AGESY (AGESY) Q2 2026 Earnings Report, Transcript and Summary

Welcome to this Ageas conference call. I am pleased to present Mr. Hans De Cuyper, Chief Executive Officer; and Mr. Wim Guilliams, Chief Financial Officer. [Operator Instructions] Please note that the conference is being recorded. I would now like to hand over to Mr. Hans De Cuyper and Mr. Wim Guilliams. Gentlemen, please go ahead.

Good morning, ladies and gentlemen. Thank you all for dialing into this conference call and for joining the presentation of Ageas' results over the first half year of 2026. In the first half of the year, Ageas delivered strong growth across both Life and Non-Life with inflows up 17% at constant exchange rate, supported by excellent commercial momentum in Life and the inorganic strategic initiatives we took last year. Before diving into the commercial performance, let me clarify one point on comparability. As usual, growth rates are presented at constant foreign exchange rates. For H1 2026, where relevant, we also refer to figures at constant scope, excluding the additional 2 months of contribution from the extra 25% in AG Insurance following the closing of the transaction in late April as well as the contribution from esure and Saga, which was not included in the half year 2025 results. This provides a like-for-like view of the underlying business performance. At constant scope, the total inflows were up 8% compared to last year. In Life, we continue to see strong commercial momentum with inflows increasing by more than 12% or more than 9% at constant scope across all segments. Belgium delivered another excellent performance with inflows up 28% or 14% at constant scope, supported by successful commercial campaigns in both unit-linked and guaranteed. Europe recorded very strong growth as well of 41% at constant exchange rate, driven by Turkiye and Portugal. In Asia, inflows increased by 4%, supported by the successful jump-start campaign in China, where inflows grew by 3% and by a strong commercial performance in Thailand with growth of 9%. Our emerging markets also continued to deliver attractive growth, particularly in India and the Philippines, where inflows increased by 16% and 9%, respectively. Non-Life also continued to deliver solid growth with inflows up more than 26% or an increase of 6% compared to last year at constant scope. Belgium and Europe both recorded growth of 5% at constant FX and constant scope, supported by pricing actions, portfolio growth and strong momentum across markets. In Asia, inflows remained broadly stable, while our reinsurance business once again demonstrated its strength, delivering strong growth of 28%, driven by new business and the continued diversification of the portfolio. When looking at our results, Ageas delivered a strong net operating result of EUR 776 million in the first half of the year, translating into a return on equity of 15.8%. This performance was driven by excellent Life results across all segments and resilient Non-Life results despite the impact from adverse weather. Life delivered an excellent performance with a net operating result of EUR 629 million, significantly above last year. This was driven by a strong commercial momentum across all segments. The growth in net operating result was driven by a stronger operating insurance service result in Belgium and Europe, complemented by a solid contribution from Asia, further supported by higher investment results. When looking at Non-Life, despite severe weather events in Belgium and Portugal, our Non-Life business delivered a resilient net operating result of EUR 240 