NextNav Inc. Price & Performance (NN)

Good morning, Mr. Klieb NN. 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 NN. I'm excited to be here today with you. With me are Annemiek vanmelijk, our Chief Financial Officer and NN Alberg, Chief Risk Officer. I'll begin with an overview of the key messages and then talk about some of the NN achievements in the past year. Next, Anamik 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 1,900,000,000.0 which is already right on track with our 2025 target. Free cash flow is up 8% year over year to NN on track to hit our €1,600,000,000 target in 2025 NN. Our balance sheet is robust with a group's solvency ratio of 194%, which sits at the upper end of our comfort range of 150% NN. Markets and regulatory changes NN material headwind through the year which we have been able to largely offset via management actions. I'm 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 €2,300,000,000 net inflow in defined contribution in 2024 NN. In addition, growth written premium for net interest NN life increased with 4.5% NN. Driven by premium increases and volume growth. We are very committed to our capital return NN and we are continuing our attractive capital return NN [indiscernible] Where we have returned over €10,000,000,000 to our shareholders since our IPO in 2014 NN. 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, also launched a recurring buyback of €300,000,000 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. To enhancing our financial results. Our ambition is to be an industry leader NN 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 NN 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 NN. Reflected through an increasing trend in our relational NN promoter score. Netlist Live remained on par, but underlying we do see positive developments. In our ongoing commitment to a more sustainable economy and society, NN taken steps through our business initiatives and financial commitments. We aim to achieve net zero greenhouse gas emissions across our businesses by 02/1950. We reported significant progress in reducing emissions of our corporate investment portfolio which according to our methodology have reduced by 31% compared to 2021 NN. We've increased our investments in NN Solution, bringing the total investments to €12,800,000,000 by the end of twenty twenty four. 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 the Non Life segments. Insurance Europe has outperformed.

Driven by profitable protection sales 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 NN. This will further bolster our operating capital generation trajectory Over time, which already shows a strong historic track record.

We have reached the EUR $450,000,000 target ahead of schedule by a year.

Even with pressure on investment results from reduced rates in non euro countries. OCG for Netherlands NN life came in very strong again this year at $4.00 €6,000,000 benefiting from a relatively high new business contribution. The NN ratio for P and 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 ten years ago, Dutch non NN 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 NN. I'm pleased that this 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 remittance 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.

NN actions reinforced the Solsea ratio at 180% at the end of twenty twenty four. 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 €25,000,000,000 in 2020 to €39,000,000,000 now which is well above the initial target of EUR 32,000,000,000 that we set for 2025 NN.

Our net inflow of €2,300,000,000 in 2024 was further supported by market tailwinds of $4,100,000,000 The pension reform were roughly double the addressable DC market which should positively influence our ability to generate net inflows. The current OCG contribution from DC may be 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 three buyouts with a total of NOK0.9 billion NN, which is about half of the buyouts that closed in 2024 NN. In conclusion, our performance in 2024 has been strong and we're well positioned to continue delivering value to our shareholders and other stakeholders NN. 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 NN longevity reinsurance deals in December 2023 NN resolving uncertainties around the NN linked port 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 NN feasible. And today, we continue to deliver on our focus on shareholder returns by announcing a dividend of €0.44 per share 8% higher than last year NN reiterating the $300,000,000 share buyback. We are excited about the future NN which we will share more details with you at our Capital Markets Day in The Hague on the May 27 this year. And I look forward to seeing you all of [indiscernible] Now thank you for your NN, and I will hand to Anemik, who will provide further details on our financial performance for the full year of 2024 NN. Good morning, everyone. Thanks, Alfred NN.

Let's start with our key financial metrics on Slide As David said, our business performed very well in 2024 NN. Generating over €1,900,000,000 operating capital for the full year. Strong performance reflects a small increase from '23 which benefited from positive experience NN, and is in line with our EUR 1,900,000,000.0 target Free cash flow increased by 8% to €1,500,000,000 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 €1,600,000,000 for 2025 NN. As David already explained, our balance sheet NN strong with a group solvency ratio at 194% of strong quality.

