U.S. Markets closed

Edited Transcript of AGS.BR earnings conference call or presentation 7-Aug-19 7:30am GMT

Q2 2019 Ageas SA Earnings Call

1000 Brussels Aug 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Ageas SA earnings conference call or presentation Wednesday, August 7, 2019 at 7:30:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Antonio Cano Y Bosque

ageas SA/NV - COO & Executive Director

* Bart De Smet

ageas SA/NV - CEO & Executive Director

* Christophe Boizard

ageas SA/NV - CFO & Executive Director

* Emmanuel Van Grimbergen

ageas SA/NV - Chief Risk Officer & Executive Director

* Hans J. J. De Cuyper

AG Insurance SA/NV - CEO & Director

================================================================================

Conference Call Participants

================================================================================

* Albert Ploegh

ING Groep N.V., Research Division - Research Analyst

* Ashik Musaddi

JP Morgan Chase & Co, Research Division - Executive Director and Co-Head of European Insurance Equity Research

* Bart Jooris

Banque Degroof Petercam S.A., Research Division - Analyst

* David Barma

Exane BNP Paribas, Research Division - Research Analyst

* Farooq Hanif

Crédit Suisse AG, Research Division - Head of Insurance Research in Europe

* Fulin Liang

Morgan Stanley, Research Division - Former Research Associate

* Jason Kalamboussis

KBC Securities NV, Research Division - Executive Director Research

* Robin van den Broek

Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Ladies and gentlemen, welcome to the Ageas Conference Call for the First 6 Months of 2019. I am pleased to present Mr. Bart De Smet, Chief Executive Officer; Mr. Christophe Boizard, Chief Financial Officer; Mr. Antonio Cano, Chief Operating Officer; Mr. Filip Coremans, Chief Development Officer; Mr. Emmanuel Van Grimbergen, Chief Risk Officer; and Mr. Hans De Cuyper, Chief Executive Officer, Belgium. (Operator Instructions) Please also note that this conference is being recorded.

I would now like to hand the call over to Mr. Bart De Smet, CEO and Mr. Christophe Boizard, CFO. Gentlemen, please go ahead.

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [2]

--------------------------------------------------------------------------------

Good morning, ladies and gentlemen. Thank you all for dialing into this conference call and for being with us for the presentation of the results of Ageas for the first 6 months of 2019.

As usual, I'm joined in the room by my colleagues of the Executive Committee. Hans De Cuyper, the CEO of AG Insurance is also present in the room. And of course, we have our Investor Relations team with us.

Ladies and gentlemen, before commenting on the 6-month results, I would like to start with an update on the Fortis settlement. As you know, 28th of July was the deadline to submit claims. We do not have yet a completely finalized view as it takes time to analyze each claim, but we can give you the broad picture.

We received in total 290,000 claims, which is more than we initially anticipated, but the average amount per claim was less than expected. Only 250 shareholders opted out of the settlement, representing around 1% of the total settlement amount. This reduced, therefore, our tail risk significantly. Around EUR 600 million have already been paid to claimants and the remaining payments should be made by the end of the first half of 2020.

On another topic, you have probably seen the press release that we issued this morning announcing a new share buyback program of EUR 200 million. This is our 9th consecutive share buyback program. And by this time next year, we will have returned in total EUR 2 billion to shareholders through share buyback programs.

Turning now to the results. The second quarter confirmed the strong start of the year, thanks to a solid operating performance across all regions and exceptional elements in U.K. and Asia. Consequently, our 6-month net results stood at a high EUR 606 million compared to EUR 441 million last year. This performance gives us confidence that we could exceed this year our guidance of EUR 800 million to EUR 900 million group net results, with the usual guidance caveat, since we do not know how the financial markets will evolve in the second half of the year and this could, of course, have an impact.

We pursued in Q2 the solid sales momentum recorded in Q1, resulting in a double-digit growth since the start of the year when we exclude the sold Luxembourg entity. The increase in inflows was driven by both the life and non-life activities and spreads across almost all the regions.

The guaranteed margin of the group was impacted this quarter by a strengthening of our reserves in Portugal due to the current low yield environment. The guaranteed margin also included a lower investment income in Belgium since the beginning of the year. As you know, the level of capital gains is quite volatile per quarter, especially in real estate, but we expect to reach a target level by the end of the year. The unit-linked margin was below target due to lower sales in Continental Europe.

As for the combined ratio, the impact of the adverse weather in Belgium in the first quarter was more than offset this quarter by a strong current year operating performance in both Belgium and Portugal, further supported by the positive impact of the Ogden rate review in the U.K. As a result, our 6-month combined ratio stood at a strong 95.7%.

Our total liquid assets amounted to EUR 1.7 billion, EUR 0.6 billion of which remains ring-fenced for the Fortis settlement. Capital management actions added EUR 0.3 billion to the group cash position this quarter, following the debt issued in April and internal loan to AG Insurance.

The EUR 633 million dividends upstreamed from our operating companies since the start of the year covered the cash outs related to the dividend paid to our shareholders and the holding costs, and will even cover part of the share buyback announced this morning.

Ladies and gentlemen, I will now hand over to Christophe for more details on the results.

--------------------------------------------------------------------------------

Christophe Boizard, ageas SA/NV - CFO & Executive Director [3]

--------------------------------------------------------------------------------

Thank you, Bart, and good morning, ladies and gentlemen. As announced by Bart, we achieved a very strong year-to-date result at EUR 606 million, up 26% compared to last year, excluding the impact of the FP&I, which was quite strong. The currency impact played no significant role this quarter.

As usual, I will give you some details per segment. On Slide 6, in Belgium, after a first quarter marked by lower investment results and adverse weather events, we enjoyed a strong second quarter, driven by a solid operating performance with all technical KPIs: combined ratio in non-life; operating margin, guaranteed business and unit-linked, showing significant improvement compared to Q1.

In Life, higher investment results in the quarter compensated for a lower underwriting result. The 6-month guaranteed operating margin stood at 82 bps, which shows an improvement compared to Q1, but which is still below our target of 85 bps to 95 bps. This is a timing issue in the real estate investment result and a significant capital gain is expected for Q4. The unit-linked operating margin, at 34 bps, was in line with our target.

