Welcome to this Ageas conference call. I am pleased to present Mr. Hans De Cuyper, Chief Executive Officer, and Mr. Wim Guilliams, 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 note that this conference is being recorded. I would now like to hand over to Mr. Hans De Cuyper and Mr. Wim Guilliams. 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 Ageas' full year results. I'm joined in the room by my colleagues of the executive committee, Wim Guilliams, CFO, Emmanuel Van Grimbergen, CRO, Antonio Cano, Managing Director, Europe, and Filip Coremans, Managing Director, Asia. I'm happy to report that Ageas delivered a strong commercial performance over the year, with inflows up 8% in local currency. In non-life, the increase in inflows amounting to a high 17% was spread across all markets and business lines, supported by both continued pricing discipline and higher volumes. In life, inflows benefited from a good sales momentum in China, driven by high new business sales in the first half of the year and solid renewals in the second half.
Measures taken in Belgium and Portugal towards commercial repositioning in life in the higher interest rate environment have started to produce results in the second half of the year. I would also like to add a word on the commercial performance of our new external reinsurance business, which has already managed to position itself as a well-respected player and which has just concluded a successful first of January 2024 renewal campaign. We recorded a strong earnings performance with a group net operating result amounting to EUR 1.17 billion, well within the upper half of our guidance of EUR 1.1 billion-EUR 1.2 billion.
If you make the comparison with last year, please keep in mind that the 2022 net operating result included two one-off elements: the liability management action on the FRESH instrument , which contributed EUR 146 million, and a EUR 45 million capital gain from the sale of our Commercial Line business in the U.K. When excluding these two elements, our result increased by 9% at constant FX. I would also like to stress the good quality of these results, with a strong underwriting performance illustrated by a higher insurance service results in both life, up to 6%, and non-life. It is in particular worth highlighting the excellent performance recorded in non-life, with a net operating result which more than doubled, thanks to the successful turnaround of our business in the U.K. and the development of our reinsurance activity.
A higher contribution of the segments Europe and Reinsurance to the group results is also beneficial in terms of earnings diversification, enabling Ageas to fully rely on multiple sources of profits and cash upstream. The strong operational performance is reflected in the group operational capital generation, which amounted to a high EUR 1.8 billion. Our cash position has been significantly strengthened, increasing from EUR 624 million to EUR 959 million, in line with what we announced in our latest investor day. It includes EUR 919 million dividends received from our operating entities, of which EUR 200 million received from Ageas Insurance's interim dividend to mirror the interim dividend paid to our shareholders. It also includes EUR 185 million related to the sale of our business in France.
For 2024, we can confirm that we expect to receive between EUR 750 million and EUR 800 million recurring dividends from our operating entities. Belgium will remain a main contributor, but it is worth noting the increased contribution from the Europe and reinsurance segments. Based on all these elements and on our very high solvency, largely above 175% in both the Solvency II and the Non-Solvency II scope, the board will propose a final dividend of EUR 1.75 per share, resulting in a total cash dividend of EUR 3.25 for the year, and this is up 8% compared to last year.
Before handing over to Wim for more detailed comments on the results, I would like to add that our non-financial and sustainability targets also showed good progress, as evidenced by the rating increases granted this year by five of the six ESG rating agencies that follow us. I now give the floor to Wim.
Thank you, Hans, and good morning, ladies and gentlemen. Hans stressed the good quality of our net operating result, confirmed by the high insurance service result, which is up 6% in life and more than doubled in non-life. Thanks to this excellent underwriting performance, the group net operating result is less dependent on realized capital gains. Indeed, realized capital gains contributed EUR 77 million this year, compared to a high EUR 182 million last year. The strong operating performance is also reflected in the group-wide operational KPIs, with a life guaranteed margin amounting to a high 124 basis points, an improved unit-linked margin at 39 basis points, and an excellent combined ratio at 93.3%.