million, supported by disciplined underwriting and healthy technical margins. Based on the strong performance delivered in the first half of the year and the continued progress of our strategic transformation, we are raising our full year 2026 net operating result guidance to above EUR 1.95 billion. This updated guidance includes the EUR 450 million of net capital gain and reflects a lower contribution of around EUR 30 million from Malaysia and the sale of our stake in Etiqa. The guidance also includes the assumption of a full year weather impact of around 3 percentage points on the combined ratio. Our operational resilience is equally reflected in our capital generation and cash creation. Operational capital generation remained strong at EUR 1.1 billion, while we now anticipate a cash upstream above EUR 1.4 billion for the full year 2026, significantly above our original guidance of EUR 1.2 billion and 49% higher than last year. This increased guidance reflects a substantially higher upstream from Asia, driven by exceptionally higher dividends from China and Thailand. This strong cash generation provides a strong foundation for shareholders' returns and future growth investments. At the same time, we remain committed to our dividend policy and will pay an interim dividend of EUR 1.5 per share in December. The first half of 2026 once again demonstrated the strength of Ageas. Our diversified exposure across Life and Non-Life, developed and emerging markets and a balanced mix of consolidated businesses and partnerships enables us to remain resilient and continue delivering value through different market cycles. To conclude, let me briefly reflect on the progress we have made so far on Elevate27. Ageas accelerated its data and AI agenda, deploying solutions that enhance customer service and operational efficiency across key markets. Ageas' data and AI agenda focuses on 2 main areas: strengthening the foundations by upgrading data platforms and relying on strong governance for responsible AI to ensure a future-proof architecture that maximizes AI value and capture value from data and AI use cases. Ageas is deploying more than 300 use cases with about 40 identified as shareable and impactful across the group. Of these, 35% target claims and fraud, 20% focus on underwriting, another 20% improve customer experience and the remainder are transversal use cases, among others in IT. Halfway through Elevate27, we have also significantly strengthened Ageas through targeted acquisitions, disciplined portfolio management and consistent operational delivery. From the 25% step-up to full ownership of AG Insurance and expanding our presence in the U.K. through our acquisitions of Saga and esure to unlocking value through the Etiqa transaction while investing in future growth opportunities in China through our stake in Taiping Pension, all these actions illustrate the disciplined way in which we are executing our strategy, creating a more diversified, more scalable and increasingly cash-generative group that is better equipped to deliver sustainable growth and shareholder value over the long term. Before handing over to Wim, let me also briefly touch upon esure. The integration of esure is progressing well with key integration milestones achieved, including a new and integrated management team since 2025. On October 8, at our deep dive event in London, we will provide a comprehensive update on both the integration journey of esure as well as the progress we are making in delivering Elevate27. With that, I will now hand over to Wim, who will take you through our results in more detail.

