ASR Nederland N.V. (ASRRF) Q2 2024 Earnings Name Transcript

ASR Nederland N.V. (OTCPK:ASRRF) Q2 2024 Earnings Convention Name August 21, 2024 3:00 AM ET

Firm Contributors

Michel Hulters – IR
Jos Baeten – CEO
Ewout Hollegien – CFO

Convention Name Contributors

Cor Kluis – ABN AMRO ODDO BHF
David Barma – Financial institution of America
Benoit Petrarque – Kepler Cheuvreux
Farooq Hanif – JP Morgan
Michael Huttner – Berenberg
Steven Haywood – HSBC
Iain Pearce – Exane BNP Paribas
Nasib Ahmed – UBS
Anthony Yang – Goldman Sachs
Farquhar Murray – Autonomous
Michael Huttner – Berenberg
Jason Kalamboussis – ING
Michele Ballatore – KBW

Operator

Good day, and thanks for standing by. Welcome to the A.S.R. 2024 Half 12 months Outcomes. At the moment, all contributors are in a listen-only mode. After the audio system’ presentation, there shall be a question-and-answer session. [Operator Instructions] Please be suggested that at the moment’s convention is being recorded.

I might now like handy the convention over to your speaker at the moment, Michel Hulters. Please go forward.

Michel Hulters

Thanks, operator, and good morning, girls and gents. Thanks for becoming a member of us at the moment on this name. So, welcome to the a.s.r. convention name on our outcomes for the primary half of 2024.

On the decision with me are Jos Baeten, our CEO; and Ewout Hollegien, our CFO. And Jos will kick it off with the highlights of our monetary outcomes. He’ll give a short integration replace and talk about the enterprise efficiency. Ewout will then discuss in regards to the developments in our capital and solvency place. After that we are going to open up for Q&A.

Now we have ample time deliberate for this name, so — however we’ll cease at 10:30 sharp. Please observe a restrict of two questions in order that makes certain that everyone has a possibility to ask the questions that they’ve. And at last, as ordinary, please do evaluation the disclaimer that we have on any forward-looking statements, which is at the back of the presentation.

Having stated that, Jos, the ground is yours.

Jos Baeten

Thanks, Michel, and good morning, everybody. Thanks for becoming a member of on this early morning name. I hope everybody has been capable of take pleasure in a very stress-free trip and I’m happy and likewise proud to report a stable set of outcomes for the primary half of 2024.

However the deal with executing a profitable main enterprise integration, we’ve got continued our business momentum, and I imagine that we’re firmly on observe to ship on the formidable targets that we’ve got offered on the Capital Markets Day in June. We report a major enhance of the figures. This primarily displays our underlying enterprise efficiency, which has continued at sturdy ranges throughout the group, in addition to a step-up from the addition of the Aegon NL companies. We’re pleased to offer extra insights into our efficiency on this name at the moment.

So, let’s flip to Slide 2 for a very powerful highlights. Our OCC elevated by EUR244 million to EUR658 million and it is reflecting the continued stable underlying capital era from our companies, in addition to a step-up from Aegon — from Aegon NL. Our sturdy OCC can also be mirrored within the enhance of the Solvency II ratio to a sturdy 180%.

If we take note of the influence of the sale of our financial institution that we count on to finalize within the fourth quarter of this 12 months, in addition to the redemption of the remaining a part of our 5% Tier 2 capital instrument which we introduced final week, our Solvency II ratio would, on a professional forma foundation, be 196%. So, clearly working on a really, very sturdy capital base.

Working outcomes elevated with nearly 50% to EUR677 million, reflecting an general sturdy efficiency of our companies, along with the contribution from Aegon NL. Mixed ratio of non-life, and that’s, as , P&C and incapacity collectively, was 91.8%. This is a vital — that is an enchancment versus final 12 months and forward of our goal of 92% to 94%.

And importantly, we did this whereas we had been, on the similar time, rising our non-life premiums organically shut to five% within the first half of this 12 months. Our enterprise development is additional elevated by the addition of Aegon NL. Organically, moreover greater premium volumes in P&C and incapacity, we see a robust enhance in pension DC influx as effectively. The working return on fairness is elevated to 13.4%, effectively above our goal stage of 12%.

And so, let’s now flip to Slide 3 to see how we’re progressing in our non-financial KPIs. This primary half 12 months, we delivered in opposition to the brand new non-financial targets and we’re very happy with the progress we have made up to now. The event of a.s.r. popularity as a sustainable insurer has risen to 39%, inside the goal vary of 38% to 43%, and this was supported by our campaigns specializing in sustainable injury restore.

The carbon footprint in our funding portfolio decreased by 2% and that’s primarily because of the elevated allocations to authorities bond portfolios to nations with decrease emissions. Right here, we intention to attain a 25% discount by 2030. We’re making good progress with our influence investments, which now characterize 8.1% of the full funding portfolio, leaving us effectively on observe to reaching our purpose to be above 10% in 2027.

Whereas not proven on this slide, we’re additionally pleased to see our buyer satisfaction, as measured by the NPS-c, has improved within the first half from 52 to 54. As talked about on our CMD in June, we are going to begin reporting on the brand new NPS-i metric in 2025. Our compelling ESG profile stays acknowledged by a broad vary of worldwide ESG indices and benchmarks. This was confirmed by Sustainalytics earlier this 12 months, awarding a.s.r. a primary place in being probably the most sustainable insurance coverage firm on this planet.

Let’s now transfer to the combination milestones. When speaking in regards to the integration, I’m pleased to say that each one integration actions are progressing effectively, and general, we’re on observe. Now we have recognized clear milestones and can execute accordingly on this and the next 1.5 years to 2 years. This 12 months, most product rationalization selections and IT preparations for all times, pensions, and mortgages could have been made and we’re progressing effectively to nearly absolutely end the migration and integration of our asset administration providers, our non-life, and our incapacity.

We relocate workers features in a single location per perform. It will allow us to shut The Hague location as deliberate by the top of 2024. We preserve engaged on the implementation of the partial inner mannequin to increase the Aegon mannequin to a.s.r. life. We nonetheless count on to have the life PIM carried out by the top of 2025.

So let’s now flip to the enterprise efficiency on the subsequent slide. And I am very happy to see our premiums acquired in P&C and incapacity enhance with nearly 17%, reflecting a robust natural development and the contribution of Aegon Nederland. The natural development was pushed by tariff changes and elevated gross sales volumes in P&C and the addition of a big collective insurance coverage contract in incapacity.

The non-operating — the non-life working consequence went up with EUR46 million within the first half of 2024, principally pushed by improved underwriting end in incapacity, natural development, and as stated, the contribution of Aegon. Mixed ratio of our P&C and incapacity enterprise improved with 0.6 proportion factors to 91.8%, under our goal vary of 92% to 94%.

In P&C, the mixed ratio elevated to 92.2%, half — partly on account of claims inflation. We already noticed claims inflation choosing up within the second half of 2023, which we’ve got countered by implementing tariff changes. And as you already know, we carried out additional value will increase for our private strains, beginning in Q2 of this 12 months, of a circa 10% on common.

