Chesnara Stock

Welcome to the Cheznara Half year 2026 Results Presentation. I'm Steve Murray, Group Chief Executive; and with me is Tom Howard, our Group CFO. So what will we cover today? I'll begin with a short overview of what's been delivered in the period. Tom will then step through the financials in more detail, which now include CheznaraLife, formerly known as HSBC Life U.K. for the first time under our ownership.

I'll then finish with some further detail of what's been delivered in 2026 and what to expect going forward. We'll have plenty of time for questions at the end of our presentation, starting with the people here with us in RBC's London offices. And for those joining online, you can type your questions into the Q&A function via your browsers.

The group has delivered another very strong set of financial results over the first half of 2026, including a substantial increase in the group's operating capital generation. Tom will run through these financial results in more detail shortly, including an overview of where our H1 position is relative to the full year 2025 pro forma estimates that we shared in March.

Our focused 3-pillar strategy set out on this slide has continued to serve the group well. We completed the acquisition of HSBC Life U.K. in January, which is now rebranded as Ceznara Life U.K. And we've been delighted with the early performance of the business under our ownership with GBP51 million of operating capital generation and $20 million of cash remittances already delivered.

The next phase of integration and migration activity has been continuing at pace with the migration of data from HSBC on track for delivery by the end of 2026. The U.K. business has also completed the migration and associated Part VII of the second Canada Life portfolio we acquired with these policies now running on our new U.K. platform. This is the fifth successfully completed migration in recent years.

We announced the proposed acquisition of Scottish Widows Europe in February this year and have completed a significant amount of the preparation required for the expected change of control around the end of 2026. We've continued to proactively evaluate and execute management actions in the period. And we've also taken further steps to integrate teams and processes across our Dutch business following the merger of our Dutch entities last year. This has helped support Skilldin's largest ever cash remittance.

And the addition of Cheznara Life U.K. to the group has materially increased the contribution from new business in the first half of the year. Movestic has also added around $700 million of assets under administration and expanded its distribution reach, including a new partnership in Norway. The best track record of continuous dividend growth in U.K. and European insurance continues. As previously highlighted to investors, we're announcing a 6% increase in the interim 2026 dividend up to 8.16p per share. This represents a one-off acceleration of the group's historic dividend growth trajectory and follows the 6% increase to the full year 2025 dividend that we announced in March.

So let me hand over to Tom, who will take us through the financial results in more detail.

Thanks, Steve, and good morning, everyone.

So I'm delighted to be reporting a set of very strong results for the first half of 2026. Today's results for the first time incorporated CheznaraLife following completion of the acquisition in January. Operating capital generation increased significantly by 79% to $96 million, and cash remittances increased by 31% to $73 million. The results reflected robust operating performance from each of our business units, incremental value from Casanare Life and a contribution from capital optimization actions.

Own funds increased by 14% to $976 million and the Solvency II coverage ratio of 185% is comfortably above the upper end of our operating range. And this is also above the pro forma guidance of 180% that we provided to you at the full year. And our sources of future value continue to go from strength to strength. Assets under administration increased to $21 billion, and adjusted operating profits grew by 46% to $31 million. The IFRS balance sheet also grew with the contractual service margin increasing significantly from GBP 131 million to $327 million, reflecting the integration of the Tesaro Life book.

This significantly increases the stock of future insurance profits available to the group. And this very strong performance underpins today's announcement of a 6% increase in the interim dividend to 8.16p per share. So as I mentioned a moment ago, we're reporting a significant increase in the group's OCG results today. OCG of $33 million arose from robust operating performance across our business units, broadly in line with the prior year results of $32 million.

Performance benefited from stronger new business results and our ongoing focus on cost control, with partial offsets from adverse mortality experience in the Netherlands in Q1 and adverse persistency experience in Sweden. Our ongoing program of capital optimization actions delivered a further $12 million in benefits through the extension of existing foreign exchange hedging arrangements at group center. And as I liked at our full year results, we expect that ongoing capital optimization actions will be a recurring source of OCG for the group, and they will, on average, comprise around 30% of the annual OCG results.

Finally, the acquisition of the Casanare Life book generated significant additional capital benefits for the group. These benefits arose as we embedded the Cesar Life risk profile into our existing U.K. reinsurance arrangements and into the group's solvency capital framework. These impacts are nonrecurring in nature and increase the group's OCG by a further GBP51 million. And we continue to have a strong pipeline of capital management actions to support the 5-year and the lifetime cash flow guidance we provided to you at the time of the acquisition.

Turning to the balance sheet. Over the half year, OCG contributed 73 percentage points to the group's solvency coverage ratio. Nonoperating capital items provided a further 5 percentage point benefit with positive investment variances from favorable markets, more than offsetting the impact of integration and restructuring costs over the period. After allowing for the completion of the Casanare Life acquisition, the group's solvency coverage ratio of 185%, is higher than the pro forma guidance of 180% that we provided to you at our full year '25 results. And it also remains significantly above the upper end of our operating range of 140% to 160%. And as a result, we retain headroom to support M&A and other growth opportunities.

And we also expect the solvency coverage ratio to remain above the upper end of this range after allowing for the impact of the Scottish Manos Europe acquisition, subject, of course, to market conditions and any other significant developments through the second half of this year. The groups on funds increased by 14% to GBP 976 million. As I referenced earlier, operating performance was robust and broadly in line with the prior year. Favorable market conditions supported growth in the value of the group's assets under administration, positively contributing to the nonoperating results. And the most significant component of the owned funds growth arose from the Casanare Life acquisition, with group owned funds increasing by GBP 79 million on day 1.

And we expect owned funds growth to emerge for further synergies as the integration and migration activities continue, and we'll provide further details on our progress at our year-end results. Group central liquidity stands at GBP 271 million after relying for the funding of the Cesar Life acquisition earlier this year. Over the half, group center balances benefited from higher levels of cash remittance on the business unit center. Total remittances increased by 31% to GBP 73 million. including GBP 30 million from the Netherlands driven in part by merger synergies and GBP 20 million from JaznaraLife.. Moving next to IFRS. The IFRS capital base grew significantly by 22% to GBP 850 million.

Adjusted operating profit increased by 41% to $31 million, reflecting robust operating performance across our business units. Favorable market conditions also support that the investment results, further improving the IFRS profit before tax after relying for the impact of integration and restructuring costs. Tax charges were higher in the period but this increase was driven solely by higher policyholder tax relating to investment gains on U.K. bond policies. These charges are deducted by Cesar at source on behalf of our customers, so the net impact to our P&L is broadly ill. Finally and importantly, the group's contractual service margin increased significantly from GBP 131 million at full year $25 million to GBP 327 million of the half year. This increase was primarily driven by the inclusion of the Ceara Life book, where the CSM recognized on acquisition was higher than that assumed in our pro forma estimates.

This represents a significant increase to the stock of future profits we expect emerge from the group's insurance business. So in summary, this has been a period of very strong financial performance for Canara -- today's results show growth across all areas of our financial framework and exceed the pro forma guidance that we provided at full year '25. Our sources of future value go from strength to strength, and we have multiple levers at our disposal further optimize the capital base and to deliver strongly against the guidance that we provided to you at the time of the Casanare Life acquisition. And finally, the balance sheet remains strong and resilient, and we retain capacity to invest for further growth. This all bodes well for strong, sustained financial performance into the longer term. So thank you all. And with that, I'll pass back to Steve.

Thanks, Tom. The strategic focus we've had over the last few years has continued into 2026. At our full year 2025 results presentation, I underline the importance of ensuring we deliver the migration and integration of Chesnara Life U.K. well alongside the work required to support the anticipated change of control of Scottish Widows Europe. And I'm pleased to report that we continue to make great progress on both fronts, which I'll cover in slightly more detail shortly. Together, Canara Life U.K. and Scottish Widows Europe are expected to contribute around GBP 1 billion of future lifetime cash flows to the group. Tom highlighted earlier, a number of the actions we've already taken this year to optimize the group's balance sheet further, including Intesa Life. And across the group, we continue to have a very full pipeline of actions at our disposal through into the NIM term.

We've also been progressing the next phase of restructuring of our Dutch business where run rate synergies delivered are above our initial estimates, and we expect the remaining anticipated cost savings to come through in the second half of the year. We continue to see a positive M&A pipeline and have already had a number of interesting opportunities to assess and evaluate so far this year. The addition of Canara Life has materially increased the contribution from new business to GBP 12 million. Movestic have continued to see positive net client cash flows into their unit-linked and risk offerings and skilled in has also delivered robust term life sales. Whilst we continue to anticipate the vast majority of our growth will come from M&A, we expect the value for new business for the full year 2026 and to be around double that of the previous year, a useful additional value generator for the group.

And finally, the work we're doing to become a more sustainable Canara has also been progressing well. We've continued to reduce emissions from our investment portfolios, along with more proactive investment in more sustainable solutions. I wanted to give a further update on where we are in the integration of Chesnara Life U.K. and the change in control process for Scottish Widows Europe. On ChesNara Life, assets under administration and own funds remain ahead of the estimated pro forma year 2025 numbers that we shared with investors in March. We were able to take certain planned balance sheet actions in H1, which helped support GBP 51 million of OCG and GBP 20 million of cash remittances from the business.

We remain firmly on track to deliver the GBP 140 million of cash generation we guided investors to expect in the first 5 years of our ownership. So whilst we only completed the acquisition 5 months ago, we're really pleased with the performance delivered so far. Jackie Ronson, our U.K. CEO and her team have continued to make great progress on our Cesar Life integration and migration program of activity. We've completed the staff consultation required in order for us to take the next steps towards implementing our new U.K. target operating model. We've confirmed who the role holders will be in our combined U.K. leadership team and also completed the first planned to be transfer of staff to SS&C.

We remain firmly on track to complete the required data migration from HSBC by the end of 2026. Tom and a separate team working on Scottish Widows Europe have continued to push ahead with the work to deliver change in control and deal completion as well as the planning required for the businesses separation from Lloyds Banking Group. The change of control application has been submitted, and we're progressing through regulatory review with the CAA. Legal completion readiness testing with Lloyds has also been successfully completed with a large number of completion planning activities also substantially progressed.

We continue to anticipate change control approval around the end of 2026. The financial framework on the left-hand side of this slide will be familiar to a large number of our investors. It has served us well and continues to form a core part of our deal assessment criteria. And as Thomas highlighted in his presentation, we have material solvency headroom above our target operating range. Our leverage is substantially below the long-term target of 30%, and we have material liquid resources at and we retained significant readily available firepower with a successful track record of financing more material transactions.

We continue to see a positive M&A market and pipeline that provides great opportunities to build on our track record of strong deal execution. And in the period, we've already had the chance to work actively on a number of opportunities, both in Europe and the U.K. The 8 deals executed over the last 5 years has provided additional confidence to potential sellers that Jasna as a company they can trust to get deals done. So we delivered a very strong set of financial results, supporting a 6% increase in the interim 2026 dividend. We completed the largest acquisition in our history in January, with the migration of data from HSBC remaining on track for delivery by the end of 2026.

We've continued to proactively seek out and execute management actions to optimize the group's balance sheet and resources which have contributed materially to the group's operating capital generation. We continue to anticipate changing control for Scottish Widows Europe around the end of 2026. Our M&A pipeline has remained positive, and we're continuing to actively assess acquisition opportunities. I want to thank colleagues across the group for their continued driving commitment which has delivered a very strong financial performance. The group is in a strong position with further opportunities to grow. And I continue to believe there's a lot to look forward to here at Cara.

So that ends our presentation. We'll turn now to questions.

Thank you. We've had a number of questions presubmitted and submitted live. [Operator Instructions] Our first question is OCG in the first half is a huge increase. How much of this is sustainable going forward? And what should we expect for the full year?

Afternoon, everyone. I think that's a question for Tom Howard, our CFO. So over to Tom.

Thanks, Steve. Thanks for the question. Yes, so in the presentation, you'll notice that in the presentation of the OCG number, -- we split it into 3 components. So I'll start with the nonrecurring components of GBP 51 million of that results related to one-off acquisition benefits. So that should be regarded as a one-off benefit from the implementation, the integration of the Casanare Life book. The remainder comprised 2 areas. So the first is recurring OCG. So that is very much sustainable, repeatable OCG that we expect from our business units. So that totaled GBP 33 million. So that will recur at a reasonably similar level for the rest of the year, and we anticipate it will actually increase as we move forward.

The second components were management actions. And -- when we were here at full year '25, I think one of the things I talked about was the fact that management actions on recurring management actions were going to be a feature of our results going forward. to be quite specific about it, we expect actually about 30% of our OCG results in any given year to be made up of management actions. So if you take the GBP 33 million recurring you can assume that, that will recur into future. If you take that GBP 12 million of management actions, you can assume that, that will also recur. And then if you look at any given year, the makeup of the results will be about 70% on that recurring bucket and about 30% from those management actions.

And I guess, to put that into numbers in terms of how we're thinking about 2026, how that broadly breaks out is you can take the 33, implies about a mid-60s to high 60s outturn for our recurring OCG and the remainder management actions will be in and around 30%, which is that 30% of the total results. to give about 100 before the one-off contribution of GBP 51 million from the Casanare Life acquisition.

Thank you. Could the increasing scale of Phoenix and other consolidators make it harder for Cessna to win the larger transactions?

So we actually see, overall, the competitive environment being far less strong than it was around sort of 5 years ago when I joined the firm in that sort of M&A space. I think you're right to point to the deal that Phoenix now rebranded as Standard Life that for me is an interesting sort of journey back in time with somebody that worked as Standard Life for 15 years and then saw the brand or a moment disappear for a while. But that's sort of a large deal that they've done recently with Aegon U.K. for around GBP 2 billion of consideration probably means actually that there's even less likelihood that they would be looking at deals in our sort of space, which would be that sort of sub-billion level.

When we look at the broader sort of market environment, one of the things when I joined Chesnara 5 years ago that had some concern around was perhaps that private equity firms might look more closely at our space. You saw Bank Capital bidding for Liverpool Victoria a number of years ago and paying a sort of premium to own funds, we haven't really seen that appetite come through in our part of the life insurance space, where we have seen private capital providers get involved is more in the bulk purchase annuity space with just group being acquired, for example, by Brookfield and also Apollo buying PIC for a large check of over GBP 5 billion.

So when we look at that competitive environment, we think it's one that we can thrive in. We've shown that over the last 5 years with 8 deals executed, and we're continuing to see a positive M&A pipeline when we sort of sit here in 2026. And that's across the deal value scale. We're seeing some interesting smaller acquisitions, but some larger ones as well. And we've already had the opportunity to assess and evaluate a number of opportunities so far this year. So overall, we see a positive picture in that space.

Thank you, Steve. And how much of the HSBC deals expected synergies have actually been delivered so far?

So let me start just to where we are on the time line and Tom can then talk about sort of what's flowed through into the numbers so far, just to sort of remind you about some of the key milestones. So we announced the deal in July last year. We had regulatory approval in January. And then what we've been doing since have been taking the further steps ultimately leading up to the migration of data that we'll need to do from HSBC systems onto our target U.K. platform -- and this morning when we spoke to analysts and investors, and as you heard in my presentation, we remain on track to do that migration by the end of 2026.

There will always be some other activity around that. But at that point, you'll see the business very largely move on to sort of one operating platform, one target operating model. We have already combined our leadership teams who are now running the business as the 2 sort of legal entities across 1 leadership team. We've started transferring some people to SS&C. So we're sort of well on track with the integration and migration activity that we need to deliver.

Tom, do you just want to get a sense of then how that flows through to some of our metrics and when people might see that.

6 Yes. I mean there are really 3 types of synergies that we expect to generate from the deal and first, we have already seen come through the numbers. So the first or what I would call structural synergies or day 1 synergies from bringing the Cesar Life portfolio in the note Casaro Group portfolio, sorry. And they're almost -- I think I described them earlier sort of almost structural and automatic synergies we get from combining the risks on the balance sheet. So they contributed a large part of the GBP 51 million that we've reported and recognized within the half year.

There are to further sources of synergies, which are yet to come. So one related to expenses. So once we work through the migration phase, once we have the business on our new administration platform, we expect to recognize the synergistic benefits from moving to that lower cost base. So that is yet to come. And then secondly, on capital optimization, there are further opportunities for us to optimize both the asset side and the liability side of the balance sheet that we've brought in. And again, we haven't done that in any -- to any great extent over the first half of this year. So they are yet to come.

I think in terms of quantum, we're not issuing any guidance right now around the potential level of both of those synergy sources. But as I think we said earlier, would be coming back at full year '26. Just giving you a little bit more color around those 2 areas.

Great. The next question the proposed cut is Widows Europe acquisition looks interesting. What is the expected contribution to OCG was fully integrated?

So I'll maybe start with strategy and then Tom, you can give a center of OCG. So we think it's an interesting deal as well. We're glad that you do. I think it gives us some very interesting strategic opportunities. We see further opportunities in Luxembourg with the sort of tailored businesses there that that we may be able to consolidate, and it also gives us an operating platform and team that potentially can also operate in broader jurisdictions.

When Tom and I have been sort of out visiting the business in this period where we're going through in preparation for change of control. We have some sort of vast language skills in that business. There's over 20 languages spoken across a team of around 40 to 45 people, which could then mean that we can operate in adjacent territories. At the time of the deal, just to remind you, we gave a couple of numbers as guidance. Now these were on a cash generation basis versus some of the new metrics we have around operating capital generation, but we talked about overall, around GBP 150 million of lifetime cash generation from the business with about EUR 100 million sort of emerging over the first 5 years. we obviously don't own that business yet.

So there's sort of no update to -- so how those cash generation numbers will be delivered but we're looking forward, subject to that regulatory approval, hopefully, to welcome that business in sort of in and around the end of 2026. I don't know, Tom, do you want to make any comment around how cash generation plays to OCG.

Yes. I mean sort of hopefully answered most of my questions which is great. No, I was going to actually go back to that the guidance we issued when we made the announcement back in February. So we talked about that EUR 100 million of cash generation. It's not quite the same as OCG, but it's a fairly close proxy. So really, in terms of thinking about the incremental OCG, it will be you should take the GBP 100 million. It won't emerge evenly over the 5 years because we tend to make choices about when we take certain actions depending on market cycle, et cetera. So it's not going to be quite divided by -- but over that 5 years, the OCG contribution in euro terms won't be far off that GBP 100 million that we issued as guidance.

Clearly, as Steve said, we're working through the completion process now. And really until we move to that full completion is a level of not uncertainty, but there will be a level of refinement around those projections and those cash flows. And again, we will sum to the update on the Jazan Life acquisition. We'll provide a further update on that cash flow outlook and the OCG uptick we expect from that deal as we close out that completion process with the regulator.

The next question is for Steve. I know the consistent optimism in your ability to acquire businesses. However, are you yet to acquire a business in Sweden and it is over 4 years since the business was acquired in the Netherlands. Why have you failed to acquire in these markets?

Yes. It's a little less than 4 years since we acquired a business in the Netherlands. So -- the last deal that we did in that market was a deal called consevArterics where we picked up an insurance portfolio there. But you're right to say that we haven't done a deal in the last couple of years in the Netherlands. In terms of the performance in the Netherlands, we've seen another period of robust term life sales, and we've seen an improvement actually in recent years in the margin that we're getting from that business as a result of some of the restructuring that we've been taking on in our Dutch business, where we brought the 2 insurance carriers that we used to have together to drive synergies.

And what we've seen this year as well is the largest ever sort of cash remittance from that business since we began ownership, having bought it from LNG almost 10 years ago. So I think there's some very sort of positive signs again around some of the activity that the local team have been driving there. We still see the opportunity for acquisitions in the Netherlands. It's also a platform that could allow us to do -- take some actions on in terms of M&A in adjacent territories. There can be times when there's a little bit less to do. And also, there'll be some deals that we just don't think makes sense.

In Sweden, I've talked probably for the last 12 months or so about at least a sort of a couple of assets in that market that we expect potentially to have to consider over the next couple of years. But it is a less active market. We've seen a couple of risk portfolios transacting sort of in that broader Nordics market over the last 6 months, but it's certainly safe to say that it's less active than U.K. Again, if we look at the Swedish performance, we've been very pleased with the net client cash flows that have been coming in the business, around GBP 700 million additional assets under administration now for that business over the over the period, be some good cost management.

And we certainly have a platform there that would be ready for consolidation. But you're right to say that the bulk of the activity more recently has been in the U.K. and obviously, the entry into Luxembourg. We think that's one of the benefits of the model that we have that actually we have these multiple sort of territorial sort of options when we think of M&A. And there are adjacent markets as well that we could access. So I certainly was striking a positive tone this morning when we spoke to analysts about the positive M&A pipeline that we're seeing, the opportunity to say we're already looking at.

And we're certainly in a position that we believe we can do more given the available firepower and this great track record that we now have over the last 5 years of executing 8 acquisitions.

Thank you. Are you prepared to take on more debt or issue equity if the right large scale acquisition comes along? Or is maintaining the current balance sheet strength more important?

So we -- our ambition is certainly not limited by the readily available resources that are on the balance sheet at the moment and sort of Tom gave a sense of where we're seeing those resources at the moment, and I'll ask him to sort of talk about that and also the debt capacity. And if we see acquisitions -- if you look at the financial framework that we have, we've got material headroom on the solvency side, as I said in my presentation, well above the GBP 140 million to GBP 160 million sort of operating range that we seek to run the business at.

We've got strong levels of central liquidity as well. The leverage ratio is well below the 30% target level that we've talked about. So that does certainly mean that this capacity for us to finance small and larger deals. And we are seeing opportunities across the deal range size at the moment in the marketplace.

Tom, do you want to talk about some of the numbers there.

Yes. I mean in terms of debt capacity, appetite for debt, one of the things we've been careful around actually over the last couple of years is utilizing a very robust framework to assess M&A. So you'll notice from the numbers today, as Steve says, we've got a very healthy solvency ratio, which means we have quite a bit of solvency headroom but also our leverage ratio is much, much lower than our long-term sort of ambition, which is 30% or less. We're in the low 20s right now. So what that means actually is we can raise debt whilst maintaining the strength of the balance sheet, which I think your question was around sort of is it possible to almost do both at the same time, and I think we can.

And it's not just actually in many senses, it's not just the level of solvency service we have. It's also the resilience of the balance sheet to things like changes in the markets in particular. So if you look at the sensitivities of the balance sheet, a lot of different stress factors, you'll see that actually in a whole range of different scenarios, our solvency ratio actually is pretty stable. So that means we can confidently put more debt on the balance sheet, knowing in the background that actually even if the macro turns against us, it doesn't compromise the solvency position, it doesn't adversely affect the leverage ratio.

In terms of Quantum, we've got capacity for certainly GBP 150 million, for example, if we were to go out to seek some support from debt markets. And I think that, combined with the cash we have on balance sheet gives us quite a healthy level of funding opportunities before alternative options like an equity raise, for example.

And I think this morning, you talked about sort of 10 million to 30 million of readily available resources? Is that...

Yes, exactly that, yes. So we sort of full year '25, we were talking about the fact that post the Cezanarlaf acquisition, we expect to have about GBP 100 million or so of spare capacity, which we were framing as the ability to do another Scottish was Europe acquisition immediately. We're actually a little bit higher than that at half year. So as Steve said, it's about 130, reflecting good operating performance, positive market performance and really good progress on the Cheson Life acquisition over the period. So yes, if you take that GBP 130 million, you've talked about another GBP 150 million in debt, you can see that's starting to build up sort of a pre-equity set of funding options that are pretty material.

And the next question is for Tom as well. You list the GBP 150 million RT1 that you raised last year on the debt part of your website. Why does your leverage ratio treated as equity rather than debt? I know this is consistent with the future-rating approach, but why do you think this treatment is appropriate?

Yes. So it's all about the loss-absorbing capability of the instruments that we use within our own funds, which sounds very tactical, but basically within our own funds, we have to split the own funds into different categories. And the RT1, as I was called the restricted Tier 1, which is the debt instruments, is permitted within the own funds stack but it's effectively treated as equity because it has the ability to absorb losses in a way that certain other classes of owned funds don't. And for that reason, as I say, it's treated as an equity instruments and it doesn't form part of the leverage calculation in the way that other aspects or other debt types would.

You're right. It's exactly consistent with the treatment of similar instruments that other players have issued in recent years. And it's fundamentally because in a stress scenario, which we believe would never happen, but we -- there is the ability to convert that debt to equity. We also, as a business, have the ability to not pay coupons in certain situations and coupons roll up on a noncumulative basis. So when you take all of that into account, it means that it is a less onerous form of debt than alternatives, and therefore, it doesn't form part of the leverage calculation.

Thank you. New business contribution is up 152% to GBP 12 million. How does that compare with growth across the wider life and pension market and Arc's margins on new business improving?

Yes, it's a little difficult to compare it overall with the wider market. I think just because that space is quite vast. I mean, if you sort of take the bookends, you have, for example, in the U.K. workplace pension business being written annuity business being written, et cetera, et cetera. I think if we look at the growth in our parts of the market, if we look at that onshore bond space, and as a reminder, that's a unit-linked product. We're taking sort of asset management charges on assets under administration and it's a sort of product that allows people to draw down flexibly in a tax-efficient way. And post some of the budget changes a few years ago, we've seen that become sort of move from being a very niche product to something that's a little bit more mainstream than IFAs use with our customers. but we're certainly seeing some material growth there.

