NN Group Stock

Good morning, ladies and gentlemen. This is the operator speaking. Welcome to the NN Group's Analyst Conference Call on its First Half Year 2026 results. [Operator Instructions] Before handing this conference call over to Mr. David Knibbe, Chief Executive Officer of NN Group, let me first give the following statement on behalf of the company.

Today's comments are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those projected in any forward-looking statement. Such forward-looking statements may include future developments in NN Group's business, expectations for the future financial performance and any other statements not involving a historical fact. Any forward-looking statements speak only as of the date they are made, and NN Group assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason. Furthermore, nothing in today's comments constitutes an offer to sell or a solicitation or an offer to buy any securities. Reference is made to the legal information on the last page of the presentation.

Good morning, Mr. Knibbe. Over to you.

Yes. Thank you, Sharon, and good morning, everyone. Thank you for joining our conference call to discuss NN Group's performance of the first half of 2026. I'm excited to be here with you today. And with me are Annemiek van Melick, our Chief Financial Officer; and Wilbert Ouburg, our Chief Risk Officer. I'm starting off with an overview of today's key messages. I'm pleased to present another set of excellent results, reflecting our continued business diversification towards our growth segments, while making tangible progress on our Future Ready program. Operating capital generation reached EUR 1.1 billion, supported by business growth in Europe. This result was achieved against a particularly demanding comparative base, resulting in a 5% year-on-year increase, and this was better than the flat guidance we gave.

Our Group solvency ratio strengthened to 224%, increasing due to the exclusion of the banking operations as per the end of June 2026. Consolidating the bank under Solvency II penalized our ratio. With the exclusion of the bank from the ratio, the level playing field is improved. Future Ready continues to deliver tangible results. We are halfway into the program, and it already delivered 65% of our target annual savings of EUR 200 million by the end of 2027.

Commercial momentum remains strong. The value of new business increased by 16%, and this was supported by a pension transaction in the Netherlands and by a 14% increase in VNB in Europe. In Europe, the growth was mainly driven by higher sales volumes in risk protection products underpinned by our strong distribution capabilities. This more than offset lower VNB in Japan, where demand shifted towards shorter-term products as new entrants affected the market and moderated sales growth.

In Non-life, gross written premium grew by 6%. At Netherlands Life, DC assets under management increased by 13% to EUR 48 billion, supported by higher net inflows and positive market movements. In line with our dividend policy, we increased the interim dividend to EUR 1.55, which represents an increase of 12% versus last year's interim dividend. This builds on our proven track record of consistent delivery on capital returns to our shareholders. We continued to deliver value to our customers, employees and society at large. We are well on track to deliver on our 2028 targets.

Let me highlight a few achievements made. We aim for customer satisfaction scores significantly above the market average and rank amongst the top 3 for broker satisfaction by 2028. Customer satisfaction continues to improve with both the Netherlands and European Unions significantly above the market average. Additionally, we reaffirmed our #1 broker satisfaction ranking in the Netherlands. We aim to be an employer of choice where people enjoy to work with a diversified population. Our employee engagement remains consistently strong and above the benchmark. Alongside this, we increased the volume of our investments in climate solutions to EUR 14.3 billion, demonstrating our commitment to supporting the transition to a more sustainable economy.

Our H1 '26 results once again demonstrate that our strategy continues to deliver. As a reminder, our investor proposition rests firmly on 3 core pillars. First, we continue to diversify our business mix. Future growth will, for both OCG and free cash flow, primarily come from international and Netherlands Non-life. Together with our banking business, these are targeted to grow over 55% of total OCG by 2028.

Secondly, with our Future Ready program, we continue to standardize and automate operations, scale AI and improve efficiency and scalability across the group and at the same time, improve customer experience. As you can see, all the KPIs are well on track.

Thirdly, we remain fully committed to deliver on our capital return commitments, a progressive dividend per share and an annual share buyback program of EUR 350 million. As I mentioned before, NN has been building its AI capabilities for years, and that early experience is now becoming increasingly relevant. NN operates in an environment that is particularly well suited to AI adoption. Insurance is a service-based, data-rich industry with complex decision-making, high volumes of customer interaction and extensive use of unstructured data. These characteristics mean create meaningful opportunities for AI to improve productivity, consistency and decision quality.

The key challenge is no longer the technology itself. It is how we manage adoption, scale proven solutions, translate AI into tangible business impact. And that is why we launched the Future Ready program in 2024. Through this program, we are simplifying our IT landscape, standardizing data and build more digital and data-driven processes across the group. Our approach is deliberately selective. We prioritize scalable AI initiatives with immediate and visible business benefits. We focus on reusable capabilities and on copying proven use cases across NN. This allows us to benefit from our scale, avoid duplication and accelerate value creation across business units.

The financial case is clear and disciplined. We expect to invest EUR 450 million in future-ready initiatives over the program period with an annual benefit building up to EUR 200 million by 2027. Around EUR 180 million of the benefits are expected to come from expense savings with the remainder linked to growth. These investments and benefits are already reflected in our targets, so there's no hidden additional investment requirement. AI yields significant productivity gains, which outweigh the increase in token costs. By the end of June, we had completed 70% of the investment and already delivered 65% of the annual benefits. Last year, at our Capital Markets Day, we showed an example where we applied AI to handle glass repair claims. I'll show you later how we scale agentic claim handling.

But let's move first to the commercial performance of Insurance Europe. Our leading businesses in Europe continue to grow impressively, capitalizing on the momentum across the region. In the first half, VNB grew with an impressive 14%, driven by both higher sales and attractive margins, which will translate into OCG over time. What is equally encouraging is that our VNB buildup is in line with our strategy and concentrated on capital-light protection products with attractive margins.

Next to protection products, our pension business has also been growing consistently over recent years, fueled partially by strong financial markets across the region. We are a leading provider of Pillar II and Pillar III pensions across Central and Eastern Europe, providing a source of AUM-based fee income, a business model with attractive operational leverage. Our pension assets under management in Europe has been growing rapidly and has reached EUR 50 billion during the first half of '26.

It is worth noting that over recent years, our bancassurance channel in Greece has contributed strongly to the VNB growth in Europe due to a successful partnership with Piraeus Bank. This bancassurance agreement is still in place, and we continue to see strong sales in 2026. However, we expect that sales via this channel will substantially be lower as of next year.

At the same time, we remain optimistic that other opportunities in Greece will provide alternative sources of growth for the business, such as our tied agent channel, which grew VNB by 30% last year and 25% year-on-year so far in '26. So despite development in Greece, we remain very confident in Europe's underlying growth trajectory and its ability to reach the EUR 600 million OCG in '28.

Making our European tied agent channel future-ready is a strategic priority for us, and we see continued progress in this area with 46% of our tied agent sales now coming from digital leads. We are also focusing our large language model visibility. And while it's early days, our initial efforts are proving successful with our average AI overview rank across Insurance Europe improving from the 12th position to the third position between December of '25 and May '26, already ranking as #1 in several markets.

As you know, in Japan, we operate in the sizable COLI market with a total market volume of JPY 250 billion at attractive IRRs of around 14%. After the business improvement order, we repositioned our offering towards long-term savings, a segment that has grown significantly in the recent years with a CAGR of 25%. This supported a strong recovery of sales momentum with VNB increasing around 30% in '25 versus '24 on a constant currency basis. In '26, however, we have observed a reemergence of the short-term COLI products with sales in this segment increasing by 20% following new product offerings by new entrants. This has weighed on our sales momentum with VNB decreasing by 5% versus the first half of '25 on a constant currency basis. However, we remain well positioned to regain market share, given our SME focus, which brings important advantages.

Firstly, we can utilize all available product approval windows for COLI, allowing us to bring new products to the market more quickly than larger diversified players that prioritize retail products. In addition, our specialized sales force tools and customer service provide deep expertise and excellent support, helping us maintain broad and diversified distribution. As such, we continue to believe we can recapture market share independent of what type of products the market moves to. We managed to optimize capital, solvency and sensitivities under the new capital framework via a landmark reinsurance transaction, which also added significantly to our local equity position and increased fungibility of capital.

Netherlands Non-life delivered solid commercial momentum with gross written premium up 6% year-on-year, mainly driven by indexation, but also some volume growth. Profitability was strong as well with a combined ratio of 90.5%, ahead of our 91% to 93% range, despite a severe hailstorm leading also to several big event cancellations late in the period. These adverse weather events were more than offset by strong performance in building insurance and margin improvements in Motor.

Last year, we indicated elevated disability incident rates, mainly due to mental health-related issues that affect our Group disability products. Recent data points indicate that a further increase in inflows, which we have reflected in our provisioning. This barely affected our combined ratio, but had some impact on our reported OCG for Non-life. We monitor the situation carefully and we'll continue to prioritize margin over volume.

At last year's Capital Markets Day, we introduced our first claim handling process using AI-backed straight-through processing for simple windshield damage. Since then, we have brought in AI-enabled claims and underwriting across most product lines, including property, motor and travel insurance with liability insurance to follow in the second half of this year. For our retail business, the target platform is now fully operational with 35% of retail claims straight-through processed backed by AI. We recently added the NN Bank distribution products to the platform, adding another 15% of claims processed through AI. So we are currently at approximately half of the retail portfolio.

In the second half of the year, we will connect the remaining bank distribution partners, which should bring the STP levels close to 100% across the retail business, supporting great efficiency and higher customer satisfaction. This will enable us to deploy our people where they create the most value and where human judgment is most important rather than where automation still has limitations.