And as you bear in mind, value will increase grow to be efficient on the coverage renewal date all year long. So, it should take two years to be mirrored at a full stage. The mixed ratio in P&C additionally displays the absence of weather-related claims within the first half. In incapacity, the mixed ratio improved by 2.9 proportion factors to 91.5%. The improved profitability of our incapacity guide displays an improved underwriting outcomes. Within the first half, simply to recollect you, of 2023, the profitability was impacted by a one-off strengthening of the provisions.

Mixed ratio of our well being enterprise stands at 99.3%, being nearly much like the primary half of 2023. At the beginning of 2024, we already reported a decline in our well being portfolio on account of disciplined pricing. Discount of economics of scale is compensated by the enhancements — by the improved declare improvement on the supplementary well being portfolio.

And let’s now transfer to the essential section of life within the subsequent slide. We’re very pleased with the stable business efficiency of our pension merchandise. Our pension DC influx advantages from the developments within the pension market because of the pension reform, in addition to the addition of Aegon DC merchandise. We see a rising premium quantity from annuities on account of the conversion of DC accumulation and the addition of Aegon.

Within the pension buyout area, we see a robust curiosity in options that we provide and we’ve got already acquired fairly various request for data and request for proposal, however sometimes, determination making in these sort of offers simply take a bit extra time. We stay assured a couple of longer-term alternative and assembly the goal we’ve got set there of EUR8 billion.

The working end in life will increase from — will increase with EUR182 million to EUR492 million in complete. The rise primarily pertains to the addition of Aegon Nederland. Working — the working insurance coverage service consequence will increase EUR62 million. The result’s partly offset by a decrease expertise variance, which is especially pushed by transfers of collective pension entitlements which has a contra entry within the CSM via the modifications in estimates.

Included within the working insurance coverage consequence are additionally the upper venture bills associated to the implementation of a brand new IT system in pensions. The working funding and finance insurance coverage consequence elevated by EUR125 million attributable to greater market valuation of equities, the addition of the Aegon portfolio, and a detrimental influence from the upper legal responsibility illiquidity premium on the accrual of the stability sheet.

So let’s now transfer to our fee-based enterprise on the subsequent slide. The working results of our fee-based enterprise consists, on the one hand, of asset administration companies, which comprise mortgages, actual property, and asset administration, and alternatively, the distribution providers companies, together with TKP. Working results of the asset administration greater than doubled to EUR50 million by predominantly the contribution of Aegon mortgage enterprise, partially offset by a decrease payment revenue because of the switch of the administration of the mortgages and personal debt funds to Aegon, which was a part of the transaction we did with Aegon Group.

Mortgage origination elevated by EUR2.9 billion and displays the inorganic development of the Aegon transaction and likewise an rising demand for mortgages within the Dutch housing markets. Property underneath administration for third events elevated with EUR3.2 billion to over EUR32 billion since year-end of 2023. This was primarily by optimistic revaluation and web inflows of the DC merchandise.

Switching to distribution and providers. The working outcomes rose by EUR9 million attributable to each natural development of the prevailing enterprise and inorganic development of the acquired companies, Nedasco, Robidus, and TKP. As introduced on the CMD, we’re making extra investments on the TKP to create a aggressive platform, enabling our clients a cost-efficient implementation of the brand new pension reform. By then we talked about that these bills could be included within the working consequence, the OCC. Nonetheless, given the incidental nature of those investments, we’ve got to exclude the bills from our working outcomes.

Working results of the holding and different decreased by EUR48 million, broadly pushed by greater curiosity bills, optimization of our debt profile by the issuance of the RT1 and senior debt devices and the switch of actions to the holding. I am certain you all observed that the banking section is lacking in our presentation. As we reached an settlement to promote Knab, the outcomes are included underneath discontinued operations in our revenue assertion. And this for now concludes my abstract remarks on the enterprise efficiency.

And now, I wish to hand over to Ewout to offer additional element to key developments, just like the solvency ratio, the OCC and, after all, the funding portfolio. Ewout, the ground is yours.

Ewout Hollegien

Thanks, Jos, and good morning to everybody on the decision. I hope everybody had a while to benefit from the summer time and loosen up earlier than the earnings season kicked off. Blissful to debate our solvency and capital place with you.

So let’s begin at Slide 9 for the actions in our solvency ratio. Our half 12 months 2024 solvency ratio quantities to 181% after deducting the interim dividend. The rise of 5 solvency factors primarily pertains to a robust stage of capital era of round 10 solvency factors, partly offset by market, operational, and capital actions. Capital actions did minus 2 p.c factors, which incorporates the interim dividend and the non permanent good thing about round 2 proportion factors because of the RT1 issuance and never full redemption of the prevailing Tier 2 instrument.

Inside the market and the operational actions, the biggest elements are unfold actions with optimistic influence from market unfold tightening by round 40 bps, which drove an uplift of the solvency ratio of about 6 solvency factors, offset by authorities unfold widening, greater fairness prices, and VA tightening. As well as, as , the UFR was lowered with 15 foundation factors, so all in all, a minus 4% from markets.

And taking a look at our professional forma solvency ratio, we foresee an uplift of round 15 solvency factors. The anticipated closing of the Knab transaction in This autumn will give an uplift of round 17 solvency factors primarily based on the H1 2024 figures. The upper contribution than the early state 13 solvency factors on the time of the transaction reflecting the inclusion of the EUR80 million for the switch of the servicing of the mortgage portfolio to BAWAG and a rise of required capital by the top of June for us as an insurance coverage firm attributable to enterprise development and the countercyclical buffer.

Subsequent to Knab, we additionally embrace the introduced redemption of the excellent EUR120 million Tier 2 devices within the professional forma numbers, which shall be executed by finish of September. The excessive professional forma ratio means an acceleration of the tempo we develop again into the stability sheet and places a — places us in a superb place to execute our plans as introduced in the course of the CMD two months in the past.

Earlier than transferring to the main points on the capital era, I wish to shortly remind you in regards to the modifications we’ve got made to the OCC methodology on the subsequent slide. We offered this slide as effectively in the course of the CMD and reveals a superb abstract of the modifications we’ve got made. To begin with, we’ve got remapped the completely different OCC elements to higher align it with the IFRS 17 working consequence, which implies that enterprise capital era will characterize enterprise impacts, just like the consequence from fee-based enterprise, worth new manufacturing, the chance margin impacts, and holding prices, and BCG is with that now extra corresponding to the working insurance coverage service consequence and different outcomes underneath IFRS part.

Finance capital era is the surplus return, finance bills together with hybrids and the UFR drag, and that is the equal of the weather which might be a part of the working funding and finance end in our IFRS working consequence. And the final half is the online SCR launch, which solely reveals the SCR-related impacts and doesn’t have a counterpart in IFRS.

Secondly, we’ve got up to date our OCC methodology, with the important thing modifications being the OCC is now primarily based on quarterly numbers, the place prior to now, we had the UFR drag and the SCR multiplier on an annual IFRS foundation. This precipitated an echo impact within the UFR drag from one 12 months into the subsequent, which was not simply understood, and with this variation, we’ve got solved that. And the complete 12 months OCC will then with that be the addition of 4 quarters.