Regarding the performance in life, when comparing to last year, please keep in mind that last year's result benefited from a very favorable environment in Asia, with lower claims experience in the context of COVID and exceptionally low tax expenses, whereas the result this year is impacted by an adverse FX evolution for EUR 40 million. In non-life, the strong increase in results reflects an excellent underwriting performance across markets, confirmed by the group combined ratio of 93.3%, combined with a top line growth of 17%. Combined ratio is supported by relatively benign weather and by a strong pricing discipline across markets. More precisely, the tariff increase is implemented in the U.K. and in the health segment in Portugal to take into account claims inflation. The reinsurance segment hit the EUR 100 million net operating result mark.
Moving now to the balance sheet items. The CSM roll forward of the group shows a positive operating CSM movement of EUR 309 million, as the CSM release is more than compensated by the time value and the solid contribution from new business. This positive operational CSM movement, along with a high net operating result, supported the comprehensive equity, which amounted to EUR 15.6 billion, slightly down compared to year end 2022, due to an adverse FX evolution. To conclude, I would like to add a word on solvency and free capital generation. Mentioned by Hans, we can rely on a high solvency.
In the Solvency II scope, the solvency ratio amounted to a strong 217%, largely above our guidance of 175%, while the Solvency ratio of the non-Solvency II scope increased significantly to 282%, up 74 percentage points compared to the end of 2022, mainly thanks to strengthening measures implemented in China. The operational capital generation of the group amounted to a solid EUR 1.8 billion, and the free capital generation to EUR 1.162 billion, up compared to last year, when excluding the impact of the sales of the Commercial Lines in the U.K.
The Solvency II scope contributed EUR 547 million, with a strong increase in operational capital generation, offset by a higher capital consumption, thanks to the strong growth of our non-life business, in our operating entities and in the reinsurance segment. In a way, the capital freed up by the sale of France has been reallocated to the strong, profitable growth in the non-life business. In the non-Solvency II scope, the operational free capital generation, which was significantly up compared to last year, benefited from asset management actions, mainly the de-risking of equity exposures in China. I have now reached the end of my presentation, and we are ready to answer any questions you may have.
Ladies and gentlemen, this concludes the introduction, and we now open the call for questions. May I ask you to limit yourself to two questions? If you wish to ask a question, please press star one on your telephone keypad. That's star one on your telephone keypad. Our first question is from Farquhar Murray from Autonomous. Please go ahead. Your line is open.
Morning, all. Just three questions from me. Firstly, just on terms of the combined ratio performance, I mean, looking quite solid, I just wondered if you could walk us through maybe the undiscounted dynamic you would have for this year, full year 2024, between kind of tariff increases and ultimately claims inflation. I'm presuming claims inflation must moderate this year. Then the other thing that would be helpful is if you could just walk us through the discounting benefit, that was 3.5 percentage points this year. I just wondered if you could give us a sense of where that would stabilize out, maybe into full year 2024, 2025. Then the second set of questions is really just around the cash number, the EUR 350 million that you flagged. Obviously, half of that's earmarked for TPP.
I just wonder with regards to the remainder, whether you can outline the order of preference between additional investments and shareholder remuneration, and perhaps give us a sense of when you might make a decision on one or the other, this year? Thanks.
Thank you, Farquhar. Well, maybe first on the splitter, and I give the discounting immediately to Wim, who has all the details on this. But on the tariff increase, it is a mix. It is indeed a mix of integrating inflation and rising claims cost, but there is also...
significant impact of, new business and business growth, and mainly in the U.K.. So in the U.K., I think the growth is approximately 50/50 split between those two elements. If I compare versus to Belgium, then I think the weight is more towards the tariff increases. As you know, that most of the inflation effects in Belgium going automatically in tarification, and more than 60% of the premiums is automatically adjusted for inflation, to take one example, above 9% impact of the ABEX index in home in Belgium, to just, give you, one example. But on, discounting, I'll, I'll give it to him.
Thanks, Hans. Yeah, as you will have seen now for the full year, we have included the full discounting effect. You may remember that, half year we announced still that we only included the discounting effect for our consolidated entities. We have now also included that for Asia, so we have a full view now on the discounting benefit. The current year discounting benefit is 3.5%. This is a good reference level because it includes now all the dynamics of the year on the discounting elements. Going forward will be influenced by what the market rates, the interest rates will do going forward. So 3.5 includes now all the elements of the year, and is a group-wide view.
and then with regards to the cash?