Moving on to Life. We are the market leader in the Dutch defined contribution market, and that position becomes even more relevant under the new pension framework. Our broker relationships remain a clear strength. We are proud to have again achieved the #1 ranking in broker satisfaction. These independently collected scores matter in a broker-led group pension distribution model, and brokers continue to value our digital services, the quality of our core processes and our strong back-office execution. Our AUM in defined contribution during the first half of '26 grew further to EUR 48 billion. Net inflows were strong at EUR 1.7 billion versus the EUR 1.2 billion in the same period last year, partly supported by a value transfer. With strong customer satisfaction, disciplined pricing and our leading DC platform, we are confident that we can continue the growth trajectory towards our target of EUR 55 billion of AUM by 2028, while maintaining an expected OCG margin of 15 to 20 basis points.

Participants will still need to convert accrued pension investments into annuities, making this an attractive high-margin segment with growth strong prospects. Growth inflows into immediate annuities were around EUR 500 million in the first half of 2026 compared with around EUR 400 million in the first half of 2025. This growth was not immediately visible in DC accumulation AUM development over the period as this line item also includes a legacy retail portfolio that runs off. This runoff will be largely completed by 2030.

We expect a 10% to 15% annual growth of DC decumulation, mainly driven by the larger DC pension funds, potentially reaching EUR 1.4 billion on an annual basis by 2030. Lastly, our track record on capital return speaks for itself, with over EUR 11 billion of capital returned to shareholders since the IPO. And we remain firmly committed to extending that track record with total capital return to shareholders foreseen to grow over EUR 15 billion by 2028 based on current commitments. In line with our dividend policy, we announced an interim dividend of EUR 1.55 per share, a 12% increase versus last year's interim dividend.

And with that, I will hand over to Annemiek.

Thank you, David, and good morning, everyone. Let me begin with our continued financial delivery over the first half of 2026. OCG is up 5% versus an already strong 1H '25, coming in at EUR 1.1 billion with strong [ underlying ] performance, particularly in Europe. Free cash flow is up 7% versus last year, mainly driven by higher remittances from Non-life in Europe, compensating for lower remittances from the bank, which included a much larger Basel IV remittance last year.

We remain well on track to achieve our '28 targets on both of these metrics. Our solvency ratio increased to 224%, driven by net capital build and the exclusion of NN Bank from group solvency. Cash capital came in at EUR 1.7 billion, where repayment of the remaining grandfathered RT1 debt in January was largely offset by a strong net cash build over the period.

Now let me give you some more details regarding our capital progression. During H1 '26, operating capital generation added EUR 1.1 billion or 13 percentage points to the solvency ratio, which is 4 percentage points higher than the capital flows to shareholders in the form of dividends and share buyback. Market variance decreased the ratio by 5 percentage points, largely driven by widening government bond and mortgage spreads. The bucket Other added 5 percentage points to the ratio. Here, the positive impact from excluding the bank from the Solvency II ratio was partially offset by the transfer of a large pension client from the separate account to the general account and model and assumption changes.

We have furthermore mitigated a potential negative impact of the introduction of the ICS framework for solvency in Japan with 2 management actions, one being transitioning Japan to our partial internal model and the other being the reinsurance transaction that David referred to earlier. Overall, this led to a net neutral impact on capital. The solvency ratio of Netherlands Life remained strong at 213%, absorbing the adversities from bucket market variances and the bucket Other, except for the positive from the bank exclusion.

Now let's move to OCG. As you can see on Page 13, we managed to grow our OCG by 5% to EUR 1.1 billion, which includes very strong performance from Europe and some nonstructural tailwinds. In the Netherlands Life segment, OCG is flattish, where higher SCR releases partially offset by a lower positive experience variance versus last year. Netherlands Non-life was impacted by adverse weather events that took place late June as well as increased group income claim inflows, which more than offset the strong performance of the P&C portfolio, where we saw growth across the book and improved margins on the motor line.

Insurance Europe reported a significant increase in OCG, driven by continued growth in capital-light protection sales and higher fees from pension fund-related assets under management. We believe most of this growth is structural, except for the part of the performance-related fees in the pensions business. As David mentioned earlier, bancassurance sales in Greece were very strong in H1. And given the developments with our distribution partner, we expect these to decrease next year. Next to this, a proposed pension reform in Czechia will likely limit management fees that can be charged over assets under management.

Now strong organic growth across other European countries like Poland and Romania is expected to compensate for these developments. And as such, we remain very confident in Europe's underlying growth trajectory and its ability to reach the EUR 600 million target for 2028. In Japan, OCG benefits from the move to our partial internal model and higher interest rates, more than offset -- these more than offset negative exchange rates and lower sales driven by the market dynamics, as just explained by David. David already highlighted the Japanese reinsurance transaction, which reduced lapse risk and sensitivity to interest rates, increased local equity by around EUR 240 million, improving the fungibility of capital and ensuring a sustainable remittance pattern going forward.

Since we exclude the bank from our Group's solvency ratio, Group owned funds are only affected by the net remittances coming from the bank. Therefore, from '26 onwards, bank's OCG is set equal to net remittances. The net remittances in 1H '26 from the bank still include a one-off related to the Basel IV windfall last year of a couple of tens of millions.

At the full year results, we guided OCG for '26 to be flat with organic growth offsetting the positive one-offs of '25. With these strong H1 results in hand, there is some upside to this guidance, mainly driven by Europe and Non-life. We would expect H2 to be in line with H1 levels with further organic growth and positive seasonality in Non-life, broadly offsetting the positive one-offs and seasonally higher new business at Netherlands Life in H1.

A few words on our IFRS results. Operating result was up 4% versus the first half of '25. Since we steer the business based on solvency metrics, I will only concentrate on the drivers that are different from the OCG analysis. Netherlands Life results reflect a lower investment result, which is largely driven by lower dividends from private investments, which can be lumpy and were elevated in H1 last year. Non-life showed an improvement in the combined ratio from 91.2% to 90.5% despite the adverse weather, which also translates into a higher operating result.

Japan's operating result was down, largely driven by adverse exchange rates and to a smaller extent, a decline in the in-force book, all largely offset by a more favorable mortality result. NN Group's net result increased to EUR 1.1 billion, mainly driven by the higher operating results and lower below-the-line negatives, where H1 '25 included negative revaluations on derivatives. Future profits under IFRS are largely determined by the CSM level. Our organic CSM grew 2% in the first half of '26, benefiting from organic growth in Europe, Japan and Non-life. Other movements includes the negative impact from higher incident rates in our disability book.

Let's move to our cash capital position on Slide 15. Free cash flow came in at EUR 922 million, up 7% versus the same period last year. Free cash flow is lumpy by nature, and therefore, it always makes more sense to look at it from an annual perspective. For the full year, we expect to be broadly in line with the EUR 1.6 billion reported in '25. 2025 includes a large Basel IV related contribution from the bank and some one-off payments within Europe like the special dividends from the Polish pension funds. At the same time, Belgium didn't pay a dividend last year. Therefore, underlying free cash flow does show some growth, and we remain confident in reaching our free cash flow target of more than EUR 1.8 billion in '28.

The change in our debt and loans reflects the impact of the untendered grandfathered RT1 notes, which have been redeemed in January '26. Our cash capital ended at EUR 1.7 billion, and we typically build between EUR 300 million to EUR 400 million per annum from free cash flow net of capital return. This provides us with ample flexibility for value-accretive opportunities or to further enhance shareholder returns via small incremental steps in our structural capital return promise as we've demonstrated over the last couple of years. As we indicated earlier this year, we do not expect to refinance the EUR 600 million senior notes that mature in '27.

Let me quickly summarize our attractive investor proposition on Slide 16. We're confident to deliver on our '28 targets, which is a testimony of our growth and further diversification. We are on track to deliver our Future Ready program. We have a strong balance sheet that provides optionality, and we continue to extend our excellent track record of remunerating our shareholders.

With this, I'll hand over to David for the wrap-up.

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

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

Congratulations with the figures. First of all, the Solvency II ratio, it's good that you have been able to reduce or remove the bank out of your Solvency II ratio, increasing solvency by 10 percentage points. Could you elaborate on what that would mean on future capital returns and excess capital determination? Is it still the old 200%? Or are you going to rebase the targeted Solvency II ratio for excess capital determinations? That's my first question.

Second question is that the Japanese reinsurance deal, which was quite nice that you basically released EUR 240 million in capital. What does that mean for future dividend upstreaming from Japan? Normally EUR 70 million, EUR 80 million, EUR 90 million a year, this is a lot of money, EUR 240 million. Would that really mean a material uptick of free capital generation and dividend upstreaming from Japan?

And the last question is about disability. You took [ EUR 1 million ] disability cost basically in total, in the Netherlands last year, I think. For the full year, it was a little bit higher. Could you give the latest view of this market? What adjustments are you taking? Do you still think that the market is attractive, that are the main items? That were my questions.

Yes. Thank you, Cor. Good to hear you as always. Let me start with disability and then Annemiek can cover the reinsurance deal and the Solvency II question. Yes, I think on the VRS, so group disability, we continue to see elevated claims this year. Mental health is obviously accounting for a significant share of that. To put it a bit in perspective, the total Non-life company is around EUR 4.2 billion of premium, EUR 3 billion is property and casualty, about 1/4 is D&A. The group disability book that we're talking about is around EUR 300 million premium or, let's say, 7% of total premium. So it is a small portfolio. However, it is a long-term product, so liabilities are higher.

Now as you know, we've already taken management actions last year with sector-specific price increases and more flexible contract terms to enable annual repricing. Now due to the backlog of the government agency, which is clearly an industry problem, I'll come back on that. We've also recently seen even more elevated claims. And these claims are now reflected also in our provisions, and that has some impact on the reporting Non-life OCG.

Now obviously, we're closely monitoring the developments. We continue to prioritize margin over volume. As you can imagine, we also have intense discussions with the government on how this -- how will they restructure this system and whether it's sustainable or not. And depending on that, obviously, we will assess at a later stage whether we want to remain active in this market or not.