In Non-Life, after a first quarter hit by some storms in March, we've achieved in Q2, an excellent result in most business lines, with a very low combined ratio of 91.1%. The new internal reinsurance agreement, which brought a positive contribution of EUR 10 million in the first quarter, had no significant impact in the second quarter. In line with the presentation of our Q1 results, all the combined ratio mentioned in the press release and in this presentation exclude the impact of the internal quota share reinsurance agreement.

The year-to-date pro forma combined ratio, meaning before internal reinsurance, improved to 97.6%, including 6 percentage points from adverse weather, which is comparable to last year. Since the start of the year, Belgium continued its growth path in both Life and Non-Life, including guaranteed products were mostly driven by the bank channel, while inflows in unit-linked benefited from successful sales campaigns in Q1. Non-Life inflows increased across all business lines.

In the U.K., Slide 7, the result included a EUR 30 million reserve release relating to the Ogden rate adjustment from minus 0.75% to minus 0.35%, but this was more than offset by large claims in Motor. The new internal reinsurance agreement contributed EUR 20 million to the 6 months' net result. The year-to-date pro forma combined ratio improved to 96.9% with a benign level in Household, mitigating the large claims in Motor. A restructuring cost of EUR 13 million was also booked in the non-technical account for this period.

Inflows were down in the U.K., following the decision to withdraw from underperforming partnerships and to enforce strict pricing discipline. Nevertheless, the volumes are now starting to stabilize. While the broker channel remains our predominant distribution channel, direct sales through the aggregator platforms continue to grow.

In Continental Europe, on Slide 8, the 6-month result amounted to EUR 57 million, up by 18% compared to last year if we exclude the contribution from Luxembourg in 2018. As already mentioned by Bart, the result in Life was negatively impacted by a strengthening of our reserves in one fund in Portugal due to the current low interest rate environment. In Non-Life, the result was strongly up, thanks to a strong performance in Portugal in both the bancassurance and agency channel and to the increased contribution for the nonconsolidated partnership in Turkey.

The growth momentum continued in both Life and Non-Life. In Life, the higher sales in guaranteed products more than compensated for the lower unit-linked sales, while Non-Life inflows were up in all business lines.

In Asia on Slide 9. We recorded an exceptionally high result of EUR 331 million. The results benefited, as always, from solid operating performance, but also in China, from a high level of capital gain, especially compared with last year, where we had impairments. China also benefited from the positive evolution of interest rates and from a favorable retroactive change in the tax regime, relating to commissions. The sales dynamic continued in Asia with Life inflows driven by strong persistency and Non-Life inflows currently up in all key business lines.

In the Reinsurance segment, on Slide 10. As expected, we booked an initial loss following the implementation of the new internal reinsurance agreements. However, this is internal and has no material impact on the overall group net result.

Let's go to the general account now. I am on Slide 11. So the general account generated a positive net result following the high EUR 61 million positive contribution from the RPN(i). The provision for the settlement has been reduced to EUR 626 million, following payments already made to shareholders.

Our Group Solvency II ratio on Slide 13, regained altitude at 201% after the issuance in April of a EUR 500 million Tier 2 instrument to compensate for the call of the AG Insurance debt instrument, which took place in March of this year. Nevertheless, the solvency decreased by 14 percentage points over the semester, mainly due to the acquisition in India and to the lasting drop in the yield curve, which specifically affected the solvency ratio in Continental Europe.

The operational free capital generation, on Slide 14, amounted to EUR 257 million for the first half of the year and to EUR 163 million, excluding the EUR 94 million dividend paid by the non-European nonconsolidated participation.

This figure of EUR 163 million is below the guidance of EUR 130 million a quarter we have indicated before, and hence, needs some further explanations. The breakdown by segment, which is given on Slide 58 of the pack shows that the main gap comes from the U.K., where we suffered, as already mentioned, from large losses in the Motor book, which are seen as exceptional.

The corresponding additional technical reserve hits the free capital generation of the U.K. twice: first, on the own fund for EUR 59 million and also on the SCR for EUR 30 million. Taking into account the 175% target capital applied on the SCR, these 2 effects resulted in a EUR 111 million hit to the operating free capital generation of the group.

To a lower extent, in Continental Europe, Portugal was also slightly weak because of some re-risking of the investment portfolio, which increased the SCR and also because of the lower contribution of the value of new business due to the lower interest rates observed now in that country. Corrective measures have been taken to mitigate this.

The EUR 119 million negative contribution of exceptional items come from the implementation of the internal reinsurance and of the stop-loss between the U.K. and the group, the impact is at EUR 95 million. This is mainly related to model effects and from the adjustment from the final -- with the final Ogden rates at minus 0.25%, whereas our former assumption was 0% for solvency calculation.

Ladies and gentlemen, this is the end of my presentation, and I leave the room for questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Ladies and gentlemen, this concludes the introduction of the conference, and we'll now open the call for questions. (Operator Instructions) We have a first question from Ashik Musaddi from JP Morgan.

--------------------------------------------------------------------------------

Ashik Musaddi, JP Morgan Chase & Co, Research Division - Executive Director and Co-Head of European Insurance Equity Research [2]

--------------------------------------------------------------------------------

This is Ashik here from JP Morgan. Just 3 questions. First of all, on M&A. Now, clearly, one thing that we have noticed is in past 3, 4 years, you have missed out on a few acquisition expectation, like, for example, [Latia] recently Fidea. Then again, you missed out on Tranquilidade

and you were not able to get AGI -- AG as well, that 25%. How should we think about acquisitions going forward? I mean, do you feel any pressure that you need to do an acquisition? Or do you remain disciplined on the M&A. I mean, clearly, you have continued to do the buyback, which is very well reflected in your share price. And I think that discipline is very well appreciated by the market. But what is the risk of you relaxing those criteria that you have for M&A going forward as well? So that's the first question I have.

Second one is on Asia. I mean, if I look at Asian earnings, EUR 330 million for first half. Obviously, this has a few capital gains and the China tax-related things. So even if I adjust for that, it's still EUR 210 million versus your guidance of EUR 275 million to EUR 325 million. So how should we think about that? Do you think your guidance is low? Or shall we still stick with that guidance? So any thoughts on that would be great.

And thirdly, on Asian dividends. I mean, Asian earnings are going up rapidly. But in this year, if I notice the dividend from Asia has just gone up like tiny amount -- no, actually, gone backwards. So how should we think about the dividend from Asia. So should we be expecting a pickup in dividend from Asia? Any thoughts on that would be great.

