Aegon Ltd. (AEG) Q2 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Aegon's First Half 2026 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. Welcome to this conference call on Aegon's First Half Year 2026 results. My name is Yves Cormier, Head of Investor Relations. And joining me today to take you through our performance and 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.

Thanks, Yves, and thank you all for joining today's call. I will start by running you through our strategic developments and commercial performance in the first half of 2026 before Duncan will go through our results in more detail. We delivered strong commercial growth and robust financial results in the first half of 2026. Our operating results increased to EUR 804 million, supported by strong commercial momentum and favorable financial markets. Operating capital generation increased year-over-year to EUR 416 million from business growth and improved claims experience. Transamerica delivered excellent growth in new life sales. World Financial Group continued to grow and perform, and written sales in the Retirement Plans remained strong. Asset Management had third-party flows -- positive third-party net flows, and our International businesses contributed to growth as well, led by Brazil. Our capital position remains strong, and we have confidence in the outlook of our business. Cash capital at holding reached EUR 1.7 billion, supported by EUR 392 million of free cash flow in the period. We are increasing the share buyback program for the second half year by EUR 150 million to EUR 350 million. Furthermore, we are announcing an interim dividend of EUR 0.21 per share, up 11% year-over-year. Finally, we continue to move at pace with our planned relocation to the U.S. We announced today that the Extraordinary General Meeting to seek shareholder approval for the move is targeted to take place on October 8. I'm now turning to Slide #3 to run through the commercial performance of the Americas in more detail. Commercial momentum remains strong across Transamerica. At World Financial Group, we surpassed 100,000 licensed agents. More agents are producing, and average premiums per policy have increased. As a result, the distribution business has delivered 5% growth in life sales and 12% growth of annuity sales compared with the previous year period. In the Savings & Investments segment, Retirement Plans continued to perform well. Asset growth in IRA and stable value products supported revenue diversification and improved spreads. This resulted in an increase in the return on assets to 10 basis points in the first half of 2026. Written sales remained strong, especially in pooled plans, which is our sweet spot. Net deposits were negative in the first half of 2026, largely from a single contract termination following the client's merger with a peer. Within the Individual Life business, our entry into the instant decision market with the final expense product and now also with an Indexed Universal Life product has been a remarkable success. New life sales increased by 54% in the first half of 2026. Indexed annuity sales increased, helped by product enhancements that appeal to customers. I'm now moving to Slide #4 for an update on our other businesses. In our International segment, new life sales were broadly stable year-over-year. Growth in Brazil, driven by strong demand for individual risk products, was offset by lower sales in China from product repricing. Aegon Asset Management recorded third-party net inflows in both the Global Platforms and Strategic Partnerships businesses. As of 2026, Transamerica Asset Management, or TAM for short, is reported under Asset Management instead of the Americas. This business had net outflows in the first half of the year. The Global Platforms operating margin increased by 5 percentage points to 20% compared with the prior year period, driven by lower expenses and higher revenues, which were supported by favorable market movements and net inflows over the past 12 months. Let's now turn to Slide #5. We continue to execute our transition to the United States decisively. We have undertaken several key actions in the recent months. Number one, we announced the sale of Aegon UK, sharpening our focus on the U.S. market. Two, we issued a $500 million senior unsecured bond to establish a U.S. dollar yield curve. Number three, we reached an agreement with our largest shareholder, Vereniging Aegon, the Association Aegon, on our future relationship and presented a proposed U.S. aligned governance framework. On the back of this announcement, we have hosted engagement meetings with investors to gather feedback on the proposal. And then number four, we are on track with the implementation of U.S. GAAP and expect to start dry runs in the second half of the year. So overall, the transition is progressing at pace, on time and in budget. So far, we've booked roughly 40% of the EUR 350 million expenses we expect in relation to this transition. Looking forward, I'm excited about the next steps in this transition. The next major milestone is the Extraordinary General Meeting targeted for October 8, where shareholders will vote on the relocation, governance amendments and the new Omnibus Equity Plan. Our goal is to align Aegon's governance with U.S. market standards and support the company's ambition to become a leading U.S. life insurance and retirement group. In the coming weeks, we will publish the EGM meeting agenda and other related documents such as the SEC Form F-4 filing. We strongly encourage our shareholders to read these documents once they become available and to vote at the general meeting. Let's turn to Page 6. Looking beyond the EGM, there is more to come. We selected New York City as the future location of our head office. I will personally be moving there in January 2027 to lead the transition of our company from its new center. I'm excited that the Board has extended my mandate through 2030 and that the shareholders have approved that to ensure continuity of management in this major transformation of the company. We are implementing the necessary leadership and organizational changes to support the future group structure. Will Fuller's role within the group has been broadened, and he will become President and Chief Operating Officer of Aegon as of January 2027, and this is in addition to his responsibilities as CEO of Transamerica. Over the coming year, we will push forward the transition plans, gradually building the head office setup and processes until the end of 2027. We are moving at pace, but in a controlled and well-thought-through manner. I will now hand over to Duncan to discuss our financial performance in the first half of 2026 in more detail.

