ageas SA/NV (EBR:AGS)

Impact 24

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Jun 1, 2021

Dear investors and analysts, welcome to the launch of Impact 24, our new strategic cycle for the coming 3 years. We have approximately 2 hours together tonight, where in the first hour, I would like to present you the highlights of our strategic focus for the coming 3 years. In the second hour, the executive committee will join me on stage to answer all your questions. I would like to start with presenting to you what Impact 24 is all about, how we will deliver on the ambition that I will express to you in a minute, but also how we are investing in a future even beyond 2024. Last year, we have celebrated 10 years of AGS. We have been looking forward for the following era of 10 years for our group and we have defined some additional tools to invest. And of course, very important for you, What are the commitments and the pledges and the targets that we will give you for your guidance on the following 3 years? Impact 24 is a new strategy, a strategy building on a sustained performance. We are a group that over the last 10 years has shown an amazing track record in performance. And this was one of the starting points of designing this new strategy Impact 24, which we started approximately November last year. How can we sustain and where possible maybe even further improve our performance going forward? Of course, we cannot look at the following 3 years while we are still in the midst of the current strategic cycle called Connect 21, and I'm sure by now already very well known to you. Remember the highlights 3 years ago. We have added society as one of the key stakeholders in our pledge of Supporter of Your Life. For the first time, we have launched 4 identical values for all our operations around the world to bring that unique DNA, to bring that unique culture alive for the group. And then we have the strategic choices. The customer who is taking center stage in our strategy, looking beyond insurance, the possibilities of technology and how we can further which our strength in managing partnerships and the partnership model. Continue how we can help as a group all the operations around the world while still respecting the local autonomy. And as you know, 20 years ago, we have started expanding our operations from the home markets in Europe into Asia. So how are we further building on that focus on Europe and Asia. And the financial targets, well, I'm very much convinced that I do not need to repeat them for you. It is the way we deliver on our performance already for the 3rd year in a row. And we are committed to deliver on all financial targets by the end of the year. At the closing of 2020, You have seen that we have actually already achieved the targets for 5 out of the 6. And we were very close for the Life margin unit linked with 29 basis points. The Q1 of this year. By the way, the unit linked life margin was already within range, and we I definitely have the intention to deliver on all six of the financial targets by the end of the year. So let's have a look a little bit how we make some progress on those Connect 'twenty one choices. We are really redesigning the customer journeys. Customer centricity is part of our strategy, and we are really aiming for top 5 net promoter score by our customers in most of our operating entities. We have multiple Beyond Insurance initiatives, and I will come back to that where we are today later in the presentation. We have quite some large replatforming projects running in some of our core operating entities to make sure that we have an infrastructure ready for the future. And in areas where it was needed, we have absolutely increased our spending in tech. Partnerships. I don't think I have to repeat that. Partnerships is truly part of our DNA and cornerstone of hour success. And of course, the 2 latest M and A acquisitions are proof of the strength of that partnership. We have expanded our partnership with CTIA, the Taiping Group in China from life into reinsurance at the end of last year. And of course, in February, we have announced that our partnership with Sabanci is now in. Life insurance next to Axi Gorta, the company we were already building together on the non life side. We continue building these smart challenges and we have Even already started with really group projects where group is in the driver's seat. I think, for instance, about building the cloud environment for our IT and data or the progression we have made in the area of reinsurance. But local autonomy stays key because that's where the customer is, that's where we feel and sense the market the best. And so local autonomy is definitely something that will stay and keep being part of the DNA of our group. And as always, We have been disciplined in our expansion. We have not looked beyond the two regions that we have highlighted, but I will show you in a minute how Asia is becoming a bigger part and has a growing share of our total performance. So Impact 24 is building on those strong foundations of Connect 21. We are a group which is in excellent shape. We have a very strong foundation. The resolution of the legacy has given us the strategic and the financial flexibility to build and to write our own future. And that's what we have done over the last 8 months. We have designed the house that we are going to build for the coming 3, but even for the coming 10 years on the foundations that as new CEO have earned at the end of last year. So The center theme was how will we sustain that performance going further? And are there areas where we can even go further and set our sights maybe a little bit harder. And sustainability is not something in the performance of the investors. Sustainability is a core theme in the whole world around us. It's related to all the stakeholders. And at the end, I will present you a separate chapter how sustainability will form or will be part will be at the heart of our strategy going Forward. So what does it mean, a sustained performance? Well, as you know, At the end of the Q1, we have given a guidance. We have slightly raised our guidance for this year to a net profit between €900,000,000 €950,000,000 Going forward, we would like to raise our earnings per share ambition to 6% to 8%, coming, as you would know, in the current financial targets from 5% to 7% under the Connect 'twenty one plan. And that should bring us in a profit range between €1,100,000,000 and €1,200,000,000 minimally. And how will we do that? Well, we have 3 key areas where we believe we can develop further growth of the group. The great news is that the biggest part of the growth potential is already present in our current core. So we have identified where we will further work on unlocking the growth potential that is already present in the footprint that we have today, the footprint, the combination in Europe and Asia. But secondly, we have identified new engines, not only new engines for profit contribution in the short term, but also future engines to make sure that EGEAS stays relevant in a rapid changing world around us that EGEAS can be seen as a future proof international insurance groups with businesses in Europe and Asia. And the 3rd pillar, Of course, we will continue exploring new markets. New markets with the cash position of approximately €1,200,000,000 that we have available today. I will zoom in on that part also a bit later. A growth strategy to deliver sustained performance, building on 3 pillars: strengthening and growing what we have in the core, developing new engines for growth and continuously searching for new market opportunities. Let me start with the 1st block, strengthening and growing the core. Well, where do we start from? Why is our core in excellent shape. What are the typical characteristics of the core we are having today? Well, first of all, And that makes EGEAS atypical to many other insurance groups, we have a great balance between the mature markets in Europe and the Growth Markets in Asia. Something that we have seen in the 2020 performance with the COVID pandemic. We have seen that the timing of the pandemic was different in Asia and Europe. And so we have seen that actually combined, we have been able to deliver on our promise with €870,000,000 which was within the guidance that we set even before the pandemic broke. That is a very attractive and quite unique footprint for our group. Secondly, We are happy with our world map. We have leadership positions in most of the markets where we operate, Maybe to a lesser extent in the U. K. And in France, but overall, we have a very strong position around the world being in leadership position or at least have a road towards leadership position and then I'm talking more about the emerging countries where we operate. We have become an expert in multi distribution management. Bank assurance is part of our DNA, but we have definitely developed strong experience in Agency Force and of course, the broker market in our home market in Belgium. Another strength is the well diverse portfolio in life, non life and health. Again, testimony in 2020 with the performance under COVID where the live performance was definitely under pressure on the investment side, on the yield and on the capital gains, you remember. But we have been able to compensate that quite nicely with the better claims we can see in the non life side, again, allowing us to deliver on a sustained performance. And then we have those partnerships. We have developed, I would say, a nose to look for local winners who can really help us to build market leadership positions in markets that we might not be familiar with, but where our local partner is very well positioned. Look for instance how we have expanded our business recently in Turkey together with the Sabanci Group or in China with CTIH. So the footprint is strong. The group is healthy in its core. So where can we further tap then in the growth from the core? Well, first of all, the market evolution itself, yes? We are in markets where we have still quite important or in the mature markets moderate, but positive growth ambitions in the market outlook. We still have potential to further develop our distribution and the commercial excellence. We have room to further improve efficiency, not so much by cost cutting, but by truly transforming the customer journeys, and we have integrated the low interest rate impact and I would say the lower for longer interest rate impact in the plans that we are presenting to you this afternoon. Let me take the first topic. Here you see our markets split in life and non life, where on the horizontal axis, you have the CAGR, the market growth and this is coming from the industry associations in the different countries between the previous cycle, 20 sixteen-twenty 19. The vertical axis is the outlook for the coming cycle 2020, 2024. While you see some Countries still close to 0 or even below 0 over the past period, we