Aegon Ltd. (AEG) Q4 2025 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to Aegon's Second Half 2025 Results Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker, Yves Cormier, Head of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. I would like to welcome you to this conference call on Aegon's second half year 2025 results. My name is Yves Cormier, Head of Investor Relations. Joining me today to take you through our progress are Aegon's CEO, Lard Friese; and CFO, Duncan Russell. Before we start, I would like to ask you to review our disclaimer on forward-looking statements, which you can find at the end of the presentation. And with that, I would like to give the floor to Lard.

Thank you, Yves. Good morning, everyone. I will start today's presentation by running you through our strategic developments and commercial performance in 2025 before Duncan will go through the results in more detail. So let me start with Slide #2 with the key messages for the year. Our results over 2025 demonstrate the strength of our strategy and our ability to consistently deliver upon our ambitions. We have either met or outperformed all our financial targets for 2025. Operating capital generation before holding and funding expenses increased year-over-year to EUR 1.3 billion ahead of target. Our operating results increased by 15% compared with 2024 to EUR 1.7 billion. This increase reflected business growth across all units, stable market impacts, and improved experience variances in the Americas and international businesses. Free cash flow for the full year 2025 was at EUR 829 million, consistent with our target. On the back of our strong capital position and financial performance, we proposed a final dividend of EUR 0.21 per common share, resulting in a full year 2025 dividend of EUR 0.40 per share, in line with our target and up 14% from EUR 0.35 per share over 2024. Furthermore, we executed EUR 400 million of share buybacks in the second half of 2025. And we are currently executing the first half of our new EUR 400 million buyback program for 2026, as announced at our Capital Markets Day in 2025. Commercial momentum remains strong in 2025. In our U.S. strategic assets, we continue to grow WFG as well as our new life sales and our retirement plan assets. At the same time, we continue to reduce our exposure to financial assets. The capital employed in this segment was $2.7 billion at year-end, ahead of our target. We also reported solid results in our other business units in 2025. Our asset manager delivered net third-party inflows. Our U.K. workplace platform generated healthy net inflows. And our international business continued to perform well. Finally, we are making progress with the preparations for our proposed relocation to the U.S. as announced at the Capital Markets Day. U.S. GAAP implementation is still at an early stage, but is progressing as planned. I'm now turning to Slide 3 to run through the commercial performance of the Americas in more detail. As we discussed at our 2025 Capital Markets Day, progress in the Americas remains strong. Starting with World Financial Group, we remain on track to grow the number of licensed agents to around 110,000 in 2027. As of year-end 2025, the number of licensed agents amounted to nearly 96,000, an 11% increase on the previous year. Initiatives to improve agent productivity have led to a higher number of producing agents. In addition, producing agents also sold a higher average number of policies at a higher average premium per policy sold. As a result, new life sales increased by 10% compared with 2024, while sales of annuities increased by 6%. The productivity gains in WFG were one of the key drivers of the 30% increase in new life sales in our Individual Life business. We also recorded strong new life sales of the final expense product that we offer in the instant decision market through a fully digital underwriting platform. Furthermore, we continue to successfully grow our RILA sales. We achieved a 45% increase in indexed annuity net deposits in 2025, thanks to higher gross deposits from further improvements in wholesale distribution productivity. In the Savings & Investments segment, the midsized retirement plans business reported net inflows in 2025 on the back of our strong positioning in the pool plan space and supported by a large takeover deposit earlier in the year. The level of written sales remains solid, which should support gross deposits going forward. We also generated further growth in both general accounts stable value and individual retirement accounts as we work to increase profitability and diversify revenue streams of the retirement plans business. I'm now moving to Slide 4 for an update on our other businesses. At Aegon U.K., we continue to be well positioned in the Workplace Platform business. Net deposits during 2025 were driven by both the onboarding of new schemes and members and regular contributions from existing schemes. For the Adviser Platform business, net outflows in 2025 reflected ongoing consolidation and vertical integration in nontarget adviser segments. As announced at our 2025 Capital Markets Day, the strategic review of the Aegon U.K. is ongoing. In our International segment, new sales continued to contribute to the growth of the book in 2025. Our joint venture in Brazil reported higher new life sales, particularly in credit life products as did our activities in Spain and Portugal. In China, new life sales were negatively impacted by changes to product pricing to reflect the new pricing regulations and the current economic environment. Aegon Asset Management generated positive third-party net deposits during the year in both global platforms and strategic partnership businesses, although at a lower level than last year. In global platforms, net deposits were mostly driven by fixed income products and more than offset outflows from the SGUL reinsurance transaction that we did last year. In strategic partnerships, net deposits were driven by our Chinese joint venture, AIFMC. We are implementing the plan for asset management as presented at the 2025 Capital Markets Day. For instance, we recently expanded our CLO warehouse capacity in the U.S. and Europe in line with our ambition to grow our higher revenue margin third-party business. Before handing over to Duncan, I would like to take a step back and reflect on the outcome of the plan we presented at the 2023 Capital Markets Day using Slide #5. First, as I mentioned, we either met or exceeded our financial targets in terms of operating capital generation, free cash flow, dividend and leverage. Second, at the same time, we have significantly transformed our business. We finished the year ahead of our target in terms of capital employed for the financial assets at $2.7 billion, and our U.S. strategic assets now significantly outweigh our U.S. financial assets, both in terms of CSM and capital employed. This is quite a remarkable shift. These are not only great achievements, but they also lay strong foundations for the next steps of our journey as we relocate to the United States while continuing to increase the profitability of the group and return capital to stockholders. I am very proud of all our colleagues across our businesses for contributing to our success. Well done, everyone. I will now hand over to Duncan to discuss our financial performance in more detail. Duncan, over to you.