Now I think it is good to note, as I said, the overall book is EUR 4.2 billion of premium. It is very healthy. And in -- but in such a book, there's always pockets that require extra attention. We've seen Motor in the past, individual, some of the individual portfolio. So there will always be pockets of that will require extra attention and group disability certainly is one now. But overall, Non-life is doing very well. They're well on track with the guidance of 91% to 93% with a combined ratio of 90.4% and we're also very confident that we will deliver on the 2028 OCG target of EUR 475 million with a free cash flow conversion of at least 80%.

And with that, let me give it to Annemiek on the Solvency II and on the Japanese reinsurance transaction.

On Solvency II and the impact of removing the bank, obviously, we're really happy that we now can remove the bank from the Solvency II ratio. It just creates a better level playing field. So we're happy that, that was the final conclusion. Now on the 200% that we set out there, that's still a relevant number. We didn't really change the capital framework when we had to, at some point, consolidate the bank there. We're not going to change it now either when we take the bank out. And it basically means there is a bit more buffer, right? So it's a good thing there.

On the Japanese reinsurance transaction, to give a bit of background there, obviously, with the move to ICS, that would have had -- if we wouldn't have taken any action a roughly mid-single-digit negative impact on the solvency ratio. So we really took 2 actions there. We brought Japan onto our partial internal model, and we did the reinsurance transaction. Now the latter really reduced lapse risk, so it also reduced sensitivity for interest rates. It's a good transaction and an increased local equity, as you pointed out, which is good. That means that there is fungible capital, and that gives us great comfort that we can actually deliver our guidance to grow free cash flow out of Japan in line with OCG. We're a long-term shareholder, long-term investor in that business. We like stable and predictable remittance patterns, similar like we also like a lot of promise to our shareholders. So over time, we would expect free cash flow to increase in line with OCG out of Japan.

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

Just 2 questions. So firstly, on Japan, you noted and you commented on the impact from a lower CSM release on Japanese earnings, it was quite material. Just wanted to understand what's going on there and how we should forecast that going forward. But I realize that has no necessarily any kind of impact to OCG.

And the second question is around the defined contribution in Netherlands Life. I mean it's been very impressive growth. When you talk about the 15 to 20 bps margin, are you there yet? Or are you building to it? And is there an equal impact also on operating earnings? I know that if you look at the breakdown of IFRS profit, it's still -- the other line is negative. Just wanted to understand how that line will grow and when we'll see the impact of this 15 to 20 bps.

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

Yes. On Japan, it's true, we have seen a lower CSM release there. It's a minus EUR 55 million. It's also in the back of the analyst presentation. And that was really driven by the line other movements. So at the end of '25, we already saw some higher lapse rates. So we have to adjust adjustments there. You then saw that coming through in the other movements, which basically lowers the CSM base. So you also have a bit of a lower release coming in there.

Now in H1 this year, we also have other movements there and also related to assumptions on lapse risk, but there is a variety of items in there. It's a bit of a reinsurance transaction. Last year, we also had FX coming in there. If you see that, that means that the CSM release will likely go down a bit further.

Now on the total organic CSM contribution from Japan, it also obviously depends on the new business added. So if we recover sales there and if we progress towards improving that business, obviously, that will be a mitigating factor there. So that's how that flows through our CSM business.

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

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

I will ask Robin, no problem.

Okay. I think the question was on recapturing market share in Japan. Well, I think Farooq, we're going to assume you asked about market share in Japan. And hopefully, that was your question. Yes, I think -- I mean, the -- if you look at what's been happening in the corporate life market, we have seen that since '21, so the last 4, 5 years, the long-term corporate life market has significantly grown. And we repositioned also our business in that direction. You might remember last year, our VNB grew around 30% versus '24 on a constant currency basis, and this was really on the momentum of the long-term COLI product.

So in 2026, we saw a reemergence of short-term COLI products and this has weighed down on our sales growth there. VNB is now down 5% versus a much higher level from last year on a constant currency basis. Now as I was saying in the COLI, we remain very well positioned in the corporate life market. I mean if we have a complete SME focus, and it brings us quite a bit of advantages. So we have dedicated products and services there, specialized sales support, customer service. And our time to market is faster because there's a limited amount of product approval windows in Japan, and we can use all these slots for corporate life. So as such, we continue to believe that we can recapture market share independent of how the market is going to move over time.

Now it is fair that if the current shift to more short-term products is ultimately more sustainable and aligned also with the regulatory expectations, then we will also adapt our offering, and we will reenter this market. We used to have a leading position in that market, so we can leverage our existing strength and capabilities there. Yes. So overall, we're a long-term investor, and we feel that irrespective of how the market develops, we feel that we're well positioned. And that also means that we remain optimistic that we will achieve our OCG target. Obviously, FX has deteriorated since we set the target. At the same time, interest rates have gone up. So we remain optimistic that we will deliver on our OCG target. And Annemiek already spoke about the free cash flow or the reinsurance transaction. And clearly, that has increased capital fungibility. And therefore, we're also very comfortable that free cash flow can grow in line with OCG.

I think on -- you also had a question on DC. Yes, just a couple of comments on DC. So DC indeed has been growing in a very good way. I mean we saw a EUR 1.7 billion net inflow, so above EUR 2 billion gross inflow but net EUR 1.7 billion inflow, which is a record inflow. So we have been increasing and increasing there, helped with markets, we now are at EUR 48 billion. So it means that we're well on track to get to the EUR 55 billion. Margins indeed, in terms of OCG are 15 to 20 basis points. It is a scalable business there. But -- so in long term, there should be some upside to this number. But for now, 15 to 20 basis points is the margin that we focus on. I think there was also a question on the operating results.

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

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

Firstly, on just M&A, kind of any update on the landscape and particularly interested in maybe talking a little bit about the German MGA, how that's progressing? And also, you removed the bank from solvency ratio. Can you just remind us how integrated the bank is? I remember from CMD, you talked about how the bank app is integrated into kind of the different products and also kind of the cost base and economies of scale around AI investment that you get from having the bank Non-life, Life, altogether.

Second question on kind of the autonomous vehicles. I think Netherlands on the 10th of April was the first one to adopt...

[Technical Difficulty]

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

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

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

The Tesla self-service driving, self-driving.

Okay. All right. Let me start with the first couple of questions. Yes, I think the M&A landscape, not much news to say. I mean, obviously, we continue to be interested in acquisitions, assuming that they are a good strategic fit and they meet our financial criteria. So far, we've always delivered on a double-digit return. We have a strong track record in M&A, which we're very attached to. So if and when an opportunity is there, we will certainly look at it. Reality is also that currently in the market, there's probably more insurance companies interested in buying than selling. So we haven't seen also many cross-border activity, but it is something that we continue to be interested in. But if not, we're also more than fine. I think we have a very good growth trajectory. The CAGRs for OCG growth, excluding M&A, are looking good. Targets are not based on M&A. They're all based on organic growth. So overall, if M&A doesn't come, we're also very comfortable with that.

On Germany, yes, so we have about EUR 100 million in Germany now. We distribute this via MGAs, mandated agents. We focus more on building insurance because that's an area of expertise for us and also where we are -- we have a lot of expertise. To be honest, it's not that difficult to grow rapidly, as you know, in P&C, but that's usually -- it's creating problems down the road. So we're looking at a controlled growth, but we're pleased with the progress so far in Germany.

Then on your question on the bank, how integrated is it? Yes, it's very integrated. It's -- you shouldn't compare that easily to, for example, NNIT. So the bank, you wouldn't see the bank in the Netherlands. If you're a customer in the Netherlands, all you see is Nationale-Nederlanden. And you will have one app. And whether there are short-term products in there like Internet savings, longer-term products like, for example, bank annuity products, you don't really see endowments or unit-linked anymore. So all third pillar savings actually go via the bank. It's an important market for us.

Our pension products or car, motor, it's all integrated into the NN platform and customers don't really notice whether it's a bank or a pension company or the Non-life company. Overall, the bank has about 1 million customers, 25% of the retail customers, and it continues to be, for us, attractive mortgages and like I said, play an important part in also the, let's say, the bank annuity growth market where we have historically around a 20% market share.

So yes, so overall, I think on your question on mortgages and AI and scaling, yes, that has some clear advantages. For example, we're rolling out the underwriting mortgages. Mortgages has always been a too complex process to do in a straight-through processing way. But now with AI, we're already reduced the time basically to 1 day to issue a mortgage. And we also said that next year, this should be done in 30 minutes. And with all the documentation, the external checks, 30 minutes is actually pretty quickly. The reason why the bank is doing that quickly is because they have a relatively clean landscape, but also because there's a lot of group experience in AI. So the Future Ready program helps to deploy AI a lot quicker than they otherwise would have been.

So that's on the bank. I think on self-driving, yes, that's still a very small market. So there is some self-driving allowed, but the driver is still fully liable. So that hasn't really changed the market. We will closely monitor motor claims on electric vehicles because they're heavier, they can be quite fast. So we monitor closely. But I think overall, the self-drive is still very small. Happy to see, by the way, how the motor book has been developing. Clearly, the trend is downward on the combined ratio after all the measures that we've taken. So that book is, in general, developing in a good way. And then let me give it to Annemiek.

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

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

First one, just on Japan, are you expecting any FSA action on the new short-term savings competition that you're seeing? And I guess just more broadly, can you just remind me the strategic rationale for only participating in COLI products and not looking at a broader product suite in Japan?

And then secondly, in Greece, are you able just to give us a sense of how much of your Greece APE is from the bancassurance partner that you're flagging is going to end? And then thirdly, just a very technical point, but why did the disability provisions hit the OCG in the first half of '26, but it didn't hit the OCG last year? Anything there would be helpful.