The OCC shall be constructed up backside up from the underlying insurance coverage entities as an alternative of from a bunch perspective, which reduces non-cash elements just like the diversification impacts. And the SCR launch methodology is up to date and now contains the discharge of fairness and actual property SCR, consistent with the runoff profile of the life guide, and the SCR impacts are actually multiplied with the SCR goal ratio from the completely different entities and never the reported group ratio. And these modifications will additional align OCC with the free money move era and it’ll additionally allow us to reveal segmental numbers as per full 12 months 2024. That being stated, let’s take a look at our half 12 months 2024 OCC figures on the subsequent slide.

What we see right here is that the extent of capital era elevated with nearly 60% in comparison with the primary half of 2023. That is primarily pushed by natural development of the enterprise and the Aegon NL contribution. The enterprise capital era quantities to EUR156 million, reflecting the sturdy contribution from non-life and the addition of Aegon Nederland.

The finance capital era is with EUR325 million, the biggest element reflecting extra returns, being partly offset by greater finance bills and, after all, UFR drag. And all elements have elevated associated to the Aegon NL deal. The web SCR launch reveals the online influence of SCR launch and SCR pressure, which shall be decrease in H2, given the timing of the SCR new enterprise pressure for primarily group incapacity. On the alternative, we additionally count on a rise of the enterprise capital era because of the [indiscernible] of the identical portfolio.

An OCC of EUR658 million within the first half of 2024 and realizing that the second half could have a decrease OCC contribution because of the seasonality sample in principally and principally visibility portfolio makes that we’re effectively on observe to satisfy our goal of EUR1.35 billion OCC in 2026. The OCC sensitivity for rates of interest has been up to date consistent with our up to date OCC methodology and now contains the influence on extra return along with the sooner offered UFR drag.

For a 50 bps motion in rates of interest, the OCC sensitivity stays manageable with sure offsetting components in both up and down state of affairs. Within the graph on the underside proper of this slide, you may see a bridge between OCC and the IFRS working consequence, given the remapping of the OCC, and this evaluation has grow to be simpler, the place the 2 buckets of tax and SCR launch communicate for themselves. The distinction in enterprise capital era is especially associated to variations in timing of revenue recognition. The brand new enterprise pressure and worth new manufacturing is especially recorded in This autumn in OCC.

In IFRS 17, that is launched throughout the next years via the CSM. And finance capital era reveals a decrease quantity for IFRS 17, which primarily pertains to the distinction in stability sheet accrual, the place the LIP is materially greater in comparison with the VA and the Solvency II. It’s because the LIP is a extra complete proxy for the precise portfolio, together with mortgages. As well as, underneath IFRS 17, the general liabilities are largely because of the CSM which is being accrued as effectively.

Allow us to now transfer to our funding portfolio on the subsequent slide. This slide reveals our top quality funding portfolio that hasn’t modified materials since full 12 months, with a slight lower of the general portfolio attributable to rate of interest actions. The principle modifications relate to the execution of our re-risking plan relating to optimization inside the sovereign bond portfolio, the place we shifted from AAA-rated bonds to extra AA-rated bonds for extra unfold at a reasonably low cost. That is a part of our re-risking plan. This a part of our re-risking plan has been nearly absolutely accomplished within the first half of 2024.

Publicity to mortgages elevated barely because of the web optimistic revaluation associated to mortgage unfold tightening and the mortgage portfolio stays of very top quality with a low quantity of cost arrears and eligible credit score losses on common LTV of 62%. Our actual property portfolio reveals enchancment after a tough 2023. The 2 largest components in our actual property portfolio being rural and residential, each present a optimistic revaluation within the first half of 2024. The smaller retail and workplace portfolio reveals a small detrimental revaluation each — however on common, our actual property portfolio elevated with round 1%. For the rest of the 12 months, we additionally stay optimistic on this asset class.

Let’s now take a look on the monetary leverage and the flexibleness of the stability sheet on the subsequent slide. As you all know, our holding money coverage has not modified. So, we solely remit sufficient money from our entities to cowl dividends, coupon, and HoldCo bills. Within the first half of 2024, we remitted EUR513 million from the completely different entities with a particular one-off remittance from asset administration associated to the sale of the mortgage funds to Aegon.

Capital distribution of EUR342 million pertains to the cost of the ultimate dividend. The guide of Different represents completely different objects, of which the biggest being the online optimistic influence of the sooner talked about RT1 issuance and the partial Tier 2 redemption, being offset by a substitute of the senior Rabobank mortgage of EUR200 million in numerous intercompany present account settlements.

The solvency ratio of the insurance coverage entities have elevated or remained steady, with their OCC exceeding remittance to the group. On common, since 2021, we’ve got remitted round 80% of the OCC from the non-life and life entities, whereas persevering with to develop these companies. And that was even excluding the five hundred remittance to finance the Aegon NL acquisition and additional proof that OCC is just about aligned with free money move era.

And with that, I wish to finish my presentation and hand it again over to Jos for the wrap-up.

Jos Baeten

Thanks, Ewout. And this, after all, concludes our presentation. However earlier than opening up for questions, let me briefly summarize. We achieved a really stable efficiency in all of our enterprise segments, bolstered by the contribution of Aegon NL. Our OCC is on observe to attain the medium-term goal of EUR1.35 billion in 2026. We continued to have a robust business momentum and that drives our natural development and sustainable worth creation.

The Solvency II ratio is powerful and a 196% on professional forma foundation with which we’re comfortably within the entrepreneurial zone. And at last, the combination of Aegon NL is effectively on observe and we’re on observe to ship on synergy targets.

So, we are actually pleased to take any questions, and I hand over to the operator.

Query-and-Reply Session

Operator

Thanks. [Operator Instructions] We are going to now take the primary query. The primary query is from the road of Cor Kluis from ABN AMRO – ODDO BHF. Please go forward.

Cor Kluis

Whats up. Good morning. A few questions, and possibly first on residential homes within the Netherlands. The courtroom in H2 will most likely include a verdict of the CPI plus case, which — particularly a danger for rents sooner or later. And evidently the advocate common made some optimistic recommendation to the choose. May you give slightly bit extra readability on that? How conservative have you ever valued your residential homes? And if there could be a optimistic verdict, what may that influence the portfolio, the solvency, and many others., or what’s your view on this CPI plus courtroom case?

And secondly, for market results in July and August, a number of issues occurred, after all, within the markets. May you give us an replace on the influence on solvency? And the final query is in regards to the financial institution sale, which was solely 4 proportion factors higher than, I believe, guided earlier than and anticipated by the market. May you give, yeah, a cause why that precisely is the personal funds — the eligible personal funds greater, SCR decrease? What is the cause for that? That had been my questions. Thanks.

Jos Baeten

Ewout?

Ewout Hollegien

Sure. So, thanks, Cor, and nice to satisfy once more, although, by the — by cellphone. Residential home validation to begin with. Intimately, like you’ve stated, as we all know, there’s a rental case occurring, the place the excessive courtroom has been requested for an recommendation on the best way to cope with that. The excessive courtroom can also be suggested by the lawyer common. And truly, the conclusion of the lawyer common was that the indexation of three% is just not being — is just not seen as unfair. And now, it is ready for the excessive courtroom to give you their last recommendation.

In your query, what does that imply for valuation, I believe what we’ve got seen during the last one and a half years, that whereas home costs had been already going up once more, that the worth of rented homes really remained kind of steady. So there was a rise in the way in which, yeah, the rented worth of the — yeah, rented homes had been valued versus the honest worth of homes. I believe the share is someplace round 70% at this second in time. And I imagine when this uncertainty shall be out of the market, yeah, that provides some form of a possible for the valuation of the rented homes to truly go up once more within the coming interval.