Thank you, Lard. I will zoom in on our second half 2025 results, starting on Slide 7. The operating results increased by 11% year-on-year to EUR 858 million, with all of our businesses delivering higher figures. Operating capital generation increased by 8% with strong figures from Transamerica. Free cash flow in the second half of 2025 amounted to EUR 388 million, and we received remittances from all units. Cash capital at holding decreased to EUR 1.3 billion at the end of 2025, mostly because of capital distributions to shareholders in the form of dividend payments and share buybacks. Valuation equity per share increased by EUR 0.60 with a positive contribution from both shareholders' equity and the CSM balance after tax. Gross financial leverage was stable at EUR 4.9 billion. Finally, the group solvency ratio remains robust at 184%. As announced in May last year, the eligibility of the perpetual cumulative subordinated bonds in our capital stack ended as of January 1, 2026. These bonds contributed 7 percentage points to the group solvency ratio as of December 31, 2025. Now using Slide 8, I will address the development of our operating results in the second half of 2025. Starting with the U.S., the operating result increased by 5% in euros or 14% in U.S. dollars, thanks to a combination of growth and more favorable variances. The operating results of strategic assets increased by 10% in local currency and benefited from business growth, notably in the individual life and retirement plan businesses, partially offset by a lower operating margin in the Distribution segment. In financial assets, the operating result increased because of more favorable experience variances compared to the second half of 2024. On the other units, the operating results of the U.K. increased, benefiting from business growth in favorable markets, which led to both a higher CSM release and increasing noninsurance revenues in the second half. In the International segment, the increase of the operating result was also driven by business growth and a onetime item in China. Furthermore, the results from China benefited from a true-up related to the local implementation of IFRS 17, which is booked in the second half. Aegon Asset Management's operating results improved in the global platforms business mostly from the impact of favorable markets on revenues and from an improved operating margin. Looking forward, as mentioned at our recent Capital Markets Day, over the 2026 to '27 period, we aim to grow the operating result of the group by around 5% per year from the EUR 1.5 billion to EUR 1.7 billion in run rate in 2025, taking into account an assumed euro-dollar exchange rate of $1.20. I now turn to Slide 9. Here you see our IFRS net results for the second half of 2025. Nonoperating items were unfavorable in the period and were largely driven by realized losses on assets transferred in the context of the SGUL reinsurance transaction. These realized losses were taken in the P&L, were fully offset in other comprehensive income and therefore, had no impact on the development of shareholders' equity. Net impairments reflect an ECL reserve increase from new investment purchases as well as a small number of downgrades and defaults of bond investments. Fair value items were negative mostly from revaluations of solvency hedges in the U.K. and other charges were mostly driven by various items in the U.S. and U.K. and partially offset by the positive result from the stake in ASR. I am now on Slide 10. In the second half of the year, our shareholders' equity grew by 2%, and our CSM balance increased by 4% over the same period. The increase in the CSM was largely from business growth in the U.S. strategic assets. We saw a 24% increase in CSM in the second half, thanks to profitable new business, favorable assumption changes and experience variances. The CSM of our financial assets decreased due to the runoff of the book as well as the impact of the SGUL reinsurance transaction. These developments mean that the CSM balance of our strategic assets now accounts for 57% of total Americas CSM. Outside the U.S., the changes to the total CSM balance were limited. Overall, valuation equity per share, which represents shareholders' equity plus net of tax CSM increased by 7 percentage points over the second half of 2025 to EUR 9.06 per share. Moving now to Slide 11. OCG before holding, funding and operating expenses