Well, you're right there. I think, there is a process ongoing on Taiping Pension . There is the process ongoing on, on Taiping Pension , which we have announced would cost approximately EUR 140 million. That still has to be deducted from the cash position, and then indeed, we will have the upstreaming coming from the Amblève, which will happen towards the end of the first half of the year, where we're talking here about, May, June. At that moment, I think, when that money is in, I think it is the right moment to assess the potential share buyback and to make a position on the share buyback as the cash would comfortably go above, one billion. So expect a decision there towards the middle of the year.
Okay, great. Much appreciated.
Our next question comes from the line of David Balmer from Bank of America. Please go ahead.
Good morning. Thanks for taking my questions. The first one is on the life, both in the U.K. and Belgium. So yeah, the European non-life segment was very strong. You have a target for the U.K., but it's obviously very hard to track it. Could you help us by giving us the combined ratio for the U.K. in 2023, please? And then on Belgium, if I look on an underlying and undiscounted basis, the loss ratio deteriorated by quite a bit in the second half of 2023, compared with the last two years. Can you explain a little bit what's going on there in terms of underlying performance, please? And then lastly, on cash remittances from China.
So with interest rates down further in China, the local result will presumably be quite bad for some time. So how should we think about the ability of Taiping to continue remitting similar amounts in 2024 and 2025? Should we not worry so much about the payout now that the solvency position is fixed? If you have any color on that, please. Thank you.
Thank you, David. Well, I give it to Antonio to give some color on the combined ratio in Europe, but please be aware that for Belgium, we give the details as a separate segment. For U.K., that is part of Europe, and we comment on Europe as a whole. But to give a bit more color on combined ratio, Antonio.
Yes, hello, good morning. So indeed, I will not give you a precise number of the combined ratio in the U.K., but, as you can see, it is, a fairly large portion of the Europe, segment. So if you look at the combined ratio of the Europe segment, it's a kind of an indication. I'd say that in U.K. we are, also very well aligned with the overall group, group target. So indeed, a very good combined ratio, particularly in motor. In the U.K., as you might all be aware, the household book is, is less, strong, let's put it that way.
So overall, quite happy with the performance in the U.K., where we see both, indeed, as Hans mentioned, volume growth and rate increases, which are in line with the indexes that you might have seen by the aggregators that publish that data and the ABI. Keep in mind that we were actually already in the second half of 2022, on the back of rising inflation, we already started moving rates upwards, slightly ahead of the market, so we have definitely profited from that in the course of 2023. For Belgium, I'm a bit surprised that you say that's a bad combined ratio in second half year. I think overall, I think it's pretty decent.
There were maybe, there was a bit of weather, not a lot, and we had some volatility around larger claims in motor, but really nothing structural or to worry about. Overall, quite satisfied also in the second half year with the performance.
Thank you. Your second question was on the cash remittances from China. I think your analysis is right. The local result, of course, will be significantly impacted by the interest rates and the FX impact, but remember that we said during the investor day that it is actually solvency in the first place driving cash remittances in China, and you see that I think some of the measures, actually, all of the measures we have announced during the investor days have materialized towards the end of the year. So we are looking forward to a reasonable dividend coming out of China this year.
Do you expect them to move to an IFRS 17 payout when China makes the transition?
David, this is Filip Coremans . Well, to some extent, they already did. If you look at the last announcement, where they started to report on the new accounting standard, which is the IFRS 17, and the last statement that CTIA made on that, at beginning of this year or the end of last year, was that they would look at a stable, more stable dividend policy based on the new accounting standard. So that will definitely guide them, but obviously I leave it to them to announce that in more detail when they announce their results. The retained earnings under the local accounting standards, as indicated, are not a constraint. It is the forward-looking outlook on solvency that will determine the dividends.
With the buffer that has now been built up, we are confident that there will be a reasonable dividend indeed.
Thank you.
Our next question is from the line of Michael Huttner from Berenberg. Please go ahead.