How fast that may go, we’ve got to see, after all. However I believe, yeah, getting this uncertainty out of the market will certainly be useful within the valuation of rented worth. And as , we’ve got a form of valuation of round EUR4.5 billion of rented worth on our stability sheet. So that may positively be one thing that may be optimistic for our solvency ratio. So, that is one.

Then on the Solvency II market-to-market motion, I believe we see a number of developments since H1. One is that charges went down with, as an example, round 40 bps in comparison with the H1 quantity. I believe we have not seen markets there’s a year-to-date transfer of — H1 to this point have moved loads. In order that form of ends in market unfold widening.

On the similar time, what we even have seen is that there was tightening of presidency bonds, particularly when it comes all the way down to Germany and the Netherlands, which is massive a part of our funding portfolio. And thirdly, we even have seen the VA coming down. So, while you carry that each one collectively, I might say that the full market-to-market motion is kind of impartial. And it is form of the identical impact that we’ve got seen in H1, the opposite method round that we’ve got seen since really H1. In order that’s on the Solvency II market-to-market.

Then on the financial institution influence, certainly, so I believe two elements that performs a job right here. One is that the SCR influence within the solvency ratio that we current at the moment of the financial institution is bigger than it was after we offered the deal. In order that’s one. And we now even have included the EUR80 million that we acquired from handing over the mortgage — demonstration of the mortgage enterprise to BAWAG. And that collectively makes that really the contribution of Knab — of the sale of Knab in our professional forma solvency ratio enhance earlier than solvency factors.

Cor Kluis

Okay. Great. Very clear. Thanks.

Operator

Thanks. We are going to now take the subsequent query from the road of David Barma from Financial institution of America. Please go forward.

David Barma

Good morning. Thanks for taking my questions. The primary one is in your capital era targets. May you remind us how conditional that’s to the charges and the spreads remaining on the type of stage that we noticed this summer time? And linked to that, you now have a optimistic OCC gearing to low rates of interest. Is there a stage of rate of interest drop at which the sensitivity breaks and turns into a much bigger detrimental or a giant detrimental?

After which secondly, on non-life, so the mixed ratio and incapacity was excellent and again nearer to the type of stage we might see prior to now. And I believe it even will get seasonally higher within the second half, due to the person aspect. May you give us a bit extra coloration on what you see as an underlying efficiency of incapacity and in your outlook for that? Thanks.

Jos Baeten

So, thanks, David, to your query. Allow us to begin with the final query, after which Ewout will soar in on the query on cap gen. What we do see as a improvement in incapacity is that we’re really pretty again on the ranges that we had been used to earlier than the primary half of 2023. So, steady developments within the particular person portfolio, and we do not see any opposed trajectories in — for the second half of the 12 months in particular person.

Group enterprise growing steady and illness go away has grow to be higher than final 12 months, and that also stays the realm the place we’re eager to comply with up on developments and if we have to enhance premiums there, we won’t hesitate to take action. So, all in all, incapacity market appears to be pretty steady in the intervening time. And we stay, as all the time, cautious on particularly the short-term illness go away market.

Ewout Hollegien

Yeah. After which on the sensitivity of the capital era for — let’s begin with the unfold motion. So I believe after we — the primary sensitivity could be on mortgages. I believe after we look to the present stage of spreads that we see on mortgages, I believe we’re completely consistent with what we see on the via the cycle OCC unfold of, as an example, round 90 bps. We’re even a bit greater for H1. So I might not count on from unfold actions a major change in comparison with what we’ve got seen, for instance, in H2 2023. So, not a lot to count on from that one.

Then your query on how delicate are we for charges going up or down, I believe what — that is additionally what we’ve got proven on the slide when it comes all the way down to capital era. They’re offsetting results when it comes all the way down to charges going up. So, when charges are going up, you’ve got seen profit on one hand from a decrease UFR drag. Alternatively, you see a form of small detrimental on the surplus return, for instance, on the equities and in the actual property aspect. In order that is kind of offsetting one another, and there is additionally an SCR element which shall be a bit decrease.

In order that’s why we now offered a bit — being even a bit favor — in favor for charges are happening for the OCC sensitivity. And I believe after we stay inside the 50 bps, as we’ve got offered right here, that can also be that you just — some — an quantity that you just then can count on. Yeah, when it goes down with 100 bps, you need to reassess once more. However that’s one thing that we’re seeing. And that is an annual quantity that we current over right here, so one thing that is on an annual foundation is the EUR10 million sensitivity.

David Barma

May you give us an concept of what it might be for like a 100 bps transfer?

Ewout Hollegien

I believe it is — the most effective assumption to make now’s double the quantity that we’ve got offered right here. So, the — double quantity of fifty bps going up or down.

David Barma

Thanks.

Operator

Thanks. We are going to now take the subsequent query from the road of Benoit Petrarque from Kepler Cheuvreux. Please go forward.

Benoit Petrarque

Sure. Good morning. Yeah. Two questions on my aspect. So, simply to return again on the non-life outcomes and the expansion gross return premium rising very properly at plus 4.6% natural, might you possibly element the breakdown between value and quantity impact? And what you see additionally on the pricing aspect for the second a part of the 12 months? And likewise, linked to the non-life, Jos, possibly on incapacity, you talked about very improved underwriting outcomes. Is that the primary impact of the improved consolidation on this market? And likewise, possibly might you discuss briefly on the plan of implementing obligatory incapacity insurance coverage merchandise for entrepreneurs? I believe there’s a plan operating on the parliament, and simply questioning the place — what’s your view on that one.

After which possibly simply to — second query is extra on the capital aspect with the 196%. Clearly, you’ll get, after all, synergies nonetheless in H2. PIM is coming. So, yeah, what’s your view on extra capital? Clearly, Aegon could be promoting some shares sooner or later. So, how do you see the surplus capital at year-end? How a lot you assume you should purchase again if Aegon shall be coming? Thanks.

Jos Baeten

Okay, Benoit. Thanks for the — for these two questions. To begin with, on the non-life, let me diversify slightly bit between non-life and incapacity. In non-life, we’ve got seen as effectively development attributable to the truth that we had been capable of acquire extra clients, particularly within the space of the SME. Nonetheless, the rise in P&C is for roughly two-thirds because of the improvement of premiums — because of the premium will increase. And as , we’ve got elevated the premium final 12 months, and we have performed the identical on common with 10% midyear 2024. And that may kick in over the subsequent 12 months.

So, one can count on that the expansion in P&C solely attributable to premium will increase will proceed additionally over the subsequent 12 months to 18 months. However on the similar time, we see elevated buyer demand and likewise see development there. In incapacity, the rise is predominantly to the addition of enormous contracts that we did inside Loyalis and, to a lesser extent, premium will increase in particular person and group, however after all, additionally because of the enhance of premiums within the illness go away portfolio.

To the second a part of your query, our view on the compulsory insurance coverage that — for entrepreneurials, we are actually within the part that the previous authorities, to say it like that, has offered a proposal and all people can react to that proposal. And the query is whether or not the brand new authorities will proceed with the previous proposal or that they are going to begin over the controversy once more. Our prediction for now, however it’s tough as a result of we’ve got to see what the brand new — what the dynamics are within the new authorities, this new legislation is predicated on an settlement between unions and employers within the pension contract that we had a few years in the past. So will probably be pretty tough to not implement an compulsory incapacity legislation going ahead.

