Earnings Call: H1 2021

Aug 11, 2021

Ladies and gentlemen, welcome to this Asia's Conference Call. I am pleased to present Mr. Hans de Kuyper, Chief Executive Officer and Mr. Christophe Boisard, Chief Financial Officer. For the first part of this call, let me remind you that all participants will remain on a listen only mode. And afterwards, there will be a question and answer session. Please also note that this conference is being recorded. I would like to hand the call over to Mr. Hans de Kuyper and Mr. Christophe Poisard. Gentlemen, please go ahead. Good morning, ladies and gentlemen. Thank you all for dialing into this conference call and for being with us for the presentation of the 6 month results of AGS. I'm joined in the room by my colleagues of the Executive Committee, Christophe Boisar, CFO Emmanuel Van Ginbergen, CRO Antonio Carno, Managing Director for Europe and Philippe Coromans, Managing Director for Asia. This quarter, our businesses continue to enjoy a strong commercial and operational performance in both Europe and Asia. In Europe, the impact of the COVID-nineteen pandemic is gradually fading. We are still recording lower revenues on real estate, mostly from our parking business and experiencing lower claims frequency in motor, but to a much lesser extent than in previous quarters. Moreover, the pandemic had a neutral impact on our results in Q2 with the lower frequency in non life positive compensated for the remaining negative Overall, the sound operating performance of the consolidated entities In Asia, the net result was driven by a solid underlying performance mitigated On the commercial front, we enjoyed a solid sales momentum in Europe and Asia with inflows up campaign in China and from excellent unit linked sales in Europe. Whereas non life inflows were up, thanks to a strong performance in Belgium and Continental Europe and to the new contribution of Taiping We in Asia. On a further note, I would like to mention an event which took place after the closing of the Q2. As you know, Heavy rainfall during the 1st weeks of July caused floods in a large part of Belgium with devastating consequences. Our teams have been fully mobilized to provide help and support to the victims. Given the size of the damages suffered Our current assessment taking into account this proposal leads us to expect a negative impact on our 3rd on our net third quarter result of around €55,000,000 and this is after tax and after reinsurance. Despite these exceptional weather events and despite the impact of the further decrease in Chinese yields, We are confident in our ability to deliver a full year net result excluding the impact of RP and I in line with our initial guidance and Solvency positions. Our cash positions remained at €1,200,000,000 which gives us a great financial flexibility. Since the beginning of the year, we have already received €670,000,000 dividends from our operating companies, which is a record amount for us and we confirm expecting above €700,000,000 for the full year. These dividends more than covered the holding cost and the €485,000,000 dividend paid to EGIAS shareholders in June. Additionally, as announced, we have finalized the acquisition of the Turkish life company Avivasa, which has since been rebranded AGESSA. I would like to take this opportunity to mention that AGESSA, which has been consolidated Into our accounts since May 5, recorded solid results in Q2 and already contributed €4,000,000 to our results. Still on the M and A front, the sale of Tesco Underwriting in the UK is now completed. We received the first payment of €45,000,000 in the 2nd quarter and we expect a second payment of around €95,000,000 in Q3. Lastly, our solvency amounts to 196%, up with 1% significantly above our target of 175%. And given our strong cash and Solvency positions, We have announced this morning a new share buyback of €150,000,000 And now ladies and gentlemen, I will hand over to Christophe for details on the results. Thank you, Hans, and good morning, ladies and gentlemen. As you can see on Slide 5, Our 6 months group results amounted to €407,000,000 including €115,000,000 negative Results from the general account, driven by €57,000,000 negative revaluation of the RP and I. As mentioned by Hans, our operational performance has been solid in both Life and Non Life. And as usual, I will now give you more details by segment. So let's start with Belgium on slide 6. In Non Life, the combined ratio year to date, which amounted to 93.8 percent, was still supported by lower claims frequency in Motor, which compensated for some adverse weather not related to the floods of July. The remaining COVID impact in Non Life was fully offset in Q2 by the continued lower revenues from real estate in Life. It is, however, worth noting that these revenues are gradually recovering as restrictions related to COVID The guaranteed operating margin amounted to 81 bps by some scattered impairment on the equity portfolio, even if at the end of