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

Good morning, ladies and gentlemen. This is the operator speaking. Welcome to the NN Group's Analyst Conference Call on its First Half Year 2026 results. [Operator Instructions] Before handing this conference call over to Mr. David Knibbe, Chief Executive Officer of NN Group, let me first give the following statement on behalf of the company. Today's comments are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those projected in any forward-looking statement. Such forward-looking statements may include future developments in NN Group's business, expectations for the future financial performance and any other statements not involving a historical fact. Any forward-looking statements speak only as of the date they are made, and NN Group assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason. Furthermore, nothing in today's comments constitutes an offer to sell or a solicitation or an offer to buy any securities. Reference is made to the legal information on the last page of the presentation. Good morning, Mr. Knibbe. Over to you.

Yes. Thank you, Sharon, and good morning, everyone. Thank you for joining our conference call to discuss NN Group's performance of the first half of 2026. I'm excited to be here with you today. And with me are Annemiek van Melick, our Chief Financial Officer; and Wilbert Ouburg, our Chief Risk Officer. I'm starting off with an overview of today's key messages. I'm pleased to present another set of excellent results, reflecting our continued business diversification towards our growth segments, while making tangible progress on our Future Ready program. Operating capital generation reached EUR 1.1 billion, supported by business growth in Europe. This result was achieved against a particularly demanding comparative base, resulting in a 5% year-on-year increase, and this was better than the flat guidance we gave. Our Group solvency ratio strengthened to 224%, increasing due to the exclusion of the banking operations as per the end of June 2026. Consolidating the bank under Solvency II penalized our ratio. With the exclusion of the bank from the ratio, the level playing field is improved. Future Ready continues to deliver tangible results. We are halfway into the program, and it already delivered 65% of our target annual savings of EUR 200 million by the end of 2027. Commercial momentum remains strong. The value of new business increased by 16%, and this was supported by a pension transaction in the Netherlands and by a 14% increase in VNB in Europe. In Europe, the growth was mainly driven by higher sales volumes in risk protection products underpinned by our strong distribution capabilities. This more than offset lower VNB in Japan, where demand shifted towards shorter-term products as new entrants affected the market and moderated sales growth. In Non-life, gross written premium grew by 6%. At Netherlands Life, DC assets under management increased by 13% to EUR 48 billion, supported by higher net inflows and positive market movements. In line with our dividend policy, we increased the interim dividend to EUR 1.55, which represents an increase of 12% versus last year's interim dividend. This builds on our proven track record of consistent delivery on capital returns to our shareholders. We continued to deliver value to our customers, employees and society at large. We are well on track to deliver on our 2028 targets. Let me highlight a few achievements made. We aim for customer satisfaction scores significantly above the market average and rank amongst the top 3 for broker satisfaction by 2028. Customer satisfaction continues to improve with both the Netherlands and European Unions significantly above the market average. Additionally, we reaffirmed our #1 broker satisfaction ranking in the Netherlands. We aim to be an employer of choice where people enjoy to work with a diversified population. Our employee engagement remains consistently strong and above the benchmark. Alongside this, we increased the volume of our investments in climate solutions to EUR 14.3 billion, demonstrating our commitment to supporting the transition to a more sustainable economy. Our H1 '26 results once again demonstrate that our strategy continues to deliver. As a reminder, our investor proposition rests firmly on 3 core pillars. First, we continue to diversify our business mix. Future growth will, for both OCG and free cash flow, primarily come from international and Netherlands Non-life. Together with our banking business, these are targeted to grow over 55% of total OCG by 2028. Secondly, with our Future Ready program, we continue to standardize and automate operations, scale AI and improve efficiency and scalability across the group and at the same time, improve customer experience. As you can see, all the KPIs are well on track. Thirdly, we remain fully committed to deliver on our capital return commitments, a progressive dividend per share and an annual share buyback program of EUR 350 million. As I mentioned before, NN has been building its AI capabilities for years, and that early experience is now becoming increasingly relevant. NN operates in an environment that is particularly well suited to AI adoption. Insurance is a service-based, data-rich industry with complex decision-making, high volumes of customer interaction and extensive use of unstructured data. These characteristics mean create meaningful opportunities for AI to improve productivity, consistency and decision quality. The key challenge is no longer the technology itself. It is how we manage adoption, scale proven solutions, translate AI into tangible business impact. And that is why we launched the Future Ready program in 2024. Through this program, we are simplifying our IT landscape, standardizing data and build more digital and data-driven processes across the group. Our approach is deliberately selective. We prioritize scalable AI initiatives with immediate and visible business benefits. We focus on reusable capabilities and on copying proven use cases across NN. This allows us to benefit from our scale, avoid duplication and accelerate value creation across business units. The financial case is clear and disciplined. We expect to invest EUR 450 million in future-ready initiatives over the program period with an annual benefit building up to EUR 200 million by 2027. Around EUR 180 million of the benefits are expected to come from expense savings with the remainder linked to growth. These investments and benefits are already reflected in our targets, so there's no hidden additional investment requirement. AI yields significant productivity gains, which outweigh the increase in token costs. By the end of June, we had completed 70% of the investment and already delivered 65% of the annual benefits. Last year, at our Capital Markets Day, we showed an example where we applied AI to handle glass repair claims. I'll show you later how we scale agentic claim handling. But let's move first to the commercial performance of Insurance Europe. Our leading businesses in Europe continue to grow impressively, capitalizing on the momentum across the region. In the first half, VNB grew with an impressive 14%, driven by both higher sales and attractive margins, which will translate into OCG over time. What is equally encouraging is that our VNB buildup is in line with our strategy and concentrated on capital-light protection products with attractive margins. Next to protection