Whether or not it should appear to be it’s now offered, we’ve got to see. And it is our expectation that it’s going to positively not occur earlier than 2027. So if and when it occurs, will probably be on the earliest date in 2027. That may very well be helpful for us for the brand new enterprise, after all. However the finish of the day, it’ll depend upon how the compulsory product will appear to be and the way fascinating will probably be as a result of there shall be — and that won’t change most likely, there shall be a possibility for patrons to choose between the compulsory protection and the common insurance coverage merchandise with insurance coverage firms. So we’re optimistic on the event, and we’ve got to see whether or not the proposal will find yourself being carried out like it’s at the moment.

Ewout Hollegien

Query on the surplus — on the — how we glance to extra capital, so — and the flexibleness that we’ve got when Aegon is coming. So, we all the time have stated, as we’ve got offered at this Capital Markets Day, that we’ve got form of a path of shopping for again shares within the coming three years of 125, 175, and 225. So that could be a trajectory that we’ve got checked out. However we even have stated, yeah, when Aegon decides to promote down its stake, we will additionally speed up that path. And I believe with the professional forma ratio that we’re presenting, we really are having the flexibleness to take action when — yeah, when Aegon Ltd is beginning to promote down their stake in a.s.r.

Benoit Petrarque

Nice. Thanks very a lot.

Operator

Thanks. We are going to now take the subsequent query from the road of Farooq Hanif from J.P. Morgan. Please go forward.

Farooq Hanif

Hello, all people. Thanks very a lot, and I believe congratulations on the OCC form of breakdown with IFRS. I believe that is actually useful. However simply my two questions. Firstly, in life, are you able to simply make clear slightly bit what your message is on the expertise there within the appendix. I can see that a few of will probably be recurring. In case you might simply give some steering or some rationalization on that? Plus, what’s the danger that you just get extra detrimental from dropping pension entitlement?

After which second query is — nice outlook for annuity enterprise and for DC. So, how a lot of that is simply your present clients basically switching it to DC and the way a lot are you seeing form of a win from corporates or others who’re switching to an insured DC answer? And for each the DC and annuity, what’s your form of outlook for development? I imply, I presume it’ll be excellent. However should you might give some numbers or steering there, that will be useful. Thanks.

Jos Baeten

Ewout, on the expertise variance query?

Ewout Hollegien

Sure, very happy to reply. So in — yeah, so we — in our half 12 months consequence, Farooq, as you stated appropriately, we see some detrimental variance from switch of collective pension entitlement, which has a optimistic counterpart within the CSM. And this is without doubt one of the IFRS 17 peculiarities which may be solved sooner or later. However what occurs presently is that the switch of gathered belongings runs straight via P&L with anticipated complete legal responsibility as a counterpart within the CSM, and this ends in form of a timing mismatch the place the CSM counterparts will move into the P&L over time.

Along with that, we additionally see that the discharge of the chance adjustment is like we’ve got no longevity reinsurance in place. With — within the — within the Aegon portfolio, we are literally having the offsetting impact of round EUR20 million can also be offered within the expertise variance. So that is the second element. And also you — while you take out each of that, we are going to come extra near a minus EUR10 million to minus EUR50 million for H1 as an actual expertise variance. And that has principally to do with the investments within the new pension system, as you additionally talked about within the name at the moment. So, really, that’s the bridge when it comes all the way down to the expertise variance.

So, very specific components which might be associated to how we cope with IFRS 17. One ingredient we’re taking a look at whether or not or not we will clear up that. After which the actual remaining portion is form of expertise variance of minus EUR10 million to minus EUR50 million associated to principally the investments that we do within the pension.

Farooq Hanif

Can I simply particularly, on these factors? Simply in a short time, sorry. Very sorry. So, it looks like the chance adjustment factor may proceed, and can you’ve extra venture integration sort of bills? Will there be some ingredient of risk-adjusted detrimental variance that we should always construct into forecasts?

Ewout Hollegien

I believe the — so the expertise variance for the reinsurance may proceed, however the offsetting impact can also be in a better launch of the chance adjustment. As a result of we launched the chance adjustment, like we’ve got no longevity reinsurance in place. And that is why you see a better danger adjustment launch. And the offsetting impact is within the expertise variance. So it is — each are offsetting one another. So, that one shall be continued.

Like, I stated, we’re actually wanting into the timing mismatch on account of the switch of collective pension entitlements, whether or not that may be resolved. And the remaining portion is then principally the investments within the pension system, and we count on additionally there some additional funding in H2. So additionally there, we count on it to extend a bit.

Jos Baeten

For the long run, that won’t be the case anymore.

Ewout Hollegien

Then the second questions on pensions, possibly a few remarks upfront. We do see three development areas within the pension enterprise. To begin with, buyouts. Now we have set a goal on that of EUR8 billion for the subsequent 3.5 12 months. And we do see a number of inquiries, as stated, and we really feel snug that we will meet that EUR8 billion goal.

To your query, if we see the event in DC, that’s partially to new contracts, because of the new pension legislation, development in our market place, and the addition of Aegon NL. And that is very useful. So, the expansion in pension DC is, to a lesser extent, coming from folks which might be altering from a DB contract to a DC contract. We do see that. However most insured contracts already within the current previous have taken selections on switching from a DB contract to a DC. And that is why we’ve got set a second goal on the expansion of DC. We intention to develop that enterprise with EUR8 billion belongings underneath administration within the interval ’24 to ’26.

After which lastly, annuities. There, we count on and we’re on the way in which to delivering on that concentrate on to satisfy a EUR1.8 billion development of annuities in — over the subsequent three years to 4 years. And that predominantly comes from our personal portfolio, the place people who have constructed up an quantity of pension cash begin to use it from their 66 or 67 age. A smaller a part of that EUR1.8 billion will come from exterior portfolio, however will probably be predominantly from our personal DC portfolio. And that is why you will need to develop the DC enterprise to help the longer term development of the annuity enterprise.

Farooq Hanif

Thanks very a lot.

Operator

Thanks. We are going to now take the subsequent query from the road of Michael Huttner from Berenberg. Please go forward.

Michael Huttner

Incredible. Thanks. You most likely answered the query, nevertheless it’s on the TKP, which is now not in OCC. So I simply questioned should you can remind us what the investments are and the place the — the place they might be. After which a reminder of the headroom, which is on Slide 13, as a result of I all the time hoped that you’re going to do the Achmea deal, so an concept that will be beautiful. After which I do know I am allowed to, however possibly a 3rd one. You talked about free money move and I’ve utterly forgotten. How do you outline free money move? And I believe that is on Slide 14. Thanks.

Jos Baeten

In your first query, the influence of the truth that TKP is a one-off and that we excluded from our operational outcomes and OCC, the influence of that on this 12 months shall be roughly someplace round EUR5 million in OCC. And to your third query, remind me what was [Multiple Speakers] the free money move, yeah. Perhaps you wish to do it. I can do it. However…

Ewout Hollegien

No, that is okay.

Jos Baeten

Go forward.