the quarter, The amount of unrealized capital gain on the equity book reached a record amount of €1,200,000,000 compared to €800,000,000 at the end of last year €1,000,000,000 at the end of Q1. So there is a progressive Equity. A positive trend on the unrealized capital gain on the equity book. The guaranteed operating margin should recover The unit linked operating margin reached 37 bps, so in the upper end of the target range. Moreover, the commercial performance has resumed robust This year, life inflows are strongly up, driven by high unit linked sales In the UK, slide 7, Motor claims frequency were back to pre COVID levels in the Q2. There, Lower frequency no longer compensated for the continued increase in claim inflation. Prudent reserving along with increased levy cost weighted on the combined ratio of the quarter. Meanwhile, the strong net results benefited from a higher corporate tax rate, which induced positive revaluation In Continental Europe, Slide 8, the performance was satisfactory in both Life and Non Life. In Non Life, the combined ratio year to date stood at an excellent 87.0 percent in Portugal, with motor claims frequency normalizing to pre COVID level in Q2. The contribution from Axi Gorta in Turkey to the result, while still positive, In life, the guaranteed operating margin year to date amounted to a high 113 bps, Thanks to a sound underwriting performance, while the unit linked margin pursued its steady improvement and stood at 32 bps within the group target range. As previously mentioned by Hans, The newly acquired Turkish company, now renamed AKESA, contribute for 2 months to the Life results. The commercial performance delivered by the segment was excellent in both Life and Non Life. In life, inflows showed a strong recovery driven by unit linked sales. Non life inflow increased by 17% at constant exchange rate over 6 months With growth in all the product lines. In Asia, I am on slide 9 now. The Life segment continued to deliver a solid operational performance. In Q2, the underlying performance was broadly in line with the excellent performance of last year. However, after a very strong Q1, the net result suffered from the adverse evolution It is worth remembering that the dividends we receive from Asia are based on local accounts, so before our own restatements. In Non Life, the result increased, thanks to the contribution from Typing Reinsurance. The continued growth in inflow at 100% in both Life and Non Life also benefited from the contribution from Typing Re For €618,000,000 in Life and €727,000,000 in Non Life, You can see slide 15 where you have all the details, segment by segment, entities by entities on the inflows. The reinsurance segment now on slide 10 benefited in the 1st quarter As already announced by Hans, our group solvency II ratio, slide 12, Increased to 196%, driven by a strong operational performance, which more than covered the accrual of the expected dividend. Our operational free capital generation, so slide 13 now, amounted to €375,000,000 including €163,000,000 in dividends from our non control On the negative side, influencing the free capital generation, we had in Belgium the Progressive migration to assets bringing increased SCR. That's what we call the rerisking of the balance sheet To support the margins, in the UK, we had a somewhat weaker own fund generation in Q2 Due to the prudent reserving and the change of scope following the sale of Tesco and additionally, we increased the increased interest cost generated by the new debt instrument issued at the holding level over the past year. All this At group level, the operational free capital generation is satisfactory given the increasing amounts of dividends Thank you. We will now go through the question and Executive Officer. Ladies and gentlemen, this concludes the introduction. We now open the question and answer session. May I ask you to limit yourself to 2 Patent 0 and 1. We have the first question from David Barmah from Exane BNP Paribas. Thank you and good morning. My first question is on the Non Life business in Europe and your the statements you make on Nat Cat. Can you remind us how the excess of loss program works At the group level and in Belgium particularly, and how the government support mechanisms work In Belgium and how that fits with the €55,000,000 impact that you mentioned this morning? And secondly, on Non Life as well. Could you give us an update on your key markets for Motor Insurance on competitive dynamics. And maybe if I can add a small last one on the life investment income. So you mentioned still a drag from your real estate investment rental income in the Q2. What was the impact This quarter versus your, say, run rate budget for that? Thank you. Okay. Thank you, David. Let me take The first question on the impact of the floods. Well, I cannot in detail zoom in, in how the reinsurance Program works for AG and AG. I said that's of course company confidential Information. But additionally, you