there they are in the front line to see if they can do some cross and upselling. So that's very important for us. We see as well, if we measure the satisfaction of our brokers or of the banking partners, or the clients of EB, that the Net Promoter Score are very, very high, what is certainly, yeah, a condition to be able to further grow. And all of this is supported by a solid capital position and risk management. I mentioned already the strong solvency position.
Our asset mix is very diversified, and also our asset liability management is very strong to limit the risk, interest rate risk that we have, and that was certainly proven during the low interest rate environment, that we were able to provide continuity and stability towards our clients and also towards the shareholder. Then some market dynamics. I only took two, but the first is not surprisingly, the inflation and the fast rising interest rates. For P&C, we are monitoring the claims cost, of course, of the P&C business, but I think Hans mentioned it already, two-thirds of our premiums is protected by an automatic indexation mechanism, and we see in the market, everything, every competitor is applying this indexation as well.
For motor business, it's not the case, but there we have the discipline to increase on a regular basis our premiums to be ahead of inflation, and we are also helped by the agreements that we have with the body shops. In practice, we see not so much impact of inflation on our motor claims, and that's why our results and our combined ratios are very good. For Life, there, with what's happening, we see that the dynamics and the competition changed. The dynamics with the banking products, because linked to the inverted yield curve, bank can guarantee at a shorter term, higher rates than insurance products at, with a longer maturity. So there, it's a bit more difficult, but we had this year a perfect timing to launch a campaign where we guaranteed 3%.
It was before the launch of the government bond, and there it was successful, and we were able to keep the technical liabilities more or less at the same level. And of course, I mentioned already the support of the employee benefits as well. Second trend is legislation on the Belgian level, but also on European level. I have to say that it's putting a lot of stress and pressure on the organization, and we are also the first in line to be controlled by the supervisor. On the other hand, we have the scale to be able to adapt to all these changes, and it's becoming an advance compared with competition, but also towards new entrants. So it's putting a lot of pressure, but on the other hand, sometimes we have the benefits as well. And so I said that there was still untapped potential.
So we have strong fundamental, fundamentals to go further and to stay a front runner in innovative products and services. We know our clients, and we were able, since 200 years, to adapt our products to the customer needs that are evolving. And, yeah, with everything that the customers see around them, the expectations of the client are really rapidly evolving, and we adapt also our tooling to help them. We launched MyAG. MyAG is a portal where the client can have an overview of all the contracts with AG, but what is more important is that we add also services. If we go to the end client, then the services has to be 100% digital, otherwise it's not possible to serve these clients.
But we are adding more and more services to satisfy the client, and this platform will enable us in the future also to facilitate cross and upselling with respect to the distribution partners, of course. We have a lot of data that we can explore better and better, and certainly with our new infrastructure, we can incorporate new technologies and know the knowledge of the client to have more qualitative leads. We see that there are still niche markets where we are not present, so we can think about buying capabilities or maybe do a small M&A. So we see still potential to grow in an organic or an inorganic way. So that was the story.
Some key takeaways: so we have seen an accelerated profitable growth, where we were able to face all the challenges in the past, and we have really the fundamentals to do the same in the future. We have a lot of strengths in our company, and we are able to evolve. We have also a strong solvency position and risk management. We were able to reimburse, we will be able to reimburse our sub-debt, and we can really deal with all the volatility in the market linked to the diversification that exists in our products, in our investments, in our distribution channels. And we will continue to look for new opportunities to continue to outperform the market. Thank you.
Thanks, Heidi. All right, before we go into Q&A, I think we have given you a lot of messages and a lot of interesting information. So, I see now the clock. Now, the question is, do we take a break now, or do we take the break after Q&A? You want to have a break first? We can have a break first. Yeah. All right. Okay, then we take a 15 minutes break, and we come back. Yep. All right, thank you. Welcome back, after this short break.
I still want to quickly take one topic with you. But before I do that, I would say that the key, the three key takeaways, that I think we wanted to bring to you, is first of all, the Ageas model is still standing. It is resilient under the current, I would say, world circumstances, and I hope that you have seen also, when you link the three presentations, maybe a little bit less in China, which was more numbers-driven, but also U.K. and AG, there is synergies happening, and is the lead in often data insights, and because that's of high importance already in the U.K., you see other entities picking that up. And I can do that on each and every topic that I've shown on the slide.
So we do have a solid, resilient model with synergies, and the joint venture that is part of our group will benefit from that. Secondly, we have been resilient in performance, whether it is COVID-related, inflation-related, interest-related, we have shown that resilience, thanks to a great diversification. But, we have also fine-tuned Impact24, which was, I must say, almost fully focused on the growth story. We also talk about the margin of our businesses, as well as the cash remittances coming from our businesses. And that's my last point. We are still running on a very solid solvency base, comfortably above 200%. You have seen that we replenish the cash position, with an outlook, actually, by the end of 2024, that should bring us above EUR 1 billion. And I wanna make a final statement on dividend.