Good morning. Thank you. I had two questions. One, can you give maybe an outlook for 2024 in all the main metrics, that'd be so helpful. Then on the cash, I'll ask it a different way. So you've reiterated the guidance of EUR 750 million-EUR 800 million for the current year, which is lovely, so this is 2024. Can you give a feel, and I know it's a little bit early, but to the extent that you do, you have a lot of visibility on the U.K. and Portugal and Belgium, so your consolidated cash sources. Can you give a bit of visibility on the potential cash guidance for 2025?
The reason I ask is I think it might be one of the factors you weigh up when you make a decision in May, June or whenever, for potential buyback. Then the last question is, I did speak to your wonderful IR team, but maybe you can give a little bit more color even there on the real estate and, you know, what's happening in terms of valuation and rental income and realized gains. Thank you.
Great. Thank you, Michael. Well, first of all, on the guidance, I'm happy to give you two guidances. Our ambition is to come with a net operating result above EUR 1.2 billion. And that I think is in line with the progression that we see, going forward on the different metrics. So that's our ambition for the year. And the second guidance is indeed that we reconfirm this, upstreaming between EUR 750 million and EUR 800 million over the results of 2023 and 2024. I would love to give you a little bit of insights about what it's gonna be in 2025, but my guess is as good as yours. I think the underlying quality of our business, and that's also what we reiterated, and I...
Underlying, I'm talking about the attritional combined ratio, but also the underlying life margin before capital gains is very solid. So we are quite confident that the performance we have seen in 2023 can continue over 2024. And so the consequence of this is that we, that we are looking forward to an outlook of upstreaming that keeps on satisfying our ambition of the dividend commitment we have, we have taken to the investor. So at this moment, I think we have no doubts on the delivery of our impact 2024 ambitions in in this respect. So that's I think the guidance I can give you for 2025, but it's hard to pluck a number on this one right now, but I hope you agree with me, 2024 is already a very strong outlook on remittances.
And then for real estate, I'm happy to give it to, to Antonio, who is following the real estate business for us.
Yes, good morning, Michael. On real estate, well, you know that real estate is the big, big chunk of that is into parking, the parking business, which has very well recovered after COVID. So there, the regular income is back or even higher than it was before COVID. So that is a very stable source of income. And also most of the other real estate, we rely heavily on the rental income. I have seen. Well, we all have seen that the real estate market is in some places a bit more depressed. And keep in mind that our real estate portfolio in Belgium is a very new one, so we develop them all energy efficient.
These are real estate assets that are still very much in demand. We didn't see any significant impact on the valuation of our real estate portfolio, overall. Remains a very diversified, high quality book. And as ever, our real estate people continue to look at any potential transactions, but these tend to be lumpy and difficult to predict. You will see a normal volatility in the level of realized capital gains across the years, but nothing has changed fundamentally in our ambition there. In the deck, you will also see that the unrealized capital gain position is still at this comfortable EUR 1.3 billion. Please be aware that we now present this at an Ageas stake.
This is our part of the potential capital gains, and that's a very stable number.
Very helpful. Thank you.
Our next question, it comes from the line of Iain Pearce from Exane BNP Paribas. Please go ahead.
Hi, good morning, everyone. Thanks for taking my questions. The first one was just on the, the bond reclassification that helped Asian solvency. Could you just give us some little, a little bit more detail around what this is and, and what the benefit was? And also, is there scope for further reclassifications that could help the solvency? 'Cause I guess this will, this will show up in the, in the TPL solvency numbers. The second one was just around a bit more detail on the life new business environment. Obviously, it seemed quite challenging in H1, a bit better in H2, particularly around, around the unit-linked outlook in, in Belgium and Portugal. That would be very useful. Thank you.
Okay, Filip will answer on the first one. Antonio can give some guidance on life and unit-linked in Europe and Belgium.
Yeah, let me start with going back to some of the key messages we gave at our Investor Day relating to the solvency supportive measures that we were considering on China. Because at that moment, we announced the solvency ratio of China in Q3 of 162%, and by end of year, this has gone over 280% because of all these measures that have been executed. They fall, I would say, largely in four buckets. The first one is we stressed that there would be more focus on operational capital generation by keeping the finger on the expense growth and the repricing actions, which obviously have taken place. And you can see that that also leads to a good operational capital generation.