products, our pension business has also been growing consistently over recent years, fueled partially by strong financial markets across the region. We are a leading provider of Pillar II and Pillar III pensions across Central and Eastern Europe, providing a source of AUM-based fee income, a business model with attractive operational leverage. Our pension assets under management in Europe has been growing rapidly and has reached EUR 50 billion during the first half of '26. It is worth noting that over recent years, our bancassurance channel in Greece has contributed strongly to the VNB growth in Europe due to a successful partnership with Piraeus Bank. This bancassurance agreement is still in place, and we continue to see strong sales in 2026. However, we expect that sales via this channel will substantially be lower as of next year. At the same time, we remain optimistic that other opportunities in Greece will provide alternative sources of growth for the business, such as our tied agent channel, which grew VNB by 30% last year and 25% year-on-year so far in '26. So despite development in Greece, we remain very confident in Europe's underlying growth trajectory and its ability to reach the EUR 600 million OCG in '28. Making our European tied agent channel future-ready is a strategic priority for us, and we see continued progress in this area with 46% of our tied agent sales now coming from digital leads. We are also focusing our large language model visibility. And while it's early days, our initial efforts are proving successful with our average AI overview rank across Insurance Europe improving from the 12th position to the third position between December of '25 and May '26, already ranking as #1 in several markets. As you know, in Japan, we operate in the sizable COLI market with a total market volume of JPY 250 billion at attractive IRRs of around 14%. After the business improvement order, we repositioned our offering towards long-term savings, a segment that has grown significantly in the recent years with a CAGR of 25%. This supported a strong recovery of sales momentum with VNB increasing around 30% in '25 versus '24 on a constant currency basis. In '26, however, we have observed a reemergence of the short-term COLI products with sales in this segment increasing by 20% following new product offerings by new entrants. This has weighed on our sales momentum with VNB decreasing by 5% versus the first half of '25 on a constant currency basis. However, we remain well positioned to regain market share, given our SME focus, which brings important advantages. Firstly, we can utilize all available product approval windows for COLI, allowing us to bring new products to the market more quickly than larger diversified players that prioritize retail products. In addition, our specialized sales force tools and customer service provide deep expertise and excellent support, helping us maintain broad and diversified distribution. As such, we continue to believe we can recapture market share independent of what type of products the market moves to. We managed to optimize capital, solvency and sensitivities under the new capital framework via a landmark reinsurance transaction, which also added significantly to our local equity position and increased fungibility of capital. Netherlands Non-life delivered solid commercial momentum with gross written premium up 6% year-on-year, mainly driven by indexation, but also some volume growth. Profitability was strong as well with a combined ratio of 90.5%, ahead of our 91% to 93% range, despite a severe hailstorm leading also to several big event cancellations late in the period. These adverse weather events were more than offset by strong performance in building insurance and margin improvements in Motor. Last year, we indicated elevated disability incident rates, mainly due to mental health-related issues that affect our Group disability products. Recent data points indicate that a further increase in inflows, which we have reflected in our provisioning. This barely affected our combined ratio, but had some impact on our reported OCG for Non-life. We monitor the situation carefully and we'll continue to prioritize margin over volume. At last year's Capital Markets Day, we introduced our first claim handling process using AI-backed straight-through processing for simple windshield damage. Since then, we have brought in AI-enabled claims and underwriting across most product lines, including property, motor and travel insurance with liability insurance to follow in the second half of this year. For our retail business, the target platform is now fully operational with 35% of retail claims straight-through processed backed by AI. We recently added the NN Bank distribution products to the platform, adding another 15% of claims processed through AI. So we are currently at approximately half of the retail portfolio. In the second half of the year, we will connect the remaining bank distribution partners, which should bring the STP levels close to 100% across the retail business, supporting great efficiency and higher customer satisfaction. This will enable us to deploy our people where they create the most value and where human judgment is most important rather than where automation still has limitations. Moving on to Life. We are the market leader in the Dutch defined contribution market, and that position becomes even more relevant under the new pension framework. Our broker relationships remain a clear strength. We are proud to have again achieved the #1 ranking in broker satisfaction. These independently collected scores matter in a broker-led group pension distribution model, and brokers continue to value our digital services, the quality of our core processes and our strong back-office execution. Our AUM in defined contribution during the first half of '26 grew further to EUR 48 billion. Net inflows were strong at EUR 1.7 billion versus the EUR 1.2 billion in the same period last year, partly supported by a value transfer. With strong customer satisfaction, disciplined pricing and our leading DC platform, we are confident that we can continue the growth trajectory towards our target of EUR 55 billion of AUM by 2028, while maintaining an expected OCG margin of 15 to 20 basis points. Participants will still need to convert accrued pension investments into annuities, making this an attractive high-margin segment with growth strong prospects. Growth inflows into immediate annuities were around EUR 500 million in the first half of 2026 compared with around EUR 400 million in the first half of 2025. This growth was not immediately visible in DC accumulation AUM development over the period as this line item also includes a legacy retail portfolio that runs off. This runoff will be largely completed by 2030. We expect a 10% to 15% annual growth of DC decumulation, mainly driven by the larger DC pension funds, potentially reaching EUR 1.4 billion on an annual basis by 2030. Lastly, our track record on capital return speaks for itself, with over EUR 11 billion of capital returned to shareholders since the IPO. And we remain firmly committed to extending that track record with total capital return to shareholders foreseen to grow over EUR 15 billion by 2028 based on current commitments. In line with our dividend policy, we announced an interim dividend of EUR 1.55 per share, a 12% increase versus last year's interim dividend. And with that, I will hand over to Annemiek.