Thank you, Lard. I will walk you through the financial results for the first half of 2026, starting on Slide 8. We have announced a robust set of financial results. The operating results increased by 9% over the prior year period to EUR 804 million, with all of our units delivering higher results. Operating capital generation after holding and funding expenses increased by 27% year-on-year, and free cash flow amounted to EUR 392 million. As a reminder, we have excluded Aegon UK from the operating results, OCG, CSM and free cash flow as the business is held for sale. Cash capital at holding increased to EUR 1.7 billion as the remittances were only partly offset by share buybacks. As a result of the lower share count and business performance, valuation equity per share increased by 4% in the reporting period. Our financial position remains extremely robust. Gross financial leverage increased slightly to EUR 5 billion. This increase was driven by the issuance of a new senior unsecured note in April, exceeding the result of the tender offer on our subordinated notes. The group solvency ratio stood at 169% per June 30, 2026. The decrease compared with the year-end 2025 was largely driven by the loss of capital eligibility of perpetual cumulative subordinated bonds as we had previously flagged. Moving to Slide 9. Transamerica's operating result was $756 million and grew by 14% in local currency after correcting for the transfer of TAM, which moved to Aegon Asset Management. The operating result came in within the guidance we provided at the 2025 Capital Markets Day. Within Transamerica, we saw some positive developments. Distribution had an improved operating margin on a higher level of commissions, and this explains the strong operating result there. The Savings & Investment result benefited from higher fees on assets under administration, which increased and from margin expansion in our general account stable value product. And Protection Solutions results have benefited from the growth in the portfolio, which drove CSM release, which more than offset higher onerous contract impacts. Financial assets improved from materially more favorable experience variances when compared with the first half of 2025, and overall, continues to produce a financial return consistent with our previous guidance. The International segment benefited from growth in Brazil and favorable persistency experience in TLB. And Aegon Asset Management's operating result, excluding the transfer of TAM, increased from an improved Global Platforms operating margin and higher revenues in strategic partnerships. This was a strong performance from the business, reflecting the efforts of our management team and staff. On Slide 10, we show the net result, which amounted to EUR 608 million, broadly in line with the prior year. There are a number of moving parts here. We had a release of ECL reserves following the full repayment of the mortgage loans related to the Transamerica Pyramid complex in San Francisco. As well as releasing ECL, this repayment has removed the concentrated exposure in our CML book. Other charges include the positive result of Aegon UK and from the stake in a.s.r. The other charges reflect the unfavorable impact of the annual model and assumption review in Transamerica. The overall impact from this on our valuation equity was EUR 231 million net of tax, of which EUR 294 million pretax for the U.S. is reflected in the other charges, and the rest is either in OCI or CSM. There is some complicated geography around where the assumption changes are booked, but overall, the predominant driver of the review is updated assumptions around policyholder behavior, addressing variances we have seen in recent reporting periods. Turning to Slide 11. Valuation equity increased on a per share basis by 4% in the reporting period, standing at EUR 9.42 per share as of the period end. Note that the valuation equity includes the yet-to-be booked estimated shareholders' equity accretion related to the sale of Aegon UK, which more than offset the exclusion of the Aegon UK CSM after tax subsequent to the announcement of the sale. I also want to highlight that this is the first time the addition to CSM from new business in the United States exceeded the amount released from the existing portfolio. This is pleasing. It indicates that the Life business in aggregate is once again in a position where future profits are structurally increasing and is an affirmation of the success and effort of our commercial strategy. On Slide 12, we see that the OCG increased by 27% compared with the first half of 