Yes. Thank you, Andrew. Let me start with the question on FSA and on COLI and some words on Greece and Annemiek can cover the rest. Yes, on FSA, yes, I mean, that's really a good question for the regulator. Obviously, we are monitoring the situation. A lot has happened. Business improvement have happened quite frequently in the Japanese market. So we will -- yes, we will just monitor the situation and see how it will evolve. And like we said, if the market is structurally changing that way, and it's also in line with regulatory expectations from the FSA, then we will also adapt. But currently, we continue to focus on protection products and long-term savings products.

Now on why only in corporate life? Yes, corporate life, I mean, it is a market where we insure SME owners. It is a very large market, first of all. I mean, I think we said before, simply that market of insuring SME owners is larger than the full Belgium market has. So it is a significant market. It's quite specialized. It's not that easy to get sales forces, and we work with third-party distribution, so security houses, brokers, Sumitomo banks. It's not that easy to get these channels to actually sell corporate life because they are complex products. There's tax involved. You need to be talking about uncomfortable things like what happens if you become disabled, what happens if you die.

So we have a very specialized sales force that focuses on that. I think that's what sets us apart also from the competition and why we've always been at a very high market shares in this market. We've looked many times in retail. So far, we always concluded retail is lower margin, first of all. And second, there's not that much synergy. There's not that much synergy between corporate life and retail. So in terms of operating synergies, it's not that we miss out on a lot by not having a retail business. So those have been the reasons for us to continue to be in the corporate life space, big enough, attractive margins and specialized setup for it.

Of course, if opportunities would emerge in retail, then we would take a look at it. I think your question on Greece. Yes. So like we said, we do expect that the sales will come down significantly in Greece after the Piraeus deal in '27. I think we disclosed earlier, we said around 55% of the VNB in Greece is bancassurance. 45%, obviously, is tied agents. Tied agent has been growing significantly, as we talked about, 30% last year, 25% up in the first half. So we will -- so we continue to see good opportunities in Greece.

In terms of OCG, I think fair to say that it would have a negative -- has some negative impact on it in '27, but we're still very comfortable to -- that we will achieve our target in '28, taking into account what is happening in Greece as well.

Annemiek? Yes.

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

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

Fantastic and just like Cor said at the beginning, really well done. I had 2 questions. One is on AI, whether you're tempted to invest more given it's -- it clearly is -- it feels to me like way, way, way ahead of plan.

And the second one is, I know you sounded a bit dismissive on deals and stuff. But just could you give us an idea of how big is your war chest? So I can work out, I think, the cash. So we're at EUR 1.7 billion now. You do EUR 300 million to EUR 400 million a year, so maybe EUR 200 million to come in next half year and another EUR 400 million next year. So that gets up to EUR 2.3 billion. You pay EUR 600 million of debt. So we're back to EUR 1.7 billion. And in my mind, I don't think you have a guidance for this anymore, but you've got a minimum of EUR 1 billion, and you'd probably run with slightly lower even. But I don't know the debt side. That's it.

Yes. Thank you, Michael. On AI, tempting to invest more, yes. But the reality is there's also the amount of change that an organization can handle is also not unlimited. We still have -- we're only halfway in the program. So -- but you're right. I mean if you're halfway in the program and you invested 70% and you already have 65% of the benefits, it's clearly -- it's doing well, but we shouldn't also be complacent. I mean we still have quite a bit to prove. So we still have some way to go to the EUR 200 million benefits that we want to achieve. And of course, over time, the question will come after this program, which is by the end of 2027, how will we proceed. But in general, it's fair to say that if you look at the organization, we're scaling now a lot of the AI use cases. We have expanded from claim handling also more into underwriting propositions -- so we do see more opportunities, but we need to see how we deal with that long term. For us, it remains -- the Future Ready program remains a clear area of attention and certainly a possibility also long term where we see more opportunities.

Yes, I think on M&A, I mean, we've never given a war chest, but it depends on the target. It's clear that we have financial flexibility. If you look at our leverage ratio and our cash ratio and our solvency ratio, there is some flexibility. But it will depend on the target. We've been very disciplined in both financial and strategic criteria, and you can count on us that we will continue to be very disciplined also on, let's say, on M&A in general.

With that, next question, please.

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

Yes. I had 3 questions. The first one is on Japan. You have approval windows that are around March and around September and October. Can you -- I think that you're very optimistic of getting products approved back in August, September last year. So can you just remind me what -- if you had approvals back in September and October and if you had now approvals for new products in March? And also, looking at the market, I mean, it looks like you are in the long term. The market has shifted to the short term. Is there any chance for you to come back into it? Or you are still a bit held up by the regulator? And do you find that it's worth it if it is a total uneven playing field that is driven by the regulator?

The second thing is on Greece. Clearly, all the banking partners are taken. So do you find that a strategy going along with only agents would still deliver you good growth? Or do you find that at the end of the day, it's going to be a decent market, but your focus just will shift in other areas? And also, I didn't understood what would make up for Greece and the Czech pension reform. I think you mentioned Poland and something else. But if you could say which countries and why they will be making up for these 2?

And the third question is on the bank. It's good to hear that you remain totally committed to it. So just a couple of things. Mortgages, you said you are down to 1 day to issue one. How does that compare to the market? And also, Annemiek, if I could have the bank is about 10 percentage points positive or thereabouts. Then we get the others that is plus 5%. So if you could give me the elements that are bringing the 10 back to 5%, only 5% in Solvency II ratio, that would be great.

Yes. Thank you, Jason. A lot of questions. Let's start with Japan. They're not set specific windows for product approval. What is limited is the amount of products that you can introduce in a year. It depends a bit on the situation, but 2 is probably roughly the right number. They're not set in specific dates. The regulator has a limited amount of time to approve or not approve these products. But it is, as a company, you cannot go to the regulator with 5, 6 products in a year. So what have we introduced? So we have introduced 2 long-term products, one more of a unit-linked version and one of a traditional one. And we introduced also an improved protection product. So that has been our focus.

Yes, we feel that we can compete very well in the corporate life market. Like I already mentioned, let's say, the quality that we have in this business, the focus that we have and what sets us apart versus competition. So we feel we can compete well in this market. And yes, your question on will you also sell these products? If this is a structural change and in line with regulatory expectation, then indeed, we will also adapt.

On Greece, yes, this is life of bancassurance. You -- every now and then, you get new partners in. I mean we had some new partner at some point in Czech. You can -- we have a banca new in Spain, but every now and then, you also lose a bancassurance partner. So likely, we will lose or to a large extent, lose Piraeus Bank. But there's more banks in Greece. And I have no doubt that we will continue to see some changes in bank insurance landscape as well. So we have the strongest track record. We have the most successful cooperation with Piraeus by far, we have a good reputation. So we'll see if other banking partners will emerge. But like we said, we're also very pleased to see that the tied agent channel is picking up significantly.

And that means that also for '28, as we said, we're well on track to deliver on the OCG. And it clearly means that some of the other countries are compensating for this. Keep in mind that also when we set the target, we already were aware that there could be some changes. In terms of markets, yes, Poland, Romania, there's quite a few markets that actually do well, and they will -- and I guess that's also the advantage of a diversified platform. You always have some that something will happen, others will do a bit better. So like we said, we're very optimistic that we will achieve the EUR 600 million for Europe.

Your question on mortgages. Yes, indeed. So the goal is now that we do it in 1 day. It obviously also depends on how well customers have been delivering all the information. It's not just the throughput time. What we also really like is that AI does the analysis. And if it doesn't really fit, it will also automatically suggest what alternatives or what could work for a customer. So I think it adds to speed and creativity as well. Is it unique? Probably not. We know a couple of other ones are -- a couple of the large banks are also working on this. Same with claim handling or underwriting, none of this is unique. But if you do it quicker and faster and you scale it more, it can still be a competitive advantage. But I assume that everybody in the market will be looking at deploying AI. So this is not about that it's unique and we do it. I think our competitive advantage should be that we do it quicker and better and we scale it better across units.

And then the last question, I think, was for Annemiek. I almost feel insulted that you think I cannot answer this, but I'll give it to Annemiek then.

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

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

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

Good morning, ladies and gentlemen. This is the operator speaking. Welcome to NN Group's Analyst Conference Call on its Full Year Results. [Operator Instructions]

Before handing this conference call over to Mr. David Knibbe, Chief Executive Officer of NN Group, let me first give the following statement on behalf of the company.

Today's comments are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those projected in any forward-looking statements.

Such forward-looking statements may include future developments in NN Group's business, expectations for the future financial performance and any other statements not involving a historical fact. Any forward-looking statements speak only as of the date they are made, and NN Group assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.

Furthermore, nothing in today's comments and -- comments constitutes an offer to sell or a solicitation or an offer to buy any securities. Reference is made to the legal information on the last page of the presentation.

Good morning, Mr. Knibbe. Over to you.

Yes. Thank you, operator, and good morning, everyone. Thank you for joining our conference call to discuss NN Group's performance for the full year 2025. I'm excited to be here with you today. And with me are Annemiek van Melick, our Chief Financial Officer; and Wilbert Ouburg, our Chief Risk Officer.

I'll begin with an overview of the key messages and dive into the excellent commercial momentum we have witnessed in our growth segments as well as our tangible progress on our future-ready program. Next, Annemiek will give a detailed analysis of the strong progression of our capital position and financial performance over 2025. After my concluding remarks, we will move over to the Q&A.

I'm excited to share that we have not only exceeded our 2025 targets, but also delivered a very strong Solvency II ratio of 220%, giving us an even stronger foundation to deliver on our future-ready growth targets. I am also pleased to see our growth segments deliver significant increases in new business values for international and a growth written premium growth of 6% in Non-life, which is now surpassing the EUR 4 billion mark for the first time.