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [3]

--------------------------------------------------------------------------------

Okay. Thank you, Ashik for the 3 questions. On the first one, on M&A, let's say, with -- I would like to make a difference between Ageas and AG Insurance on the one side and then Fidea, Tranquilidade, on the other side. Why? Because, let's say, Ageas has never been a real concrete filer, it has not been for sale. And it's not as far as we expect in the near future. AG Insurance is -- was a particular situation where, okay, we were prepared for both situations, having 100% or staying at 75%, and in both situations, I think we would -- could have been -- be and we are happy with the outcome as it is today.

The 2 others Fidea, Tranquilidade, as you point correctly, we each time look to not only strategic personnel, but also the financial conditions. And in line with our previous approach, we have decided not to go beyond a certain level of price that we're willing to pay in order to make the deal, let's say, defendable, in line with our overall strategy that we communicated since 2009 and repeated in the Investor Day last year in September.

Going forward, we keep spotting opportunities and also, in line with strategy, if we don't see them, we move to the buyback scenario. So don't expect us to completely change our pricing or financial discipline. This is something that we keep high on the agenda.

Second question with respect to Asia, I think your analysis is spot on. So if you look to EUR 330 million, you fully exclude, for Asia, the cap gains that are mentioned on Slide 20 of EUR 69 million and you take out what is not an official figure we can mention about the tax impact. But I think most analysts were very precise in what the impact was, you come to something like EUR 210 million, which is indeed, more than half of our guidance of EUR 275 million to EUR 325 million.

Two reasons why we are not bullish to immediately increase this range is that, on the one side, if there might be an impact in financial markets, equity markets, it is most probably more sitting at the Asian equity book. And secondly, we always see that Q4 in Asia is lower than the first quarter's due to the fact that they recruit more agents, make more cost in the Q4 in order to prepare a good start of the year.

But I would say this year, in any case, we will -- we expect to exceed this guidance. That's also the reason why we are quite confident that we will go above our EUR 800 million to EUR 900 million net profit expectations for the group. And I would say, let's have a look how this goes on in the coming quarters before we really, I would say, officially broaden this range.

The third question on the dividend. If you look -- and I think you also see it in the free capital generation overview, we received something like EUR 89 million dividends from noncontrolled participations. We have a solid dividend year after year from Thailand and Malaysia, see no reason why this would change. In China itself, the dividend was last year, 30% of the local result. Local result was last year, higher than our IFRS results due to impairment rules. So if the evolution of the profit in China and Asia overall continues as it is now, we could expect in absolute numbers a higher dividend from Asia.

--------------------------------------------------------------------------------

Ashik Musaddi, JP Morgan Chase & Co, Research Division - Executive Director and Co-Head of European Insurance Equity Research [4]

--------------------------------------------------------------------------------

And just one quick follow-up on that. Is it fair to say that do you think that the Asian earnings are trending towards the high end of the range of EUR 275 million and EUR 325 million? Is it just EUR 125 million for the next 2 quarters. Is it fair to say that or not really?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [5]

--------------------------------------------------------------------------------

I'd say it's fair to say that for this year, we expect to achieve that range, yes? Yes, in any case. And again, that recovery out there of the financial markets.

--------------------------------------------------------------------------------

Ashik Musaddi, JP Morgan Chase & Co, Research Division - Executive Director and Co-Head of European Insurance Equity Research [6]

--------------------------------------------------------------------------------

Yes, that's very clear. Thanks a lot, and thanks a lot for your management discipline on M&A.

--------------------------------------------------------------------------------

Operator [7]

--------------------------------------------------------------------------------

Next question from Albert Ploegh from ING.

--------------------------------------------------------------------------------

Albert Ploegh, ING Groep N.V., Research Division - Research Analyst [8]

--------------------------------------------------------------------------------

I've got 3 questions as well. The first one to start on the free capital generation, Slide 58. If I strip out Q1 and look in isolation to Q2 only and also eliminating the dividend, I think there was something like a shortfall of roughly EUR 100 million to reach your EUR 125 million, EUR 135 million quarterly guidance. I know there are many moving parts in the U.K., Continental Europe in reinsurance. So maybe you can help us bridge that gap a little bit with the SCR impacts in the large Motor losses in the U.K. specifically, that will be question one.

The second one on the U.K. with the large Motor claims. It seems in the press release, if I read it correctly, yes, that there seems to be some kind of a one-off event, but how certain can we be? So is there any future impact from this as well on the earnings? So any views there would be appreciated.

And the final question is more, let's say, a question on the capital gain outlook. I think you -- in the opening statements, you made clear that the real estate budget should still be delivered for the full year. Can you remind us again what that budget is and then what we more or less can expect to flow through in the earnings in Q4?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [9]

--------------------------------------------------------------------------------

I propose to pass the questions, respectively, to Christophe, Antonio and Hans. Christophe?

--------------------------------------------------------------------------------

Christophe Boizard, ageas SA/NV - CFO & Executive Director [10]

--------------------------------------------------------------------------------

The generation, you are right that the shortfall is around EUR 100 million. In my speech, I discussed the year-to-date approach, that the shortfall is more concentrated on Q2. And you are right that we have to explain this.

I will refer to the same explanation as the one I gave during the speech. So coming back on the U.K., the large losses started in Q1, but the main effect was observed in Q2. And as I said, unfortunately, you have kind of doubled it when you increase the reserves. You have first the lack of result, because the increased reserve directly hits your result and so you're eligible own fund; but then, with your increased reserve, you have an additional SCR. And the additional SCR is, even in our calculation, with the 175% target capital is amplified. So the impact is the decrease in own fund plus 175x the increase in SCR, and it's the reason why I make this rough estimate of EUR 111 million year-to-date. So I don't have the same calculations on the top of my head for Q2, but most of this is related to Q2. The effect was limited in Q1. So most of it was in Q2.

And for Portugal, it was more a Q2 effect. The Portugal, so the fact that we have the re-risking, so it means that they bought slightly more equities. And the low value of new business, that's something which occurred in Q2.

All in all, these are seen as exceptional. On the one hand, on the U.K. exceptional; on Portugal, as I said, for the product, we have taken actions. The commission have been reduced by the bank. So I think that we shouldn't change the guidance at this stage. And today, I confirm, for the future the EUR 130 million run rate for the future quarter.