Adverse impact from markets and regulatory items were nearly offset by strong capital NN, net of capital flows and management actions. Our cash capital position showed a strong increase of €300,000,000 during the year to 1,300,000,000.0 at the upper end of our €500,000,000 to €1,500,000,000 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 €300,000,000 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 Our ratio ended the year at 194% NN, the upper end of our 150% to 200% NN NN. Full year operating capital generation of 1,900,000,000.0 adds 22 percentage points to the solvency ratio, which is eight percentage points higher than the capital flows to shareholders in the form of dividend share buyback. We Market variance was negative. Mainly reflecting wider government bond spreads and negative equity variance. The bucket NN includes quite some regulatory changes as you may recall from H1, such as the U of R step down of 15 bps, the Vola reference portfolio update, and the 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 two percentage points from an attractive reinsurance transactions on the in force block of decumulation business. We also added five percentage points by accelerating into our SAA by actively reducing our mortgage exposure and to a lesser extent NN, our equity exposure. The outlook is positive into 2025 NN. With the Basel IV implementation at NN Bank expected to add approximately three 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 part full year NN three. After an 0.6 percentage points increase during 1H24 we saw a stronger appreciation over H2 with 2.5% NN. NN Real Estate, Residential benefited from solid house price performance NN, while the Supreme Court ruled favorable on the so called CPI plus file. [indiscernible] We believe this largely eliminates litigation when it comes to historic rental increases. [indiscernible] also expect continued improvement of real estate into 2025 NN. Regarding Dutch mortgages, we explained before that they've 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 evaluation NN improvement for mortgages under Solvency II. Under Solvency II and IFRS, we need to apply a point in time valuation NN identify the fair value of mortgages, which theoretically means looking at the spread between the swap rate and the client trade at a period ending date. As you know, the swap curve reprice is dynamically and commercial rates typically need some time to adjust. Therefore, this point in time mortgage spread can be distorted and create NN volatility to our Solvency II ratio. We've been able to refine the point in time mortgage spread by haircutting the movement of the swap curve in the last four weeks, which is expected to reduce the mortgage spread volatility by approximately NN third. 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 on Slide [indiscernible] [indiscernible] [indiscernible] With OCG coming in at SEK 1,900,000,000.0 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 NN life was €370,000,000 plus growth in line with GDP. I'm pleased to see that in 2024, Netherlands NN Life again performed better than this run rate. Largely driven by strong new business in P and C and disability NN. [indiscernible] Insurance Europe experienced another strong OCG increase of 9% to SEK NN outperforming its 25 target of NN Growth was driven by higher volumes, and a higher margin. I would like to highlight the strong delivery of Poland within this, which is a largest contributor to OCG the segment NN Europe delivering an OCG of €128,000,000 in 2024 NN. [indiscernible] 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 'twenty four. Partly offset by a lower capital strain. OCG for segment auto 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 The Netherlands NN life, and the positive experience variances in N and 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 2025 NN, mainly driven by expected continued strong performance of Europe. Before we go to free cash flow, few words on our IVRS results on Slide 14 NN. [indiscernible] Similar to OCG, our 24 NN 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 results for Netherlands Non Life was stable versus a strong twenty twenty three 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 and C which was strong at 91.9% NN. For disability, with a combined ratio of 96% NN, positive business performance, feeds into CSM first before it's released into the combined ratio. Having said that, we remain confident on our overall combined ratio guide [indiscernible] 91% to 93% NN.