reinsure yourself for one single event and we also We insure ourselves on an annual basis for these type of incidents. Now how does the Mechanism works. Before 2,005, actually all Cutnot claims came automatically On the Cut Nut Fund, which was run by the government, there was no intervention by the instruments industry. And in 2005, the CAPNAP law came into force where the insurance industry would take first layer of claims and that layer is automatically adjusted for the size of the market and today That stands for the industry around €350,000,000 Above that, We do cash traditional go back to that Capnath Fund owned by the government. From 2005 till this year, actually, all cut off events have been Taken by the insurance industry within that first layer. So it's now the first time and of course quite excessively That we will go above that first layer. And therefore, there are some discussions going on at this moment With the government, how part of this cost could additionally be shared between the government as well as the insurance industry. I cannot due to the confidentiality of those negotiations, I cannot Go into the details of the current proposal made by the industry. I think we are more or less in the final Days to come to a formal agreement. What we have done is we have in the €55,000,000 taken into account Already the current proposal which is on the table coming from the insurance industry. So that brings us to €55,000,000 The overall claims cost for AG looking forward today is expected to be around €400,000,000 that makes the total event definitely an event above €1,000,000,000 claims cost for the market. The €55,000,000 is net after tax, after reinsurance and for the 75% owned by AGS in AG. So that's what I can tell you About the flocks. On the motor dynamics in the European market sorry, yes. No, Thank you for that. Sorry. Just one thing. My understanding was you had an excessive loss treaty for cumulative events. Is that still in force? Because I would have thought that the July plus the H1 Whether events would have triggered that. Well, we have that stop loss, yes, in place. And of course, this type of Incidents will go way above the retention of that stop loss. That being said, of course, it is also not automatic That any additional intervention you would do that, that is automatically fall into your reinsurance cover, So that you should also take into account when you assess that €55,000,000 impact. But I cannot give you at this moment Edexus. At this moment, I cannot give you more light on this due to the confidentiality of the discussions. Thank you. For Motor, I pass it to you for the European markets. Yes. Hello. Good morning. So on Motor, let's I guess you were referring to the main markets, so Belgium, U. K, Portugal. Belgium on motor, you see as As was said by Hans and Christoph in his introduction, we see frequency creeping up to pre COVID levels. I would say in Belgium, we're not Yes, entirely, but very close. Just anecdotical evidence, we see there was a report from the Flemish Road Safety Institute and they indicated that claims frequency on the Flammidge roads was actually to levels of 2016. So that it's picking up as the lockdown measures are relaxed. For us, not really a lot more to mention on the competitive dynamics of the Belgian market. It remains competitive, but not more competitive in the past, so it's a stable market. U. K. Also there we see claims frequency creeping up, Slightly different nature, less claims frequency related to say the daily commuting as many companies are still in Semi lockdown, but you see a higher frequency in the weekends, etcetera. So overall, frequency is creeping up. On the pricing dynamics, you've seen in the 1st part of the year a drop of average premiums. I think for Q2 compared to Q1, we were minus 1.5% in the market. We see that stabilizing, but just for completeness in Q1, the drop was more significant. I think it was more in the order of minus 6%. And in Portugal, a bit the same story, frequency creeping up again, but A fairly stable market in terms of pricing dynamics. Okay. Life investment income, Christophe, you will Yes, okay. So two things on the investment income, first on new money And then on the existing book. So on new money yield, we achieved a very remarkable performance because in Q2, Numener yield reached 2.05%. So this is done through Obviously, not with GOVIZ. So we have more So we have a riskier asset that we reached with 2% or 5%. By the way, the reason why if you look at the evolution of the Coming from AG, it is going slightly up. And it is a consequence of what I mentioned in my speech, the rerisking of The balance sheet, but all in all, all remaining obviously within our risk appetite, of course. But we reached with 2% or 5% on new money. Then on the existing book, we have a drag on real estate. On real estate, 2 things. First, Retail and then Ipeka. So broadly, we have on Ipeka a loss Around €10,000,000 but we are we observe a good trend in