Thank you, David, and good morning, everyone. Let me begin with our continued financial delivery over the first half of 2026. OCG is up 5% versus an already strong 1H '25, coming in at EUR 1.1 billion with strong [ underlying ] performance, particularly in Europe. Free cash flow is up 7% versus last year, mainly driven by higher remittances from Non-life in Europe, compensating for lower remittances from the bank, which included a much larger Basel IV remittance last year. We remain well on track to achieve our '28 targets on both of these metrics. Our solvency ratio increased to 224%, driven by net capital build and the exclusion of NN Bank from group solvency. Cash capital came in at EUR 1.7 billion, where repayment of the remaining grandfathered RT1 debt in January was largely offset by a strong net cash build over the period. Now let me give you some more details regarding our capital progression. During H1 '26, operating capital generation added EUR 1.1 billion or 13 percentage points to the solvency ratio, which is 4 percentage points higher than the capital flows to shareholders in the form of dividends and share buyback. Market variance decreased the ratio by 5 percentage points, largely driven by widening government bond and mortgage spreads. The bucket Other added 5 percentage points to the ratio. Here, the positive impact from excluding the bank from the Solvency II ratio was partially offset by the transfer of a large pension client from the separate account to the general account and model and assumption changes. We have furthermore mitigated a potential negative impact of the introduction of the ICS framework for solvency in Japan with 2 management actions, one being transitioning Japan to our partial internal model and the other being the reinsurance transaction that David referred to earlier. Overall, this led to a net neutral impact on capital. The solvency ratio of Netherlands Life remained strong at 213%, absorbing the adversities from bucket market variances and the bucket Other, except for the positive from the bank exclusion. Now let's move to OCG. As you can see on Page 13, we managed to grow our OCG by 5% to EUR 1.1 billion, which includes very strong performance from Europe and some nonstructural tailwinds. In the Netherlands Life segment, OCG is flattish, where higher SCR releases partially offset by a lower positive experience variance versus last year. Netherlands Non-life was impacted by adverse weather events that took place late June as well as increased group income claim inflows, which more than offset the strong performance of the P&C portfolio, where we saw growth across the book and improved margins on the motor line. Insurance Europe reported a significant increase in OCG, driven by continued growth in capital-light protection sales and higher fees from pension fund-related assets under management. We believe most of this growth is structural, except for the part of the performance-related fees in the pensions business. As David mentioned earlier, bancassurance sales in Greece were very strong in H1. And given the developments with our distribution partner, we expect these to decrease next year. Next to this, a proposed pension reform in Czechia will likely limit management fees that can be charged over assets under management. Now strong organic growth across other European countries like Poland and Romania is expected to compensate for these developments. And as such, we remain very confident in Europe's underlying growth trajectory and its ability to reach the EUR 600 million target for 2028. In Japan, OCG benefits from the move to our partial internal model and higher interest rates, more than offset -- these more than offset negative exchange rates and lower sales driven by the market dynamics, as just explained by David. David already highlighted the Japanese reinsurance transaction, which reduced lapse risk and sensitivity to interest rates, increased local equity by around EUR 240 million, improving the fungibility of capital and ensuring a sustainable remittance pattern going forward. Since we exclude the bank from our Group's solvency ratio, Group owned funds are only affected by the net remittances coming from the bank. Therefore, from '26 onwards, bank's OCG is set equal to net remittances. The net remittances in 1H '26 from the bank still include a one-off related to the Basel IV windfall last year of a couple of tens of millions. At the full year results, we guided OCG for '26 to be flat with organic growth offsetting the positive one-offs of '25. With these strong H1 results in hand, there is some upside to this guidance, mainly driven by Europe and Non-life. We would expect H2 to be in line with H1 levels with further organic growth and positive seasonality in Non-life, broadly offsetting the positive one-offs and seasonally higher new business at Netherlands Life in H1. A few words on our IFRS results. Operating result was up 4% versus the first half of '25. Since we steer the business based on solvency metrics, I will only concentrate on the drivers that are different from the OCG analysis. Netherlands Life results reflect a lower investment result, which is largely driven by lower dividends from private investments, which can be lumpy and were elevated in H1 last year. Non-life showed an improvement in the combined ratio from 91.2% to 90.5% despite the adverse weather, which also translates into a higher operating result. Japan's operating result was down, largely driven by adverse exchange rates and to a smaller extent, a decline in the in-force book, all largely offset by a more favorable mortality result. NN Group's net result increased to EUR 1.1 billion, mainly driven by the higher operating results and lower below-the-line negatives, where H1 '25 included negative revaluations on derivatives. Future profits under IFRS are largely determined by the CSM level. Our organic CSM grew 2% in the first half of '26, benefiting from organic growth in Europe, Japan and Non-life. Other movements includes the negative impact from higher incident rates in our disability book. Let's move to our cash capital position on Slide 15. Free cash flow came in at EUR 922 million, up 7% versus the same period last year. Free cash flow is lumpy by nature, and therefore, it always makes more sense to look at it from an annual perspective. For the full year, we expect to be broadly in line with the EUR 1.6 billion reported in '25. 2025 includes a large Basel IV related contribution from the bank and some one-off payments within Europe like the special dividends from the Polish pension funds. At the same time, Belgium didn't pay a dividend last year. Therefore, underlying free cash flow does show some growth, and we remain confident in reaching our free cash flow target of more than EUR 1.8 billion in '28. The change in our debt and loans reflects the impact of the untendered grandfathered RT1 notes, which have been redeemed in January '26. Our cash capital ended at EUR 1.7 billion, and we typically build between EUR 300 million to EUR 400 million per annum from free cash flow net of capital return. This provides us with ample flexibility for value-accretive opportunities or to further enhance shareholder returns via small incremental steps in our structural capital return promise as we've demonstrated over the last couple of years. As we indicated earlier this year, we do not expect to refinance the EUR 600 million senior notes that mature in '27. Let me quickly summarize our attractive investor proposition on Slide 16. We're confident to deliver on our '28 targets, which is a testimony of our growth and further diversification. We are on track to deliver our Future Ready program. We have a strong balance sheet that provides optionality, and we continue to extend our excellent track record of remunerating our shareholders. With this, I'll hand over to David for the wrap-up.