Secondly, we talked about some de-risking actions that would have been taken, which Hans also announced, at the asset side, where indeed the equity proportion has been built off, which leads to strong operational free capital generation that you saw for the NCPs. Then, one of the most material actions that was taken was the launch of the supplementary capital bonds program of RMB 20 billion. Of this, RMB 11 billion has been executed by the year-end. We announced there, I think it would support solvency around 50%, that is in line with what we announced at the Investor Day. Then thirdly, we talked there about the option to reclassify the HTM bond portfolio to AFS, that we were considering that to bring the valuation and unrealized capital gains on that bond into the equation of core solvency.
There was the fact that the liabilities were being discounted with the VIF, but the assets were kept at market value. That has also been executed and has a material improvement, obviously, over the core solvency. So all these together raised the solvency ratio of China from 162 at Q3 to slightly above 280. I leave it to my, our partners to go more in detail to that when they announce their results, but these are the core actions taken. Forward looking, and that I must say there is still some things to keep in mind. Indeed, interest rates have come down. That may put a little bit of pressure, and certainly the VIF effect will still play for a few years. The equity markets have been volatile.
Now, they were at the same level as this year, at the beginning of the year, so that's to keep in mind. And then obviously, the last step in the adjustment on the gap of the retained or the future earnings, which is gonna go from 45% to 40%, which will happen in the beginning of the year. Normally, when our partner releases these results, they also give a first indication of the next quarter forward-looking solvency outlook that will give you more insight on that.
And I'll give you some color on the unit-linked sales in Belgium. I think you also are referring to Portugal. So unit-linked sales are essentially driven by bank assurance business and are very much dependent on financial markets, movements, shape of the yield curve, commercial appetite at the bank. So it's quite some elements that were, you know, honestly, last year, not really in our favor. So that's why you see that the sales have been modest. We're continuing to focus on the margin of those business, but we don't want to sacrifice that. We have some actions that are on the way, that the success of which, again, will depend on, say, retail customer appetite for these types of products....
Today, in those two markets, there's a much more strong appetite for shorter term, term deposit-like products that offer short-term returns. That's very much promoted by the banks, sometimes also in the influence of the governments. We have good plans on the way, but we will depend on what the market is doing. The good news may be for next year is that I think it's September, October, there's gonna be the maturity of the infamous state, Belgian state, one-year deposits at very attractive rates. There was a lot of money that moved to the funds. Everybody will look at how that is invested.
We might pick a part of that, but, but again, I think the main message is it's, we are a bit at the mercy of financial markets and the shape of the yield curve.
Perfect. Thank you. If I could just come back on the reclassification. So all the unrealized gains that you sort of flagged at the investor day are now appearing in the solvency number? Just to clarify that. And then will this have any effect on solvency sensitivities going forward? I know you don't disclose them, but sort of would you think that those solvency sensitivity, sensitivities would now be bigger or less as a result of putting this into, as a result of this reclassification?
So on your first question, yes, the unrealized capital gains are now recognized in core, in the core capital and then in the solvency ratio. On the volatility of the Solvency ratio, I would say it has not necessarily diminished a lot. The equity market volatility will still play as it played before. On the interest rates, the picture is more mixed, because, of course, drops in interest rates will lead to capital gains accumulation on these bonds a bit more rapidly than the revaluation of liabilities. So there is still some volatility related to interest rate movements. But at least, under a lower interest rate, this capital gains accumulation on the bond portfolio will support the solvency. In increasing interest rates, in this case, it will be the opposite.
Cool. No, very clear. Thank you.
But, to be crystal clear, I think also the insurance regulator in China is looking at these dynamics more in detail. But that is something we will find out in future together.
Perfect. Thank you very much.
Our next question comes from the line of Anthony Yang from Goldman Sachs. Please go ahead.
Hi, good morning, and thank you for taking my questions. The first one is on Belgium. I think in 2022, you disclosed a slide disclosing the guaranteed interest rates and fixed income yield. And the spread in 2022, it was roughly, I think 160 bips. Maybe could you give us an update on how that has moved in 2023? And then, the second question is, again, on the net capital gains. I think you had a normalized run rate of EUR 80 million-EUR 100 million in Belgium. Can I check if that's still the same? Thank you.