Our sort of total market share is probably somewhere in the region of 15% to 20%, to give you a sense of that market. And we've certainly seen ourselves winning new distribution relationships in recent years. For example, countrywide Assured is now the provider of the onshore bond for AJ Bell. So there's some good healthy signs there. If we look at the other markets that we're operating in, so I would say skilled in on the term insurance side has maintained sort of the sort of market share that we've been used to seeing over the last couple of years. We've seen a little bit of improvement in the margin there as a result of some of the restructuring activity that we've taken.

So that's been sort of pleasing to see. And I think I talked earlier about the flows that we're seeing in from Mavastic into our unit-linked products. We have a workplace pensions product, a custodian product and also on the life and health side of the business. The margins actually on that are less than the business that's running off in Sweden. So that's why it's very, very important that we continue to expand the distribution arrangements that we have run that business very efficiently to ensure that we're getting the right level of profitability coming through.

I think relative margins in the space, there's -- we think we're pretty good at cost management. So I think you should certainly expect to see from Cesar that we'll keep a very close eye on the bottom line. I don't think that we're sort of making margins that are significantly more than other people. That's for sure. I just don't think in mature markets that you see a huge amount of differentiation in that margin ordinarily that's available.

Thank you. Adjusted operating profit increased 46% to GBP 31 million, while OCG increased 79%. Why is the gap between profit growth and cash generation so large? And is this something we should expect to continue?

Yes. So within the OCG calculation and the OCG benefit, we also benefit from any reduction in our solvency capital requirements. So solvency capital requirements are not a feature of the IFRS results. So a number of the actions that we took over the first half of the year involved us optimizing the capital requirements. So for example, we extended the reinsurance arrangements that we had in the U.K. We also introduced more foreign exchange hedging, and that had the impact of reducing the capital we have to hold against those risks. That fed in positively to OCG because OCG is ultimately a Solvency II measure. It looks at the solvency balance sheet and that benefits that measure.

Under IFRS, that doesn't feed into the results. So as a result, whilst we saw the positive operating and market experience and sort of effects in the first half of the year coming through the IFRS results, you don't see the release sort of reduction in that solvency capital requirement, and that is primarily the difference. If you look at this going forward and you think about sort of the type of business we are. We would generally expect the IFRS results to be lower than OCG for 2 reasons. Firstly, our business is a mix of insurance and investment business. So the OCG benefits treat all of that business if it's just the same type of product and wraps all of that into the metric. Under IFRS, it differentiates between investment products and insurance products and that is a very, very different accounting treatment for both.

The mix of our business is such that the accounting treatment will pretty much always result in a lower results for IFRS adjusted operating profit than it does for OCG and that's a feature of our business, and it's actually a feature of many insurance companies businesses as well where they have the mixed portfolios between the insurance and investment.

Thank you. In your central liquidity slide, you show cost of GBP 24 million, which builds on the GBP 32 million in 2025. This GBP 56 million over 18 months figures compared to GBP 13 million over 12 months in 2024. What is driving the high cost over the last 18 months? And why are costs sold out of control?

Yes. So let me just explain the component first, and perhaps I'll probably address the last part of that question as well. So look, it really reflects a really significant uptick in the level of activity that we're carrying out a group center to support all of the strategic change over the last 2 years. So you've heard us talk about the acquisition of HSBC Life U.K., the acquisition of Scottish Wiles Europe. The rights issue the debt raise. And also, you've heard us talk about the SSC transformation program in the U.K., where we're migrating both legacy administration platforms to SS&C and also there's the migration of the Casanare Life book to as well.

So the numbers that you're talking about are looking at there incorporate all of those costs, and it also incorporate the cost of the corporate center as well. Now in terms of the split, I would say the corporate center cost as a proportion of that total cost is about 20% or so. So in terms of that question or that sort of observation around whether costs are in control, I think it's very easy to see where groups end up losing control of cost is when you see a group center, which has a very, very high proportion of fixed cost relative to project costs because we're building up large internal structures.

The cost that we include there are simply the cost of, I say, of running the group. So that's the cost of a relatively small team at group and the cost of some of the support functions around that. On a normalized basis, we would expect to see those costs come down. So particularly as we go through the SSC and conclude on the SSC transformation program, as we complete the Scottish Willis Europe deal, and we get through some of the last aspects of the Casanare Life integration. Those costs will come down quite considerably.

There may be situations where you see an uptick in those costs, and that's because we're executing value-accretive M&A deals. So what we do when we're looking at these M&A deals is we ensure that when you take those project costs into account, -- and when you look at the expected lifetime cash flows, the types of cash flows that we've guided people towards in those 2 acquisitions, those costs have to make sense in the context of those cash flows and deliver a very, very attractive return overall.

So as Steve said earlier, we're very, very cost conscious. But I'm also quite -- relax isn't the right word, but I'm quite supportive of higher cost base in group center if it's funding very, very high return opportunities. like M&A opportunities. And that's what the bulk of those costs that you've highlighted actually represent?

We reminded people this morning in my presentation about the Casanare Life and Scotch Widows contribution that we're expecting in the lifetime of those 2 books are being around GBP 1 billion of cash flows. Those cash flows are net of these restructuring costs. So we include those in the value cases that we have and then the transparent disclosures that we're making, quite often, you'll be spending before those benefits sort of come through. But those cash flows that numbers that we put out in those 5-year cash and lifetime cash flow numbers that we have are inclusive of those costs that Tom has talked about as well, just for the avoidance of that.

And we're now moving on to our final question. If you do have any further questions, please e-mail the team who will respond to anything that hasn't been covered today. Finally, could you describe your future plans for the dividend and whether you would consider a share buyback?

I think we've been quite consistent on this point, actually for quite some time. And this is actually just something that we test ourselves on quite a bit, and we also discuss very frequently with the Board. But when we're thinking about the dividend and the dividend policy and whether that's a regular distribution or whether it's a share buyback option, any -- anything we agree on that policy has to stack up beside the other opportunities we have in front of us. And by stack up, I mean, what we're looking at are long-term returns for shareholders.

So right now, we're in this, I think, really positive position where we have a strong M&A pipeline. We've already executed on a couple of opportunities that we've just been talking about, and you've seen the early-stage benefits of some of those come through in our half year results today. But there are other opportunities in the near to medium term that we are looking at and that we will look at. And we're very confident as a management team that the returns available for those opportunities are sufficiently attractive to justify the current dividend policy.

And I think we've announced a meaningful increase in the interim dividend today. We followed through on the guidance that we gave last year, which was to increase the full year '25 dividend by 6% and today's interim by 6%. We've done that because we were confident in the early-stage benefits of the Casanare Life deal. So we feel very comfortable with that. And it is for us all about making sure that the choices we're making are generating the optimal long-term return for our shareholders.

I think if you look at a -- we have the best dividend growth track record in U.K. and European insurance. I reiterate that this morning, this great continuous track record the deals that we've announced have added GBP 1 billion of lifetime sort of cash generation potential. So we think we've taken very material steps to Tom's point, to elongate the cash flows in the business. And at the same time, we're still able to go after what we believe are exciting growth opportunities in the market. So when you look at that together, we think that's very attractive for our investors.

Thank you. That's all the questions for today. So I'll hand back over to management for any closing remarks.

Just to say thank you for joining. We've really enjoyed the opportunity to answer your questions this afternoon. if there's any further questions that you have, please do send those through, and we'll do our best to answer them. So enjoy the rest of your day, and thanks for joining the presentation.

Thank you.

Thank for joining us today. That concludes no investor presentation. Please take a moment to complete the short survey following this event. The recording of this presentation will be made available on Engage investors as well. I hope you enjoy today's webinar.

Welcome to the Chesnara Half Year 2026 Results Presentation. I'm Steve Murray, Group Chief Executive; and with me is Tom Howard, our Group CFO. So what will we cover today? I'll begin with a short overview of what's been delivered in the period. Tom will then step through the financials in more detail, which now include Chesnara Life, formerly known as HSBC Life (UK) for the first time under our ownership. I'll then finish with some further detail of what's been delivered so far in 2026 and what to expect going forward.

We'll have plenty of time for questions at the end of our presentation, starting with the people here with us in RBC's London offices. [Operator Instructions] The group has delivered another very strong set of financial results over the first half of 2026, including a substantial increase in the group's operating capital generation. Tom will run through these financial results in more detail shortly, including an overview of where our H1 position is relative to the full year 2025 pro forma estimates that we shared in March.

Our focused 3-pillar strategy set out on this slide has continued to serve the group well. We completed the acquisition of HSBC Life (UK) in January, which is now rebranded as Chesnara Life U.K. And we've been delighted with the early performance of the business under our ownership with GBP 51 million of operating capital generation and GBP 20 million of cash remittances already delivered. The next phase of integration and migration activity has been continuing at pace with the migration of data from HSBC on track for delivery by the end of 2026.

The U.K. business has also completed the migration and associated Part VII of the second Canada Life portfolio we acquired with these policies now running on our new U.K. platform. This is the fifth successfully completed migration in recent years. We announced the proposed acquisition of Scottish Widows Europe in February this year and have completed a significant amount of the preparation required for the expected change of control around the end of 2026.

We've continued to proactively evaluate and execute management actions in the period, and we've also taken further steps to integrate teams and processes across our Dutch business following the merger of our Dutch entities last year. This has helped support Scildon's largest ever cash remittance. And the addition of Chesnara Life U.K. to the group has materially increased the contribution from new business in the first half of the year.

Movestic has also added around GBP 700 million of assets under administration and expanded its distribution reach, including a new partnership in Norway. The best track record of continuous dividend growth in U.K. and European insurance continues. As previously highlighted to investors, we're announcing a 6% increase in the interim 2026 dividend up to 8.16p per share. This represents a one-off acceleration of the group's historic dividend growth trajectory and follows the 6% increase to the full year 2025 dividend that we announced in March.

So let me hand over to Tom, who will take us through the financial results in more detail.

Thanks, Steve, and good morning, everyone. So I'm delighted to be reporting a set of very strong results for the first half of 2026. Today's results for the first time incorporate Chesnara Life following completion of the acquisition in January. Operating capital generation increased significantly by 79% to GBP 96 million, and cash remittances increased by 31% to GBP 73 million.

The results reflect a robust operating performance from each of our business units, incremental value from Chesnara Life and a contribution from capital optimization actions. Own funds increased by 14% to GBP 976 million, and the Solvency II coverage ratio of 185% is comfortably above the upper end of our operating range. And this is also above the pro forma guidance of 180% that we provided to you at the full year. And our sources of future value continue to go from strength to strength.

Assets under administration increased to GBP 21 billion and adjusted operating profits grew by 46% to GBP 31 million. The IFRS balance sheet also grew with the contractual service margin increasing significantly from GBP 131 million to GBP 327 million, reflecting the integration of the Chesnara Life book. This significantly increases the stock of future insurance profits available to the group. And this very strong performance underpins today's announcement of a 6% increase in the interim dividend to 8.16p per share.

So as I mentioned a moment ago, we're reporting a significant increase in the group's OCG results today. OCG of GBP 33 million arose from robust operating performance across our business units, broadly in line with the prior year result of GBP 32 million. Performance benefited from stronger new business results and our ongoing focus on cost control with partial offsets from adverse mortality experience in the Netherlands in Q1 and adverse persistency experience in Sweden.

Our ongoing program of capital optimization actions delivered a further GBP 12 million in benefits through the extension of existing foreign exchange hedging arrangements at Group Center. And as I flagged at our full year results, we expect that ongoing capital optimization actions will be a recurring source of OCG for the group. And they will, on average, comprise around 30% of the annual OCG result.

Finally, the acquisition of the Chesnara Life book generated significant additional capital benefits for the group. These benefits arose as we embedded the Chesnara Life risk profile into our existing U.K. reinsurance arrangements and into the group's solvency capital framework. These impacts are nonrecurring in nature and increased the group's OCG by a further GBP 51 million. And we continue to have a strong pipeline of capital management actions to support the 5-year and the lifetime cash flow guidance we provided to you at the time of the acquisition.

Turning to the balance sheet. Over the half year, OCG contributed 73 percentage points to the group's solvency coverage ratio. Nonoperating capital items provided a further 5 percentage point benefit with positive investment variances from favorable markets more than offsetting the impact of integration and restructuring costs over the period.

After allowing for the completion of the Chesnara Life acquisition, the group's solvency coverage ratio of 185% is higher than the pro forma guidance of 180% that we provided to you at our full year '25 results. And it also remains significantly above the upper end of our operating range of 140% to 160%. And as a result, we retain headroom to support M&A and other growth opportunities. And we also expect the solvency coverage ratio to remain above the upper end of this range after allowing for the impact of the Scottish Widows Europe acquisition, subject, of course, to market conditions and any other significant developments through the second half of this year.

The group's own funds increased by 14% to GBP 976 million. As I referenced earlier, operating performance was robust and broadly in line with the prior year. Favorable market conditions supported growth in the value of the group's assets under administration, positively contributing to the nonoperating result. And the most significant component of the own funds growth arose from the Chesnara Life acquisition with group own funds increasing by GBP 79 million on day 1.

And we expect own funds growth to emerge for further synergies as the integration and migration activities continue, and we'll provide further details on our progress at our year-end results. Group Center liquidity stands at GBP 271 million after allowing for the funding of the Chesnara Life acquisition earlier this year. Over the half, Group Center balances benefited from higher levels of cash remittances from the business units to center. Total remittances increased by 31% to GBP 73 million, including GBP 30 million from the Netherlands, driven in part by merger synergies and GBP 20 million from Chesnara Life.

Moving next to IFRS. The IFRS capital base grew significantly by 22% to GBP 850 million. Adjusted operating profits increased by 41% to GBP 31 million, reflecting robust operating performance across our business units. Favorable market conditions also supported the investment result, further improving the IFRS profit before tax after allowing for the impact of integration and restructuring costs. Tax charges were higher in the period, but this increase was driven solely by higher policyholder tax relating to investment gains on U.K. bond policies. These charges are deducted by Chesnara at source on behalf of our customers, so the net impact to our P&L is broadly nil.

Finally, and importantly, the group's contractual service margin increased significantly from GBP 131 million at full year '25 to GBP 327 million at the half year. This increase was primarily driven by the inclusion of the Chesnara Life book, where the CSM recognized on acquisition was higher than that assumed in our pro forma estimates. This represents a significant increase to the stock of future profits we expect to emerge from the group's insurance business. So in summary, this has been a period of very strong financial performance for Chesnara.

Today's results show growth across all areas of our financial framework and exceed the pro forma guidance that we provided at full year '25. Our sources of future value go from strength to strength, and we have multiple levers at our disposal to further optimize the capital base and to deliver strongly against the guidance that we provided to you at the time of the Chesnara Life acquisition. And finally, the balance sheet remains strong and resilient, and we retain capacity to invest for further growth. This all bodes well for strong, sustained financial performance into the longer term. So thank you all.

And with that, I'll pass back to Steve.

Thanks, Tom. The strategic focus we've had over the last few years has continued into 2026. On our full year 2025 results presentation, I underlined the importance of ensuring we deliver the migration and integration of Chesnara Life U.K. well alongside the work required to support the anticipated change of control of Scottish Widows Europe. And I'm pleased to report that we continue to make great progress on both fronts, which I'll cover in slightly more detail shortly. Together, Chesnara Life U.K. and Scottish Widows Europe are expected to contribute around GBP 1 billion of future lifetime cash flows to the group.

Tom highlighted earlier a number of the actions we've already taken this year to optimize the group's balance sheet further, including in Chesnara Life. And across the group, we continue to have a very full pipeline of actions at our disposal through into the medium term. We've also been progressing the next phase of restructuring of our Dutch business, where run rate synergies delivered are above our initial estimates, and we expect the remaining anticipated cost savings to come through in the second half of the year.

We continue to see a positive M&A pipeline and have already had a number of interesting opportunities to assess and evaluate so far this year. The addition of Chesnara Life has materially increased the contribution from new business to GBP 12 million. Movestic have continued to see positive net client cash flows into their unit-linked and risk offerings and Skilledon has also delivered robust term life sales. Whilst we continue to anticipate the vast majority of our growth will come from M&A, we expect the value from new business for the full year 2026 to be around double that of the previous year, a useful additional value generator for the group.

And finally, the work we're doing to become a more sustainable Chesnara has also been progressing well. We've continued to reduce emissions from our investment portfolios, along with more proactive investment in more sustainable solutions. I wanted to give a further update on where we are in the integration of Chesnara Life U.K. and the change of control process for Scottish Widows Europe.

On Chesnara Life, assets under administration and own funds remain ahead of the estimated pro forma year 2025 numbers that we shared with investors in March. We were able to take certain planned balance sheet actions in H1, which helped support GBP 51 million of OCG and GBP 20 million of cash remittances from the business. We remain firmly on track to deliver the GBP 140 million of cash generation we guided investors to expect in the first 5 years of our ownership. So whilst we only completed the acquisition 5 months ago, we're really pleased with the performance delivered so far.

Jackie Ronson, our U.K. CEO, and her team have continued to make great progress on our Chesnara Life integration and migration program of activity. We've completed the staff consultation required in order for us to take the next steps towards implementing our new U.K. target operating model. We've confirmed who the role holders will be in our combined U.K. leadership team and also completed the first planned to be transfer of staff to SS&C.

We remain firmly on track to complete the required data migration from HSBC by the end of 2026. Tom and the separate team working on Scottish Widows Europe have continued to push ahead with the work to deliver change of control and deal completion as well as the planning required for the business' separation from Lloyds Banking Group. The change of control application has been submitted, and we're progressing through regulatory review with the CAA.

Legal completion readiness testing with Lloyd's has also been successfully completed with a large number of completion planning activities also substantially progressed. We continue to anticipate change of control approval around the end of 2026. The financial framework on the left-hand side of this slide will be familiar to a large number of our investors. It has served us well and continues to form a core part of our deal assessment criteria.

And as Tom has highlighted in his presentation, we have material solvency headroom above our target operating range. Our leverage is substantially below the long-term target of 30%, and we have material liquid resources at plc, and we retain significant readily available firepower with a successful track record of financing more material transactions. We continue to see a positive M&A market and pipeline that provides great opportunities to build on our track record of strong deal execution.

And in the period, we've already had the chance to work actively on a number of opportunities, both in Europe and the U.K. The 8 deals executed over the last 5 years has provided additional confidence to potential sellers that Chesnara as a company they can trust to get deals done. So we've delivered a very strong set of financial results, supporting a 6% increase in the interim 2026 dividend.

We completed the largest acquisition in our history in January with the migration of data from HSBC remaining on track for delivery by the end of 2026. We've continued to proactively seek out and execute management actions to optimize the group's balance sheet and resources, which have contributed materially to the group's operating capital generation. We continue to anticipate change of control for Scottish Widows Europe around the end of 2026. Our M&A pipeline has remained positive, and we're continuing to actively assess acquisition opportunities.

I want to thank colleagues across the group for their continued driving commitment, which has delivered a very strong financial performance. The group is in a strong position with further opportunities to grow. And I continue to believe there's a lot to look forward to here at Chesnara. So that ends our presentation.

We'll turn now to questions, and we'll start in the room in London. I know there's a number of people with new roles here, which we might congratulate them on shortly, and Aloni will find a microphone to pick somebody. Who put the hand up first, Tom? Who do you want to start?

It's always Abid.

Always Abid. Congratulations on your promotion, Abid, if we haven't said that publicly before.

And I can -- you can always congratulate me next time as well. I've got 3 questions, if I can. The first one is on OCG. So the OCG was very strong. What elements do you think are repeatable? And how should we think about that for the full year '26 and full year '27?

And if I can ask a sort of subpart to that, the OCG delivery from the HSBC deal was very strong. And I don't know if that's optically if it was very strong. So if you could just talk to how you're tracking against the GBP 140 million that you were looking to deliver over the first 5 years because I think there's a number out there, sort of GBP 51 million. I just want to sort of get a sense of how those 2 compare.

And then the second question is on people. I think you have a new group CRO joining the business next month. And I might be reading too much into this, but does that investment into people signal some intent and ambition to be a larger FTSE business going forward?

And then finally, on the firepower, can you update us on the level of available resources that you have to self-finance another deal before you come back to the markets for additional capital?

I think that was 4 questions technically, Abid, but as always, we'll allow it. Absolutely. An actuarial 3. Shall I start with people? And then do you want to pick up firepower and OCG, including the HSBC part? So yes, so it was a good spot. We -- so we went into the market earlier on in the year for a new group CRO. The previous role holder held both the CRO function and part of what normally is called the sort of chief actuarial sort of responsibility.

So we took the decision to sort of split that role beef up a sort of first-line Chief Actuary role that's become more commercial. We've also invested in another person that's going to join Tom's team to support M&A and broader development alongside, as you say, the new CRO, Sue-Ann, who's coming in. She's got an extensive CV, tons of relevant experience. She's been working previously in a business that was also trying to do M&A across jurisdictionally. That business was doing it across 20 territories. So Chesnara looks pretty simple, I think, in comparison to what she was coring before.

And I think what you've seen from us over the last 5 years is make a significant investment in the top team. Jackie came in almost 3 years ago now and is driving that U.K. business forward, and we've got new leadership right the way across the group that we're doing a terrific job driving the performance. So I think it's a good spot. And certainly, our ambition is to become a much larger sort of FTSE 250 company. I think that's very safe to say. Tom?

OCG. So yes, I mean, if we deconstruct the OCG a little bit, which I think we certainly attempted to do in the presentation, of the GBP 96 million, GBP 51 million is one-off in nature. So that is the day 1 acquisition impact of bringing Chesnara Life in. That arises from things like diversification benefits. And I think, as I mentioned, by moving the Chesnara Life solvency framework onto the Chesnara solvency framework. So it's very much a structural benefit we get from bringing that on. It's material and it's one-off, and I'll come back to that in the context of the GBP 140 million, which is your second question.

So then if you move that to one side, the other components are what we call the recurring OCG of GBP 33 million and then management actions. So the recurring OCG of GBP 33 million is very much as the name suggests. So we expect that to be a very reliable indicator going forward. So GBP 33 million in the first half. I think not to tell you what to factor into your models, but I think you can take from that, that something of that nature would be reasonable for the second half.

And then if I draw you back to a comment I made at full year '25 about how to think about recurring management actions, -- what I said at the time of this still holds is that in any given year, we would expect that the recurring management actions will make up about 30% of the total OCG result. So I won't do the math for you, but I'm sure you can work out with a recurring plus 30% sort of gets you to what we would call a recurring sustainable level of OCG before any of these acquisition one-offs.

Then turning to how we think about the GBP 140 million. Look, we've made a great start against that. So GBP 51 million on what I call day 1 alone. We frankly -- I mean, I'm sure my team thank me for saying this, but we haven't had to do a huge amount to get there because a lot of this was by virtue of bringing the portfolio into our business. We sort of automatically generate quite a bit of that benefit. It hasn't yet given us pause for thought around the GBP 140 million.

What we will do is we'll come back at full year '26 and issue an update on how we're thinking about the GBP 140 million and the GBP 800 million, not least because we've got -- and Jackie will attest to this. We have a little bit of work to do between here and the end of the year to finish the migration program and so on. So we'll have a much clearer line of sight around the timing of some of the further synergies we expect to get.

And I think what we had been saying as well actually at the time of acquisition was for that GBP 140 million and GBP 800 million, we weren't expecting that to emerge linearly over the 5 years in the lifetime. There will be a little bit of -- it would be a little bit uneven. And the reason for that is, frankly, we like to be a little bit judicious about when we exercise some of those capital management actions. So timing can be better sometimes if we delay from a commercial perspective. But we'll come back at full year '26 with some more color.

Firepower. So the way we've been running the balance sheet pre -- when we -- again, when we talked about the Chesnara Life acquisition was we expected that post the acquisition, we would still retain enough firepower to do another Scottish Widows Europe type of transaction. And that sort of triangulated back to about a GBP 100 million roughly level of headroom before thinking about alternative options like debt and equity financing. That position is unchanged. In fact, it's increased, I would say, a bit over the first half.

So that GBP 100 million, you could factor up to maybe something like 130 million, and that's because the solvency ratio has, as we said in our presentations, the 185% is a little bit of ahead of where we expected to be at 180% because we've had favorable trading and decent markets over that half year. So that's positively bled into solvency headroom.

And as you've seen from the liquidity presentation, we've got ample liquidity as well. So yes, so we're slightly higher than we were at full year. But in and of that sort of ticket size around that kind of SWE type size is still roughly where we are.

Michael?

So a lot to follow on. But one which is the only criticism that I could find is Sweden. So I know we discussed it and you were saying, there's some good stuff as well. But every time -- not every time, but a lot of the time, Sweden kind of is the one number which is a bit lower. So the questions on why isn't the regulator doing what is expected there? Or what could you do to kind of prompt them a little bit?

On the cash, just to push you a little bit harder, my number is bigger than yours. So the -- I was hoping you would say GBP 200 million rather than GBP 100 million plus. But that's because clearly, you need some cash to run the business. You can't run the business without cash. So I'd be interested to know how much you actually need as a base number.

And then the management actions, but here, you obviously said you'd tell us more and you've told us a little bit. Just 2 side questions. One, the 30%, is it of the total? Or is it 30% on top? It makes a small difference on the big one. But also what kind of management actions?

Yes. Should we maybe take those in order. I'll start with Sweden and we can talk about -- Michael, we can talk about both the cash capacity, but also where some of the debt capacity also is in the balance sheet. So I think it's useful to understand that and then management action point as well.