--------------------------------------------------------------------------------

Antonio Cano Y Bosque, ageas SA/NV - COO & Executive Director [11]

--------------------------------------------------------------------------------

Hello. Good morning, Antonio here. I'll try to give you some details on what happened in the U.K. on the large Motor claims, so -- and whether this is a trend or not. So what we have seen already starting, as Christophe was saying, towards the end of Q1 but more accentuated in Q2, is an increase of -- these are bodily injury claims involving what's called vulnerable road users, where we normally have about 15 cases in each quarter. In Q2, we had well above twice that number. But as important is also the fact of the severity. So the average of these large bodily injury claims was also quite higher. So we had quite a number of claims around our EUR 3 million retention level.

Now obviously, we've gone through all the numbers and looked to any possible root cause, channel, your underwriting, risk type, all the usual analysis. We didn't find any trends. We also asked an external third party, an actuarial firm, to take an independent look. Also their conclusion was that, in fact, there is no clear trend. It is also so that we don't get any signals from the market that this is a trend that our competitors are spotting.

Nevertheless, I will still keep -- I still keep a bit of a doubt whether there is a trend or not. For now, we have not really detected a trend. So it might be just volatility, although an extreme form of volatility.

--------------------------------------------------------------------------------

Hans J. J. De Cuyper, AG Insurance SA/NV - CEO & Director [12]

--------------------------------------------------------------------------------

Hans De Cuyper on your final question on the capital gains, real estate. We always target a return of roughly 5% on a yearly basis on our real estate portfolio. So in euros, that would mean that we realized around EUR 70 million to EUR 80 million gross capital gains also every year. Due to the seasonality of these transactions, because most of the time, they are bigger transactions, we are not yet halfway, which is reflected in that operating margin, but we remain very confident to minimally achieve that target by the end of the year.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

Next question from David Barma from Exane.

--------------------------------------------------------------------------------

David Barma, Exane BNP Paribas, Research Division - Research Analyst [14]

--------------------------------------------------------------------------------

The first one is a follow-up on the U.K. and besides the large losses, what are you seeing in terms of inflations and the price development? And how should we read that in the top line development, which seems to be stabilizing now?

My second question is on China. And there, how -- could you give us your view on the potential impact of this commission change and the competitive environment, if it's not too early to tell?

And lastly, on Belgium, could you -- what's your outlook for the Belgium Life business and especially on the guaranteed side, considering the interest rate outlook and in light of the drop in the credit rate we've already seen in 2018?

--------------------------------------------------------------------------------

Antonio Cano Y Bosque, ageas SA/NV - COO & Executive Director [15]

--------------------------------------------------------------------------------

Okay. So a bit of a follow-up on the U.K. I believe that your question was more about claims inflation and development of rates. In claims inflation, I keep aside the bodily injury claims I just discussed. If we look more at the operational damages and the material damages claims inflation, there, frankly, it's more like a positive news. We don't really see a pickup of claims inflation although a lot of people are expecting that related also to the Brexit. We don't see that in our numbers. So it's thinking we're more on the positive side.

In terms of rates, the recent confuse.com and Willis Towers Watson market review showed that during Q2, they saw a 3.5% rate increase overall in the market. I think we are more or less in that range. Going forwards, I think people are adapting to the slight surprise, let's put it that way, of the Ogden rate not being at 0 or positive, but still negative. So it is somehow logic that you see this slight rate pickup.

In terms of growth of our business, as Christophe was also mentioning in his introductory speech, we're still suffering the effect of the loss of some accounts that, for various reasons, we thought were not profitable. But we see, indeed, volumes stabilizing, a nice growth in the direct business. And in Q2, actually, the drop on current -- and with current FX rates movements excluded was only slightly negative. So -- and we are also slightly above what are our internal targets.

--------------------------------------------------------------------------------

Christophe Boizard, ageas SA/NV - CFO & Executive Director [16]

--------------------------------------------------------------------------------

Okay. With respect to China and the impact on tax of the increase of the cap on commission deductibility. So what we have taken in our results half year was the retroactive benefit for 2018. As mentioned, so Taiping Life has not public its -- published its results yet, it will come soon. So we prefer not to disclose a precise figure. But we can always say that what we've seen that is mostly mentioned by you analysts is in a reasonable estimate.

With respect to the -- I would say, the recurring benefit of that, so the 2019, this has not at all been taken until now in the half year results. Also, because we are not -- it's not clear yet what the market will do, will it be fully taken as a profit or will part of it be used to give higher profit sharing, to adapt pricing, to change commission, so it's a bit too early. So today, the only effect taken into our half year results was the guaranteed recovery of 2018. And I'm sure that in Q3, we will be able to tell a bit more about the future treatment of that advantage.

--------------------------------------------------------------------------------

Hans J. J. De Cuyper, AG Insurance SA/NV - CEO & Director [17]

--------------------------------------------------------------------------------

Okay. Your last question on Belgium, I assume with the dividend, you mean the profit sharing towards our customers. Of course, we are only half the year. So we cannot tell you anything and definitely not disclose anything on the dividends on our guaranteed portfolio. The only thing I can tell you is that we always closely monitor inflows, outflows, guaranteed rates and then profit sharing to secure our investment margin in the long run. And you know our asset liability management profile, which is underneath, which we also always want to protect.

Today, I mean, we have no concerns on this approach for the remainder of this year, despite the low-yield environment, we only take -- always take the required measures to maintain that investment margin. But on profit sharing itself to the end customers, I cannot tell you anything at this stage of the year.

--------------------------------------------------------------------------------

Operator [18]

--------------------------------------------------------------------------------

Next question from Fulin Liang from Morgan Stanley.

--------------------------------------------------------------------------------

Fulin Liang, Morgan Stanley, Research Division - Former Research Associate [19]

--------------------------------------------------------------------------------

I have 2 questions. The first one is regarding Asia and especially China. And so just wanted to hear management views on the future competitive landscape given that China is -- actually lift up the ban on the foreign investors, so in the life insurance space. So do you think the competitive landscape will change and will be especially for the domestic players like Taiping Life? That's my first question.

And then the second one is, so you strengthened the reserves as a result of lower interest rates. However, the interest rates actually is keep falling since you've strengthened. Will you actually further have to further strengthen the reserves? So what should we think about that?