Yes. Thank you very much, Annemiek. I don't think I could wrap that up more nicely than you did. So let's open up the call for Q&A. Karen?

[Operator Instructions] And your first question today comes from the line of Cor Kluis from ABN AMRO ODDO BHF.

Congratulations with the figures. First of all, the Solvency II ratio, it's good that you have been able to reduce or remove the bank out of your Solvency II ratio, increasing solvency by 10 percentage points. Could you elaborate on what that would mean on future capital returns and excess capital determination? Is it still the old 200%? Or are you going to rebase the targeted Solvency II ratio for excess capital determinations? That's my first question. Second question is that the Japanese reinsurance deal, which was quite nice that you basically released EUR 240 million in capital. What does that mean for future dividend upstreaming from Japan? Normally EUR 70 million, EUR 80 million, EUR 90 million a year, this is a lot of money, EUR 240 million. Would that really mean a material uptick of free capital generation and dividend upstreaming from Japan? And the last question is about disability. You took [ EUR 1 million ] disability cost basically in total, in the Netherlands last year, I think. For the full year, it was a little bit higher. Could you give the latest view of this market? What adjustments are you taking? Do you still think that the market is attractive, that are the main items? That were my questions.

Yes. Thank you, Cor. Good to hear you as always. Let me start with disability and then Annemiek can cover the reinsurance deal and the Solvency II question. Yes, I think on the VRS, so group disability, we continue to see elevated claims this year. Mental health is obviously accounting for a significant share of that. To put it a bit in perspective, the total Non-life company is around EUR 4.2 billion of premium, EUR 3 billion is property and casualty, about 1/4 is D&A. The group disability book that we're talking about is around EUR 300 million premium or, let's say, 7% of total premium. So it is a small portfolio. However, it is a long-term product, so liabilities are higher. Now as you know, we've already taken management actions last year with sector-specific price increases and more flexible contract terms to enable annual repricing. Now due to the backlog of the government agency, which is clearly an industry problem, I'll come back on that. We've also recently seen even more elevated claims. And these claims are now reflected also in our provisions, and that has some impact on the reporting Non-life OCG. Now obviously, we're closely monitoring the developments. We continue to prioritize margin over volume. As you can imagine, we also have intense discussions with the government on how this -- how will they restructure this system and whether it's sustainable or not. And depending on that, obviously, we will assess at a later stage whether we want to remain active in this market or not. Now I think it is good to note, as I said, the overall book is EUR 4.2 billion of premium. It is very healthy. And in -- but in such a book, there's always pockets that require extra attention. We've seen Motor in the past, individual, some of the individual portfolio. So there will always be pockets of that will require extra attention and group disability certainly is one now. But overall, Non-life is doing very well. They're well on track with the guidance of 91% to 93% with a combined ratio of 90.4% and we're also very confident that we will deliver on the 2028 OCG target of EUR 475 million with a free cash flow conversion of at least 80%. And with that, let me give it to Annemiek on the Solvency II and on the Japanese reinsurance transaction.