The net result for the year NN by over €400,000,000 versus full year 'twenty three which contained a non operating provision of €360,000,000 related to the [indiscernible] Now last but not least, let's focus on cash. Seven percentage point CAGR for normalized free cash flow since 2021 NN, up to $1500000000.0.24 NN. In addition, our free cash flow is becoming more diversified within NN increased contribution from segments other than Netherlands Life. Now remittances of individual countries or business units can be lumpy. As evidenced by Belgium NN, which paid a special dividend of €120,000,000 in 2023 NN. 'twenty four, it required a capital injection of €70,000,000 and did not pay a dividend. Due to the renewal of our strategic bank distribution agreement with ING NN, 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 NN €25 either. I'm pleased to see that diversification is paying off and we were, and will be able absorb these impacts in NN four and 'twenty five, via increased remittances from the bank As such, we're well on track to achieve our free cash flow target of NN in 2025 NN.

NN very positive message is that we believe Netherlands NN remittances are sustainable at current levels for over a decade, which without the need for re risking and pension buyouts Netherlands Life, the book was always strongly skewed toward DB rather than individual life, which helped contain the overall NN 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 NN pace of Netherlands Life's assets under management that is expected to be around 2 NN% With our strong cost management track record in mind, we can continue to offset the NN 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 economic losses could obviously affect this projection. Based on a stable remittance pattern from NN Life, and continued growth from Netherlands Non Life and Europe. We would expect continued diversification NN growth of our free cash flow profile. Provide an anchor for us to extend our strong capital return policy with progressive dividend policy and an annual buyback of at least €300,000,000 With this, I would like to hand back to David for concluding remarks.

Yes. Thank you, Annamik NN.

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 €300,000,000 And with these remarks, I would like like to open up the call for the Q and A. Operator?

Ladies and gentlemen, we'll now start the question and answer session. Your questions will be And now we'll go and take our first question. And it comes from the line of Kirk Lewis from ABN AMRO ODDO BHF. NN line is open. Please ask a question.

Sorry, I was on mute.

Congratulations, first of all, with a very good solvency figure. NN appreciated. First question is about de NN, the de risking action that that you did and answers obviously by five percentage points. You NN, I think, tens of millions of adverse OCG effect are we really talking about €20,000,000 €30,000,000 NN do we talk about a little bit higher figure? Second question is about disability insurance. The combined ratio in disability insurance was in H2, especially somewhat on NN high side. 'ninety eight, 'ninety nine. NN you give your comments on that? [indiscernible] What's your view? Do you have to take actions to get that better? And last thing is pension buyouts. Could you give some idea of your view on pension buyouts? How that NN you at that for 2025? NN last year, you did SEK 900,000,000. Do you see NN run rate of debt also for $2,025,000,000 euros That's my NN. Thank you.

Yes. Thank you, Cora. And I was a bit worried would we talk to you asleep, but NN, you're still awake. First one, Anemik will take, and I will talk about disability and the pension buyout.

Hi, Corve. Thanks for your question and also for your compliments NN. On the management actions that we took We always look at ways to optimize our balance sheet. NN we just were presented with a very attractive reinsurance transactions, and we could accelerate NN the SAA. Now as you said, the Alexor acceleration into the SAA yes, would come at a few tens of millions. You were referring to NN millions I would say it's it's below 50 so kind of an okay range that you're guessing at. Also just a strong possibility to do. We could basically cap five percentage points of solvency at a few tens of million OCG, which was an attractive trait. And it now gives a strong position to exit Yes. Thank you, Annemieke. Yes, on disability, I think I mean, overall, the the NN life company did well there. You saw the OCG coming in at NN million NN. Both from P and C and the D and A business. Combined ratio of P and C obviously, it looks good. To be honest, I think the IFRS 17 combined ratio of disability is probably not the best number to look at. Heather, there's some some dynamics around CSM.

Which means it was a bit elevated now. You would also expect for technical reasons 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 Cygnus portfolio. There are some concerns on a longer term disability in the Dutch market You might have seen some news on that. So we'll continue to monitor there and increase premiums. But overall, the NN life business is doing well, and we continue to commit to a guidance of 91% to 93% combined ratio for the NN life business.