Thank you, Hans, and good morning, ladies and gentlemen, also from my side. As Hans mentioned, Ageas delivered a strong first half of 2026. The net operating result reached EUR 776 million, up 6% compared to last year despite a significantly higher level of weather-related claims in Belgium and Portugal, amounting to a total weather impact of EUR 180 million. This performance was driven by a strong Life result across all segments, resilient Non-Life earnings and excellent commercial momentum across the group. The Life net operating result was strongly up, plus 17% compared to last year, driven by an excellent insurance result, illustrating the quality of the business in all segments. In Belgium, the Life net operating result was up plus 20% at constant scope, significantly higher than last year, driven by a higher operating insurance service result, further supported by net capital gains, resulting in a Life guaranteed margin of 106 basis points, up 14 basis points compared to last year. In Europe, the Life net operating result was up 33% compared to last year, driven by an excellent performance in both Turkiye and Portugal, thanks to a higher CSM release and a continued solid result on short-term life. In Asia, the Life net operating result increased with 6%, driven by a higher CSM release and a positive development in experience variances. The CSM balance increased from EUR 9.4 billion at year-end '25 to EUR 11.1 billion at the end of June, driven by a strong operating CSM movement corresponding to a growth rate of 3.6% and further supported by the 25% step-up to full ownership of AG Insurance. Looking at the drivers of the Life value of new business, the present value of new business premium showed strong growth, up 15% at constant foreign exchange rate, driven by Belgium, Portugal and China. The group Life new business margin stood at 7.9%. This margin was mainly impacted by the new product mix in China and higher sales of invest products in Belgium. In Belgium, the new business margin is expected to recover towards normal levels by the end of '26. Moving now to Non-Life. The reported group combined ratio stood at 95.2% compared to 92.1% last year. This increase was driven by a significantly higher weather impact, which added around 5 percentage points to the combined ratio compared with around 1 percentage point last year. Excluding weather, the underlying combined ratio remained strong, demonstrating the continued quality of the Non-Life portfolio. Despite a significant higher impact from adverse weather of around EUR 180 million, the Non-Life net operating result remained resilient, amounting to EUR 240 million. The Non-Life net operating result in Belgium stood at EUR 75 million. As mentioned, the result was impacted by severe storms and hail in late May and June, which had an impact of EUR 59 million. Thanks to a well-diversified portfolio, the impact was partly offset. In Europe, the combined ratio increased compared to last year, mainly due to storms in Portugal at the beginning of the year. These weather events added 3.5 percentage points to the combined ratio compared to less than 1 percentage point last year. The weather impact was partially offset by the strong growth in the results in Accident & Health. In Asia, the Non-Life net operating result increased mainly driven by Taiping Re, supported by an improved combined ratio and a stronger investment result. Finally, in reinsurance, the net operating result was also impacted by the severe weather in Belgium and Portugal, as shown in the results from group purchasing and from capital management. The combined ratio of the reinsurance third-party business, on the other hand, stood at a strong 82.1%, supported by strong business growth and favorable claims development. The Non-Life net operating result in reinsurance third-party business increased considerably. This growth was achieved in a softening CAT market, where we remain disciplined while selectively expanding into specialty lines where we see attractive risk return opportunities. Let me now turn to the balance sheet and cash. Regarding the balance sheet evolution, our comprehensive equity increased by EUR 2.2 billion to EUR 19.7 billion. This was supported by the strong earnings contribution and a 25% step-up to full ownership of AG Insurance. Shareholders' equity stood at EUR 10.2 billion. Our cash position stood at a solid EUR 1.2 billion. The decrease compared with year-end '25 mainly reflects our dividend payment and the financing of the acquisition of the remaining 25% stake in AG Insurance, partly offset by higher dividend upstreams from our operating entities. For the full year, cash remittances are expected to amount to more than EUR 1.4 billion, of which more than EUR 1.1 billion has already been received in the first half of 2026. This includes exceptionally high dividends from China and Thailand as well as increased remittances from other segments, highlighting our group's increased ability to convert earnings and capital generation into cash at group level. To conclude, I would like to add a word on solvency and operational capital generation. The Solvency II ratio stood at 195% at the end of June, lower compared to year-end '25. The movement mainly reflects a number of previously flagged items. The closing of the Taiping Pension capital increase with an impact of around minus 3 percentage points, the end of the grandfathering of the FRESH instruments around minus 4 percentage points, the repayment of 2 debt instruments with an impact of minus 3 percentage points and the downgrade of the Belgian sovereign debt with an impact of around minus 8 percentage points. The insurance operations contributed plus 12 percentage points. And it is important to mention that the recently announced sale of our Malaysian activities will add 23 percentage points to the solvency at the moment of closing. The solvency of the non-Solvency II scope companies stood at 230%. This mainly reflects the interest rate environment in China, the capital consumption linked with the strong new business growth and the increased equity exposure. Operational capital generation remained strong at EUR 1.1 billion, in line with last year's strong performance despite the impact from adverse weather. This demonstrates the resilience of the group capital generation capacity and the quality of the underlying operating performance. In the Solvency II scope, operational capital generation proved resilient and increased compared with last year, reaching EUR 558 million despite the weather impact in Belgium and Portugal. In the non-Solvency II scope, operational capital generation stood at EUR 627 million. The operational free capital generation, including both the Solvency II, and non-Solvency II scope, amounted to EUR 484 million, impacted by an increased operational capital consumption in Belgium, Europe and China. I've now reached the end of my presentation, and we are ready to answer any questions you may have.