the occupancy of the car parks. And Hans, we are close to 70%, 75% now. So what is left What is really behind is the airports, but on the rest, we are recovering rather quickly. And then on the retail, what weight on the result is the fact that we have reduced some rents. We have And this is for another €9,000,000 So €10,000,000 on the EBITDA and €9,000,000 for the retail, €19,000,000 in total. If I can make a comparison, year to date on the interparking, we see still compared to pre COVID levels compared 2019, a drop around 30% to 35%. But we do see, for instance, in July That is already reduced to minus 10%. So we do expect for the second half of the year a recovery. We have actually some countries Already where the parking revenues are above the pre COVID levels. And as Christophe said, Edex. The main impact that remains are the airports and the airports is the biggest impact on the Belgian Parking Business. But we are actually quite confident that we can go back to pre COVID levels and even grow that because Index. The parking park is still also growing gradually So that we can go back to pre COVID levels very, very soon. And so it was in Q2 last year, all real estate and equity impact was minus 44,000,000 and this year 2nd quarter, which is minus 2019, so we are actually less than half on what it was the year before. Thank you very much. Thank you. Sorry. Thank you. Next question from Ashik Musaibi from JPMorgan. Please go ahead. Yes, thank you. Good morning Hans, good morning Christophe. Just a couple of questions, if I may. First of all, if I think about your earnings guidance, I mean, you had increased it from €850,000,000 to €950,000,000 and then €900,000,000 to €950,000,000 And now again going back to €850,000,000 to €950,000,000 I mean how do we think about that Change in the guidance again. I mean, are we more or less thinking that the earnings would be between €850,000,000 to €900,000,000 or What are the moving parts here? Because on one hand, I agree that this losses from The Belgium floods are high, €55,000,000 no doubt about it. But at the same time, I mean, European equity markets have been strong. So there could easily be some offset from capital gains that you can book in Europe. So how you are thinking about this guidance It's the first question. Second thing is, I mean, clearly, macro in Asia, especially China, has been volatile with equity markets as well as Interest rates coming down. So any fresh thoughts on how do we see the underlying earnings of Asia? I mean, in past, you have done a great job in giving us the building blocks of the earnings. So any thoughts on those updated numbers would be very helpful. And lastly is you have announced share buyback of €150,000,000 I mean, how do we think about the capital position here? And is there any relevant M and A in the pipeline That you would flag or not at this point. Thank you. Okay. Ashik, let me take the first one On the guidance, you know very well and you're right. We have said in the beginning of the year the guidance of €850,000,000 to €950,000,000 with a very Strong performance in the Q1 is mainly also coming from the capital gains and some continued positive impact of COVID. We have raised it to €900,000,000 to €950,000,000 Since I think we have now for the second part to take into account Two important elements going forward. First of all, is the €51,000,000 coming from the floods. And the second one, as you remember, in previous guidance, we have assumed a negative impact from the variable interest rate in China for the First two quarters and that, that would more or less stabilize in the second half of the year. We see now that interest rates are Going down, well, have been going down in China, stabilizing a bit now. So but we do expect Some additional negative impact and Philippe in your second question can zoom in into this For China. So those are the 2 main attention points. You're also right that we have a very solid unrealized capital gain position, both on the equity book as well as on the property book. And so that's why we are also not Lowering the upper limit. So we take into account the potential on the lower side, But we do not lower the upper limit because that will depend on financial markets, equity markets and the potential of capital gains. Also let's not forget that this year, the capital gains season on the real estate transaction is almost fully in the second half of the year. This is still to come. I cannot give you detailed numbers on this. That is also something We should take into account. So that's the motivation to go for €850,000,000 to €950,000,000 Where will we end in the range? Honestly, it's hard to say. I keep it open for the full range for the time being with the arguments I just gave you. And on the Asia earnings, I will pass to Filip for some details. Yes. Thank you, Hans. Let me start with saying that underlying there is absolutely no change in the outlook And indicators that we see on Asia. And I know, of