Next to this, we saw increased DC inflows of EUR 2.6 billion at Netherlands Life. These results demonstrate a continuing shift towards high-quality fee and underwriting income. And we are making meaningful progress on our Future Ready Program, where I will share some compelling AI use cases later. And finally, on the back of our solid business performance and outlook, robust cash generation and healthy capital levels, we are further enhancing our promise to shareholders by stepping up our capital return commitments by EUR 100 million with a EUR 50 million step up in our annual share buyback and a EUR 50 million increase in our dividend, above the regular progressive increase.

As I mentioned, we have exceeded our key financial targets for 2025 with an OCG of EUR 2.1 billion, coming in well ahead of the targeted EUR 1.9 billion and our free cash flow slightly above the target of EUR 1.6 billion, a growth rate of 7% per annum for both metrics. These impressive numbers are further evidence of our ability to deliver on our business plans and a further testimony that we can drive profitable growth, which is good for all stakeholders.

Our capital position has significantly improved as has the underlying quality of capital with several tail risks being addressed as pointed out on the slide. Annemiek will provide the details on our financials later. This strong business performance as well as comfortable cash and capital levels have allowed us to increase capital return by EUR 100 million above our typical progressive dividend, splitting this evenly between a step-up of the dividend and a higher annual share buyback.

Consequently, we have increased the dividend per share with 13% to EUR 3.88 per share, increasing the base level for our continued progressive dividend policy. And we are stepping up our annual share buyback program by EUR 50 million to EUR 350 million. Today's increase marked a continuation of our outstanding track record of capital return to shareholders, having now returned over EUR 11 billion to shareholders since our IPO in 2014. We remain very committed to our capital return promise and to extend this strong track record, which is based on our current market capitalization, still implies an attractive future DPS growth of approximately 7% per annum.

We continue to deliver value to our customers, employees and society at large. And with the Capital Markets Day, we have set new targets for 2028. Let me highlight a few. We aim for the customer satisfaction scores significantly above the market average and secure a position among the top 3 for broker satisfaction by 2028. Customer satisfaction has shown consistent improvement, especially in Europe where all units are above market average. Additionally, we, once again, affirmed our #1 position on satisfaction with the Dutch brokers who play a dominant role in the distribution of our products.

We also aim to be an employer of choice where people enjoy to work with a diversified population. Furthermore, we aim to cut greenhouse gas emissions by 45% by 2030, invest over EUR 13 billion in climate solution and support 2.5 million people's well-being by 2028. As you can see, progress on all these targets is well on track.

With the Capital Markets Day, we took a deep dive into our Future Ready program, our plan to position us for greater competitiveness and adaptability in a rapid evolving landscape. We focus on standardization, automation and reuse of AI with a clear focus to improve customer experience and growth. I'm proud to say we are making significant progress and happy to share that we are firmly on track with the new KPIs that we set at the Capital Markets Day. We now have 236 AI use cases in place and already 42% of our sales come from digital leads. From the EUR 200 million annual target benefits by 2027, we have 40% realized in our run rate for the end of 2025.

Let me just highlight a few of these use cases behind these achievements. First, a breakthrough in claim processing. We can now process third-party car liability claims fully straight through. This enables us to deliver faster service with processing time decreasing from 1 to 3 days to a few minutes as well as reduce manual effort and improve customer satisfaction. And it builds on our existing AI modules and system integrations, it is scalable for other use cases as well.

Second, we are now using AI-powered avatars to train and coach our tied agents, enabling them to practice complex customer scenarios. Data shows that following standardized scripts significantly boost conversion rates, and we are now scaling this across the more than 9,000 agents. The result is a higher sales conversion, improved agent retention through better support and increased customer satisfaction.

Third, our new generative AI tool, AIReply. It drives high-quality e-mail responses using historic interactions and templates. This frees up time for customer service agents to focus on what matters most, delivering value to our customers. We are rolling it out across all Dutch business units with international outgrow to follow. And these are just a few highlights because there is much more to come.

We show excellent commercial performance in our growth business, Insurance Europe, Japan and Netherlands Non-life. Our largest growth segment, Insurance Europe continues to show significant VNB growth with an increase of 16% versus 2024, with both higher sales volumes and increased margins play a part in this success. With the growth from 2025 included, new business in Europe has grown with an average of 12% annually over the last decade, clearly not incidental and showing that our strategy is reaping real benefits.

Japan, our other international growth segment, continues its sales recovery with a significant 25% increase in new business value in 2025 versus '24. When comparing VNB year-on-year from Q2 onwards, the period since the launch of our new long-term savings product, we even see a 34% increase. Our market share has already been improving on the back of this performance. Going forward, we expect gradual sales recovery to continue, also driven by further product introductions. This will help VNB to recover to 2022 levels by '28, as outlined during our Capital Markets Day last year.

Netherlands Non-Life witnessed solid commercial momentum with gross written premium up 6% on year, surpassing the landmark of EUR 4 billion for the first time. This was driven by both indexation and volume growth. While the overall combined ratio remained within the 91% to 93% target range at 92.9%, the combined ratio of P&C was excellent at 90.3%.

And now I'd like to take a moment to highlight some of the business specifics for Europe and Netherlands Life. Our European business continued its impressive growth trajectory, and I'd quickly like to reemphasize our strategy. The focus is on a simple capital-light offering, favoring technical and fee income with a limited reliance on spread income. Our protection products have small ticket sizes, which makes these products accessible for a large pool of people who are increasingly aware of the usefulness of these products.

With these small tickets, high-volume products, the key is getting in front of customers, and this is an area in which we excel. We have a multichannel distribution network, well balanced with tied agents, bancassurance, brokers and direct. The tied agents channel, in particular, is undergoing a digital transformation and is one of the key beneficiaries of the Future Ready program, as can be seen by the success of our digital reach generation.

We took the decision to focus on protection more than a decade ago, and I am pleased to see how well that decision is paying off. With our presence in the highly underpenetrated markets, I have faith this trend can prove to be sustainable. Protection is the key pillar of our growth in Europe. But our pension offering is also a strong contributor. We're one of the leading providers of Pillar 2 and Pillar 3 pensions across Central and Eastern Europe, providing a source of AUM-based fee income, a business model with attractive operational leverage. And in 2025, this business model showed strong growth, also helped by financial markets in those regions.

Moving on to a promising growth opportunity in our home market. We have a leading position in the Dutch immediate annuity market. Even in the new pension framework, it is mandatory that people convert their accrued pension investments into an annuity. This is an attractive market segment because margins are healthy, and we expect the reform to improve our growth prospects.

In 2025, our gross inflow into immediate annuities was around EUR 0.8, up from EUR 0.5 billion in 2020, representing a CAGR of 10%. We expect these inflows to continue to grow, mainly fueled by the increasingly large DC pension funds. We expect to see a CAGR for immediate annuities of 10% to 15% going forward, leading to a potential gross inflow of EUR 1.4 billion in 2030.

This growth was not immediately visible in the growth of AUM. I won't bore you with the details, but this line item also includes a legacy retail portfolio that runs off at about 10% per annum. This runoff will be largely completed by 2030, where we expect the immediate annuity portfolio to have reached EUR 10 billion in AUM.

Together with the strong customer satisfaction, targeted pricing and our market-leading position in the overall DC market, we are confident in continuing this upward trajectory towards more than EUR 65 billion of AUM with an anticipated 15 to 20 basis points OCG margin by 2028.

In conclusion, our investor proposition rests firmly on 3 core pillars. First, our business mix will continue to diversify over time where growth segments will become more dominant in our mix. Netherlands Life will also become a more capital-light business as the mix changes towards DC pensions.

Second, with our Future Ready program, we continue to standardize and automate operations, improving efficiency and scalability across the group and at the same time, improving customer experience.

Third, we remain fully committed to delivering on our capital return commitments. And with safe announcements, we have taken another significant step in strengthening those commitments.

And with that, I will hand over to Annemiek.

Thank you, David, and good morning from my side to everyone listening in on the webcast. I'll begin with our excellent financial delivery of 2025. As you can see on Slide 14, our OCG is up 9% versus 2024, coming in at EUR 2.1 billion. It's a strong trend and testament to underlying business performance, whilst also benefiting from some nonstructural tailwinds. Free cash flow was up 7% versus last year with improved diversification as Netherlands Non-life, Europe and the bank increased contributions. The delivery on both metrics reinforces our confidence in the '28 OCG target of EUR 2.2 billion and our free cash flow target of above EUR 1.8 billion.

Our solvency ratio is strong at 220%. And as David highlighted, it's a significantly better quality since we removed the unit-linked overhang and are less sensitive to market movements and longevity risk. Cash capital increased to EUR 1.8 billion, although this has since reduced somewhat to EUR 1.6 billion following the repayment of the remaining RT1 debt that was called during January. These elements combined have put us in a position to reward shareholders beyond our normal capital return promise. We further enhanced our structural capital return with EUR 100 million, equally divided between dividends and share buyback. As such, we present the year-on-year dividend per share increase of 13% and a EUR 50 million increase in the annual share buyback to EUR 350 million.

Now let me give you some more insights into our capital progression. Looking at the capital bridge for the second half of 2025, strong operating capital generation of EUR 1.1 billion had a 13 percentage points to the solvency ratio, which is rounded 5 percentage points higher than the capital flows to shareholders in the form of dividend. Market variance increased the ratio by 7 percentage points, largely driven by the positive impact of interest rate movements, and decreasing spreads on government bonds and mortgages, partly offset by negative equity variance.

Mortgage spreads at the end of December were around 75 bps. We've previously communicated a normalized through-the-cycle level of 100 bps. However, we currently see tight spreads across basically all asset classes and clearly, mortgages are no exception. The bucket other added 2 percentage points to the ratio. This is mainly due to an update in the way we calculate non-available own funds for Insurance Europe entities, which add up 4 to 5 percentage points. We brought our approach more in line with the market after noting a more conservative approach versus peers. This was partially offset by a number of our model and assumption changes. The solvency ratio of Life showed a strong increase from 200% to 233% as well.