Ladies and gentlemen, this concludes the introduction, and we now open the call for questions from the analysts. [Operator Instructions] Our first question is coming from Michael Huttner from Berenberg.

My 2 questions or if you like, a lot of questions for China, please, and well done for the extraordinary little Ageas getting bigger. So the first question, a little bit provocative is since you've obviously sold Malaysia, would you ever consider -- the reason I ask for that is I know the cash is good, but the growth is 4% or whatever in premiums. It looks lower than Belgium. I thought Asia was growth, but it really not growth. So I'm really missing something. And I wonder if you could kind of do a little mini deep dive into what's happening in China because it doesn't seem as strong as we'd like, and I don't understand it. Also, I was a little bit surprised was in guaranteed. I thought the growth would be in participating. Anyway, anything on China and well done for the results.

Okay. Thanks, Michael, for your question. On your first point, would you consider selling China? My answer is very short, no. I think we had the opportunity to have a very attractive valuation for Malaysia, where our partner also saw a future of Etiqa more integrated in the bank. And so that's why I think we went into the transaction with Maybank in Malaysia. This is a stand-alone event. So this is not changing our strategy and positioning for Asia. We are a group focus on Europe and Asia, and I absolutely continue to believe into the growth potential of the Asian region. On the growth of China, you're right that the top line growth was lower than in Life this time below Belgium. And I would more -- I would say, congratulate Belgium for that than complaining to China. First of all, if you look, for instance, at the growth of technical liabilities in China, that is still going up with 10%. So this is a young company. So the relationship between new volumes and building up technical liabilities, which at the end of the day is your foundation for the margin and the results, is very different if you compare that between China and Belgium. So in that sense, the portfolio is growing nicely into the Chinese market. What has happened? Well, of course, we have the low interest rate environment, very well known to you, but we've also seen specifically in bancassurance that the regulator is asking for more market discipline by the insurers. There is a very specific circular, Circular 65, that China has issued where you see that they want to better align your real economics on expansion and -- on expenses, sorry, and commissions with the pricing assumptions that you use in pricing your products, which is a move that we -- and you have heard CTIH saying that yesterday as well, it's a move that we support because at the end of the day, that will improve the quality of the business and the quality of the market. And that is something you see happening in China in general. And there is a move from volumes, both in agency and in bancassurance to quality of business activity levels of agents and so on. With that, you know that my view on the future potential of the market has not changed. Aging population is an important topic in China, and I remain confident in the growth potential, both for the market, but definitely also for our business there. Your final comment is participation versus guaranteed, participation is part of guaranteed. So I think you have to combine the two.

The next question is coming from Andrew Baker from Goldman Sachs.

First one, just on the higher cash remittances for the year. I guess you highlight the high dividends from China and Thailand for '26. Were there any one-offs here? Or is it -- are these good levels that we can think about growth, I guess, going forward, so using as a base going forward? And then secondly, can you just help me think a little bit more about the year-on-year development of the operational free capital generation? I know you mentioned higher capital consumption driven by Belgium, Europe and China. But I guess the decline year-on-year is quite high. So are you able to give a bit more detail here? And again, how we should think about the development in the second half and just going forward more generally?

Andrew, I will take the first one, and I will give the second one to our CRO, Christophe. Indeed, we have raised the total upstreaming for the group from the guidance, EUR 1.2 billion in the beginning of the year, to EUR 1.4 billion now. And this EUR 200 million, you can almost fully link to China and Thailand. I think there is one-off effects in there. Clearly, also in China because if you look at the evolution of payout ratio, we see a slow and gradual growth. But that has delivered a lot higher number over the year also because of the tax effect. You know the change in the tax regulation that we have announced with EUR 300 million extra profit at the end of last year. And we see that now coming through also in the dividend. So yes, indeed, there is some one-off effect in this. But we are aligned with the announcement I saw yesterday our partner making at China Taiping Insurance Holdings that they do expect a growing dividend towards the future, but please base that on, I would say, the historic evolution and not on that specific number that we have seen this year. Last for China, you know that we said that earlier. Together with our partner, we always keep the long-term view on solvency. And you know that this long-term view is impacted by the low interest rate environment. And that's also an important guidance for our dividend evolution. And similarly, we saw that increased dividend out of Thailand. I think also in there, there are some one-off effects. Can I give OFCG to Christophe?