Ewout Hollegien

We did not put an actual definition on it, Michael. However what we imply, that’s — that OCC is free money move, which implies that it is absolutely distributable.

Michael Huttner

I see. So, simply to grasp, the EUR658 million would — is money? I imply, cashable, if I’ll say. Is that about proper?

Jos Baeten

Yeah, it is…

Ewout Hollegien

It is distributable capital.

Jos Baeten

Yeah.

Michael Huttner

Incredible. Let me [Multiple Speakers]

Ewout Hollegien

And that’s money — these are money elements. However for instance, additionally the discharge of capital, after all, that you’ve got, that’s not money. However what you do is that you just get extra money within the authorized entities, and extra money within the authorized entities is distributable. And that is why we stated the OCC definition that we’ve got made is much more free money move than it already was. And that implies that we — the capital that we generate within the authorized entities may also be distributed, may also be remitted to the HoldCo, may also be paid out to shareholders.

Michael Huttner

Very useful. And the headroom?

Jos Baeten

The second, your assumption that we are going to do a transaction, effectively, I am going to go away that with you. We agree that it might be nice. However we do not see any actions on that entrance anymore in the intervening time. So we do not know whether or not they’re nonetheless in a course of, whether or not they’ve stopped the method, whether or not they’re negotiating, whether or not they are going to come again to us. So, if and when the portfolio could be out there, we might be very pleased to entertain such a transaction.

Ewout Hollegien

Along with that, Michael, so after we look to the monetary leverage, we see a leverage ratio which is definitely under the 25%, in order that — we imagine, actually wholesome leverage ratios. So, after all, in case of a big transaction, there could be a monetary flexibility to additionally look to the debt aspect.

Michael Huttner

Very useful. Thanks.

Operator

Thanks. We are going to now take the subsequent query from the road of Steven Haywood from HSBC. Please go forward.

Steven Haywood

Good morning, and thanks very a lot. Two questions. One is on the actual property portfolio. Clearly, you talked about the EUR4.5 billion rented property the place you had no actual form of revaluation on that for some time. However really, I am hoping you can provide us some steering on anticipated revaluations of the remainder of the property portfolio within the second half of this 12 months and possibly going ahead as effectively. One among your friends has, clearly, given us some useful revaluation steering there. After which secondly, on the complete 12 months 2024, the OCC and likewise on the IFRS working revenue, are you able to give us any type of coloration, useful hints getting in the direction of what kind of stage you count on for the complete 12 months? Thanks.

Jos Baeten

I believe each for you, Ewout.

Ewout Hollegien

Sure. So let’s begin with the residential revaluation, or possibly good to say it. So we do not — we do not worth actual property ourselves. We do this by exterior valuators independently. So it is all the time tough to precisely venture what the valuation shall be. Sadly, we can’t see at the very least the result of the valuation. So it is — in order that’s a tough one. Trying extra to the market perspective, I believe the — yeah, we’re considerably optimistic on — when — for — on actual property throughout the market. The bulk in our actual property portfolio is in residential as in — as — and is in rural actual property.

After we look to residential, additionally what I discussed to — by answering the query of Cor, we really see that the honest worth is method greater than the valuation that we’ve got within the guide. In order that’s form of 70% is the rented worth in comparison with the honest worth. And traditionally, yeah, that is all the time, as an example, round 10% to 50% greater than the 70% at the moment. So that provides you form of an upside that we imagine is there. Having stated that, we do not know the way fast that upside shall be actually into our numbers, however we’re positively optimistic in regards to the massive a part of our portfolio being a residential actual property. That is one.

And rural is already very optimistic for a very long time. Quite a bit to do with the shortage of excellent farmland, as a result of after we discuss our rural land, it is all the time about farmland. Within the Netherlands — you may’t make land — effectively, within the Netherlands, we do — we do not do this any longer. And that implies that really the nice farmland is changing into scarce, and which will — that drives really the costs of that land already for a lot of, a few years. And we stay optimistic for that a part of the portfolio.

And are available all the way down to retail, we really do not see a rise in our — within the emptiness ranges that we’re having. We see — nonetheless see rents are going up. So additionally there, we imagine that the momentum is just not detrimental. Transaction costs are usually not excessive, and that makes it — we do not see optimistic revaluations there, however after we look to the direct rental revenue on retail, really, that’s good and the identical applies for workplaces, after all, the world over, loads to do on workplaces.

After we look to our workplace portfolio, the workplace portfolio is located close to massive railway station and really, that makes that — we nonetheless see the emptiness ranges are good — are excellent and powerful. And likewise the rental revenue stays there. However after all, additionally there, you see transaction costs not going up. So I believe for retail, workplaces, impartial, possibly barely detrimental for the opposite half — for the big portion of the portfolio, we are literally optimistic additionally for the second half of the 12 months.

After which the second query was on how we glance to the extent of capital era for H2. Yeah, I believe it is good after we wish to make form of an evaluation there to begin with final 12 months — H2 final 12 months as a place to begin. So I believe, clearly seeing, H2 2023 was on the stage of EUR525 million. Included in that was EUR64 million of the financial institution, in order that’s — that needs to be excluded. That leaves us with various EUR460 million for the second half of the 12 months. Now we have some extra bills for the senior mortgage that we’ve got issued. So as an example, round EUR10 million.

On the opposite aspect, we will add again price synergies that we’re already realizing. We see enterprise development. So each collectively, as an example, round EUR40 million. So all in all, various at the very least EUR500 million needs to be possible when it comes all the way down to OCC. And that brings us for full 12 months OCC, effectively, of at the very least 1150 (ph) and I believe completely consistent with — completely on observe to attain the EUR1.35 billion in 2026.

Steven Haywood

Okay. Thanks very a lot.

Operator

Thanks. We are going to now take the subsequent query from the road of Iain Pearce from Exane BNP Paribas. Please go forward.

Iain Pearce

Hello. Good morning, everybody. Thanks for taking my questions. The primary one was simply following up on some actual property objects. Simply the workplace emptiness price. If we embrace these newly refurbished properties, that is near 10%. I do know you stated that you just’re type of snug with workplace emptiness price for the second. However is there something that provides you confidence about filling these new properties and type of decreasing that workplace emptiness price to extra regular ranges? After which should you might simply briefly contact on the aggressive dynamics within the well being market? Clearly, an honest lack of quantity in H1. So simply give us some particulars round what’s pushed that, that will be helpful. Thanks.

Jos Baeten

Allow us to begin with the final query, after which I am going to hand over to Ewout. The well being market within the Netherlands is a market the place clients every year could make a alternative whether or not they stick with their present medical health insurance firms or whether or not they transfer to another person. We, during the last couple of years, have been very rational in our pricing. And as already talked about in the course of the full 12 months 2023 outcomes, what we’ve got seen on the finish of 2023, that our pricing in well being was above the common pricing and was above the worth will increase in the remainder of the market.

So we misplaced clients which have chosen to maneuver to a medical health insurance firm with a lower cost. That’s a part of the market dynamics. However our coverage is worth over quantity. So we wish to value in a rational method. And if that will imply that we lose some enterprise, then we desire to lose enterprise as an alternative of pricing irrational and really shopping for losses for the longer term. In order that’s not the way in which we run the corporate. So that’s really the primary dynamic within the well being market. After which the…

Ewout Hollegien

Yeah.