Sorry, actually, I have 3 questions. The last one is you mentioned about the Belgium, it helped -- the margin improvement is helped by the investment results. I just wonder how much of the investment result is actually recurring. And we can expect -- should we expect this margin improvement to continue in the future?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [20]

--------------------------------------------------------------------------------

Okay. I'll take the first question and hand over for the second one to our Chief Risk Officer, and to Hans for the question on Belgium. With respect to Asia, we have, since 2001, opted to enter into a joint venture with a very strong local partner who has the knowledge of the market, the distribution capacity, being Taiping Group. And we see, indeed, the markets are opening to foreign investors, and okay, increased competition is always helpful. We don't see the market decreasing in terms of opportunities there. So we still believe that future growth is guaranteed in the margin. We will surely take our place in that. We have now something like a 4.5% market share, we are in top 6. And we see, indeed, that the newcomers, but also a lot of local ones, take little by little a bit more market share, but that's, in many cases, due to single premium, something we almost banned in our portfolio, I think 93% of the business we do is regular premium. And we will, together with partner, stick to, let's say, a very prudent, and at the same time, commercially strong proposal to our customers. So not really puzzled or let's say, frightened by the fact that competition will increase.

--------------------------------------------------------------------------------

Emmanuel Van Grimbergen, ageas SA/NV - Chief Risk Officer & Executive Director [21]

--------------------------------------------------------------------------------

Okay. Emmanuel. Indeed, so you are right, in Portugal, we had to strength the reserves in one particular fund due to, indeed, the big decrease in the interest rate. And if you just look at the swap day, the swap decreased by 60 basis points over the first 6 months. And since then, we have an additional decrease of 27 basis points.

So we took some actions. One of the action was to strength the reserves, what we did in Q2, but we did also some rebalancing in the asset portfolio, some re-risking, what you can also see in the operational free capital generation of Continental Europe.

And finally, also measures has been taken for new business in order to make sure that a minimum margin is kept. So in a nutshell, measure on new business and also rebalancing of the asset portfolio has been taken in the second quarter.

--------------------------------------------------------------------------------

Hans J. J. De Cuyper, AG Insurance SA/NV - CEO & Director [22]

--------------------------------------------------------------------------------

Your last question on the investment result in Belgium, indeed, we saw in Q2, because you asked about the quarter, an improvement on the investment results of roughly 23 basis points, but partially offset by a slightly lower underwriting result due to mortality, which we also see a little bit as a less quarter, but nothing structurally. But when we combine everything, we always come back, of course, to our asset liability matching profile and the ambition to achieve the group targets of 85 basis points to 90 basis points. And as of today, we are well on track, with the caveat on the seasonality of the capital gains.

--------------------------------------------------------------------------------

Operator [23]

--------------------------------------------------------------------------------

Next question from Jason Kalamboussis from KBC Securities.

--------------------------------------------------------------------------------

Jason Kalamboussis, KBC Securities NV, Research Division - Executive Director Research [24]

--------------------------------------------------------------------------------

I had 3 questions. The first one is, I just want to understand, coming back to the first question of this session, when you approach the M&A, clearly, there are a number of targets that didn't materialize. So it's great to have the discipline. But do you find that when you're approaching them and when we're talking about amounts that probably are about EUR 0.5 billion, you do have also strategic elements in that at the end of the day, you look at it's one thing to have if you have the same returns in Portugal, or in Asia, at some point, you cannot do 3 acquisitions or the sizable acquisitions. So you will decide and you have a strategic bias that would send you more towards Asia versus Europe. So I was wondering if you have any such criteria in your mind?

The second thing is on the U.K. Do you have -- I mean, I thought, by the way, that it was only higher severity, not higher frequency, if I understood it well, you had higher severity and frequency. So do you find that there, you have some sort of anti-selection, or there is some problem in your distribution? So I can appreciate what you said that you looked into it, but it is quite striking that if you are the only one, and especially given some problems that we have seen in the U.K. over the last years, what do you see on that front?

The third thing is on Asia. If there are assets that you know are to become available in the market, would you be happy to pay over to buy someone else's joint venture and also pay for a continuing partnership agreement? Or do you prefer the model where you still have less than 50%, find a local partner and build it up from scratch?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [25]

--------------------------------------------------------------------------------

Okay. On your first point, our M&A strategy, whether it would send us more to Asia than Europe. Again, one element that also will come to the table when we look to Asia is, of course, our promise on dividend there. So we try to balance the portfolio between Europe and Asia, also in the context of our dividend promise. And if we go back again to the investor presentation, September last year, when we talked about opportunities we look at in Europe, we primarily look to opportunities in Non-Life here, where you have, let's say, mature activities that are cash generative that permit us to broaden the pool of upstream cash in order to pay our dividend. So the really major, major M&A files in Asia is not exactly what we believe will be concrete in the coming period maybe.

And also go to your last question, whether we would be doing others than minorities. Let's say, we have today one nonminority deal in Asia, which is the Philippines, where we have 50% plus 1 share. The others are minorities and one of the reasons is that we believe that we are -- I would say, it is one of our strengths that we are good, solid, long-term partners that do not need the majority and where we, by teaming up with a strong local partner, have a quicker start with the distribution available, with our customer base available. So -- but never say never. So we spot opportunities in the regions where we are interested in and -- but we'll always keep that financial discipline that I also gave as an answer to the first question of Ashik.

--------------------------------------------------------------------------------

Antonio Cano Y Bosque, ageas SA/NV - COO & Executive Director [26]

--------------------------------------------------------------------------------

So Jason, coming back to U.K. and its large losses. So it is indeed, as you say, we see both an increase in number of the severe cases and also the average cost of those cases is higher. So it is both.

Obviously, some people, including myself, have spent some time and some sleepless nights understanding what is happening here. Bear in mind, we're not talking about hundreds of cases here. It's having like 10 more cases involving what's called vulnerable road users, it's pedestrians, cyclists, there's no clear trend that we see. We continue to follow it up. Our current view is still that there is no clear trend. And there's no clear reason why the nature of our portfolio should be more vulnerable to these types of accidents.

--------------------------------------------------------------------------------

Operator [27]

--------------------------------------------------------------------------------

Next question from Farooq Hanif from Crédit Suisse.