Yes. So on the operational free capital generation, well, you can follow it on Slide 20. Of course, we have two elements there. We have the operational capital generation itself. There you see that we go from EUR 1.1 billion to EUR 1.06 billion, so a slight drop. Now, of course, you see that the general account is weighing a bit, but we have, of course, more debt compared to last year. So that weighs a bit there. And you see that the Solvency II scope is actually doing better. So that is helped by Belgium, but also growth in Turkiye, for example. And the non-Solvency II scope is also going down a bit. Even Thailand is doing relatively well in there. It's going up. But the big driver there is China, where you do see a slight drop in the value of new business margins because of indeed the shift to more participating products, more short-term products. So overall, in the operational capital generation, a slight down. So what explains the fact that our operational free capital generation goes down from EUR 713 million to EUR 484 million, so about EUR 230 million, is indeed on the operational capital requirements. And there, you see compared to last year that indeed, on our Solvency II scope, we do lock in quite a lot more capital. Now there are also quite some -- so there are two things in there. There are one-offs in there, which are linked to asset management actions, and there is growth in there. So for Belgium, it's mostly the first one. It's linked to long-term reinvestments in the first half of the year. On Europe, it's more growth. There are some shorter-term penalties and so on. I will not go into detail into that, but it's mainly the increase in the growth that we see over the first half year. Then on the non-Solvency II scope, it is relatively limited increase, but you also have two factors in there. You actually -- if you would do the same basis, we have an increase in our equity allocation in China in the first half year, which we did not have last year. So if you would remove that, actually, you would have a lower operational capital requirement than last year. So all in all, when you put everything together, of course, our operational capital requirements go up more than last year, and that's indeed the main driver of the drop in the operational free capital generation. In terms of going forward, well, I explained a bit the one-offs. It's always difficult to predict that. So usually do not provide guidance going forward on OFCG.

The next question is coming from Nasib Ahmed from UBS.

First one is a broader question around capital management. I'm kind of flipping Michael's question around your free cash flow generation is higher than what you need to return capital to shareholders by dividends. So can you talk about kind of what's your preference on -- for a regular share buyback or dividend upgrade? And then also on the uses of capital, you said you don't want to sell, but in terms of buying more stakes or increasing your participation in some of the stakes, I know Thailand is the second biggest. China, maybe not possible. How much can you increase in Thailand and we talk about Ethias file as well? So that's one. Second is just on U.K. motor. What have you seen in the market over the first half in terms of pricing, where have you been? And then maybe the latest on pricing. Some data points have been pretty positive. What's the latest on the pricing trends there?

All right. Thank you, Nasib. I will take both questions. Well, first of all, in capital management, I would say there is no change in our view. We are running a sustainable growth strategy. So our first preference is if we see good opportunities to further grow our business, we will definitely consider that. If we have excess or less opportunities and growth, by the way, that can be Europe, that can be Belgium, that can also be Asia. Let me be clear on that one. That can also be Asia. And of course, we have that pool of reinsurance, which today is not in demand to significantly increase that capital within the plan Elevate27, but that's something always we can consider. If beyond that, we have excess capital, of course, on the dividend, we know we have a dividend commitment. And that, of course, we will try to and we will honor in the first place. If beyond that, capital remains available and there is low opportunity for investing in growth, then, of course, we do not exclude the option of a share buyback in the future. You also asked about increasing your stake in participations that we have. Also there, no change. We have said that if our partner wherever in the world would like or to diversify our participation, you have seen we have done that many years ago in Turkiye, for instance, where we went from Non-Life also into Life. Then, of course, we are open to explore that opportunity and to widen our partnership. Same if our partnership wants to step up in the market. Of course, that is also something for which we keep some funds available in case these opportunities would arise so that we can also support that because the strategy is clear in the countries where we are, we would have that ambition to become like a top 3 with maybe an exception for China, top 5 type of position. You mentioned China, by the way, let me remind you that we closed the transaction with Taiping Pension in the first half of the year. So there, we recently did an expansion of our partnership into the pension business. And U.K. motor pricing. Well, we have seen the market in motor slightly going up in the first half of the year, that was mid-single digit, 4% to 5%. I can tell you that we did a little bit more, and we went low -- sorry, high single digit, 9% to 10%. But what is also interesting for us is that we have now a more diversified presence in the market towards different distribution channels and different customer groups. And I see that the team in the U.K. can now, I would say, fine-tune the pricing adjustments to balance, I would say, growth where it remains interesting, but also hold back where profitable growth comes under challenge. And so we have, I would say, a little bit more agility and flexibility in doing that. By the way, we have also launched an AI engine on dynamic pricing, and there we also see some first positive effects coming in. So that's what we see. Second half latest data point I saw and that was over summer that it seems to be a slight continuation of the increase in pricing in the U.K. motor. Claims inflation remains high in the U.K. We talk about second -- 5% to 10% continued claims inflation. And honestly, I think the outlook for inflation for me is not overly positive that it would come down in the short term.