On buyouts, yes. So the NN, we've been we've been saying about the 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 three went to the new system. End of the year. But there's already some signs that also that 30 are going to be running in into delays. So So we're still in a ramping up phase. If you look at the buyouts itself, EUR 1,700,000,000.0 was closed. In 2024 NN.

We did EUR 900,000,000 of the SEK 1,700,000.0. For this year, there has been around SEK 2,500,000,000.0 of deals has been announced. And there is in terms of RFPs another roughly SEK 2,500,000,000.0 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 €5,000,000,000 Of course, it's lumpier, But that means if you have last this year or in 2024 NN, not even '2, you have this year around maybe 5 NN you want to get to '25. That would still mean that you would expect much higher numbers for '26 and '27 NN. It is good to point out that there is 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 to continue to see buyouts after NN eight. Or even after oneonetwenty nine if it's delayed for a year. The implementation because pension funds might look for an interim solution. So all in all, I think definitely expect for 25 more deals than in 'twenty four, but still a further ramp up in 'twenty six and 'twenty seven after that is is likely.

NN position is that we're very well NN, We're the number one in terms of market share. We're the number one with broker NN. But we also need to be realistic that buyout is very much pricing driven. So NN we're 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 Anemie NN, in order to maintain the remittance pattern from NN Life NN. And we'll continue to aim for an above double digit return. And when we can do these deals, then we'll NN we'll do it.

Okay. Wonderful. Good to hear. Thank you very much.

Now we'll go and take our next question. And the question comes from the line of Benoit Petrark from Kepler Cheuvreux. Your line is open. Please ask a question.

Yes, good morning. So the first question is on the OCG for Life and NN Life. EUR $514,000,000 in H2. NN is that number and do we need to take like you mentioned some impact from the derisking on that number. I tried to kind of guess a bit the kind of the run OCG NN NN Life into NN. Think you mentioned flattish, but it could be even a bit NN, I think. So just wanted to clarify on that. And on the de risking NN, so I've got an other bucket on the Slide 27, which is up €700,000,000 Just wondering where you been putting the money here. [indiscernible] other Guis up. So maybe you could comment on that one NN. Then the next question is on the the NN Life kind of the new business on Non Life, which was particularly NN. Could you quantify what is maybe one NN versus recurring? Thank you.

Yes. Thank you, NN. Let me start with NN Life. Like I said, the overall result NN was strong. I think it was helped a bit by relatively favorable weather, but also we think new business contribution now, you need to think that's a couple of €100,000,000 was also probably a bit above what we would expect from a normal run rate, and it means simply that the volumes also the margins that we got in were probably a bit more than NN than we expected. And we always guided on OCG that we said, NN €370,000,000 plus GDP growth. Which would then for €25,000,000 would roughly take you in line with where we are today in 2024 NN. Assuming also that the weather might not be as benign and as has been in the last two years. So overall, I think it's a positive result, but also for this year, we expect a good OCG outcome.

Yes. Let me help you out a bit with your request on the run rate for N NN Life for '25. We would expect that to be broadly flat. Couple of items there to NN. We would expect expect less unfavorable experience variances than in 2024 NN. 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 V NN B, enhanced new business contribution and we've seen quite high new business contribution in NN Life, which was driven by renewals which were partly related postponement of the new pension framework, and as already alluded to on the first question in core, of core, 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 NN 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. NN the question comes from the line of David Barmak from Bank of America Your line is open. Please ask your question.