Jos Baeten

Actual workplaces?

Ewout Hollegien

So, the workplaces, no — thanks, Iain, for asking this. Precisely the explanation why we offered that bucket individually is that we’re assured that — effectively, the workplace area that we — that’s new for hire attributable to current renovation, we’re very assured that we will hire it in the end. In order that’s why we additionally current it separate. And that brings us again to the degrees that we see extra as common ranges, and that was the elements that I simply talked about within the earlier — in answering your earlier query.

Operator

Thanks. We are going to now take the subsequent query from the road of Nasib Ahmed from UBS. Please go forward.

Nasib Ahmed

Thanks. Good morning. Thanks for taking my questions. So, firstly, on the P&C premium development, you talked about 10% over the subsequent 12 months to 18 months. I see P&C premiums are about 50% of the guide. So that you’re form of hitting the highest of your goal 5% already with none quantity development or with none price will increase in incapacity. Is that form of the short-term view, that you just’re most likely going to exceed that concentrate on? That is the primary query.

Second query on the PIM influence. So I do know it is higher than 10 factors on the group. However should you had been to mix the a.s.r. life and Aegon life entities, the 176% and the 179% solvency, what could be the mixed solvency of the life entity publish the PIM implementation? And would you get greater than 10 factors at that subsidiary stage? Thanks.

Jos Baeten

In your P&C query, we have elevated premiums on common with 10%. There’s a diversification influence between hearth and motor and between retail and business. So, you depend at 10% on the full premium quantity, as a result of it should move in over the subsequent 18 months. And there are variations. For instance, in motor, the rise is a bit greater than in hearth. So it is too simple so as to add up 10% to the full premium quantity. Having stated that, the expansion going ahead, after all, predominantly shall be at the very least pushed by this premium will increase. However particularly within the business enterprise, in SME, we additionally intention additional natural development of consumers and merchandise.

After which to the mixed life entity solvency query?

Ewout Hollegien

Yeah. So, no, the introduction of the partial inner mannequin for a.s.r. life intimately, so what we’ve got stated earlier than is someplace between 10% to 12.5% at group stage. That is the contribution that we count on. We — it is tough to place an actual quantity on what it means for the mixed life entity, as a result of the primary part that — of step one that we’re doing is that we carry a.s.r. life to the partial inner mannequin. Then when they’re each on the partial inner mannequin, then we will merge the authorized entities. The ten% to 12.5% that we’ve got talked about earlier than as a good thing about the inclusion of the partial inner mannequin is the profit at group stage.

Nasib Ahmed

Nice. Thanks.

Operator

Thanks. We are going to now take the subsequent query from the road of Anthony Yang from Goldman Sachs. Please go forward.

Anthony Yang

Hello. Good morning. Thanks for taking my questions. The primary query is, might you give us an replace in your re-risking progress? And if that’s the case, how a lot has that contributed to the OCC? After which the second query is, coming again to the non-life enterprise, only a clarification. Ought to we — are there any portfolios as much as renewal within the second half ’24, which you should still enhance value? Thanks.

Jos Baeten

Let me first reply the second query. A non-life portfolio is constructed up over time and thru the 12 months. So really, the — as from the first of June, the complete portfolio is up for renewal. Most non-life contracts are quick time period, one 12 months or three years. So if we announce a premium enhance on common of 10%, contracts which might be — that had been new as from the first of August 2023 shall be renewed and get a premium enhance 1st of August 2024. And that is why will probably be — it should grow to be seen via the 12 months. So there’s not one specific a part of the portfolio that renews at, for instance, a sure date. That’s for the retail portfolio. In SME, there, on common, it is extra across the 1st of January. So the SME portfolio, extra of the SME contracts will renew from the first of January.

Ewout Hollegien

Sure. And on the re-risking query, Anthony, in order , the re-risking consists of three components there, so transferring to equities, transferring to a liquids, and optimizing the sovereign portfolio. What we’ve got performed is — in H1 is usually the third half. So it is really optimizing the sovereign portfolio by transferring from AAA to the principally AA nations. And that is really kind of finalized, and the annual OCC contribution of that’s round EUR10 million.

Anthony Yang

Thanks.

Operator

Thanks. We are going to now take the subsequent query from the road of Farquhar Murray from Autonomous. Please go forward.

Farquhar Murray

Good morning, all. Only one query from me, actually, on the life aspect as regards to the form of DC and annuity inflows. I imply, these already look to be form of operating round in regards to the ranges which might be wanted to achieve the targets that you just outlined. I simply questioned should you might define whether or not there’d be any the explanation why that will taper off lease ranges. Clearly, the buyout alternative is back-end loaded. I simply wish to double verify there is not any cause why that is front-end loaded. Thanks.

Jos Baeten

Ewout, you wish to?

Ewout Hollegien

Yeah. So I believe on the — each the DC, in addition to annuities is, certainly, completely on observe with the ambition that we’ve got set. So when the — the annuities is sort of EUR300 million already for H1. And we’ve got an ambition of doing EUR1.8 billion in three years. So, really, we see already that we’re, yeah, completely really on observe on getting the annuities into our enterprise profile. And truly, the identical applies when it comes all the way down to DC. After we see the influx now, it is ramping up completely really to assembly the EUR8 billion goal in three years.

Farquhar Murray

And as I say, is there any cause why that will be front-end loaded by way of pension reform impacts?

Jos Baeten

No, as a result of the pension reform, each employer has the time to take a call in the course of the subsequent three years. In order that shall be unfold over the subsequent three years. So we count on that the DC developments and the annuity developments shall be extra equal over time. And as stated, the pension buyout is extra lumpy enterprise. That can positively not — 4 occasions 2, that may kick in over time. As talked about in my presentation, we have already got various RFIs operating and request for proposal. So we’re optimistic on the truth that we do not have to attend till the top of 2025 or 2026 for the primary buyout. However that shall be extra lumpy and is much less predictable whether or not that shall be equally unfold out over the complete interval.

Farquhar Murray

Proper. Thanks, Jos.

Operator

Thanks. We are going to now take the subsequent query from the road of Michael Huttner from Berenberg. Please go forward.

Michael Huttner

Thanks a lot. Simply two. One, you talked about insights from OCC. I simply questioned should you can feed them simply once more. The impression I’ve is that it seems to be as should you make extra of your cash from the real-world funding form of numbers slightly than the bottom assumptions. However it’s laborious for me to — it is the primary time I’ve actually checked out this. After which the second is, you do have a payment goal. I believe it is EUR140 million. It seems to be such as you’re already beating it. However I simply surprise should you can discuss that. Thanks.

Jos Baeten

To your second query, after we introduced the goal of the asset administration enterprise and the distribution companies, by then that included nonetheless the TKP funding. We have taken that out. So sure, we’re on the way in which to satisfy the EUR140 million. However it’s nonetheless the goal. And should you would take out the TKP funding for the 12 months 2026, in that 12 months, we assume that we had been nonetheless investing roughly EUR2 million to EUR3 million in that enterprise. So if you wish to add a quantity to that, then it might be roughly EUR2 million to EUR3 million on the EUR140 million in 2026.

Michael Huttner

Thanks.

Operator

Thanks.