--------------------------------------------------------------------------------

Farooq Hanif, Crédit Suisse AG, Research Division - Head of Insurance Research in Europe [28]

--------------------------------------------------------------------------------

Just going back to lower yields. I noticed that in the second quarter, you've seen a drop in flows in Belgium and Continental Europe, and I presume you're trying to maintain that margin, and that will make the product potentially less attractive. So I was wondering what you think of your kind of outlook in a low-yield environment for inflow growth in guaranteed life?

Secondly, going back to your comments about partnerships in the U.K. that are underperforming. Can you give us some more details on what kind of partnerships are underperforming and what your ambitions are for aggregator business going forward as a proportion of your book?

And lastly, just to go back on the question just asked earlier, is there any more kind of vulnerability or positivity on yields in Portugal? So the reserve increase, was that just a one-off boost or is there some sort of link with the swap rate that we need to be aware of?

--------------------------------------------------------------------------------

Hans J. J. De Cuyper, AG Insurance SA/NV - CEO & Director [29]

--------------------------------------------------------------------------------

Well, I can give you a feedback on inflow in Belgium. Of course, we closely monitor our new money yield which is still at an attractive level due to the mix where we invest in fixed income. You referred to second quarter that we have lower inflow, but the main reason there is the seasonality of the commercial campaigns driven by the bank. Year-on-year, we had a very strong first quarter. This year, we had a very strong quarter -- second quarter last year. So if you take it year-to-date, we still see a fairly outperformance in growth compared to last year.

Indeed, we closely monitor, as I said before, the inflow in the guaranteed business, but we still have adequate room for the remainder of the year to maintain the growth momentum that we have seen in the first half. So there is no real need to start pushing down sales volumes. It's mainly linked to the timing of commercial campaigns in the bank channel.

--------------------------------------------------------------------------------

Antonio Cano Y Bosque, ageas SA/NV - COO & Executive Director [30]

--------------------------------------------------------------------------------

So on the U.K., so the nature of the partnerships, I think we've mentioned that already in the past, that involves some NGAs, but also some affinity partnerships with car brands and some retailers. Those are ones that we have stopped.

And in terms of our aggregate -- direct aggregator channel, it is still relatively small. I think it represents about 10% to 15% of our business today, but it is an area that is growing, let's say, since we are personal lines motor insurer in the U.K. mainly and the market or the customers are -- have moved already to these aggregated channels. So we think we should have also a more stronger presence in that channel. And so far, so good. We're quite happy with the performance there.

--------------------------------------------------------------------------------

Farooq Hanif, Crédit Suisse AG, Research Division - Head of Insurance Research in Europe [31]

--------------------------------------------------------------------------------

Can I just quickly follow-up on that one point. So is there a correlation between the vulnerable…

--------------------------------------------------------------------------------

Emmanuel Van Grimbergen, ageas SA/NV - Chief Risk Officer & Executive Director [32]

--------------------------------------------------------------------------------

On the volume question on the reserving in Portugal. So in detail, so we have to keep in mind that in the first 6 months, there was quite a heavy drop in the yield and in the swap. There was a decrease of 60 basis points. Since then, we have an additional 27 basis points. Again, we took actions on rebalancing the portfolio in Q2, looking also for new investment opportunities. We have also to look at how will the spread evolve. So since the end of Q2, for instance, the spread on Portugal increased a little bit, so that can compensate and help also the situation. I don't believe that we will -- moving forward that we will have the same type of hit as we had in Q2. But of course, we cannot completely exclude it, but we are following up and taking measures to reduce it.

--------------------------------------------------------------------------------

Farooq Hanif, Crédit Suisse AG, Research Division - Head of Insurance Research in Europe [33]

--------------------------------------------------------------------------------

Can I just -- could I possibly return on the U.K. quickly? So is there a correlation between the large vulnerable persons claims that you're seeing and the partnerships? So can we see that this might possibly get better as you switch your mix?

--------------------------------------------------------------------------------

Antonio Cano Y Bosque, ageas SA/NV - COO & Executive Director [34]

--------------------------------------------------------------------------------

No, we see no correlation there, because there's not really a channel correlation.

--------------------------------------------------------------------------------

Operator [35]

--------------------------------------------------------------------------------

Next question from Robin van den Broek from Mediobanca.

--------------------------------------------------------------------------------

Robin van den Broek, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [36]

--------------------------------------------------------------------------------

First question is on your payout. Last year at your Investor Day, you've changed from net insurance result to reported results. And obviously, 2019 is building up quite a bit of one-offs in a positive way. So your ordinary dividend is very likely to grow substantially year-on-year. I was just wondering, how does that change your dynamics? I think in the past, you said that 1/3 of the buyback basically needs to be financed from the liquid buffers. With these dynamics in place on a normalized basis, that's probably changing. Today, you reiterate your EUR 200 million buyback. So short term, that's not an issue for you, clearly, but how should we think of that? And just to confirm that everything will be still an ordinary dividend, you're not going to put partly -- part of that in the special?

Second question is on Asia. You mentioned that there's a one-off benefit from the rate developments in the results. Could you quantify that? And also I'm wondering to see your thoughts going forward, because it seems that your 750-day average will inflect to becoming a headwind at the end of this year. So maybe you could give some quantifications on that? And also remind us how the mismatched duration sits in Asia? And what kind of risk you could see there?

And lastly, just maybe a quarter-to-date update on your Solvency II ratio?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [37]

--------------------------------------------------------------------------------

Okay. Robin, first of all, the question on dividends. I think we have 2 clear messages that we gave at the Investor Day. The first one was that we, moving now to the group results, start off with the policy of a payout of minimum 50% of the group result, excluding, of course, the noncash RPN(i) effect. And in line with our tradition and our track record, we have all interest and intention to keep that promise. So we will pay out 50 -- minimum of 50% of the group net results. But as I mentioned earlier, we are confident that this will be outside or above the EUR 800 million to EUR 900 million range that we normally expect.

Second point is with respect to the buyback. We also gave a promise of a buyback of minimum EUR 150 million unless there would be sizable M&A. Also there, we -- that's a promise that we will keep. We also mentioned in that Investor Day, and I assume that's what you refer to, that looking also to the past, looking to what we normally expect in a year, that a part of this buyback should be funded or could be funded by the excess upstream dividends. Like this year, you could see that something like 125% or 120% of the upstreamed dividends is available for this new buyback. It could be that it's less next year, then due to a very high dividend, but that's to be assessed at that moment. But the 2 promises, minimum 50% payout and a minimum of EUR 150 million buyback,, less sizable M&A activities are 2 promises that we will keep and realize.