So when we look at the performance of Sweden in the first half of the year, so we've seen very strong net client cash flows sort of come in. So within the overall economic result, we've seen a sort of negative because the strong levels of business coming in haven't offset some of those sort of outflows going out. But I think what we always look at there is what can we control.

And I think the fact that the team have expanded distribution, brought in more business, we have this new sort of partnership, which has just started up in Norway. All of those things, I would take as sort of positive signs of outflow coming in. And that GBP 700 million of assets under administration increase in the first half of the year as well is quite a material addition to the size of the business. But it has continued, as you pointed to, to be a market where we've seen a lot of this sort of transfer and [Audio Gap] activity going on.

We know lots of that and sort of saying it doesn't feel like that's sustainable longer term, and we certainly share that view. But all we can do is make sure the team is focused and control what they can, making sure the cost management remains strong, which it has in the first half of the year, and the team are actively working on expanding that sort of distribution opportunity further and seeing if it can drive some further efficiency from the business.

Do you want to cover cash and management actions?

So you're right, Michael. We do hold back a buffer within sort of our treasury management policy. And that's broadly to cover expected 12 months' worth of expected debt outflows, potential shareholder dividends, working capital, et cetera. So that's why you will see a difference, and that's why your number will be higher than my number, for example, because I'd like to manage that on quite a prudent basis. In terms of the management actions, 30% of total, so that's probably a slightly higher number than the alternative.

And then on the management actions, the types of things that will feed into that recurring management action. So we have a program of management actions that we look at over the longer term, so sort of 5 years plus. And the types of things that we're looking at are an extension of things we already do. So you've heard us talk a lot about foreign exchange. There's still a bit more, I think, we can do on that.

You've heard us talk about things like mass lapse reinsurance where we can reinsure very extreme tail risk events. Again, there's more we can do on that. Other areas that we have been less developed on, I would say, historically that we're looking very seriously at actually more focused on the investment side of the balance sheet, so we can uprisk elements of our portfolio.

Our portfolio is now bigger. It's more diverse because we brought new books into the group. We have another book coming into the group later this year as well, assuming we are successful on regulatory approval. So that increases the scope and the opportunity around that investment uprisking piece in particular.

So expect to hear and see more on that going forward. And that is the kind of thing that lends itself very much to a recurring management action as well, just given the nature of the sort of thinking behind some of the levers we have at our disposal there.

I think, Michael, just on sort of M&A more broadly in that capacity. I think Tom's spoken very well about that cash piece. We do clearly now have more capacity in the balance sheet to look at look at debt, and that's probably in the order of sort of circa GBP 150 million, that sort of number. It's never quite exact. It depends on the business coming in. And certainly, our appetite isn't capped by the available firepower and that capacity.

I think we've gone at the market, had great support from investors. So we're looking at a very broad range of deal sizes. But just to give you a sense, I suppose, of how we sort of see that building up. And when Tom is looking at sort of the financial framework and the available firepower, we're not just looking at sort of cash at bank, we're looking at these other sources as well.

Ben? Congratulations on your new role. It feels like a little bit of a step back into the past, isn't it? Back to the future.

Backwards to go forward. Yes. Ben Cohen, RBC. I just wanted to ask a couple of things. The first really maybe more of a clarification. I think in your prepared remarks, Steve, you said that you've got multiple levers to further strengthen the capital base. Is that a reference to the sort of the bigger debt raise? Presumably it's debt, it's reinsurance. Is there anything that is kind of almost kind of coming out of the book itself that gives you kind of more confidence there?

The second question was just in terms of the M&A environment. Could you maybe talk a bit more about the different markets in Continental Europe versus the U.K. in terms of size of deals, level of competition, the sorts of things that are interesting at the moment, kind of what's changed maybe since the full year?

Sure. Shall I pick up M&A and then do you want to talk about sort of some of the actions available, which might be a little bit of what we just said with Michael. So yes, so I think -- so the sort of M&A environment we like is an active one because what we tend to find is when more deals are happening, it encourages people to come forward with the portfolios. A deal being done here sometimes has a knock-on impact over here.

So the fact that we've still been seeing in the first half, plenty of M&A happening, we've seen a very large deal in the U.K. with the Aegon U.K. and Standard Life transaction, which was very well received by the market. We've seen transactions in Continental Europe, including in Germany being announced as well. So I think across the broader sort of jurisdictions, both in U.K. and Europe, we think there's still plenty of activity. If I suppose I cover our sort of territories, and I'll include Luxembourg and then maybe just give a little bit of sort of territories outside of where Chesnara currently operates. So U.K. continues to be active, certainly in our part of the market.

So we still see sort of large international firms, large financial institutions looking to optimize their book. We're still seeing this huge trend of large insurers going after the bulk purchase annuity space, some interesting transactions that have sort of happened there recently, but people seeing if they can deploy more capital. So we believe they'll continue to look at portfolios that they believe maybe don't make a return, maybe they don't fit with some of the new operating platforms that they're coming in. So when we sort of map that pipeline out over sort of a 3-year period, we think there's going to be plenty for us to look at.

And the fact that sort of Jackie and the team have made positive progress on that integration and migration activity means we're looking at opportunities now. We believe that given the sort of lag time that you tend to have, as I talked about full year '25, we're absolutely in a position that we can be assessing opportunities now with a view to those sort of completing somewhere in 2027 in all likelihood.

In Europe, so I would say -- so in Sweden, we sort of talked at the full year about there potentially being a couple of opportunities in that market. I think that position remains the same. We haven't seen sort of material transactions. We've seen 1 or 2 small ones where you've seen some risk book sort of moving around in the market. We're seeing a little bit more than outside of Sweden as well. But it continues to be sort of less active than the U.K., but there are -- there's a couple of things there that we'll have a choice around whether we want to participate in. The Netherlands has seen -- having seen a very active market, I'd say, at the moment, is just less active in the short term. Medium term, I still think the middle part of that market will ultimately consolidate.

And we do have options with the Netherlands of some sort of surrounding territories that we could use the operating platform as well. And then Luxembourg, I think we'll just repeat what we said at the time of the Widows acquisition. We we do believe there's a significant sort of tail of businesses in that market, and we expect to have the opportunity to look at assets there. We do also keep an eye on other jurisdictions. We've talked about other offshore territories before.

Germany is a market that's very large in Europe that's sort of impossible to ignore, particularly you have the sort of growth ambition that we do. Belgium has been a territory that we've also looked at as well. So our challenge remains being candid, given that positive M&A environment to ensure that we're focusing on a small number of things. It'd be quite easy for us to be spending a huge amount of time and a very large number of opportunities. And part of Tom and I's job is to make sure that we remain focused on the things that are sort of higher probability and we think will move the dial for the group.

On balance sheet, I suppose, sort of levers that you might want to...

Yes. I mean we've covered some of them in when we've covered capital optimization actions. And we've been quite focused up to this point in looking at opportunities to optimize the solvency capital requirements in some areas, so like FX hedges, like mass labs and so on. I think on the own fund side of the balance sheet, one of the -- there are probably 2 levers that are most interesting for us.

I talked about investment uprisking. There's general efficiency initiatives across the group that we're embarking on as well, which will be accretive to own funds over time. But actually, in many ways, one of the best ways to strengthen the balance sheet is via scale and sensible scale. So if you look at what happened post the Chesnara Life acquisition, actually, the sensitivities, the sort of resilience of the balance sheet has actually improved post the acquisition.

So we're now a bigger group, but with a more resilient balance sheet. And actually, some of the scale benefits that we got from the Chesnara Life acquisition allowed us to recognize more own funds that previously we weren't able to recognize because, frankly, our SCR, solvency capital requirement was too small. So we were running up against some of those restrictions.

So as we build more scale, and I would call sensible scale that diversifies really efficiently into the group, that will be a source of further capital strength as well. So when you have that successful M&A strategy alongside a range of capital optimization actions as well to boost SCR, you end up really broadening the jaws between that own funds growth and SCR optimization.

I'll just check if there's any more question follow-up, Michael. Yes. And then we'll go to the phones.

It's just a very little one. The the GBP 140 million or the GBP 800 million, does that -- do the management actions come on top of that? Or are they already included in that? And then also a really small -- in the number, the GBP 140 million and GBP 800 million, does one include the GBP 20 million cash actually remitted or the GBP 51 million operating capital generation? Those would be my 2 questions.

Yes. So on management actions, so the GBP 140 million and GBP 800 million had a limited amount of management actions in there. And as I said earlier, we will come back in full year '26 when we've got a much better line of sight on what we can deploy and when.

The -- I mean, the GBP 50 million is -- in terms of how the -- what's emerging compares to that GBP 140 million, OCG is the best proxy to look at. The cash remittance is almost a consequence of the OCG because with cash remittances, basically, you have to generate the OCG to generate the space to remit the cash. But sometimes we will choose not to remit the cash or maybe not all of the cash because we will decide to leave some of those resources within the business unit, at least temporarily to fund growth.

So the GBP 20 million is a very, very early proof point, but I would see it as a consequence of the GBP 50 million as opposed to it being the key driver itself.

Yes. Of course.

Just one more. So you did -- I'm always interested in mortality because obviously, I'm getting there. The -- you mentioned Netherlands was not quite as positive.

Yes. So we had some seasonality in the Netherlands. And look, we see that across the book. So the way we are actually set the assumptions is on the basis of a long-term expectation. And you will have periods, and it's often the winter periods where you see these little spikes in short-term activity relative to those long-term assumptions. So what we did was we recorded that negative variance in the first quarter.

What we saw in the second quarter actually was the experience pretty much reverted to that longer-term mean. So you will tend to see those bump. And sometimes it's actually positive. You'll have periods where the sort of emerging mortality is actually better than your long-term assumptions. But we thought it was appropriate to call that out because it is a feature of the experience in the first half. But I think the pleasing thing from our perspective is that it did confirm our view that, that was likely to be seasonal rather than symptomatic of a longer-term deterioration in the Dutch mortality rates.

Okay. Should we go to questions online?

We've got some questions from the webcast. First question is from Brian at Hardman & Co. Can you expand on the mortality experience in Scildon? Are the H2 cost savings from the Netherlands merger already accounted for in OCG capital?

Do you want to pick up both? I think we probably just dealt with mortality, Brian, I'm conscious you probably typed that before Tom's last answer, but do you want to pick up sort of the cost savings?

Yes. So the short answer is yes. So the -- and it really feeds through in 2 ways. So it feeds through in the OCG numbers that we're recording for Scildon, which is our Dutch business. We saw those come through last year actually more significantly than this year because that's when the bulk of those savings were delivered. But where you also see -- and I talked a moment ago about the fact that cash, there's a little bit of a lag effect on cash remittance. So you have to generate the OCG and then you decide to remit it.

The reason why we've had a remittance of GBP 30 million -- one of the reasons why we've had a remittance of GBP 30 million from Scildon, which is actually the highest remittance in its history, is that, that additional OCG, which was generated over the last 2 years as the management team went through that process is now available for distribution as cash. And that's been a really helpful contribution to this first half year's result as well.

The sort of the second half, the sort of remaining synergies are sort of lower than what we've delivered. So there will be a little bit more to come through, but not at the same sort of level that Tom has alluded to over the last 18 months. So thank you, Brian.

Next question comes from Ming at Times Capital. Could you please provide some color on Sweden's adverse lapse experience? This seems to be more frequent. I recall 2021 benefited from a reinsurer of mass lapse experience. But since then, it's adverse lapse experience in most years. What -- was this reinsurance a one-off? Or could you do more like you do in the U.K.

So you're absolutely right, Ming. So -- and that sort of mass lapse reinsurance that we deployed is very, very similar to the mass lapse that we've been using in the U.K. as well. And what that allows us to do is reinsure particularly some of the tail risk that you can have to hold a lot of capital around.

So there'll be some things that we can do in Sweden to sort of optimize that, particularly if we can continue to grow policy numbers. But ultimately, we've already put that treaty in place there. So there isn't a sort of a significant amount more that we can do there. In terms of what's driving some of these trends in the market, there's a lot of business sort of being transferred around by some of the large brokerage firms into sort of newer solutions, and we've seen that sort of spiking up and down a little bit.

We strengthened, you might remember our long-term assumption around transfer rates a couple of years ago. And we've seen periods where actually that transfer activity has been sort of very close to back in line with that longer-term assumption. In this period, it's been a little bit higher again, but certainly not as significant as we saw a couple of years ago. So that's really the activity that we're seeing on some of the longer-standing parts of the unit-linked book. What we look at is sort of the in and the out around that.

So as I said earlier, we've seen very good sort of flows into the business. So we're winning more than our fair share of the market. Historically, our market share has been around sort of 4% to 5% of that particular part of the market. And I would say at the moment, based on our intel that we're doing a little bit better than that in terms of transfers in. It's -- the net economic impact, though, has remained slightly more negative in the period because what's leaving the business is at a higher margin than what's coming in.

The team are very focused on continuing that sort of successful expansion of distribution, managing their costs well. And I think those are the 2 key actions that we need to ensure we keep taking with Movestic.

Next question comes from Visu at TCS Diligenta. How does Chesnara Group view its strategic priorities for new business growth and open book product propositions, particularly in areas such as onshore investment bonds?

Yes. So on the onshore investment bond, particularly, I think we've been very clear with the market that, that remains and will continue to be a priority for us in the U.K. We've been really pleased with the performance, both of the countrywide bond and the Chesnara Life bond in the first half of the year. That sort of GBP 7 million new business contribution that you'll see in the results is a strong result, not least given that we sort of changed the brand on that Chesnara Life business in the early part of the year.

So the sales and business development teams have had to be out there sort of talking about that, making sure people understand who Chesnara Life are. So I think that result is a good one. And look, that is adding some additional value to the group that we didn't have access to before. One of the things that Jackie and the team will evaluate in the medium term is whether there might be some adjacencies off the back of that sort of onshore bond. But that's been a nice sort of add-on and that capability that came from the Chesnara Life deal has been very helpful in the first half.

More broadly, we've seen a good performance from Sweden and the Netherlands in the first half of the year and provided that we can demonstrate to ourselves that there's a sustainable level of return that meets our hurdles, we're very happy to keep writing that new business I did say in my prepared remarks, however, that we did feel still that acquisitions are going to drive a very large part of the growth in this business given the positive M&A pipeline that we're seeing. But it remains an important part of the strategy is that third strategic pillar that we have.

There are no further questions from the webcast. So I hand over to you for any closing remarks.

We'll go back to Michael for one more.

Just one because -- so I think in terms of -- I'm trying to think in terms of operating leverage. So you have a deal with SS&C. And effectively, you share in the economics. So the more cost saves they drive, the more you can share in as well. Is there kind of discontinuity upwards? In other words, where you suddenly jump up and say, we've suddenly got an extra GBP 50 million, I mean, I'm making numbers up. But -- and how far are you away from that point?

So post the -- I'll be slightly careful of what I say because obviously, there's commercial agreements in place and Jackie, our U.K. CEO is in the room, so she can throw something at me if I go too far on this. But the way that we set that arrangement up is you're absolutely right. We wanted to make sure that if we grew the business further, we'd get a benefit from scale, but also that SS&C would make more money as well.

And I think we've all -- we've certainly been party to arrangements in the past where if you don't have that win-win scenario, you don't get the investment, the support from your partner in this space. And I think that arrangement feels like it's been working quite well. We're starting to see -- we will see with that HSBC Life (UK) book, now Chesnara Life coming on, we get into the sort of next tier of sort of efficiency in rate cards and things like that. So that will sort of open up that operational leverage that you talk about. And look, obviously, if we then bring other books in as well, we'll get that sort of compounding benefit.

We -- one of the benefits that we continue to get is working alongside SS&C on acquisitions. So the more work that they can be doing with us upfront, it gives us more confidence both in terms of the pricing of the deal, but also the time lines for migration and integration. And we've got a sort of busy sort of pipeline, obviously, particularly with that very large migration happening this year, but there are still further books to pull on to the platform. So we're pleased with that relationship. They'd really like to support us elsewhere across the group.

Jackie and I are continuing to say to them, show us that there's going to be great delivery this year, and we'll be very happy then to have those follow-on conversations. And I'm sure they'll continue to provide us strong support through the second half of the year.

Well, I think that's all for just now. So thank you, everybody, for joining our half year results presentation. We appreciate you attending, and thanks for the questions in the room. We hope you have a great rest of the day, and we will see you, if not before, at the full year results presentation in March 2027. Thanks very much.

Welcome to the Chesnara Full Year 2025 Results Presentation. I'm Steve Murray, Group Chief Executive. And with me is Tom Howard, our Group Chief Financial Officer.

So what will we cover today? Well, I'll begin with an overview of what has been delivered in a major period of strategic transformation. Tom will then step through the financials in more detail, including how the group balance sheet looks post the completion of Chesnara Life, formerly known as HSBC Life U.K. I'll then finish with a recap of what the group has delivered over the last 5 years, where we are now and why we believe we're only just getting started. We'll have plenty of time for questions at the end of our presentation, starting with the people here with us in RBC's London office. And for those of you joining online, you can type questions into the Q&A function via your browsers.

Our focused 3-pillar strategy set out on this slide has continued to serve the group well. And the last year or so has seen a further increase in the scale and pace of our delivery. We undertook a major restructuring of our Dutch business with the merger of our two main Dutch insurance entities and transfer of our DC pensions portfolio to Allianz. We announced our largest ever acquisition, HSBC Life U.K., alongside GBP 140 million rights issue. Our successful inaugural RT1 bond raising GBP 150 million provided additional flexibility to finance further M&A. The group then entered the FTSE 250 for the first time in its history. In January this year, we completed the HSBC Life U.K. acquisition at an attractive discount to own funds. This business now rebranded as Chesnara Life is expected to add over GBP 800 million of future lifetime cash flows.

Then in February this year, we announced the proposed acquisition of Scottish Widows Europe, a Luxembourg-based business that broadens our European footprint and supports our longer-term consolidation ambitions. We're targeting completion in and around the end of 2026 with the acquisition expected to add a further EUR 250 million of lifetime cash flows to the group.

The group has also delivered a strong set of results across all our key financial measures with the contribution from new business also increasing. You'll see throughout the presentation, we're using our updated financial metrics for the first time. We believe these should allow investors to more easily understand the group's performance and also more readily compare it with peers. Tom will run through these financial results in more detail shortly, including the expected impact of recent M&A on the group's pro forma balance sheet.

Our strong track record of dividend growth continues. As previously highlighted to investors, we're announcing a 6% increase in the final 2025 dividend, up to 14.8p per share. Given the strong financial performance of the group and also the financial benefits that we anticipate from Chesnara Life, we also expect the 2026 interim dividend to rise by a further 6%. This represents a one-off acceleration of the group's historic dividend growth trajectory. Total shareholder returns for 2025 were also materially higher, demonstrating the value that we continue to create for our investors.

So let me hand over to Tom, who will take us through the financial results in more detail.

Thanks, Steve, and good morning, everyone.

So 2025 was a year of very strong performance for the group, achieved alongside significant strategic and operational milestones. We are yet again reporting a strong set of financial results, and we are increasing returns to our shareholders.

Before I dive into the detail, it's worth noting that today's results do not include the day 1 impacts of the Chesnara Life acquisition as this transaction completed after the year-end. We have, however, included pro forma results in this presentation, and I'll cover these later. Also, and Steve has referenced this already, you'll see that we're presenting today's results in line with our updated financial framework. This further simplifies our investor story by moving to a smaller number of financial metrics anchored around our three performance pillars of cash, capital and value. We held an information session at the end of February to bring some of you through the detail of these changes, and you can find the definitions and more detail in our accounts and on our website.

So turning to our performance and starting with cash. The group delivered operating capital generation of GBP 94 million, an increase of 19% compared to the prior year. We also saw increased cash remittances from our business units to Group Centre, increasing to GBP 58 million compared to GBP 45 million in 2024. From a capital perspective, the group's Solvency II balance sheet remains resilient to a wide range of economic and demographic shocks. At full year '25, the solvency coverage ratio was materially higher than the upper end of our operating range, and the group's own funds increased by 34% to GBP 859 million.

And finally, our sources of future value continue to grow. Assets under administration grew to GBP 15 billion and adjusted operating profits grew by 42% to GBP 56 million. The group is successfully delivering against all areas of our financial framework. And this enables an increase in the final dividend per share of 6% to 14.8p per share.

Turning now to operating capital generation in more detail. The group's OCG growth was particularly strong, increasing by 19% to GBP 94 million with increased year-on-year contributions from each of our business units. In the U.K., OCG benefited from a combination of positive operating performance and capital optimization actions. In Sweden, we saw another year of strong operational performance with positive contributions from disciplined expense management and improved persistency experience. And finally, merger synergies alongside robust operating performance supported improved year-on-year results in the Netherlands.

The group solvency coverage ratio increased materially during the year to 257%. The two capital raises completed in the second half significantly contributed to growth in the group's solvency surplus. And this was supported by strong operating performance from our business units, as I outlined in the previous slide. Nonoperating variances were primarily driven by macro factors, namely the impact of a weaker U.S. dollar on the value of customer asset holdings in Sweden and movements in the yield curve in the U.K. After factoring in Solvency II tiering adjustments and the final dividend, the group solvency coverage ratio remains comfortably above our operating range of 140% to 160%. We expect the coverage ratio to remain above the upper end of this range on a pro forma basis after allowing for the day 1 impact of the Chesnara Life acquisition.

The group's own funds increased by 34% year-on-year, reaching GBP 859 million after allowing for the dividend and the impact of Solvency II tiering restrictions. Positive contributions from the operating performance of our business units and nonoperating contributions from favorable market conditions drove growth in own funds.

Now on this slide, we show the group's central liquidity after allowing for the completion of the Chesnara Life acquisition in January. The balance of GBP 266 million remains comfortably above our buffer levels with material headroom available to the group to deploy on further M&A opportunities. Over 2025, liquidity was supported by the capital raises and increased remittances from our business units. As I pointed out earlier, cash remittances increased by 30% to GBP 58 million, reflecting the sustained improvement in operating performance across the group's business units.

Moving next to IFRS. Adjusted operating profit increased by 42% to GBP 56 million, and the IFRS capital base grew significantly to GBP 694 million compared to GBP 449 million at full year '24. Again, we saw robust operating performance from each of our business units with a material year-on-year increase in the Netherlands, where the insurance results also benefited from merger and simplification synergies. Leverage reduced by 9 percentage points to 22%, comfortably meeting the group's long-term ambition of 30% or less.

Now as I mentioned earlier, the preceding results reflect the group's full year '25 position. And as such, they don't include the day 1 impact of the Chesnara Life acquisition, which completed in January. And for clarity, these pro formas do not include the impact of our recently announced proposed acquisition of Scottish Widows Europe or later-stage capital and expense synergies from the integration of Chesnara Life. So taking the Solvency II and IFRS balance sheets in turn. We expect the group's own funds to increase to circa GBP 1 billion and the solvency coverage ratio to remain above the upper end of our operating range.

The IFRS capital base is expected to increase to over GBP 800 million. And within this, the contractual services margin will rise to circa GBP 200 million, materially increasing the store of future value from our insurance portfolios. The group's leverage ratio will be comfortably within our long-term ambition of 30% or less.

So hopefully, this demonstrates how the steps we've been taking are transforming the financial profile of the group, whilst maintaining a robust balance sheet, attractive leverage and the financial firepower to support further attractive M&A opportunities.

Thank you all. And with that, I'll pass back to Steve.

Thanks, Tom. As Tom and I have highlighted, this has been an exceptional period of strategic delivery for the group. On this slide, I thought it was useful to remind investors about the key areas of activity we've been undertaking over the last 4 or 5 years here at Chesnara.

Firstly, we restarted the M&A machine and have materially increased the cadence of deals announced with 8 acquisitions, including the recently announced Scottish Widows Europe transaction. This activity has been supported by the raising of further capital from debt investors and shareholders. And as a reminder, together, Chesnara Life and Scottish Widows Europe are expected to contribute around GBP 1 billion of future lifetime cash flows to the group.

Secondly, we've improved the foundations of the business. We combined our two main Dutch insurance entities and also transferred our DC pension portfolio to Allianz. We've been implementing a new U.K. operating platform with 4 successful migrations completed so far. We've significantly strengthened the senior leadership team here with 11 out of 12 positions now having new role holders. And we also set ourselves new and ambitious sustainability targets with delivery against these on track.

And finally, we've more proactively executed management actions, including FX hedging for the first time as well as expanding our new business relationships, particularly in Sweden.

So where does that leave us today? As you can see on this slide, we've significantly increased our assets under administration and customer numbers. We also anticipate a near doubling in the value from new business in 2026 following the addition of Chesnara Life to the group. Our balance sheet has grown substantially. And as Tom highlighted earlier, we retain a strong solvency position well above our normal operating range of 140% to 160%.

Cash generation and dividend coverage have also materially improved, including the impact of our recent rights issue. And we've continued to grow the dividend above longer-term inflation rates and deliver a higher level of shareholder return.

On Scottish Widows Europe, we expect this deal to further enhance our assets under administration, cash flows and own funds position. Our solvency is also expected to remain above our normal operating range post deal completion. And we retain immediately available firepower to execute another Scottish Widows Europe sized deal without the need for further external financing. With assets under administration of over GBP 20 billion, owned funds of over GBP 1 billion, solvency above our normal operating range and recent M&A expected to add a further GBP 1 billion in future lifetime cash flows, we have a strong foundation for further growth.