are all in positive territory for the new period. So we have a positive growth outlook on all the markets where we operate. Look where Turkey is. Turkey is in outlook completely at the top where we are now present both in non life as well as in life. Not surprisingly, our core Asian markets are in the middle with market outlook growth that hovers around 10%. And then you have the more mature markets at the bottom left side, but still in positive territory. With this, we have also, of course, our plans in the contribution of the profit. Where you see where Asia in 2018 was €170,000,000 of the total profit of the group or only 1 quarter, It has actually moved estimate for the end of this year to €350,000,000 to €400,000,000 TOF400,000,000 TOFID contribution approaching 40% of the total profit of the group. But of course, these are growth markets And in growth markets, not all the profit is readily available, of course, for cash upstreaming and for dividend because Capital need to be kept to keep and to sustain the solvency margin in a growing market. So you see that The upstreaming on Asia has grown from 92% in 92,000,000 sorry, in 2018 to €170,000,000 in 2021. But there again, Asia is already approximately 25% of our overall cash upstreaming. If we look forward, and I think this is the true evidence of our success story. We are celebrating in 2024 200 years of insurance in Europe starting with the creation of AG in Belgium in 18/24. This year, we are 20 years in Asia with the 1st joint ventures in China as well as in Malaysia starting in February for Malaysia and December in 2001. Well, by the end of this strategic cycle in 2024, We expect the profit contribution for the group to become fifty-fifty, 50% from Asia, 50% from the European Markets. Distribution is one of our key strengths, distribution management, avoiding distribution conflicts because in most of the markets, We work with multiple distribution channels. Bank Assurance is approximately 30% of the inflow for the group. Bancassurance has also been one of the key triggers to be invited into the Asian region. Maybank in Malaysia, who was looking for bank assurance partners 20 years ago. Also in China, actually, our business, which is now, to a big extent agency, but actually it started predominantly with bank assurance. K Bank in Thailand with MTL, same story. Very often, bank issuance was one of the key triggers to invite Aegis into a partnership. Broker, I think we are leading in the Belgian market already for many years. And agency, we have absolutely developed in the region, but we still have potential for growth and potential for expansion of the agency force in the region. So first pull of growth on the distribution is this penetration in bank Thomas, also having an insurance contract. And what we have done country by country is we have looked at the current position that our operations is having in the banker penetration in that country. We also know from international studies what the market best practice is. And we have identified EGR's full potential where we want to go this strategic cycle in 2024. I know you know that in Belgium, we are already market leader in bank up penetration with 28%. So we want to sustain that bank up penetration going forward, which is at such already a challenging and attractive ambition. In Portugal, as you can see, we want to move up more to the range of 16%. And actually, in Thailand, India and the Philippines, in the life side, where the total market potential is only single digit and it's also, of course, due to the composition and the type of the population and distribution of wealth, where we feel that we should aspire to go to that market best practice in those countries. And here you will see the potential on agency development, which is a second pillar in the distribution development. In China, agency was 27% of our distribution in 2010. In 2020, we are working approximately between 380,000,400,000 agents in that vast country, and Agency has taken 69% of the top line. Well, that is a position and that is a path that we have not already fully exploited in the other Asian countries. And I think about Malaysia, where we still highly bank assurance with Maybank or in Thailand as well. So we see room for further development of that channel and that is both in recruitment expansion as well as in the efficiency of that channel. And so with this, I can say that we continue to believe in the power of our distribution models. Digital is very important. Direct is important. Platforms is a topic I will come back to in a minute. But in the core, We are still very much convinced that our distribution partners stay relevant in the distribution in the customer engagements in the insurance industry, and we are happy to keep on investing in those. Commercial excellence was the 3rd topic, and these are the typical indicators for commercial excellence. Can we cross sell and up sell? Can we work and improve to the maximum persistency? And can we raise the productivity of our distribution force as well as of all the sales and marketing campaigns. New in this, during the study and the design Of this strategy, we have studied a few very interesting companies working with artificial intelligence, working on data insights exactly on those three topics in commercial excellence. So getting to know your customer better and steering the right offer At the right moment to the right customer with your distribution partner with the use of artificial intelligence is the use of technology and data in our processes that we will continue to embed to get some uplift in the output from the distribution partners that we have and that is a very important element both in bancassurance as well as in the agency force in the Asian region. But of course, in the world of today and in the post COVID world, You cannot design a strategy without clearly assessing how we deal with the lower for longer interest rate. Well, you know from previous investors relations presentations that we can be proud of the ALM profile on which we have built the life portfolios for more than 20 years. The asset liability matching is part of our DNA. It is absolutely cut in stone when we further grow and develop the life portfolios. On the other hand, The customer need has not expired. Aging population is still a very hot topic. The financing of Social Security by public debt is still a very actual topic. Protection gap is important. So we Keep on believing in the need and the potential of the private sector in the life savings market in the areas where we operate. And we also keep on we are convinced that the structure of the portfolios that we have today allow us to keep on further developing these portfolios. Due to a very smart capital, but definitely also liability and asset liability management. Of course, we will further diversify the product portfolio, and course, we will also look how we can balance the guaranteed life and savings market with the unit linked market and even with the life protection products, and we can also further improve on efficiency. And efficiency should come from redesigning the customer journeys and also digitizing internal processes, internal repetitive work and at the same time, improving the quality of work for all our employees around the world. So the ambition that we have is that in the markets where we have a leading market position in market share. We also would want to make sure that we have leading expense ratios, which by the way in some of our biggest markets that is already the case if you look for instance at the expense ratios in the Belgian market. So for the lower for longer interest rates, we have taken the impact, we have all the mitigating actions in place and the plans that we are showing today is taking into account the impact of the interest rates up to 2024 and even beyond. This is the story about how we can further deliver on the growth coming from our core. And actually, the core in itself is capable to deliver approximately 80% of the upside of the growth story for the coming 3 years. So let's have a look at the new opportunities for growth, which we would like to launch or which we would like to further develop. You remember that in the Connect 21 strategy, we have launched the Think 2,030 think tank. So I think it's a good moment now to get an update from our futurists how they look at 2,030. Impact 24 is a long term sustainable growth strategy. So integrating future trends was never in doubt. The 2030 thing can consider the certainties, but also the uncertainties and identify new opportunities for growth where AGF can make an impact. So buckle up and let's go. Welcome to the future. Check out some of the trends that may have already impacted us by 2024 and others that may develop longer term. IMPACT24 ensures we are preparing ourselves today for all scenarios. Let's start with technology and data. Well, no surprises here. Change in IT is accelerating, leading Personal data, but we are willing to share it in return for better products, services or content. So by 2,030, data must Become a key strategic asset that will provide us with competitive advantage. Next stop, customers. Because in 2,030, Customers are king. With the hyper personalization of services, the concept of right time, right place is the norm. Customers expect fully reliable solutions in a secure and transparent way, matching their needs with the right product, Services for content. So clearly, there is no time to waste. Put customers first. And those Customers will care much more about sustainability. Sustainability practices have an impact on consumers' decisions and behaviors. As a company, It is part of our license to operate. Consumers are more conscious about choosing local goods and services. So being part of the local economy and the fabric of society matters. Climate change is affecting health and influencing the value of companies and investments. So remember, we have a responsibility towards future generations. Sustainability needs to sit at the heart of everything we do, helping to drive our choices. But how can we truly be there for our customers? Let us look at a few trends that open up opportunities for insurers, starting with the future of Health and Care. Survival rates from non communicable diseases have further improved. Thanks to new treatments, drugs and early detection Global health spending is gravitating towards prevention and solutions around an aging population. Digital health applications mean greater personalization and more affordable healthcare. And pandemic risks are real, That much we know now and this is incorporated into our thinking and risk management. Happiness and wellness will come first for a growing middle class. So focusing on prevention, preparation and assistance alongside new health focused opportunities is a logical step. Economic inequalities, however, will reach a worldwide tipping point. Let's have a look at how protection Growing