Then the second question, you take? Yes, maybe it was the impact from rate developments. I assume you refer to impact on the reserving?

--------------------------------------------------------------------------------

Robin van den Broek, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [38]

--------------------------------------------------------------------------------

Yes, the 750-day average?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [39]

--------------------------------------------------------------------------------

Yes. Well, let's say, to give figures half year, where it was last year in the first half, the positive impact of EUR 5 million, this year is a positive impact of EUR 18 million. So it's a difference of a bit more than EUR 10 million, most of it in the second quarter.

--------------------------------------------------------------------------------

Robin van den Broek, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [40]

--------------------------------------------------------------------------------

And if that changes going forward, I think Q1 next year, I think the average could be down 5 bps, while I think last year, it was up 1 or 2 bps. I think in the past, you alluded to EUR 50 million in one quarter. Can you remind us what the swing was of the 750-day average year-on-year in that quarter?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [41]

--------------------------------------------------------------------------------

I personally don't have that figure in mind and propose to maybe take it up with the Investor Relations team. Okay?

--------------------------------------------------------------------------------

Robin van den Broek, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [42]

--------------------------------------------------------------------------------

Okay.

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [43]

--------------------------------------------------------------------------------

The mismatch, Christophe?

--------------------------------------------------------------------------------

Christophe Boizard, ageas SA/NV - CFO & Executive Director [44]

--------------------------------------------------------------------------------

Well there's a mismatch on Asia, but the well-known issue and the fact that there is a big duration mismatch, you have very long duration products. So very long liabilities and the available assets are such that you cannot match these long liabilities. So there is a mismatch. Two answers on this. So first, the allocation to the equity portfolio is quite large. And to some extent, you can consider that on the long term, and we are talking very long-term product, equity -- with the lack of available assets, too much fixed-duration, equity are well suited to this kind of thing, but you have inner increase, that's for sure. But it is an answer. And the second answer is that you have some big margin on this product and at the end, this big margin gives you room to manage the interest rate risk.

So in conclusion, true there is an issue. It is structural due to the product themselves and to -- in front of this structural issue, you have the large equity allocation, which is an answer on the long term. And then the fact that margins are high enough to manage the corresponding interest rate risk.

--------------------------------------------------------------------------------

Emmanuel Van Grimbergen, ageas SA/NV - Chief Risk Officer & Executive Director [45]

--------------------------------------------------------------------------------

Okay. And on your last question, to comment on the evolution of the solvency over the quarter. What I would like to do is to refer to Page 55, where you have, on the right-hand side of the slide, some details explaining the increase of the solvency from 194% Q1 to 201% by the end of Q2. So we had indeed, the issuance of the debt that is boosting the solvency by 13%. And then on the market, we have -- okay, we have 0% impact on the market where you could say that's a good performance. And the way that you have to read it is we are negatively impacted by the decrease in the swap curve over the second quarter, which is in line with our sensitivities. And this negative impact is compensated by spreads, but also by FX. So -- and the FX is due to the fact that you know that at the group level, we need to have capital for our U.K. FX, currency capital for our U.K. business. And since in Q2, the solvency of the U.K. decreased slightly, our capital that we have to hold is also lower. So for the market, it's a neutral evolution, negative interest rate impacts in line with sensitivity, compensated by spreads and the currency.

And then finally, operational over the quarter is a plus 3% on the solvency there, it's probably on the low end side of the range. But there, we already gave quite some insight, mainly driven by, on the one hand, the U.K. and the large losses in the U.K. and, on the other hand, also some derisking in Portugal.

And then we have the usual share buyback and expect the dividend share buyback, minus 1% and expected dividend, minus 4%.

--------------------------------------------------------------------------------

Operator [46]

--------------------------------------------------------------------------------

Next question from Bart Jooris from Degroof Petercam.

--------------------------------------------------------------------------------

Bart Jooris, Banque Degroof Petercam S.A., Research Division - Analyst [47]

--------------------------------------------------------------------------------

A lot have been answered. I had quite some disturbance on the line when you were answering the Asia guidance. Could you repeat that? Did I understand it well, that you do not change the guidance, but you expect it to be on the higher end?

Then continuing on Asia, could you give us some more details of the underlying good performance? Are we talking about better underwriting effects, better investments, even if we -- investment result even if we exclude the capital gains?

And then on the U.K., the Ogden rate became lower than what you expected. This came, of course -- the decision came very recently. Did that take into account the further decline of interest rates? And when do you expect the next review of the Ogden rate?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [48]

--------------------------------------------------------------------------------

Okay, back on the first question, Asia guidance. So what I said is that we keep our range at EUR 275 million, EUR 325 million for the time being, being, being more the, let's say, what you could call the multiyear provision for the next period. But we expect this year, unless unforeseen, let's say, financial market impact, that we will end up the year in Asia, of course, out of this range and above the EUR 325 million, as we are already at EUR 330 million now, this should be the normal expectation.

Underlying in the first -- the second question of Ashik, he made -- he deducted somewhere the full capital gains for Asia of the first half. And also, what we expect the impact of last year of tax, it came to something like EUR 210 million. If you would do a similar exercise for the past year, also taking out or correcting for, at that time, minor capital losses or impairments, you had last year, something like EUR 185 million, so this year, compared to last year, is something like 12%, 13% increase of the result if you exclude impact of impairments in capital gains.

And as we are increasing the underlying technical liabilities, and you will see that somewhere on Slide 5 or 6, I think -- it's on Slide 5, with more than 10% year after year, so it's not abnormal that you can expect the underlying profit to follow that route. Also know that we have still some start-ups like Malaysia and Vietnam who are in the first year, so we also expect better results than what we have now.

--------------------------------------------------------------------------------

Antonio Cano Y Bosque, ageas SA/NV - COO & Executive Director [49]

--------------------------------------------------------------------------------

Okay. On the Ogden rates, yes, it is what it is, it's minus 25 basis points. Bear in mind today now, IFRS is also based on the minus 25 bps and that's also the case for our best estimate. So we don't have this divergence anymore. And our best estimate year-end last year was still based on a 0%. So that has led to an increase of provisions.