course, that many of you were surprised By the relatively low results in the surface for Q2, certainly after a strong Q1, Happy to comment on that. But if we look at the underlying 1st and foremost year to date, we had an overall result of 203 And in fact, the underlying result is not all that different because the net net the capital gains realized To date, it was €65,000,000 And the valuation interest rate up to half year was €74,000,000 So underlying, That leads to a €212,000,000 And if we do the same exercise specifically for Q3, We had the valuation interest rate impact in Q3 of €34,000,000 and a negative capital gain impact of 36. So underlying, we had even a very strong 125 for Q2 on his own. To put that further into perspective, and Christoph and Hans commented on it, these negative capital gains, very important to note what they are not. They are not realized losses and they are not impairments. They are IFRS derecognitions of local capital gains. The result in China, in their accounting rule, they put their property in fair value to P and L, and the outstanding trading book of which also the gains run through the P and L. Under IFRS, we do recognize both. However, what we do not do and that is quite conservative, if you ask me, is take the profit sharing compensating effect into account. So we do still carry the full charge of the profit sharing notations that Taiping Group Taiping Life makes in these funds. And I'm more inclined to look at the underlying trend, which is more in line with what you can expect In the local results, which in the end drive dividend expectations forward. So What is then our outlook as you asked, Ashik, by end of year? The interest rate in China undeniably came down further and took a dip in July, Even touching 2.8 now rebounded a bit to close to 2.9. But based on that, our best estimates and Of course, with the caveat of high volatility in this indicator, a range between €170,000,000 €180,000,000 impact of valuation interest rate by end of year. Then on the result outlook related to that, we stick to our €350,000,000 to €400,000,000 range. But I am inclined to say that given the fact that in the local accounts they realized already quite a bit more capital gains than we did, That we may not end under IFRS close to the €400,000,000 but rather to the €350,000,000 That's very clear. Okay, okay. I will start. Thank you. Thanks a lot. That's very clear. Okay. Thanks, Philippe. As you can see, your last question on the share buyback. Well, three Three comments I want to give there. First of all, of course, I cannot disclose anything on M and A, but what we call our Odess' position. To look at potential M and A is actually not impacted really by this share buyback because You have heard me saying during the introduction that we expect more than €700,000,000 of upstreaming this year, Take into account the €485,000,000 coming from the dividend. We still have ample room to do this share buyback. Secondly, I think we have always said that our guidance this year is the Connect 21 program, and we want to honor Our commitment there and where we have said if no significant M and A announced that we would do a share buyback of Miner. So that's also, I think, the second reason why we do the share buyback. And last but not least, Also our solvency position has been very resilient throughout The whole COVID crisis into this year, right, into the Q2. So we're also very, very confident From a solvency point of view. One final comment I'm going to give because that question might come later on anyhow. Within the European directive, we had a limitation of €130,000,000 But once again, same as the dividend last year, We have announced a share buyback in a very open and constructive dialogue with the National Bank. You know that the European directive will end 30 September, so there was no objection to go €20,000,000 above That maximum limitation that we have. So we have been able to honor our Connect 21 commitments. That's very clear. Thanks a lot for those great detail, Hans. Thank you. Thank you. Next Question from Benoit Petrar from Kepler Cheuvreux. Please go ahead. Yes. Good morning all. A couple of questions on my side. I would like to come back on the July event in Belgium, which is all extremely severe and shocking as well. I was wondering what have been the lessons learned from your side from these events. I mean, we're talking a lot about climate change. I was wondering if you are currently happy with your reinsurance program, the way you structure it. Or you are potentially thinking about a small reset or adjustment of this program. So that will be the first question, just kind of the long term more long term medium term long term impact of this July event From a strategic point of view. Then the second one, just to come back on the normalizing Frequency in Non Life in Belgium. It was still a small positive in Q2. What do you see so far in the Q3? Do Do you expect more normalization? We've been talking about