2025. OCG from the Americas increased by 35% in local currency with higher contributions from both strategic and financial assets. The main thing to highlight is that the large increase in new business strain, reflecting the growth in our business, whereby new life sales grew by 54% year-on-year, is offset by a repositioning of certain savings and investment portfolios from an RBC regulated entity to a Bermuda subsidiary to improve capital efficiency and the release of EUR 43 million of required capital from the Pyramid mortgage repayment. We have accepted the increase in new business strain coming from the higher sales given the return profile we expect to achieve on these. And going forward, should sales levels persist above the 2025 ambition level, we will manage OCG to the targeted level by accelerating earnings on in-force from other portfolios and, over time, by benefiting from the incremental OCG from these new sales. Aside from this, earnings on in-force grew from business growth in strategic assets, the SGUL reinsurance transaction announced in December 2025 and improved claims experience in the financial assets. Claims experience was in aggregate EUR 11 million favorable in the reporting period. In the International segment, OCG decreased year-over-year, impacted by EUR 20 million of unfavorable items, mostly from the adverse impact of new business in China as well as unfavorable claims experience in Spain and Portugal due to the storms. In addition, the joint venture in China remains a drag on OCG as previously guided. Asset Management OCG reflects the developments I outlined previously on the operating profit. Turning now to Slide 13 to address the U.S. RBC ratio. It decreased by 4 percentage points to 420% in the first half of 2026. This is a healthy position relative to our operating level of 400%. The contribution of OCG to the ratio from RBC regulated entities more than offset the impact of remittances. In first half 2026, around 40% of the remittances from the Americas were sourced from surplus at nonregulated entities, reducing the unfavorable impact on the capital position of the regulated entities. Market movements had a 12 percentage point unfavorable impact, more negative than implied by our published sensitivities. This is explained by movements in the period not fully captured in our single shock-based sensitivity approach, such as lagging performance of private equity investments and energy related assets, fund basis risk impacts and cross effects between asset classes in the variable annuity book. Onetime items negatively impacted the RBC ratio, and most of the impact came from the assumption update, which had $164 million negative impact, less than under IFRS due to accounting differences. I'm now moving to Slide 14. Cash capital at holding increased to EUR 1.7 billion. Free cash flow amounted to EUR 392 million and includes remittances from the units as well as capital distributions from a.s.r. Remittances received from Aegon UK are recorded as cash flow in divestitures and will be deducted from the cash proceeds from Standard Life at the close of the transaction. In the reporting period, we executed upon EUR 227 million of share buybacks, of which EUR 27 million were for share-based compensation plans. The other items largely reflect the net cash proceeds from the senior bond issuance and the tender offer, both executed in the second quarter of 2026. Note the coming maturity of a trust pass-through security in December will partly offset this. We remain committed to ending 2026 with approximately EUR 1 billion of cash capital at holding. Given our healthy position, we have announced today an increase to the total amount of share buybacks to be executed in the second half of 2026 by EUR 150 million to EUR 350 million, so as to ensure that our target of around EUR 1 billion is met. I'm now moving to my final slide, #15. The first half of 2026 demonstrated continued commercial momentum and strong financial performance, while the quality of our balance sheet remains strong. The results reinforce our confidence in delivering on our medium-term ambitions. On this, you will also find updates of all the financial ambitions provided at the Capital Markets Day last year to take into account the sale of Aegon UK and the transfer of Transamerica Asset Management to Aegon Asset Management at the beginning of the year. All of these changes are mechanical, and none of the underlying assumptions have changed. We look forward to connecting with you at the EGM targeted for October 8. And with that, I will hand over to Lard for final comment.