economic inequalities have emerged. An older, richer and unequal population is putting pressure on social security Pushing up protection needs. Increased regulation is proving costly and complex, stimulating opportunities around pensions and individual In Asia, a youth spy combined with hyperaging and economic slowdown are a major challenge, And Asia has increased its dominance on a geopolitical level with China the single biggest contributor to global growth and India, the 3rd largest economy. So for all the regions, but especially Asia, opportunities exist in perfection. Now let us dig deeper into what the insurance growth will look like. Low interest rates continue to put pressure on traditional With the rise of Open Banking and Insurance as a Service, Banks are becoming digital service providers, mostly operating within the context of 1 or more ecosystems determined by Technology companies and their customers. Big Tech companies have become more than just commercial organizations. They have a worldwide impact on governance and regulation and are the main drivers for innovation and technological progress Across many industries. Insurance legacy systems, existing business models and traditional services are at risk with new types of insurance covers and delivery channels required to stay relevant. Within a scattered distribution landscape, other industries are selling new types of financial products embedded in their core services. So it is high time to explore next generation partnerships. So back to Earth, what does this all mean? Well, we can try to predict the future and some of those predictions will be accurate, others less so. But not considering the trends as possibilities was never an option. The choices and the investments we make are not just for the next 3 years, But for the years that follow on through 2,030 and beyond, the future will depend on what we do in the present. So this is how the future might look like in 2,030. And we have combined the insights of our managers around the world with artificial intelligence where we check the trends that we have identified whether these are also the trends that come out of the World Wide Web with artificial intelligence. And then, of course, we have mapped them with the capabilities that we already having as a group, which is already part of our culture, our DNA and our business footprint. And with that in mind, we want to develop 4 group wide teams to get EGEA's Future Proof to keep EGEA's relevant in the future, and we have provided in the plan €200,000,000 to €320,000,000 investments. It can vary in those initiatives to future proof our operations. And the 4 are the world of digital platforms and how we can connect with them, the worldwide protection player in everything related to your physical integrity, the health ecosystems where we have very strong expertise in Portugal as well as in Belgium and the further role of reinsurance in the group. So let me briefly tackle them 1 by 1. First of all, the digital platforms. What we have learned in this strategic exercise by looking at many, many companies and many platform and tech players is that the digital platforms are not a competitor of your current business model and your current distribution channel. It is a new market with new customers, with new type of covers, very often short term covers, low premium but high volume covers and a market that is rapidly growing specifically in Asia. In Asia today, it is still very, very small. This direct and platform market, it is only 1%. But as you can see, It is becoming more in high demand. In Europe, you have already 10%, mostly, of course, with the direct players. These are EGEA's numbers. So for instance, U. K. And the employee benefits activities of AG in Belgium are part of this chart. But what we do see is that in the Asian region, There are still many, many customers discovering insurance for the first time. And so, of course, they discover insurance for the first time via The current customer interactions with all their providers they are getting used to and these are very often digital platforms, online retailers, online apps for chat and all kinds of services that will come to you. So it is a natural trend for new customers to get to know insurance via that new way to interact with your customers. And what we want to do as a group, because partnership is at the core of our DNA, I think we have all the credentials to also be a partner in this new world, on this additional world on top of the existing distribution channels, which in Asia, of course, is predominantly bank issuance and Agency. So that's what the first topic we want to invest in. So that means we have to make some IT investments to make sure that all our systems are API compliant and because you need an IT infrastructure that Systems are API compliant and because you need an IT infrastructure that can connect easily to those platform players and you also have to design some new types of products and covers. But what we see is that most of those platforms do seek underwriting periods and risk capacity outside their own platform with the established incumbent insurance and reinsurance players in the respective market. And we have identified the markets with potential, but actually, over time, It is in almost all the markets we operate, but probably faster and more urgent in the Asian markets than the Belgian markets because there, All customers in the European markets have already one way or another an insurance intermediary. 2nd theme, protection. Protection in the area of the personal integrity. This is not a new business for EGS. We have approximately €850,000,000 premium in this market already today and that is across different products going for mortality, term life, over the accident cover, critical illness disability. So we are already quite an established player in protection, but you see that it is a product in very high demand again in the Asian regions. And that's why we believe we can be a more global player in the protection area. This is a value of new business type of business, highly profitable, sometimes small premiums, but again, very big volumes. And of course, you see a link between protection and the first team digital platforms because on the digital platforms very often it will also be exactly those Protection Covers that are the 1st products to build a connection with the customer. We have already a great example in the group. Our growth in Singapore, for instance, is to a big extent coming from the partnership that we have with Singtel, the main telecom provider in the Singaporean market. So we will have an increased focus on protection. It's also a mitigant by the way for the low interest trade environment and very adjacent to our life and savings activities. And it can bring us a lot of synergies because for these we developed automated underwriting, which we are already developing for our core business as well. Reinsurance plays an important role here, right, because reinsurers are coming more and more next to the direct insurance players are not always behind when we talk about platforms and protection covers. And we feel that we can really have already some impact in value in a period of 3 years' time. So accelerating the growth in value new business should be one of the key indicators. And here you see in the first place the potential in the Asian and Turkish market. Number 3, health. We have 2 great examples of health in our group. We have Medish in Portugal, which is already truly a health ecosystem. This goes way beyond health insurance covers and there are a whole list of services, which you can see here on the name card of Medish under your slide. And we have our position with AG in Belgium, where we are in health more in the corporate area, so the relationship employer employee, where for instance, in disability, We have a 43.5 percent market share already. We are more careful in Belgium in the retail market, mainly also due to pricing regulation. We want to be extra careful on the retail side. But we have already 2 great examples how the health insurance is evolving into the whole ecosystem around health. And here again, We see that there's high demand in the Asian markets. Here we will go more carefully. We will look at maybe 1 or 2 additional countries in the next strategic cycle where we can transfer the expertise and the ecosystem that we have built up into those markets with rapid growth in the area of healthcare. And of course, in the post COVID world, I don't have to tell you that healthcare services are in extremely high demand in that region. So Portugal is setting the scene here because they have already the ecosystem in place. Partnership is part of this ecosystem, you need all these partners to provide these services. The timeline here is a bit longer, yes? Building an ecosystem will take time. So here we want to see real value contribution coming in a period of 5 to 6 years. And then the 4th global initiative is a development of reinsurance. And let me take you back in time a little bit. So we have started with Intrias in 2015, which was reinsurance part of the group, which finally achieved a core status and a standard and Poor's A weighting in 2016 and started also to underwrite the protection covers with some non controlled participation. But we actually really start embedding reinsurance as a full segment in 2017, 2019 when we brought reinsurance into the holding because we saw benefits in PROTECT from risk diversification and keeping more of the risk in house and diversify first before going to the reinsurance market. But of course, we also have the 2nd pillar of reinsurance today, which is related to the capital Engibility. And then we talk about the quota share reinsurance from our core operations in Portugal, U. K. As well as Belgium. And that is, of course, an enabler of the credit profile of the group. And then we have, of course, in December last year, announced the acquisition of the 25% stake in the partnership with Taiping Re, where for the first time, We also look at outward reinsurance. In 2020, reinsurance is already giving us a gross inflow if we take Taipingwe on a 100% basis, approximately around €2,300,000,000 and the profit coming out of that business last year was approximately €80,000,000 So there are a lot of benefits in the overall footprint of AGS around the world to further develop reinsurance. It gives us diversification. It gives us earnings and capital fungibility. I don't have to explain to you that we've done already multiple times. It brings a sustainable operating cash flow at the holding, and that sustainable revenue stream, of course, again supports the rating of the group and that rating has dramatically increased our financial flexibility also on the debt markets. And we have also, and we should not forget, reinsurance can also help us to have a skill and business model uplift. First of all, on acquiring specific skills and I