increased by 8% compared with the second half of 2024. OCG from the U.S. increased by 19% or 27% in U.S. dollars over the same period with a higher contribution from both the strategic and financial assets. Mortality and morbidity claims experience was favorable in the second half of 2025, while it was unfavorable in the prior year period. OCG benefited also from a favorable release of required capital from the investment portfolio actions and a reduction in short-term financing. This was partly offset by a higher new business strain from growing our strategic assets. Adjusting for favorable items, the U.S. OCG in the second half of 2025 fell within the guidance of $200 million to $240 million per quarter. In the U.K., OCG decreased mostly because the second half of 2024 includes some favorable items, while the International segment reported lower OCG. At Aegon Asset Management, OCG increased due to favorable markets and an improved operating margin compared to the prior year period. Holding, funding and operating expenses were largely unchanged year-over-year at EUR 142 million, bringing the total for full year 2025 to EUR 295 million. As a result, OCG after holding, funding and operating expenses for the full year 2025 amounted to EUR 992 million. I'm now turning to Slide 12. The capital positions of our business units remain strong and well above their respective operating levels. The U.S. RBC ratio increased by 4 percentage points compared to June 2025 to 424%. The increase was driven by OCG from the operating entities applying the RBC framework. This is partly offset by remittances to the holding. Onetime items and management actions negatively impacted the RBC ratio by 3 percentage points during the period. The negative impact on the RBC ratio of the SGUL reinsurance transaction was offset by capital investment into Transamerica from the group. Market movements had a limited impact. In the U.K., the solvency ratio of Scottish Equitable decreased by 2 percentage points to 183%. Operating capital generation in the period was offset by remittances to the holding and investments in the business. Market movements here also had a limited impact. On Slide 13, you see that cash capital at holding has come down in the second half of 2025 to EUR 1.3 billion. This development is consistent with our aim to reach the midpoint of the operating range for cash capital at holding around EUR 1.0 billion by the end of 2026. Free cash flow amounted to EUR 388 million in the period and included remittances from all our units as well as dividends received from our stake in ASR. For full year 2025, free cash flow amounted to EUR 829 million, consistent with our target of around EUR 800 million for the year. We returned nearly EUR 1 billion of capital to our shareholders through dividends and share buybacks in this period. Consequently, our share count ended 2025, 5% lower than at the start of the year. Capital injections into the businesses amounted to EUR 751 million and mostly related to the investment in Transamerica to offset the impact of the SGUL reinsurance transaction. This is funded by the disposal of part of our ASR stake, 12.5 million shares, as indicated at our Capital Markets Day. The remainder mostly related to investments in our international investment management businesses and in Aegon Asset Management. We have already launched a share buyback for the first half of 2026, totaling EUR 227 million and expect this to be completed on or before June 30, barring unforeseen circumstances. This share buyback covers both the first half of EUR 400 million program for 2026 announced at the Capital Markets Day and EUR 27 million related to share-based compensation plans. After completing this first part, we expect to launch the second half of the EUR 400 million program. I am now moving to my final slide, #14. To conclude, the results over the second half of 2025 were strong, and we are confident we are well positioned to meet our growth ambitions for 2026 and 2027. As discussed at our 2025 Capital Markets Day, the next time we present our results will be in August with the first half figures. We will also move the timing of our results conference call to 2:00 p.m. Central European Time to accommodate U.S.-based investors. With that, I would now like to open the call for questions. Please limit yourself to 2 questions per person. Operator, please open the Q&A session.

