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 constitutes an offer to sell or 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. Thanks for joining our conference call to discuss NN Group’s performance for the full year of 2024. I’m excited to be here today with you. 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 then talk about some of the business achievements in the past year. Next, Annemiek will give a detailed analysis of our capital position, financial results and ongoing financial performance. Let’s dive right into the key messages. Our business results have been strong with the operating capital generation for 2024 reaching €1.9 billion, which is already right on track with our 2025 target. Free cash flow is up 8% year-over-year to €1.5 billion, putting us well on track to hit our €1.6 billion target in 2025. Our balance sheet is robust with a group solvency ratio of 194%, which sits at the upper end of our comfort range of 150% to 200%. Markets and regulatory changes presented material headwinds through the year, which we have been able to largely offset via management actions. I am particularly pleased to report excellent commercial performance with the value of new business 20% higher year-over-year, mainly driven by continued strong sales and margin improvements in Europe as well as higher defined benefit sales and pension buyouts in Netherlands Life. And our Netherlands Life business saw another €2.3 billion net inflow in defined contribution in 2024. In addition, growth written premium for Netherlands Non-life increased with 4.5%, driven by premium increases and volume growth. We are very committed to our capital return policy, and we are continuing our attractive capital return trajectory, where we have returned over €10 billion to our shareholders since our IPO in 2014. Today’s final dividend announcement leads to a full year dividend of €3.44, an attractive 8% year-on-year increase in our dividend per share. In line with our capital return policy, we also launched a recurring buyback of €300 million for this year. We believe this year’s dividend per share growth is sustainable going forward. We aim to grow the amount available for dividends by mid-single digit. The growth for the dividend per share is then further amplified by the share buyback. Once again, we’ve made significant progress in achieving our strategic KPIs, which are delivering value for all our stakeholders and are fundamentally linked to enhancing our financial results. Our ambition is to be an industry leader known for customer engagement, talented people and a positive contribution to society, including our efforts to tackle climate change. Allow me to outline some of the progress made. Further improving customer experience remains our focus in all of our markets, with successful implementation of artificial intelligence tools within NN to advance support for both agents and employees. I’m pleased to see that our efforts are working. Our international markets have shown a further improvement in customer satisfaction, reflected through an increasing trend in our relational net promoter score. Netherlands Life remained on par, but underlying, we do see positive developments. In our ongoing commitment to a more sustainable economy and society, we have taken steps through our business initiatives and financial commitments. We aim to achieve net zero greenhouse gas emissions across our businesses by 2050. We reported significant progress in reducing emissions of our corporate investment portfolio, which according to our methodology, have reduced by 31% compared to 2021. We’ve increased our investments in Climate Solutions, bringing the total investments to €12.8 billion by the end of 2024. Since 2022, we have supported over 766,000 people through our community investment programs. Our commercial momentum continues to be strong, particularly in Europe and Non-life segments. Insurance Europe has outperformed, driven by profitable protection sales and pension growth. Our strong positions in Central and Eastern Europe have helped deliver a volume growth of 10% and a margin growth of 16% in 2024. This will further bolster our operating capital generation trajectory over time, which already shows a strong historic track record. We have reached the €450 million target ahead of schedule by a year, even with pressure on investment results from reduced rates in non-euro countries. OCG for Netherlands Non-life came in very strong again this year at €406 million, benefiting from a relatively high new business contribution. The combined ratio for P&C was strong at 91.9%, where we benefited from benign weather, offsetting large fire claims in the first quarter of the year. May I remind you that 10 years ago, Dutch Non-life entities were struggling to make a profit, a concern even addressed by the regulator. Mainly due to consolidation, the pricing discipline has improved significantly, and now Netherlands Non-life is one of our best-performing units. The Netherlands Non-life segment continues to show strong performance with approximately 4.5% growth written premium growth compared to 2023. I’m pleased that the strong OCG continues to translate into strong free cash flow. Similar to last year, we remitted more than 80% of the OCG to the group, and we expect this to be sustainable. Our Dutch Life business remains focused on stable, predictable remittances and maintaining a strong balance sheet, which we believe are sustainable at current levels, barring significant real economic losses. Annemiek will provide some further detail on this later on. Management actions reinforced the solvency ratio at 180% at the end of 2024. Commercial success in the pension market is highly dependable on brokers. As such, I am pleased to reiterate we have the highest broker score. This will help in both the DC and the pension buyout market. On the DC side, we continue to bulk up on AUM, which grew from €25 billion in 2020 to €39 billion now, which is well above the initial target of €32 billion that we set for 2025. Our net inflow of €2.3 billion in ‘24 was further supported by market tailwinds of €4.1 billion. The pension reform roughly doubled the addressable DC market, which should positively influence our ability to generate net inflows. The current OCG contribution from DC maybe limited, it will increase over time as this is a business model with positive operating leverage. Although we do not need buyouts to sustain the free cash flow for Netherlands Life, we will selectively engage in that market if we can achieve an above double digit. So far, we have closed 3 buyouts with a total of €0.9 billion, which is about half of the buyouts that closed in 2024. In conclusion, our performance in ‘24 has been strong, and we’re well positioned to continue delivering value to our shareholders and other stakeholders. Our capital remains robust at 194%. I am sure you will recall that last year, we took significant steps to optimize and reduce the risk on our balance sheet, including two beneficial longevity reinsurance deals in December 2023, and resolving uncertainties around the unit-linked portfolio with the settlement this year. Together with a lower UFR benefit on the back of higher rates, this has significantly increased the quality of our capital. Our delivery in 2024 shows that our 2025 targets are realistic and feasible. And today, we continue to deliver on our focus on shareholder returns by announcing a dividend of €3.44 per share, 8% higher than last year, and reiterating the €300 million share buyback. We are excited about the future on which we will share more details with you at our Capital Markets Day in The Hague on the 27th of May this year, and I look forward to seeing you all of you there. Now thank you for your attention. And I will hand over to Annemiek who will provide further details on our financial performance for the full year of 2024.