Hello. Thanks for taking my questions. NN, coming back NN the on the changes in the asset allocation NN. So you've saved five percentage points of Solvency II and you talked about the OCG impact of this, but what's the what kind of NN should we see when you redeploy these assets towards more liquid NN, both in terms of capital drag NN and probably OCG uplift? And what kind of timeframe do you have for for this? And then secondly, on longevity. So it's helpful to see that you were able to re NN longevity at good terms there on annuities. Do you plan on eventually reinsuring the remaining €5,000,000,000 NN of DC annuities left. And then lastly on the NN Life So [indiscernible] comments on your confidence in the remittance outlook for NN Life. I'm trying to square that somehow with the the solvency position of NL Life that has been moving up or down quite a bit in the past few periods. So I guess my question is, what kind of Solvency II level do you need to to be at to maintain the NN? Thank you. Yes. Thank you, David.

Me answer the question on longevity NN then now for the other two, I'll give it to Annemieke. NN, as we said, we [indiscernible] to reinsure around a SEK10 billion NN of liabilities. Now we don't have to do that in one NN. You can also spread that out. That would generate a significant amount of capital relief. The If you recall, NN the past, we at the end of twenty twenty three, we did a deal of billion of liabilities NN that released 8% NN. 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 we'll judge these longevity deals in that context.

Just to understand, this is a combination in this, you include both the Both the traditional DB part and the that are getting in the decumulation NN. This is for the NN?

Yes. The what typically works best in these books is in payment benefits because the reinsurance will give you a bit a better pricing on this.

Yes, David. On your question, just looking back at the question, the first question related to the SAA NN 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. NN that's largely related by reducing the exposure in equities and to some extent also emerging market debt NN high yield into private debt, where just from an SCR chart, NN 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 NN preferably at a better SCR charge. So that's related to the first NN. On your question of NN Life's remittance outlook, As Seth, we're obviously really happy with the outlook on free cash flows for 2% versus the 3% to 4% that we had. Which gives us real NN that we can actually sustain these remittances. NN as you know, for the group, we have a comfort range of between 150% to 200%. NN is a large part of the group.

So you could guess that that's probably around the same level as well. So our high confident that we can actually just continue with the current remittances out of life.

Thank you.

Thank you. And now a good take on question and it comes from NN line of Nasi Bahamet from UBS. Your line is open. Please ask your question.

Hi, Bonnie. Thanks for taking my question. Firstly, on payout ratios, So I saw on the slide you say an NN payout ratio 81% NN.

But if I look at the group, you're going from 65% last year to about 85% NN I take the €1,600,000,000 free cash flow. Divided by the same OCD €1,900,000,000 Is that sustainable level both for NN Life IEDB 8185% for For group, in terms of payout ratio, That's the first question. Second one on Japan NN.

Can you give an update on the improvement order? Are you selling new business again? You said NN of NN twenty five, I think. You'll probably get an update.

And then finally on NN Bank, NN 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 anything else that you get in terms of having that as part of part of the group. [indiscernible] Yes.

Thank you, Nazib. Let me start with Japan and the bank and then Anemik can cover the payout ratio. In general, on Japan NN, we think there the economics are positive. Rates NN FX have been developing. There's some economic growth again, and it's obviously politically a stable market [indiscernible] [indiscernible] 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 proven 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 market grew with around 6%, but the underlying this meant a market and a 36% growth of the long term corporate life market. And that is good news because the NN [indiscernible] to launch the long term COLI product. So we'll be launching that probably in March, April NN. We'll launch this product. Which will then much more complete our product NN.

But the reality is, as long as we have this business improvement order NN there we're dependent on the FSA NN As long as we have the NN improvement order, the new sales will be relatively muted. NN 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 NN. And where we can deploy capital against very attractive IRRs. But the goal for now is launch the long term COLI product and get the business NN order behind us. And from there, NN start increasing really the sales again. On the bank, yes, NN, 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 Unilevering NN that if you want to build savings and the question is how big is that going to be over time.

You have to do this via bank with bank NN. Products. So it completes our product range. It gives us a lot more digital customers and a lot more traffic on our portals. Obviously also an efficient mortgage originator for the bank. For the group, but also for third party NN. The ROE of the bank was 14.6%, so that is on a standalone basis is is attractive. NN 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 EUR NN target of OCG that we have set NN the above 12% ROE target of the back.