Our 3-pillar capital framework with a focus on: one, a Solvency II ratio comfort zone of 150% to 200%; two, EUR 0.5 billion to EUR 1.5 billion cash at the holding company; and three, a single A financial strength rating has not changed. With the current strong Solvency II ratio, it's fair to say that we're currently sustainably above 200% and that our binding constraint for capital return has now moved from solvency to cash at the holding company. Of course, this could change under adverse scenarios.

Now let me give you some details on our high-quality private debt portfolio before moving into OCG. We're comfortable with our private debt portfolio, which is well diversified by industry and geographically focused on Western Europe with an exposure to the U.S. below 10%. Over half of the book is either collateralized or government guaranteed, around 60% is above investment grade, and there is no exposure to leveraged products. We put a lot of emphasis on manager selection. Our goal is to gradually build the right exposure, giving managers time to put the funds to work. Our enhanced oversight capabilities allow us to properly challenge the fund managers. One example of this is the sample testing that we perform on the credit ratings assigned to individual loans. So while the market has seen some isolated incidents on private credit exposure, we're confident that our credit exposure has a more conservative risk profile.

And let's move to OCG. As already mentioned, our OCG came in at EUR 2.1 billion, up 9% versus last year. This reflects ongoing commercial and business success, driven by our growth segments, Europe, Japan and Netherlands Non-life. The strong underlying trend was further enhanced by some nonstructural elements.

Netherlands Life's OCG grew by 13%, helped by an infliction in experience. Last year was negative, now it's positive and higher investment returns. The main moving part for Life into '26 is the likely absence of positive experience variances, so we would expect a modest decrease in OCG for '26.

For Netherlands Non-life, which grew by 9% on a reported basis, we confirm an underlying rate of EUR 400 million for '25, from which we expect to grow with GDP plus going forward. Benign weather and the positive impact from reinsurance renewals were key reasons for Non-life to overachieve in '25.

Europe's OCG grew by 13%. As David explained, increased sales and higher margins drove it, and we're very pleased with the overall performance. Due to favorable markets, our pension fund service also benefited from performance fees during '25.

Sales recovery in Japan was strong and as such, has put some pressure on OCG as the current framework doesn't allow for deferred acquisition costs, as you know. However, Japan's OCG still grew by 8%, and this was more than offset by the benefits of a reinsurance transaction and favorable claims environment. For '26, we expect Japan to grow OCG benefiting from the move to ICS and continued new business growth. Lower OCG at the bank has a large [indiscernible] effect of NIM compression, which was only partly offset by one-offs. For '26, we expect a roughly stable OCG versus '25.

With the above comments in mind, looking forward to '26, we expect the nonstructural positive contributions in '25 to be offset by underlying continued business growth, leading to a flat reported OCG. As such, we're well on the way to deliver on our '28 OCG target of EUR 2.2 billion in '28.

Now a few words on operating results on Slide 18. Since we steer the business based on solvency metrics, I'll only concentrate on drivers that are different from the OCG analysis. Operating results were up 17%, largely driven by a sharp increase in Netherlands Life. Investment income benefited from the result on derivatives that fall outside of hedge accounting and higher dividends from private investments, especially the first item is rather technical and has no economic substance.

Japan's operating result was down due to a decline in the in-force book. This dynamic should be temporary as new business is rebuilding after the new long-term savings products that we launched in March. Future profits on the IFRS are largely determined by the CSM level. Our organic CSM grew 2% in '25 with high single-digit growth from both Netherlands Non-life and Europe. Japan is now also contributing to CSM growth following its sales recovery.

NN Group's net result decreased due to revaluations on derivatives outside hedge accounting used for hedging purposes. Bond sales and the final accounting results from the sales of Turkey.

Now let's move to our cash capital position. Free cash flow slightly exceeded our '25 target and came in above EUR 1.6 billion in '25, up 7% versus last year. Although free cash flow is lumpy by nature, we expect it to grow year-on-year to our target of over EUR 1.8 billion in '28.

Remittances from business segments were also up 7% and benefited from increased diversification as Insurance Europe, Netherlands Non-life and the bank all showed increased contributions. The bank benefited from additional remittance capacity due to the capital release from Basel IV.

Other includes the impact of increased debt costs and approximately EUR 50 million of Future Ready investments. Capital flows of more than EUR 1.2 billion includes the payment of the final dividend over '24, the interim dividend over '25, and the EUR 300 million share back that has been executed over '25. The change in our debt and loans reflects the impact of the untendered grandfathered RT1 notes, which have been redeemed in January 2026. As such, a pro forma cash capital position per year end '25 was closer to EUR 1.6 billion.

Now that we achieved our 2025 targets, our eyes are set on 2028 and our improved investor proposition. We've increased confidence to deliver on our 2028 targets, which will not only grow but also further improve and diversify our business. We're on track to grow our Dutch Non-life and International segments, and the strong business and financial results of Netherlands Life underscore our commitment of stable and predictable remittances until 2040.

We're on track in creating a highly digitalized Future Ready platform and organization. We have a strong balance sheet to support these key pillars of our investment case. Based on this confidence, we enhanced our capital return proposition today with an additional EUR 100 million on top of our regular progressive dividend policy and annual share buyback.

Going forward, we will continue to return additional excess capital to shareholders, unless it can be used for value-creating opportunities with a continued preference for small incremental steps rather than one-off lumpy returns.

At our Capital Markets Day, we indicated EUR 1.5 billion of excess cash bill potential over the 4 years from 2025 to '28. With today's enhanced capital return announcement of EUR 100 million, we allocate more than EUR 400 million of this excess cash bill to shareholders.

In order to improve future financial flexibility and manage debt costs, we intend not to refinance the EUR 600 million senior debt that was originally raised for the Delta Lloyd acquisition and is set to mature in 2027. Consequently, we expect the residual excess cash bill to be around EUR 500 million over 2025 to 2028, which can be used for value-accretive opportunities for further enhanced shareholder returns.

Thank you all. And with this, I'd like to hand it back to David for the wrap-up.

Yes. Thanks, Annemiek. I'm going to keep it short and punchy. We exceeded our 2025 targets. Capital is strong, our growth segments show excellent and continued commercial momentum, and we further enhanced capital return towards shareholders, and we are ready to continue this impressive track record.

And with these remarks, I would like to open up the call for Q&A. Operator?

[Operator Instructions] and our first question today comes from the line of David Barma from Bank of America.

Thank you for the 2026 capital generation guidance. I wanted to ask you about how disability fits into this. So could you please explain the deterioration in the second half of '25? How much of that was experienced compared to reserve adjustments maybe? And perhaps can you give some color on the measures you're taking in '26 to improve the combined ratio, and so how that is included in your flat OCG guidance for this year?

Then secondly, on Japan. So your new business data really starting showing the relaunch from the second quarter. And you had mentioned NBV growth of 50% year-on-year in that quarter. The second half was strong but has slowed a little bit. Would you be able to talk about the sales trend there, please? And how that's tracking compared with your expectations?

Yes. Thank you, David. Let me just say a couple of things on the combined ratio of the Non-life business, including D&A, and then Annemiek can fill in also the -- on the OCG guidance, and then we'll go to Japan.

Yes, on overall, the combined ratio of Non-life, I think overall, it was in the range of 91% to 93%. It was 92.9%, a little bit better than [indiscernible]. Obviously, P&C was very strong, but disability stood out. And then good to know within the disability book, we are really talking about the disability part of the sickness here, which is the first 2 years of coverage that the book is actually doing well.

What we have seen in this D&A book is that we've seen elevated inflows. I think partially, this is a long COVID. Partially, this is also a societal impact as an increase of mental health concerns.

Unfortunately, we were -- the reporting of the government agency on this claim was relatively late. So that meant that also, we needed to take strong measures in '25 to catch up, and that's what we did. So we've been actively repricing. First of all, we've also increased the segmentation between sectors because we saw quite some differences also in sector performance. And probably most important, even though these are 3-year contracts, the vast majority now of contracts will have the ability to reprice every year. So once a year instead of every 3 years.

Now this was combined with the strengthening of reserve. So all in all, we feel that these are strong measures that we have taken. Also, the solvency was not impacted there. So the remittance pattern will not be affected by this, by the development in the disability book. And we continue to guide 91% to 93%, as the right guidance of the combined ratio and clearly, we're on track to deliver on the EUR 475 million OCG target that we set for 2028.

Yes. On your question on how it impacts the '26 OCG forecast for Non-life, it doesn't, because the disability reserve strengthening doesn't flow through the OCG.

Yes. Then on Japan. Well, developments are very positive. I mean the -- clearly, the VNB was up 25%. I think, I mean, if you correct for currency, it's more in the range of 30%. These are very good numbers. So what has basically been happening in the market is that the overall corporate life market was flat, the short-term market or more the -- tax-driven markets actually went down with 4%. And then the long-term market where we mostly operate grew with 10%. So clearly, we're doing well in this market.

We also expect in this half year to introduce a new long-term product. So we have a unit-linked version out there, and we expect to launch also a more traditional product as well. So that means that next to the good protection product, a unit-linked product, we will also have a traditional life product in there. So that means that overall, yes, we're positive on the development. Japan is clearly on track to get to the targets that we have set. We initially said that we want to get back in '28 at the levels of VNB of 2022 which at that point was JPY 20 billion. And the business is clearly on track to deliver that, which is obviously a positive.

We will now take the next question, and the question comes from the line of Andrew Baker from Goldman Sachs.

The first one, just on the solvency ratio. Are you able to give a bit more detail on the change in non-available own funds methodology? And specifically, what changes you made to bring your methodology closer to peers? And then also what drove some of the offsetting model change impacts?

And then secondly, in Netherlands Life, are you able to give us a sense of the impact of a steeper yield curve on OCG now versus maybe your expectations at the CMD? And also, if you are able to give us any type of sensitivity to yield curve steepening on OCG, that would be really appreciated.