think, for instance, about the whole developments of automatic underwriting, but also into this new Think 2000 and 30 world and for instance in platforms where you see that many of those platforms do get There is capacity from reinsurers directly. And so reinsurers are coming more next to the insurance companies instead of behind. So we want to make sure that our group is ready when this trend would deepen or further accelerate. And so on reinsurance, we have a roadmap. So on the one hand, we said, okay, what we should automatically do is even more centralized the reinsurance purchases where we can and optimize within the group first, maximize the sessions in capital management and also see where our joint ventures can participating in that central reinsurance purchasing and diversification. Of course, we have a partnership in reinsurance as well, which we should continue to develop that can help us to scale up the reinsurance business together with Taiping We and there is also an interest for Taiping We to also explore the development of the European reinsurance platform so that we become more balanced also in reinsurance between Asia and Europe. And then we can potentially further invest to make sure that our group is really future proof that everything what is coming to reinsurance and I just spoke about the platforms to just name one example, reinsurance capabilities can also Help us to make sure that we are staying future proof, but now I'm talking even beyond 2024. Our fee business and everything related to prevent, prepare, protect and assist is now creating some inflows, revenues, not profits, of approximately €64,000,000 And we are not forgetting in the strategy the home ecosystems, the mobility ecosystems and also what we do in life and savings, for instance, the pension fund business, but we see that these are local priorities. The 4 themes that I just gave you are group wide priorities because we see that there is a need and a potential in multiple countries at the same time in a relatively similar way. The others are local priorities and could stay very relevant and further develop in specific markets. And based on our current footprint, we expect the inflows to grow from €64,000,000 to €170,000,000 by 2024. Of course, with the central theme of health and protection, you will see that, that will take a bigger part of the pie of the fee business going forward. This is a story about the growth markets. So 4 central teams and then local priorities where there is opportunity. So let's look at the 3rd pillar, the new market opportunities or how will we fine tune our M and A guidance going forward. Well, first of all, we are willing and we have shown that we can do that successfully. We are willing to strengthen and diversify our positions in markets where we are with partners that we know. Think about Taipingwe, think about Avivasa in Turkey. If there is opportunity to take leadership positions in markets where we are, even with the partners that we know, we will definitely assess these opportunities. We keep a forward controlled entity on our Board. You will see you have seen that the profit of the group becomes fifty-fifty between Europe and Asia. But of course, with minority participation, we also must make sure that we keep a good balance between the profits where we have, I would say, strong or full control versus the profit from the growth markets where we might have less control. So that's why to keep that balance with the growth of Asia, We are still interested to add a 4th entity that means controlled that helps us to diversify earnings, that gives us stable dividend upstream and naturally in these conditions you come more in Europe and not in Asia. And our preference for non life will be in line with our strategy. The preference will be in non life, in health or Protection. We see that in the life savings books and specifically the run off players in the life savings books. These type of transactions we cannot match with our disciplined return on equity targets in M and A. So what are our principles for future M and A? It must have a critical size, a strong local presence so that we can effectively compete in the markets where we operate. And of course, it should be a group that fits very well in our culture and in our DNA and who is willing to work and to comply with the EGEA's quality standards. It should be able to bring a meaningful contribution, maybe not immediately. If we look at Philippines, if we look at Vietnam, these are startups, but we are convinced with the growth potential in the markets that they will grow into a meaningful contribution over time so that we can justify Management Time. We are not financial investors in those partnerships. No, these are strategic investments and we work with our partners to develop those businesses, so it must be able to justify management time and we will remain disciplined on the return expectation. But on the chart of return expectation, we add 1 new line and that is diversification benefits. We see more and more when we value an opportunity that the diversification benefits and they could be in the area of reinsurance or they could be of course in the area of SCR and the Solvency II. We have 2 important pools where we can create diversification benefits and that can help us to support on the return ambition of an M and A opportunity. So we will, in our mature markets, continue to be a consolidator if there is an opportunity. For the U. K, U. K. Has a new strategic focus. They will be implementing this strategy for the coming months years. So for the time being, we will definitely refrain from M and A until this restructuring is also showing us the expected results. And I have explained that we are still open and interested to consider a 4th entity in the European region. Then we have our growth markets, and we have already not emerging, but developing markets like in Malaysia, like in Thailand, like in China, where We have already a stable and growing dividend coming up to the group. And also in those countries, we are open and often together with our partner to be active in market consolidation opportunities. And then we have those early stage markets. And I think at Vietnam and the Philippines, in the first place, these are still markets of growth where we are building up our presence and our footprint. And we will add in the M and A also potential opportunities in transforming Insurance. I've spoken about this partnership with future winners like the platform players. So next generation type of partnership our partnerships that can help to develop our ecosystems that I spoke about a minute ago. Also there, M and A could occasionally be an opportunity. We are open to consider if we see a great opportunity that fits within our strategic choices, then we might be able to consider also M and A activity in transforming insurance. And then of course, and it's a topic that has been raised by many of you at the introduction or in running up to the presentation today, it is society, it is everything related to sustainability and ESG. We want to put ESG at the heart of our business. ESG is not only anymore something that we will do for society next to our business. No, it has to be embedded in all our stakeholders. And I will take a few for you today. First of all, in 2021, we have subscribed to the United Nations Sustainability Development Goals. We have taken the 10 where we can have most impact. The 10 closest to our business, we keep on prioritizing on those 10. Secondly, at the end of last year, we have done a materiality survey with our employees, with the unions, with our partners, with customers to understand where they feel that EGS can truly have an impact when we talk about ESG. First conclusion we can take is ESG is not conflicting with your other stakeholders and also not conflicting with investors. At the first place, also on the ESG side, everything feels that an insurance company should be financially resilient and should practice responsible governance. These are the 2 key priorities. In the 2nd block, you see the investments. I will come back to that in a minute. You see the employees. I'm not going to zoom into that one too much for you, but it is a very important part for our managers and there is the area of products and services. So we have designed a sustainability program at the heart of our business with 4 key Cornerstones. The first cornerstone is our people, and I'm not going to elaborate too much on this one. I'll touch briefly upon it. The second one is our customers, and then I'm talking predominantly about our products and services. The third one is our investment portfolio. We are a sizable life player, so investments are important. And the 4th one is our planet and greenhouse gas emission. First of all, we want to be a great place to grow for our 45,000 employees, and that means delivering a top quartile net promoter score for our employees. And it will be mainly built about training, development, but also in the KPIs, I will tell you something about diversity and fair and equal treatment of all our employees. And we have already developed a lot. I'm not going to zoom in too much detail right now. I think the other topics I weigh more for interest for you today. The second one is everything related to products. And that's, I think, where we can take the biggest jump forward. That's where many insurance companies are not deeply developed, and we are not the big corporate risk insurer. We are not doing the oil tankers or the big industrial polluters of this world. They are not insured with our group. So that's also not the area where we can make an impact. We are a lot on retail and SME type of clients. So we thought what can we do to make sure that also we stimulate our customers to help building a more sustainable world. We have 40,000 employees. We can do so much with them. But what can we maybe do with 40,000,000 customers that we are having around the world? And the commitment we take It's by 2024, 25 percent of our premium around the world are products which are directly providing solutions for ESG related topics. And I think about cutnot, for instance. I think about social themes, let's for instance, disability and psychological disability or have some incentives that our customer has an opportunity to contribute to a sustainable world if he chooses AGS. I name A few, for instance, we have the green parts program for spare parts in motor repair in the U. K. So if you choose 4 gs, you know that we work with Green Spare Parts. If you take your pension and disability scheme in employee benefits with AG in Belgium, You get access to the burnout programs that we offer to accompany your employees facing this psychological disease. And we can continue and continue. We can develop in the area of home, together with our banking partners, On the mortgage together with the home insurance, we can add incentives, for instance, related to isolating your