Thank you, Duncan. I would like to say a few words about the other announcement we made this morning. As you know, as part of the planned move to the United States, we aim to have a fully operational executive team based in the U.S. by the end of 2027. The CFO will be a key member of that team. Obviously, we discussed this with Duncan and, for personal reasons, he has decided not to make the move to the U.S., leading to the announcement that we made today. We will, therefore, begin the search for a new CFO, and we will keep you updated as that process progresses. On a personal note, this is a significant announcement for me. I have had the privilege of working alongside Duncan for over a decade, benefiting from his business acumen and strategic and financial insights. And that unique partnership will come to an end in the course of next year. Duncan is an exceptional colleague and a trusted friend and confidant. Duncan will continue to work with me on the move to the group to the U.S., the implementation of U.S. GAAP, the closing later on of the 2026 annual accounts, and he will facilitate an orderly transition to his successor. I would now like to open the call for questions. Please limit yourselves to 2 questions per person. Operator, please open the Q&A session.

[Operator Instructions] And our first question will come from Farooq Hanif from JPMorgan.

I think I'll make the most of Duncan while he's here for 2 financials-based questions, if that's okay. So could you possibly explain a little bit more about the repositioning of savings and investment portfolios, what that means and how that can be a tool for the future? And secondly, can you talk a little bit more about the assumption changes that you've made below the line? I mean, they do seem to be, obviously, nonrecurring in nature, but they always get a lot of attention. So it would be good to just understand what was different from expected and why you made those changes.

Duncan?

Okay. Thanks, Farooq. I'll deal with the assumption update first. So as you know, we review assumptions every year in the second quarter. And during 2025, we were seeing some negative variances related to policyholder behavior coming either through the P&L in the variance line or onerous contracts and some through the balance sheet in the CSM. And so we've decided to address that with this update, further improving the quality of our earnings and ensuring that our balance sheet remains up to date and strong. In short, they -- mostly related to policyholder behavior in 2 areas. The first is on our variable annuity book, where we updated assumptions around behavior at certain moneyness assumptions, whether that is lapses for in-the-money VA products or utilization for -- sorry, other way around, lapses for out-of-the-money VA or utilization for in-the-money, and that had a slight negative impact. And the second was around the efficiency of premium paying on our life insurance products, which we flagged to you in our results last year. So it's really related to the variances we saw during 2025 and philosophically wanting to make sure that we remain ahead of that. That's that. The first question was related to, okay, the repositioning. So well, the good news is that the OCG -- sorry, the good news is that the commercial strength of Transamerica is really coming through. As I mentioned in my speaker notes, this is the first half year where the net contribution to the CSM from new business for the Life company as a whole was higher than the release of CSM. So historically, we've seen strategic assets doing well, but the financial assets obviously reducing over time. But now in aggregate, the Life company is actually increasing the fuel -- the pool of future profits, which I think is a big positive, and reflects the work of the team there. And that obviously comes with a negative from a capital position, which is strain, which was running high. And in order to manage that and bridge the period whereby we're investing in new business to structurally increase earnings, we are looking at ways to accelerate earnings on in-force. In this case, we repositioned the portfolio to a Bermuda entity in order to increase capital efficiency and support OCG. That's something we'll continue to look at if strain remains high because we want to keep our OCG at a healthy level, and we have plenty of tools to be able to do that going forward.

And our next question will come from Nasib Ahmed from UBS.