Good morning, everyone. Thanks, David. Let’s start with our key financial metrics on Slide 10. As David said, our business performed very well in ‘24, generating over €1.9 billion operating capital for the full year. This strong performance reflects a small increase from ‘23, which benefited from positive experience and is in line with our €1.9 billion target for ‘25. Free cash flow increased by 8% to €1.5 billion in ‘24 with increased diversification between the business units. As such, we’re comfortably on track to deliver on our free cash flow target of €1.6 billion for ‘25. As David already explained, our balance sheet remains strong with a group solvency ratio at 194% of strong quality. Adverse impact from markets and regulatory items were nearly offset by strong capital generation, net of capital flows and management actions. Our cash capital position showed a strong increase of €300 million during the year to €1.3 billion at the upper end of our €0.5 billion to €1.5 billion range. This continued strong commercial and financial performance reinforces our commitment to a capital return policy that includes a progressive dividend per share and a yearly buyback of €300 million. The raise of the total dividend per share by 8% is a further sign of this commitment. Now let me give you some more insights into our capital position. Our ratio ended the year at 194%, in the upper end of our 150% to 200% comfort zone. Full year operating capital generation of €1.9 billion adds 22 percentage points to the solvency ratio, which is 8 percentage points higher than the capital flows to shareholders in the form of dividend and share buyback. Market variance was negative, mainly reflecting wider government bond spreads and negative equity variance. The bucket other includes quite some regulatory changes, as you may recall from H1, such as the UFR step-down of 15 bps, the VOLA reference portfolio update and a countercyclical buffer step-up of the bank, as well as model and assumption changes. We’ve been able to largely offset these headwinds by management actions. We added 2 percentage points from an attractive reinsurance transactions on the in-force block of decumulation business. We also added 5 percentage points by accelerating into our SAA by actively reducing our mortgage exposure and, to a lesser extent, our equity exposure. The outlook is positive into ‘25, with the Basel IV implementation at NN Bank expected to add approximately 3 percentage points to the solvency ratio. Now a few words on real estate and mortgages before we go into business performance. Real estate valuations moved further away from the trough seen as per full year ‘23. After a 0.6 percentage points increase during 1H ‘24, we saw a stronger appreciation over H2 with 2.5%. Within real estate, residential benefited from solid house price performance, while the Supreme Court ruled favorable on the so-called CPI+ file. We believe this largely eliminates litigation when it comes to historic rental increases. We also expect continued improvement of real estate into 2025. Regarding Dutch mortgages, we explained before that they have proven to be a safe and attractive asset class with low loss experience even in financial crisis for which we provide ample details in the appendix. You know that, as such, we take a look-through approach based on a normalized margin of 100 basis points for Dutch mortgages for capital management purposes. We now also managed to secure a valuation improvement for mortgages under Solvency II. On our Solvency II and IFRS, we need to apply a point-in-time valuation to identify the fair value of mortgages, which theoretically means looking at the spread between the swap rate and the client rate at a period ending date. As you know, the swap curve reprices dynamically and commercial rates typically need some time to adjust. Therefore, at this point-in-time mortgage spread can be distorted and create uneconomic volatility to our Solvency II ratio. We’ve been able to refine the point-in-time mortgage spreads by haircutting the movement of the swap curve in the last 4 weeks, which is expected to reduce the mortgage spread volatility by approximately 1/3. Since a large move in mortgage spreads has become less likely, as such, we’ve reduced the published sensitivity to mortgage spreads from 50 bps to 25 bps to reflect this lower expected volatility. Now let’s move to OCG, Slide 13. As our business performance remained strong with OCG coming in at €1.9 billion for the year. Netherlands Life was up 2% year-on-year despite negative experience variances as it benefited from a higher investment result. Last year, we indicated that the run rate for Netherlands Non-life was €370 million plus growth in line with GDP. I’m pleased to see that, in 2024, Netherlands Non-life again performed better than this run rate, largely driven by strong new business in P&C and Disability. Insurance Europe experienced another strong OCG increase of 9% to €461 million, outperforming its ‘25 target of €450 million. Growth was driven by higher volumes and a higher margin. I would like to highlight the strong delivery of Poland within this, which is the largest contributor to OCG in the segment Insurance Europe, delivering an OCG of €128 million in ‘24. Japan Life’s OCG was broadly stable despite negative currency impacts, and the OCG of banking decreased as the net interest margin has started to normalize during ‘24, partly offset by a lower capital stream. OCG for segment Other decreased due to less-favorable experience variances for the reinsurance business, whilst remaining somewhat above run rate levels. OCG for the holding, which includes holding expenses and debt costs, stayed at par despite wage inflation. Despite the strong new business contribution with Netherlands Non-life and the positive experience variances in NN Re as well as the expected NIM pressure on NN Bank to continue we would still expect the group to deliver a similar level of OCG in ‘25, mainly driven by expected continued strong performance of Europe. Before we go to free cash flow, a few words on our IFRS results on Slide 14. Similar to OCG, our ‘24 operating result also increased, largely driven by the same drivers such as strong business growth in Insurance Europe. This was partly offset by lower interest margin at Banking and a lower investment result at Netherlands Life, mainly related to reporting refinements. The ‘24 operating result for Netherlands Non-life was stable versus a strong 2023, and the combined ratio came in at 93.1%, slightly above the 91% to 93% guidance. We would focus on the combined ratio of P&C, which was strong at 91.9%. For disability, with a combined ratio of 96%, positive business performance feeds into CSM first before it’s released into the combined ratio. Having said that, we remain confident on overall combined ratio guidance of 91% to 93%. The net result for the year increased by over €400 million versus full year ‘23, which contained a non-operating provision of €360 million related to the unit-linked settlement. Now last but not least, let’s focus on cash. As you can see on Slide 15, we have delivered a strong 7 percentage point CAGR for normalized free cash flow since ‘21, up to €1.5 billion in ‘24. In addition, our free cash flow is becoming more diversified with an increased contribution from segments Other and Netherlands Life. Now remittances of individual countries or business units can be lumpy as evidenced by Belgium, which paid a special dividend of €120 million in ‘23. In ‘24, it required a capital injection of €70 million and did not pay a dividend due to the renewal of our strategic bank distribution agreement with ING and the derecognition of a mass lapse contract following a discussion with the regulator. For this reason, we will not expect Belgium to pay a dividend in ‘25 either. I’m pleased to see that diversification is paying off, and we were and will be able to absorb these impacts in ‘24 and ‘25 via increased remittances from the bank and NN Re. As such, we’re well on track to achieve our free cash flow target of €1.6 billion in ‘25. Another very positive message is that we believe Netherlands Life remittances are sustainable at current levels for over a decade without the need for re-risking and pension buyouts. In Netherlands Life, the book was always strongly skewed towards DB rather than Individual Life which helped contain the overall runoff pattern of the book to 3% to 4% per annum. This positive SKU has further improved over time due to new business and renewals, and we also pick up more free yield on our book now that interest rates are higher. As a result, we now see a slower runoff pace of Netherlands Life assets under management that is expected to be around 2% per annum. With our strong cost management track record in mind, we can continue to offset the run-off pattern via expense reductions for over the next decade to come. This is based on our current best estimate and current regulatory framework, a scenario of severe real economics losses could obviously affect this prediction. Based on a stable remittance pattern from Netherlands Life and continued growth from Netherlands Non-life and Europe, we would expect continued diversification and growth of our free cash flow profile. This will provide an anchor for us to extend our strong capital return policy with a progressive dividend policy and an annual buyback of at least €300 million. With this, I would like to hand back to David for concluding remarks.