[Operator Instructions] And our first question today comes from the line of Farooq Hanif From JPMorgan.

My first question is on the operating profit in the second half of the year, which was kind of at the upper end of your guidance range. Having looked at the detail and discussed with the IR team, it feels like it's a reasonably clean number. But obviously, it's towards the upper end. So I'm just wondering about the sustainability of that, given the growth in CSM, the strategic assets that you talked about. So if you could comment on that, that would be helpful. And my second question is on, I mean, the ASR stake. I know you've been reluctant to really give much update on it in the past. But I was just wondering, sort of philosophically, is this something that you would want to or could or would be happy to own once redomiciled in the U.S.? And to what extent do the proposed tax legislation in the Netherlands impact your decision around that?

Thanks, Farooq. Duncan, can you take both?

Sure. Farooq, you're right, the second half operating result was, once you adjust for favorable or unfavorable items, I think, is a reasonable representation of the underlying figure. It benefited obviously from strong markets, which we saw in the second half of the year. But it leaves us in a good place with our ambition to hit the targets we outlined at the Capital Markets Day in December. On ASR, no change there. So that's a shareholding which we're happy with. We've given guidance in the past that there are 2 reasons we would sell that. One is that we feel that it hits intrinsic value and/or we have an alternative use of the capital. Our redomiciliation to the U.S. has no impact on our ownership there.

What about the tax, is that something you've considered?

Again, I think, at the Capital Markets Day, I said that I didn't see tax having an influence on our ownership position with ASR.

Your next question comes from the line of David Barma from Bank of America.

Firstly, on OCG, which is tracking towards the bottom end of your quarterly run rate in Q4. What conditions do you need to see for you to be closer to the top besides currency movements? And in particular, on the new business strain, which was particularly strong or high in Q4, what kind of strain are you expecting for the coming years? And then secondly, on WFG, results came down in 2025. I'm looking at the first profits here. And if I look at agent productivity or cost income, they both seem to have deteriorated in the period. So are you able to give some color, please, on the trends there? And maybe if you can quantify the investment program that I think is going on at WFG in '25?

On the first question, on OCG, you know, we had a very strong quarter in OCG. Our reported OCG was actually very healthy. We highlighted three things in there, which supported it in the fourth quarter. The first was, we had positive mortality and morbidity variances. As you know, that's going to move around quarter-on-quarter, but this quarter, it was pretty favorable. Secondly, we had high new business strain versus the guidance we gave during 2025, and that reflects that we had a very strong commercial performance on the life insurance side. And then thirdly, we had a high release of required capital, which was high versus prior quarters. Although if you look at our history there over the last 2 years, you do see that can move around quite a bit, and does tend to spike in the second quarter and the fourth quarter as that's the quarter we paid dividends out of Transamerica. So net-net, it was a strong quarter. Once you adjust for all of these favorable items and also take into account FX, we think we were at the bottom end of the kind of underlying run rate. And if you go back to our Capital Markets guidance, which we gave in December, we feel in a good place with achieving that for 2026 and 2027.

So on WFG, we have a lower margin on the back of very strong sales growth and also productivity growth. So there's more producing agents producing also higher premium per policy sales. But the reason why the operating result is lower than last year is that we're investing in the business in a number of areas. It's in leadership and governance of the company as a whole because the company is growing quite a lot, don't forget that, from 56,000 agents a number of years ago to 96,000 now. Also, technology initiatives to strengthen the sales process, a lot of training that we did to improve productivity and making more agents that are licensed producing quicker and compliance and field support for the growing number of agents. So that's the reason -- that's the investments that we are having in the business. Duncan?

And maybe just to add on that. So if you go back to the Capital Markets Day, we flagged that we saw our strategic assets in the U.S. growing by around 10% per annum over the coming years. For Distribution segment, we flagged also that we expected the operating margin to remain at the lower end and the growth in the profits to be mostly driven by revenue growth.

Your next question today comes from the line of Farquhar Murray from Autonomous.