When will it change? I think it is within 5 years. So somewhere between today and 5 years, we could expect a change. Don't ask me what the trigger would be to have a revision before 5 years, as you don't have to ask me a lot of things on U.K. politics.

--------------------------------------------------------------------------------

Bart Jooris, Banque Degroof Petercam S.A., Research Division - Analyst [50]

--------------------------------------------------------------------------------

Okay. Just one small follow-up, if I may. You stated that you take -- for the tax impact in China is you took into effect the recoupable tax over 2018, but what about the first half 2019?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [51]

--------------------------------------------------------------------------------

So in the half year results that we present today, there is no impact of the tax review in China for this year. So the only amount that is in the results is the recovery for 2018. And 2019, as I mentioned in one of the other answers, we are still looking on how the market will deal with that. Will it be purely taken into profit or will part of it be used for improving customer products or using it in the commercial development. It's a bit too early, but there, you can expect us in Q3 to have a clearer view on that. But so the positive is that we did not take anything in account of the potential benefit for this year.

--------------------------------------------------------------------------------

Bart Jooris, Banque Degroof Petercam S.A., Research Division - Analyst [52]

--------------------------------------------------------------------------------

Okay. But first -- 1H '19 is already finished and so you should have an idea there. So do you just wait until the third quarter to draw your final conclusions? And can we then see a potential impact, if there is one, reported every quarter?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [53]

--------------------------------------------------------------------------------

Let's say, sorry, the decision has been made in the course of Q2. So it's not that we have been ready and as we -- it's Taiping Life together with us to already take the final decisions. The only thing I can say that, indeed, in Q3, we should have a clearer view on that.

--------------------------------------------------------------------------------

Operator [54]

--------------------------------------------------------------------------------

Thank you. Ladies and gentlemen, there are no more question in queue. (Operator Instructions) We have a new question from Mr. Ashik Musaddi from JP Morgan.

--------------------------------------------------------------------------------

Ashik Musaddi, JP Morgan Chase & Co, Research Division - Executive Director and Co-Head of European Insurance Equity Research [55]

--------------------------------------------------------------------------------

Just one follow-up question on your Belgium and Central Eastern European combined ratio. In Belgium, in second quarter was 91%; in Central Eastern Europe and which mainly is positive, let's say, is 89%. This compares with your guidance of, I think, sub 96%, something like that? I mean, how much of this you would say is because of luck, which is amazing weather? And how much do you think is like continuing improvement that we are seeing in underwriting on a regular basis? So just trying to get a bit of sense. The reason I'm asking this is, I mean, similar trends we have seen from likes of AXA, as well as AXA was saying that it's not a lot of luck, it's just like consistent improving of the underwriting. Any thoughts on that would be great.

--------------------------------------------------------------------------------

Hans J. J. De Cuyper, AG Insurance SA/NV - CEO & Director [56]

--------------------------------------------------------------------------------

Yes, Ashik, I can answer you for Belgium. Indeed, we do not manage these portfolios based on luck. We do plan underwriting and pricing quite well. So I believe that I think we are now structurally in a very healthy position in our portfolios. But of course, always be aware that on a yearly basis, you have the cat nat effect, which we have already I think consumed for this year in the first quarter. So it's normal that you have a good recovery.

Secondly, second quarter is mostly one of the best quarters we have. And thirdly, AG has a very strong reinsurance program in place, both on individual events as well as cover on a yearly basis. So I'm fairly confident on a strong performance. And please, don't think it will always be a 91%, but on an annual basis, we believe we can always stay within the target of the group, the 96%, including cat nat effects.

--------------------------------------------------------------------------------

Operator [57]

--------------------------------------------------------------------------------

Next question from Mr. Jason Kalamboussis from KBC Securities.

--------------------------------------------------------------------------------

Jason Kalamboussis, KBC Securities NV, Research Division - Executive Director Research [58]

--------------------------------------------------------------------------------

Yes. A quick follow-up. Just in Asia, what would need to happen? I mean, if we put aside the capital gains, what would get you next year to the lower end of your guidance? What are the things you know would you think could be any concern that you could have that could make the low -- make you hit the lower end?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [59]

--------------------------------------------------------------------------------

In all fairness, I believe it's mostly effect of financial markets, so impairments. Like in most Asian countries, the proportion of equity in the portfolios is higher than in Europe because the capital requirements are not as severe as they are on the Solvency II. So that's what we see as a major impact that could bring us to the lower end of the range.

--------------------------------------------------------------------------------

Jason Kalamboussis, KBC Securities NV, Research Division - Executive Director Research [60]

--------------------------------------------------------------------------------

So in terms of the products that you're selling, how you're distributing it, any trends in the market? You don't see anything else that could come basically -- could pull you back?

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [61]

--------------------------------------------------------------------------------

Not really. Maybe for completeness, something I should add is, like for instance, our entity in Malaysia is already accounting under IFRS 9. So it means that you have also there not only effect of impairments, there is also value movement in the fixed income portfolio. But in the total picture, we're not talking about those amounts that completely would damage our capacity to be in the range that we put forward.

--------------------------------------------------------------------------------

Operator [62]

--------------------------------------------------------------------------------

Thank you. There are no more questions for the moment. (Operator Instructions) As there are no further questions, I would like to return the conference call back to the speakers. Sir, please go ahead.

--------------------------------------------------------------------------------

Bart De Smet, ageas SA/NV - CEO & Executive Director [63]

--------------------------------------------------------------------------------

Okay. Ladies and gentlemen, thank you for your questions. To end this call, let me summarize the main conclusions. First of all, we achieved record results, thanks to a solid operational performance across all regions and supported by exceptional elements in U.K. and Asia. And I repeat that we are confident that we could exceed this year our guidance of EUR 800 million to EUR 900 million group net results with the usual caveat that we do not know, of course, how the financial markets will evolve in the second half of the year.

Second conclusion is we enjoyed a solid sales momentum with a double-digit growth, driven by both Life and Non-Life.

And thirdly, given our solid net cash position and strong solvency, we decided to launch a new share buyback program of EUR 200 million above the promised minimum EUR 150 million.

With this, I would like to bring this call to an end. Do not hesitate to contact our Investor Relations team should you have outstanding questions.

Thanks for your time. I wish you all a very nice day. And for those who have it in front of them very nice holidays. Thank you.

--------------------------------------------------------------------------------

Operator [64]

--------------------------------------------------------------------------------

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