On Solvency II and the impact of removing the bank, obviously, we're really happy that we now can remove the bank from the Solvency II ratio. It just creates a better level playing field. So we're happy that, that was the final conclusion. Now on the 200% that we set out there, that's still a relevant number. We didn't really change the capital framework when we had to, at some point, consolidate the bank there. We're not going to change it now either when we take the bank out. And it basically means there is a bit more buffer, right? So it's a good thing there. On the Japanese reinsurance transaction, to give a bit of background there, obviously, with the move to ICS, that would have had -- if we wouldn't have taken any action a roughly mid-single-digit negative impact on the solvency ratio. So we really took 2 actions there. We brought Japan onto our partial internal model, and we did the reinsurance transaction. Now the latter really reduced lapse risk, so it also reduced sensitivity for interest rates. It's a good transaction and an increased local equity, as you pointed out, which is good. That means that there is fungible capital, and that gives us great comfort that we can actually deliver our guidance to grow free cash flow out of Japan in line with OCG. We're a long-term shareholder, long-term investor in that business. We like stable and predictable remittance patterns, similar like we also like a lot of promise to our shareholders. So over time, we would expect free cash flow to increase in line with OCG out of Japan.

Your next question today comes from the line of Farooq Hanif from JPMorgan.

Just 2 questions. So firstly, on Japan, you noted and you commented on the impact from a lower CSM release on Japanese earnings, it was quite material. Just wanted to understand what's going on there and how we should forecast that going forward. But I realize that has no necessarily any kind of impact to OCG. And the second question is around the defined contribution in Netherlands Life. I mean it's been very impressive growth. When you talk about the 15 to 20 bps margin, are you there yet? Or are you building to it? And is there an equal impact also on operating earnings? I know that if you look at the breakdown of IFRS profit, it's still -- the other line is negative. Just wanted to understand how that line will grow and when we'll see the impact of this 15 to 20 bps.

Okay. Thanks, Farooq. It's indeed a bit dodgy, but we could hear you. So that's good. Annemiek, on the CSM release.

Yes. On Japan, it's true, we have seen a lower CSM release there. It's a minus EUR 55 million. It's also in the back of the analyst presentation. And that was really driven by the line other movements. So at the end of '25, we already saw some higher lapse rates. So we have to adjust adjustments there. You then saw that coming through in the other movements, which basically lowers the CSM base. So you also have a bit of a lower release coming in there. Now in H1 this year, we also have other movements there and also related to assumptions on lapse risk, but there is a variety of items in there. It's a bit of a reinsurance transaction. Last year, we also had FX coming in there. If you see that, that means that the CSM release will likely go down a bit further. Now on the total organic CSM contribution from Japan, it also obviously depends on the new business added. So if we recover sales there and if we progress towards improving that business, obviously, that will be a mitigating factor there. So that's how that flows through our CSM business.

Can I just quickly ask on that point before we talk about DC. How quickly you think you can move out of it? When a product available window is available?

Sorry, Farooq, you're not that well hearable.

I will ask Robin, no problem.

Okay. I think the question was on recapturing market share in Japan. Well, I think Farooq, we're going to assume you asked about market share in Japan. And hopefully, that was your question. Yes, I think -- I mean, the -- if you look at what's been happening in the corporate life market, we have seen that since '21, so the last 4, 5 years, the long-term corporate life market has significantly grown. And we repositioned also our business in that direction. You might remember last year, our VNB grew around 30% versus '24 on a constant currency basis, and this was really on the momentum of the long-term COLI product. So in 2026, we saw a reemergence of short-term COLI products and this has weighed down on our sales growth there. VNB is now down 5% versus a much higher level from last year on a constant currency basis. Now as I was saying in the COLI, we remain very well positioned in the corporate life market. I mean if we have a complete SME focus, and it brings us quite a bit of advantages. So we have dedicated products and services there, specialized sales support, customer service. And our time to market is faster because there's a limited amount of product approval windows in Japan, and we can use all these slots for corporate life. So as such, we continue to believe that we can recapture market share independent of how the market is going to move over time. Now it is fair that if the current shift to more short-term products is ultimately more sustainable and aligned also with the regulatory expectations, then we will also adapt our offering, and we will reenter this market. We used to have a leading position in that market, so we can leverage our existing strength and capabilities there. Yes. So overall, we're a long-term investor, and we feel that irrespective of how the market develops, we feel that we're well positioned. And that also means that we remain optimistic that we will achieve our OCG target. Obviously, FX has deteriorated since we set the target. At the same time, interest rates have gone up. So we remain optimistic that we will deliver on our OCG target. And Annemiek already spoke about the free cash flow or the reinsurance transaction. And clearly, that has increased capital fungibility. And therefore, we're also very comfortable that free cash flow can grow in line with OCG. I think on -- you also had a question on DC. Yes, just a couple of comments on DC. So DC indeed has been growing in a very good way. I mean we saw a EUR 1.7 billion net inflow, so above EUR 2 billion gross inflow but net EUR 1.7 billion inflow, which is a record inflow. So we have been increasing and increasing there, helped with markets, we now are at EUR 48 billion. So it means that we're well on track to get to the EUR 55 billion. Margins indeed, in terms of OCG are 15 to 20 basis points. It is a scalable business there. But -- so in long term, there should be some upside to this number. But for now, 15 to 20 basis points is the margin that we focus on. I think there was also a question on the operating results.