also frequency potentially shooting up a bit during the Normalization phase. And I was wondering if you still think that, that will be the case. And then just finally on rerisking. You've been doing risking in the Q2. And where are you now? How much further risking are you expecting? Thank you. Okay. Let me take your very first part of the first question, lessons learned. I think it's too early. We are still dealing with the recent events. Of course, we can all read that frequency and impact of these events is under rise. So I can imagine that after the agreement with the government, there will be a follow-up how the CAPNOT regulation might be further improved, Which I think is also very important for the insurers because that way they are able to align their reinsurance programs with the regulation And that we can operate within a very clear legal framework and that insurers can protect and organize themselves for this. But what about our current reinsurance program, I'll pass it to Antonio. Thank you, Hans. So the reinsurance programs get Every year, but the principal philosophy remains the same. Basically, we ensure slightly above the 1 in 200 events. And these models Continue to be adapted and referring specific to climate change, it is nothing new for the reinsurance world. So the models have been gradually adapting Maybe there will be more adaptations, but don't expect because of this specific event like a drastic change in the reinsurance cover. But as Hans was saying, should the legal framework be adapted, Then that obviously will be reflected in the reinsurance. No additional lockdown coming up. Don't see any reason why that should stop. So we are gradually normalizing definitely in Belgium, definitely in the Flemish part of Belgium. Okay. On your first question for good segment, We are subject to this rerisking thing. It is mainly Belgium and then but to a lesser extent, Continental Europe. So I will take Belgium That's a very good illustrative example. So first, let me give you the asset allocation. In Belgium, and you will understand Where we are heading to. So real estate, we are slightly above 10% loans close to 20% equity close to 4% and then the bonds at the rest. So the re risking, it is on real estate. And on the real estate, it is safe to assume that we are close to a maximum in when you compare with the SAA, the strategic asset allocation, which is the reference, we are close to a maximum. So I don't expect a lot of additional SCR coming from the real estate. On equities, the trend will continue. Why? Because we will take advantage This is famous long term equity. But as you know, they have a more favorable Solvency Treatment. But on Equity, the goal is to increase by roughly one point. And then on all the fixed income bond and loans, we still have migration from sovereign debt Two more advanced instruments like loans, infrastructure, direct lending or things like this. So and there The movement will continue. So conclusion, on Equity, We can expect more SCR, more allocation on equity and then the reshuffling of the fixed income portfolio with more note and instrument bearing additional SCR. So conclusion, and I don't I cannot give you precise figures, The trend will continue for the wine. Thank you very much for that. Thank you. Next question from Michael Huttner from Berenberg. Please go ahead. Fantastic. Thank you very much. And so the my main question is really to understand the operating capital generation. I know you Don't kind of focus so much on that, but you did publish it. Euros 212,000,000 The guidance for the year was €500,000,000 to €540,000,000 which is well below. And it looks from what you're saying on the SCR that the second half will not be higher. So here my question is how does that impact the cash generation that you would expect And the second thing is on the are there I feel the disconnect and I'm really sorry, but I feel it really strongly. You're investing more in these real assets, You're not actually giving us more gain to reduce the guidance. I'm kind of thinking, well, if I am not a shareholder, I'm just an analyst, what do I I'd be a little bit disappointed. And then finally, if I may, so China's cash is delivering a bigger payout that you kind of So 35% versus 30%. How sustainable is that? Thank you. I will I take the question. So on the free capital generation, you are right. Indeed, We are below the guidance, the guidance of €130,000,000 a quarter. And in my speech, I gave you some explanation, so let me remind you the main one. First, some rerisking in hedging and The cost of this rerisking is quite sizable. The increase in SCR for ENGIE is €29,000,000 €29,000,000 additional SCR times the €1,750,000,000 of the objective. You have a very sizable effect On the operational free capital generation, if you only restated by this amount, you would be back within the guidance. But there are Additional things like the fact that you left the scope, it accounts for €5,000,000 We have more