First of all, Impact24, I have already said we are fully on track to deliver on our promises of, we set a 6%-10% DPS growth. And we actually said it would be in the upper range, EUR 1.65 billion-EUR 1.8 billion over the cycle. But I hope you also see that of the presentations you have seen today, that we have a very diversified remittance to support that dividend, yeah. Because it all starts, of course, with the remittances from our business units, and this is a footprint that will stay with us beyond Impact24. And this is a long-term positioning we take. We have the continued strong remittance coming from Belgium.
You have seen the U.K. recovery, and in the last two slides of that, also in numbers, what it is gonna mean in numbers. And the Portugal performance is also very strong. So we do have this growth outlook on the earnings in Europe. Reinsurance, we have not spoken a lot yet, but you will have the breakout session with Joachim later. We have a careful development on external reinsurance, but do not forget, a big part of this is still the capital management, and that follows the flow of this underlying operating entities. Like, whoever performs also from reinsurance, we see a stable dividend contributor upstreaming to the group. And then last but not least, Taiping Life.
There, I think the key indicator to look at is, is the operational capital generation there to support those future cash remittances. And I think with the story of Filip, you can- I can confirm it is there. And at the end of the day, the dividend that we pay to our shareholders is a combination of the four, yeah, and of course, also the way we control the holding cost. So with this, I wanna close with, one final outlook, that is that we feel confident that the current footprint assures us to give a attractive dividend growth in line with Impact 24 ambition, also beyond that strategic cycle. And we are starting to make our plans. We will come with our plans somewhere mid, mid-next year on the new strategic cycle.
But the philosophy we follow for the design of that new financial, the new strategic cycle, so is that we can continue these dividend expectations in line with what we have set with Impact 24 ambition. And that's, I think, the final statement I wanted to make, and now I leave it for Q&A.
Be careful. Okay, thank you, Cor Kluis from ABN AMRO. Although, a few questions, maybe first question on the home market. Since you became CEO, you have talked quite a few times about home market. Can you give an update on that? You've made already a recent comment, like, the prices are quite high, especially in Europe at this moment, for life companies, but, or non-life companies. Could you elaborate a little bit more on that? Second question is about the U.K. In the U.K., direct, indirect, retail, you've got 2% market share, which is not too much. What's your view on that?
Is that still sufficient, or you wanna boost the size of that, or is it sustainable with 2% in the direct channel? So that's that question. And last question, maybe as a reminder for China, it's been quite fast, but you talked about the solvency ratio for the core solvency. We started with 81%, and then you mentioned a few figures which we could add to that. 7% for debt issuance, 35% for unrealized bonds-
I'll summarize for you.
Can you add it all up, step by step? That's it.
Okay, thanks, Cor. Maybe first on the for the home market. Well, the plans, I must say, the ambition has not changed. It has maybe a little bit fine-tuned. I come back to that first. But first of all, we always keep availability for in-market consolidation or diversification, and Taiping Pension could be one of those options in that context. We still feel that we want to rebalance the group between Europe and Asia, or maybe rebalance is not the right word. Keep in balance between Europe and Asia. Asia, growth is a little bit more moderate, so that means it is also maybe a little bit less urgent. Remember, also, at the beginning of Impact24, we said it does not have to be done within Impact24, and this is really preparing for the future.
We have been looking at quite some opportunities, but as you say yourself, prices that we have seen being paid in Europe are very high. We also see banks active in the segment, because this Danish compromise is prolonged, so they are also hungry. So we will remain financially disciplined. Criteria are not changing. We would prefer non-life, because non-life gives us nice capital diversification benefits. And secondly, we want to have a market where we can have a material impact on that market. So it should be a sizable, scalable business in the market that we go. But we do not plug. I would not plug there by the end of Impact24, this has to be delivered. This is supply and demand and financial discipline.
Some areas that we indicated, that we say, look, it could maybe also happen in the beyond insurance, or it could be happening in the fintech. With the focus on the cash remittance, on the investors' lens, we have said, "Okay, that is probably not what we're gonna look at into right now." We are not gonna take a big sum to do a sizable deal for something that I would say, which for five, maybe 10 years, would not be dividend accretive. That is not something we want to do today. And there is also some noise on reinsurance, M&A opportunities, left and right. What I see on the names that I hear flying, it's not always easy to find a buyer for these reinsurance activities.
And again, I've said we have a solid team, more than 30 reinsurance experts, who get strong credits, I must say, when I talk to people from the reinsurance world. And I think with that team, we can realize the gradual organic growth ambitions that we have given ourselves. So I think there we will also focus on organic growth.