Yes. There's a little bit of a question on how do we see these margins from DC feeding through. And I think we always said there that on OCG was roughly EUR 45 million OCG in '25, and we would expect that to gradually grow with the targets that we have for DC, both on the accumulation and decumulation to roughly EUR 90 million of OCG in '28. Now obviously, we don't give any forecast on the operating results. But for the DC accumulation business, that's roughly similar. And then for the decumulation, it works a bit different than OCG versus operating results. So probably good to take that offline with IR later.

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

Firstly, on just M&A, kind of any update on the landscape and particularly interested in maybe talking a little bit about the German MGA, how that's progressing? And also, you removed the bank from solvency ratio. Can you just remind us how integrated the bank is? I remember from CMD, you talked about how the bank app is integrated into kind of the different products and also kind of the cost base and economies of scale around AI investment that you get from having the bank Non-life, Life, altogether. Second question on kind of the autonomous vehicles. I think Netherlands on the 10th of April was the first one to adopt... [Technical Difficulty]

Sorry, Nasib. We lost you after your first question, which was 3 questions, I think, on M&A on the German MGA and the bank. And after that, we lost you.

Okay. Sorry. So yes, the second question was on the Tesla self-service driving in the Netherlands. I think you're going to be the first one in Europe to adopt it. So what does that mean for your business? Are you going to go into kind of commercial insurance? And if I can kind of sneak another one in, it's like full year '27 guidance on OCG. You've given the '26, but given the European comments on recent Czech, what would you expect for full year '27?

Sorry, Nasib, I missed your question on -- you said the first in Europe to adopt what exactly?

The Tesla self-service driving, self-driving.

Okay. All right. Let me start with the first couple of questions. Yes, I think the M&A landscape, not much news to say. I mean, obviously, we continue to be interested in acquisitions, assuming that they are a good strategic fit and they meet our financial criteria. So far, we've always delivered on a double-digit return. We have a strong track record in M&A, which we're very attached to. So if and when an opportunity is there, we will certainly look at it. Reality is also that currently in the market, there's probably more insurance companies interested in buying than selling. So we haven't seen also many cross-border activity, but it is something that we continue to be interested in. But if not, we're also more than fine. I think we have a very good growth trajectory. The CAGRs for OCG growth, excluding M&A, are looking good. Targets are not based on M&A. They're all based on organic growth. So overall, if M&A doesn't come, we're also very comfortable with that. On Germany, yes, so we have about EUR 100 million in Germany now. We distribute this via MGAs, mandated agents. We focus more on building insurance because that's an area of expertise for us and also where we are -- we have a lot of expertise. To be honest, it's not that difficult to grow rapidly, as you know, in P&C, but that's usually -- it's creating problems down the road. So we're looking at a controlled growth, but we're pleased with the progress so far in Germany. Then on your question on the bank, how integrated is it? Yes, it's very integrated. It's -- you shouldn't compare that easily to, for example, NNIT. So the bank, you wouldn't see the bank in the Netherlands. If you're a customer in the Netherlands, all you see is Nationale-Nederlanden. And you will have one app. And whether there are short-term products in there like Internet savings, longer-term products like, for example, bank annuity products, you don't really see endowments or unit-linked anymore. So all third pillar savings actually go via the bank. It's an important market for us. Our pension products or car, motor, it's all integrated into the NN platform and customers don't really notice whether it's a bank or a pension company or the Non-life company. Overall, the bank has about 1 million customers, 25% of the retail customers, and it continues to be, for us, attractive mortgages and like I said, play an important part in also the, let's say, the bank annuity growth market where we have historically around a 20% market share. So yes, so overall, I think on your question on mortgages and AI and scaling, yes, that has some clear advantages. For example, we're rolling out the underwriting mortgages. Mortgages has always been a too complex process to do in a straight-through processing way. But now with AI, we're already reduced the time basically to 1 day to issue a mortgage. And we also said that next year, this should be done in 30 minutes. And with all the documentation, the external checks, 30 minutes is actually pretty quickly. The reason why the bank is doing that quickly is because they have a relatively clean landscape, but also because there's a lot of group experience in AI. So the Future Ready program helps to deploy AI a lot quicker than they otherwise would have been. So that's on the bank. I think on self-driving, yes, that's still a very small market. So there is some self-driving allowed, but the driver is still fully liable. So that hasn't really changed the market. We will closely monitor motor claims on electric vehicles because they're heavier, they can be quite fast. So we monitor closely. But I think overall, the self-drive is still very small. Happy to see, by the way, how the motor book has been developing. Clearly, the trend is downward on the combined ratio after all the measures that we've taken. So that book is, in general, developing in a good way. And then let me give it to Annemiek.