financing costs. The financing costs now reached €30,000,000 which is again a sizable Amount decreasing the own fund generation of the general account. So a lot of some Adversing, but then as I said and compensated by a nice increase in the dividend coming from China. I know that this has to be deducted when we compare with the guidance. But in the near future, we will Upgrade the presentation of the free capital generation and we will be able to rely more on the free capital generation coming from Asia, but this is In the future, but you will see that the free capital generation coming from Asia is really strong. Then your second point was How come we're investing more in real estate? We don't generate more return. We do. We do. And when we invest more in equity and more in real estate, we have more own fund generation. So I cannot give you the exact breakdown, but indeed there is more over time. So when we invest Into this riskier asset, you have a kind of one off upfront cost with the increase of SCR. But for the future, You have on a recurrent basis more regeneration of own funds. So this is included. You asked an additional question, which you asked on the sustainability of the payout ratio In China, which is indeed very important and we saw indeed that our payout ratio on a local result basis moved from 30 now to 35. We've given the also excellent results last year in China led to record high dividend submission Out of the region, we are now at €152,000,000 I believe more or less and that is going up with the dividends still coming in from Malaysia, I believe. So We will be close to 1.70 net dividend contribution. So your question on the sustainability of the 35% It's indeed very relevant. First and foremost, it all depends on the capital consumption for the growth And the capital generation, as Christoph said, operational free capital generation is of the essence. Now remember that last Time. We said that last year over last year and it was also in the footnotes of the free capital generation in the previous presentation That Asia region overall had an operational free capital generation around €400,000,000 So having if you look at the dividend outflow, It's still yes, 35 seems very much sustainable. It also depends on the solvency evolution of the operating entities. And As you can see, they're fairly stable. Of course, Taiping China Taiping still has to release its results. So Cannot say too much, but don't expect too many surprises there. Of course, they paid this dividend, which in the first half always has a little downward pressure. But overall, Solvency ratio seems to be stable with this payout ratio. And the only other thing that remains to be noted is the upcoming sea Rota. And then probably you read in the press, there was an article appearing in Asia Insurance Review, I believe, a few days ago, saying that they expect that the impact for the sector to be around 10%. Now giving the fact that the solvency ratio of Taiping is over 200, That is not worrying. And at the same time, China Taiping also announced or at least Taiping Life announced issuance of subordinated debt, Which will in execution, which will add another 14% to the solvency ratio. So all in all, we expect stable solvency conditions and sustainability of payout ratios 30% to 35%. And Philippe, what we can add on the sustainability of the dividend of China Is that at the CTIH level, at the Taiping Group level, there is a need to collect dividends. So because it's A key component of the group. That's the largest entity. So Typing Life, it's a little bit like AG for AGS for them. Correct. Understand. That's very helpful. Thank you. Thank you. And We have a new question once again from Executive. Ashik Musabi from JPMorgan. Please go ahead. Yes. Thank you. And sorry, Philippe, sorry to come back again on Asia. I mean, you kindly gave the whole moving part of Asia for this year. I'm just wondering like how do we think about the interest rate impact For next year, this year, you mentioned it's 170,000,000,000, 1000000. I mean, should we expect any improvement in that number for next year On a marginal differential basis, yes, not like what would be the actual number. But like differential wise, would this number Go down next year or would this number, would you say go up next year based on what we know about the interest rate as of now? Thank you. Schick, I particularly appreciate the last part of your sentence as what we know right now, Because this is obviously moving every time and it's quite volatile. But yes, of course, you can actually project it if you look at the The 75% rate averaging forward, it will taper off in the end towards the current rates and that gap It's diminishing because the current figure is around 3.08 and the new rates are a count of 2.9. So There, that band is narrowing down, so this effect will taper off. Initially, we even hope that in 2022, we would have almost no impact. But Given this recent dip in rates, some impact will be