Should I say the U.K.?
Yep.
Yeah, 2% is relatively small. As you saw from the charts there, we have focused this initial phase of the transformation very much kind of where we've got the greatest strengths. Our broker business is certainly where we've got the data, the greatest level of sophistication and confidence to grow, and so therefore, we have done that. We're adding sophistication all of the time in terms of our out-and-out direct business. There's clearly headroom for us to do more there. I think what we'll do is pragmatically manage the mix between our distribution over time.
We've got kind of that overall revenue and profitability objectives that we'll manage in combination, and we will be agile in terms of managing the market, in terms of where we see the best place to develop that, that growth from. But in the short term, broker, as our heartline, is where we, we have focused our efforts.
Philippe, of course-
Yeah, just to repeat maybe and to sum up, there is a few things I said. First and foremost, we start at nine months, and I'll just use one of the ratios, because the other one is just half of it, right? At 162% comprehensive ratio. Taiping Group, every time they publish their comprehensive ratio, they also give one quarter forward outlook, which was put at 150%. That raised some questions, put them aside around what if the it falls below 150%, the 75% rule and so on. To answer those, because I got some of them, it's not so problematic. One, and foremost, it's only focused on digital channel, new business constraints. And two, we don't see that happen because of the things I'm gonna mention now. Yeah.
Then the supplementary capital bond issuance on the comprehensive side would add up to 80% in the ratio, potentially in two tranches. So assume 40%-40%, probably the first tranche still coming before the end of this year or early beginning next year, and the second tranche to be issued in the course of 2024. But the EUR 20 billion in total would allow for about 80% additional. Yeah. Then the other thing that is unavoidably there is the further notice, until the regulator will not change his mind, I presume, the 45% cap is gonna drop to 40%. That will consume about, approximately, 15%, let's say. Yeah. I said, probably correct, I mentioned 14%, but assume 15%.
Yeah. That is the going down from the 45% now to the 40%. And then I said there is still one hidden pocket of potential solvency capital to be unlocked or by IFRS 17 transition, or by reclassification. That is the unrealized capital gains within the current regime are not recognized on the held to maturity books, where the liabilities are valued with the VIR, the assets are at HTM. That shareholder portion of that unrealized capital gain would add another, I think I said up to 70% at this moment, given current unrealized capital gains to the core. To the, sorry, comprehensive ratio. Whether that will be there or not, let's see. But it is there economically, yeah? What I did not mention, and I cannot comment on it now, and we will come back on that when we see a year-end, is what is the effect of current market volatility, very rolling forward? I did not mention that, right? Yeah, Ashik.
Thank you, and Ashik Musaddi from Morgan Stanley. So first of all, thanks a lot for providing all this information on China. It's very helpful for us. All three questions I have is on China. So no, I mean, the more information we get, the more questions we have, but still for good, I would say. So first of all, what is the visibility on this CNY 20 billion cap debt in debt that is looking to be raised in China? I mean, what's your confidence level that it will be raised? There is no uncertainty on that, so any color on that would help. Second thing is, can we get some color as to what moves Chinese solvency ratio?
I mean, I'm not sure if you'd be willing to give sensitivity, static sensitivity, but any, indicative, qualitative color would help to us to think about, what we need to track to understand the, the comprehensive solvency ratio. And thirdly, is you showed a very interesting chart about the liability split of, China, which is, 60% participating, I think 30% or 25% non-participating.
How should we think about the equity assets and the non-standard assets, the other non-standard assets, being part of participating business? What I'm trying to understand is how much of equity market risk and non-standard asset risk can be passed on to policyholders, rather than all going to shareholders. Thank you.
Okay. I surely cannot answer all your questions in honesty, just because I don't have the information, and certainly not here at hand. But let's talk with the first item. Our trust level on the issues on the CNY 20 billion is quite high, and our, and I mean, CTIH, quote, unquote, "red line versions" are with the regulators, and two other market participants just finished their issuance. So as far as we are aware, and as far as the latest information I'll get on that, we're still expecting it to do it before the end of year. In fact, some of our colleagues of Taiping Group are running already a selective roadshow and book building, so I'm quite confident that it will happen. Could it be that it is not closed before the year-end?
Yes, but, the confidence level is quite high. On the solvency ratio sensitivities there, I do not have the data. In all honesty, and certainly I don't know it by heart. The fact is that indeed, and it relates to the third question, the biggest volatility comes from equity markets. Because the movement on equities, if it's part of the shareholder portion or it's in par, non-par, depends a bit, immediately it's core Tier One capital. And that is what is creating this huge volatility, I would say, from one quarter to the other, even more so than the interest rate movement. Interest rate movement is a drag on a longer term, and so quite stable drag, but it's the equity volatility that really hits and makes the wild swings.