Ewout Hollegien

Yeah. After which on the — I believe Michael had one other query, which I hope I reply appropriately. So my interpretation of your query is — Michael, is that your query is whether or not or not the — effectively, the consequence on the investments, whether or not or not that needs to be greater. Properly, the way in which we are literally taking a look at portfolio, so we glance to the precise unfold of the portfolio, each on the mortgage aspect, in addition to on the credit score portfolio and, after all, additionally within the revenue charges.

And for — and as , for equities and actual property, we’ve got an extra return assumption that really is already for a lot of, a few years steady. So, 6.6% on equities pretax, 5.5% for actual property pretax. And it is also what we have mentioned throughout this Capital Markets Day. We didn’t enhance that extra return assumption even if really the charges have moved up and — effectively, theoretically, you can too — might have some form of a principle that then additionally the surplus return on the fairness and actual property needs to be greater. We didn’t do this. So, extra returns stay steady, that is — for actual property and equities. And for the remainder, we actually look to the precise spreads of the portfolio and that is really how we give you the surplus returns.

Jos Baeten

Does that reply your query, Michael?

Michael Huttner

[Multiple Speakers] Thanks. Sure, 100%. Thanks very a lot.

Jos Baeten

Thanks.

Operator

Thanks. We are going to now take the subsequent query from the road of Jason Kalamboussis from ING. Please go forward.

Jason Kalamboussis

Sure. Hello, there. A few small questions. The primary one is a clarification on Farquhar’s query, buyout. And also you’re saying that — I could also be fallacious, however I’ve all the time assumed that that is actually a ’26 to ’27 story, and alongside the way in which, after all, you may decide up a few offers someplace there. Do you discover that, although, we’re beginning to transfer to ’25? Which means in ’25, we usually tend to see various offers slightly than the odd occasional deal. And basically, additionally for ’24, do you assume that one thing can occur? Or on the finish of the day, for the second, there are a number of request for proposals. However as you’ve stated, I imply, pricing will solely tighten afterward.

The second query is on the money stability. I do know you do not run there your — at HoldCo stage, your money, however simply to verify. You are — you continue to wish to stay the EUR500 million to EUR600 million typically. And so, you had, I believe, a compensation of EUR200 million mortgage to Rabobank. Are there any such objects that we should always count on over the subsequent 12 months? Thanks.

Jos Baeten

To your first query, in a great world, we might hope that we might do that 12 months EUR2 billion, subsequent 12 months EUR2 billion, and the 2 years thereafter EUR2 billion. However as stated, it’s pretty lumpy enterprise, and we count on that it’s going to not find yourself being like a great world. Predominantly, it may very well be back-end loaded. However what we do see is that various pension funds are already performing now.

And we’re realistically hopeful that at the very least in 2025, we are going to already see the primary transactions coming to a last conclusion. And possibly — however that will be underneath very optimistic circumstances. Perhaps already in 2024, we might do one or two smaller transactions. However I count on that there shall be deal with 2025 and 2026 after which, after all, additionally remaining half in 2027. However we do see sufficient actions to be optimistic on that improvement.

Ewout Hollegien

Jason, and with respect to your query on the HoldCo money, as stated, so the HoldCo money coverage that we had in previous, certainly, didn’t change. So, what we do by full 12 months is that we remit sufficient money to cowl dividends, coupons, and likewise the HoldCo bills. The EUR500 million is for — or EUR560 million for the interim, it is high-quality. I believe for the complete 12 months, the quantity shall be greater and shall be round EUR800 million mark.

When it comes all the way down to, will we count on extra outflow — particular outflow, not — the one one which we do count on is the EUR120 million Tier 2 redemption. So, the remaining portion, that we count on to redeem by finish of September. And moreover that, we do not count on extra outflow. So, no extra outflow moreover the EUR120 million, and money at HoldCo by year-end nearer to EUR800 million and EUR560 million at the moment.

Jason Kalamboussis

Okay. Nice. Thanks very a lot, each.

Operator

Thanks. We are going to now take the subsequent query from the road of Michele Ballatore from KBW. Please go forward.

Michele Ballatore

Sure. Thanks. My query — I’ve one query in regards to the web SCR influence. Particularly, in regards to the completely different elements, should you can provide extra particulars? And likewise, what modified? I imply, in 2023 was EUR34 million, I see from the Capital Markets Day presentation, however was not restated based on the brand new methodology. So, are you able to remind us what modified? Yeah, and as I stated, the completely different elements? Thanks.

Jos Baeten

Sure. Thanks, Michele. So, a number of feedback on that. So, the online SCR influence is the discharge of capital attributable to the truth that we’ve got a runoff portfolio within the life section, but additionally in the course of the 12 months in incapacity, you’ve form of launched the SCR pressure that you just really add on the finish of the 12 months. So that’s included. When it comes down extra to the bridge to — of — in the direction of H1 2023, I believe it is, after all, tough to bridge as a result of we now have added — we’ve got now added Aegon to it. So — and that’s, effectively, a big stability sheet that you just add to that and that — with that, you additionally see a rise of the SCR launch in comparison with final 12 months. And I believe that is the primary cause for the bridge really between H1 2023 and H1 2024.

Michele Ballatore

Thanks.

Operator

Thanks. We are going to now take the final query from the road of Nasib Ahmed from UBS. Please go forward.

Nasib Ahmed

Hello, sorry. Only a follow-up on my earlier query, Ewout. On the a.s.r. life firm, the influence of the PIM, if I estimate that this EUR400 million good thing about the SCR, that provides me about 12 factors on the group. Take off EUR400 million on the SCR of a.s.r. life, I get about 38 factors profit. Is that form of in the appropriate ballpark? In fact, there’s going to be diversification on the group. So that you most likely get greater than 38 level. However simply — yeah, is that math right? Thanks.

Ewout Hollegien

I can solely offer you applause. I believe it is a good assumption to make when it comes all the way down to the profit you could count on in a.s.r. life.

Nasib Ahmed

Thanks.

Operator

Thanks. There aren’t any additional questions at the moment. I wish to flip the convention again to Jos Baeten for closing remarks.

Jos Baeten

Okay. Thanks very a lot, operator, and thanks all of you for the questions. And hopefully, we had been capable of reply them in a method useful for you. Simply to sum it up, as stated, we’re very pleased with the efficiency we have delivered at the moment. We’re actually on our technique to ship on all of the targets we’ve got set in June, particularly reaching the medium-term goal of EUR1.350 billion by way of OCC. We see a continued sturdy business momentum, which we’re pleased with, as a result of on the similar time, we’re nonetheless busy with the inclusion of the Aegon Nederland enterprise, which is difficult work, and remaining commercially lively in that interval is all the time a problem, however we’re profitable in that.

We’re pleased with the strong Solvency II ratio that we offered on a professional forma foundation, the 196% going ahead, with an extra uplift because of the inclusion of a.s.r. life within the PIM. And at last, as stated, we’re assembly the at the very least EUR215 million goal in our integration program going ahead. So, all in all, pleased, and pleased to see you over the subsequent interval to proceed the dialog on the efficiency of a.s.r. So, thanks for becoming a member of us. For individuals who are nonetheless on trip, take pleasure in the remainder of your trip. And for many who began to work, like all of us, take pleasure in your working day.

Operator

This concludes at the moment’s convention name. Thanks for taking part. Chances are you’ll now disconnect.