Earnings Transcript for AGESY - Q2 Fiscal Year 2023

Operator: Welcome to this Ageas Conference Call. I'm pleased to present Mr. Hans De Cuyper, Chief Executive Officer; and Mr. Wim Guilliams, Chief Financial Officer. [Operator Instructions] 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.

Hans De Cuyper: Good morning, ladies and gentlemen. Thank you all for dialing into this conference call and for being with us for the presentation of the six-month results of Ageas. I'm joined in the room by my colleagues of the Executive Committee, Wim Guilliams, our CFO; Emmanuel Van Grimbergen, CRO; Antonio Cano, Managing Director, Europe; and Filip Coremans, Managing Director, Asia. We are happy to announce strong results for our first reporting under IFRS 17/9. This new accounting framework better reflects our performance by providing a more comprehensive view on the contribution and the potential of our Asian activities and our Life business. Our net operating result amounted indeed to a strong €599 million, representing 17% return on shareholders' equity. It contributed also to our comprehensive equity, which stood at a high €15.6 billion. On the commercial front, our performance has been strong, with inflows up 6% at constant exchange rate and the positive trend in both Life and Non-Life. In Life, the growth was primarily driven by China, which recorded a 12% increase in inflows, thanks to a strong sales momentum plus 45% in new business ahead of a regulatory change in the guaranteed return. In Belgium and Portugal, where customer appetite was lower in bancassurance in the context of higher interest rates, actions have been taken to enhance the attractiveness of our products. In Non-Life, inflows were strongly up by 11% at constant exchange rate, with growth in all business lines and across segments. The strong new business along with a very solid operational performance of the entities, especially Non-Life, drove the Group operational capital generation up 16% and above €1 billion mark. This translated into a high operational free capital generation of €492 million. We can rely on a high solvency position with a solvency ratio for the Solvency II scope at 220%, largely above the Group target of 175% and 213% for the non-Solvency II scope, up by 6 percentage points. We have now reached the midpoint of our Impact24 strategy. We are proud of the achievements already realized and are confident that we are on a good track to achieve our targets. For 2023, strong operating performance of the first semester gives us confidence to increase our full year net operating result guidance to a range between €1.1 billion to €1.2 billion. Lastly, you may remember that we introduced last year for the first time an interim dividend. We are happy to announce that the Board will again this year propose an interim gross cash dividend of €1.5 per share, and that we intend to repeat this on an annual basis going forward. We are still fully committed to our target of an average DPS growth of 6% to 10% over Impact24. So the final dividend will reflect our growth pattern. And now, ladies and gentlemen, I will hand over to Wim for more detailed comments on the results.