Indeed, I think we don't include that famous graph anymore, but it would not have changed materially. Actually, how we invest and how we price on guaranteed business follows still very much the same philosophy. So that has not materially changed, to reassure you. Then your second question was on the cap gains going rate. That remains. I mean, the composition might change over time, but that's also part of, say, the business model we apply in Belgium. Anthony, on the rate, indeed, the dependency, as I said in the speech of cap gains, I think is a lot lower because we had lower cap gains.
We had very high cap gains, by the way, in 2022, but as set on real estate, the unrealized capital gains position is still very much intact. So the run rate of the past you can see as an average going forward. But this year, with the excellent, I would say, recurring yields contribution, we have a little bit less dependency to realize those cap gains. So see it more as some seasonal effects.
Thank you so much.
Our next question comes from the line of Farooq Hanif from JP Morgan. Please go ahead.
Hi, everybody. Thank you very much. Firstly, on some detailed questions on the numbers in Asia, I noticed that the short-term Asia life result has improved in the second half. Are we now over the worst when it comes to health claims? And continuing on that, also, you've got a very high return on surplus assets in Asia, which I was surprised by, given your comments on investment returns. So if you could comment on that and where you see that number going forward. And then secondly, on in the non-life business, clearly due to pricing and volume growth, you've seen very high top line growth. What are you feeling like for 2024 on top line growth? Are you—for example, are you still being able to put in quite high pricing in your key markets?
Thank you.
Yeah, yes, thanks for your question, Farooq. Let me take the first question first. Yes, indeed, there is a noticeable difference, and you can see it in the tables that we provide. But on the short term result, the PAA result in life, where the first half of the year it was virtually zero, and the whole result has been building up to a more normal level, which is still a bit below the year before, as we indicated. So we feel, yes, that some of the repricing actions, but also some adjustments we made to it. So it seems that we're getting into a normalized claim pattern again, after a bit of a boost in claims catch up in the health lines in the first half.
That is correct. This seemed to have normalized over the second half. On the second question, I give it to our CFO.
Yeah, thank you. Okay. Thank you, Filip. I think it's good, because in the tables you get the detailed result, and there you see the evolution of the result on surplus assets split between life and non-life. In life, you can say it's a more normal evolution. It's the evolution of the reinvestments, which are a bit lower, and that are reflected in the amount. You're probably referring more to the evolution on the result on surplus assets in non-life, which increased importantly. But of course, you have to remember that in 2022 we had the RSGI impairment, which had a negative impact and was recognized in the result on surplus assets. So the evolutions are quite normal if you see the evolutions of the rate environment in the different countries, and how they are reflected in the result on surplus.
Then Farooq, your outlook on non-life, I'm happy to give you my view. Maybe Antonio can complete, but it's a bit country by country. As I said, Belgium was, to a big extent, also inflation driven, and that's, I think, will be lower this year. That will not be the 9% anymore. So that effect will, I would say, moderate. Also, be aware that in Belgium, we included the non-life business from the Touring business. It's not material, it's EUR 26 million of revenues, but that was a one-off addition by integrating the insurance, the small insurance company they had next to assistance. And on the growth of the portfolio, I think we have all reasons to expect a similar evolution in the coming years.
Ageas, for quite some years, is gaining slowly market share year by year, and we can expect that to continue. If I look at the U.K. market, as I said, that is a mix of growth and tariff adjustments, approximately 50/50. The market remains relatively hard. We haven't seen the market softening too much, but the additional increase that we have seen over last year, that will continue for the full year, I think is unlikely. It will be maybe a bit less. But I think the quality of pricing at this moment is still strong in the U.K.. And with our transformation program coming to an end by the end of this year, I mean, we have all reasons to believe on a continued strong commercial momentum of our business in the U.K..