Yes. On your question on OCG, obviously, we just said that we see some upside on the previous guidance of a flattish OCG for '26, which is largely driven by the strong performance -- business performance of Europe and Non-life. And we also flagged that for next year within Europe due to the bancassurance situation in Greece and the Czech pension reform, we would see some headwinds there. And quite frankly, it's just great to see that the underlying profit as we're getting out of Europe now is really giving us a lot of comfort that we can absorb those headwinds for Europe next year, which probably means that for Europe will have a bit of a rebase next year.

We will now go to our next question. And the next question today comes from the line of Andrew Baker from Goldman Sachs.

First one, just on Japan, are you expecting any FSA action on the new short-term savings competition that you're seeing? And I guess just more broadly, can you just remind me the strategic rationale for only participating in COLI products and not looking at a broader product suite in Japan? And then secondly, in Greece, are you able just to give us a sense of how much of your Greece APE is from the bancassurance partner that you're flagging is going to end? And then thirdly, just a very technical point, but why did the disability provisions hit the OCG in the first half of '26, but it didn't hit the OCG last year? Anything there would be helpful.

Yes. Thank you, Andrew. Let me start with the question on FSA and on COLI and some words on Greece and Annemiek can cover the rest. Yes, on FSA, yes, I mean, that's really a good question for the regulator. Obviously, we are monitoring the situation. A lot has happened. Business improvement have happened quite frequently in the Japanese market. So we will -- yes, we will just monitor the situation and see how it will evolve. And like we said, if the market is structurally changing that way, and it's also in line with regulatory expectations from the FSA, then we will also adapt. But currently, we continue to focus on protection products and long-term savings products. Now on why only in corporate life? Yes, corporate life, I mean, it is a market where we insure SME owners. It is a very large market, first of all. I mean, I think we said before, simply that market of insuring SME owners is larger than the full Belgium market has. So it is a significant market. It's quite specialized. It's not that easy to get sales forces, and we work with third-party distribution, so security houses, brokers, Sumitomo banks. It's not that easy to get these channels to actually sell corporate life because they are complex products. There's tax involved. You need to be talking about uncomfortable things like what happens if you become disabled, what happens if you die. So we have a very specialized sales force that focuses on that. I think that's what sets us apart also from the competition and why we've always been at a very high market shares in this market. We've looked many times in retail. So far, we always concluded retail is lower margin, first of all. And second, there's not that much synergy. There's not that much synergy between corporate life and retail. So in terms of operating synergies, it's not that we miss out on a lot by not having a retail business. So those have been the reasons for us to continue to be in the corporate life space, big enough, attractive margins and specialized setup for it. Of course, if opportunities would emerge in retail, then we would take a look at it. I think your question on Greece. Yes. So like we said, we do expect that the sales will come down significantly in Greece after the Piraeus deal in '27. I think we disclosed earlier, we said around 55% of the VNB in Greece is bancassurance. 45%, obviously, is tied agents. Tied agent has been growing significantly, as we talked about, 30% last year, 25% up in the first half. So we will -- so we continue to see good opportunities in Greece. In terms of OCG, I think fair to say that it would have a negative -- has some negative impact on it in '27, but we're still very comfortable to -- that we will achieve our target in '28, taking into account what is happening in Greece as well. Annemiek? Yes.

And I think you also had a question on disability, where we took -- if you look at the additional provisioning that we took for the disability inflows, only a small part actually went through OCG, which was roughly EUR 20 million. Obviously, the rest goes through solvency. Last year, we also had a bit of a hit there a small part on the OCG. However, that was on a full year basis, relatively small and the other moving parts were just more relevant to mention.

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

Fantastic and just like Cor said at the beginning, really well done. I had 2 questions. One is on AI, whether you're tempted to invest more given it's -- it clearly is -- it feels to me like way, way, way ahead of plan. And the second one is, I know you sounded a bit dismissive on deals and stuff. But just could you give us an idea of how big is your war chest? So I can work out, I think, the cash. So we're at EUR 1.7 billion now. You do EUR 300 million to EUR 400 million a year, so maybe EUR 200 million to come in next half year and another EUR 400 million next year. So that gets up to EUR 2.3 billion. You pay EUR 600 million of debt. So we're back to EUR 1.7 billion. And in my mind, I don't think you have a guidance for this anymore, but you've got a minimum of EUR 1 billion, and you'd probably run with slightly lower even. But I don't know the debt side. That's it.

Yes. Thank you, Michael. On AI, tempting to invest more, yes. But the reality is there's also the amount of change that an organization can handle is also not unlimited. We still have -- we're only halfway in the program. So -- but you're right. I mean if you're halfway in the program and you invested 70% and you already have 65% of the benefits, it's clearly -- it's doing well, but we shouldn't also be complacent. I mean we still have quite a bit to prove. So we still have some way to go to the EUR 200 million benefits that we want to achieve. And of course, over time, the question will come after this program, which is by the end of 2027, how will we proceed. But in general, it's fair to say that if you look at the organization, we're scaling now a lot of the AI use cases. We have expanded from claim handling also more into underwriting propositions -- so we do see more opportunities, but we need to see how we deal with that long term. For us, it remains -- the Future Ready program remains a clear area of attention and certainly a possibility also long term where we see more opportunities. Yes, I think on M&A, I mean, we've never given a war chest, but it depends on the target. It's clear that we have financial flexibility. If you look at our leverage ratio and our cash ratio and our solvency ratio, there is some flexibility. But it will depend on the target. We've been very disciplined in both financial and strategic criteria, and you can count on us that we will continue to be very disciplined also on, let's say, on M&A in general. With that, next question, please.