house. In motor, More and more, we give premium reduction for less kilometers. So, which will help us again stimulate you to go to a more sustainable world. We will actively work that 25% of our premium around the world is having 1 or some of those features by 2024. And the second one you have seen that in the materiality survey is transparency. We will fully review our portfolio for transparency and of course where we can improve. Then let's look at the investments. Today, we have €6,500,000,000 directly invested in ESG related projects, windmills, social housing, solar panels, a tramway, you name it. We have already a portfolio of €500,000,000 invested. But we are also facing challenges because everybody is moving into this direction, We see that actually the margins and the investment returns on those opportunities become less and less attractive. And we want to be careful because we have these pension liabilities next to it. So that's why we found a solution. How can we further grow this portfolio and how can we bring it to our ambition and we set our ambition at €10,000,000,000 by 2024. And we will do that by investing directly in ESG or by stimulating all the companies or the activities or the projects we invest in, stimulating them to move to a more sustainable world. That means We will do the ESG check when we make an investment. We will be an active bondholder or shareholder in companies we invest in or we focus on companies who want to raise funding and capital to finance their own projects to make that transition in the industries where they are. So direct ESG related projects or investments in companies who confirm and who can commit to the fact that the investment will be used for their transition to a more sustainable world. And we are also fully committed to the 0 emission ambition of the European Green Deal by 2,050. And you might say, why only 2,050? It is not a bit late. But remember that most of our life insurance is linked to pension and that asset liability management and a buy and hold philosophy in our fixed income portfolio is part of our DNA. It is part of our financial resilience. And that's the first thing that our stakeholders want when we talk about ESG. So we cannot divest this portfolio to rapidly migrate to a fully ESG compliant investment because then we might work on the E, but we will lose on the S because we will put the pensions of all the clients who trust in AGS for their pension, we will put that under pressure. So we have to make that transition gradually, but we are committed to do that in line with the ambitions of the European Green Deal. And we will go to a total portfolio of at least €10,000,000,000 We will be GSE neutral in our operations by 2024. And then we talk about Scope 1 and Scope 2. And that so we put some ambitious targets in place. We have already taken some initiatives. We want to reduce business travel by 50% compared to the pre COVID year 2019. We are already revising our green our car fleet to make it more green, and we are stimulating employees to look at smarter commuting solutions. And last but not least, because it's often forgotten, there is also an important carbon footprint in our sector related to IT and data centers. At this moment, we are quantifying the impact and we can see and we are checking how we can neutralize the impact going forward. So here are our KPIs, our ambitions that we put regarding sustainability. 25% of premium will come from products that stimulate our customers to go to a more sustainable world. We will do the check for transparency on the full portfolio. We bring investments to €10,000,000,000 and the full all the investments will integrate the ESG assessment by 2024. We will be following the European Green Deal, but we make our own operations neutral by 2024 and we take 2 indicators related to diversity. It is the ratio of women in senior management compared to the ratio of women in the total company where we are at 50% today. We want to bring it to 70%. And in all our succession planning, we want to guarantee that by 2024, we have equal lists of names equally split between male and female. And we also follow the Belgian Women on Board Gender Diversity Index where relative to our peers, we want to achieve a top quartile ranking. So what will success look like? These are our Connect 21 choices. I don't think I need to repeat them now. I can leave them for your reading going forward. It is actually a continuum of the trends that we have already set in Connect 21, but we have mapped them with the strategic choices I have just explained to you. And I may be an important part for all of you that is which are the targets for our investors. Let me start with operational targets. Well, 1st of all, we will make the non life combined ratio below 9 percent. We lower it with another percent and we will make it below 90%. We have seen the strong quality of our non life portfolios around the world. We have also seen the new strategic plan of the U. K. And we are confident that we can deliver a non life combined ratio below 95%. The strength of our life guaranteed margin, we will continue. So we commit that we lengthen the 85 to 95 basis points ambition. But here I want to make one footnote, at least for 2022, because we don't know how this target and how this KPI will look like in the IFRS 17 world. So we will have to potentially redefine, We calibrate this in the IFRS 17 world in 2023, but for 2022, at least, We continue with the ambition to deliver a life guaranteed margin between 85 and 95 basis points and we also keep the same ambition 30 to 40 basis points for Unit Linked. And then we have, of course, the other financial targets and then I'm talking about shareholder reward. Well, We come with a new design and we had 4 criteria to look at this. First of all, The new design must be approved of our sustained performance that I have explained to you and I have shown you the plans. Secondly, It should take into account our growth ambitions that we have expressed in the plans today. 3. It should also take into account our atypical profile with a fifty-fifty mix between the mature markets in Europe and the growth markets in Asia. And 4th, it must be a metric that can guide you for the following 3 years. So that means It should be IFRS 17 compatible. And so let me present to you the new financial targets. On Solvency II, we keep the same ambition of 175%, no change. We want to commit that we have a holding free cash flow upstreaming between €1,700,000,000 and €2,100,000,000 cumulatively for the 3 years. And this is defined as the sum of all the dividends coming from the OpCos around the world minus the corporate center cost as well as minus the interest margin on our debt. So that is the definition of holding free cash flow. Of that holding free cash flow, we commit on the dividend 2 things. First of all, we will confirm a progressive dividend, so meaning dividend can be only up, flat or up for the coming 3 years, year after year. And secondly, we will distribute a total out of the free cash flow between €1,500,000,000 to €1,800,000,000 cumulatively for the 3 years in dividend. To give you a reference over the previous cycle, Connect 'twenty one, the number was close to €1,400,000,000 So we give a range which is above the deliverable that we have for the Connect 'twenty one dividend. And I've already told you earlier, with the growth we reflected in the earnings per share ambition and that is an earnings per share ambition between 6% 8% coming from 5% to 7%. So and this is how it look like. We take the upstream from our OpCos, including also the profit of the reinsurance, which we also assume within the group being dividend to the own funds. We deduct the holding cost and we target a holding free cash flow cumulatively between €1,700,000,000 2.1 €1,000,000,000 of which €1,500,000,000 to €1,800,000,000 will be distributed towards the shareholders. And if we look at the dividend, then you see that we're coming actually cumulatively from the Connect 21 period €1,400,000,000 to a range which is even above. And if we translate that into the free cash flow, then we see that the free cash flow over the previous period will be approximately €1,700,000,000 For the new period, we see it between that €1,700,000,000 €2,100,000,000 Here, the free and sorry, there is one other thing I want to add here, is the operational free cash flow generation. On the operational free cash flow generation, we continue with our annual guidance, but we can confirm now that in the definition that operational free cash flow generation is the metric that we know in Europe. And for Asia and Turkey, we take the dividends. If we add the 2, The operational free cash flow generation will be above the holding free cash flows. That means that the targets that we are giving in holding free cash flows are truly generated by the value creation and the dividends in Asia and therefore are also sustainable in time. You will definitely ask what about share buyback. Well, share buyback remains possible. But has never been and will never be a guarantee, we look at share buyback assessing year after year What is the free cash flow being upstreamed? What about our growth? And that could be the growth organically in the plans that I have shown you or inorganically through M and A. We will look at these combined and consider whether a share buyback in a specific year is appropriate. So it remains a possibility, but not an upfront guarantee. So this is the summary and an update of a slide you know depending on the solvency because of course solvency is a very important part. And here you also see that on the top level, share buyback is possible after an assessment of free cash flow, Organic and Inorganic Growth. IMPACT24 is a natural evolution of our successful Connect 21 strategy that reflects who we are and what we know best. Our purpose and our values are more relevant than ever before. As a supporter of your life, we care, we dare, We deliver and share. The choices and investments we make are not just for the next 3 years, but for the years that follow on to 2030 and beyond, a long term sustainable load strategy. Through Impact 24, we aim to unlock the full potential that exists in our current business, our core and to broaden our scope and scale, adding new capabilities along the way. We tap into the current footprint of the group while continuing to apply our success formula of local empowerment. This keeps us close to our customers and provides competitive advantage. We will consider a range of different initiatives to improve our distribution and commercial excellence. And to help turbocharge our progress, we will further deploy technology and data and provide best in class Our ability to grow rests in the hands of our people. Customer and employee satisfaction go hand in hand to drive results. Our aim is to be the most Employer to be considered a great place to grow for our employees. Working with local