And then, Portugal is the last one. Healthcare, I think, in non-life is an attention point. Around the world, we see in healthcare claims frequency and claims cost continue to be at a high level, and in Portugal, that was absorbed with material premium hikes on the Médis business. We expect, I think, that to continue for a while, until, I would say, the claims inflation, the medical inflation, becomes a little bit more reasonable as well as the frequency. I think there is, there I can expect, we can expect further rate hikes to continue this year.
Okay. Thank you very much. Thank you.
The next question, it comes from the line of Benoît Pétrarque from Kepler Cheuvreux. Please go ahead.
Yes, good morning. Just a few questions left on my side. So on the combined ratio, for 2024, so what do you have in mind? You were at 93.3 in full year. You know, you know, I guess it remains quite good in the U.K. in 2024, maybe a bit up in Belgium. So what is your role equation for 2024 in terms of combined ratio? And also taking into account the recent interest rate, let's say, development and the forward curve trending lower by year end 2024. On the net operating guidance, I was just wondering, how much capital gains you have in mind for 2024, and you expect, do you expect the real estate cap gains to pick up from a weaker 2023?
And on the share buyback potential, how much minimum holding cash do you have in mind currently? That will be useful to assess the buyback potential. And just finally, I think one of your main shareholders has been rumored to be selling a large stake, and I was wondering if you had any contacts with them. Thank you.
Okay, maybe on combined ratio, Wim can give you some color there.
Yeah, we're not giving a specific guidance on the combined ratio that we're expecting for 2024.
We can, of course, explain the dynamics. You now have a good view in 2023, what's the impact of the current year discounting. As I mentioned, all impacts are included now. So now it will be more the how is the interest rate evolving over this year? Of course, we had a decrease, but we have also a recent increase again, so we have to see where that stabilizes. We have mentioned the good weather situation. The good weather situation, to put that in a number that translates approximately to 1.5 impact of weather in the combined ratio. So it will be also important to see, going forward, where that weather impact will land. All the other elements, you have a bit of negative items, like Antonio mentioned about the large claims in motor, but that then offset in other segments by other elements.
I think if you look there at the current year discounting, if you have that approximate number of the weather impact, you have a good idea on what is the dynamics of the combined ratio today.
Just a short follow-up on the discount effect. Do you have a bit of a sensitivity to us on kind of, you know, if ECB will be cutting rates, say, 100 bips, and if the swap rate will come down accordingly? I mean, can you help us to get a view on how does that play for the discount benefit in 2024?
Not at hand, but we note your questions. We also will look a bit at what the peers are doing and see if maybe we, at a certain moment, have to see how we have to give some more color on that. But not at hand, because there's a lot of elements at play, so we need to find the right drivers then to give you a good view on how that sensitivity would work. On your question on cap gains, as you know, we don't give a separate guidance on cap gains. The guidance we have is our operating margin in life, 85-95 bips.
You see that, last year we had 124 bips, and Belgium, who is the major contributor of cap gains, is 100 bips, so well comfortably above that target range, and that's to a big extent helped, of course, by the rising interest rates. So this is a recurring effect that we see. And then, yeah, capital gains, it also has a lot to do with deals. And sometimes, as you know, there are 2 to 3 to 4 bigger deals in the real estate, which is very hard to plan and to schedule.
So we don't give specific guidance on cap gains, but I can only repeat that the underlying recurring quality of the asset yield is already very, very strong to continue, I think, these attractive life guaranteed margins above our ambition, 85-95 basis points. Cash, well, we want to have a comfortable cash position. We don't plug a fixed number on that, but of course we need to have a comfortable cash position. On share buyback, I responded already in an earlier question. I think with the current numbers of cash, share buyback is definitely an option. But we have this additional coming in from Amblève, EUR 350 million. That is supposed to happen at the end of the first quarter, May or June.
Once that money is in, we will put that question on the table for us to decide on a potential share buyback. Then your last question is on our major shareholder, and I assume you mean Fosun. Here, you have indeed seen, as we do, the rumors in the press, but it's clear that we do not comment on these press rumors, neither on what are the plans of our shareholders.
Thank you very much.
Our next question comes from the line of Ashik Musaddi from Morgan Stanley. Please go ahead.