Wim Guilliams: Thank you, Hans, and good morning, ladies and gentlemen. The strong net operating result was driven by an excellent business performance in both Life and Non-Life, which translated into a Life Guaranteed margin at 160 basis points and a combined ratio at 93.3%. Please note that in line with our efforts to improve transparency on our non-consolidated partnerships, these indicators are now disclosed for the whole group, including both the consolidated and the non-consolidated entities. KPIs for the Impact24 scope only are still available in the Excel spreadsheet. I will now give more details on the Group performance in Life. Please remember that the restated first half of '22 numbers were impacted by the move to IFRS 9, which resulted in two-third of the restated realized capital gains in -- concentrated in the first half of '22. Compared to the first half of '22, the Group Life net operating result was down this semester, due to a lower contribution from Belgium and Asia. In Belgium, this was fully explained by less realized capital gains, largely from real estate transaction. €30 million compared to a very high €85 million realized in the first half of last year. As you know, the realization of real estate capital gains in Belgium tends to show seasonal differences year-on-year depending on the timing of the transactions. In Asia, there was also a lower contribution from realized capital gains. More significantly, the result included some increased health costs in China in the context of the country reopening after COVID, whereas the first semester last year benefited from lower claims experienced during the lockdown. Additionally, the result included some adverse FX impact from the decrease of the Chinese RMB. Moving now to the Non-Life activity. Last year, the Non-Life net operating result included a €45 million positive contribution from the sales of the commercial lines in U.K. If you exclude this non-recurring element, the result was strongly up by 35%, thanks to an excellent operational performance confirmed by the Group combined ratio of 93.3%. This combined ratio was driven by a strong claims experience across all product lines, supported by relatively benign weather and by an improved expense ratio. Regarding the balance sheet evolution, the CSM roll-forward of the Group shows a positive operating CSM movement of €249 million, which is the contribution from time value and new business minus the CSM release. This positive evolution corresponding to a 5.1% growth on an annualized basis was supported by significant contribution from new business, which was higher than the CSM release. Indeed, the CSM release amounted to €435 million, translating into an annualized release of 8.9% while the new business reached a high €466 million, thanks to the strong sales momentum in China. This positive operational CSM movement, along with a solid group net operating result, supported to comprehensive equity, which amounted to €15.6 billion, almost stable compared to year-end '22, due to a significant adverse FX evolution. Our cash position has increased from €624 million to €830 million. It included €620 million dividends received from our operating entities. This number does not take into account €83 million dividends from our Asian operations, which have been improved and will be received in the second half of the year and which will therefore increase the total cash upstream from the entities to €713 million. To conclude, I would like to add a word on solvency and free capital generation. Mentioned by Hans, the solvency of the Solvency II scope companies stood at 220%, up 2 percentage points. It was driven by a large 9 percentage point operational contribution above the accrued dividends. Solvency of the non-Solvency II scope was up 5 percentage point to 213%, thanks to a solid operational performance and market movements. Operational free capital generation of the Group amounted to €492 million. It included €368 million from the Solvency II scope, which is a lower number than last year. Please note that is fully explained by an opposite evolution of the operational required capital. Indeed, it increased this semester due to high business growth and asset management actions where it was significantly down last year due to lower equity exposure in Belgium and the sale of the commercial lines in the U.K. The non-Solvency II scope, the operational free capital generation was in line with last year at €211 million with high new business in China, resulting in both higher available capital and higher required capital. I have now reached the end of my presentation, and we are ready to answer any questions you might have.

Operator: [Operator Instructions] The first question comes from Michael Huttner from Berenberg. Please go ahead.

Michael Huttner: Fantastic. Thank you very much, and thanks for this, I think, very strong results. And actually, I have three questions, but anyway, I'll ask some, and you can say we'll only take two. The first one is, so you've got €1.5 per share interim dividend. So we have no feel for what the dividend for the full year could be. Can you talk a little bit about that, please? The second one is on health in Portugal. That seems to be a challenge. And I just wondered how long it will continue to be a challenge and normally in insurance, I'm going to think in terms of fees. So as I said ago, it's completely resolved. This feels still like we're on the second kind of path, if you like. And then the third one is on real estate. The gains in Belgium clearly are mainly from real estate, and I just wondered if you can give us a feel for how that is progressing in terms of valuations and deals and whatever. Thank you.

Hans De Cuyper: Thank you, Michael. Good morning. I will take the first question. Indeed, we have launched a €1.5 per share interim dividend last year. We are continuing this, and we are also giving a confirmation that it is our plan to do that annually in the future. Now, that does not change our Impact24 guidance on the full dividend, meaning a 6% to 10% in DPS, which we have announced earlier. So, there is no change there, and we are confident to achieving it. It is €1.6 billion to €1.8 billion in euro terms. The only thing we say is that the full dividend will reflect the growth pattern. So the growth pattern, you will see in the dividends announced in February, while the interim will be fixed at €1.5. For your other two questions, they're related to Europe and real estate, so I'll give them to Antonio.