Yes. Thank you, Annemiek. Bottom line, 2024 was another year with excellent business and commercial performance. We remain committed to our capital return policy and grew the dividend per share with 8% versus 2023 and relaunched the annual buyback of €300 million. And with these remarks, I would like to open up the call for the Q&A. Operator?

[Operator Instructions] And now we’re going to take our first question and it comes from the line of Cor Kluis from ABN AMRO ODDO BHF. Your line is open. Please ask your question. Excuse me, Cor, your line is open. Please ask your question.

Sorry, I was on mute. Congratulations, first of all, with the very good solvency figures. This is much appreciated. First question is about derisking, the derisking action that you did and enhances obviously by 5 percentage points. You mentioned, I think, tens of millions of adverse OCG effect. Are we really talking about €20 million, €30 million or do we talk about a little bit higher figure? Second question is about disability insurance. The combined ratio and disability insurance was, in H2, especially somewhat on the high side 98%, 99%. Could you give your comments on that? What’s your view or do you have to take actions to get that better? And last thing is pension payout. Could you give some idea of your view on pension buyout? How that – how you look at that for 2025? And last year, you did €900 million. So you are seeing a run rate of that also for ‘25? Those are my questions. Thank you.

Yes. Thank you, Cor. And I was a bit worried when we thought you were sleep, but unfortunately, you’re still awake. The first one, Annemiek will take, and I will talk about disability and the pension buyout.

Cor, thanks for your question and also for your compliments. On the management actions that we took, we always look at ways to optimize our balance sheet. And we just represented with a very attractive reinsurance transactions, and we could accelerate into the SAA. Now as you said, the acceleration into the SAA, yes, it would come in a few tens of millions. You are referring to €20 million, and I would say it’s below €50 million, so kind of an okay range that you’re guessing at. And also just a strong possibility to do, we could basically get 5 percentage points of solvency at a few tens of millions OCG, which was an attractive trade. And it now gives us a strong position to accelerate into the SAA further with the buildup of private debt.