The strategic focus we've had over the last few years continues in 2026. It's very important we deliver the integration of Chesnara Life, which we expect by the end of 2026. We then have further work in 2027 on the remaining U.K. portfolio migrations we have planned onto our new U.K. operating platform. We're already progressing the work for the change of control of Scottish Widows Europe, and we have a range of available management actions across the group that we're actively working on to optimize the balance sheet further, including across the businesses that we've acquired. We continue to see a positive M&A pipeline in 2026 and are already assessing some interesting opportunities.

We're pushing forward with the next phases of restructuring of our Dutch business, and all of this will continue to be underpinned by the work we're doing to become a more sustainable Chesnara, more details of which can be found in our annual sustainability report on our website.

I wanted to provide a further update on where we are on the integration of Chesnara Life and the change of control process for Scottish Widows Europe. On Chesnara Life, we expect the assets under administration and own funds at completion to be a little ahead of the position that we shared with investors in July. The work to migrate policies onto our U.K. target operating model is in full flight. Jackie Ronson, our U.K. CEO, is leading a designated internal team here with strong support from SS&C. And this work is expected to complete by the end of 2026. Delivering this important stream of activity will then ensure we have further operational capacity to onboard future M&A in the U.K.

On Scottish Widows Europe, under Tom's sponsorship, we're already pushing ahead with the work to deliver change of control and deal completion as well as the planning required for the business' separation from Lloyds Banking Group. And we're targeting change of control approval in and around the end of 2026. It's important to highlight that there's relatively limited overlap between the delivery teams on the Chesnara Life integration and those working on change of control for Scottish Widows Europe.

Our recent transactions have been conducted with some of the largest financial services firms in the world. Lloyds Banking Group joins HSBC, Sanlam and Canada Life as another major institution that has chosen to trust us to support their customers going forward.

We continue to see a positive M&A market and pipeline that provides great opportunities to build on our track record of strong deal execution. And we're already seeing interesting targets to assess in the early part of 2026. We remain very focused on ensuring that we successfully complete the work required to onboard our latest acquisitions, not least to showing that we can continue to safely and efficiently look after these customers will allow us to execute more M&A in the future.

Investors will have heard me talk previously about the proactive investments we've been making to build out our leadership capability and wider capacity. This allows us to handle multiple deal processes and the associated integration activity. We've also previously shared that a typical deal tends to take around 9 to 12 months at least from initiation to completion. Given that, we are certainly in the position where we can and should be looking at new opportunities now. And we will, of course, remain disciplined in our approach to assessing and executing any acquisitions, ensuring we have a high degree of confidence that will add value for investors.

So we've delivered a strong set of financial results, supporting a 6% increase in the final dividend. We've completed the largest acquisition in our history, the restructure of our Dutch business and announced another material transaction. And we're continuing to see a positive M&A pipeline as we look forward into 2026 and beyond. These strong results wouldn't have been achieved without the outstanding efforts of colleagues across the group. I want to thank them for all their hard work in what's been a fantastic period of delivery. We begin 2026 with the group in a strong position with further opportunities to grow. And I continue to believe that there's a lot to look forward to here at Chesnara.

Thank you for your presentation. We've had a number of questions pre-submitted. [Operator Instructions]

And so to begin with, the company has had a strong dividend track record. What underpins its sustainability from here? And just another question similar to that. I mainly hold this for income. Is my dividend properly safe? Or should I be worried?

So thanks very much for the questions, and it's great to be spending some time with you all this afternoon. So when I talk about sort of historically why we have the best dividend track record in U.K. and European insurance over the last 21 years. And then Tom can talk about how we think about sort of dividend policy and future cash flow that we brought into the business. And hopefully, that will deal with the dividend security question as well.

So I think one of the unique things about Chesnara is the way that we have consecutively increased the dividend since we floated on the stock exchange since 2004. And I know a number of you that have dialed in will have held the shares since then. Some of you may have joined more recently, including as part of the rights issue that we did to support the acquisition.

And if you look at how the balance sheet overall has been positioned throughout that time and continues to be, on the asset side, it's pretty conservatively positioned. If we think about the holdings that we have, we don't have any material exposure to things like private credit. private equity and some of those more sort of esoteric asset classes. And we've been sort of pretty prudent in the way overall that the business has been managed. So in times where the cash generation and the operating capital generation have been very strong, we've tended to sort of make sure that we've got a consistent and growing dividend at around 3% historically. And that means that similarly in times when perhaps the cash generation hasn't been as strong, there's been plenty of capacity within the balance sheet and also when we think about the future cash generation of the group to continue that track record. So that is why historically, you've seen the continuation of that strong track record.

What we've been doing more recently then is seeking out opportunities to restart the M&A machine and add cash flows to the group that should extend into the longer term, the sort of sustainability of that approach to dividend. The historic dividend track record has also provided investors with good inflation protection. So the broadly sort of 3% growth rate that we've had sort of each year has certainly beaten longer-term rates of inflation in the U.K., and we're really sort of pleased to have given investors that protection.

In the presentation, you'll have heard both Tom and I talk about some of the sort of transformative deals that we've done in the last year. And particularly, a couple of metrics we'd point to there would be the sort of GBP 1 billion plus of lifetime cash generation that we expect the two acquisitions, the HSBC Life U.K. deal that has now completed and also the Scottish Widows Europe deal that we announced in February to add to the group. So that certainly provides a lot of support for that longer-term dividend policy.

And you can see from the numbers that Tom talked through, and I'll ask him to sort of share his views of where the balance sheet is and that longer-term cash flow profile. you can see the balance sheet continues to be conservatively positioned. So we think that gives investors a lot of comfort around the security of the dividend. We certainly have strong line of sight to the underlying sources of capital generation as well. So the dividend track record is one that we're proud of, and we would expect that to continue going forward.

Tom, what did I miss?

Not a lot. Look, there are two things that really support the dividend and have done actually for 20 years in this business. The first is operating capital generation. So one of the things you might have seen me talk about this morning was the fact that we've reported a very, very strong growth in OCG in 2025. So that's up 19% to GBP 94 million. So OCG is really the capital that we generate in a given year from doing the basics. So running our books efficiently, managing our expense base, collecting premiums, paying claims and doing that in an efficient manner. And that really is one of the aspects that allows us to build up the reserves, if you like, to support the payment of the dividend.

The second thing is having a robust balance sheet. So if you have a balance sheet that is pretty robust with -- when lots of things happen as we're seeing right now, for example, in the economy where we have lots of things happening in the market, it means that actually that gives you a very solid base to think about distributing capital back to shareholders. You can use quite a bit of that OCG to distribute in the form of dividend when you know you have a very solid balance sheet behind you. And actually, I think one of the interesting aspects of the Chesnara balance sheet, particularly in current times, is we are very, very defensively positioned, which basically means that we are far less sensitive to many other businesses than a lot of the things we're seeing happening in the markets right now, such as, the stresses we're seeing in the equity markets, we're seeing movements in interest rates. We're seeing movements in credit spreads.

All of those things affect our balance sheet. But actually, we do a lot of work on this. When you look at those in aggregate, and we've been obviously looking at them very closely, particularly in recent weeks, they actually have a pretty negligible impact on the strength of our balance sheet. So that gives us a lot of confidence in terms of our ability not just to pay dividends now, but actually to pay dividends at an attractive level into the long term. And that's before we think about the impact and the incremental opportunity we have from the two deals, one of which we've completed, which is HSBC and the other which we intend and hope to complete by the end of this year, which will give us further gas in the tank, if you like, in terms of our ability to potentially distribute dividends going forward.

Do you want to maybe just touch on dividend cover as well because that's probably the other part of the equation here, I think.

Yes, sure. I mean it's very, very linked in that the way we think about dividend cover is, obviously, we look at the dividend level and we look at that OCG I talked about. And what you have seen in this morning's results is a very healthy dividend cover over 1.7x if you compare the OCG to the dividend. That's not to say that we're targeting 1.7x and above into the long term because within the OCG, there will be years where it's a little bit higher, it's a little bit lower. There will also be some one-offs within that OCG number. So we take what we call capital optimization actions from time to time when the markets allow for that, which actually will boost the OCG number.

But the way we think about this really into the long term, and we are a long-term business is we're comfortable with a divi coverage level of about 1.5x or more. We think that's sustainable into the long term. That's something we've delivered historically, and we've actually grown that, I think, pretty significantly over the last 5 years and are confident that's roughly the level that we will be operating at into the long term and into the future.

And moving on to our next question. Is this a growing income story or just a very well-managed runoff?

It's a great question. So we think it's a growth story. Obviously, we've just talked about dividend and the fact that we have grown that dividend and that income over such a long period of time. If we look at the sort of shareholder register, a number of U.K. income funds and European income funds hold the stock, but they've also been interested in some of the growth potential predominantly that's coming from acquisitions as well.

And one of the slides in the presentation that we gave today that was a new one talked about the sort of the journey that we've been on since full year 2020 and where we think we are now. And you can see the own funds position on the balance sheet and own funds for those that aren't familiar with some of the insurance terms is in effect, an NPV calculation that takes the policies that are on the balance sheet today, projects those forward, sees what the cash coming through and sort of discounts that back.

So there's been a very material increase in the own funds of the business. We've grown the assets under administration substantially, sort of over doubled in the last 5 years as well. Tom has talked about the sort of dividend coverage having improved. You can see the OCG today, that operating capital generation having increased materially as well. So we would say all of those point to the fact that there has been material growth through M&A in the business.

You may have heard me talk in the presentation about the fact that we are seeing a positive M&A pipeline in 2026 as well. So we do see further acquisition opportunities looking forward. So you get this very nice balance, we believe, with Chesnara of having the strong dividend track record, that dependable income, but also opportunities for growth as well. And you've seen all of that within the last period.

Are you still finding good deals or are things getting more competitive?

So if anything, so when I joined as CEO of the company almost 5 years ago now, one of the things that I was a little bit nervous about at the time was potentially private markets players, private equity players sort of entering particularly the U.K. market, but also Continental Europe as well. And I was joining Chesnara from Royal London. And those of you that have been following some of the things happening at that time may recall that Liverpool Victoria was in the market and Royal London were rumored to be bidding for that business and Bain Capital were taken forward as the preferred partner. And they were sort of bidding about the onetime zone funds for that business with no synergies available either on asset management or within the business itself.

So when I came into Chesnara, it was one of the risks that I pointed to the Board was to say, if we're seeing private markets players coming into the market, that could be a sign that the M&A market has got very, very competitive and that valuations might not be right for Chesnara given that was one of the sort of three things that we've obviously been trying to do strategically. We haven't really seen that come to pass since. And when we think about the recent opportunities, there's been relatively limited competition certainly compared to 3 or 4 years ago either from in-market players or from private equity as well. So we think we're in this sort of nice spot where there are still interesting opportunities coming to market, less competition than we've seen before and at a valuation point, which should be attractive for investors.

So overall, we sort of like that competitive dynamic. We've made some investment in the business to ensure that we can look at multiple deal processes at the same time and also conduct multiple integration processes at the same time. So for Chesnara Life, that will be led by our U.K. CEO, Jackie Ronson. And then for Scottish Widows Europe, Tom is taking a leading role in the sponsorship of that. And we've now got some of that senior leadership bandwidth, but also more underlying capacity and capability in the organization to handle those things. So combined with that relatively positive sort of competition dynamic, that's why you're hearing a sort of positive outlook for us for M&A.

And just on M&A, to what extent, if at all, does the current market volatility impact your approach to the M&A pipeline?

So it doesn't materially impact the approach at the moment. I think if you saw a prolonged period where you had interest rates going up and up and up or equity markets falling dramatically for a much longer period of time, I can imagine if you were looking to sort of sell a book of business in that environment, you may well sort of pause for thought. I think what we've seen historically through shorter-term periods of volatility, we saw this around the time of this trust budget. If we go back as far as the global financial crisis and sort of after that, we've still continued really to see M&A activity happening. And this is not the only period of market volatility that we've had. I'm sure a number of you over the last 3 or 4 years when you've been looking at your portfolio, have seen some pretty violent movements in equity markets and interest rates and spreads and things like that.

So we're not anticipating in our part of the market there being a particularly material impact. And certainly, any of the early engagement we're having on M&A opportunities at the moment, we don't see there being any disruption to that.

I don't know, Tom, if there's anything that you'd want to add?

No.

With the introduction of new metrics, is it to make things clearer or to make things look better?

Do you want to take that one?

No. Look, it's absolutely to make things clearer. And maybe give you a slightly personal perspective on this. When I came into Chesnara about 2 years ago, I think one of the things that really struck me about the business on the very much the positive side was a sense of purpose within the business. But actually, what we do is quite simple. We are here to meet the needs of our policyholders. So we accept premiums and we pay claims. And actually, whilst there's a bit of complexity under the bonnet, that's fundamentally our purpose. But what I -- my observation was that actually the financial story wasn't following the simplicity of how we actually operate. So I felt there was some work to do on that.

And secondly, I just felt in terms of comparing our performance to our peers, we were operating with actually a vastly different set of financial KPIs in some areas to our peers. And in some respects, there's nothing wrong with that. But actually, it made it quite challenging for -- certainly for Steve and I to talk about how we're performing relative to some of our peers in the market as well, but also actually how we can differentiate ourselves because we felt within our investor and equity story, there were some very interesting features that we're actually struggling to get out because actually the whole financial ecosystem of KPIs were actually getting in the way.

So we actually spent quite a bit of time internally looking at how we could strip out some of that complexity, really slim the story down into the 5 or 6 numbers that actually matter and just make sure we're wrapping that around a very, very simple story that is appealing to a very broad range of investors. So what we wanted to do ultimately was take the story away from the preserve of a smaller number of insurance technical specialists and broaden it so that actually could be explained to anyone who has an interest in investing in high-growth, high-income stock.

Do you think that there will be more competition in market in the coming years?

So from an M&A perspective, so we don't know. If we look today, we aren't seeing the signs of sort of new entrants coming in. If we take the different markets that we're in, so taking the U.K. first, one of the sort of big thematic trends in our market is larger insurance companies and private market providers sort of entering this bulk purchase annuity space where insurance companies provide an insurance policy to DB pension schemes in exchange for managing those liabilities and assets going forward. And there are sort of 14 or 15 large to medium insurance companies, some backed by very large sort of U.S. sort of private markets firms sort of going after that space and looking to deploy capital there. And that's because they see better returns from that than potentially from participating in M&A. So that suits us. So long may that continue in terms of those firms sort of deploying capital there because that should mean there's a little bit less competition.

And in Europe, again, we aren't seeing sort of as much sort of private equity and private markets participation there as we've seen historically. So currently, where we are, we're seeing the competitive environment being a good one for us to operate in. If we're seeing sort of higher interest rates for a little bit longer, that's likely to mean that the cost of debt for people is a little bit more expensive. So that might also mean there's a slightly higher barrier for entry for people looking to enter into our space.

And the final thing I would say is that regulators, particularly in Europe, are very, very interested in people that are owning sort of customer assets that have got sort of long policy terms, particularly sort of 20, 30 years. And there is consultation out at the moment around whether private equity firms are suitable owners for those sorts of books of assets.

So when we look at all those things together, we think that sort of is helpful for an organization like us. But sort of Tom and I are sort of positively paranoid every day in terms of sort of trying to figure out where there might be some people coming into our space and providing more competition. But at the moment, it feels like that's in a good place.

[Operator Instructions] So moving on, how sensitive is your capital position to market shocks or interest rates?

Do you want to take that?

Yes. The good news is relatively insensitive. And maybe just to give you a sense, this is something that we test very, very frequently. So we have formal and actually informal processes. There's a formality with our regulator where we have to test the resilience of the entire group's balance sheet to very extreme shocks on a regular basis. So we do that. We discuss that in quite a bit of detail with the Board as well. And then as we work through periods of, let's say, temporary volatility like we are working through right now, we will do ad hoc testing just to ensure that, frankly, we're not missing anything.

So really, when we look at the balance sheet, there are probably three areas that we look at. The first is what's happening in equity markets and how does that impact the valuation in the balance sheet. The second interest rates. And then outside of that, it's mainly credit spreads and foreign exchange impacts.

Quickly working through each of them. On equity markets, there's a particular feature within our capital structure, which means that when equity markets fall, whilst that's not good from an own funds perspective because it reduces the valuation within the funds that are subject to those equity falls, we actually have to hold less capital against those funds. So net-net, in a situation like we have right now where equity markets are falling, our solvency ratio actually goes up. Now solvency surplus falls, but the percentage ratio will actually go up because we get the benefit of that dampening effect within the capital rules.

From an interest rate perspective, we're seeing interest rates go up generally right now, and that's actually positive for our balance sheet because it reduces the long-term value of the liabilities. So we have roughly a similar-ish valuation of assets against a lower valuation of liabilities, and that's good for the balance sheet.

And then from a credit spreads perspective, if we did see a widening of credit spreads over a prolonged period, that would be negative to the balance sheet. But to give you a sense of the quantum, a 50 basis point credit spread widening would cost us about 5% on the solvency ratio. And from a solvency ratio of in excess of 250%, you can see actually that that's not a material impact as we're structured right now.

So I guess if you step back from all of that, it means actually because we are defensively structured, we actually trade really well through volatile situations like this and actually have done in the past. So we've seen situations like COVID, post trust budget in the U.K., the GFC. And actually, part of the reason we've been able to deliver a very, very reliable, sustainably growing level of dividend through those really stress scenarios is because the balance sheet is structured in a way to actually withstand those short-term volatilities. And we're seeing that in operation right now as the Middle Eastern crisis develops.

How do you view the current government's economic policy and its effect on Chesnara?

So some of our team actually had the opportunity to be part of a lunch with Rachel Reeves recently. We also participated in some lunches with the opposition parties as well, just to sort of hear about their economic plans.

So look, the sentiment is if the government can find ways to drive growth, we see that as a net positive for Chesnara, not least because we should continue to see people contributing monies into some of the policies that we run and particularly, we're opening new business now in the U.K. and have been for a few years with an onshore bond, which we think is an attractive product, helping people sort of manage wealth. So if there's further growth in the economy and more money in people's pockets, we would see that overall as a net positive.

In a strange way, the fact that the -- some of the changes that were made in a couple of budgets previous tightened some of the sort of tax rules and reduce some of the benefits of other saving products. We've actually seen that benefit coming through for our onshore bond product. So we've actually seen higher flows into that proposition than we have historically.

So I think that's as far as I should go in terms of commenting any further on sort of government policy, but we certainly welcome anything that can be stimulating growth, encouraging sort of growth in wealth and ultimately then further investment both in the U.K., but also allowing people to sort of save for the longer term. And that's something that we do for customers, both in the U.K. and Continental Europe, where we have 1.4 million customers today.

Would you look at acquisitions outside of your current markets in the U.K., Netherlands or Sweden?

So we've just announced such an acquisition. So whilst it's in wider Benelux and the Scottish Widows Europe deal, that business is headquartered in Luxembourg. That's a market that we've looked at for a little while. So we've been aware of a number of sort of international financial services group having books of business that have sort of run out of Luxembourg. There are other territories like that, including Dublin that we've been interested in as well.

That book of business actually historically was written from the Clerical Medical With-Profits Fund in the U.K. Some of you may have been policyholders of that fund in the past. And when Brexit happened, it ultimately became illegal to have a branch structure out of a U.K. fund sort of managing customers in Europe. So people had a decision to make and a number of people put a holding company into Luxembourg or Dublin or other territories.

So we will be entering an adjacent territory through that acquisition, which we expect to complete sort of in and around the end of 2026. The financial returns from that deal on a stand-alone basis are attractive. We're acquiring a material discount to own funds. We're expecting that business to add well over GBP 200 million of lifetime cash flows to the group as well. But we do see broader strategic opportunities having a platform in that market. There's a new administrative platform with a team operating there potentially that gives us access to a broader pool of acquisition opportunities.

So it's early days. Tom is sort of sponsoring all our efforts there, and our main focus is ensuring that we clear the change of control process with the CAA, with the Luxembourg regulator and also doing the early planning of separating that business from the wider Lloyds Banking Group. But we're excited about the acquisition. We were pleased to announce that in February, and we'll keep everybody up to date as we progress with that.

So a couple more on M&A. Is the M&A pipeline long and deep enough that a further equity raise could be necessary? And on M&A, could Chesnara become a target itself?

So if we talk about firepower, just overall first and how we think about it. And those of us that have -- those of you that have followed Chesnara for a while will have heard us talk about the financial framework that we operate here and that we run across acquisition opportunities. So we have around GBP 100 million of remaining firepower. So that is capital resources that we can deploy immediately without having to go back to sort of debt investors or shareholders for additional funding.

And the reason that we still have material firepower is the way that we funded the HSBC Life U.K. deal. We were aware of having a very strong pipeline of opportunities. So as well as sort of raising GBP 150 million through a rights issue. We followed up on that shortly with the issue of an RT1 bond, which raised a further GBP 150 million of capital. We also have an overdraft facility at group, we call it the RCF that is a sort of 3-year facility that we can also utilize for M&A as well. So that means despite the fact that we've deployed a lot of capital this year already on M&A, we do still have material internal resources available.

When we look at the pipeline overall, there are a range of sort of size and shapes of deals across different territories. Some of those we could fund off the balance sheet. Some of those, we would need to look at coming back to the market and maybe financing those in a different way. We would obviously only do that if we saw a very attractive return profile, and that's what we saw with the HSBC Life U.K. deal. So when we came forward with that rights issue, we felt that, that business, the sort of cash flow profile was attractive. The scale that it brought into the group and the U.K. business was attractive as well. And therefore, we wanted to make sure that shareholders had access to that upside, but that meant also asking them for additional funding as well. And we were really, really pleased with the support that we had of that rights issue. And I know a number of you will have acquired additional shares as part of that.

So we've got a lot of financial flexibility. So any future M&A doesn't automatically mean that we need to raise additional debt or come back to shareholders. But if we saw the right opportunity, we would certainly consider that going forward. And actually, a number of the conversations that we had, particularly with institutional investors off the back of the HSBC Life U.K. deal was they were sort of encouraging us to look at a wide range of opportunities given the attractive returns that they see coming from that HSBC Life deal that we since rebranded that business as Chesnara Life.

We're now moving to our final question for today. If you have any further questions, please e-mail the Chesnara team who will respond to any questions that weren't covered this afternoon.

So shares have taken a dip. Is this in line with the market? Or is there a particular direct reason?

Yes. So if we look at sort of share price since the start of the year, that's probably the best place to look. I think we've seen sort of the U.K. sort of listed insurers, we've all seen some sort of drop in share price over part of that period. Actually, what we saw with the Chesnara shares is a period of outperformance in the early part of the year. So if you look at where the share price is today, it's in and around actually where we started the year. When we were updating our Board yesterday on the results, when we were looking at the peer group, we were sort of down over the period about 2% versus the peer group that were down on average closer to 10%.

So whilst we have seen a little bit of a drop in share price overall, actually, we've seen the Chesnara shares sort of outperforming. That is obviously a pretty narrow window of performance. In some of the slides that you'll have seen earlier, we've shown the progression of the total shareholder return that we've delivered, which obviously takes into account the dividends that we've paid, but also the share capital growth that you've seen as well. And in a year when we've gone out with a material rights issue, the fact that you've seen well over a 40% total shareholder return for 2025, we would see that as a very strong result.

So we continue to see -- we think the shares perform in line, if not slightly better than the peer group. And we think the results today are a strong set of financial results. We still see plenty of opportunities to grow, and it's what we're trying to do as part of the roadshow that we're on at the moment with investors is to make sure current investors and future investors understand the current business as is and also the future growth opportunities that we have. They understand this really impressive dividend track record that we've had over the last 21 years. So we'll be doing that over the next few weeks and making sure as far as we possibly can that, that sort of flows through in the share price.

Thanks, Steve. And with that, I'd just like to hand back to you for closing remarks.

Well, thank you very much for joining. Hopefully, you've enjoyed the presentation and the Q&A. We believe Chesnara is in a very strong position to grow going forward. The strong 2025 results have supported a 6% increase in our final year dividend. We've also informed investors that our expectation is that the interim dividend for '26 will also be increased by 6% as well, building on the best dividend growth track record in U.K. and European insurance. So we believe there's a lot to look forward to at Chesnara, and we hope you do as well. So thanks for dialing in.

Thank you to the management team for joining us today. That concludes the Chesnara investor presentation. Please take a short moment to complete the survey following the event. The recording of this presentation will be made available on Engage Investor. I hope you enjoyed today's webinar.

Welcome to the Chesnara Full Year 2025 Results Presentation. I'm Steve Murray, Group Chief Executive; and with me is Tom Howard, our Group Chief Financial Officer.

So what will we cover today? Well, I'll begin with an overview of what has been delivered in a major period of strategic transformation. Tom will then step through the financials in more detail, including how the group balance sheet looks post the completion of Chesnara Life, formerly known as HSBC Life (UK).

I'll then finish with a recap of what the group's delivered over the last 5 years, where we are now and why we believe we're only just getting started. We'll have plenty of time for questions at the end of our presentation, starting with the people here with us in RBC's London office. And for those of you joining online, you can type questions into the Q&A function via your browsers.

Our focused 3-pillar strategy set out on this slide has continued to serve the group well. And the last year or so has seen a further increase in the scale and pace of our delivery.

We undertook a major restructuring of our Dutch business with the merger of our 2 main Dutch insurance entities and transfer of our DC pensions portfolio to Allianz. We announced our largest ever acquisition, HSBC Life (UK) alongside a GBP 140 million rights issue.