partners is part of our DNA. This positions us well to engage with current and future winners. We have strong confidence in bank card brokers and agents and we will look to foster new alliances that allow us to leverage the strength of digital platforms and ecosystems to provide scale access to new pools of Customers and Growth. If you will further grow Nexo Digital Platforms, We are also focusing on opportunities in adjacent businesses, in health protection and reinsurance at Grupo, With home mobility and life savings being our local priorities, We will prioritize opportunities that strengthen and diversify our market leader position in existing markets in Europe and Asia with a clear preference for non life health or life protection. At the heart of our decision making to innovate, Understand risk, drive growth and build a more inclusive future sits sustainability. Sustainability and long term thinking act as a catalyst helping us to select what we do and what not to do, but also how we Through Impact 24, we are connecting our future ambition to our vision of the world in 2,030 and beyond In areas where we believe we can make the greatest impact by 2024, the year the JEAS turns 200. Okay. Welcome back. Thank you for staying with us during the presentation. And during that little movie summarizing our strategy, I'm joined here in the room with our Executive Committee here, Emmanuel Van Klimberg, our Chief Risk Officer Antonio Cano, Managing Director, Europe Philippe Coramans, Managing Director, Asia and Christophe Boisard, our CFO. So that means we are ready and fully available for your questions. If you want to ask a question, you can raise your hand and the team behind the scenes will allocate a time slot for you and I will call upon your name when it is your turn to pose your question. And we got first question from Ashik Musaddi. Ashik, please go ahead. Yes. Thank you. Thank you, Hans, and good afternoon, everyone. So just I have 2, 3 questions actually. I think the last part of your presentation is where all the numbers came. So I just want to cross Check some of those numbers again. So if I understand correctly, the first thing you said is free cash flow would be 1.7 to 2.1. That will lead to dividend of €1,500,000,000 to €1,800,000,000 This is just dividend. This doesn't include the buyback. So that means You will still save CHF200 1,000,000 to CHF300 1,000,000 on top of the dividend. Plus, you would have some excess capital at the moment in your balance sheet. So you mentioned that buyback is not certain, but it could be there, it could not be there. So How do we think about it could be there, it could not be there thing basically? What has changed versus last year, say, because see, last year we were in the same situation, You always had this buyback guidance, but you had mentioned that if there is an M and A, you won't do that. So what has changed on that Commitment basically is what I'm trying to understand. The second question I have is, how do I think about this growth rate of 6% to 8%? Is this a growth rate on EPS, on net profit? Basically, both are same because there is no buybacks? So that's something I'm trying to understand because clearly, I think in past, if I think about 5% to 7% growth, You were trying to do, say, 3% to 5% of net profit growth, 2% of buyback. So 3% to 5% is jumping to 6% to 8% is a big jump. So That's what I want to clarify. And third one is on non Asian earnings, right? You're saying Asia would be fifty-fifty In 2024, that kind of implies that non Asian earnings is going down in 2024 versus 2020. Is my interpretation correct? Or would you say it should be flattish or something like that? Sorry, three questions here. Thanks, Sachik, and I think very relevant questions. The first part on your numbers, it's correct. So 1 point billion to billion free cash flow billion to 1.8 only dividend. So that's the first thing I can confirm to you. That is only about the dividend. So what remains is not €200,000,000 to €300,000,000 It could be between €300,000,000 €600,000,000 if you deduct the 2, So then we have a range between €300,000,000 €600,000,000 that remains available for other things and it could be including share buyback. The change we make, Ashik, is that in Connect 21, We have confirmed upfront a share buyback if there is no material M and A. But now we have a wider growth story and we have also the free cash flow as the main reference. So that's why we say a share buyback is possible, but we will do the full assessment of what is the free cash flow, What do we have in the pipeline for the organic growth story that we should properly provide to as well As before, what is the M and A, the M and A realized and announced, but also maybe M and A that might be in the outlook. So we take an overall consideration. If we feel that there is additional margin after that analysis, then a share buyback remains possible the following years. So that's what we mean with a share buyback after assessment of growth, free cash flow generation and with growth we mean organically and inorganically. 2nd question about EPS. Yes, you're right. We have given you a target 6% to 8% without an assumption upfront of share buyback. So you could link it to the net profit growth actually because we use the same denominator in this 6% to 8%. So indeed, this is linked to the profit growth. And the last one I have to nuance. It is not that the profit in Europe is going down. We only say that the growth of the profit will be faster in the Asian region than in Europe, and I will pass it to Filip directly to shine some light on the Asian region in this respect, which will further bring the balance from 40% to 50%. But Philippe, maybe you can give some insights on Asia? Yes, absolutely. So you have I heard toward Asia quite a few times throughout the presentation. And if you look back at the whole pack, which will be available to you. You will see that we project Asian earnings to become 50% of the group, where at the same time with a 6% to 8% earning growth. That means that we are landing between €1,100,000,000 to €1,200,000,000 Let me be optimistic here just for the sake of simplicity. That means that we feel that our agent profit, which we now gave a guidance of €350,000,000 to €400,000,000 during the last investor call, would grow from the €400,000,000 rather to €600,000,000 over the next period, which is a K here between 15% at or between 14% 15%. The majority of that is something and that relates to the story yet on core is something that we generally see come out of the growth in these markets. Let's say 2 third of that. The other 1 third We'll have to come from distribution diversification, what Ernst referred to, adding the distribution channel agency where we have not fully deployed that, that really adds growth in the India story, in the Vietnamese story, in the Philippines, where we are all Today solely in Bangka almost, the further penetration in protection lines, which should add then be accretive business, also helped distributed by these agency channels. We see there the main reasons for the markup. Also, and that is in the final part, the additional growth in Asia earnings We'll also be sustained by sheer volume. Not all our businesses have already, would I say, cost completely eroded the cost overruns. So efficiency gains are also still there. And that means that we're quite ambitious, yes, indeed, on the Asian earning. But if you take that they go from 4 to 6, That still means that the rest of our book grows from €550,000,000 to €600,000,000 as well, so 10%. That's very good. Thanks a lot and very impressive plan. Thank you. Thank you, Ashik. Next The question is for Michael Huttner. Michael, please raise your question. Thank you very much. I have two questions. One is on the buyback. Given the planned start next year, right, Can you say anything about buyback this year? And the second is on the 4th country, 4th leg. Can you explain it a bit more? I wasn't sure sorry, I wasn't sure whether you It was I couldn't make out whether you were going to go into a developed market or non developed market in Europe or lesser developed market. Maybe you can give a little bit more insight on what you see as your 4th leg in Europe. Thank you. Okay. Thank you, Michael. But on the first question, I think I mentioned it somewhere in the presentation. For this year, we are still guided by the Connect 21 KPIs. So that means where we have stated we do a share buyback unless We have significant M and A. But as you know, these decisions are only taken after the 2nd quarter results, so probably in the month of August. But our guidance is based on Connect 2021 KPIs. That being said, and it's maybe a good opportunity for you to mention because we talk about free cash flow as well as dividend, So that means that in 2022, our dividend commitment will also still be based on the results of 2021, which is the 50% of profit. So the free cash flow that we count It's about upstreaming and the dividend in 2023, 2024, 2025 based on the results of 2022, 2023, 2024. So I don't want to leave any misunderstanding in that respect. Secondly, on the 4th entity, This is not new, right? It was part of our M and A strategy already under Connect 21, where we have said we have actually 3 core markets with Belgium, U. K. And Portugal. And it would be good to strengthen and diversify the dividend and the profit contribution for the group if we could add such a forward market, a market which where we have an operation that is sizable, potentially leading in the market and with a very stable profit and dividend contribution and also an entity that we control. And so that's why almost naturally, we say that this market is supposed to be in Europe. We have not been successful yet in the CONNECT 21 strategy, but we still keep it as one of the potential M and A action points. Thank you very much. Okay. Next question is for Fulin Liang. Please, Fulin, go ahead. Thank you. Hello. Thank you for the presentation. It's really good. I have just two questions. The first one is, Presumably, all the like 6% to 8% EPS growth, that is also Depends on the IFRS 17 implementation, right? So all the metrics, apart from the cash, Which will be only applied to 2022. Is that right understanding? And then on the cash, If I do the math correctly, so you have 1.7 on the lower And you have R1.7 billion free cash and that is post the home office kind of cost of R0.5 billion. So you add that up, You were expecting 2,200,000,000 remittance from all your operations. And then if I look at that on the lower end, 2.2 versus the actual remittance from your So remittance from your kind of business in the last 3 years, in the last 3 year cycle, we were talking about RMB1.9 billion remittance, which is a sum of 1.6 plus, not 0.3 from Asia. So 1.6 Europe plus 0.3 from Asia. And this 1.9 will be increased to 2.2 at least. Presumably, the European remittance Growth is will be very limited. So does that mean