Antonio Cano: Thanks, Hans and Michael. On the healthcare business in Portugal, indeed, we have been suffering this year. Reasons being an increased frequency as people shy away from public hospitals and make more use of their private insurance. So, you can say the frequency has gone up, combined with an increased inflation of claims costs as hospitals and other providers have to also put on through the inflation they are faced with. So these are the two things. So, we have been increasing rates. We are continuing to do that on a slightly higher base. And concerning timing, I think you will see an improvement starting next year. I don't think that the second half of the year, our rate increases and also various actions on product design that we're doing will already be feasible. So that will be for '24. On real estate gains in Belgium, there are always various deals in the pipeline. So there is -- and that it's public. We sold an office building here in Brussels already in Q3 in the city center. And there are other things in the pilot. So, we expect to be able to realize the normal level of capital gains we have in real estate. It is true that market valuations, particularly for offices, are slightly down, but that does not really hurt our P&L because as you know, we value our real estate at amortized costs. It has a very minor impact on our solvency margin on funds to include the market value. And also bear in mind, we have a quite diversified modern real estate portfolio, as we always try to update it. So, no big issues on real estate, nor on the capital gains for the remainder of the year.

Michael Huttner: Brilliant. Thank you. Very clear.

Operator: Your next question comes from David Barma from BofA.

David Barma: Yes, good morning. Firstly on Non-Life. So the discounting benefit was a bit higher than I thought in the first half. Is this the kind of level we should expect now to be stable, assuming no change in the interest rate environment? And then, if that's the case, should we expect some unwind in the 2024 P&L? And then secondly, on the capital generation of the non-Solvency II scope. I thought that would increase a bit more this year. So here, I'm referring to the €211 million, I think. Can you explain a little bit why that's not the case, please? Thank you.

Hans De Cuyper: Okay, David. Wim will take the first one, our CFO, and then Manu will talk about the solvency.

Wim Guilliams: Hi, David. Good morning. Indeed, yes, we have disclosed the current year, the discounting impact on the current year claims, which amounted to 2.6%. But please remember, this is 2.6%, in which we take the total revenues Group-wide, whereas last year, we also disclosed the number, but that was for the consolidated entities only on the full year basis. So the 2.6%, if you compare last year, was lower still because we had the interest increase over the year at that moment. So that was the movement that we had over the year. Now, we're more at a stable interest rate environment. So this is the one you can expect going forward, 2.6% if rate stays unchanged. The only thing we will do at the end of the year is a full year disclosure, where we will also restate at that moment the non-consolidated. Now I have to be fully correct in this document, we also added for the first time, the amount of last year on the same scope, so on the full scope, that's the 2% which was mentioned as you reference. The difference with IFRS 4 that we disclosed in the June and December in fact, that was only on the consolidated and only on the consolidated revenues.

Emmanuel Van Grimbergen: Hi. Good morning, David. Emmanuel. So I'll take your question on the capital generation of the non-Solvency II scope. And if you -- I propose to go to Page 17, where you have a little bit more details and there you can see the free capital generation of the non-Solvency II scope that is indeed stable at €211 million compared to H1 2022. And you have the split between on the one hand, the operational capital generation. And on the other hand, the capital consumption. And you see that the operational capital generation is really increasing quite materially between H1 '22 and H1 '23 from €599 million to €700 million by the end of this first half of the year. So that is reflecting the strong time value, but also a strong new business contribution in the operating business. And on the other hand, because you have the strong growth, you see the capital consumption going from €222 million to €279 million. And please keep in mind, on the capital consumption, we have to multiply by 175 to get at the end, the free capital generation. So the bottom line is strong operational capital generation, but also the capital consumption supporting the strong growth in Asia.

David Barma: Thank you.

Operator: The next question comes from Anthony Yang from Goldman Sachs.

Anthony Yang: Hi, good morning. Thank you very much. My first question is on the -- on the cash remittance from China, which I see is actually almost zero in 1H '23. And I just wonder if -- and also I think you kind of mentioned the approved €83 million from Asia in the second half of this year. Maybe if you can -- if you could elaborate more on why is that, that would be helpful. And then the second question is just on the -- coming back to the euro, indeed, U.K. If you can -- could you give us an update on how do you think on the price versus claims inflation momentum in the second half of this year? Thank you.

Hans De Cuyper: Okay. I will give to Filip to give you an overview of the Asian remittance.