Because it hits core Tier 1, and the cap system is all percentages of that core Tier 1, you see? So it has this huge volatility comes from that. I gave an indication that it is about 15% of the balance sheet. I, I cannot do the math from my mind, but that gives an indication of where the volatility comes from. I honestly, Ashik, I do not know by heart the split between par and non-par of that equity position. I should look into it, but it is, I think, more or less evenly spread over the two portfolios. That would be my best guess if top of mind. I don't know, Wim, whether you know.
No, I never had information that it's differently spread.
No, I think it's quite homogeneous.
Absolutely.
Is that, that exposure over the two. So that gives a feel, right?
Michael Huttner from Berenberg. I had one question on the dividend, one question on U.K. capital, and one question on Belgium. On the dividend, you mentioned just now that the China dividend might be, I don't know what the words you used, but clearly not as high.
I just wondered if you can give an idea of what your thinking is there? On the U.K., can you say how much capital you're using at the moment either, I don't know, with, with the reinsurance or without the reinsurance, just to give us a, a feel. And then, on Belgium, so you're remitting, or you're reimbursing... I, I just wondered if you could give us the numbers for 100% to give you a feel for how much capacity you do have to make acquisitions, investments, or whatever. What your solvency would go down to if you-- once you've remitted all this money. The thinking I have is that, certainly in Germany, there's a very active market to buy brokers, and I just wondered whether you couldn't, instead of giving the money to your parent, just buy a lot of brokers. That's it.
Well, maybe on the remittance. What I said is we have, I think, a strong mix of remittance between, let's say, the four segments: Belgium, Europe, reinsurance, and Asia. We have spoken a lot about solvency in China, and Philippe has also explained that actually that is the only item potentially impacting dividends, because capital generation is strong, profit is strong. Retained profits, by the way, in China, is also very strong. The message I want to give is, even if that would maybe not grow in line with the business for a while, that should not, thanks to the good diversity of our upstreaming, that should not immediately negatively impact our ambition.
That is the message I wanted to give, and that's also to react sometimes on some of the reports I read, which put a very high weight on the upstreaming out of China for the feasibility of our capital management at group level, and that's the message I want to give. We have a very diversified pool, and that's why we are also confident to stay on our Impact24 ambition. Maybe on the U.K., or you wanna do first, Heidi?
No, I've seen scribbling around on an iPad over there, so I know I can outsource this question. CFOs in the room, so I've been saved.
You know, Jonathan. Maybe Jonathan, maybe first introduce yourself.
Yes. So I'm Jonathan Price. I'm the U.K. CFO, so I came for these questions. Yeah, in terms of the U.K., so that is the retained element in the U.K., which is the 60% of the business. The own funds level is at about GBP 550 million. So I think broadly, if you gross that up for the greater share, you get a pretty sensible number.
Okay, Heidi.
So our solvency position is around 240, and if we reimburse the sub-debt, we will lose 20%, so we stay about 200 above our target solvency ratio. Yeah, can we invest? We acquired, for example, Touring, but that was not feasible to us. So we can do it with the normal activities without hampering the dividend upstream.
Also there, Michael, I can add, in case Belgium comes with a sizable opportunity, but that would strengthen our position in Belgium. We have the group cash available to do M&A. That could also be applied in Belgium. We do not exclude that to Asia or to a new market.
Hi, Iain Pearce from BNP Paribas. First one, just on Chinese solvency levels. You sort of run through the moving parts there, which is really, really useful. Just thinking about what you view as the internal level of solvency you'd like to run within China and what the target levels might be, that'd be really useful, and whether you include that 70% of unrealized gains in when you're thinking about that. Secondly, just on the internal... Sorry, the agency numbers. We've seen agency numbers obviously fall a lot, 2021, 2022. Your numbers are down 2023, when the market seems to have stabilized a little bit. Previously, Taiping was more stable than the market.
So just wondering if you could explain those moving parts, whether that's Taiping catching up or they're seeing something different in the market. And then on the U.K., you talked about the broker market taking share in the U.K., actually, in the last couple of years, but obviously, reversal of some of the longer-term trends we've seen. So if you could just talk whether that's a reflection of pricing practices, something different going on in the market, and what the level of share of broker is in terms of distribution overall in the market. Thank you.
Philippe, you?
Yeah. I mean, I mean, I'm thinking about the first-
So you want Ant? You want Ant to start?
No, no, no, it's more like I'm thinking about the first question, actually. But, but on the... Let me start with the agency numbers. Yes, but if you look at the longer time scope there, they did not come down a lot over the last three years, if you think about it. And this year there is a shift, because we've been focusing more on the new recruits being higher performers.