Yes. Thank you, Andrew. Annemiek?

On the non-available own funds. In our European business, we obviously have available own funds. We have solvency ratios that we actually statutory report in those businesses, but we cannot contribute all those available funds to the group, and that has to do with fungibility. We did some peer review also because the European business, obviously, is growing, and we don't like that buildup of nonavailable own funds from a group perspective. And we found out that we had a rather conservative approach there.

Technically, if you would actually sell one of those businesses within 9 months, you would get part of those nonfunds obviously reimbursed, they typically relate to future expected profit. We've now brought that more in line with what our peers do, and that means that we had a solvency build -- additional solvency build of roughly 4 to 5 percentage points out of this nonavailable own funds change. It doesn't change the local solvency ratios because they already included that. It also doesn't change the remittance capacity, but it does prevent group solvency leakage.

In terms of NN Life with the steeper yield curve, obviously, it was helpful for OCG of NN Life to have that -- steepen our yield curve. If you look at it going forward for the target, yes, it's a positive for '26, we would expect Life to be modestly below the '25 result that we had, and that mainly has to do with the absence of positive experience variances. We do recognize that the steeper curve, obviously, has a positive impact, but that's all market driven. So we're not going to change our target there for Life, but there could be some upside to it.

We will now take the next question, and the question comes from the line of Farooq Hanif from JPMorgan.

When you talked about incremental step-up in capital return, you were referring in the path to the buyback, but you've also added to the dividend. Can you just comment on whether the dividend is now part of the toolkit for incremental step-up, given the amount of surplus cash that you've just indicated to us?

And my second question is on the VNB. So the VNB, from what I can see, I mean you had a really big jump in margin in Netherlands Life and Insurance Europe, which I'm guessing is mix -- business mix improving. Can you talk about how that can continue to improve going forward? And also in Japan, as you're launching these new products, whether you also expect a VNB margin uplift as well as just the sales uplift?

Yes. Thank you, Farooq. Yes, on the capital, the capital return increased thinking. So obviously, we have continued strong business performance. As Annemiek explained, the cash levels are good and capital levels are strong, also our confidence in the business outlook is positive, and that's why we decided to enhance our capital return. And we indeed decided to do that by splitting this evenly between dividends and an annual share buyback.

We think that the EUR 50 million extra dividend and the anticipated buyback step-up is a good balance also between shareholder remuneration and deleveraging. Typically, we see that a higher dividend, obviously, it compounds over time and the market sees it as the most structural form of dividend.

I think your question is also -- so that was in our thinking. I think your question is also going forward. So our capital framework hasn't changed. We have always indicated that solvency being above 200%. If that happens, then the binding constraint moves to cash, which is where we are today. And we also said our cash, on the cash side, we expect a buildup of EUR 300 million to EUR 400 million per year. So from that point of view, we do expect that we can further enhance capital return in the medium term, but it will continue to have a focus on small incremental steps.

Just quickly, if I may, with respect. I think my question was more about the sort of level of the incremental step-up. I think we sort of had a feeling that it will be EUR 50 million a year, but it was EUR 100 million this year, if you know what I mean. And that's kind of what my question was more about.

Sorry, your question was more about EUR 100 million versus EUR 50 million?

Yes.

Yes. Well, to be honest, I don't have much to add to it. I think the -- we always said we like incremental, we like that if we do something that we can do it recurring, we want to avoid lumpy buybacks. And like I said, given the strong business performance, our belief in -- that we can continue this given where cash and capital levels are, we felt that EUR 100 million is also the right step, given our focus on that it should not only be incremental but also recurring.

Yes, on VNB. Well, I mean, there's a lot of parts moving, obviously, always in VNB. We've seen actually the VNB of Life coming down a bit, but this is normal because we have less defined benefit renewals, in fact -- ahead. So with the shift to DC over time, you will see that these defined benefit renewals will completely disappear, and the shift will be really to the DC space where we measure it in net inflow. So I think that is one dynamic. If you look within and in Life, actually, the margins in terms of the riders and the disability parts that are still part of and continue to be in VNB is there, the margin is positive.

We also -- I already mentioned that the immediate annuity market continues to be an attractive market for us. We look at capital deployment, and this is an attractive market for us to deploy capital in. We did around EUR 800 million. We expect that market to grow 10% to 15%. It's already growing around 10%. But with the effect of the pension reform, we actually expect a bit more of a step-up. So we do expect that we can continue to make attractive margins there.

In Europe, it's really a combination of the APE that is going up, but also our focus on protection. Protection continues to have very attractive margins. And we do expect also going forward that we can maintain those -- that we can maintain those attractive margins because of our strong distribution and as I was saying earlier, the ability, it's not just around the product, but it's also the ability to have the right distribution channels to actually get customers to talk about this. So for Europe, yes, we continue to believe that we can grow the VNB on the back of both volume and while keeping a healthy margin.

Japan, again, also attractive margins. There, we also see that the volume is up, and we've moved from what we call the short-term COLI to the unit linked, which is more the long-term market, which also has a higher margin. The traditional products typically tend to have a little bit lower margin, but also is still attractive.

So going forward, I think also for Japan, it will apply that there is still an underserved market. There's still a lot of SME owners out there. It's a big market that are under protected. So we continue to see the opportunity to grow both in volume and in margin also for Japan and a new product launch next to the repricing that we did of the protection product and the unit-linked product that we launched before summer. The combination of that should give a good platform for the growth of Japan, and we still aim to be in the top 3, top 4 back again in that market in the coming years.

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

The first one is just on the capital structure. So with the paydown of the RT1 and then the further EUR 600 million deleveraging and then assumes capital build, CSM build, the leverage looks like it's going to come down quite a lot. Just wondering why you want to sort of adjust the leverage picture and sort of if you view that as a more normal capital structure going forward?

The second one was just on Japan. You said you've done a reinsurance deal in Japan. I'm just wondering if you could give some more detail on what that reinsurance deal is, if there's any sort of benefit to remittance on that or capital strain, just trying to think, and is there an optionality to do more of that on the reinsurance side in Japan?

And if I could just ask a very quick third one. Just on the cash and capital now being finally constrained, cash capital at holding. In terms of where that target sits, I think in the past, you've sort of spoken debt holding costs, dividend cost buyback cost plus 1 in 20 shops. I mean with NN Life solvency being so strong, what sort of number should we be thinking about that? Is it the sort of EUR 1.6 billion, EUR 1.7 billion, the right number to be thinking about?

Well, thank you, Iain. Unfortunately for me, these are all for Annemiek.

On your first question on leverage, listen, the EUR 600 million senior note that we intend not to refinance this senior one, that was really -- that was tied to the Delta Lloyd acquisition. It was done at historically low rates and not refinancing it in '27 just saves us probably EUR 15 million or something. It doesn't materially lower our leverage ratio. And it's currently around 17% -- slightly over 17%, and will go to around 16%, if you already deduct the RT1 notes. So it doesn't materially impact that.

And if you look at the -- if you remember, at the Capital Markets Day and what I also said in the presentation, our cash build is roughly EUR 1.5 billion in the next 4 years until '28. And with today's announcement, we said we do the EUR 100 million additional capital return, EUR 400 million in total, then we have the EUR 600 million deleveraging and that then leaves another EUR 500 million in excess cash build. So it's not that we were unhappy with the leverage structure. It's just we don't need the cash, and it was tied to the Delta Lloyd acquisition on a historical rate.

On NN Re, it was a small reinsurance transaction we did -- sorry, on Japan, it was a small reinsurance transaction on the in-force book and the short-term COLI that we did. In general, we've been doing reinsurance transactions on Japan frequently over the last couple of years, and we'll continue to look at it. It doesn't change the remittance forecast that we have on Japan.

Cash capital, we've indeed always said that we hold cash capital to cover our holding costs, to cover debt cost, and we need to sustain a 1 in 20 shock for all the business units that we have. Typically, that number varies between EUR 0.5 billion and EUR 1.5 billion, and that's still the case for the guidance that we have on cash capital.

We will now go to the next question, and your next question today comes from the line of Michael Huttner from Berenberg.

Fantastic. And congratulations. I have one on Life and the other one, I'm kind of hesitating. I guess I'll ask it on AI because it's kind of topical. So on Life, I would say, you're not shrinking, you're growing. And your comments today seem -- this is NN Life, it seem to indicate that with the new figures you've given us on the immediate annuities. Can you kind of flesh that out a little bit? I mean, if I give you the way I'm looking at it, you might say, well, actually you're wrong or this is right. So if I add the DC assets to the Life reserves, this is in your financial supplement, year-end '24, we had EUR 148 billion, year-end '25, we're at EUR 146 billion, EUR 147 billion. So that's a shrinkage of maybe 1% or something.

And I think in the past, you've said shrinkage of 2%, but it feels like we're no longer really shrinking and you kind of alluded to the benefit of the Dutch pension reform coming through, even though you haven't kind of focused so much as some of your peers on pension buyouts. So I just wondered why don't you raise your targets in Life because the business is clearly doing fantastic. I mean, just a solvency of 223% is amazing. So that's -- sorry for the long question.

And the other one is really kind of almost stupid, but because it's so topical. So you gave us these lovely use cases in AI. Could you just say which one is a single biggest thing? My feeling from the way you've been kind of approaching the topic on protection is, it is coming from the fact that your agents are so much more productive once they've been trained with avatars or AI or whatever. If you could give us a feel, that would be magic because clearly, if you can accelerate protection growth, that's a big plus.

Yes. Thank you, Michael. Yes, on Life or NN Life, there is obviously competing things. So the closed book still runs off and earlier, we said it still runs off at around 2%. And that is on the back of basically retail but especially defined benefit books slowly running off.