The next question is coming from Michele Ballatore from KBW.

I have 1 question about the growth in Belgium, which, of course, was quite strong. I mean, can you give me more color on this growth, both in Life in terms of what drove the demand there? I mean, if it's a byproduct of how the market performed in the first half or something else? And also in terms of the products that you're selling? And in Non-Life, also in Belgium, what kind of -- you mentioned tariff increases and portfolio growth. Maybe if you could give color on these 2 dynamics, where are you increasing tariffs? And what is the growth?

Okay. Thanks, Michele. Indeed, we saw a very strong performance on the Life side in Belgium. The Life side grew 27%, the Non-Life side, 13%. But of course, we have also to look scope on scope because in Belgium, of course, we took 2 more months at 100% in the numbers that you have in front of you. So if we bring Belgium back, we saw a growth of 13%, which is a mix of 14% in Life and 5% in Non-Life. On the Life side, strong performance by bancassurance. And of course, you know we have renewed that bancassurance agreement into a 15-year contract, and we see that there is more effort invested in further building the bancassurance relationship with BNP. So we talk here more about the investment type of products also with a higher proportion of unit-linked than usual. If you look at the fiscal products, they are anyway more focused on the second half of the year. But there is, I think, some continued pressure also by changing in tax regulations, stricter application of the tax deductibility. So that market for the time being is growing less. But of course, we are waiting to see lot of performance there on the second half of the year. The growth in Non-Life is 5%. I would say that is a nice continued growth. You know that almost 2/3 of the products in Non-Life in Belgium have an automatic indexation mechanism embedded taking into account the inflation. There is in the market a slight increase in premium for the CatNat risk that we have seen and also AG has applied a small increase in the property book. So -- but 5%, I would say, is a healthy continued growth for Non-Life. And there is also growth in volumes. And that's also an element. It is not only an element of tariff.

The next question is coming from Farooq Hanif from JPMorgan.

The first question is the comment you made about not sitting on capital. So obviously, you've made a decent gain on the Etiqa transaction. You have a lot of cash post that. How long would you wait? So what is the time frame for deciding whether you will return capital or use it for inorganic growth or growths? So for example, hypothetical situation, let's say you think some file is going to come, for example, in your home care, but it's taking a bit longer than you think. Are you prepared to just wait for that because you'd rather just be ready for when that happens? Or would you rather sort of fund when the time comes and really want to deploy that quickly? So I just want to understand the timing of that really. That's question 1. Question 2 is on the combined ratio, really been supported by strong reserve releases. And this is an area where, I guess, we've not had quite a lot of guidance from you guys. So how much of that reserve release is structural? And how much is you basically being able to offset some of the nat cat that you saw in 1H? Can you give us some guidance on that? And what -- are we still on a path to 92% basically?

Farooq, I will take the first question. Second question, I give to Wim, who is very close to the reserve. We closed the first half year with a cash position between EUR 1 billion and EUR 1.1 billion. A similar amount is expected to come in at the closing of the transaction in Malaysia. So we can assume that EUR 2 billion to EUR 2.1 billion is probably a good reference for the evolution of the cash position. Your second part of the question is a lot more difficult. How quickly? Well, first of all, first things first, let's close the Malaysia transaction before we can really think about how to deploy. Of course, there is a bit of noise of M&A also in our home market, Belgium, there is an opportunity. We have expressed our interest in that opportunity. But it's very hard to read today what the timing of this will be, so I can absolutely not comment. But I think you have enough confidence, I think, in how we manage the balance sheet and the cash position and the M&A opportunities. So if we truly believe we have excess capital for the longer run, we will consider that share buyback. But it is very, very hard today to put a timing on that one. Reserving?