Thank you, and good morning, Hans. So just a couple of questions. So, I mean, given that we are talking about a potential buyback to be announced at the, at mid this year, is it fair to say that there is nothing, not much in the pipeline from an M&A perspective? Or would you say that, okay, I mean, M&A is still ongoing process, you have a lot of debt facility, still good cash balance. So how should we think about that? Or is it, yeah, is it M&A not really on the table at the moment, any sort of it? That's the first question, and second question is, I mean, how should we think about China earnings going forward now? Clearly, last year there was some sales hiccup, but that's been absorbed now.
And, you mentioned that, things have started picking up again. Capital has been sorted out, so I don't think there is much, issue with respect to, not growing because of capital. So how should we think about earnings projection in Asia going forward? I mean, should we go back to the low double-digit growth in earnings in Asia, or, or are there still some headwinds, such as interest rates, equity markets, like, uncertain capital gains, et cetera? Thank you.
Thank you, Ashik. Great to hear you again. On your first question, M&A, but first of all, I already said that the topping pension file is still ongoing. This amount has not been deducted from our... or earmarked in our cash position, so that still has to be taken into account in our cash position. On the other M&A, the only thing, of course, we never comment on specific M&A opportunities or files, but the M&A philosophy has not changed. So that means if somewhere around the world, our partner or our business sees opportunities for in-market consolidation, then we are definitely considering them, of course, in the markets where we are, we hope to take some leading positions, so that is number one.
Secondly, as you know, we would rather look at the controlled entities side for further M&A to balance this profile of the group between controlled and non-controlled participation. So in that sense, no change, but I agree with you, we have still some ample potential, including the debt capacity, to look at opportunities. China, maybe Filip, who is closer.
Yeah. That's a very complete question you ask, Ashik. I mean, the everything comes into play, let it be clear. When I look at the overall Asian region, Southeast Asia, I'm upward biased. I see economic recovery as well as commercial traction being good, so I do expect a bit higher earnings growth to come out of that region. India, the same, but we all know that India is actually on quite a stroll. On China, a lot will depend on macro, let it be clear. Macro volatility is still the main determinant on whether there is potential to outperform or not. We had no capital gains whatsoever this year, all over the region. That is something that definitely depends on equity market movements in China.
But the most important component there is, interest rate movement and how that affects all the metrics. I think the commercial dynamics in China are still good. We also saw the first signs coming out of the opening campaigns being quite solid, so it's again, it's not that that's where it is, it's more the longer term interest rate movement. And maybe not so much the interest rate movement, but whether or not the market will show more agility in repricing. We saw a first wave of repricing come over last summer, which was very important actually for the restoration and the maintenance of the margins, but in the meanwhile, interest rates slipped again. And the debate is on. Sector is looking at crediting rates on the universal life books to be reviewed.
They're also looking at the bonus policy on the par products. It will be important to see how that evolves over the first half, to have a better view on the longer term growth and profitability in China. That's in a nutshell, what I would like to share with you.
Very clear. Thank you. Thanks, Filip.
As there are no further questions, I would like to return the conference call back to the speakers.
Ladies and gentlemen, thank you for your questions. To end this call, let me summarize the main conclusions. We enjoyed a solid commercial performance, with inflows up by 8% at constant exchange rate, thanks to the strong growth in non-life across segments and business lines, and the good sales momentum in life in China. We recorded the net operating results of EUR 1.17 billion, and that is well within the upper half of our guidance of EUR 1.1 billion-EUR 1.2 billion. Quality of this result is reflected in the high insurance service results and confirmed by the strong operational capital generation. Given the strong performance, coupled with the group high solvency, the board will propose a total cash dividend for the year of EUR 3.25, up more than 8% compared to last year.
Before ending this call, I would like to mention that this was the last analyst call for Antonio Cano, who, after 30 years within the group, has decided to pursue a new career path as from June first. I would like to thank him for his outstanding contribution to the group in his different role at Ageas and at AG Insurance before. With this, I would like to bring this call to an end, and as usual, don't hesitate to contact our IR team, should you have any outstanding questions. Thanks for your time, and I would like to wish you a very nice day.
Ladies and gentlemen, this concludes today's conference call. Thank you very much for attending. You may now disconnect your lines.