actually you are effectively aiming for doubling your remittance from the Asia business units. Is that the right way to understand it? Is And then presumably, you have actually communicated your business target with your Asia partners in different countries. And They have actually agreed on this kind of doubling the or kind of a very high in growth of the cash remittance. Okay. Let me take the first question for Christophe on EPS at IFRS 17. And the remittance is highly Asia related, so Philippe will jump in. Yes. Thank you. So on IFRS 17, to make things very clear, you should consider that all these targets should be understood as if IFRS 17 didn't exist. So consider the 3 year, homogeneous 3 year and IFRS 17 will come later. We are actively working on with the CFO forum of what could be the right way to restate and to recalibrate the different objectives that you should consider in this exercise as if IFRS 17 didn't exist. Having said that, you will appreciate the fact that we are except for the EPS. We are moving from something based on a percentage of the IFRS result of the guidance for the dividend to something which is more linked to cash flow. This is, I would say, IFRS proved. So it means that And you can see that among peers in the market, more and more, you can see this kind of move, right, to go to cash. And I think it's a way to smoothly make the transition to IFRS 17. So it is more to address the IFRS 17. Then one last thing and to justify why we are switching from the previous framework to this one based on cash flow. It's a little bit like ALM, ALM where you try to match your liabilities with corresponding assets here. Since we have this growth component, since we have the payout ratio, which is quite different between Europe and Asia, We have kind of we can see things in parallel as the ILM. We have the remittance and then we give certainty about the share that will be distributed. So in a nutshell, IFRS 17, consider that it doesn't exist for this exercise. And later on next year, you will have another session with updated figures and target. But at this stage, We will try to put and to propose things which are homogeneous to this target. No real change. It will be the calibration under IFRS 17. Then on the cash, it is a market move and it partially addressed with IFRS 17 issue. Okay. Maybe Philippe on the remittance? Yes. On the remittance Out of Asia, to be very clear, it is not excessively going up in this plan, Mr. Linn. Let me clarify what is at least for Asia region underlying. 1st and foremost, you have heard that we expect a very a hefty growth in the region. That's not only in the bottom line, that's also in the top line. And indeed, distribution channel expansion underpinning that will require investments. So overall, on a gross basis, because you were grossing up The remittance there for Asia region, we are in this plan with between €500,000,000 €550,000,000 only, yes, cumulative. That is gradually going up and by 2024, we expect that gross amount to be close to €200,000,000 a year. In fact, that is not very aggressively up if compared to where we are today. We go there for an average Net payout ratio or gross payout ratio of around 30% throughout the region. But in the overall growth picture that you were talking about, we should not forget that indeed, And I should pass it to Antonio Cano, but we have an increasing result from reinsurance coming into play. But it's maybe better, Antonio, if you gave the overview on the European side. Yes. I'll check if this works. Do you hear me? Yes. Okay. So indeed, as Philippe was saying, yes, we should add up the increasing profit generated by the reinsurance segment, which is assumed to be upstream to 100%. In fact, the insurance sits legally at the Atco level. And then we have also the latest acquisition from Turkey, Avivasa, which is also a new contributor to dividends. Okay. Got you. Sorry, just clarify with Philip. So because in the last 3 years, 3 year cumulative is only CHF 300,000,000 and it is growing to CHF 500,000,000 to CHF 550,000,000. That's quite impressive growth. Yes. But just to be the €300,000,000 I think that is And that may be true because we made some investments. But if we look, for instance, at this year, what we expect this year because we have more or less announced that, We are close to €170,000,000 for the year only. So but that is because China Typing We're typing live better. Had an exceptionally good year last year, certainly in comparison to our IFRS results Because the strong rebound in the Chinese equity markets that boosted the result there relative to ours and they had for the year a payout ratio of 35%. Not sure that that will stay. In any case, we do not count on an increase in the payout ratios for these 3 years in Asia region. So we stick to on average 30 for our plan. If the reality would turn out to be that these payout ratios can go up, It will depend on the local growth plans that we see mature. Of course, we will not be unhappy And probably nobody will be unhappy at that moment. But in this plan, we stick to it. Okay. Thank you. Okay. Thank you, Fulin. Ashik, I understand you have another question. Yes. Thank you. I have a few follow-up questions, if I may. I mean, how do we think about your share buyback decision? So you made it very clear that there could be €300,000,000 to €600,000,000 left, and then you will assess The opportunities, etcetera. But is this an annual assessment, 3 year period assessment? So how do we think about that? So let's say in 1st year, you decided, no, the pipeline of potential M and A looks good, so we are not doing a buyback. But next year also, you are not able to do that. So at the end of 2 years, do we expect a double buyback or would you say not really? So any thoughts on that? Sorry to come back on this question again. Secondly, you mentioned that there is €200,000,000 to €300,000,000 of IT related spend you are planning to do. So will that be Coming out of this SEK1.7 billion to SEK2.1 billion or will is that already deducted from this, I. E, this number is after those expenses? And just third question is, I mean, how do we think about your balance sheet flexibility to do M and A at the moment? I mean, What's I think you have €1,200,000,000 cash at the moment at the holding company. So if you don't do assume anything for buyback, that means, I mean, euros 700,000,000 €800,000,000 of M and A flexibility. Would you say there is any leverage capacity left? So any clarity on that would be very helpful. Thank you. Okay. I pass it to Christophe, I think. I'll come back on the second question for the investments. So on the share buyback, Ashik. So first, I'd like to remind you, but this was already said, that for this year, we are still with the Connect 21 plan. So it means that in August, when the Board meets, we still have this commitment on the €150,000,000 So now we are talking next year, In 2022. In 2022, we entered the new plan. Here, it will be an annual assessment and we cannot Say that it is on 3 year because it would mean that we have to wait. And so each and every year, we will assess if a share buyback can be done or not. And at this stage, I'd like to remind you our very old policy around capital management. You remember that we said number 1, M and A. We give priority to M and A and You can see that we have ambition on this. 2nd in the list was to be nice with shareholders. And in this, we have the dividend story and the share buyback. And you will appreciate that in this version of the plan, more emphasis is given on dividend because if you do the math, you can see that More or less, the dividend will increase by 8% a year, right, if we follow the different figures that we have I told you and then you remember that at the first position, we had liability management, but this is less of a concern since most of the legacy are already done. So again, Number 1, M and A. Number 2, share buyback. So we will have the same attitude vis a vis share buyback. So first, M and A and Nice acquisition comes first. Then we have the share buyback. You have the margin you mentioned, but nothing prevents us to take something out of the existing cash. So it means that we have flexibility. The big difference between the previous version of the plan is that there is not This commitment with a figure of 150. But I think there is not a change except that, as I said, More emphasis is given to dividend with this nice 8% increase on average. Okay? On the investments, Ashik, so the €200,000,000 to €320,000,000 first of all, the major part of this will be in our OpCos. This is not an additional cost that we have to deduct in the corporate center cost compared to the corporate center cost today. That's not what it is. These are IT budget, but not only IT. There is also product development. There is also investments we need to make for the health care ecosystem or for instance to build one of those platforms that we might be interested to or to connect to one of those platforms we might be interested to. So most of these amounts are integrated in the local budgets when they design their plan. But the impact of it, the answer is yes, it is taken into account in the overall plan, but don't see it as an additional deduction we have to make from the corporate center cost. Thank you. That's very clear. I mean, it's Just on the buyback, I think apart from that written commitment from what you're saying, it looks like nothing has changed. Apart from that one liner that you had in your previous presentation of like at least more than 1000000. Apart from the written commitment, it feels like The way you are thinking, nothing has changed. Yes. Well, we give, I think, a strong commitment, Ashik, on dividend. On the other hand, we have this look at growth, free cash flow access that we have organically and organically, inorganically. So we look at the total growth of shareholders' return when we look at share buyback as well as what we have available as Christophe has just explained. What we will not give is that if we don't have a sizable amenity, that share buyback is automatic. And we're also not committing that it will be automatically €150,000,000 So because of these growth plans also inorganically, we do take a little bit more flexibility. And we also look, by the way, how we position with the dividend. So we link the 2, but we want to give, I think, a very adequate positive shareholder return after all. But the assessment, and I want to confirm that what Christophe says, We will make that assessment year after year. That's very clear. And sorry, just one question I had was the balance sheet flexibility on M and A. Yes, I know. Christophe, I don't know whether you can talk about the cash and the leverage. Yes. So on flexibility, what We indicate is that our fighting power is in the range of 2,800,000,000 all in all. And so it means obviously additional debt and the additional debt will be a mix of sub debt where we still