Our successful inaugural RT1 bond raising GBP 150 million provide additional flexibility to finance further M&A and entered the FTSE 250 for the first time in its history. In January this year, we completed the HSBC Life (UK) acquisition at an attractive discount to own funds. This business, now rebranded as Chesnara Life, is expected to add over GBP 800 million of future lifetime cash flows.

Then in February this year, we announced the proposed acquisition of Scottish Widows Europe, a Luxembourg-based business that broadens our European footprint and supports our longer-term consolidation ambitions. We're targeting completion in and around the end of 2026 with the acquisition expected to add a further EUR 250 million of lifetime cash flows to the group.

The group has also delivered a strong set of results across all our key financial measures, with the contribution from new business also increasing. You'll see throughout the presentation, we're using our updated financial metrics for the first time.

We believe these should allow investors to more easily understand the group's performance and also more readily compare it with peers. Tom will run through these financial results in more detail shortly, included the expected impact of recent M&A on the group's pro forma balance sheet.

Our strong track record of dividend growth continues. As previously highlighted to investors, we're announcing a 6% increase in the final 2025 dividend, up to 14.8p per share.

Given the strong financial performance of the group and also the financial benefits that we anticipate from Chesnara Life, we also expect the 2026 interim dividend to rise by a further 6%. This represents a one-off acceleration of the group's historic dividend growth trajectory.

Total shareholder returns for 2025 were also materially higher, demonstrating the value that we continue to create for our investors.

So let me hand over to Tom, who will take us through the financial results in more detail.

Thanks, Steve, and good morning, everyone. So 2025 was a year of very strong performance for the group, achieved alongside significant strategic and operational milestones. We are yet again reporting a strong set of financial results, and we are increasing returns to our shareholders.

Before I dive into the detail, it's worth noting that today's results do not include the day 1 impacts of the Chesnara Life acquisition as this transaction completed after the year-end. We have, however, included pro forma results in this presentation and I'll cover these later.

Also, as Steve has referenced this already, you'll see that we're presenting today's results in line with our updated financial framework. This further simplifies our investor story by moving to a smaller number of financial metrics anchored around our 3 performance pillars of cash, capital and value.

We had an information session at the end of February to bring some of you through the detail of these changes and you can find the definitions and more detail in our accounts and on our website.

So turning to our performance and starting with cash. The group delivered operating capital generation of GBP 94 million, an increase of 19% compared to the prior year. We also saw increased cash remittances from our business units to group center increasing to GBP 58 million compared to GBP 45 million in 2024.

From a capital perspective, the group's Solvency II balance sheet remains resilient to a wide range of economic and demographic shocks. At full year '25, the solvency coverage ratio was materially higher than the upper end of our operating range. And the group's own funds increased by 34% to GBP 859 million.

And finally, our sources of future value continue to grow. Assets under administration grew to GBP 15 billion, and adjusted operating profits grew by 42% to GBP 56 million. The group is successfully delivering against all areas of our financial framework. And this enables an increase in the final dividend per share of 6% to 14.8p per share.

Turning now to operating capital generation in more detail. The group's OCG growth was particularly strong, increasing by 19% to GBP 94 million with increased year-on-year contributions from each of our business units.

In the U.K., OCG benefited from a combination of positive operating performance and capital optimization actions. In Sweden, we saw another year of strong operational performance with positive contributions from disciplined expense management and improved persistency experience. And finally, merger synergies, alongside robust operating performance, supported improved year-on-year results in the Netherlands.

The group's solvency coverage ratio increased materially during the year to 257%. The 2 capital raises completed in the second half significantly contributed to growth in the group's solvency surplus. And this was supported by strong operating performance from our business units, as I outlined in the previous slide.

Non-operating variances were primarily driven by macro factors, namely the impact of a weaker U.S. dollar on the value of customer asset holdings in Sweden and movements in the yield curve in the U.K.

After factoring in Solvency II tiering adjustments and the final dividend, the group's solvency coverage ratio remains comfortably above our operating range of 140% to 160%. We expect the coverage ratio to remain above the upper end of this range on a pro forma basis after allowing for the day 1 impact of the Chesnara Life acquisition.

The group's own funds increased by 34% year-on-year, reaching GBP 859 million after allowing for the dividends and the impact of Solvency II tiering restrictions. Positive contributions from the operating performance of our business units and nonoperating contributions from favorable market conditions drove growth in own funds.

Now on this slide, we show the group's central liquidity after allowing for the completion of the Chesnara Life acquisition in January. The balance of GBP 266 million remains comfortably above our buffer levels with material headroom available to the group to deploy on further M&A opportunities.

Over 2025, liquidity was supported by the capital raises and increased remittances from our business units. As I pointed out earlier, cash remittances increased by 30% to GBP 58 million, reflecting the sustained improvements in operating performance across the group's business units.

Moving next to IFRS. Adjusted operating profit increased by 42% to GBP 56 million. And the IFRS capital base grew significantly to GBP 694 million compared to GBP 449 million at full year '24.

Again, we saw robust operating performance from each of our business units with a material year-on-year increase in the Netherlands, where the insurance results also benefited from merger and simplification synergies. Leverage reduced by 9 percentage points to 22%, comfortably meeting the group's long-term ambition of 30% or less.

Now as I mentioned earlier, the preceding results reflect the group's full year '25 position and as such, they don't include the day 1 impact of the Chesnara Life acquisition, which completed in January. And for clarity, these performance do not include the impact of our recently announced proposed acquisition of Scottish Widows Europe, or later-stage capital and expense synergies from the integration of Chesnara Life.

So taking the Solvency II and IFRS balance sheets in turn. We expect the group's own funds to increase to circa GBP 1 billion and the solvency coverage ratio to remain above the upper end of our operating range.

The IFRS capital base is expected to increase to over GBP 800 million and within this, the contractual services margin would rise to circa GBP 200 million, materially increasing the store of future value from our insurance portfolios. The group's leverage ratio will be comfortably within our long-term ambition of 30% or less.

So hopefully, this demonstrates how the steps we've been taking are transforming the financial profile of the group whilst maintaining a robust balance sheet, attractive leverage and the financial firepower to support further attractive M&A opportunities.

Thank you all. And with that, I'll pass back to Steve.

Thanks, Tom. As Tom and I have highlighted, this has been an exceptional period of strategic delivery for the group. On this slide, I thought it was useful to remind investors about the key areas of activity we've been undertaking over the last 4 or 5 years here at Chesnara.

Firstly, we restarted the M&A machine and have materially increased the cadence of deals announced with 8 acquisitions, including the recently announced Scottish Widows Europe transaction. This activity has been supported by the raising of further capital from debt investors and shareholders.

And as a reminder, together, Chesnara Life and Scottish Widows Europe, are expected to contribute around GBP 1 billion of future lifetime cash flows to the group.

Secondly, we've improved the foundations of the business. We combined our 2 main Dutch insurance entities and also transferred our DC pension portfolio to Allianz. We've been implementing a new U.K. operating platform with 4 successful migrations completed so far.

We've significantly strengthened the senior leadership team here with 11 out of 12 positions now having new role holders. And we also set ourselves new and ambitious sustainability target with delivery against these on track.

And finally, we've more proactively executed management actions, including FX hedging for the first time, as well as expanding our new business relationships, particularly in Sweden.

So where does that leave us today? As you can see on this slide, we've significantly increased our assets under administration and customer numbers. We also anticipate a near doubling in the value from new business in 2026 following the addition of Chesnara Life to the group.

Our balance sheet has grown substantially, and as Tom highlighted earlier, we retain a strong solvency position well above our normal operating range of 140% to 160%.

Cash generation and dividend coverage have also materially improved, including the impact of our recent rights issue. And we've continued to grow the dividend above longer-term inflation rates and deliver a higher level of shareholder return.

On Scottish Widows Europe, we expect this deal to further enhance our assets under administration, cash flows and own funds position. Our solvency is also expected to remain above our normal operating range post deal completion. And we retain immediately available firepower to execute another Scottish Widows Europe-sized deal without the need for further external financing.

With assets under administration of over GBP 20 billion, own funds of over GBP 1 billion, solvency above our normal operating range and recent M&A expected to add a further GBP 1 billion in future lifetime cash flows, we have a strong foundation for further growth.

The strategic focus we've had over the last few years continues in 2026. It's very important we deliver the integration of Chesnara Life which we expect by the end of 2026. We then have further work in 2027 on the remaining U.K. portfolio migrations we have planned onto our new U.K. operating platform.

We're already progressing the work for the change of control of Scotch Widows Europe, and we have a range of available management actions across the group that we're actively working on to optimize the balance sheet further, including across the businesses that we've acquired.

We continue to see a positive M&A pipeline in 2026 and are already assessing some interesting opportunities. We're pushing forward with the next phases of restructuring of our Dutch business, and all of this will continue to be underpinned by the work we're doing to become a more sustainable Chesnara, more details of which can be found in our annual sustainability report on our website.

I wanted to provide a further update on where we are on the integration of Chesnara Life and the change of control process for Scottish Widows Europe. On Chesnara Life, we expect the assets under administration and own funds at completion to be a little ahead of the position that we shared with investors in July.

The work to migrate policies onto our U.K. target operating model is in full flight. Jackie Ronson, our U.K. CEO, is leading a designated internal team here with strong support from SS&C, and this work is expected to complete by the end of 2026. Delivering this important stream of activity will then ensure we have further operational capacity to onboard future M&A in the U.K.

On Scottish Widows Europe, under Tom's sponsorship, we're already pushing ahead with the work to deliver change of control and deal completion as well as the planning required for the businesses separation from Lloyds Banking Group. And we're targeting change of control approval in and around the end of 2026.

It's important to highlight that there's relatively limited overlap between the delivery teams on the Chesnara Life integration and those working on change of control for Scotch Widows Europe.

Our recent transactions have been conducted with some of the largest financial services firms in the world. Lloyds Banking Group joins HSBC, Sanlam and Canada Life as another major institution that has chosen to trust us to support their customers going forward.

We continue to see a positive M&A market and pipeline that provides great opportunities to build on our track record of strong deal execution. And we're already seeing interesting targets to assess in the early part of 2026.

We remain very focused on ensuring that we successfully complete the work required to onboard our latest acquisitions, not least is showing that we can continue to safely and efficiently look after these customers will allow us to execute more M&A in the future.

Investors will have heard me talk previously about the proactive investments we've been making to build out our leadership capability and wider capacity. This allows us to handle multiple deal processes and the associated integration activity.

We've also previously shared that a typical deal tends to take around 9 to 12 months at least from initiation to completion. Given that, we're certainly in the position where we can and should be looking at new opportunities now. And we will, of course, remain disciplined in our approach to assessing and executing any acquisitions ensuring we have a high degree of confidence they will add value for investors.

So we've delivered a strong set of financial results, supporting a 6% increase in the final dividend. We've completed the largest acquisition in our history, the restructure of our Dutch business and announced another material transaction. And we're continuing to see a positive M&A pipeline as we look forward into 2026 and beyond.

These strong results wouldn't have been achieved without the outstanding efforts of colleagues across the group. I want to thank them for all their hard work in what's been a fantastic period of delivery. We begin 2026 with the group in a strong position with further opportunities to grow. And I continue to believe that there's a lot to look forward to here at Chesnara.

So with that, let's start the Q&A, and we'll begin in the room in London.

Abid, you are very sharp with your hand up. Must be your new promotion, meaning you're getting your hand up even faster than you were before. So congratulations on that.

Takes lot of practice. It's Abid Hussain from Panmure Liberum. I've got 3 questions, if I can, please. The first one is on the dividend cover. So on my numbers, I think the dividend cover looks strong as it is now, and then it gets even stronger reaching around 2x, I think, on my numbers, at least anyway by '28, 2008.

So just wondering how do you think about the dividend cover and then the potential uses of OCG? That's the first question.

And then the second one is on M&A pipeline and the current macro drop that we're seeing out in the markets. Just wondering how might the pipeline be impacted by the volatile markets and particularly the rising bond yields and inflation.

And then finally, on the firepower. So as the balance sheet expands, does that impact the ability to self-fund future acquisitions at all?

Okay. We'll take those in order. If I maybe, Tom, if I do sort of dividend philosophy and then you can sort of talk about how you see sort of coverage and that developing. I'll pick up that sort of broader macro question but -- and then we'll do a double act on how we see sort of future financing of M&A.

So just as a reminder, I think -- so the way that we've tended to think about the dividend historically is looking at longer-term rates of inflation, and trying to deliver a rate of dividend growth that beats that. And I think the group has done a fantastic job of that over the last 21 years.

This may be a surprise to you, but we have the best dividend track record in U.K. and European insurance. I think I may have mentioned this a couple of times speaking to you all. So that's 21 years of consecutive dividend growth with a one-off step-up of the final dividend here at 6% as a reminder for people. So we're proud of that track record.

As I talked about in my presentation, we've certainly seen the coverage of that dividend over -- sort of improve quite materially. So I think philosophically, we still want to make sure that investors can have confidence that the dividend in the longer term sort of is inflation-proof, and that's what we'll continue to sort of look at going forward.

Tom, do you want to just talk about coverage more generally and how you see that?

Yes. I mean maybe just to wrap some numbers around that. So I mean, Abid, you're right. So if you look at the 2025 results, and certainly coverage when we consider it in the context of OCG, it is a healthy coverage. I think you'll notice I was quite careful to say that we felt that the 2025 OCG results was very, very strong, which is my way of encouraging you not to put a 19% CAGR on the OCG from this point forward.

But really, if you look at the OCG number, the way we think about it is if you look at the underlying OCG, which is the sustainable level of OCG, excluding management actions, we did employ some management actions this year. So mass lapse in the U.K., for example, you sort of get to about 80% of the reported number broadly is the underlying OCG number in any given year on average.

So if you take that rule of thumb, what we're reporting today becomes something like 1.5 to 1.6, and that's kind of how we think about it into the longer term when we're planning our underlying OCG. So that's kind of how I would guide you using those parameters.

I think more broadly, just in terms of uses of OCG, which was part of that, I think you managed to get 6 questions as part of 3 there. So well done.

Look, as you've seen from us historically, I think we've done a good job of sort of balancing that support for the dividend and having a good, strong sort of dividend growth track record, but ensuring that we're creating capital resources that can be used for strategic purposes.

I talked about already in 2026. So seeing sort of positive opportunities to look out on M&A, and I would certainly expect to be looking to deploy capital on further M&A in the sort of medium term.

How might this current sort of macro environment impact the M&A pipeline? So sort of sat here today, I don't think we're seeing a material impact in our part of the market. What we've tended to find historically, I think, is when you've seen much larger transactions.

So it's sort of up in the billions, and you can see sort of bond yields moving or equity markets moving, whatever it might be, that can tend to mean that people maybe pause taking those to market, particularly if you were going to go and do an IPO or something like that, you'd probably look at to time the market a little bit.

We've seen a little bit less of that happening sort of in our part of the market. Certainly, deal sizes up to sort of GBP 0.5 billion level or maybe slightly above.

And I think particularly, if you've already started sort of kicking off processes, you tend to find that people continue with those. And I mean, the volatility at the moment has been for a relatively short period. If you saw something continuing and the expectation of that being for years, maybe people might think again.

But again, if you look at even the last 5 years, there's been quite a few market periods there have been very volatile and you can see what we've been able to deliver a quite a material uptick in M&A. So there's nothing there that worries us from a sort of impact on pipeline perspective.

So final question was sort of then financing capacity. So I talked in my part of the presentation around the fact that we've raised some capital. We've obviously deployed a lot of capital. Our sort of best view of how we see internal capacity at the moment is that we could do another Scottish Widows Europe-size deal. So something around the GBP 100 million of consideration level.

And look, the reason that we can do that, having done 2 large deals, is because we've got a very strong balance sheet. If you look at where we're entering 2026, and then if you add on broadly the impact of SWE, we're seeing the own funds position that has sort of increased dramatically over the last 5 years.

Solvency will remain above the target operating range. Tom talked about us having good levels of central liquidity. So when you look at the financial framework that we talked about historically, we continue to have sort of big ticks in all of those areas.

If we continue to see the sort of positive growth in OCG that we've seen as well, we should assume that, that sort of financing position will improve a little bit as we go, given that we're not distributing it sort of -- the dividend cover is not 1x, is above 1x.

So all of that, we think, puts us in a good position and we clearly have the opportunity for larger things to speak again to debt markets and ultimately to shareholders. And we were delighted with the response that we received from both of those sets of investors in 2025 as we prosecute the strategy.

I don't know if there's anything else you'd say on?

No. I mean the only thing I'd say is, I mean, we have full capital fungibility from the business units into group centers. So you noticed the -- quite a step-up in the cash remittance profile from '24 to '25. We do expect that to continue.

And that's obviously -- OCG is a lead indicator to cash. Cash then is really what -- it fills up the hopper at group center to help us do deals. And so we've got a clear line of sight on those cash remittances. And as I say, no dividend traps and full fungibility from the business units up to group center.

Yes. Thanks, Abid. Mandeep?

Mandeep Jagpal, RBC Capital Markets. A couple from me, please. Firstly, just a more specific question on the M&A pipeline composition. Two deals delivered in the last 12 months, including one in a new country. How does the pipeline look in terms of the size of deals, geography types of policies. I think you said 10 to 12 months to complete a deal. So could we expect one sooner than that?

And then on Chesnara Life, the new business component. Any update on how you'll proceed with the open element there now that you've seen -- you've got it on board?

And then finally on AI. How are you using AI in your existing business? And does it have the potential to materially improve the DD and pricing process for acquisitions given all the data involved?

Thanks for the questions. I think most of those are for me, but as always, I'll ask for Tom to chip in as we go. So M&A pipeline. So what can we say? So probably the last update that we gave investors, we talked about the fact that overall sort of the average deal size was a bit higher than we've seen historically.

So I think particularly if you look back 4 or 5 years ago, we were seeing smaller deals, you can see we've done a sort of a few portfolio transactions with sort of single-digit millions. If we look at the pipeline at the moment, I'd say it's a bit bigger still.

So we're seeing sort of a range of opportunities certainly, of the sort of level at sort of Scottish Widows Europe, maybe some a little bit bigger than that to give you a sense.

In terms of geography, so it's a similar split actually to the sort of geographies that we've talked about before. So certainly still seeing things coming to market in the U.K. we're seeing some opportunities in sort of broader Benelux across potentially the Netherlands and elsewhere as well. We're still seeing slightly less in the Nordics overall. I think we do still -- if we take a sort of slightly longer time horizon, say, 12 to 18 months out, I think there are some possibilities there that we expect to come to market. But if we look sort of here and now, that hopefully gives you a bit of a feel for the sorts of things that we're having the opportunity to look at.

The -- so yes, thank you. So in spite of doing 2 large transactions, you'd like another one very quickly, Mandeep. So thank you for that feedback. So I think I've got even more gray hair probably than the last time I spoke to you. So I'm never going to be drawn on exactly when things would come in.

But if we look at the ingredients that we need to be successful. So I think -- just firstly, I think the M&A that we've conducted and the counterparties we've done that with has been very helpful for the profile. So we're probably getting even more inbound now or certainly invitations in than we would have been getting 2 or 3 years ago. So I see that as a positive, particularly just thinking about the top of the hopper.

We've talked about the financial strength of the balance sheet, the fact that we continue to retain good internal firepower. The solvency range is in a strong position. We've grown the balance sheet. All of that is helpful. And we are seeing multiple opportunities to look out at the moment. So we remain very disciplined.

It's really, really important that we deliver what we have on our plates internally from an operational perspective. But we believe we've got the capacity to be looking at other things just now, and we'll obviously update you as when we come through. But I certainly won't be making a prediction as and when that lands.

On AI, I mean, there's obviously a huge amount of focus on this. Just a couple of areas that we've been utilizing AI. So we have been developing customer services assistant in part of our business with AI. The results of that have been very, very good. I think in terms of both the speed of development and deployment of that, but also how accurately the AI is now able to sort of deliver results and not just on simple things, on some quite complicated things as well.

So it's an area that sort of myself and the rest of the leadership team are interested in. And what we particularly like about that is I don't need to build a huge amount of infrastructure to enable that technology so we can potentially acquire that on a license-based cost. So I don't have a sort of multimillion pound setup cost in terms of being able to utilize that.

Jackie and the team have been utilizing AI as part of some of the migrations in partnership with SS&C. And whilst that's early stages, I think there is opportunity to expand that as we go. And I suppose part of what the AI has been doing is sort of acting like a pseudo business analyst and the speed, again, and the accuracy at which the AI can be utilized there is really quite impressive.

So we're already seeing opportunities. We are seeing opportunities to use AI on some of our collateral. We used AI to test some of the results materials that we had as well. So you should certainly expect us to be embedding some of those things within the business. And it should mean if you take a medium-term view that we're able to [Audio Gap] more efficiently than we were able to do a few years ago. So that's really for us.

Chesnara Life open, yes, I avoided your second question, but not on purpose. So when we spoke to you all about the Chesnara Life, formerly known as HSBC UK acquisition -- actually HSBC Life (UK) acquisition, sorry, we said there was still a decision pending there. We're going to look at the returns that we felt were available from the new business franchise, both in the short, medium and long term.

So we've taken the decision we're going to be keeping and enhancing the onshore bond franchise that business has. You might remember that we already write onshore business within the U.K. business. We acquired that capability through Sanlam, and that's been a helpful contributor to the new business result this year.

There's been a couple of million pounds worth of value of new business that we've written and having sort of looked at both the distribution arrangements, the sort of margin, the return available, we think that is a franchise that under Jackie's leadership, we can grow.

On the protection side, we -- the final evaluation there was that we couldn't make the required return. So we've closed that to new business. That decision was made in the early part of the year. So we're no longer taking new business from the open market.

We've communicated that to distribution partners. They were pleased with the way that we did that. We were quite upfront with them and try to give them a reasonable sort of lead time on that. So hopefully, it's another example, Mandeep, of us being disciplined around how we're deploying capital. But that's the decision that we've taken there on Chesnara Life.

Gordon? Substack superstar, Gordon Aitken.

I don't need to introduce myself now, do I? So I've got 3 questions, please. First of all, I mean, I like your dividend slide. I know you like it to. And you go all the way back to '04.

So -- and people might look at that slide and think, "Oh, how did you manage to grow your dividend through '08, '09? Because that was a pretty hard time." I hear a lot of people talking about '08, '09 at the moment saying how the current situation we're in is kind of similar.

So I think we were both at Standard Life at the time and I mean we grew our dividend at that point in time. So maybe you can just say why is everything fine because a lot of people obviously are saying it's not fine and your yield is 8% and an 8% yield would tell you that a lot of people think that, that dividend is -- we've just grown at 6%, people think it's not going to grow or think it's going to get cut. So where -- why is it fine?

Related to that, second question is, I mean the last 3 weeks, obviously, we've seen massive upheaval in the geopolitical situation. You can just say what -- to what extent has that impacted the business, if at all?

And then finally, your Solvency II ratio is 140% to 180%, and that's sort of your ideal range. Now I think it's very difficult for everyone these days with stochastic models to know what is 140%, what is 180%. We know that 100% is a 1 in 200 event. So why is 140% the right number? Why is 180% the right number? I mean, what drives that? I'd love to know what 140% and 180% are equivalent to in terms of 1 in -- because it's obviously a lot less than 1 in 200.

And why does the Board think that's the right number? Is it driven by the math at all? Is it driven by what regulators would see? Is it driven by what your shareholders would see? But I think it's a -- I think this is a problem. At the moment, it's just very, very hard for shareholders to understand what your solvency ratio, what it means?

Yes. So I'll do a little bit of history around dividend solvency and then I'll maybe pass to Tom to talk about what does that mean for us now and why do we have a high degree of confidence in continuing that track record.

So I think part of the reason that Chesnara has done such a great job of growing the dividend is we've taken a very prudent approach to the way we run the balance sheet. And that's not just on the liability side, it's on the asset side as well.

So in the appendix of the presentation, we sort of -- we're showing everybody where the asset portfolio is. And it's pretty conservative. You can see there's not anything that's particularly sort of exciting and racy that we're doing there.

So that means that when we go through these cycles, we're not there saying, goodness me, have we got some sort of liquidity crunch that's coming here because there's a lot of strain on that part of the portfolio. And you can see the sort of way the balance sheet moves, it's through a relatively narrow range, and it's sort of -- it's well understood.

And I get that some of that is quite boring, but we like boring in that circumstance because you've got a balance sheet that's pretty predictable. And because we've set that sort of dividend policy to beat inflation, but have that sort of consistency of it as well, what we're not trying to do is sort of over-distribute when cash generation and capital generation is very strong and then when it's not.

So that's really what we've seen historically sort of coming through. And what we think we've done at the business in recent time is we've added to the longer-term cash generation. We've strengthened the balance sheet. We think we've improved the operational performance. So we've got really good line of sight through to those underlying sources of capital generation, but at the same time, still taking this sort of prudent, conservative approach in areas.

I think in terms of the 140% to 160%, that sort of flows a little bit out of that sort of prudent philosophy. And some of the things, sometimes we forget to remind people about, so we have no transitionals in the balance sheet. So we're not still working through that sort of 16 years' worth of Solvency II transitionals that other people can.

If you look at the UT1 position, it's very, very clean. If you look at the asset portfolio, it's pretty conservative. So again, when we run the stresses and scenarios on the balance sheet, and Tom can talk a little bit more about that and maybe how the recent markets sort of flow through in the sensitivities. That 140% to 160% range, we think, is pretty conservative and gives us plenty of headroom to think about doing things like M&A as well.