Filip Coremans: Thank you so much for that relevant question. Indeed, as of first half, there has been no dividend remitted from China. But as Hans and Wim mentioned in the meantime, that dividend has been approved and will be coming in in the second half. And if you look at the bigger picture of dividend remittance out of Asia, overall, we will have about €120 million comparison to last year €147 million, but taking into account some effects of FX and the reality of the results last year, all companies actually in the region, including China, have maintained or improved their payout ratios. So I would say this is normal as expected remittance. The reason it has been delayed, maybe you have noticed it in other companies, quite a few state-owned enterprises in China have delayed their dividend payments from first half to second half. It's, let's say, a decision of the Ministry of Finance.

Hans De Cuyper: Anthony, on the U.K., you asked specifically about inflation for the second half of the year. now obviously, I don't have that particular. What we see is that inflation for motor attritional claims has gone down slightly. It is slightly south of 10%. It used to be higher than that. So, we see a gradual decline in motor attritional inflation. In household, on the contrary, we see what you could call an inflation, but it's not so much the prices of the services, but it's things like people have to stay longer out of their house when there is a major claim. And why do they stay so longer? Because you have supply chain issues. It is just very difficult to get people to make repairs. So, you actually see what translates in a higher average cost in inflation, that is running higher than 20% now, which is quite high. On the rate side, you've seen in the market, depending on which source you consult, year-on-year rate increases of 25% to 30%. We are in line with that, although we started increasing our rates in motor already in the second half of last year. So we were not very competitive in the second half, but it means that average premium is higher. And that will flow through the P&L in the coming months. We continue to apply that rate increase. So, we are in the 25%, 30% rate increase year-on-year in motor. And then for households, we just had a 14% increase, special one-off on top of the regular increases. I think, all in all, the conclusion is that with the current rate increases and expected inflation, motor is definitely okay and household will be.

Operator: The next question comes from Jason Kalamboussis from ING. Please go ahead.

Jason Kalamboussis: Yes, good morning. Just to follow up on David's question on China. How should we see the development of the €311 million in the second half? And in general, so how do you see things developing because we have had the strongest new business in the first half? Is this also going to continue? Do you see that due more to the post-COVID liberation of end of the year '22 and that could slow down in the second half? Coming also back to the dividends to the remittance out of China. So, it's €83 million. Can you remind us the number last year? And also the €83 million, is that based on the cash result of '22? So, can you remind us how are the cash results developing so far this year, so that we have an idea if this remittance is likely to recover this year? And the final thing is on Solvency II, you're reaching to 20%. For the moment, there is no question of share buybacks, but would you consider for example, can this influence your decision, Hans, in having a slightly higher dividend yield growth for the full year, if results continue to be strong at year-end -- at year-end? Thank you.

Filip Coremans: Yes. Thank you for your question, Jason. Filip Coremans here. Let me take the first one first. The new business in China indeed in -- and that is across the board, but Taiping life stood out at the upside was indeed extremely high. So, there was a growth of about 45% in their new business volumes in local currency in euro, because of exits around [37%]. This is not related or not entirely related, I would say, to COVID reopening, but also to the fact that the guaranteed interest rates in China have been lowered as from the 1st of August. So this created, obviously, additional traction on the sales in the first half of the year. Now, in the second half of the year, for the same reason, we do expect some slowdown in new business volumes, but obviously, it should be beneficial for the new business margins. When we look at the new business margins and that it also translates in the figures on strong operating loan fund growth that we saw, the new business margin growth in China in the first half was still about 28%, 29%. But indeed, as you can see, a nudge lower than the 45% topline growth. So there was a margin squeeze more than compensated by the volume. In the second half, this may be reversed. We will expect better new business margins, but definitely, lesser volume and potentially also a shift more from participating businesses to non-participating -- from non-participating to participating business. The cash result, as of the first half, it's around €4 billion -- €4 billion, €4.1 billion I think, slightly above or in line with last year. Outlook on that, we are not giving also. You may have noticed that our partner is moving more and more towards disclosures on this IFRS 17/9, if not entirely as well. So, we respect that. In terms of outlooks on dividends for next year. Obviously, this is too early to talk about it. It does not only depend on the result. It surely also depend on the solvency. You've seen the solvency ratio that came in for the first half at 197%, comprehensive 98% on core. Too early to tell where they're going. But this is an attention point that we share with a partner and where the whole industry is looking at. The regulator has introduced some new tools in that perspective. For instance, the issuance of core Tier 2 has been enabled. We -- and you noticed maybe we derisked a little bit in the asset mix. This is an option that we still have also for the second half as well as obviously looking at the option that they took in the first half of the liquidity premium. So various actions are there to manage the solvency looking forward. And I think we are relatively comfortable where it's going to.