On payout ratio, Anewik NN.

Yes. Your question on the non life payout ratio NN 80%, that feels relatively sustainable NN. Same goes for the 85% NN the group.

Thank you.

Thank you. Now we'll proceed with next question. And it comes from the line of Farquhar Marais from Autonomous. Your line is open. Please ask a question. [indiscernible] two questions from me. Just firstly, a clarification on David's NN question earlier. Can I take it that you are essentially expecting to recoup the OCG reduction with NN no incremental drag on the Solvency II ratio? I think that's what you NN on better capital charge. And then secondly, coming back to pension buyouts, thanks for the comments in terms of volume expectations NN. Could I also get your initial impression so far in terms of pricing NN and competitive behavior? And also probably more NN, what are your thoughts on the political discussions around that kind of NN? Yes. Good morning Farquhar NN.

Let me start with the buyouts and then, and then we can take the question on the OCG. Pricing NN, 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 there were not that 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 NN. Now the pricing in the market is better NN, so that's why we continue to say it needs to be, in our view, above double digit.

Currently, it's a three basically three players in the market. We do expect that Achmeya 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 remain very disciplined on pricing. Yes, on the political discussion, clearly not helpful. 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 NN force portfolio, more than 50% of our customers NN renewal already goes to the new system. There's a lot of preparation [indiscernible] pension funds tend to move pretty NN, hence the back loaded comment. 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's a good chance that we will continue as is and we are certainly in the sector and a social partner very vocal on, please no more changes because we're already implementing the current approved legislation by Parliament. [indiscernible] Yes.

On your question, to recoup the OCG reduction at Life, yes, we will recoup that over time as the PDI buildup rolls out. And obviously, that has a bit of a lower SCR strain. Bear in mind that we also had [indiscernible] NN to the delay of the pension transformation, which we would expect expect to come down in 2025. [indiscernible] Thank you. NN we'll go and take our next 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 EUR 110,000,000,000 NN liability reserve sitting in Netherlands NN. How much of that already NN? And also aside from the the pricing considerations that you highlighted, Is there anything that NN needs to prepare internally to to get yourself ready for longevity reinsurance NN. In say in 2025 NN? And then the second question is, coming back to the strategic assets allocation NN. Aside from private credit, are there any other asset classes that that you plan to shift into in 2025 NN? And overall, what is the corresponding solvency to charge from these actions in 2025 NN? Okay. Thank you, Anthony. It's a good opportunity also for Wilbur.

To cover this. So Wilbur NN longevity and on SAA. Thank you, David.

So starting with your first question on longevity. So in the Life Unit, we've roughly NN 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 processes. Just making, for example, all the data in the systems ready and running such processes carefully. But we've done a few work experience here and we're in a good state. To go forward for future deals. So then also moving on to the SAA questionnaires. So as Anemik also has explained already, so the main shift that we're now also exploring is to NN ongoing is to move out of equities and out of out of emerging market debt and high yield, while building up 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 there that as was said, the private debt NN, they really offer a superior return over EMD and high yield. While being less capital intensive compared to, for example, equities. And we really would like to also then benefit from the liquidity premium there. On top of that, we've of course reduced some exposure to mortgages in favor of government bonds due to the relatively high concentration [indiscernible] 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 Solvency II [indiscernible] Yes. It's almost moved to a halt, but we expect small positive indeed.

Thank you.

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

Hi, thank you. Congratulations as well. Firstly, on your liquids, 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'll get approval NN recognize the adequacy premium and get get an appropriate charge NN that attitude? Are you happy with the DNB is on-site with your shift into a liquid.

Secondly, you've 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 either linked settlement to worry about, You have NN reduced the mortgage spread, you have to NN, why stick with the 200% sustainability above 200% NN? This something that you're thinking about that you might NN? NN then very lastly, Assurance Europe NN, is that just going to continue? Is that a trend that that you see as being very sustainable? Thanks. Yes. Thank you, Farooq.