So there was a lot of effort going into training and productivity improvement and retention of high productive agents. This year, there is definitely a shift in putting a lot more emphasis on the productivity of the new recruits, which makes the recruitment hurdle to jump over for new candidates higher. I have some figures, but cannot immediately follow, but that is the main difference between previous year and this year.
There was also, Philippe, some cleanup of dormant agents as well, eh?
Yeah. But that kind of happens every year, but it's mainly the focus on getting a higher quality level of new recruits, which is coming into play. In my speaker notes somewhere, there is a mentioning of it, but I'm aware it's that. On the target capital level, I will not answer. In all honesty, this is a target capital level that we normally, by opco, we do not disclose, first and foremost, and it's also something that our partner is not disclosing, so I have to leave it to that. Obviously, we are at this moment, slightly below it, I would say, yeah, in the long run. Okay, Ant?
Yeah, in terms of, brokers taking market share, you asked how much of a share of the overall market they have. It's just over about a third of the overall personalized market is controlled by brokers. They have been gaining share. It's single digit share that they have been gaining, but still an important reversal of the longer-term trend, as I said. And the reasons why, I'd probably place it into two main categories in terms of how they have been taking that share and acquiring customers.
One would be an acceleration in terms of their pricing sophistication, and certainly in the work that we're doing with brokers, that marriage in terms of the, the data assets of, of two businesses coming together to bring the power of that into pricing sophistication into the market. That's certainly been something that's helped brokers and helped us help brokers. And also product innovation. I think they've been really quick to market in some of the, the various, responses to customer need, particularly in the cost of living crisis. They've been among the most nimble to bring new products to market and attract new customers in areas such as EV evolution as well. So I'd probably put it down to those two main factors.
Thank you very much. Farooq Hanif from JP Morgan. Three questions as well, please. Going back to Taiping Pension. So you mentioned an auction, I think, of EUR 140 million for 10%. I mean, I just wanted to understand some of the valuation around that, because, you know, if you-- that implies kind of a value of that business that's almost half of the market cap of China Taiping Group, probably. So I'm just kind of thinking, you know, what, what you, what you would view as the kind of the profitability of that, 'cause obviously, you know, it's a big growth opportunity.
Second point is on. It's going back to your cash remittance. So obviously, with the interim dividend, with the internal debt repayment, you've got a gigantic headroom on your cash. It's not really a concern short term, but it's always been a persistent concern of the market, like me, that your sustainable cash remittance is still below central costs and dividend. But the bar that you show in 2025, obviously, there's no number on it, but it seems to sort of grow. And I'm just wondering, when you see that inflection point coming through? I know there's a temporary issue in China that will solve itself, hopefully over time, but do you see that as something that would be in the, you know, in the frame for the next plan?
The last question is, more of a technical one: so is the VIR decline with low yields in China a big drag on comprehensive solvency, or is it quite manageable given that you're raising debt? Thank you.
Okay, first, on Taiping Pension. You're right that maybe that valuation is rich, but this is actually greenfields type of valuation, right? We think this is a really emerging type of market segment, and you can say that it's a bit rich in multiples, but multiple on what? And the second thing there, do not forget that this is very capital-light business. This is not insurance in essence. The main activity is pension fund management and/or adjacent services like trustee business, et cetera, et cetera. So it is, in fact, pension fund management business, fee business. So solvency of that entity, and that is public because they also publish it every quarter, right? It's at 234% at this moment. So it's not that the company is craving for capital.
So for me, this is really creating optionality for us, right? To participate and not miss the boat on the pension and the health and care, and potentially build adjacent product lines in the employee benefit space, right? And then I think that is a fair market entry price. It's not so easy to get into the top tier of the pension fund market in China, by the way, for a foreigner. I can guarantee you that. So, on the VIR impact, I think maybe the indication you have now in the forward-looking solvency projection that they made for the quarter is not a bad indicator, because obviously it's based on that. So, the VIR impact at current interest rates will obviously die out after the 357 days, right?
So that is a two-year story, all depending on how rates move. It's a bit around your question, but you know what I mean, yeah. So they, they're now at 161. They project to 150 if nothing moves forward, so that gives you a feel. On the remittances versus our dividend, Wim, maybe?
Yeah. I think it's good if you look at cash remittances, and that we also include in when we do the performance management internally and the KPIs we're disclosing with you. Yeah. You have, on the one hand, the earnings capacity a nd the distributable reserves that you're creating over time. That we have shown today, I think with the U.K., U.K. recovery, that will support the high earnings growth in Europe going forward. So that's a source of future growth that can be the base of cash remittances.