have room for around €500,000,000 but we could take senior debt and you know that prices are extremely convenient on senior debt, less than 1%. Okay. Thank you. If I may give the floor to Robin Vandenbroek, Robin, please raise your question. Yes. Good evening, gentlemen. Can you hear me? Yes, absolutely. No, I think most of my questions have been answered already. I just wanted to make sure I understand the free cash flow dynamics correctly. I think for this year, you're guiding for more than SEK 700,000,000 of remittances from the OpCos and then your reinsurance unit basically sits at The HoldCo, last year, I think the profitability was around €80,000,000 So should we see the profitability of the reinsurance It's basically as a reducing factor of your HoldCo costs also throughout this plan. And then that SEK 700,000,000 of remittances from your OpCos is basically A starting point also for the next 3 years. That's my first question. And the second question is on free capital generation. You've not really talked about that today. Should we assume on the back of that, that the 500 to 550 for European entities is still the right way to look at it? Or can we expect some maybe positive impact From the long term equity holdings that you're already using as of today. Thank you. Maybe, Antonio, on the reinsurance? Yes. So very, very short on the reinsurance. No, we assume reinsurance to be just an operating company. So their dividends are part of the dividends coming from the operations. Separately, there's a reduction from holdco costs. At the end of the day, it doesn't make a hell of a difference, but it is assumed to be insurance result and dividend. On operational free cash capital generation, Robin, First of all, what we say is and we want to explain that the upstreaming and the free cash flow will be fully funded by the capital generated in each and every entity, yes? So that means your guidance for Europe is right. But when we link free cash flow with free capital generation, We will also add here the dividends coming from Asia. So you take the free cash flow in Europe, which you can compare with the free capital generation. On both of them, we add the dividends from Asia. And then we say that we make sure that the free cash flow can be fully funded with the free cumulative free capital generation over the 3 year period, which means that the new targets we are setting and the new KPIs are sustainable in the long run. So we are not tapping into the existing capital of our operations with these targets. That being said, we will continue on giving operational fee capital generation guidance year after year. So what we have been doing in the past, we will keep on doing that into the future. So I hope that explains your question. Yes. Thank you very much. I think we have another question and that is coming also from Michael Huttner. Thank you. Just a very quick follow-up question on the well, 2, 1 on the €1,200,000,000 I think you said at the beginning, I'm going to talk more about it. And maybe you have already, I don't know. And the other one is on the tax on the sorry, I put the camera on, sorry. Apologies. On the tax, so the benefits of the reinsurance, as I remember it, is the you used up some of The tax losses which have been created in the past. And I just wondered how much are they part of your thinking here? Maybe you can give us a figure because I think the missing number we are kind of we are thinking about is that reinsurance is becoming a big profit earner here. Thank you. Well, the €1,200,000,000 my question is, is it related to earnings or is it related to the cash position because we have twice the same numbers? Sorry, it was I think I'm sorry, maybe I was a bit confused at the beginning. I think it was the cash position. On the cash position. Well, the SEK1.2 billion on the cash, well, I did link it when I gave the revision of the M and A strategy. It was just meant to put the M and A capacity and Christophe has just answered, if you include leverage on our total capacity. So no, my intention was that I would come back to M and A, And I think I have clarified where our focus would go to build growth with this €1,200,000,000 Secondly, maybe you can talk about the reinsurance. Yes. So you linked the reinsurance result to the tax losses. Bear in mind that at the operating at the holding level, we have the costs of the operations of the holding plus the costs of the sub debt. Now the reinsurance profits today don't yet compensate for those 2 cost items. So yes, it is a kind of tax free earnings and they help to compensate the costs and the interest rate at holding level. So, both we're not eating up on the deferred tax losses. They are perpetual as well as they stay. Okay. Thank you. Fulin, I understand you have a follow-up question. Fulin, you're on mute maybe. We don't hear you. Hello? Yes. Can you hear me now? Yes. Yes. Okay. Cool. Sorry. So you might have actually touched on but I because I was Switching actually the devices, I missed a little bit of the presentation in the middle. Two quick ones. The first one is, did I miss the point that did you say actually 4th, European countries you want to do is where you potentially Could I have a leading position? And you had accretion before? Did I get that correctly? And then secondly is on the UK. You said U. K, so you're referring from the M and A and why you're doing the operational kind of improvement. Are there any specific targets for those Restructure like operation targets in the U. K? Well, first of all, of the 4 type of operation, no, it is It's about entering a new market that we could declare as a core market like we today having Belgium, Portugal and the U. K. So it will be a new market, but core means we have a controlled entity with a leading position and stable profit and dividend upstream. That are roughly the criteria for a 4th core market. And I don't know you want to talk about UK, Yes. So in U. K, we are still simplifying and reviewing the portfolio of activities. And so therefore, as long as we're busy with that, we will refrain from M and A. I think that was part of your question. But U. K. Remains one of our core markets and our profit targets remain what they were previously. And so you when or let's say, what's the trigger you think, okay, we've Done with U. K. And then probably is the time to consider M and A. Combined ratio below 95%. It would be anyhow towards the end of this cycle Or the next cycle. And allow me, I will not be more specific than that. But I think we still have 1 to 2 years hard work. The plan by itself fully now because there is also an IT component, the plan by itself will run almost 3 years. So the plan will bring us to 2024. Thank you. Okay. Ashik, you understand you have one more question. Just two small follow ups. So Just to be clear, the guidance for your growth, 6% to 8% is on the €950,000,000 number for 2021, right? Is that understanding correct? Well, it is on the number of 2021, but I'm not committing to €950,000,000 Between €950,000,000 We have said the $2,000,000,000 is the guidance. Okay. That's great. And secondly is the reinsurance earnings from Asia It will be part of Asian earnings and not reinsurance earnings. That's correct. Okay. That's all I was looking to ask. I mean, it's a very clear Just to clarify, the reinsurance from Asia. So Asia, that is the result from Typing Re. There is some reinsurance activity we do with our NCP partners in Asia. It's still minor. But that is part of the reinsurance track, just to be complete. Okay. Maybe if I can just ask one more question. I mean, On Asia, see, we have been just looking at China for quite 2, 3 years. Basically, the focus has been just China, China, China, China, China. That's it. I mean, what about Thailand and Malaysia? I mean, if these 2 are good businesses, but somehow the growth is not coming In these two businesses, what's going on? When do we see a turnaround of those things? Is the product a problem, market a problem? Any thoughts on that would be very helpful because clearly, China is coming through very strongly, but if it is supported by Malaysia and Thailand, which is 2 of your best businesses, I mean, no doubt about it, Ithaca and Montai, But it's just not coming through in terms of earnings. So any thoughts on that would be helpful. Thanks. Yes. 1st and For most, I agree. In fact, I had expected this question, Ashik, for many reasons. 1st and foremost, and allow me to say that I'm working on trying to get more granularity in the disclosures on Asia region. But that will take some time. But I think we owe that to the investor community, given the big stake that it will become to give indeed more insights in the business and profitability signature, not only of the region, but indeed a bit more granularity. This is something, of course, that we have to do in tandem with the partner. I'm very transparent. We have to have the dialogue that we are thinking about how we can do that. It could be that it becomes part of the regular disclosures. It could be that we do it in a separate investor meet maybe once or twice a year to give you guys more insight. Secondly, on Malaysia and Thailand, I think it would be Doing them a little bit of injustice, saying that their earnings are not coming along. Only indeed China dwarfed The dialogues and the stories also because of the impact of valuation interest rates, equity market movements, which are materially and blur from my perspective the nice developments we see in the other countries. Thailand has been historically one of our best investments ever. The return on investment made there beats everything. Only the last 2 years, indeed, that has been more difficult. But of course, last year was heavily impacted. The Thai equity market was very heavily impacted by COVID. They are recovering nicely. We will see how they come out of this year. But indeed, we will try to give more insight on how these businesses are doing, but I don't think it would be fair to say that they're not growing. And in this plan, we do have and you have seen the chart or at least you will get it when you have access to the documents, you see the growth expectation CAGRs that we have on this market separately listed. So that is a promise To work hard on that, to get more information to you. Okay. Thank you all. Thank you, Ashik, for your questions and all the others on the line. How much I think we would have lost now to go at the table and to have a dinner together like we used to have at the other launches of the previous strategic cycles. I'm confident that next time we will be able to do that again wherever it might be in the world. But anyway, I think thank you for staying with us the last 2 hours. I hope it was all clear. If not, if you have further questions, of course, you will find your way to our Investor Relations team. So thank you again for joining us again today and talk soon. Good

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