there. Okay. Executive Officer. Let me put another caveat to it and that is for everybody. The volatility does not only come from the rate. There are 2 other components And you keep that in mind that it is not a science. It depends on the curve. It's not a single point. So also the movement in the May have an impact from month to month, from quarter to quarter on the effect. And the other thing is the size of the balance sheet, because We still continue to grow quite strongly. If you saw the assets under management decreased with 11%. Also on new business that impact is there from quarter to quarter movements. So keep that in mind that the volatility of these figures are high. Thank you. Thank you. Next question from Poonin Degroof, Morgan Stanley. Please go ahead. Hi, hi. Good morning. I've got just two questions. The first one is, So I saw that the inflow of Asia is growing, which is good. But if I look at the APE in the second quarter of the Q2 of this year, by my calculation, APE has actually down about 18%. Is there anything we should be concerned? Or is there any special reason that the APE in the second quarter is down, I mean compared to the Q2 of last year? And that's the first question. And the second one is, I'm sorry, I don't actually fully understand that Capital Loss Exponentation in Asia. Maybe I can I ask a question from a different angle? Is actually the Property market value and the equity investment market value actually going up In Q2 or is actually going down? Thank you. First on let me first talk a little bit indeed about the new business. Indeed, you rightfully noticed that APE In the Q2 so first, let me start with year to date. APE is up, I think, around 13% 12%, 13% year on year. So there is a nice growth for the 1st 6 months, but indeed it was more in the Q1 and quite a bit less in the Q2. Now there are 2 caveats to that. 1st and foremost last year in the Q1, of course, we had more COVID impact and there was a catch up Clearly there in the Q2 into SERMs volumes, whereas this year the Q1 started extremely strongly. And secondly, there has been more focused on higher than B products. So less focus maybe on Top line and specifically in China, less focus on higher tickets in the banca channel, but more on value adding tickets in banca channel, Which I'll expect APE, but we will and we will publish these tables later, as you know, with some delays still. Van B in the region For an NPE up of 12% will be up more than 40%. The exact figure, I leave it mostly to our Colleagues are piping to disclose. So the value of the new business written is significantly better than the APE growth even. So it's also achieved a focus on more value and adding products, maybe less on the top line in the second quarter. Then the second question was about that capital loss. So clearly, there is no losses. It's the recognition, as I said. So market value recognized on property went up in the local account and mark to market on that trading book went up in their local accounts. To make your life, let's say, easier, It will be interesting for you to follow the result announcement of China Typing, which unfortunately, as you know, comes in 1 or 2 weeks from now. And that will give you a better insight in the difference between local results and the IFRS results that we recognize And then also in the magnitude of the adjustment we had to make. Actually, in summary, it is capital gains that runs over the P and L From a valuation point of view, it's actually good news because value is improving. In one sentence, so the revaluation of real estate, it is fair value to P and L. This increased result He's eligible for increasing the profit sharing at a rate of 70%. And then what we do is since Our own IFRS option is to do amortized costs on real estate. We Restate and we canceled this revaluation of real estate, but we don't restate the profit sharing increase. That's the reason why We say it is very, very prudent, as Philippe said. Okay. Thank you. Thank you. Thank you. And there are no For further questions, I would like to return the conference back to the speakers. Ladies and gentlemen, thank you for your questions. And to end this call, let me summarize the main conclusions. First of all, we delivered a very solid operational performance in Europe and in Asia. I want to note that the inflows were strongly up And despite the expected impact of the recent floods in Belgium and the interest rates evolution in China, We are confident in our ability to deliver a full year result in line with our initial guidance of €850,000,000 to €950,000,000 And given our strong cash and solvency position, we have announced a new share buyback of €150,000,000 With this, I would like to bring this call to an end. Do not hesitate to contact our IR team should you have any outstanding questions. Thank you for your time, and I would like to wish you a very nice day. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for attending. You may now disconnect your line.