That's important to say. The continued earnings growth in reinsurance, like Hans mentioned, don't forget capital management in there. Yeah, it's not only protection. Protection is, growing steadily, but there's also the capital management, which is linked with the performance of the non-life businesses of the books who are ceding. Yeah, that's important to do. And then Belgium, of course, the continued growth, which we saw also in the past, it will continue going forward. That's a bit the earnings base we're creating, which is the base of the regular cash remittances.
The next dimension, which is important, is of course, are we generating sufficiently free capital to be able to support that from the guard trade of the solvency? Where we spent a lot of time today to explain the solvency situation in China, to give you the view that there's other measures that can be taken to support that solvency going forward. If we bring that all together, then we say that we have a very diversified book of earnings potential, diversified book of operational free capital potential, and thus also diversified options of cash remittances going forward. And that's what's underlying that trend, that growing trend of the recurring, with potential from time to time to have, non-recurring, ad hoc cash remittances within the group. That's a bit of view we wanted to share with you today.
Hi. Thank you, it's Anthony from Goldman Sachs. The first question is actually, if I come back but to China, but more on the commercial, commerciality side. You touch on the, the channel, the bancassurance , channel expense, rule change there. What's your view on that going forward? Do you think that could incentivize, say, the banks to sell more like, single premium products? 'Cause I think that's kind of comments from some of the local Chinese peers.
And then the second question is, could you... Not sure if you could give any color on, is Taiping Life preparing for the coming marketing campaign for 2024? And, if so, are there any, like, change in product mix versus the campaign last year? And then the last question, just on Belgium. Could you give comments on any color on the pipeline of the, like, the potential realized capital gains? 'Cause I think that's used to be a key part, in protecting your operating earnings margin. Thank you.
Now, on the bancassurance impact of that regulation. First and foremost, I think it will lead to some moderation in the campaign funding. Then, of course, I upfront commission product lines will may be a bit more difficult or the incentives will have to come down. So I can imagine that it may lead to more single premium. Would that be a problem? Not necessarily. Don't forget, and you saw that, in bancassurance anyway, the Value of New Business s ignature is not the highest. Yeah, it is, it was about 6%, but this should actually lead to better margins looking forward. But there will be a transition this year. They have to survive the regulation, so to speak.
So I would not be too worried about it. We'll be seeing what the strategies are. But then in combination with your second question, there is still a high focus on having the right value new business or new business value signature in the book. So, whether for the new year, there will be more focus on par versus non-par, I think there will always have to strike a balance. Because the non-participating book still has higher Value of New Business signature than the participating book, where the participating book creates more optionality and flexibility into rate absorption. So I think, that debate is still out there. We will see. Obviously, with the lowering of interest rate guarantees, on the non-par, the gap between the two has become narrower.
It gives a little bit more incentive for par, but still today, the Value of New Business signature of non-par is higher. So I think it may rebalance that a bit because over the last years, most of the sale was only non-par from that perspective. I'll see that the debate is on whether it will be a bit more par in the mix. Yeah. Let it also be known that I'm not in the market there, so that is my view on that. Of course, our colleagues from Taiping would be better placed to answer your question in detail, without any doubt.
Capacity for cap gains?
So Ageas share over existing unrealized capital gains after tax are now between EUR 1.2 billion-EUR 1.3 billion. To see what is the potential for the future, I think the historical cap gains we generated in the past will be a good guidance for the future.
Okay, Michael? And then, there in the back.
I was a bit distracted, so apologies if it's already been asked, but can you talk a bit more about the real estate exposure and how basically that's developing? I mean, you half answered the question saying the cap gains is sustainable, but I had it—I think I had in my mind and memory a very short discussion where you explained that you, in order to realize the capital gains, now you actually have to invest more cash to make the buildings more attractive, more green, or whatever it is. So if you can give a feel for how that market is developing and what we could expect, whether it could hurt solvency or have some material impact. Thank you.
This, maybe first on the realizations of this year, we see some impact on the speed of the realization, but not on the realization themselves. So we are on track to deliver on plan, and so maybe there were less candidates in the selling process, but the prices at which we can sell are still at a very good price. So we already closed a large deal on the city center, and, yeah, the other deals that were expected to do this year, we have a high probability to reach them, so that's fine. Of course, for the total portfolio, we can say that we have a well-diversified portfolio, so that's certainly something that is very important.
I think Hans mentioned already that the leverage of our portfolio is also minimal if we compare with other real estate players, and it's only, it's more the leverage funds that are suffering. We do valuation on a recurrent basis. There we see some impact, but it's acceptable, and it's not leading to major impairments because in total balance sheet, they were accounted by at amortized costs, so there is not immediate impact. So yeah, but I think the diversification is really key in this answer.
And then green. You asked about green.
Yeah, green.
Yeah, these CapEx is continuous. Every year, there is a certain amount going into the CapEx. It's mainly, I think, playing in offices, correct me if I'm wrong.