So 2 questions from me as well. Firstly, on the Financial Assets, the locked-in capital, that's reduced, I think, because of markets and runoff. You've still got the $2.2 billion target. So Duncan, if you can kind of give some guidance on does the runoff get you there? Or do you need to do more transactions? Of course, you'd expect -- I'm asking the question because there have been a lot of type of transactions this year again. And then the second question on the U.K. proceeds from the sale. It feels like you're replacing the free cash flow with the cash that you're going to get from Standard Life. They've got a CMD on the 30th of November. So the interest cover on the debt probably stays the same because you're not really losing any cash. So is there really any need to pay down debt? I know you did say that the proceeds are going to be used for both buybacks and debt. But has your thinking kind of changed given that the cash is similar, there's no change to the cash? That's my 2 questions.

Duncan, are you taking them?

Yes. So the -- on the financial assets, so you're right that the capital employed came down further in the half year. It came down to $2.4 billion compared to $2.7 billion at the full year and is pretty close to the target of $2.1 billion, so improved by about $300 million. About 1/3 of that is driven by the favorable market impact on variable annuities, where what happens is we see reserves being -- becoming more prudent, more floored reserves, and that reduces required capital. So that is a bit sensitive to markets, but it has been helpful. And then the rest is spread across the other products where we had largely due to runoff of the books and asset allocation choices. Our philosophy hasn't really changed. So this is something where we have an active team looking at actions we can take unilaterally, bilaterally and also assessing transactions. So we're going to continue to look at ways to bring down the capital over time, obviously, with an economic approach as well. In terms of hitting that $2.1 billion, well, the gap is pretty small now. So I feel pretty confident that we'll be able to hit that number either through our unilateral or bilateral actions and if needed, transactions. But we will, of course, look at all our options to reduce that portfolio.

U.K. proceeds?

U.K. proceeds, no change there. So we do -- you're right, though, to point out, we do look at our leverage position relative to our cash flow, but no change at this point in time into how we're looking at the proceeds, which will be used for a combination of share buybacks and debt reduction.

Our next question will come from Farquhar Charles Murray from Autonomous.

Just 2 questions, if I may. Firstly, coming to the kind of individual life sales, which, as you say, were remarkably strong. I just wondered if you could explain what's driving that. It does feel like you kind of hit a bit of a sweet spot, and you did mention kind of product enhancements. And also just to give us comfort on the quality of those sales, could you outline what the IRRs and payback periods are on those new sales at present? And then secondly, coming back to the comment you made about accelerating in-force earnings given the elevated strain, my question, actually, would be, would you be seeing a similar tension between U.S. GAAP earnings and that managing those life sales as you're seeing with the OCG number?

Yes, very good. Duncan, and I'll hand over to you in a second. But maybe on individual life sales, Farquhar, we have -- this is mainly driven by a couple of factors. The first one is that we launched first in the final expense and later on in Indexed Universal Life an instant-issue, digital enabled -- digitally enabled process that allows brokers and agents to really speed up the process around underwriting and decision-making and finalizing a policy. To give you an idea, before we launched this, we -- you would take a couple of weeks to get the paperwork done. This is now under 12 minutes. And that, of course, is a massive service improvement that is driving the sales growth in these various segments. Secondly, we have seen, other than that, of course, the growth in the World Financial Group producing agents and the size of that. And we've also seen higher growth of other life -- traditional life products not done through this model, and -- but that was more muted. So really, I would say it's, to a large extent, driven by the launch that we did over the last, let's say, 18 months of various products, this new process, digitally enabled process. But Duncan, can you comment -- can you continue on this -- on the other financial aspects of it, IRR, payback periods?

Yes. On the specific simplified issue product that Lard is talking about, we are earning an IRR of over 12% and a payback of around 8 years. That's on a fully cost-loaded basis as well, so with all costs allocated to it. So we think the returns are fairly attractive. And on your second question on strain and U.S. GAAP, I can't really talk about that, Farquhar, because we don't have U.S. GAAP, and we've also -- I also commented at the Capital Markets Day that we weren't really going to get into any details of U.S. GAAP until we have progressed much further in the project, which, as Lard mentioned, is making good progress, and we expect to have the dry run sometime in the second half of this year. We'll, of course, still be under the RBC framework though, also managing strain will remain an important metric for us.