Yes. Thank you, Annemiek. Yes, on disability. I think, I mean, overall, the Non-life company did well. You saw the OCG coming in at €406 million, both from P&C and the D&A business. Combined ratio of P&C obviously looks good. To be honest, I think the IFRS 17 combined ratio of Disability is probably not the best number to look at. There’s some dynamics around CSM, which means it was a bit elevated now, you would also expect for technical reason that it would further trend down. But if you take a step back, we’re pleased with the Disability business. I think the group business did well, especially the sickness portfolio. There are some concerns on longer-term disability in the Dutch market. You might have seen some news on that. We’ll continue to monitor there and increase premiums. But overall, the Non-life business is doing well, and we continue to commit to a guidance of 91% to 93% combined ratio for the Non-life business. On buyouts, yes, so the – obviously, we’ve been saying about the buyouts that we feel that they are mostly back-end loaded. But this is an old comment. I mean we’re now getting closer and closer to the, let’s say, to the final deadline. If you look at the numbers, it has been indeed back-end loaded. I mean there’s 170 pension funds, only 3 went to the new system. Potentially 3 more this summer and then 30 announced at the end of the year. But there’s already some signs that also that 30 are going to be running into delays. So we’re still in a ramping-up phase. If you look at the buyouts itself, €1.7 billion was closed in 2024. We did €900 million of the €1.7 billion. For this year, there has been around €2.5 billion of deals has been announced. And there is, in terms of RFPs, another roughly €2.5 billion in the market. So if all of that would happen and RFPs don’t always lead to a buyout, maybe some new outs would come. But you’re roughly in the range for the market of around €5 billion, of course, it’s lumpier. But that means, if you have last – this year or in ‘24, not even 2, you have this year around maybe 5 and you want to get to ‘25 that would still mean that you would much higher numbers for ‘26 and ‘27. It is good to point out that there’s more and more talk on pension funds that struggle with the timelines, and they might choose an interim solution, which could be joining an APF or there could be other interim solutions. So I think it’s very possible that we’ll also continue to see buyouts after 1/1/28 or even after 1/1/29, if it’s delayed for a year, the implementation, because pension funds might look for an interim solution. So all in all, I think, I definitely expect for ‘25 more deals than in ‘24, but still, a further ramp-up in ‘26 and ‘27 after that is likely. Our position is that we’re very well positioned. We are the number one in terms of market share. We are the number one with broker scores. But we also need to be realistic that buyout is very much price driven. So, even if we are in an equal situation, we’re in a good place, but they’re highly price-sensitive, these deals. And we’ll continue to be very disciplined. We don’t have to do it, as Annemiek explained, in order to maintain the remittance pattern from NN Life. And we’ll continue to aim for an above double-digit return. And when we can do these deals, then we’ll certainly do it.

Okay, wonderful. Good to hear. Thank you very much.

Thank you. Now, we are going to take our next question. And the question comes from the line of Benoit Petrarque from Kepler Cheuvreux. Your line is open. Please ask your question.

Yes, good morning. So, the first question is on the OCG for Life, NN life, €540 million in H2. How clean is that number? And do we need to take, like you mentioned, some impact from the derisking on that number? I tried to guess a bit the kind of the run rate of OCG for NN Life into ‘25. I think you mentioned flattish, but it could be even a bit down, I think. So, just wanted to clarify on that? And on the derisking actions, so I’ve got an other bucket on the Slide 27, which is up €700 million. Just wondering where you have been putting the money here? And also I see French Gov is down and Other Gov is up, so maybe you could comment on that one. And then the next question is on the Non-life – kind of the new business on Non-life, which was particularly strong. Could you quantify what is maybe one-off versus recurring? Thank you.

Yes. Thank you, Benoit. Let me start with NN Non-life. Like I said, the overall result indeed was strong. I think it was helped a bit by relatively favorable weather, but also we think the new business contribution, how you need to think it, that’s a couple of hundred million was also probably a bit above what we would expect from a normal run rate, and it means simply that the volumes, but also the margins that we got in were probably a bit more than we expected. And we always guided on OCG that we said it’s €370 million plus GDP growth, which would then, for ‘25, would roughly take you in line with where we are today in 2024, assuming also that the weather might not be as benign as it has been in the last 2 years. So overall, I think it’s a positive result, but also for this year, we expect a good OCG outcome. Annemiek?

Yes. Let me help you out a bit with your request on the run rate for NN Life for ‘25. We would expect that to be broadly flat. A couple of items there to mention. We would expect less unfavorable experience variances than in ‘24. As you can see by what we’ve disclosed, Life did have some unfavorable experience variances. On the other hand, we would also expect a bit less strong VNB enhanced new business contribution. We’ve seen quite high new business contribution in NN Life, which was driven by renewals, which were partly related to the postponement of the new pension framework and as already alluded to on the first question on core, of course, a few tens of million lower of OCG due to the acceleration into the SAA. Now net-net, we would expect that would balance out, hence, the roughly flattish outlook on OCG for Life. Your question on the other bucket on Slide 27, and now we’re getting really into the nitty-gritty. I believe it would be related to infrastructure equity, but I’ll get IR to get back to you on that.

Thank you.

Thank you. Now we’re going to take our next question. And the question comes from the line of David Barma from Bank of America. Your line is open. Please ask your question.

Hello. Thanks for taking my questions. Annemiek, coming back on the changes in the asset allocation, so you save 5 percentage points of Solvency II and you talked about the OCG impact on this. But what’s the – what kind of dynamics should we see when you redeploy these assets towards more liquid investments, both in terms of capital drag and probably the OCG uplift and what kind of timeframe do you have for this? And then secondly, on longevity. So it’s helpful to see that you were able to reinsure longevity had good terms there on annuities. Do you plan on eventually reinsuring the remaining €5 billion of DC annuities left? And then lastly, on the NL Life, so I’ve seen your comments and your confidence in the remittance outlook for NL Life. I’m trying to square that somehow with the solvency position of NL Life that has been moving up or down quite a bit in the past few periods. So my question is, what kind of Solvency II level do you need to be at to maintain this statement? Thank you.