And I know it's hard for people to look across the market because insurance companies are writing very, very different risks. But we've had a lot of opportunity, particularly off the back of Chesnara Life and Scottish Widows to look again at the capital models, stress test that, and we're very, very confident with that 140% to 160% range. And it's helpful actually that after 2 major deals in capital raising were still materially sort of above that level, which is great.

Do you want to add just on to sort of dividend, why should Gordon be confident that it continues going forward, recent markets and then your views on 140% to 160%?

Yes. Well, I'll start at the end, if it's okay? So on the 140% to 160%, maybe just to round out Steve's point, because it's really a philosophy, right? I mean you're spot on, if we were to reverse calibrate almost the approach here, you would be far less than 1 in 200 for the reasons that Steve outlined, we don't have transitionals, we don't have matching adjustments, et cetera.

So in the discussions that we have with the Board, in particular, it's about does the range give us the right level of strategic flexibility and the 140% to 160% is absolutely does that. So rather than sort of approaching it from a very purist way, which is to say, should we calibrate it to X, we look at that corridor and we say, does that give us enough flexibility and therefore, do we have enough prudence then within that.

I think in terms of looking at what's kind of happening right now and how that effects other things. I mean, it's really interesting. I won't surprise you to know that the things that we look at most closely will be equity markets, interest rates, spreads, kind of the 3 key areas.

And sort of going back to the solvency ratio, the interesting feature of the standard formula approach, which we use, is that actually, in periods of stressed equity situation, the solvency ratio actually goes up, albeit the surplus falls because we have this symmetric adjustments impact, which gives us capital relief.

So in really broad terms, for every 1% equity market underperformance against our assumptions, our solvency ratio actually goes up by 1%, which is an interesting feature of the rules. So we're not complacent about that because if that's sustained, obviously, it has a long-term impact on our own funds. But right now, it's not something that we are overly concerned about.

From an interest rate perspective, we've seen interest rates actually go up, which is actually net positive for us. Now if the curve twists a bit, you can see some little things happen there. But again, that's broadly neutral. So it's really -- right now, it's credit spreads. We've seen some broadening of credit spreads in IG and that will have an impact. But again, it's relatively contained.

So we disclosed sensitivities in here, which, from memory, have us about 50 basis points, cost us about 5 percentage in solvency, so coming off of the level we're at 5% on that sort of 250% plus, again, it's immaterial as things stand right now. So we're keeping an eye on it.

And obviously, if the 3 of those components moved in the wrong direction for a sustained period of time, that would give us pause for thought. But right now, we are very, very far away from that. And the other thing I would just say as well, is that we stress the business a lot through the ORSA process.

So we look at combined stresses where we take situations that are actually far more extreme than what we're seeing right now in the markets, we combine them, and we look at the long-term impact of that over the next 5 years on the balance sheet. And that actually shows that we can support the planned level of investment we have for the business over the next 5 years even in that stressed scenario.

Mandeep?

A couple more, please. Just on OCG, would there be any seasonality in the development between H1 and H2 going forward? I'm just trying to think about how to forecast for '26.

And then related to that, Steve talked about a range of management actions available, maybe some potential later stage Chesnara Life management actions. So what specifically is in the toolkit there? And are those management actions not in the GBP 800 million cash flow guidance?

And then I think in one of the slides you showed a 180% pro forma Solvency II ratio that does not include SWE or these later-stage synergies from Chesnara Life. What would that ratio look like including these 2?

Shall I do -- I'll do 3 because I'll just repeat what I said during the presentation, I think the -- which I'll probably disappoint Mandeep, but -- and then, yes, OCG and management actions.

So we expect once the SWE deal to complete to be above that 140% to 160%. That doesn't include the benefit of a range of further management actions, some of which Tom will come on and talk about what they might be.

So that's why probably when you've been hearing some of the answers, we were very, very comfortable and confident in the position of the balance sheet, particularly exiting into 2026, but also thinking about that impact of SWE, and that gives us plenty of headroom to do further M&A. That means we've got plenty of sort of internal resources to deploy in M&A up to about that sort of GBP 100 million level.

The reason we're not giving more prescriptive numbers is, firstly, that SWE deal, as a reminder, was a lockbox structure that was locked at the end of 2024. And given that we don't expect this to complete until 2026, as we start to get closer to that, we'll be in a position to give more of an update and also on where we get to with some management actions.

But hopefully, that gives investors a good degree of confidence that the group continues to be very well capitalized.

Yes. On OCG, Mandeep, so in terms of the seasonality question, so there isn't an inherent seasonality within the business. So we don't -- because we don't write. So for example, BPA, you see that a lot where you have back-ended activity within that type of product class. So if you look at the underlying OCG that I referred to earlier, that actually emerges in a very smooth fashion.

We will be selective about when we choose to apply capital management actions. And the reason for that is that sometimes, it may well just be commercially advantageous for us to wait or to do something a little bit earlier. So you might see a bit of bumpiness between half 1 and half 2 because we sort of choose to put that bumpiness in because it's just more long-term value to be generated by doing that.

But if you look at the core elements of OCG, which are the runoff of the SCR, the variances in terms of persistency, mortality expenses and so on, that emerges pretty linearly over the course of a calendar year.

And then in terms of the management actions, the types of management actions that we are looking at and will look at for the portfolios we're bringing on. Really, you should expect us to be a bit boring here, which is we're kind of proud of, right?

So we talk a lot about the management actions that we've been deploying, particularly within so far within our U.K. business and at group center, mass lapse, these are things we're actually, frankly, quite good at and have given us quite a bit of optimization benefit over the last 2 years in particular.

So we see quite a bit of opportunity to do more of the same on the new portfolio. So that will be the first block of actions you'll see come through over the next 12 to 24 months.

We're also looking at others, I shouldn't surprise you. I think we're a little bit underweight in terms of actions on the asset side of the balance sheet. So we'll look at opportunities to potentially look at selective re-risking opportunities within those portfolios as well.

But I think when we're next talking about the types of capital management actions we've been deploying on the newer portfolios, they're probably going to sound pretty familiar.

We may go to some questions online?

Yes, we've got a few questions from online. [Operator Instructions] Given -- this is from [ Ming Zhu ]. Given your share capital base, under what circumstances would you consider a share buyback?

And the second question is, what is the plan for Luxembourg? Are you really going to do M&A from there? Or is it just a diversion of management's time and focus?

Thanks, Ming, and thanks for joining us. So on buybacks, you've probably heard us talk about this before. So what we always do against any sort of material capital allocation decision is we run that against things like a buyback and look at those returns.

We've been in a fortunate position where we've had a number of very attractive opportunities in front of us, particularly with regards to M&A. So we haven't seen a scenario whereby sort of not doing M&A and doing a buyback has made sense for the group, not least to ensure that we've been retaining the sort of capital and firepower to execute that M&A strategy.

So suppose the circumstances in which we'd look at that would be if we were no longer confident that was an M&A pipeline available and also an M&A pipeline that was available that generated better returns than something like a buyback. And certainly, I think you've probably already heard from us this morning that entering sort of 2026, I mean neither of those things are the case.

There's plenty of things for us to look at building on the track record of execution that we've done and the early things we're looking at, we would expect to materially deliver better returns than a buyback.

So plan for Luxembourg, so the first plan is to get through change of control, working very closely with the CAA under Tom's sort of sponsorship. We're expecting sort of completion, hopefully, in and around the end of 2026. We do see broader strategic opportunities in that market.

So look, the SWE deal, we like the financials. We think it represents a very attractive return for investors as a sort of stand-alone investment. But one of the other interesting things was potentially giving us access to Luxembourg and adjacent territories.

There's a sort of modern operating platform and associated team in that market that are certainly very keen to work with us to look at M&A. So we'll see how that develops over time, but we certainly think there are a number of opportunities there for us to look at.

And just on the sort of management distraction, I talked in my presentation about having built out sort of capability. I think we've brought in some fantastic leadership into the firm, so that does mean that we can be looking at a number of things at the same time.

So rest assured, we certainly have the sort of management bandwidth to be looking at multiple things as we push the strategy forward.

Thank you. The next question is from Brian Moretta from Hardman & Co. Can I ask about the new U.K. FX hedge? What financial effect do you expect? What's the synergy plans for the Netherlands now that the merger is complete?

Shall I take the Netherlands and do you want to do FX hedge?

So the legal merger, as you rightly say, Brian, and thanks for joining online, is complete, a large part of the first phase of integration, which really was bringing together the management teams of the 2 organizations, is complete as well. There is still more to go in terms of sort of looking at operational processes and bringing those together, bringing other teams together and those sorts of things.

So we would still expect the potential for some further sort of synergies and efficiency improvements as we look into 2026, albeit we've already seen probably 2/3 to 3/4 of that coming through into the 2026 result. And Pauline and Edwin have done a super job sort of managing the business through that.

So I think in terms of the broader plan, so organically, I think the sort of market certainly pre the Middle East conflict had started well. We continue to write term insurance business in that market. As a reminder, we write about 10% to 12% of the [ broke ] term insurance in the Netherlands, which provided a good return for us last year. And we do also see opportunities to grow through acquisition as well. And that's the mandate very much that the team has within that market.

Tom, do you want to talk about U.K. FX hedge?

Yes. So this is a new hedging arrangement we've put in place in the U.K. business. And what it deals with is any FX volatility associated with GBP and dollar within the policyholder unit-linked funds. So to the extent that there is an FX variance, that will impact on the level of owned funds and ultimately, capital generation within the U.K. business.

So what this allows us to do is 2 things really. First is to hedge away some of that owned funds volatility, and secondly, it actually reduces our solvency capital requirement as well because it reduces the level of FX stress that we need to include within the solvency capital requirement as well.

Thank you. We've had a few questions around leverage levels. So I'll just combine a few of them. How are you thinking about your leverage levels? Do you consider your solvency to leverage ratio as well?

Do you want to pick that up, Tom?

Yes. So I think we've been quite explicit about working towards a long-term ambition of 30% or less on our main leverage measure, which is the Fitch measure. So you can see from the results today, we're clearly within that. And on a pro forma basis, we're also materially lower than that 30% level. That's the key metric we look at.

From a Solvency II perspective, we also look at Solvency II ratio as well, that's slightly higher, so that's in the 30s. But we're comfortable at that level because for 2 reasons really. Firstly, we've issued debt ahead of acquiring these businesses and the businesses will complete, and that will basically increase the own funds position of the firm post completion, which will reduce that Solvency II leverage.

But more importantly, we've just got a very strong line of sight on the level of cash flows from the business units and we're amply covered from an interest coverage perspective on both bases.

So yes, we absolutely look at the Solvency II leverage ratio as well as the IFRS leverage ratio. But in terms of its positioning, no concerns around where that is, and we think that's actually in a very good place and direction of travel as it happens is likely to be down as we move through the integration processes.

Thank you. No further questions from the webcast at the moment. So Steve, maybe I can hand back to yourself for your closing remarks.

Yes. So thanks, everybody, for joining us this morning. As you can see, as we enter 2026, the group is in a very strong financial position with attractive opportunities to grow. So thanks for joining, and have a great rest of your day.

Welcome to the Chesnara Investor presentation on the acquisition of Scottish Widows Europe.

With that, I would now like to hand you over to CEO, Steve Murray.

Thanks, [ Sergey ], and good morning, everyone. Thanks for joining this Chesnara conference call. So I'm Steve Murray, Group CEO; and with me is Tom Howard, our group CFO.

Earlier today, we announced the proposed acquisition of Scottish Widows Europe from Lloyds Banking Group. This is another important transaction for the group and our second material deal in the last 12 months following the HSBC Life (UK) acquisition, which completed in January. This deal further demonstrates the significant momentum within our M&A strategy.

So what will we cover on the call? Well, I'll start with the highlights of the deal before Tom provides an overview of the Scottish Widows Europe business and further detail on the financials. I'll then finish with an overview of the Luxembourg market and a summary of the key elements of the transaction. You'll also then have plenty of time for questions at the end of our short presentation. So let's look at why we believe this is another attractive transaction for our investors.

The deal adds around EUR 250 million of lifetime cash generation to the group, including around EUR 100 million in the first 5 years. The total consideration of EUR 110 million accounts for around 64% of Scottish Widows Europe's eligible own funds, with the deal expected to be materially value accretive at completion. It enables access to another interesting market, allowing us to further participate in future in-market and cross-border European consolidation.

The transaction is fully funded from available cash resources, including the partial utilization of the proceeds from last year's successful RT1 issuance. The deal strongly fits with all elements of our capital allocation framework. And post transaction, we expect to remain comfortably above our normal solvency operating range of 140% to 160%.

The acquisition is our second major transaction in the last 12 months and 16th deal to date. It underlines the strength of our pipeline and our ability to continue executing disciplined accretive M&A. And post deal, we continue to retain financial flexibility and wider bandwidth to prosecute further M&A.

So with that, I'll hand over to Tom, who will give a brief overview of the Scottish Widows Europe business before covering the financial benefits of the deal in a little more detail. Over to you, Tom.

Thanks, Steve, and good morning, everyone. Scottish Widows Europe is a closed life and pensions business headquartered in Luxembourg. It manages around EUR 1.7 billion of assets and 46,000 policies and is currently part of the wider Lloyds Banking Group.

The business manages legacy unit-linked and U.K. with-profits products that were sold via a branch structure into Europe, mainly into Germany. Now these types of products are well known to us, and we successfully manage many of them already across the Chesnara Group. The business operates on a proven and scalable European administration platform and is led by an experienced local management team, giving us continuity and local market knowledge from day 1.

The acquisition of 100% of the share capital of Scottish Widows Europe and associated legal arrangements remain subject to regulatory approvals, and we've already been actively engaging with the Luxembourg regulator in advance of today's announcement and are working towards deal closure in and around the end of this year.

From a financial perspective, today's deal meets all of the requirements of our capital allocation framework. It delivers a material sustainable stream of future cash flows for the group, and we retain strong levels of post-deal solvency cover and central liquidity to support further M&A activity.

On a pro forma basis, the group's solvency coverage ratio of 173% remains comfortably above the upper end of the group's operating range of 140% to 160%. The risk profile of the Scottish Widows Europe portfolio is also complementary to the group's existing portfolio. And as a result, the pro forma Solvency II sensitivities are in line with existing impacts. This maintains the group's strong resilience to a wide range of economic and demographic stress scenarios.

We also expect the deal to be slightly accretive to leverage, and we expect the group's pro forma leverage position to be significantly below our long-term ambition of 30% or less post closure of this deal. In calculating these pro formas, we have also allowed for impacts of the recently completed HSBC Life (UK) deal and the group's recent RT1 bond issuance.

Finally, it's also important to note that the pro forma calculations do not incorporate further potential upside from capital and other late-stage synergies from the integration of the Scottish Widows Europe portfolio into the Chesnara Group.

And with that, I'll pass back to Steve.

Thanks, Tom. So we've previously highlighted to our investors that there were attractive opportunities in the wider Benelux region that could be of interest to us. We believe Luxembourg is an attractive market for Chesnara and one we've been monitoring for some time. It's a stable AAA-rated jurisdiction with around EUR 235 billion of total life insurance liabilities and a dedicated regulator with a strong supervisory framework.

The EU passporting regime allows Luxembourg insurers to serve customers across that single market. It's a relatively fragmented market and one where there's a long tail of businesses that haven't yet reached scale. There are also a few incumbent consolidators, and we believe our track record and expertise can differentiate Chesnara as a potential future consolidator in Luxembourg and wider Continental Europe. And this can be further supported by the local expertise and distinct stand-alone policy administration platform that comes with Scottish Widows Europe.

So the acquisition of Scottish Widows Europe strongly aligns with our stated strategy of seeking out and delivering value-enhancing M&A. It's expected to add an additional EUR 250 million to the group's lifetime cash generation, and it further enhances the value of the group following on from the materially accretive HSBC Life (UK) deal we completed in January. And we believe the acquisition further demonstrates both our position as a leading European consolidator and our ability to source and deliver value-accretive acquisitions for our investors.

I said at our half year 2025 results presentation that we're excited about the momentum building across Chesnara and that we're continuing to see attractive M&A opportunities across the U.K. and European market. We, of course, remain fully focused on ensuring the migration of Chesnara Life, the new name for HSBC Life (UK), is carefully managed as well as moving forward with the change of control process for Scottish Widows Europe.

Alongside this work, we continue to actively assess M&A opportunities that we believe could provide further attractive returns for our investors. So with another acquisition announced and a strong future pipeline, we continue to believe that there really is a lot to look forward to here at Chesnara.

So with that, we'll hand back to Sergey, our operator, and we'll open up for questions, where Tom and I will also be joined by Sam Perowne, Head of Investor Relations and Strategic Development. So back to you, Sergey.

[Operator Instructions] And we're going to take our first question, which is from Michael Huttner from Berenberg. What is the reason for the attractive valuation? 64% of own funds? And is there another metric which helps understand how good this deal is?

Thanks for the question, Michael, and for joining us this morning. So when we look at the deal and we look at what sort of Lloyds as the -- as our partner here we're sort of looking for, one of the things that they wanted to ensure that there was a strong counterparty that had knowledge of U.K. sort of products, could make sure that these customers' assets were looked after over the short, medium and long term. And we also had the regulatory relationships to make sure that regulators would be sort of comfortable with the transaction. So all of those things have sort of flowed into the deal and the partnership that we've had here with Lloyds Banking Group, and it's been a sort of pleasure to work with Chira, Donald and the broader team at Lloyds Banking Group on this.

It's a slightly different deal to HSBC Life (UK), where clearly, there was a new business franchise as part of HSBC Life (UK). This is a sort of closed book in runoff. So all of those things sort of flow into the return profile here. You're right to point out, look, we see the entry multiple is attractive for the group. We see the cash flow return, just on your second point as a key measure that we think investors should be looking at. And the total lifetime cash generation of EUR 250 million with EUR 100 million of that coming through in the first 5 years, I think, demonstrate a good return on capital for investors from the deal, and we're excited to be announcing that this morning.

Thank you, Steve. A further question from Michael. What does this do to the annual cash profile? And what sort of percentage uplift is there?

Tom, do you want to pick up Michael's second question?

Yes. Thank you, Michael. So look, the -- I mean, we've talked in terms of the 5-year cash profile. So if you look at sort of what that means in terms of an average uplift in the year, clearly, not every year will be the same. So it's not a case of sort of taking the 5-year cumulative cash flow and dividing by 5. There will be some years where it will be slightly less than an average, some years where it will be slightly more. But in very broad terms, we expect this deal to add about 20% to the cash flow profile of the group, so the -- on average over the first 5 years.

Okay. We've got our next question from Abid Hussain from Panmure Liberum. Acquisition price, the discount to own fund seems materially -- material relative to the size of the deal. From that, I think we can assume that this will be materially accretive from day one. Any reason why you managed to secure the large discount?

Thanks for the question, Abid. I covered a little bit of this, I think, with Michael's question. So look, we have a disciplined capital allocation framework that we apply to M&A. It's important that we can demonstrate to ourselves that where we're deploying capital, we get an appropriate return for investors. So that will sort of always flow into our analysis for a deal. There are some differences with this deal to some of the other ones that we've done. So it's a closed book deal where this book sort of runs off over time, which is slightly different to that HSBC Life (UK) transaction.

But look, we -- the fact that we're announcing the deal this morning shows that we believe that this provides great returns for investors. I suppose if you take HSBC Life and the Scottish Widows Europe deal together, having -- bringing in EUR 800 million of additional cash generation from that HSBC Life (UK) deal, and then an additional EUR 250 million of lifetime cash generation from Scottish Widows Europe, very much means that when we look forward at the future cash generation of the group, we further enhanced that sustainability going forward, which is clearly a key thing that sort of Tom and I and the broader team have been looking at. So very pleased to be announcing this deal and partnering with Lloyd's, and we look forward to proceeding through the change of control process and working with the local team in short order on this.

Thank you. Follow-up question from Abid. Capital synergies, can you talk to any capital synergies that you can harvest from this deal or as a result of being larger and more diversified? And deal pipeline, can you give any color on what the pipeline is looking like for the rest of the year?

Shall I pick up pipeline, Tom, first, and then we can come back to you for capital synergies. So look, I said in my presentation that when we spoke to the market as part of the half year results that we were seeing an attractive pipeline, I think more broadly, if you look at how 2026 has started across the broader financial services sector and then down into insurance, you're certainly seeing plenty of activity, some very, very large deals having been announced.

And when we look at the various sort of territories, broader Benelux as well, we're expecting to have plenty of interesting opportunities to evaluate. And hopefully, I was clear in my presentation that we've done these 2 material deals in the last 12 months, but we retain financial firepower to do further acquisitions. So at a group level, we have sort of over EUR 100 million of resources that we can deploy immediately before then looking at the debt capital markets, equity, working with strategic partners that we've talked about as those other sort of sources of capital for us.

And the way that the group structures work means that we have a lot of operational bandwidth there because we have sort of separate operating platforms in the different jurisdictions. We expect, as a reminder, to complete the HSBC Life (UK) migration sort of by the back end of 2026, which means we could be starting to look at U.K. acquisition opportunities now and progressing those through the sort of deal pipeline. So we remain positive. We think it's a good market for us. And the fact that we've sort of partnered with Lloyds Banking Group off the backdrop of having partnered with HSBC, having partnered with Canada Life, having partnered with Sanlam and other large financial services firms, again, we think shows that people can trust us to be good custodians with policyholders and customers going forward. So look, we're excited about the pipeline and the future prospects.

Tom, do you want to pick up Abid's question on capital synergies?

Sure. Thanks, Abid. So really there are 2 types of capital synergies that this deal really brings to the table. So the first of what I call structural synergies. So exactly as you pointed out actually in your question, the fact that this deal increases the size of the group, but it also brings in a portfolio from a different territory, actually means we have more efficient diversification of risks across the group at the top co level. And that's something which I say is structural and which will sort of naturally evolve as we integrate the business into the broader group.

Then there are a second category of capital synergies, which are -- actually will be familiar to anyone who's been listening to our earnings updates. So the types of things we currently do within the U.K. business, for example, like mass-lapse reinsurance, foreign exchange hedging. So really where we see the opportunity on the second category of capital synergies is really just to extend tried and tested and proven capital management activities from elsewhere into the group and deploy those within the Scottish Widows Europe portfolio as well.

So -- and certainly, what we haven't done, just to be clear as well, within the deal assessment or within any of the numbers that we are disclosing to you here today, is bake in an array of new management actions that we have not yet deployed elsewhere in the group. So that gives us a strong level of confidence that, number one, we can deploy those management actions. But also number two, our view is we're presenting a relatively prudent view of the cash flow generation profile from this deal.

Thanks, Tom. Next question is from Larissa Van Deventer from Barclays. You expect the deal to generate EUR 100 million in cash within 5 years, which is just under cash breakeven. What is the average duration of the book you are buying? On the book, is conversion to annuities automatic as contracts run off? And if not, what is the process to recapture those funds? Is your focus increasingly shifting to Continental Europe?

So Tom, why don't I pick up that sort of final part around sort of strategy and where we might be looking. And maybe you and Tom can sort of pick up a little bit around duration, the sort of products. And I think Larissa is quite rightly sort of pointing to what happens to endowment policies as they come up for their sort of retirement agent. And thanks for joining us this morning, Larissa.

So I certainly wouldn't look at this as a sort of fundamental shift to sort of Europe at the expense of the U.K., Larissa. We can do deals across sort of all of those markets. It's the great thing about the sort of structure that we have here with individual operating platforms where we're regulated directly within all -- pretty much all the territories that we operate. So that gives us quite a lot of flexibility. I think we've consistently said, and we certainly said at the half year that we were seeing some interesting opportunities in wider Benelux, and this clearly is one of those, and it's great to have announced this deal this morning, but there are certainly other things for us to look at.

We are, though, continuing to see the U.K. as an active market off the back of the HSBC Life deal, and we're continuing to have sort of conversations with potential counterparties in that market as well. And provided that we can see an attractive return for shareholders, provided that we're convinced that we have the operational bandwidth and capability to bring these books of business in safely and run those products and deliver on the promises that those customers have been made, we're quite comfortable looking at a range of territories.

And the platform that we get as part of Scottish Widows Europe does give us some further strategic optionality in terms of the policies that are administered on the system that comes with Scottish Widows Europe as well. So yes, so a good problem to have with plenty of opportunities across various jurisdictions.

Tom, shall I sort of hand to you and Sam on sort of duration and products and those sorts of things?

Sure, Steve. I'll pick up duration effect, and I'll pass to Sam on the product question. So I think -- so Larissa, yes, I mean the duration point is an important one. And actually, that's part of the reason why we -- when we've really been very deliberate to talk about the cash flow profile of deals more recently, so we did that obviously for HSBC, and we're doing that today.

So I think the way I think about the duration is when you look at the emergence of the cash profile, over 60% of that cash generation we expect to emerge post 5 years. So that will give you a sense without going into specifics of the sort of the duration of the portfolio that we expect that the longevity of the portfolio to be significantly beyond 5 years. So hopefully, that gives you a sense of that.

I think on the product side, Sam, do you want to pick up the question on the conversion approach on the endowments, the annuities?

Yes. Thanks, Tom. So the main part of the products that are sort of effectively sort of U.K. style with-profits endowments, but they do have the ability to then convert at maturity into an annuity. Now that slightly depends on the exact product type, but we do expect a fairly high level of conversion into annuities over time. And that really is part of the reason that the duration of the book is relatively long as those annuities come through.