Your question on reserving, as you know, we are very disciplined in how we set reserves. Our confidence interval is 75%, but you know that's a confidence interval on top of a best estimate. And our best estimate is not a point estimate. It's a bit of range. So you have a bit of reflections on where you put yourselves in the range. And there we are very disciplined in how we put ourselves in the range. What you've seen happening over the first half of the year is the normal evolutions of the claims. And you see that we had a higher reserve release in Belgium, 3% compared to 2% last year and also a higher reserve release in Europe. Now you may have seen similar trends with some of the peers who communicated in the U.K. market. Also there, the prior year development has been strong. So that's a bit supporting, of course, the evolution of the reserve release as such. And of course, there is a bit of a link between how you look at the range of your best estimates and what you see in weather. And so that's the way you a bit look at it going forward. Now we've never given explicit guidance on that prior year development and how that will contribute. You should know H1 is always higher than H2. It's just a mechanical effect of a prior year release because you still have the claims of the end of last year running through and that becomes a prior year release. Now if you want to have a bit of an estimate, I would give more an indication of 2% going forward, higher in the first half of the year, lower in the second half of the year. But you have also seen a bit of lower numbers in the previous years. Now on your reference point, path to 92%. Now the fact that we stay very disciplined in the reserving is that we also stay very disciplined in what we see happening across the globe and then especially what's happening in the Strait and what that could have as an impact on the inflation. And where we are mostly monitoring that is, of course, the impact on the U.K. market, where you know that inflation has the most direct impact in our market in Belgium and Portugal, that's more spread over time and can be better absorbed in the pricing. Now we've done some scenario analysis on how long we think that this is happening, and we put ourselves at the high amount of that scenario analysis. So if you would take that out, I can confirm that we are more in that 92% range. So that is on track with the path to the 92%.

The next question is coming from Jason Kalamboussis from ING.

I had a few questions. The first one is in Portugal. According to the news, you would be ready to take a stake to defend the bancassurance partnership. So could you remind us when it ends and the financial rationale for locking something like whatever EUR 0.5 billion to EUR 1 billion of capital to defend such a bancassurance deal and to what is the kind of length that you are looking, the duration? The second part are kind of small questions. In China solvency comprehensive solvency, what's the third quarter outlook they give because difficult always to find. See to -- the sensitivities in equities haven't exactly worked. So it would be interesting to understand why -- and finally, you have 3% nat cat in the guidance. Now this is high for the second half because in the first half with pretty bad nat cat, we had 3.5%. So you assume nearly the same or a bit less for the second half. Does that give you a bit of margin to beat your own guidance?

Okay. Thank you, Jason. First one for me, the second one for Christophe. On Portugal, indeed, we have that successful bancassurance partnership with BCP. Maybe let me start by referring to the numbers that we have seen the Life business in Portugal growing just below 50%, 48%, 49% in the first half of the year. So I can tell you that the bancassurance business is functioning very well with our partner in Portugal. Indeed, there has been some noise in the media about stake that Fosun is holding into BCP. I've also said that together with you and I've also seen that the CEO of BCP has commented that they prepare for a potential scenario of divesting by Fosun. Look, that's all that I can comment on this. But of course, it is a relationship which is very close and very important for us. Bancassurance agreement we are having now is still running a few more years. Christophe, on Solvency?

Your question was why does the equity sensitivity does not work? It has to do with the size of the shock. So, there is a mechanic in your equity that is in your equity SCR that they call the symmetric adjustment. So that means if markets are very high, our capital charge for equity is actually higher than if markets were quite low. So that means if you do a big shock like 25%, this can go outside of the boundaries because it ranges from a plus to minus 10% on top of a base shock. So if you, for example, take European equities, the base shock under the standard formula will be 39%. It can basically be 10% higher or 10% lower in terms of capital requirements, depending if the markets at that moment are high or low. So that means if you do a big shock on 25%, you go beyond those boundaries. If you do a smaller shock, it behaves differently. So that's the reason that it's indeed difficult to use a big shock like 25% on, let's say, if you have a smaller movement during a quarter.