Yes. Thank you, David. Let me answer the question on longevity and then for the other two, I’ll give it to Annemiek. Yes, as we said, we expect that over the course of 3 years that we can build another capacity to reinsure around a €10 billion of liabilities. Now we don’t have to do that in one go, you can also spread that out. That would generate a significant amount of capital relief. If you recall, in the past, we – at the end of ‘23, we did a deal of €13 billion of liabilities and that released 8% for the group and 17% for unit-linked. Now the attractiveness, of course, will depend on pricing in the market, cost of capital. And we need to trade that off with future OCG, and we’ll judge these longevity deals in that context.

Just to understand, this is a combination in this, you include both the – of the traditional DB part and the DC that are getting in the decumulation phase, this is for the component?

Yes. The – what typically works best in these books is in payment benefits there because the reinsurance will give you better pricing on this. Annemiek?

Yes, David. On your question – I’m just looking at the question. The first question related to the SAA and to the changes that we made in Life. As we said in H1, we’ve identified in our new SAA a better equilibrium between return and required capital, where we feel that would lead to some capital release while still marginally growing investment return over time. And that’s largely related by reducing the exposure in equities and, to some extent, also emerging market debt and high yield into private debt, or just from an SCR charts, but also from getting in a liquidity premium, private debt scores better. So over time, as we ramp up that exposure, we would expect to recoup what we’ve lost now in terms of OCG and preferably at a better ICR charge. So that’s related to the first question. On your question of NL Life remittance outlook, etcetera, we’re really happy with the outlook on free cash flows for Life with the slower runoff of the book, which is now 2% versus the 3% to 4% that we had, which gives us real confidence that we can actually sustain these remittances. Now as you know, for the group, we have a comfort range of between 150% to 200%, Life is a large part of the group. So you could guess that that’s probably around the same level as well. So we’re highly confident that we can actually just continue with the current remittances out of Life. Thank you.

Thank you.

Thank you. And now we’ll take our next question, and it comes from the line of Nasib Ahmed from UBS. Your line is open. Please ask your question.

Hi, Anne. Thanks for taking my questions. Firstly, on payout ratios. So I saw on the slide, you say NN Life payout ratio, 81%. But if I look at the group you’re going from 65% last year to about 85%, if I take the €1.6 billion free cash flow divided by the same OCG, €1.9 million. Is that a sustainable level, both for NN Life, i.e., the 81% and 85% for group in terms of payout ratio? That’s the first question. Second one on Japan. Can you give an update on the improvement order? Are you selling new business? Again, you said summer of ‘25, I think then you’ll probably get an update. And then finally on NN Bank, what benefit do you get from having that as part of the group? I know you want to provide financial solutions and one-stop shop for your customers, but anything else that you get in terms of having that as part of the group? Thanks.

Yes. Thank you, Nasib. Let me start with Japan and the Bank, and then Annemiek can cover the payout ratio. In general, on Japan, we think there the economics are positive. Rates and FX have been developing. There’s some economic growth again, and it’s obviously politically a stable market. What is positive? Obviously, we’re active in the Corporate Life market, and the business improvement order that we received and a couple of other players are very much around the cash or the short-term Corporate Life market. And as we spoke about before, our intention obviously is to get this business improved with order behind us, but also get into the – not only into the shorter term, but also into the longer-term Corporate Life market. Now the good news is that the overall COLI markets grew with around 6%. But the underlying, this meant a reduction of minus 4% of the short-term market and a 36% growth of the long-term Corporate Life market. And that is good news because despite the business improvement order, we did get regulatory approval to launch the long-term COLI product. So we’ll be launching that probably in March, April, we’ll launch this product, which will then much more complete our product range. But the reality is, as long as we have this business improvement order and there we’re dependent on the FSA, as long as we have the business improvement order, the new sales will be relatively muted. Once this business improvement order is lifted, we do expect that we can further ramp up the sales, but that will take time. Japan continues to be a market that has good margins and where we can deploy the capital against very attractive IRRs. But the goal for now is launch the long-term COLI product and get the business improvement order behind us. And from there, we can start increasing really the sales again. On the Bank, yes, indeed, NN Bank is a relatively simple bank. It’s the fifth bank of the Netherlands. It’s integrated into the Dutch business. What is important is that with everything that happened in the third pillar in the Dutch market with the Unilink misselling that if you want to build up savings and the question is how big is that going to be over time? You have to do it via a bank with bank annuity products. So it completes product range. It gives us a lot more digital customers and a lot more traffic on our portals. It’s obviously also an efficient mortgage originator for the bank, for the group, but also for third-party businesses. The ROE of the bank was 14.6%. So that is on a stand-alone basis is attractive. And also, you’ve probably seen that the OCG development of the bank was positive. To be honest, also a bit helped by savings markets. But it’s clearly on track to deliver the €80 million target of OCG that we have set and the above 12% ROE target of the bank. On payout ratio, Annemiek?

Yes, your question on the Non-life payout ratio, indeed, 80%, that feels relatively sustainable. Same goes for the 85% at the group.

Thank you.

Thank you. Now we’ll proceed with the next question, and it comes from the line of Farquhar Murray from Autonomous. Your line is open. Please ask your question.

Good morning. Just two questions from me. Just firstly, a clarification on David’s question earlier. Can I take it that you are essentially expecting to recoup the OCG reduction which has actually no incremental drag on the Solvency II ratio? I think that’s what you mean on better capital charge. And then secondly, coming back to pension buyouts thanks for the comments in terms of volume expectations there. Could I also get your initial impression so far in terms of pricing discipline and capacity behavior? And also probably, more generally, what are your thoughts on the political discussions around that kind of referendum? Thanks.