In terms of how that works in terms of the reinsurance agreements back into the Clerical Medical With-Profit Fund, there's, in effect, 2 separate reinsurance agreements, as you've seen from the release, one covering the investment risk within the with-profit fund for the endowments and then there's a separate one for those vesting annuities as they get taken up by policyholders.

Thank you very much for that, Sam. A follow-up question from Abid from Panmure Liberum. Free cash flow and dividend. Our estimates, the deal will increase the free cash flow by some 20% from full year 2027. What do you plan to use the additional capital generation for reinvesting into growth, accelerating the dividend or both? And the final part of his question is product set. Are there any odd features we should be aware of within the incoming product set?

So why don't I sort of pick up that broader question on sort of cash flow. And then, Tom, you might want to sort of supplement that in and sort of comment on how this sort of adds to the cash flow and you and Sam can then sort of talk about product set as well, just building on Larissa's question.

So firstly, I'm delighted to get a question about what we'll be doing with the sort of the additional cash generation. When I started as Chief Executive of Chesnara over 4 years ago, a large part of the questions that I was getting at that point was, is the dividend sustainable? Is there a sort of cliff edge coming? So the fact that we're now talking about how do we sort of deploy this excess capital that may be coming through off the back of already having announced a step-up in the dividend off the back of the HSBC Life deal. As a reminder, we've signaled to the market that we're expecting to accelerate that historic dividend track record by 1 year and lift the dividend by 6% at sort of full year '25 in the interim 2026. I think it's a sign that hopefully, we're demonstrating a little bit more transparency around where the cash is coming through, but investors comfort in the additional sort of cash flow that's coming through across the group.

We're still seeing -- certainly on the strategic side, as I sort of talked about earlier, we're still seeing good opportunities to look at in the market. And when we do our pipeline mapping over sort of 3 years, our expectation is that we're going to have good opportunities to look at for investors. So I would certainly see there being strong uses of the group's capital to deploy in M&A as you see this consistently do over the last 4 or 5 years as well.

Tom, I don't know if there's anything that you want to add on sort of cash flow more broadly before just turning to the product set itself.

Yes. I mean, Steve, the only thing I would really add is to say that we have been talking a lot recently about our capital allocation framework and how we use that to think about M&A. So free cash flow is an important aspect as is retaining a strong level of solvency surplus, as is ensuring we have liquidity and as is ensuring that our operating leverage is attractive relative to that long-term ambition. So I guess all I would add to Steve's comments is to say that as we're ticking each of those boxes, it just gives us a huge amount of future flexibility around things like investment in the business, decisions around the dividend and so on. And this deal just kind of adds an additional layer of flexibility on top of what we already had.

I think on the product side, I mean, the short answer to your question is, is there anything odd portfolio is no. I think in my comments earlier, actually, I made the point that these are product sets that are very well known to us in the U.K. And if you think about how these products originated, I mean, these are effectively U.K.-based products, which were passported out to Europe post-Brexit. So these are very, very well known to us.

You'll see as well that -- and we covered this in some detail in the RNS that we have the 2 reinsurance arrangements in place with the Clerical Medical With-Profits Fund, as Sam pointed out earlier. So to the extent that contracts have certain features. So for example, guaranteed annuity options. Those features are reinsured back into the with-profits funds as well. And just that gives us a level of comfort in the operation of the policies, but also from a financial standpoint that we have a level of coverage against potential future costs of any guarantees on those products as well. So I started by saying the short answer is no, then I gave you a long answer, which is also no, but that is basically the answer. So we are comfortable that these are products that are very well known to us.

Thanks very much, Tom. Our next question is from Andreas van Embden from Peel Hunt. Will Scottish Widows U.K. continue to reinsure Scottish Widows Europe under the annuity reinsurance and the investment reinsurance agreement until the policies run off? What is the amendment and restatement under the deal?

And second question, what is the certainty that the remaining cases in relation to the policy claims will remain within the EUR 60 million provision set? And what is the range of outcomes?

Thanks, Andreas, and thanks for joining this morning. I'll pick up that sort of second point. And then, Sam, why don't I hand back to you for the first point just around the -- how the sort of different agreements are working. So you're right. So within -- as part of the deal, I think one of the important elements upfront was Lloyds Banking Group being very, very clear that where there had been some sort of historic challenges with a group of policyholders that they were going to sort of stand behind those, and there was already a sort of deed of indemnity in place around that, which gets maintained going forward.

From our perspective, the way that works is that the liability ultimately is capped, as you've pointed out to in the RNS, and that's a hard cap. So that's why we're sort of confident that we've got a clear view on that liability. There are teams in place to sort of support the activity that's required on that book. It's quite a well-established and long-established program. And that was a sort of key element of the deal upfront that Lloyds wanted to make sure that they stood behind their policyholders, and that meant for us, that was a sort of an issue that was dealt with very early as part of the deal process.

Tom, do you just want to pick up the -- sorry, Sam, do you want to just pick up the sort of reinsurance points there?

Yes. Maybe if I just deal with the second part of the question first. So obviously, Scottish Widows Europe has been part of the Scottish Widows Group for quite some time. So as part of this transaction, when those -- when the Scottish Widows Europe business becomes part of a separate group, we obviously required some amendments to the existing reinsurance agreements that are in place. So that's the reason why there have been some amendments and restatements under this transaction. That will -- those changes will require U.K. regulatory approval as well.

In terms of the length of the policies, so yes, they will remain in place until the policies run off. Obviously, there's the ability to terminate under very limited circumstances, but we would intend -- we would expect that both those reinsurance agreements to remain in place for the full maturity of the lifetime of the business.

Next question is from Will Rosier from Canaccord Asset Management. Can you please touch on Lifeware a bit more? How well do you know them?

Thanks, Will, and thanks for the question and for joining this morning. So we've been able to spend a bit of time with Lifeware during the deal process. We've also had the feedback from the sort of Scottish Widows Europe, broader Scottish Widows and Lloyds Banking Group team who've been working extensively with them as they've been migrating from their own legacy platforms onto the sort of newer system over the last few years, and we've also been able to take market references and also get feedback from the regulator. And all of that has given us a good level of confidence both in the system itself, but also as the firm.

I've spoken to the CEO of Lifeware personally a couple of times as well. So having that sort of platform there fully functioning, the fact that the migration of policies onto a more modern platform has already taken place was an attractive element of the deal from us. And I suppose the administrative capability that, that Lifeware system has is a little bit different to some of the other platforms that we have in Europe, which are focused more on sort of term insurance and savings products in the Netherlands and the group pensions and custodian business lines and life and health business that we have in Movestic in Sweden. So it sort of supplements that capability quite nicely.

When we look at the U.K., as a reminder, we have SS&C as our primary sort of go-forward policy administration platform. We're fully focused on ensuring that the migration of HSBC Life (UK) goes well, working in partnership with them. Who knows in the future, there could be opportunities to collaborate with them more broadly, including in Europe. But having the stability of that platform on a more modern sort of technology stack and also a company that's sort of used to operating in this market and some other European distinctions, we felt was an attractive part of the deal.

Thanks, Steve. [Operator Instructions] A question is from Phoebe Baker from Chelverton Asset Management. How will this acquisition impact the dividend?

Thanks for the question, Phoebe. The -- so we previously talked alongside the HSBC Life (UK) acquisition that our expectation was given the attractive financials and the cash flow profile that we'd be looking at a sort of 1-year acceleration of the historic dividend profile. And I know you'll be aware of this, Phoebe because Chelverton have been a long-term supporter of Chesnara. But for those that might be a little bit newer to the story, we have the best dividend growth track record in U.K. and European insurance. We've increased the dividend every year for the last 20 years plus. So we felt there was a sort of strong signal to investors off the back of that successful deal and the associated rights issue that we're able to sort of say there was also going to be a sort of a 1-year acceleration in that sort of historic circa 3% profile that we tend to have, which is inflation beating for investors up to sort of 6%.

When we look further forward, look, we're bringing in further sort of long-term cash generation of EUR 250 million, EUR 100 million of that, that we're expecting in the first 5 years. That's on top of the EUR 800 million lifetime cash generation in HSBC Life (UK) and around EUR 140 million that we expect over the first 5 years there. And we think that adds very much to the long-term sustainability of the group's cash flow, which we expect to turn into dividends. And we know that, that long-standing sort of dividend growth has been important to investors. So that should help sort of support that going forward. So that's how we see this deal in the context of the dividend.

Thank you. We've got no further questions at the present time. So Steve, I'd like to hand back to you for any closing remarks.

Yes. Thanks, [ Scott ]. So that ends the Chesnara conference call for today. Thanks for joining us. We look forward to speaking to you alongside our full year 2025 results presentation on the 24th of March. So please enjoy the rest of your day. Thanks for joining.

Welcome to the Chesnara Interim 2025 Results Presentation. I'm Steve Murray, Group Chief Executive. And with me today is Tom Howard, our Group Chief Financial Officer. Tom and I are hosting the presentation today in London from Panmure Liberum's offices. And as well as the people here with us in London, we also have people dialing in from across the world, including Chesnara colleagues from the U.K., Sweden and the Netherlands. Thanks for joining us today.

So what will we cover? Well, I'll start by looking at our headline financial results and highlighting some of the key activities we've undertaken over the first part of 2025. Tom will cover the financial results in more detail, and I'll then finish looking at some of our future areas of focus. We'll have plenty of time for questions at the end of our presentation. For those of you that are watching online, you can submit questions during the presentation itself. And for those of you here in the room with us, we'll come to you directly with microphones.

Our strategy remains fully focused on the 3 areas set out on this slide: Managing the books of business we have efficiently and effectively, looking to execute value-accretive M&A and writing profitable new business. And embedded across these strategic priorities is our aspiration to become a sustainable Chesnara. This focus helps ensure we have strong line of sight to future sources of value and long-term cash generation, which in turn supports our long-standing progressive dividend. And I'm pleased to report it's been another successful period of financial and operational delivery, including the achievement of several strategic milestones for the group. In July, we announced the proposed acquisition of HSBC Life (UK), the largest deal in our history. That was partly financed by GBP 140 million rights issue, which was strongly supported by our investors.

As well as this major strategic milestone, we also completed the legal merger of our Dutch businesses, migrated another U.K. book onto our new platform managed by SS&C, and we issued our first RT1 bond, raising a further GBP 150 million of capital to support future M&A activity. And on the 18th of August, we were admitted into the FTSE 250 for the first time, and we've already seen improved liquidity and reduced volatility in the trading period since. In this period of significant strategic progress, we've also delivered positive financial results in the first half of the year. We saw strong cash generation, up 26% versus half year 2024. Our solvency ratio remains well above our operating range, and the contribution from new business remains robust. And off the back of our strong cash generation and solvency position, we've yet again announced an increase in our interim dividend.

On the 3rd of July, we announced the proposed acquisition of HSBC Life (UK) Limited, our 15th and largest ever acquisition announced. We presented this slide to investors back in July, highlighting some of the key attractions of the deal. These include the expected incremental lifetime cash generation of over GBP 800 million, pricing being at a very healthy discount to own funds, the addition of over 450,000 policies and around GBP 4 billion of assets under administration and the acquisition providing us with further strategic optionality around the U.K. new business capability that we're acquiring. The deal positively met the 4 parts of our financial framework that we have for assessing deals, covering solvency, leverage liquidity and future firepower. Overall, we believe the acquisition will deliver compelling value for investors and represents a major milestone for the group. And we're looking forward to welcoming HSBC Life (UK) people and customers to Chesnara in the early part of 2026.

I'm pleased to confirm we're again increasing the interim dividend by 3%. This maintains our unrivaled track record of consecutive dividend growth across the U.K. and European insurance sector. As part of the HSBC Life (UK) acquisition announcement, we also confirmed a single year increase of 6% to the full year 2025 and interim 2026 dividend, representing a 1-year acceleration of our recent dividend growth trajectory.

So with that, let me hand over to Tom, who will take us through the financial results in more detail.

Thanks, Steve, and good morning, everyone. So it's been another period of growth for Chesnara. We're reporting a strong set of financial results, and we're increasing returns for our shareholders. As Steve mentioned earlier, we've also been busy since the half year with the announcement of the HSBC Life (UK) acquisition and our successful equity and debt issuances. These are transformative actions for the financial profile of the group. And whilst they won't form part of today's results, I will provide pro forma impacts later in this presentation.

So looking at the financial highlights over the half year. The group's cash generation grew year-on-year to GBP 37 million. The solvency ratio increased by 4 percentage points to 207%, and our leverage ratio remained steady at 31%. And the group continues to have strong predictable sources of future value from the existing balance sheet. Both own funds and the IFRS contractual services margin benefited from positive operating and economic performance across our businesses. And finally, and importantly, we're continuing to deliver for our shareholders, extending our track record of dividend growth.

Our operating divisions reported a total of GBP 55 million in cash generation over the half. In the U.K., results benefited from positive market conditions, particularly in Q2 and management actions from the extension of existing mass lapse reinsurance coverage and the implementation of a currency hedge. In Sweden, whilst we saw solid operating performance, this was offset by negative economic variances, primarily from the continued depreciation of the U.S. dollar against the Swedish krona. And our businesses in the Netherlands benefited from both positive operating results and the impact of lower interest rates and credit spreads over the half. After allowing for center costs, cash generation of GBP 37 million is 26% higher than the prior year. And at 1.4x, it continues to provide strong coverage against the dividend.

Turning to the balance sheet. The group's solvency ratio remains strong and it's resilient to changing market conditions. Over the first half, operating activities generated 8 percentage points in solvency surplus, comfortably covering the 4 percentage point cost of the dividend. Management actions contributed a further 4 percentage points in solvency surplus, reflecting the U.K.'s reinsurance and foreign exchange hedging arrangements, which I touched on earlier. After factoring in Solvency II tiering adjustments, the group's solvency coverage ratio of 207% remains comfortably above our operating range of 140% to 160%, and this gives us significant financial flexibility to invest for further growth.

Group own funds were resilient over the period, supported by positive operating and economic performance. The operating result increased year-on-year, driven by improved expense trends in the U.K. and the Netherlands and another period of robust new business performance across the group. This was partially offset by adverse impacts from lapse activity in Sweden and mortality experience in our skill and business in the Netherlands. Favorable market conditions supported a positive economic result, and this continues to be a recurring source of value creation for the group. After allowing for dividends and tax, the closing own funds of GBP 632 million represents a prudent measure of the future value available to the group across the entirety of the insurance and the investment portfolio.

Moving to IFRS. The contractual services margin grew by GBP 11 million over the half, increasing the store of future value within the insurance portfolio and supporting growth in the IFRS capital base. The insurance result increased year-on-year, reflecting stronger underlying operating performance. The net investment result was lower year-on-year, reflecting positive but less favorable market conditions. And foreign exchange impacts contributed positively to the IFRS capital base, mainly from the depreciation of sterling relative to the euro and the Swedish krona. Overall, the IFRS capital base was broadly in line with the prior year after allowing for the payment of the full year '24 final shareholder dividend.

So I mentioned earlier that today's results don't allow for the impact of a number of significant post-balance sheet events. The group's proposed acquisition of HSBC Life (UK) will materially increase the scale of our U.K. business, and it will significantly increase the group's financial flexibility into the long term. Our recent rights and debt issuances totaling GBP 290 million will provide the group with resources to both fund the acquisition and to retain significant levels of capital and liquidity headroom to invest in further M&A opportunities.

So what does all of this mean for the numbers? Restating the opening 2025 balance sheet to allow for these impacts shows the following. The group's own funds will increase by 60% to just over GBP 1 billion, reflecting the impacts of both the integration of the HSBC Life (UK) portfolio and the additional capital raise. At just below 200%, the Solvency II ratio remains significantly above the upper end of our operating range. Our leverage position also improves. On a pro forma basis, we expect the group's leverage ratio to improve by around 5 percentage points, comfortably within our long-term target of 30% or less.

Now I've previously used this slide to illustrate the recurring and predictable components of the group's cash generation. And today's results show that we continue to generate organic surplus in each of the areas highlighted. Moving from left to right. Firstly, positive operating results were driven by both the runoff of the group's capital requirements and improved operating experience in the U.K. and the Netherlands. Secondly, market conditions drove positive economic surpluses as returns exceeded the prudent risk-free levels that we assume within our models. Thirdly, we implemented management actions to optimize the capital position in our U.K. business, freeing up available surplus. And lastly, we continue to write profitable new business across the group. And of course, all of this is before we allow for the impact of the additional GBP 800 million of long-term future cash flows we expect to generate from the HSBC Life (UK) acquisition.

And so to conclude, continued delivery of our strategy has led to another period of strong financial performance for the group and increased returns to our shareholders. The HSBC Life (UK) deal, along with our successful equity and debt issuances will transform the financial flexibility of the group. And we continue to have a robust balance sheet with significant levels of capital resources and liquidity to deploy against an active M&A pipeline.

And with that, I'll pass back to Steve.

Thanks, Tom. So at the start of the presentation, I highlighted a number of areas of major strategic delivery so far this year. Looking forward, I wanted to set out where I expect to see the main activity across the group over the coming months. Following the completion of the legal merger of our Dutch businesses, the financial and operational work required to more fully integrate the business is already underway and will continue throughout the remainder of 2025 and 2026. We continue to see the potential for further expense and capital synergies from this activity. Our work in the U.K. continues to move further books onto our new platform with SS&C, albeit with some rephasing to incorporate the anticipated migration of the HSBC book in 2026. And as a reminder, completion of the HSBC Life (UK) deal is targeted for the early part of 2026.

We're actively working on further M&A opportunities, and we continue to expect the majority of our future growth to come from M&A. And we see some further opportunities to enhance our new business contribution from our existing business lines as well as some interesting strategic optionality from the capability in HSBC Life (UK). And finally, in September, we'll be publishing our first ever climate transition plan, which will set out some of the more detailed steps we'll take to meet our ambition to be a net zero business by 2050. On M&A, we continue to see a positive M&A pipeline. We believe the announcement of the HSBC deal shows that we're well regarded positively by both large financial institutions and regulators and so we are well positioned to take advantage of further M&A opportunities, including larger-sized deals. And we're continuing to positively assess opportunities now.

In the short term, there's a little more work happening in Europe, where we have the operational capacity to take on M&A opportunities immediately. And whilst we're mindful of ensuring we deliver the planned completion and migration of HSBC Life (UK), there continue to be further potential opportunities in the U.K. as well. So overall, we see a positive M&A pipeline well into 2026 and beyond, and we retain the capacity, capability and firepower to deliver. I mentioned earlier that the HSBC Life (UK) deal strongly met all 4 areas of our financial framework, which is set out on this slide. Our approach to financing the HSBC deal, including our GBP 140 million rights issue and the subsequent GBP 150 million RT1 bond issuance means that our level of immediately available firepower has been restored to over GBP 200 million.

So we've achieved several major strategic milestones for the group so far this year. We've seen strong financial results, a further increase in the interim dividend, the announcement of the largest acquisition in our history, the completion of the legal merger of our Dutch businesses, and we've restored our immediately available firepower to support future M&A. I want to thank colleagues across the group for all their efforts so far in 2025 in what has been an exceptional period of delivery. There's more for us to do, and I continue to believe there's a lot to look forward to here at Chesnara.

So let's pause the presentation, and we'll turn over for questions. We're going to find a mic. Abid, your hand was up quickest. So well done even though you're late into the room.

It's Abid Hussain from Panmure Liberum. I've got -- I'll limit myself to 3 questions. And if there's time at the end, I'll come back with my other questions. So the first one is on the uses of cash generation. Our own capital generation modeling suggests that the jaws between the free cash flow and the dividend are starting to open up over the medium term. Are you hoping to utilize that retained capital for growth opportunities? So could you outline the uses for the increasing flow of cash that we see over the medium term? So that's the first question.

And then the second one is on firepower and M&A bandwidth. I think you said there's over GBP 200 million firepower. Clearly, the liquidity at the center looks very strong on a pro forma basis. But just wondering, does the team have the bandwidth to conduct other transactions in parallel with integrating and digesting the HSBC deals? Any color on that, please?

And then the final one is on the M&A pipeline. Can you share what type of potential deals are in the hopper? I think you were looking at other deals before the HSBC deal landed. So could you just give us some color in terms of geography and product? And then sort of some background info in terms of is there increased demand from vendors to clean up their own books given that the valuations in the listed market is undemanding. Is there sort of an additional demand to the usual demand for IT, tech and sort of the unit economics, which is the sort of the underlying reason? Is there any additional demand that you're seeing off the back of that?

Okay. Thanks, Abid. Shall I take -- I'll take pipeline and firepower and then sort of uses of cash, you can give your perspectives on how that jaws opens up and what we'll be using that for. So in terms of pipeline, what we've tried to do over the last couple of years is give a little bit more color around the sorts of things that we're looking at. And you're right to say we were looking at other things alongside the HSBC Life (UK) deal. So from a capacity perspective, even though we've got a relatively small central team, we can scale that up through the use of advisers. We obviously utilize the strong support of business units. So on the HSBC Life (UK) deal, Jackie, who's in the room and her team played a huge role as part of that deal supporting diligence and doing the sort of integration and migration planning.

So that does mean that the sort of the pipe that we have centrally to assess deals, do due diligence is quite sort of expandable. And we can look at multiple things at the same time. And we have done that over the last few years as well. And we certainly went -- a lot of that burden sort of falls on myself, Tom and Sam. And we certainly feel we've got the bandwidth to do more. And when we announced the HSBC Life deal on the Thursday, we took a sort of break on the Friday, and we were back at it on the Monday. that's how we work, and that's because we're seeing very attractive opportunities to assess.

In terms of sort of geographies, so we are seeing opportunities in each of the geographies that we exist in at the moment. We've talked about sort of wider Benelux. So we are seeing some opportunities in sort of adjacent markets to the Netherlands, particularly that might be quite interesting. When we look at those opportunities there, they're all product sets that we run within the existing portfolios that we have. So some of that is unit-linked business. We are seeing still some term assurance opportunities as well. And I think we've talked before that one of the things that Tom and I have been particularly focused on is looking forward at the extension of the cash flows of the group into the long term. HSBC Life (UK) is very, very helpful around that with that over GBP 800 million lifetime cash generation coming through. And we are seeing some books of business that have some further long-term sort of cash generation. I think I go into any more detail, you'll start to figure out what we're looking at. So I'll pause there.

In terms of firepower, you're right. So we're talking about having -- in effect, where we believe we're sort of back broadly to the position that we were at before the HSBC Life (UK) deal. So the RT1 bond clearly has been a major factor around that, the GBP 150 million, we were really pleased with the support from the market that we got and the coupon that we were able to get for the bond. We don't see liquidity being a constraint. We don't see sort of solvency being a constraint. So when you look at those 4 areas of the financial sort of scorecard that we tend to look at, all of those, we put a tick in those in terms of our ability to be able to deploy further capital. And the pro forma position we presented is probably a little bit better than we might have been anticipating because of some of the positive underlying performance from our business in the first half. Use of cash generation?

Yes. So I talked in my piece around HSBC giving us a much greater level of financial flexibility as a group. So I think you could take from that, that our expectation is with GBP 800 million of incremental cash flows coming in, GBP 140 million coming in, in the first 5 years that is a major leap in terms of where we are now as a balance sheet. So that will -- that presents us with significant opportunities to deploy extra capital from that trade alone. But also actually, I alluded to the fact that we exercised 2 management actions in the U.K. over the first half. So when I think about the existing book, so we also look at opportunities to optimize the existing book as well. So when you take the M&A activity, the optimization actions on the existing book, that is the strategy that we employ to free up capital on an ongoing basis. So you've seen over the last couple of years, that coverage ratio has increased.

I'm not going to set an expectation around where I kind of see it landing on a steady state, but one should expect a level of accretion, particularly as we continue with a level of success around the M&A strategy. it's all underpinned by a really, really strict capital allocation policy. So in terms of usage, as long as we're seeing -- and I think Steve covered this, as long as we're seeing attractive M&A opportunities in the markets that we operate in and perhaps outside of the markets we operate in, which we currently are, that remains the primary use of what I would call excess capital or the additional capital that is thrown off by that increase in the jaws because, frankly, from our investors' perspective, the return that we can generate on those M&A opportunities just remains very attractive.

And Steve, did you say that you are seeing increased M&A activity in the hopper?

I think we are. I think it's -- I wouldn't say it's increased since we last spoke to people at the full year, but I think it had increased to that point. And you alluded to some of the drivers, Abid. I think we're still seeing those. I think large institutions and the HSBC deal was a good example of this and maybe being a little more discerning about where they want to be operating, what sort of is core to strategy. We've seen large insurers and banks certainly sort of trimming portfolios to free up capital to deploy elsewhere. We're seeing a huge amount of activity in the U.K. market on pension risk transfer, BPA. I know a number of you in the room have sort of written about that. And we think that will present us with opportunities as people look to sort of release capital maybe from the other books that they have to deploy on that opportunity as well.

So I think we're seeing plenty of activity. I think management teams have been rewarded for taking action proactively in their portfolios. And when we map sort of our pipeline out over the next 3 years, we think it looks pretty interesting and attractive. So we are trying to have a range of conversations as well as actively working on files now. We're speaking to the teams about what they might want to do a year out, 2 years out, 3 years out so that we've got a very good idea of that coming through. I did admit as part of the HSBC deal that we didn't expect this deal to come to the market. So I'm sure we'll get some positive surprises along the way as well. But our analysis suggests that it's an active market.

Larissa had a hand up just before you, Michael, sorry. So...

Larissa Van Deventer from Barclays. On the IFRS earnings, there was a significant decrease in the investment returns, which admittedly tend to be volatile. Could you give us a sense of what the reasons were and how you're thinking of managing the returns going forward, whether you would deploy hedging strategies and the like, please?