At the same time, you're right that we do see good growth in DC. Of course, the dynamics are very different from big spread business and capital heavy runoff to growth of lighter. We set a target of EUR 55 billion AUM for the DC business, EUR 10 billion in annuities, and annuity is attractive. We haven't assumed any buyouts in that. So we do think that DC assets indeed will grow, immediate annuities 10% to 15%, we can make 10 to 15 basis points over this AUM. So that's clearly a plus, and then some of it is one-off.

I think for Life for us, it's always been important that stable remittance is very key for us. And also at the CMD, we indicated that we can maintain a stable remittance pattern out of NN Life. So even if OCG goes up a bit, which it has, or it comes down a bit, we will continue to focus on keeping stable remittances out of NN Life and offsetting the let's say, the slow runoff of DB with growth in DC. So from that point of view, yes, happy to see that NN Life is doing well, but there's not a change in the approach or in the guidance here.

Yes. On AI, I think even though we talk a lot about what we say, use cases. So we mean a use case, obviously, is where we have something AI that is really deployed usually in our operations. But the real game, of course, is scaling. So what is very cool, I think about the tied agents is that we see things that are developed in Poland or in Madrid. And then we have the ability to scale that to other markets. And this is a clear advantage of having a multi-country, multiunit platform that if you develop it once, it is with AI and certainly now on the language, it's really easy to scale this across other markets.

So probably a very big one right now is the tied agents, you're right, the 42% of growth, and it's not just the lead generation, it's the AI avatar that we have to coach our agents. It's the connecting AI using connecting the agent to the right customers. So there's a lot of individual AI use cases there and the fact that it's scalable across our 7 tied agent markets is very helpful.

But I also mentioned the claim handling part for Non-life, you can imagine that once you have an agentic AI claim handling module life, you can also scale that to European markets where we do a lot of protection business. And protection, of course, also has a claim handling, same for underwriting. So we now are focusing on trying to get to a 50% automated full underwriting in the retail space in the Netherlands. Again, we do lots of underwriting in the European markets and vice versa.

So my real expectation is that we should only develop AI use cases that are scalable, right? Because we trained everybody, a lot of initiatives come out of the company. And actually, we've been, in a way, almost slowing down the company because we don't want these -- all these small individual cases, we really want scalable cases that we can at least scale and we say scale means at least in 3 markets. So at least in 3 countries or 3 units, it should be deployable, and then we develop it. And so today, it's probably tied agents. Over time, claim handling, underwriting, customer service. I see in all these areas, some real scaling opportunities.

We will now take the next question, and the next question comes from the line of Michele Ballatore from KBW.

Yes. So I have two questions. So the first question is about the Non-life, in particular about property and casualty. In terms of the pricing environment, what are your observations going into 2026? Any sign of softening? I mean anything you can add to this?

And the second question is about the capital. So with EUR 500 million of available, let's say, capital cash beyond the distribution, if we think about, let's say, inorganic growth, I mean if we think about the businesses that you have where your organic -- the pace of the organic growth is satisfying and businesses where you say, well, I mean, some M&A there, some inorganic growth, some action could be beneficial. So can you talk a little bit about your preference there?

Yes. Thank you, Michele. I think on pricing Non-life, well, we've done a lot. And within P&C, you see very different trends. Motor, I would say, trouble always starts in motor and especially in retail. So we've done a significant premium increases in the past year. Our expectation is that we will probably see a mid-single digit depending a bit on the book, high single-digit premium increase. And this is simply also keeping up with inflation of claim cost and other liability costs. But we do think that the bigger premium increases are behind us, but we will continue to have to increase premiums to keep up with claim inflation.

In terms of dynamics, retail motor, always competitive. We might lose some market share. Motor is 25% of our book. It's -- generally, we're underweighted anyway in motor, and we don't mind. We continue to prioritize margin over volume even though, again, I don't think we will be expecting major increases in motor.

I think fire, but also the other books around travel liabilities, a different dynamic, combined ratios are very low. It's a very attractive business. So there also, we are doing less premium increases simply because the portfolio is holding up well. We also want to maintain our competitiveness, and this is the core of our P&C book.

So overall, I expect a relatively good environment for P&C as we have seen in the last year, even though, again, we have to state that we didn't see any fires or -- well, we saw fires, but not very large fires. We didn't have very large storms. So the P&C results also on the fire side were a bit helped by favorable weather.

Overall, I still think it's a good environment that we -- even if we would lose some market share, we continue to prioritize margin over volume. But we don't think it's needed. The business grew 6% and 2% was also volume growth here.

Yes, I think on available cash, obviously, we still need to build all these -- and when we talked about the EUR 1.5 billion, we still need to build the EUR 500 million in cash. But you're right, we do have financial flexibility. But if you look at inorganic, it has been a challenging market. And we continue to see that there's more buyers and sellers, there haven't been that many transactions, certainly not cross-border.

We are very happy with our organic growth path. We said 7% to 8% or 7% CAGR, we think is very attractive. Our businesses are growing well. If we see an opportunity for M&A, we have a very strict financial and strategic criteria. We are actually proud of our track record in M&A. But that also means that we need to be very careful in embarking on M&A unless we have a high conviction on both the financials and the strategic merit. If these opportunities will come, we will certainly take a look at it, but we're also happy to continue on the organic growth path that we have been doing.

If I may, my question was about more like the preference in terms of, if you have to do something, what businesses you will target?

Well, I'm not sure we have to do anything. I mean, what we have to do is deliver on our targets that we set for '28. And we said that we've set our free cash flow and OCG target. We also said that the 7% to 8% CAGR per share is what we've been aiming for. So that is what we focused on. Anything, any opportunities that would come on top of that in terms of inorganic would also mean that, that would have to add to the targets that we have already set.

So from that point of view, it is more opportunistic. If something very attractive comes along, that would be interesting. But our first priority is just to deliver on our targets and deliver on the capital return commitments that we have given at our Capital Markets Day in 2025.

We will now go to the next question, and the question comes from the line of Nasib Ahmed from UBS.

I'm not sure if Nasib can hear us. I will move on to the next question. One moment, please.

And your next question comes from the line of Thomas Bateman from Mediobanca.

[indiscernible] great results. It's great to hear the conversation so much about growth as well. Could you just comment a little bit on the strategy in Greece? I don't want to say too much, but I guess I've observed some movements in the banks there. So any comment you can give on your strategy there would be interesting.

And then the second question is just on government bond volatility in Japan. It seems a little bit immaterial now, so you've got solvency at 220%. But has there been any impact in solvency from Japan year-to-date? And is that tied at all to the realized losses on bonds that you've done in the year? And if not, maybe can you just give a little bit of color on those realized losses?

Yes. Thank you, Thomas. Yes, on Greece. So obviously, there have been developments with Piraeus acquiring Ethniki. When we set our targets, we already took this into account. So we obviously expect to deliver our 2028 target for Europe, irrespective of these potential changes in Greece.

Having said that specifically for Greece, I mean bancassurance is an important channel. So that would have an impact on our business. Today, we see a very strong performance still from Piraeus in '26, and potentially, we also expect that in '27. It is important to point out that this is not our only distribution channel in Greece. We have a very strong and growing tied agent network. That network was also further strengthened with the acquisition of MetLife.

We see today that the digital -- the [indiscernible] Michael already asked on the use cases around tied agents, but that's still relatively low in Greece. And we see opportunities for further digital leads, the avatar training and some of the other things that we can still roll out in Greece. There's a potential development of the broker market and some of the direct business. So we do see opportunities also to further scale. Tied agents grew also with 30% already last year in VNB. And so that will also be important going forward that we continue to strengthen also other channels. But the key message is that when we set these targets, we took already this change into account. Annemiek?

Your question on government bond volatility in Japan, they are less relevant for solvency, but higher yields, obviously helped VNB and OCG in Japan. Obviously, higher interest rates could have some volatility on the solvency, but the solvency in Japan under the current regime is very strong also versus peers, and we would expect it to be the same under the new regime there.

So the realized losses that you see in the nonoperating items of the IFRS result that we called out there, they are not related to any bond [ resales ] or losses in -- of sales in Japan. They were more related to some government bond sales that the Dutch Life company did, actually some sales of U.S. bonds given that under the Solvency 2020 regime, for us, it's just more attractive to hold long-term euro-denominated bonds. And as far as those realized losses, they are concerned, they obviously were already included in the shareholders' equity via OCI, but now we just have to take them in a nonoperating item.

We will now go to our next question, and the question comes from Nasib Ahmed from UBS.

I've got a clarification first off. Annemiek, you said there's a reduction in the leakage from the own funds eligibility change. I remember you had a 1 point leakage every year on the solvency. Does that go away now with that change?

And I guess my 2 questions are, I think you've got a German business as well. How is that going? Is there capacity to increase exposure there? And then finally, on Japan, what does high yields mean for new business lapses? I think you mentioned kind of solvency, but investment returns is higher yields actually negative for lapses, people switching out of these savings products into other products. So just trying to get a sense of that as well.

Yes. Thank you, Nasib. I'm glad you made it. Yes. So let me just start with the German business, and then Annemiek can take the questions on the other ones. Yes. So we entered into Germany, mostly on what we call mandated agent business. It's still relatively small, but it is attractive. So today, the business is performing well. At the same time, growing in Non-life or especially in P&C, always you need to be careful. But it is, so far, it is screening as an attractive opportunity. And it is -- the business is on a growth path today, and that's also in our plans. Annemiek?

Yes, your question on the leakage from the non-available own funds change that indeed will go largely away. And your question on the higher yields for the Japanese business, it is indeed helpful given that the embedded fixed guarantee rate of -- in the COLI products.

Yes. Well, with that, we will now close the call. Well, thank you very much, and thank you very much for everybody on the call for the interest you've shown and all the interesting questions that you asked. And obviously, we look forward to continue to engage with you on the upcoming roadshows and conferences, and have a nice day.

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