Just 2 questions, if I may. Firstly, on the legal settlement. So I suspect in terms of magnitude, the most we're going to get is that it's part of the $230 million of charges in the U.S., which I can understand. But maybe you could give us some color on those cases where this settlement takes us in terms of the uncertainties around that and maybe what's the process for finalizing this? And then secondly, on the U.K. strategic review, if this ultimately does come to a sale towards the summer, could I ask how you will approach any decision between cash and equity within the offers made around it? And is there any preference or what are the criteria and considerations from your side?

Farquhar, this is Lard, I'll do both. So let's start with the legal settlements. They are pertaining to 2 cases, which we settled. The detail of that, it's quite technical. So I will refer to a page, which is Page #269, 2-6-9, of the annual report. It's the first 2 paragraphs under the section proceedings in which Aegon is involved. And if you read those 2 sections, you will find those are the 2 cases that we're talking about here. They are indeed included in the other charges of USD 230 million, as you pointed out yourself. So they're including that alongside other items in that bucket. As pertaining to the process, we settled those cases, they now need to be approved by the courts, and that's a process that will take a bit longer. Then when it comes to the U.K. review, we have launched it, as you know, at the Capital Markets Day on the 10th of December. It's early days, so we will not give any comments on this until such time as we have an update for you. We expect that update to happen somewhere before the summer, let's say. That's what we aim to do.

[Operator Instructions] And our next question today comes from the line of Michael Huttner from Berenberg.

I had 2 questions. One, in the past, Duncan, you've given us the kind of waterfall to the underlying OCG. I just wondered if you could do that, for my benefit, I imagine my competitors are much more clued up than I am, but that would be really, really helpful for the year. And then the second question, which kind of relates to it, but maybe a bit differently. I'm always obsessed by mortality, and there's that lovely Munich Re update, I think, this week on GLP-1s and stuff. Can you talk a little bit about the improvement in mortality you've seen? So year-on-year, the variance is better, but is there any trends here we should be thinking about?

Michael, thank you. So we think that the clean 4Q OCG was around EUR 294 million for the group compared to the reported OCG of EUR 372 million. And if I break the movement from one to other down, we had a positive impact of around EUR 47 million in the U.S. from favorable items. And within that, there was EUR 36 million attributable to favorable claims experience. The majority of that was mortality, EUR 29 million was mortality, EUR 7 million was morbidity. So that's good. Against that, we had new business strain, which was EUR 34 million higher than the guidance we gave at the start of 2025, and that's reflecting strong sales. And then against that, we had relatively elevated release of required capital against the guidance we gave at the start of 2025 of around EUR 45 million, and that's reflecting normal ALM activity. And as I noted, we do tend to see that spike a bit in 2Q and 4Q as Transamerica pays dividends. Then in the other units, we had overall positive favorable items of around EUR 31 million, of which about EUR 20 million was in international, split equally between China and Spain. And then around EUR 7 million in the U.K. and EUR 4 million in Aegon Asset Management. On mortality, we saw this quarter favorable severity. We saw that particularly in younger ages and very old ages. You know that number can move around in any single quarter, given the size of our book. But if I take a step back and look at our mortality experience since we made the updates, about 1.5 years ago now, we're happy with how it's performing versus our best estimate.

Our next question today comes from the line of Nasib Ahmed from UBS.

First one on financial assets. At the CMD, you did the universal life deal. And it seems like you've got the SPV set up. So are you going to chip further away at the $2.7 billion this year? Do you have anything in the pipeline in terms of reinsurance transactions or anything else? Any more color on that, Duncan, would be appreciated. And then secondly, I noticed you're focusing a little bit more on IFRS in the presentation slide. You removed the bridge of the OCG where you show the expected in-force and the release of capital. Just wondering why the change? Is it because U.S. GAAP is closer to IFRS? How should we think about U.S. GAAP, is it more closer to OCG or IFRS?

Duncan, 2 questions for our CFO.