Hans De Cuyper: Okay, Jason. Well, on the dividend, share buyback solvency ratio, indeed that we enjoy a high attractive solvency ratio, but we also have, I think, a very attractive dividend yield as well as dividend yield growth. Of course, it is also a matter of cash position and other metrics. It is not only solvency position. So in that sense, our view does not change here. We will, if we have the room, consider share buybacks. But at this moment, I think there is nothing to be announced. It will depend on growth ambitions, solvency and cash position of the Group. And that will be evaluated anytime, but do not expect the share buyback in the short term.

Jason Kalamboussis: Thank you.

Operator: We'll now take the next question, which is a follow-up question from Michael Huttner from Berenberg. Please go ahead.

Michael Huttner: Thank you very much. I had two. The first one is on the China dividend risk. When I was -- when I hear that, the FinMin kind of delays dividend payments, my heart did a little bit like oops. So, if you can talk a little bit about that because clearly, that -- it is a big part of your cash inflows. And the other one -- and I remember at the dinner in London, you mentioned a little bit about growing your reinsurance business. And I'm sure there are slides on this, but maybe you can explain little bit of what has happened? And thank you.

Hans De Cuyper: On the Jason -- no, Michael, thanks. On the delay in dividend, I think you don't have to look too much into that. Ultimately, the payout ratio that Taiping stick to was exactly the same as last year. But rather than having the decision made at -- before the end of the first half, it has happened in the second half. It was inspired first and foremost, because they were also looking into the outcome of the transition to IFRS 17/9, which I think was a fair decision they took. But also, and I mentioned it, quite a few bigger companies in China have actually moved their dividend payout from first half to second half. It is also something that Taiping Group flagged in their Investor call. And in fact, if you look at our -- the investment results for the Asian region, it is also holding back a little bit the investment result in the first half because these dividends came in after the 30th of June. So not much more I can add to that.

Michael Huttner: Thank you.

Antonio Cano: I'm Antonio, again. On reinsurance, just to recap. So our reinsurance business is the biggest part is the internal reinsurance business. These are the capital management treaties with Belgium, U.K., Portugal and in quota shares. Then there is also a internal reinsurance activity as like would say a normal reinsurance. So we participate in the panels of our subsidiaries and some JVs. And what is new and I think that is what you're referring to is that we have started since the 1st of January to also offer reinsurance to third parties. The premium we have written up until now is around €35 million. It is obviously about risks that are not the same as we have. So European windstorms is something that we're not searching for because we have plenty of that ourselves. So it's a very diversified book, some agents on LatAm business, Central Europe. It's a nice well diversified business, and we were very pleasantly surprised that we could actually write the business we wanted. And as you probably know, that is very much helped by the situation in the reinsurance market with increasing capacity in an extremely hard market. So far so good on this third-party business and timing could not have been better.

Michael Huttner: Brilliant or lovely. Thank you.

Operator: The next question comes from Benoit Petrarque from Kepler Cheuvreux.

Benoit Petrarque: Yes, good morning. Just one remaining question on my side. Looking at dividend growth. So if I take your free cash flow for the year starting with the €730 million remittance and taking roughly €190 million on cost, I get to €520 million roughly, €520 million free cash. That's actually a decrease versus last year. I think remittance last year was a bit higher. So how do you take that free cash flow on board in your thinking process for dividend growth this year? Thank you.