Yes, good morning Farquhar. Let me start with the buyouts and then Annemiek can take the question on the OCG. Pricing discipline, yes, it’s improving. I mean we’ve been very vocal that, typically, the Dutch market was at mid- to high single digit, and we’ve been very vocal that we’re now participating in that market despite that we might not get some deals. But as we said, we don’t need the buyouts for volume reasons. We don’t need it to sustain the remittance pattern. Now the pricing in the market is better now. So that’s why we continue to say it needs to be, in our view, above double digit. Currently, it’s a 3 – basically, 3 players in the market. We do expect that EMEA will come back. They have announced that they aim over time to get a 20% market share in this market. So I think, over time, the dynamics could move from 3 to 4. In any case, we will be very disciplined on pricing. Yes, on the political discussion, clearly not helpful. I just did some interviews also, and I think we’ve been very vocal on – this is a pension reform that is complex. It was negotiated for literally a decade. And then if you, for example, look at our DC portfolio or just our in-force portfolio, more than 50% of our customers at renewal already goes to the new system. So a lot of preparation in IT and I’ve made comments on that pension funds tend to move pretty slow, and hence, the back-load is common. But any uncertainty will then create even more potential delays. So I am optimistic that this might not go that far and that – I haven’t seen a majority to actually go into the proposal of a referendum. But predicting politics is even more difficult, I think, than predicting interest rates. So we’ll have to watch it. I do think there is a good chance that we will continue as is, and we are certainly in the sector and a social partner are very vocal. And please, no more changes because we’re already implementing the current approved legislation by parliament. Annemiek?

Yes, on your question to recoup the OCG reduction at Life, yes, we will recoup that over time as a PDI buildup rolls out. And obviously, that has a bit of a lower SCR strain. Bear in mind that we also had quite positive VNB at Life in ‘24 due to the delay of the pension transformation, which we would expect to come down in ‘25.

Okay, thanks.

Thank you. Now we’re going to take our next question. It comes from the line of Anthony Yang from Goldman Sachs. Your line is open. Please ask your question.

Hi, good morning. Thank you for taking my questions. The first one is actually a follow-up on the longevity release. If I ask in this way, so you have roughly €110 billion total liability reserve sitting in Netherlands Life, how much of that is already reinsured? And also aside from the pricing considerations that you highlighted, is there anything that NN needs to prepare internally to get yourself ready for longevity reinsurance in, say, in 2025? And then the second question is coming back to the strategic asset allocation. Aside from private credit, are there any other asset classes that you plan to shift into in 2025? And overall, what is the corresponding Solvency II charge from these actions in 2025? Thank you.

Okay. Thank you, Anthony. It’s a good opportunity also for Wilbert to cover this. So Wilbert, on longevity and on SAA.

Thank you, David. So your first question on longevity. So in the Life unit, we’ve roughly reinsured half of the outstanding exposure. Apart from pricing, indeed we’re actually fully ramped up to also do further reinsurance deals, but they require all of the regular process such as making, for example, the data in the systems ready and running such a process carefully. But we’ve done a few, we’re experienced here, and we’re in a good state to go for future deals. So, then also moving on to the SAA question, so as Annemiek also has explained already, so the main shift that we’re now also exploring is to – and ongoing is to move out of equities and out of emerging market debt and high yield, while building up our portfolio further into private debt. We do this gradually over time, as we’ve already set this in motion over the last years. Please note that, as I said, the private debt investments they really offer a superior return over EMD and high yield, while being less intensive compared to, for example, equities and we really would like to also then benefit from the liquidity premium there. On top, we’ve, of course, reduced some exposure to mortgages in favor of government bonds due to the relatively high consideration of mortgages in our portfolio. And also we expect to further reduce our relative exposure to mortgages as the current book runs off.

Thank you. Is it fair to say that on a net-net basis, the Solvency II impact from these strategic asset allocations is neutral at the Solvency II level?

Yes. It’s almost neutral, but we expect a small positive indeed.

Thank you.

Thank you. Now we’re going to take our next question and the question from comes line of Farooq Hanif from JPMorgan. Your line is open. Please ask your question.

Hi. Thank you. Congratulations as well. Firstly, on illiquid, it seems to me that the DNB has been a little bit more cautious about the asset class in the past. Are you fully happy that you will get approval to recognize at a liquidity premium and get an appropriate charge given that attitude? Are you happy with the DNB is on side with your shift into illiquids? Secondly, you have talked about a lot of things that make me feel that your solvency – your economic solvency is actually really, really improved even more, because you have no unit-linked settlement to worry about, you have reduced the mortgage spread, you have this access to longevity. Why stick with the 200%, sustainably above 200%, is this something that you are thinking about that you might reconsider? And then very lastly, Insurance Europe growth is that just going to continue? Is that a trend that will – that you see as being very sustainable? Thanks.