So on the reinsurance deal, you're right. In December, we announced at the Capital Markets Day, I think a very innovative transaction on our part, whereby we reinsured a significant part of our secondary guarantee universal life exposure in the U.S., and that brought our required capital down to $2.7 billion. Actually, if you take a step back and look over the last 4 years, I would argue that we've done a huge amount of management actions across all of our books. And we're actually positioned as one of the more innovative parties in the market with the recent transaction, I think, giving us even more optionality because we've established this reinsurer. We continue to look for ways to bring down the $2.7 billion to our targets in 2027. That will be done through a range of actions, management actions we can take ourselves, actions which we engage with policyholders on and then also potentially third-party actions. I think the main message I'll give you is that we're confident we can hit our targets. And we've demonstrated, I think, that we are at the forefront of innovation in dealing with these legacy blocks. On the shift from -- on the emphasis on IFRS, I think we've always placed a great deal of emphasis on IFRS. We've historically run 2 frameworks, OCG and our accounting framework, which is IFRS 17. We are trying to simplify our communication. We took a step of that with the Capital Markets Day, where we have given targets, which I think are simple to understand and simple to track. And so that's how we're going to manage the next 2 years. You know that we're in the early phases of implementing U.S. GAAP. I'm not going to comment on that on how that's going or what the expected outcome of that is. But over the coming years, we will update the market when we have U.S. GAAP figures and eventually transition our disclosures to that of a normal U.S. company.

[Operator Instructions] And our next question today comes from the line of Farooq Hanif from JPMorgan.

So just following on from Nasib's questions. You mentioned at the CMD that the reserving on a stack basis, you're happy with across most of your books, but LTC is the one that stands out. Is your position still that it's hard to find market deals that economically make sense to you right now? Is that still your position and that you can deal with it kind of internally through your internal management actions on pricing? And secondly, this is a slightly kind of open-ended question, I guess, but just, I mean, you consistently have lots of positive and negative experience variances on an IFRS basis, for example. And I see quite a lot of assumption changes again in CSM. I'm just kind of wondering to the best of your knowledge, do you feel like you're getting closer to dealing with these variances going forward? Or are there any items we should watch out for going forward in earnings that could still remain volatile under IFRS?

Both questions for you, Duncan?

Okay. On the financial assets, so what we tried to give at the Capital Markets Day was, firstly, a framework whereby we said that we look at third-party transactions on an economic basis, and we referenced our valuation equity and also free cash flow per share, so both cash and economics. So that's the framework when we assess transactions. Second thing we gave was, we stated that our statutory reserving in aggregate for the financial assets was now comparable to on an IFRS basis. But within that, there are obviously blocks which are stronger and blocks which are lower. And we did indeed say that long-term care was lower. If we look at third-party transactions, actually, I think the binding is more the economic price. And if you look at long-term care, the reality there is that there are a lot of -- it's a relatively more sensitive block because it's long duration. The peak reserves are not until sometime in 2030. And that makes it a bit more sensitive to various policyholder and behavior assumptions. And therefore, we've so far taken a view that we are the appropriate owner of that block and our approach to managing that liability is through rate increases and other options we give to the policyholder to manage exposure. And I think that's probably the base case for the coming period. On variances, well, we gave a range of around EUR 100 million within our operating profit, which I think should be enough to cover positive and negative variances in a half year period, both from experience variances and onerous contracts. There will always be variances. This half year, we had positive mortality. We had some negative on premium persistency and expense on onerous contracts. So there will always be a number, and that simply reflects the leverage of the balance sheet to the P&L. But I believe that the operating range we give, which is EUR 100 million range, so plus or minus EUR 50 million should be enough to cover those variances on a go-forward basis.

Your next question today comes from the line of Iain Pearce from BNP Paribas.

Just one. In the presentation, you flagged some impacts from downgrades and defaults. I was just wondering if you could give us any more details on what this relates to, if there's sort of concerns about further downgrades in the investment portfolio? If it has anything to do with any of your private credit holdings as well? And I assume these are U.S. related as well. Just any details on what's driving that because it's not something we've really had flagged before.

I can take that. That's a good question. So as you know, under IFRS, we have the ECL. And if you look in our statistical supplement on Page 15 you'll see the movement in the ECL and there you'll see transfer between stages, which we saw some movement from stage 1 to stage 2 and some movement from stage 2 to stage 3, relatively small. I would say, still fairly benign. And that was across a range of bond holdings we have, ABS holdings we have, et cetera, but still pretty benign, to be honest with you, not a meaningful number yet, but it is something we track. On our asset portfolio, in general, it's performing very well, and you can see that in the movement in the ECL.