Hans De Cuyper: Hi, Benoit. Thank you for that question. As you know, at the start of Impact24, our target was to have a cumulative dividend over the period of €1.5 billion to €1.8 billion, which we increased to €1.65 billion to €1.8 billion. And that we support with the holding free cash flow. So there, we have a target range over the Impact24 of €1.7 billion to €2.1 billion. Last year, we did already €700 million, which means that for the two remaining rate years, yes we have to reach the lower boundary €1 billion and to go to the upper boundary of €2.1 billion, we ask them to make up the difference. So that means that we are comfortable on reaching that target that will then support our progressive dividend commitment in Impact24.

Benoit Petrarque: So you look at it on a three years basis, not on an annual basis?

Antonio Cano: Correct.

Benoit Petrarque: Yes. Thank you.

Hans De Cuyper: Thank you.

Operator: The next is a follow-up question from Anthony Yang from Goldman Sachs. Please go ahead.

Anthony Yang: Hi, thank you very much. Apology, I think my signal wasn't good previously. I might miss this. Just on the cash remittance from China, I think you mentioned payout ratio is a consideration, but I just want to confirm, is the local solvency ratio at the time in Life a consideration as well there? Thank you.

Hans De Cuyper: Yes, obviously. So there are -- let me try to comprehensively summarize that. There are indeed considerations on solvency, because we want to safeguard the company staying solvent after dividend. But let's not exaggerate the impact of dividend solvency as well. The current dividend remittance has about -- I think about 3% impact on the solvency ratio. That's it. The second thing is indeed earnings and retained earnings. And let's not forget that they have quite a bit of retained earnings still on the book. So I would say the prime consideration will be sustainability of a decent dividend and a payout ratio and solvency. Let me then I think also a bit more comprehensively on solvency because I can feel that, that is underlying your question. The comprehensive ratios reported at Q2, they were quite comfortable. And we were at 96.7% on the comprehensive ratio. And half of it on the core. The targets for comprehensive from a regulatory perspective are 100% and the core is around 50%. Obviously, there is ample room. These ratios, they project from time to time forward in their quarterly solvency releases, where they give a mechanical update on what they expect that ratio to be, which is all -- for all companies for the next quarter. In the last solvency release, they mentioned, I think it would go down to around 170% and around 85% on core. That drop is mechanical to the extent that they take into account there the dividend that has been approved and which was expected and also the impact of valuation interest rate changes. Are these acceptable? They're acceptable. They're not as generous as we are today. But -- and that is where I think a few items are being lined up from a regulatory perspective and from a company perspective and that has to be taken in consideration. Ultimately, what will matter here is the end of year situation and not the quarters. Let's not forget that in China, the quarterly closings take less importance and less relevance in their decision-making. So first and foremost, the regulator has enabled in China the issuance of supplementary capital instruments. And many of the peers and also Taiping Group is looking into that, this could be core Tier 2 debt issuance. It's something that is a consideration, and that may be coming forward in the coming months or quarters in China. The second thing what you may have noticed, and we did not go into the details, but there is also active looking at the asset mix re-risking or derisking of the asset mix is always an option to adjust solvency certainty of equity, which has an immediate effect. Thirdly, and that's an action that the Taiping Group took in the first half because actually, the solvency ratio at the end of the first half was quite high, taking into account that you still have this transition measures in a solvency regime of C-Ross 2 coming in is looking at the illiquidity premium. Taiping Life has historically been at a very low illiquidity premium of about 25 bps where we saw in the industry going up to 45 bps. That 25 bps has been increased to 32 bps at the end of first half, which compensated to a large extent, not entirely, the effect of the transition measures falling away on C-Ross 2. So all these things come into play and are on the table of Taiping Group and Taiping Life management to manage the solvency situation looking forward. Important here is also a discussion that is taking place as you may be aware, because you follow the market closely from the Insurance Association in China, where they're looking at feedback. They've have been asked by the regulator to provide feedback on the first year of C-Ross 2. And this feedback is something that the regulator may take into account, and this is speculative what I say in making some adjustments to the C-Ross regime that has been in the press. Whether that will happen end of year or not, we will see. So -- but all these items come into play. And as I've said, remittance will depend on the year-end situation. It can depend on the payout ratio and the current results, but Let's not forget that there is retained earnings on the books of Taiping Life. Thanks.