[Operator Instructions] And our next question will come from Michael Huttner from Berenberg.

Fantastic. I had 2 questions. One is, when you're going to change your name, presumably Aegon, which is -- it's a Dutch name, right? I can't remember, it's ENNIA and something else, whereas clearly, you have an established brand in the U.S. So that would be one. And then the second one is on the new business, and you kind of said, yes, funding new business is a key aspect. In the first half here, you clearly used the mechanism of the Bermuda transfer and then you had the release from the mortgage capital requirement. How much more buffers do you have to release to kind of offset this lovely new business growth and it is nice to business growth?

Thanks, Michael. I'll take the name change, then later on I will go get to the other question you had on new business. Yes. So we're going to change our name to Transamerica as a holding company. So we currently -- Aegon and the operating company's name in the U.S., Transamerica, and we will align those as we move to the U.S., and that will happen at the moment our legal seat moves, which is expected in the very early part of 2028. By the way, just for your historical reference, Aegon was a name that was created when AGO and ENNIA were merging. But it was AGO, ENNIA and then I think a lot of marketing people did a lot of work to make that into an acronym that would stick and that is Aegon. But in the U.S., I do want to say that apart from the institutional relationships that we have, who know us, the main brand has really always been Transamerica. So we're mainly aligning it, and we will do that, as I mentioned earlier, as our legal seat moves in the kind of the first weeks of 2028. Duncan?

Yes. So Michael, your question was around buffers and funding new business. So I would say over the last years, the financial position of Transamerica has dramatically improved, thanks to the actions we've been taking on the in-force blocks, our expense base and also writing profitable new business. So we feel that we have a very significant amount of flexibility in our balance sheet, which allows us to take the sort of actions we took in the first half. If you take a giant step back, what we saw in the first half was an acceleration of our new business strain. The returns we anticipate earning on that invested capital, we hope will be attractive. And meaning that over a period of time in the coming years, that will lead to a structurally higher level of earnings on in-force. Of course, we have to fund that. And so the action we took in the first half was one of the means we look to fund it, and if needed, and if the strain remains high, we'll continue to do that in the coming periods.

Our next question will come from Henry Heathfield from Morningstar.

I was just wondering if you could give an update on the number of multi-ticket agents that you have in WFG. And then secondly, within retirement, I was wondering if you might give an update on the large and midsized Retirement Plans balances.

Yes. Thank you very much, Henry.

Yes. So the multi-ticket is no longer something which we are disclosing, Henry. We do disclose that we've grown our agent base now to over 100,000 licensed agents, and we're continuing to target to reach around 110,000 licensed agents by 2027. And within that larger agent force, if you recall, one of our ambitions is to continue to focus on agent productivity improving and increasing, but we're no longer giving the exact KPI metric. Agent balances, we can take that offline and send that through to you -- sorry, the retirement balances.

Our next question comes from Nasib Ahmed from UBS.

Sorry, so a couple of quick follow-ups. Duncan, I remember you've hedged base fees by 20% on the VA block. And I think last time we spoke, you said you could potentially do more. And given equity markets have done well, would you look to lock in the good returns that you've got already? And I guess the second question on, if you can kind of bridge the OCG for the second half, of course, good numbers in the first half, but you haven't upgraded the guidance for '26. So what are the pluses and minuses in the second half?

Okay. On the base fees, you're right, we hedged about 25% of that. And indeed, I think markets are still at an attractive level. So that is something we could consider. Our main constraint there, to be honest, is that we have the floor reserve issue or topic, and you see that in our sensitivities around capital. It's quite a good problem to have because it means that as equity markets go up, we are creating more prudence in our reserves naturally, which provides a hedge if equities go down. So we're kind of creating our own self-hedge anyway. And the floor reserves at the end of the first half were just under $500 million, which is a pretty high level. So base fee hedging is something we'll continue to look at and if we decide it makes sense. But irrespective of that, the balance sheet keeps getting more prudent as equity markets go up on the VA. Your second question was around OCG. Well, the guidance we gave at the Capital Markets Day was over multiyear period. And I don't really want to get into ticking and tying it every half year because there's so many moving parts. But obviously, financial markets were helpful and will continue to be a benefit. Against that, we did the assumption update, which will be a small drag. So we're going to keep our -- and strain will, I think, likely remain elevated in the second half of the life sales. So we're going to keep in just giving you the big picture guidance of what we provided at the Capital Markets Day.