And your next question comes from the line of Jason Kalamboussis from ING.

Two quick follow-up questions. The one is in the U.S., plus 14% on local currency is above your -- which you're indicating as guidance. Do you think that this was supported mostly by the stronger markets we saw in the second half? Or do you find that there is a good momentum that could be carried in 2026? And also incidentally, I mean, if you could comment on the fourth quarter, how was it compared to the previous 3 quarters in the U.S. in local currencies? And the second thing is just for my understanding on the U.K. sale process, I understand that you are not going to comment on it, but I was looking just to understand how it works. So you are looking at bids for the whole of the U.K. But within it, do you also take or do interested parties show an interest for part of it and give a price or they have to actually look at it as one piece. And if you want afterwards to sell it in two different pieces, for example, because you're not happy with the price you get for the whole piece, then they have to resubmit, and you start discussions on that kind of second process. Essentially, is it a 2-stage process? Or is the second one folded partly in the first one. So I would be just interested if you could share any thoughts on it.

Jason, this is Lard. I will do the U.K. piece and then I'll hand over to Duncan for your first question. On the U.K., as I mentioned, the strategic review that we launched pertains to the insurance business and pertains to the platform business. It does not pertain to the asset management office that we have and business that we have in the U.K. So that's something I want to make sure it's clear for everybody. Secondly, it's in the early stages, and we aim to give an update when appropriate, and we hope to do that before the summer of this year.

On the operating profit in the second half, what tends to drive -- or what drove a lot of that growth, Jason, was the variances. So in the second half of 2025 for the U.S. on a U.S. dollar basis, we had a positive experience variance on claims of $129 million linked to mortality and morbidity comment earlier, whereas last year in the second half, that was only $33 million. So there's a big swing from variances, which are always going to occur, but hopefully should be captured in our range. If we look forward, the guidance we gave at the Capital Markets Day was that we would expect the operating result run rate to grow around 5%, driven by around 10% growth in strategic assets and shrinking profits and financial assets. As you know, the strategic assets profits are driven mostly by CSM progress and then our noninsurance profits. You see that our CSM is progressing really nicely. So our CSM on Protection Solutions ended the year at $4.3 billion and at half year it was $3.6 billion. So good progress there, which I think is supportive of the growth ambitions on the insurance side. And I just flagged earlier that on distribution, we expect a continued lower margin but good revenue growth. So that should support the overall roughly 10% growth in strategic assets. Against that, the financial assets will continue to run down. You note there that the CSM ended the year at $3.2 billion, began the year at $3.8 billion. So as that runs down, there'll be a lower release from CSM and hence shrinking operating profit over time. And the dynamic of those two things should get you the roughly 5% growth in operating profit.

And the next question comes from the line of Michael Huttner from Berenberg.

It was on the net inflows rather than -- so what I noted from speaking to your excellent IR, but I wanted to have some comments on how you see it developing. In the second half, net outflows in retirement plans in the U.S. was $0.6 billion. I think that's the retirement of baby boomers. I just wondered what the outlook is there? And then in the U.K., we had EUR 273 million net inflows in H2, which is well below what we had in H1, I think EUR 1.9 billion or something. So I just wondered how you see the run rate here. Then finally, on asset management, EUR 1.3 billion net outflows, I think, again, second half. And I just wondered how you see that developing?