Okay. I will add a few comments on the weather. Maybe good to remind a few of the key numbers. So we had a significant weather impact. That's EUR 180 million impact on the net operating result. If you look at that weather impact, that's an impact of almost 5 percentage points on the combined ratio. So in the combined ratio that we published, we have 5 percentage points. In the guidance we did for the full year, we're referring to a guidance of 3% impact on the total combined ratio. That's for the full year impact, which means that in the second half of the year, we're expecting an impact of 1 percentage point. Now this 1 percentage point is aligned with the impact of weather that we had over the last 2 years. Now you may remember when it was 1%, I said be a bit careful. A normal through the cycle level is more 2%. So now this year, we've taken in the guidance more that we are on the upper end of that guidance going to the 3%. So that's a bit to clarify the numbers because you mentioned the 3.5 percentage point. The 3.5 percentage point is the weather impact in Europe only in the segment Europe. The numbers I'm referring to are the one at the total level at group level. So we're taking that analysis at group level.

And finally, just the comprehensive solvency in China, what's the outlook they give for third quarter?

Solvency ratio. I think the outlook for TPL is 205%.

The next question is coming from Benoit Petrarque from Kepler Cheuvreux.

So a few questions on my side. First of all, on the U.K. remittances, it's up a bit in H1. I was wondering where you stand on Solvency II ratio and also versus your commitment to start to remit from esure in '28, whether you see that happening a bit upfront than expected also in '27 potentially. And on the remittance number above the EUR 1.4 billion for this year, if you clean for China and Thailand, could you strip out, say, EUR 175 million to get to a clean number for -- yes, for the future clean base for [indiscernible] and just finally on Ethias. I think there have been quite a number of political comments during this summer. What is your base case today? Do you think you could get a chance to get a deal by year-end? Or do you have a stronger conviction that, that will happen in '27?

Thank you, Benoit, for your questions. First of all, on U.K., we do not give solvency ratios by the specific entities. But what I can tell you is what we said at the beginning of the transaction that it will become accretive as of 2028 and that until then, the esure contribution, which we expect a normal evolution, and that's also what we see that, that would be consumed by the integration cost and also, of course, the higher cost of debt. And that is exactly what we have seen happening in the first half of the year. So we are on schedule in this respect. But we will, as I said, come to you with a more deep dive on the U.K. business and the integration specifically at the beginning of October. So I hope to welcome you there. On the EUR 1.4 billion coming with excessive -- or excess solvency -- sorry, excess upstreaming from China and Thailand, I think you're right, EUR 175 million is probably a fair estimate for the two combined on the exceptional element in the upstreaming of solvency. Third, your question on Ethias, again, we cannot comment a lot on M&A opportunities. What I can tell you is that our view on the opportunity of Ethias has not changed. So in that sense, timing, I would say, has by no means become more clear. And if you follow a little bit the political environment about both files, the potential partial divestment by the government of Belfius and then the potential yes or no link on Ethias, you can imagine that at the moment, it is a very complex situation and complex decision. You gave two options there. Would it happen in '26 or '27? There is maybe a third option that it might even happen later or never.

Ladies and gentlemen, I would like to return the conference call back to the speakers for any closing remarks.

Okay. Thank you, ladies and gentlemen, for your questions. To end this call, let me summarize the main conclusions. Next to our strong top line growth, our operations also delivered an improved profitability despite the impact from significant adverse weather, a clear reflection of the resilience of our insurance business. In 2026, we expect to reach a net operating result above EUR 1.95 billion, including the contribution of the sale of our stake in Malaysia and assuming around 3% full year weather impact on the combined ratio. In 2026, we expect to receive above EUR 1.4 billion cash upstream from our insurance entities, which is an increase of 49% compared to last year. In line with our dividend commitment, an interim cash dividend of EUR 1.5 per share will be paid in December this year. With these closing remarks, I would like to bring this call to an end. If you should have outstanding questions, don't hesitate to contact our IR team. Thank you for your time, and I wish you a very nice day.

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