Yeah.
The offices need to be green, and retail, all except one, have been recently completely renovated.
Yeah. So, so I think, for AG Real Estate, they invested already a lot in the past, so they had already very high-quality buildings, so... And that's also an advantage if you have to sell buildings.
Okay, you had a question in the back? Yep.
Yeah, just a couple of... Farquhar Murray from Autonomous Research here. Just a couple of questions, really, for Heidi on Belgium, actually. The competition authorities in Belgium seem to have recently put out a report on the banking system, and one of the proposals they seem to be making is that discussing is actually unbundling products within the banking system. So I wonder, just wondered what your preliminary thoughts might be about that competition authority report. And also, could you give us maybe a sense of scale of how much significant product bundling might be in terms of your relationship with BNP Paribas Fortis?
If I well understood your question, you are referring to a new legislation where... No? The-
It's actually a competition authority report that came out a couple of weeks ago, where they were looking at basically product. They basically proposed introducing Livret A for the banking system, which didn't sound so good, but also they actually proposed unbundling products, as part of kind of trying to enhance transparency within the banking system. And I just wondered whether you could give us maybe, preliminary thoughts on that report, and also maybe a sense of the importance of product bundling within the kind of product packages you do within BNP Paribas Fortis.
It's the MRTA, yeah, the MRTA with pricing to the mortgagor.
Yeah.
It is not bundled in the sense that you have to buy a mortgage and your fire insurance or your term. You can come also with a different product. So to my knowledge, the bundling, real bundling is very limited to like PA type of covers in your current accounts or things like that, but that's-
Yeah
... very tiny. But I would say fire insurance, MRTA, there is no real legal bundling.
No, it's not only legal bundling, more product packages, so we can sell the account packages.
Yeah, and the account packages is, but that's... I mean, I wouldn't even know the numbers. That's really-
It's marginal
... minimal.
It is marginal, then-
Yeah
... how much is the premiums from bank channel for the non-life business? And what's the combined ratio of that?
The total non-life business, fire, motor-
Yeah
... I mean, should be the combined ratio that you see for a non-life business is a good indicator for that. So that was very positive this year. And the premium volume, I'm not sure we can disclose the premium number for the bank channel.
No, we don't disclose.
We don't. But it is material, let's put it that way. ... But it's not impacted by that. So if you look at the bundled business or the PA things start to account, I mean, EUR 2 million max. That will be bundled, yeah.
But we don't disclose volumes and Combined Ratio by channel, so we don't disclose those numbers. No. Yeah.
Thank you. Steven Haywood from HSBC. Just two questions, please. Can you give us an indication of the yearly cost of the new Chinese debt instruments? Can you indicate that as a percentage of the operating profit that comes out of these from Taiping? And the second question is on the U.K. and the restructuring. Can you give us an indication of the costs to restructure here? And you mentioned the GBP 55 million of cost savings already delivered. How much more are you targeting in the U.K.? Thanks.
Yeah, of course, on the debt instrument, I cannot foreclose what is going to happen during a roadshow of a partner who's going to issue that debt, right? So, but I can only refer to what similar instruments that have been issued over the last weeks, months by amongst others, Taikang. So give you an idea. But don't forget that the pressure of these instruments on the P&L is not the cost of that instrument, right? That money will be invested, so it's a spread. Yeah. And so I think Taikang issued, do you remember, at 3.75-3.8, so 80 basis points, yeah, on that instrument, which is a perpetual.
So that, that cost pressure, depending on how they deploy the money, obviously, may not be so high, right?
Yeah. The total transformation cost in terms of investment, restructuring, and everything that's going into the transformation program, adds up to around GBP 20 million-GBP 25 million per year, each year of the transformation cycle. GBP 55 million achieved so far. There certainly is headroom to go for. In terms of our overall cost ratio, we set ourselves the objective of improving that by 5% in total over the total strategic horizon. I think we're very much on target to achieve that number.
Yes. It's Benoît Pétrarque from Kepler Cheuvreux. So yeah, on the remittances, the EUR 750 million-EUR 800 million, you know, could... I understand the moving parts, but could you just maybe provide the breakdown between the different units for next year? I wanted to come back on Ethias, potentially, highly political file. We have elections next year, but what is your kind of likelihood to get a deal on Ethias? Is that something you still expect or, you kind of, forgot about it? I wanted also to look at on the mix on the asset mix in at AG. I think your portfolio of govies went down quite a lot in the past five, six years.
Loans went up at the same time. Equities a bit up as well, and I think commercial real estate a bit up as well overall. So, what is your kind of strategic mix in the current interest rate environment? Where do you want to go in the coming years on that? And on China, I was wondering, what is your duration mismatch in China, and how does that compare to the competition? Just as a benchmarking exercise. Thank you.