Yes. Thank you, Farooq. Let me start with the question on solvency. We have obviously our capital policy where we save the capital sustainably above 200%, then we will evaluate our capital return. That’s our long-standing policy now. We have also made very clear that if we make any decisions, then we really prefer further structural sustainable increases over kind of one-off lumpy buybacks. At the same time, and I think as Annemiek explained it’s, we do have a positive outlook on our capital situation based on everything we know today. But we first need to deliver on all of that before we can actually talk about potential other steps. So, if your question is, are you reconsidering today the 200%, the answer is no. The growth of Europe, yes, we do expect that to continue. I think there are two main drivers why we continue to see that Europe can grow. I think one is, and we spoke about it before, is the under penetration of protection products, and that’s the core of our product. It’s further helped by pension savings where most governments are increasingly concerned about the lack of pension buildup, and certainly the pay-as-you-go system in most European countries are clearly unsustainable with an aging population and rising government debt. So, you would expect for both pension savings and for protection a tailwind, that’s one. I think the other thing is – and that’s why I think we have been successful in tapping into that is simply distribution. I mean we have a very diversified distribution platform and let’s take tied agent as an example. We have been heavily investing in tied agent, not only in digitalizing it, but in building engines around AI tooling in which we do a much better propensity to buy, propensity to surrender and how do we tie then the analytics to the right agent at the right moment. And for example, in a market like Poland, 60% of the new business of tied agents already comes through this lead system. And we are rolling this out in other countries that – in multiple markets where we have tied agents. And so we expect that, that would continue to – based on the under penetration that we see that you still need to be able to get into contact with customers because a few people wake up in the morning and decide to buy a protection product. So, you still need to have that conversation. And I think with the tied agent, but also the bank channels and the broker channels that we have are well positioned to tap into that. So, we do believe that we can sustainably grow our European business, not just this year, but also over a longer period. On illiquids, Wilbert?

Yes. Thank you, David. So, on the illiquids, as I have said, we take a gradual approach. Current portfolio in our private debt assets is well diversified across both sectors, regions and issuers. But also in terms of your comments towards the regulator, we have an approved model and there are currently no open discussions there. But we are, of course mindful of the risks, also good to know that our PDI portfolio currently has a mid-single digit allocation.

Great. Thank you very much.

Thank you. Now we are going to take our next question. And this comes from the line of Michael Huttner from Berenberg. Your line is open. Please ask your question.

Just a second, so lovely results and very nice stability. I had two questions, maybe three. One is Belgium strategy. The second one is your 2% revision of the growth. I think we have gone from – historically, I think it was minus 8%, and then we went to minus 4%, now minus 2%. And I just wondered if you could – if we were to assume kind of a run rate on pension DBs where could that 2% tend to? And then the final question is very cheeky one. What would sunset be today, the 194% plus the 3% plus whatever market movements. Thank you. On the Belgium strategy, let me ask it in a more complete form. I would be interested in the numbers because my feeling is Belgium is a great market, but it’s quite a difficult market unless you have kind of size. And I would be interested to know how you see it. And in terms of numbers, how much capital, how much cash return, etcetera.

Okay. Thank you, Michael. Let’s start with the market overview of Belgium, and then Annemiek can cover a bit more background on the Belgium unit and also on the other two questions that you have given. Yes, I think in general, Belgium is a good market. I mean the Benelux in general, it’s – we have a good position there. What we see in the Belgium market is that it has relatively good margins. In terms of distribution, we have two channels. We have, obviously, the broker channel, but especially also the ING channel. ING is a major bank in Belgium, as I am sure you know. We just renewed it for 10 years, which is obviously good news. I mean, typically, bancassurance renewals will cost you up from money and it’s also reflected in the remittance discussion that we have. But it’s good news that for another 10 years, we have renewed the ING contract. Also good to point out that we sell non-life business from the Netherlands that is also sold by ING Bank, Belgium. So, that makes Belgium an attractive market. But as any market, it does have its challenges. I think on a normalized – it is a substantial unit in terms of OCG. For Europe, around 20% of the OCG out of Europe comes out of Belgium. I think on a normalized basis, we would expect €70 million to €80 million remittance out of Belgium. But as we were saying, given the discussion on the MetLife’s capital relief and the ING contract, we don’t expect that for this year. And with that, let me give it to Annemiek.

Yes. And Michael, to add a bit on Belgium, so what David said, OCG roughly €100 million. And if you would look at a normalized run rate for dividend on Belgium, that would typically be around €70 million to €80 million a year, and then ‘25, as David said, due to the mass lapse contracts. And due to the renewal of the agreement with ING, they didn’t do the dividend and we had to give them a Tier 2 of around €70 million. Now, on your question on the runoff of the book, where we actually now would expect a runoff of roughly 2% per annum. You are referring to some numbers of 7% or 8%, 8% well back, I guess that related to the individual life book. But if you look at the total composition of NN, we obviously have a really good starting position. The – sorry, there is a lot of talk here. You will obviously have to look at the starting position. Now, we had a really good starting position as three-quarters of the book is related to DB and only one quarter is related to individual life. Individual life runs off a lot quicker than DB. So, that blend, despite the runoff of individual life historically from 7% to 8%, already got us to 3% to 4% runoff on an annual basis. Now, because we did quite some new business and renewal in DB, plus because of higher interest rates, that runoff has now slowed down to 2% per annum. And on your solvency position as of today, today, we would expect it to be relatively flattish. Government and corporate spreads have been relatively stable so far. So, best guess will still be around at 194%. And you are right too, then add the uplift of the Basel IV introduction of NN Bank, which is around 3%, which would come on top of that ratio. Thank you.

Helpful. Thank you.

Thank you. And now we are going to take our last question for today. And it comes from the line of Jason Kalamboussis from ING. Your line is open. Please ask your question.