Anthony Yang: Thank you.

Operator: The next question comes from Steven Haywood from HSBC.

Steven Haywood: Hi, good morning. Thank you very much for taking the questions. Firstly, on the net operating profit guidance for 2023. The top of the range, €1.2 billion. It's obviously, double what you achieved in the first half of this year. So, considering that's the top of the range, are you expecting some headwinds in the second half of this year versus the first half net operating profit? I would have expected more positive capital gains to come in the second half in Belgium. And then obviously, other business developments positive to come through in the second half. So that, I was expecting a higher outlook for your net operating profit guidance. And secondly, on the combined ratio target of 95%, part of the Impact24 plan and considering -- I think this is for the consolidated entities and you've achieved 90.5%. Should we possibly consider revising that 95% combined ratio target, or should we potentially apply it to the whole group and not just the consolidated entities? I wonder if you could give your thoughts on the combined ratio target going forward. Thank you.

Hans De Cuyper: Okay. Thanks, Steven. First on your guidance, we say indeed €1.1 billion to €1.2 billion. In this, we always assume that we would consumed a normal weather budget. So that means that if weather stays as favorable as it has been in the first half of the year, in that case, I think we should further target closer to the €1.2 billion than the €1.1 billion. So in that sense, I think you have -- you are right that under favorable conditions, there is still upside potential. On capital gains, at this moment, indeed, we have no indication that our capital gain ambition would not be achievable. You see that we still also have on real estate in the equity of €1.3 billion unrealized capital gain for real estate available. So there, I think we have -- as you know, when we book at amortized cost and our real estate is not leveraged, these are two things that you should really take into account. So we are comfortable that on realizing and as Antonio just said, first deal has already been announced in Q3. So they will be visible at the end of the year. So I'm also confident under current market circumstances that we will achieve the capital gains that we have under budget. A final reference because you might look at the 2022 full year results coming from IFRS 17 which were above €1.2 billion, but please do not forget, there were two exceptional elements in there that was €146 million from a FRESH transaction that we have done in the general account in the second half of the year and there was the €45 million from the U.K. commercial lines. If you would take that out, your reference '22 under IFRS 17 was €1.088 billion, meaning that with €1.1 billion to €1.2 billion, we do see an interesting increase in our profit outlook for the full year. Then combined ratio. Well, first of all, we review these targets only at the revision of our strategic cycle. So that's the first comment I want to make. So, we are comfortable indeed today on achieving the 95%. Not again, you also know that weather can easily play 3%, 4% in this ratio. So, the 90.5% that we have disclosed now is under the favorable conditions. We have a Group-wide view by the way, because that's your question. The Group-wide view for the first six months was at 93.3%. So also well within the 95% target.

Steven Haywood: Okay. Thank you very much.

Operator: As there are no further questions, I would like to return the conference call back to the speakers.

Hans De Cuyper: Ladies and gentlemen, thank you for your questions. And to end this call, let me summarize the main conclusions. We welcome our first half year results under IFRS 17, improving the transparency of our Asian activities and our Life business. We recorded a strong net operating profit of €599 million, supported by an excellent business performance in both Life and Non-Life. We enjoyed a very solid commercial performance with inflows up at 6% at constant exchange rate, thanks to the strong sales in China and in the Non-Life across segments. This resulted in a high CSM new business of €466 million. This positive start to the year gives us confidence to increase our full year net operating result guidance to a range between €1.1 billion and €1.2 billion. Additionally, we announced an interim dividend of €1.5 per share. With this, I would like to bring this end -- this call to an end. Don't hesitate to contact our IR team, should you have outstanding questions. Thank you for your time, and I would like to wish you a very nice day.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you very much for attending. You may now disconnect your lines.