These are different business lines. I will go one by one. First of all, our plan assets in the U.S. have gone up by 13% year-on-year. And the net outflows you're reporting, so the business itself is in very good shape. And especially when you look at the written sales, the new plans, the pool plans that we're getting, actually, the retirement business is doing very well. The outflows are indeed something that is in line with what the market sees overall in the U.S., which is baby boomers taken there, taking some of the money out. But also given where the stock markets are, people taking a little bit of money out. And that's what you're seeing there. Nothing else driving it. If you look at the U.K., the outflows we're seeing there is stemming from the same trend that we've been seeing for a longer time, which is a combination of a couple of things. And in the second half, there was one additional thing that I want to mention as well. So first of all, we target, as you know, a target segment of 500 advisers. Beyond that, in the nontarget segment, there's quite a lot of vertical consolidation and that drives where people are buying platforms and as a result, move assets away from it. So we've seen that for quite a number of quarters, and that has not changed. What we also saw in the second half of the year, there was quite some jitters in the U.K. on the budget. It's now settled because the budget is clear. But before that, there were concerns and as a result, clients took some money out because there were rumors that the tax-free pickup of pension money would not be possible anymore. And as a result, that led to a little bit of that. We have good progress actually on the technology improvements that we're making with target advisers providing positive feedback on that. But unfortunately, the commercial result of that is not yet visible. If you look at the AUM flows, so first of all, third-party flows were up. So they were worse than last than 2024. '24 was a record year, by the way, for that. But they were much lower than 2024, but they were positive. So we have positive flows driven -- so both on global platforms, which is our own platform as the strategic partnerships. And in terms of the outflows, we saw 2 main things happening; one client in the U.S. redeemed from our U.S. high-yield fund; and then we had the ASR, so they had some allocation changes in their general account. And as you know, we have a partnership with them on that. We noticed that in our asset management results. That is what we've been seeing. However, bottom line is, the retirement business in the U.S. is doing very well as is demonstrated by the set of numbers here. And the U.K., the workplace business is also in a very good place. It may not have been as high as the previous year because that was like a record year. This one is the second best year that we had, so it's still in a very good place. And on the adviser platform, I gave my views. And on AUM in total -- sorry, on asset management in total, we had positive flows, as I mentioned earlier. I also want to point to the margin improvement that we saw, by the way, in the asset manager, it nearly doubled this year to 17%.

And the next question comes from the line of Nasib Ahmed from UBS.

Just one question. Lard, you mentioned the legal proceedings on Page 269. I had a look, and there's a paragraph, the third paragraph, which has been there for a while around distribution. Just wanted to understand what that's related to? Is that WFG related? Or is it something else?

Well, the two that I was referring to are the cases that -- so one has to do with an old block of business and bonuses that were paid on that on universal life policies. Again, it's more eloquently described in the first paragraph of that section in Page 269. And the second one had to do with the topic of the MDR, so the monthly reduction rates that were increased. And also that is described more wholesome in Page #269. Those two cases have been settled. That's good news. And now we await the confirmation. Now, then what you're referring to, the third paragraph, they're not WFG related. So the first two cases -- so the cases I mentioned that we settled are not WFG-related.

Sorry, I was asking about the third paragraph where it says, there's some legal action going on around agents that might be considered independent contractors as opposed to employees. So I was asking about that one, whether that's WFG related?

We'll follow up with you on that. But I think you're referring to a case that we mentioned half a year ago, already in our half year disclosure. We'll follow up. IR will give you a ring.

And the next question is a follow-up from Michael Huttner from Berenberg.

Sorry about that. On the number of advisers at WFG, the total number is up, which is wonderful. The dual or the multiticket number is up, but it's kind of much slower growth. Can you talk a little bit about that? I think it was a question a couple of years ago, and I think the implication was that it didn't worry you too much, but it's the multiticket is obviously the higher value part, I don't know. Any comment would be helpful.

You may recall in many of the discussions last year that we wanted to improve productivity, right? And I've mentioned in a number of earnings calls that we were running programs to indeed improve that productivity. Now what has happened is that through our training and through our field support, we have been able to make more agents because the agency sales force has grown quite a bit. So the agents that become fully licensed agents, then also need to learn and to get productive and to become sellers. And that's what you're actually seeing in the numbers. We were able to improve the number of producing agents. Then the second thing that happened is they also sold insurance policies with a higher premium amount. And that also drives the metric of productivity up. That's all good news. So the agency network become stronger, has become bigger, has become more productive and that bodes well for the future, and we will continue to strengthen the network. I mentioned that we are doing investments supporting the field force training, all these good things to ensure that, that massive sales force that we have, which is the second largest in the U.S., and that goes to the underserved mainstream American family class and help them with our protection and retirement plans, et cetera. So yes, it's a good progress that we're making there.

Thank you. We have no further questions. I would like to hand the call back over to Yves Cormier for closing remarks.

Thank you, operator. This concludes today's Q&A session. If you have any remaining questions, please get in touch with us at the Investor Relations team. On behalf of Lard and Duncan, I would like to thank you for your attention. Thanks again, and have a good day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.