Yes. Hi. Good morning. The first thing is on Japan. You said that you have now – you got the approval to launch the long-term product, but you also say that this has been – the market is growing by 36%. So, my question is, why did you launch that a year ago, was that more difficult with the improvement order? And also the fact that you got an approval, does it mean that we are kind of nearing the end of the process? And could you also, for Japan, remind us when you enter this improvement order, because if I am correct, your peer got out after about 2 years. So, looking to understand if this is coming up in the February, beginning of March, end of March or somewhere around here. The second question is on longevity. So, you said that 50% has been reinsured so far. Understanding that there was not much that was going to be done beyond that, so when I hear now the €10 billion, I am wondering how much of it is relating to buyouts. So, if you could clarify on the books that you have already. On the 50% remaining, how much do you think can be reinsured? And how much is basically quite difficult or not possible to do the – on which to do a longevity deal. And the final third question is on non-life, what pricing actions do you expect, and what are the kind of tariff increases that you are putting through currently? Thanks very much.

Yes. Thank you, Jason. Let me cover Japan and non-life, and Annemiek will follow-up on the longevity. Yes, Japan. Well, it is not common indeed that product approvals – as you might know, in Japan, products need to be pre-approved you launch it, and there is very tight windows. So, that means you cannot launch three products in a year, for example. So, in general, a launch of a new product is a big thing because they need to be pre-approved. It’s not that common that you get product approval during a business improvement order, so we also take that as a positive that we are well on track to deal with the business improvement order. As much as I would like to, we cannot give you any indication of timelines. Q1 2023 is when this started. And there is many, many business improvements in the markets. Indeed, we have seen 2 years, we will also see longer periods. So, from that point of view, it gives you some data points, but not a lot, because like I have said, there is multiple business improvement also ongoing today. We are doing everything we can and we are optimistic, obviously, that we are taking the right steps, but we still need to close it. And it remains good news that the long-term market is developing and that we were getting into that market or we now have the possibility, at least to get in. Non-life pricing, it’s quite a diversified market, I think in terms of pricing. If you look at D&A, as I was saying, the performance certainly for the sickness portfolio is pretty good. So, there you would expect probably some low-single digit price increases. At the same time, there is always experience rating. So, during the year, you do have the possibility to increase that. Long-term disability book is a bit more price sensitive, so you could expect a bit higher premium increases, probably mid to high-single digit. P&C is also quite diversified motor. The amount of damage and repair costs continue to go up, so on motor, we have done quite a bit of premium increases last year, in some cases, even more than double digit, and we are still doing premium increases also this year, though a bit lower. Because, like I have said, we continue to prioritize margin over volume, and motor is a – it’s an important book, but it’s also a book that we need to watch always the most in any of the markets. Fire, clearly has been doing very well. So, that’s also reflected in that you would expect a bit lower premium increases on the fire book because already the fire portfolio shows a very healthy combined ratio. Overall, the message will remain very resilient in premium increases, the market is absorbing that. We are not the only one, and that’s why we also remain committed to the 91% to 93%. Longevity?

Yes. On longevity, we have to distinguish two items. One, if we would do a buyout, you typically, on that transaction, also do a reinsurance transaction. Secondly, if you look at the current book that we have, we do continue to build up liabilities that we could reinsure. And as we indicated before, we would expect that to be roughly a buildup of €10 billion over 3 years time. And to put it into capital perspective in December last year, we did a €13 billion deal, which brought life 17 percentage points of solvency. So, we will now still have a focus on decumulation, which would probably lead to roughly €10 billion buildup of liabilities we could use there in the next 3 years.

Alright. Thank you. Very helpful. Just on Japan, so I get one follow-up question, if I may, David. If you are looking – if you come out of that improvement order, let’s say, whenever end of Q1, are there a lot of products that suddenly you need to pre-approve to go into the market? And can you get these approvals relatively quickly, or do you find that at the end of the day with this product, it’s significant and coming out of the order would be great, but you would not need to have a big re-launch in the coming months after that. Just to understand how this works?

Sure. Yes, I think there is good news and bad news in this answer. No, I don’t think we need more products, like I have said, it’s very difficult in general in Japan to launch products, and we are actually lucky because we are only in corporate life. If you are in multiple product lines, it’s even more difficult because you need to choose which product line you are going to introduce a product. So, we don’t need new products. I think we have a short-term, we have cash-driven product. We have a long-term product, so we are good to go. It is – but it is good to caution that once this business is proven or is lifted, you don’t – suddenly, your sales are back at the level that they were. We do need to reactivate business partnerships, brokers, security houses. And a lot of the distribution partners, we need to start working with them and serve them well again, so that they actively start selling also the NN corporate life products again. So, it’s not so much products, but it will take some time after the business improvement in order to get the sales back up.

Very helpful. Thank you.

Thank you. There are no further questions for today. I would now like to hand the conference over to David Knibbe for any closing remarks.

Yes. Thank you very much, operator and thank you very much for everybody on the call. Thank you very much for the interest you have shown. We also heard some complements, which is also a very nice of you. So, thanks for that and the interesting questions you asked. It is worth mentioning that we remain committed to our capital return policy, which includes a progressive dividend and a recurring share buyback of at least €300 million. And obviously, we look forward to continue to engage with you on upcoming road shows, conferences, investor meetings and especially, of course, our Capital Markets Day in May 27, where I hope that we can also personally see you and shake hands. And we might even offer better lunch than just Dutch cheese sandwich. So, I hope that will convince all of you to visit our Capital Markets Day. And for the rest, I wish you a very pleasant day.

This concludes today’s conference call. Thank you for participating. You may all disconnect.