Our next question comes from Farquhar Charles Murray from Autonomous.

Apologies again, so just as a follow-up question from me. One here basically. On the accelerated shift towards the aggregation approach on group solvency, can you just give the reasoning for making that move? It seems a little bit earlier what the consequences are of that. It looks like it obviously kicks out a slightly better outcome on the U.K. And was there any risk of that group solvency becoming an issue in the absence of mainly accelerating it?

Yes. No, there's nothing to read into that, Farquhar. We've got a huge agenda in terms of workload and transitioning this group out of the Netherlands into the U.S., implementing U.S. GAAP, et cetera, et cetera. And so the desire to accelerate the transition to the reporting under the aggregation approach was something we discussed with the BMA in order to allow us to simplify our own calculations and reporting and basically reduce operational complexity across the group. Nothing more than that, to be honest. As we make progress to moving to the U.S., we're just looking to make our lives as easy as possible from a work perspective. And we don't anticipate any change in the outcome of the ratio other than what we flagged on the U.K., which is now going to have, we think, a positive 10 points or so versus the minus 5 points or so we guided for previously.

Our next question will come from Michael Huttner from Berenberg.

Two questions. One, so you've done lots of adjustments and reviews and stuff on your Life book. I haven't seen anything or any mention of long-term care, which for me is still the biggest chunk of capital still locked up in the Financial Assets. Can you say where you are here? You used, I think, to provide a graph where you say you're 100% or whatever expectation and there's some rate rises coming. The second, I don't know how to ask it politely, but I'm a bit -- I did say that -- the new business growth is fantastic. The word instant in the disclosure makes me a bit nervous. It reminds me of what happened when we had the mortgage crisis in the U.S. when people self-disclose and mortgages weren't always as expected. How confident are you that the risk, which I guess is a mortality risk here, is properly kind of covered?

Michael, so long-term care, you're right, the -- within our Financial Assets required capital now. It's just under 50% of the total required capital. So it's a large part of it. And it's quite a long duration book. If you recall, the reserves will peak sometime in the early 2030s. So it is a meaningful part of the required capital. We're making good -- we continue with our strategy, to be honest, which is proving successful. So where we see adverse outcomes, we implement actuarially justified premium rate increases. We are also looking at other options for reducing the burden for policyholders and in an actuarially justified way. So we're implementing the strategy, which has been so far, I think, quite successful. I'm aware and you'll be aware, obviously, that there's been some transactions in the market, which is a positive because that means that counterparties are starting to get comfortable with stand-alone LTC. That's something which, of course, we will -- we do look at and we will continue to look at as we go forward. And we'll assess that as we do any transaction, which is on an economic basis. Your other question was around -- yes, the expense. The good thing is that, obviously -- just to reassure you, the pricing of new business and the returns we earn on new business is something which is kind of fundamental at Aegon and it's something which we spend a huge amount of time on both locally with the U.S. management and at the group. As I mentioned, we believe we're achieving an IRR of around 12%, payback 9 years or so. And it's something which in that market, we actually get a lot of feedback on relatively quickly. So we see policyholder behavior. We see lapses. We see claims relatively quickly, and we got a lot of data, and we're able to adjust on the back of that, which is a big positive, and we do, do that. And then in terms of underwriting, there's no relaxation in our underwriting standards. If anything, we are utilizing also additional information to price the risk which we take on.

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

Thank you, operator. This concludes today's Q&A session. Should you have any remaining questions, please get in touch with 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.

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