Your final question for today comes from the line of Jason Kalamboussis from ING.

Yes. I had 3 questions. The first one is on Japan. You have approval windows that are around March and around September and October. Can you -- I think that you're very optimistic of getting products approved back in August, September last year. So can you just remind me what -- if you had approvals back in September and October and if you had now approvals for new products in March? And also, looking at the market, I mean, it looks like you are in the long term. The market has shifted to the short term. Is there any chance for you to come back into it? Or you are still a bit held up by the regulator? And do you find that it's worth it if it is a total uneven playing field that is driven by the regulator? The second thing is on Greece. Clearly, all the banking partners are taken. So do you find that a strategy going along with only agents would still deliver you good growth? Or do you find that at the end of the day, it's going to be a decent market, but your focus just will shift in other areas? And also, I didn't understood what would make up for Greece and the Czech pension reform. I think you mentioned Poland and something else. But if you could say which countries and why they will be making up for these 2? And the third question is on the bank. It's good to hear that you remain totally committed to it. So just a couple of things. Mortgages, you said you are down to 1 day to issue one. How does that compare to the market? And also, Annemiek, if I could have the bank is about 10 percentage points positive or thereabouts. Then we get the others that is plus 5%. So if you could give me the elements that are bringing the 10 back to 5%, only 5% in Solvency II ratio, that would be great.

Yes. Thank you, Jason. A lot of questions. Let's start with Japan. They're not set specific windows for product approval. What is limited is the amount of products that you can introduce in a year. It depends a bit on the situation, but 2 is probably roughly the right number. They're not set in specific dates. The regulator has a limited amount of time to approve or not approve these products. But it is, as a company, you cannot go to the regulator with 5, 6 products in a year. So what have we introduced? So we have introduced 2 long-term products, one more of a unit-linked version and one of a traditional one. And we introduced also an improved protection product. So that has been our focus. Yes, we feel that we can compete very well in the corporate life market. Like I already mentioned, let's say, the quality that we have in this business, the focus that we have and what sets us apart versus competition. So we feel we can compete well in this market. And yes, your question on will you also sell these products? If this is a structural change and in line with regulatory expectation, then indeed, we will also adapt. On Greece, yes, this is life of bancassurance. You -- every now and then, you get new partners in. I mean we had some new partner at some point in Czech. You can -- we have a banca new in Spain, but every now and then, you also lose a bancassurance partner. So likely, we will lose or to a large extent, lose Piraeus Bank. But there's more banks in Greece. And I have no doubt that we will continue to see some changes in bank insurance landscape as well. So we have the strongest track record. We have the most successful cooperation with Piraeus by far, we have a good reputation. So we'll see if other banking partners will emerge. But like we said, we're also very pleased to see that the tied agent channel is picking up significantly. And that means that also for '28, as we said, we're well on track to deliver on the OCG. And it clearly means that some of the other countries are compensating for this. Keep in mind that also when we set the target, we already were aware that there could be some changes. In terms of markets, yes, Poland, Romania, there's quite a few markets that actually do well, and they will -- and I guess that's also the advantage of a diversified platform. You always have some that something will happen, others will do a bit better. So like we said, we're very optimistic that we will achieve the EUR 600 million for Europe. Your question on mortgages. Yes, indeed. So the goal is now that we do it in 1 day. It obviously also depends on how well customers have been delivering all the information. It's not just the throughput time. What we also really like is that AI does the analysis. And if it doesn't really fit, it will also automatically suggest what alternatives or what could work for a customer. So I think it adds to speed and creativity as well. Is it unique? Probably not. We know a couple of other ones are -- a couple of the large banks are also working on this. Same with claim handling or underwriting, none of this is unique. But if you do it quicker and faster and you scale it more, it can still be a competitive advantage. But I assume that everybody in the market will be looking at deploying AI. So this is not about that it's unique and we do it. I think our competitive advantage should be that we do it quicker and better and we scale it better across units. And then the last question, I think, was for Annemiek. I almost feel insulted that you think I cannot answer this, but I'll give it to Annemiek then.

There were many questions, Jason. But I think your last question was why is removing the bank from the group solvency at 10%. Why is the bucket other than only up 5%? There are a couple of items in there. Indeed, exclusion of the bank was plus 10%. We also had a pension transfer at NN Life, which is minus 2%. And then we had some model assumption changes, which was a minus 4%. And those include the provisioning for the disability claims and also some small model and assumption changes related to real estate.

Yes. Thank you very much, Jason. And with that, we're also at the end of the line of questioning. So thank you very much for everybody on the call. Thank you for taking the time in the middle of August to have an interesting discussion with us. Obviously, we look forward to continue to engage with you. There's roadshows and conferences coming. So we all look forward to meeting you also in person. And have a great summer.

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