Yes. Thanks, Larissa. So you're right. I mean this is a feature of our business. So if you look at our assets under administration, about 85% or so of those assets are unit-linked in nature. So that's the business we're in. The decision then one has to make is around the long term -- should I say, long-term value or long-term logic of hedging those positions. And look, our position, and we've said this before, is we don't have plans to do that for 2 reasons mainly. Firstly, we actually quite like the alignment with our policyholder outcomes. So where the markets are performing, our policyholders are benefiting. Frankly, we're benefiting as well from an own funds perspective. So that alignment is quite important.

Secondly, from a slightly more financial perspective, the hedging does introduce volatility elsewhere in the IFRS result. So whilst you may be solving for one part of the IFRS result, certainly within the PBT, what you're going to find actually is some unintended consequences elsewhere. What we really focus on from an IFRS perspective is the evolution of the capital base. And I know within the capital base, there's sort of geographical bits of what goes into PBT, what goes into OCI and so on. I'm far more focused on how that is growing rather than, frankly, the individual component of that. But you're right, it is an aspect of our business, and it is a volatility that we're certainly comfortable to live with.

Michael?

Steve. It's lovely to see you so cheerful. So I'm always thinking -- yes, yes, [indiscernible] The HSBC optionality, that was one thing. The second is the numbers are better than you first thought. Maybe can you touch on that and how much more there is to come from HSBC? I think just before you kind of said there was bits of capital you could use. And then the one I call the ugly duckling, but it could be a nice white swan is a beautiful swan is Sweden. We've had lots of volatility there. And what's the outlook?

Yes. So let me pick up Sweden first. So if we look at the first half of the year, what's been pleasing, the overall sales result has been very strong. So we have 2 main business lines there. We have our main unit-linked business, which is predominantly group pensions, and we have what's a newer business line, which is still unit-linked, which is a custodian business. And we've seen very strong flows into that custodian business. Because that is less developed than unit-linked, the margins are a little bit lower. So you've seen that sort of flowing through into VNB. From a macro perspective, and Tom sort of alluded to this in his presentation, we've seen a very material shift in SEK to dollar during the first part of the year. And whilst we've seen this in previous cycles, it tend to be much more gradual. So we've taken the full impact of that through the sort of own funds calculations and things that we do at the half year in terms of the sort of 13%, 14% sort of moved during the year.

And then we projected that over the lifetime of the book. So there's a reasonable impact of that sort of coming through. And we are continuing to see sort of transfer activity in that market at a slightly higher level than ideally we'd like to see. We're not worried about the performance of our business in that regard. It's an overall market feature, but you are still seeing some business sort of leaving the books at a higher rate than our long-term assumption is. So that's why you're seeing some of that impact. What we do have is we've got a very good operating platform that will provide us with operating leverage if we can see a stabilization of that dollar position, further business sort of coming on to the books. And we're certainly interested in acquisition opportunity if they present themselves. It's just a market that's less active than the other ones. So -- as you might imagine, we have active conversations with all of our businesses around what our expectations are around cash generation and return on capital, and we'll continue to do that with Sarah and the team in Sweden.

In terms of sort of the pro forma position, and Tom might want to sort of pick up the detail on this. But we tend to start from a relatively prudent position. And then as we sort of go through and do some more detailed modeling, you sometimes find that you don't need some of that prudence. So I think we've also seen a strong set of financial results in the first half of the year. You can see our own solvency has improved materially. The cash generation has been very strong.

Can you just give a bit more color?

No. That's probably why we're so cheerful, Michael. We -- look, it's been a strong 6 months in terms of trading. And the point then is, well, how are you feeling about the pro forma impact of HSBC plus the rights issue plus the RT1. So we've provided some color in there. So in my remarks, I talked about the fact that actually we've managed to hit that sort of bull's eye of getting the long-term leverage ratio actually quite significantly below our target level. That's important. Keeping the solvency ratio above the upper end of our operating range is really positive because it allows us to retain that future M&A firepower and hopefully win more deals as well. And we've got a strong liquidity position. So that's the pro forma.

The trading that has come through in the first 6 months was actually stronger than we expected. So that gives us added confidence in that pro forma position as well. So sat here right now, I think we -- like I said, we're feeling very, very good about the first 6 months trading, and it's really supportive of the views -- the pro forma views we had around the impact of some of these things, which are some 2 of these things have happened. One of these things we're expecting to complete at the start of next year, and we're expecting it to be broadly in line with the pro formas.

I think the sort of third question or comment was, is there more to come? That's certainly the plan. As I say, we see a good pipeline in terms of the options that we have with our own business. I do expect there to be more to come from the Dutch merger. There's other management actions that we have that we can execute. And again, we took the opportunity, as Tom said, in the early part of the year, mainly in the U.K. to deploy a couple of management actions. We saw pricing being attractive. We thought that was a sort of sensible thing to do. And some of those options are available on the HSBC life book when that comes into the fold for us as well. So when we're sort of projecting out, again, that's probably why you're seeing us smiling as well because we are seeing a number of opportunities for us to continue this great track record of cash generation and obviously, the best dividend track record in the market in U.K. and European insurance. I may have mentioned that 1 or 2 times previously.

Ben?

Ben [indiscernible], RBC. I had 2 questions. Firstly, could you say a bit more about new business opportunities in the U.K. and in Holland, just in terms of any sort of macro impacts? I know there are always -- housing market is always important in that market. And the second question was more of a numbers one. I think you flagged up some project expenses in the first half. Given that the deal only took place in the second half, could you give us some steer in terms of the cost that you might -- well, you would have incurred in the second half?

So I'll pick up new business and Tom can pick up that cost piece. So one of the more recent features of our own U.K. business is we kept open an onshore investment bond that we acquired as part of the Sanlam Life and Pensions acquisition. That's been really quite a nice feature of our business in terms of the new business we've been bringing in. Most of that comes from connectivity with IFA platforms, particularly the -- what was the Nucleus platform. And we think there are some opportunities potentially to extend our distribution footprint there as well. So that's interesting optionality. When we think about the HSBC Life (UK) business, that's far more open to new business than we are at the moment.

So again, that gives us some interesting options. They operate in the same space in that onshore investment bond space. So we know that well, and they have a good protection franchise as well. So we're working with the teams at the moment, assessing that, and we'll update the market as and when we own the business on what that go-forward strategy will be. But as always, we'll look at that through a sort of sustainability or return on capital perspective, but we do think there's some interesting options potentially to increase the amount of business overall that we end up writing in the U.K.

In the Netherlands, so you might remember last year was quite a tough year in the term market. We saw sort of lower volumes and lower VNB. We've seen a little bit of an uptick in that in the first half of the year. And under the new leadership team that we have, we think there are some further opportunities to extend the product footprint. So we write a small amount of annuities in that market. It might be we can extend that a little bit. We've got a reasonable savings and investment product. Again, then we may be able to extend that a little bit as well. But you might have heard me say in the presentation, look, we -- our expectation is still that the bulk of the growth that will come into the group will be from M&A. But we do think there are some interesting options to extend what we're doing in that new business space a little bit.

Yes, the cost point. So look, you're right to point out, clearly, this year has been a more active year for us in terms of prosecuting M&A. We did one deal last year at the back end, it was obviously much smaller than the HSBC Life deal. And also, we have had the RT1 and the rights issuances as well. So look, what I'd point you to is in the rights prospectus, we talked about roughly GBP 10 million costs there. They're clearly one-off, nonrecurring. Where we end up in terms of year-on-year progression in cost is probably the best way to think about this. Some of this depends on where we get to an M&A in the second half as well. So again, I can't say too much about that, but you can imagine that we are looking at files. But look, where more M&A happens, for example, it's likely to be sort of at the upper end of a GBP 10 million to GBP 15 million range and perhaps where M&A doesn't happen in the second half, a little bit closer to the bottom of that range in terms of year-on-year.

Andreas?

I just had a question around cash remittances to the holding. It was around GBP 56 million in the first half. I just wondered, is there any trapped capital within the Netherlands that could be released in the next 12 months following the integration? And if so, what should we think about in terms of a number? How much can you release up to the holding in the next 12 months? And then a similar question, but then for HSBC, the HSBC Life deal, how long will it take to start remitting cash/capital from that transaction? Is that something that you could start doing towards the end of 2026? Or should we wait for '27, '28 to see significant remittances from this deal coming through?

Shall I maybe take the Netherlands? You can add to that and then you can take HSBC if we split that between us. So -- so I think you're right to point to some of the benefits that we should expect when we bring the 2 balance sheets together in the Netherlands. So one of the potential benefits there if we get some further diversification benefit and improved solvency ratio is that there'll be more sort of -- there'll be a bigger clearance level above the sort of minimum thresholds that we like to run in advance of sort of dividends being paid up. But as opposed to sort of looking necessarily at sort of accelerating big chunks of capital, we look at that sort of adding to the longer-term sustainability. But it could mean if we needed to, that there's a bit more to draw down on going forward.

And one of the things that we'll clearly do in the fullness of time is we'll look again at the sort of capital management policies for that business and make sure that they're fit for purpose for a larger business, which Scildon certainly now is post Waard. So overall, we're expecting a sort of more stable dividend flow to come through from that business as a larger business with a balance sheet that's got a little bit more diversification in it as we bring those things together.

Do you want to pick up HSBC and anything else you'd want to say on the Netherlands?

Yes. No, I think you've covered the Netherlands. I think the HSBC answer is actually relatively straightforward. So we are expecting increased remittances in respect of the year from completion. So the reason I'm being slightly pedantic is we're expecting cash generation in the year of completion, so 2026. The exact timing of remittances may well be '26, maybe '27 in terms of the physical transfer of cash from the subsidiary to the holding company. But that is merely a timing point, and that's something that's within our control. But the key point is we are expecting remittances from the year of completion. And actually, I think we were reasonably clear that we were expecting a pretty rapid profile within -- because we talked about the GBP 140 million of -- sorry, of the GBP 800 million emerging in the first 5 years. And I think what we said is we're certainly not expecting that to be a hockey stick emergence over the 5 years. It will be relatively stable from the first of those 5 years.

Gordon?

Gordon Aitken from Aitken Advisory. So just 3 questions on M&A, Steven. First, just on the deals, who are you actually competing with? Because the market -- obviously, there's different people and there are lots of consolidators in the market, but you say different people at different sort of sizes, different people in different geographies. So I'm guessing someone like Phoenix would not be interested in HSBC Life because it's just simply not going to shift the dial for them. So maybe if you can talk about just actually how -- my sense is maybe it's not as competitive as we think it is in the areas you're trying to hit.

And second question on price. I mean 85% of own funds. I mean, if you go back in time when [indiscernible] did his deals that we talked about sort of 70% of embedded value. I mean you've been in this game a long time. And maybe talk about how pricing has changed over those 20 years. Is it tighter or whatever relative to then?

And just finally on we've been talking about banks, U.K. banks selling their insurance subsidiaries for years. And it always seems to have taken longer than we thought. What -- like maybe you can talk about why you think that is? And maybe what was the trigger for HSBC to sell their business now to you?

Yes. I'll take them in that order, Gordon. So in terms of the competition, so you're right. I think when I -- so when I joined Chesnara sort of 4 years ago, one of the things that I was concerned about was competition for some midsized deals, so the sort of GBP 100 million, GBP 150 million to GBP 500 million sort of deals because I just come from Royal London who had been outbid by Bain Capital for -- on the LV deal. And the pricing of that for me at the time looked quite punchy and certainly well above the sort of multiples that we were sort of talking about there. And I was concerned that there might be sort of private capital, strategic private capital that was coming in and was going to be prepared to pay material premiums to book. We haven't seen that come through in this space. I know we've seen a little bit more of that coming through in the PRT space. And alongside that, we've actually seen some of the people that would have been more active on books of business in the market shift their strategies away.

So if I compare sort of competition now to 4 years ago, it's definitely less. And I think what you're also seeing from vendors is, of course, they want a good price, but execution certainty is incredibly important, not least because we've seen at least 2 aborted processes in Europe and some challenges with regulators and things like that. So I think those things play to our strengths because I think we've been good executors of deals. If you look over the last 20 years, this is our 15th acquisition, HSBC Life that we've announced, 14 that we've completed. And when we've come out and said we're going to do deals, we've been -- we've followed through and done what we said we would do around that.

In terms of sort of who we're competing against, it will depend at times. So for the smaller deals, we will still see some of the mutuals sort of turning up on the pitch for that. I think for these sort of larger deals, quite often that's -- they don't have the capital resources to deploy there. So it will be some of the traditional names in the market. But in the U.K., a number of them are very, very focused on that BPA space. So we -- in the U.K., we think there's a little bit less sort of competition from some of the people that you would normally see. If we think sort of broader Benelux, you've seen that very large sort of Viridian deal happening. I would expect them to be quite active, not just in Germany, but in adjacent territories. I think they've been quite clear that France is active. But if they can do Germany and France, why wouldn't they sort of provide support to sort of Benelux deals as well. But I think that's maybe a little bit further down the list for them.

I think we'll continue to see a.s.r. as an acquirer of books. But in the same way as you talked about Phoenix, if you listen to where their focus is, firstly, they do want to do more PRT, and I think they'd like to do some larger deals as well. So there's nothing within the competitive environment where we're looking and saying, goodness me, there's somebody there that we don't think we can compete against. And I think that does flow through then into pricing where we've probably seen 3 years ago pricing being sort of higher -- starting to get higher than I'd be comfortable with. When we look at the pricing for HSBC, we think that's very competitive with sort of historic levels. I think when Tom and I talked on the Thursday, the 3rd of July, we also pointed out as well that above and beyond the eligible loan funds, there are other Tier 3 assets that are accessible to us as part of that deal that we can generate value from as well, which is why we believe the sort of multiple that we've acquired at is very attractive for us.

We've probably moved from sort of Clive's days where he was the first sort of person entering into that market. So I don't think we're going to return to a sort of world where you're seeing sort of 0.5, 0.6 for larger businesses. But if you look at some of the multiples that you could apply for some of the smaller deals that we have, we picked up books at far lower multiples than that because of our return on capital requirements. So why aren't -- I suppose your question was why aren't people selling things more quickly, particularly banks? I suppose our experience, we talked about this sort of at one of our results last year, is that, look, these organizations have a huge number of priorities on their list. So I think sometimes these things just don't get on to the priority list and maybe driving new business and distribution becomes more important.

I think the difference that happened with HSBC, and they've been very public with this, there was a change in Chief Executive, and he was very definitive about where he was going to be and where he wasn't going to be in the market, and that's been driven top down through the organization. So he was clear and they were clear with us that they no longer saw sort of U.K. insurance as being a space that they wanted to play in and that drove that. You don't always see that in other sort of large financial institutions. They quite like keeping that optionality there in case there's a big shift in the market that they need to react to. We're not big enough to have 20 strategic priorities. We've got 3, and we keep focused on those and trying and delivering. So sometimes it's hard for us to understand why you would have 40 strategic priorities. But if you're a large organization, of course, you can.

Barrie?

It's Barrie Cornes, Panmure Liberum for at least for the rest of the today. Steve, when some of us are looking further ahead now, I wondered if you could paint a picture for us as to what Chesnara will look like maybe in 5 years' time, be it locations, type of business, size of the company. Just give us a picture as where you think realistically it might be in 5 years' time, please.

Yes. So I would be disappointed if we aren't a far larger organization, and that's not because we need to be big to puff our chest out and say we're big. That's more because of the pipeline, the opportunity, the capability that we've brought in. We're now in the FTSE 250 for the first time ever, which is a nice step up, but our ambition is certainly broader than that. So based on what we're seeing, I would certainly hope, and this is the conversation that Tom and I have been having regularly, including yesterday with the Board, that there are some very attractive growth opportunities. Looking where we are now, I could imagine that you may see us in another territory as well. I think there are some interesting opportunities there.

So I certainly wouldn't rule that out. But we're focused on making sure that we can take advantage of the opportunity in front of us because we have good capability. I think some of the people that we brought into the organization are doing a terrific job. We've got the financial firepower capacity. We've been so pleased with the support that we've had from investors, both for the rights issue and also the RT1 bond. So I think that gives us a very good foundation to drive forward from. So we're certainly not finished here. We've only just got started would be the message I'd be given even if it's taken me 4 years to get to where we are now.

Michael?

You referred to a.s.r. So I was at the lovely lunch last week, and it's not a hint, not hint, but if you do a lunch, it would be very nice. So the -- what Josh was saying is, a, he saw some opportunities around Athora if Athora focuses on PICG and it's effectively moving a little bit out of Netherlands. I just wondered if that's one of the things. Separately, Ageas, which is the Belgian thing is may be put on for sale in Belgium. And here, there are so many moving parts. It will -- there's clearly going to be stuff coming out, including a.s.r. said they were thinking that Allianz might sell out of Belgium. And then the third thing is just on the numbers going forward, could you remind us -- I was really puzzled and I'm sorry, I've forgotten how much do we add to the cash for each of the next 5 years? That would be really helpful. That's is.

Why don't you take the last one first?

Michael, I'm really going to disappoint you -- my answer, Michael. Sorry. So look, we've not issued forward guidance on an annualized basis on the cash gen. So I mean, you've seen the pro formas in terms of the balance sheet. We've also issued guidance around the incremental impact of the HSBC deal for the moment. So I think that's the guidance you should take.

It wasn't trying to ask something you haven't said. It's just to remind me that the GBP 40 million is that the annual figure that coming in the next 5 years? I was trying to square [indiscernible].

I think what we've said, we have the future areas of cash generation. And previously, we sort of gave it -- I think we used to give -- we previously given a total of dividend.

Yes. So yes, so we have switched to making that more of an illustrative presentation rather than a projection. The reason for that actually is I think a number of the questions that people like you, Michael actually were asking in recent years was around the sustainability of the dividend near term. And I think actually, what we've really demonstrated over the last couple of years is that, that concern has dissipated. We've been able to demonstrate, I think, very, very clearly over the last couple of years and even before that, that actually the long-term portfolio cash generation is real. It extends far beyond 5 years. And I think actually, what HSBC does in terms of cash flow profile is just add another layer of certainty around that. So what we really wanted to do was sort of move the focus away from saying, well, what does the cumulative next 5 years look like? Because when we're sitting down thinking about M&A opportunities, when we're talking to the Board about our business plan, we've got a 20-, 25-year plus time horizon for the business now.

So as a general comment on markets, I mean, we really like the fact that the market is active in the way that you've been describing. I think there's a lot going on. And I think when you see some of these big strategic moves for us, that potentially opens up opportunities for us to have conversations, particularly around assets that maybe before we didn't think were going to be available. So I think when you see -- there's a couple of trends. I think when you see the development of the PRT market further in the U.K. and in the Netherlands, I think that potentially means that you may see other portfolios becoming available as part of that or some options there for us. And I think if -- as I say, I think we're continuing to see and many of you have written about it, management teams that are being more discerning about the things that they have in their business and taking positive action, I think, tend to get rewarded. Aviva are a great example of that.

So we are certainly seeing the opportunity to have lots of good conversations with bigger financial services groups about businesses, entities that might be sitting in there that could be attractive for us. There's also some sort of post-Brexit activity. I think there's some temporary structures that were put in by sort of U.K. and European insurers to quickly get sort of Brexit compliant where either people will need to recommit to those businesses, drive them forward or find a solution. So that would be something else that, again, we think is a bit of a thematic that could be interesting for us. So we're not short of opportunities to be considering. That's for sure.

Abid?

Just a follow-up on the dividend point. Have you talked to how long the pro forma book of business will cover the dividend, how long the cash flows will cover the dividend? On my numbers, it seems well beyond -- clearly well beyond 5 years. Have you sort of put a number out there?

So we've not put a number out there. But as you can imagine, as part of the assessment of the M&A opportunity itself and also then as part of the annual planning process that we go through with the Board, that's something that we look at very, very closely. So one of the really attractive aspects of the HSBC deal was the longevity of that cash flow profile. So we talked about the fact that, okay, the GBP 140 million in the first 5 years is great. I'm a little bit more excited about the GBP 660 million post 5 years, to be honest, because that just illustrates to you that portfolio length. So no, we're not going to issue sort of a half-life number, if that makes sense. But hopefully, that gives you a sense that, that puts any concerns that people might have had around the longevity of the portfolio to rest.

Larissa and then [Ming].

Actually, just a follow-up question on the dividend as well. On Slide 6, you say that the final FY '25 and interim FY '26 dividend is expected to increase by 6%. Is that on a per share basis or the total quantum of the dividend?

That's for you, Tom. I can't remember what that basis was. If we can't find it, we'll tell you afterwards, Larissa.

Yes. So that is on a per share basis, and it's adjusted for -- to allow for the bonus factor in the rights issue.

That was going to be the next question.

Ming?

Just 2 questions, please, and one comment. I need to keep the comment long. The first question is on M&A. And I was hoping I don't need to ask anything about M&A for at least another 18 months, but you had a comment earlier that you straight went out looking for sort of in talks on the Monday after Friday. So that kind of stressed me out a bit. And you have a comment there that further M&A, you are hoping not to sort of tap into the equity market. But my question is, what happened if you come across another deal as good as HSBC or even better, but bigger, what would you do? So that's my first question.

And my second question is a follow-on with your comments from Barrie. You mentioned that your ambition is -- my take is more than FTSE 25 but the upper limit market cap for the FTSE 250 is about GBP 4 billion. So that kind of stressed me out again. And could you just provide a little bit of color on that, please? And my third one is just really a comment. Well done on the deal and the timing is great. We waited 9 years for this kind of deal. And you done it when I'm an investor rather than analyst. So thank you very much for that. And most importantly, you've done a deal before the retirement of the nicest insurance analyst (not necessarily the best, which he is fully aware of). So I'm going to pass the mic on to the best insurance analyst, Ben Cohen for the retirement speech.

Sorry, Steve, I think you answer first.

Yes. So don't be stressed. So I think it's important. So if you remember, the way that we're structured as a group is quite helpful when you think about this. So I think we've been clear we'd be very, very careful about anything else that we were going to do in the U.K. in the short term, particularly if it meant that we were looking at a sort of migration that would cut across what we're planning to do with HSBC Life (UK). But quite often, what you find is from sort of initiation through diligence, signing, change of control, that can be at least a sort of 12-month process. So I think it's right that we continue to look at the U.K. market, look at opportunities, but we're obviously very, very careful about anything that we would do that would disrupt that sort of migration and completion. So some of the activity I would expect that we'll be doing in the U.K. is more about early assessment versus sort of doing -- be sort of signing something imminently that would interfere with the HSBC Life (UK) migration. In Europe, it's different.

We have the operational capacity available now in both of the businesses that we have to bring in books if we found the right opportunities. And if it was a new territory, say, with an operation that was sort of stand-alone, again, that doesn't put -- there's no sort of operational contention there with what we're doing in the U.K. And for the central team, we do have the capacity to both oversee what we're doing with the next stage of HSBC Life (UK) and also be assessing and working on M&A opportunities as well. So that's part of the investment we've made in the team. We do have a few more people now than we did in the past to do that. In terms of the growth ambition, I haven't actually looked at the -- what the number is at the top of the FTSE 250. But our ambition is to grow.

And it's -- I suppose what I was trying to convey is the size of the opportunity that's available to us. It's important that we get after that and we don't sort of rest on our laurels and we're progressive from a strategy perspective. Where that ends up in terms of a number, we'll see where we get to. And we'll remain disciplined on M&A. But hopefully, what you've seen from us over the last 20 years, and I would say, particularly over the last 4 years, is that we've been disciplined, but we've deployed capital well and the metabolic rate has sort of increased, and that's what we're planning to do going forward. So again, don't be stressed. We'll look at these things prudently in the right way, but there's a big growth opportunity for us here.

So I think we'll hand over to Ben. But just before handing over to Ben, Barrie, it is your last day. You were very kind to me when I joined Chesnara. It was great to get the benefit of your insight. I know many people across Chesnara have really appreciated the support that you've given the candor and particularly the headlines on the analyst reports, which are sort of more the Sun than the Telegraph in my mind in terms of where I'd put those. But let's hand over to Ben, who will say a few words that will be more eloquent than mine.

Thanks very much. I feel like I'm part of a tribute band here. Not everyone here will know that September 15 marks 40 years to the day that Barrie started out in the city as a fresh face trainee at the Royal Insurance. I think I first met him when he had moved a step closer into research as Investor Relations at Royal and Sun Alliance. But my abiding memory is many years later when Aviva had invited analysts for a driving day north of London. as the assembled piled on to a coach to take us to the track outside the hotel we were based. We look around to see Barrie waving to us from his racing green Lotus Esprit. I think -- and I'm sure he did very well at the racing too. He went on to have a very successful career, well liked by competitors, colleagues and companies alike. Now he has finally finished paying off an epic house rebuild. He will be laying down his analyst glove shortly, and I'm sure you will join me in wishing Barrie a happy, healthy and long retirement.

Thank you, Ben. Thank you very much, Ben. I really appreciate it. I've had 40 years being an analyst, mostly 25 years as an analyst and the other 15 working in insurance. It's been great. I've been able to follow some fantastic companies just like Chesnara, which has been the complete privilege. But thank you very much. I very much enjoyed my time.

Thanks, Barrie. Well, I can't think of a better way to end the presentation. Thank you all for joining us as we've shown you this strong set of results. There's a lot to look forward to here at Chesnara, and enjoy the rest of your day. Thank you.