Well, thanks. On your first question, we do not disclose the breakup of our remittances over the different segments. That is not something that we make public. On your second question, Ethias, well, I think positions have not changed, we have always said this, that could be an interesting addition to our activity in Belgium, because it is an alternative distribution channel that we do not, but mainly, and that we do not develop at the moment. And secondly, AG is absolute leading in the private sector. Ethias is a strong player in the public sector, so there could also be some complement. On the file itself, honestly, I do not expect any change. We have elections twice next year in Belgium, in June and November.
I don't think... As you know, the three Belgian governments are holding almost equal parts of Ageas. So I don't see anything happening before these elections. After elections, well, we know that the federal government and the Flemish government have always been rather positive against the disposal of Ageas. They don't see it as the key role of the government. The Walloon government less, they have always been holding on Ageas, but of course, specifically after the floods, the debt situation of the Walloon government is becoming a main attention point. So the only moment that it might be discussed, but it is very preliminary, is I think, in the formation of a new government, and they need to discuss the budget. So, but I do not expect anything before elections.
On the duration mismatch, on China, I will not provide any insight, I am afraid. It's not something that is published by CTIH, nor by the competitors, so it's very difficult to compare with something that is not public. But that being said, otherwise, you would have had the answer already. But I see no reason why it would be very different, because the similar products are sold in a different - and in similar market.... Sorry?
I thought it was disclosed in the embedded value report.
Then I am not aware of it. I don't have it. On the asset?
Yeah, for the asset mix, you, the asset mix was integrated in the slide deck. If you compare with the past, you have to be aware with rising interest rates, that our balance sheet was, decreasing. So that's a bit why the real estate percentage is higher than in the past. So there, we have a plan to come again within the boundaries, and the shift from bonds to loans was to pick up the illiquidity premium that was in the market. So I don't know if that is sufficient.
I think Ashik still has a question.
Thanks for that. Just one question on excess capital. So can we just get a reminder of what's your view on excess capital? I guess your holding company cash has now grown to EUR 1.2 billion after what you get from AG. So is it fair to say you have got about EUR 0.5 billion excess capital, less whatever you spend for Taiping pensions? And then leverage, if you can just remind where you can go on leverage, because I guess under the new regime, IFRS 17, that's less of a constraint for you versus the previous one. But then we have Solvency II as well.
So if you can just remind us, what's your leverage capacity, how much you can raise debt, and, is the understanding about EUR 300 million-EUR 400 million excess cash at holding company, is that a good way to think about excess capital? Thank you.
Okay. Well, first of all, on this excess capital, Wim just explained on the dividend that we look at recarrying, upstreaming, and the relationship with the dividend. So for now, we deem the excess capital as excess. That means that it can go or in our inorganic opportunities if we explore them. If not, and we have excess cash, then we have always said we do not exclude the share buyback. But remember that the EUR 350 million I spoke about is only coming in towards the end of the first half next year, in May. We might look at a buyback or something. So not, not, not before that we reach the amounts that you are just mentioning. That capacity, EUR 1.5 billion, I think, altogether, but I leave it to Wim to give you a little bit more color.
I can give you a technical answer. Solvency II wise, RT1, approximately EUR 400 million, Tier 2, also EUR 400 million. And then the question is, with the new leverage ratio under IFRS 17, as you mentioned, we're more on the lower end for the moment, and then you come to, levels that Hans is mentioning. But we said in the past, a total in senior loans of EUR 350 million. I think we can go a bit higher at this moment, but I would call it EUR 400 million-EUR 500 million. Yeah.
So that's one point-
EUR 1.3 billion, EUR 1.5 billion is the total
You would say that the holding company cash is all excess?
No, what we say is in the chart, the evolution of the cash, we've assumed that upstreaming covers holding cost and dividends. That means that the extras you have seen in the bar is indeed meant to be excess cash. And in that case, you would come at these approximately EUR 1.2 billion, if I have the number in my mind, by the end of 2024. And we have the position that we have always taken on excess cash, or it serves to inorganic M&A opportunities. If we do not have the right opportunities, then we do not exclude share buyback. Michael?
Well, I wanted to close down here the Q&A session. We've gone a bit over time already. I want to thank the online audience for being with us until now and saying goodbye to you. All the people here in the room, I would like to invite you to join us in the breakout rooms for the sessions on data and AI and reinsurance.
Then practically after that, maybe, Veerle?
Yeah, after the-
Dinner?
Yeah, after that, we will come back here for drinks.
Ah, yeah. Okay.
Reception here.
Yeah.
Dinner is at what time?
We do that.
7:00 P.M.
Dinner at 7:00 P.M.
Okay.
Okay. Thank you for your presence, and I hope you have still some two interesting sessions.