Let me start with the question on Solvcy. Yes, we have obviously our capital policy where we save a capital sustainably above €200,000,000 NN we will we will evaluate our capital NN. That's our long standing policy now. We've 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 Salome NN, it's we do have a positive outlook on our capital situation based on everything we know today. But we need to deliver on all of that before we can actually talk about potential other steps. So if your question NN, are you reconsidering today the 200%, the answer is no.

The growth of Europe Yes. Do expect that to NN. I think there's two main drivers why we continue to see that Europe can grow. I think one is NN we spoke about it before is the the underpenetration of protection products. That's the core of our product. It's further helped NN pension savings where most governments are in [indiscernible] 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 protect think the other thing is NN that's why I think we've been successful in tapping into that is simply distribution. I mean, we have a very diversified distribution platform. And let's take Tide Agent as an example. We've been heavily investing in Tide Agent, not only in digitalizing it, but in building engines around AI tooling NN 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 Tide Agent already comes through this lead system. And we're rolling this out in other countries that NN multiple markets where we have tight agents.

And so we expect that that would continue to based on the underpenetration that we see, that you still need to be able to get into contact with customers because 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 tight agents, but also the bank channels and the broker channels that we have, we're well positioned to to tap into that. So we do believe that we can sustainably grow our European NN, not just this year, but also over a longer Liquids, a little bit.

Yes. Thank you, David. So on the liquids, as I said, we take a gradual approach. Have a current portfolio in our private debt assets is well diversified across both sectors, regions and issuers. But also NN terms of your NN towards 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.

Okay. Thank you very much.

Thank you. Now we'll go and take our next NN. And it comes from the line of Michael Hutner from Berenberg. Your line is open. Please Fantastic. Thank you. And then I'll add my voice to all the others NN lovely results and very nice stability. I had two NN.

Maybe three. One is Belgium strategy. The second one is your 2% revision of the growth. I think we've gone from historically, I think it was minus -eight NN then we went to -four, now -two NN. I just wondered if you could if we were to assume kind of a run rate NN pension DBs, where could that 2% trend to? Then the final question is very cheeky one. NN would some seat be today?

The 194 plus the 3% plus whatever market movements Thank you. On Belgium statutory, let me ask it in a more complete form.

I'd be interested in numbers because my feeling is Belgium is It's a great market, but it's quite a difficult market NN you have kind of size. And I'd be interested to know how you see it NN in terms of numbers, how much cap cash NN, etcetera?

Okay. Thank you, Michael. Let's start with the market overview of of Belgium and then, Anemie can cover a bit more background on the Belgium unit and also on the other two questions that you're given. Yes, I think in general Belgium is a good market. I mean, the Benelux NN 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'm sure you know. We just renewed it for ten years, which is obviously good news. I mean, Bank NN 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 ten years, we have renewed the ING contract. Also good to point out that we sell NN life business from The Netherlands NN is also sold by ING Bank Belgium. So that makes Belgium an attractive market. But as any market, it does have its challenges. Think on a normalized, it is a substantial unit in terms of OCG for Europe NN around 20% of the OCG out of Europe comes out of Belgium.

Think on a normalized basis, we would expect €70,000,000 to €80,000,000 remittance out of Belgium. But as we were saying, given the discussion on the Mass Labs capital relief NN the ING contract, We don't expect that for this year. And with that, let me give it to Anemieke NN.

Yes. And Michael, to add a bit on Belgium, NN what David NN, OCG roughly SEK 100,000,000. And if you would look at a normalized run rate, for dividend on Belgium, that would typically be around €70,000,000 to €80,000,000 a year. €125,000,000 as Lavet NN, due to the Maslabs contracts and due to the renewal of the agreement with RNG. They didn't do the dividend, and we had to give them a Tier two of around NN Now your question on the the NN of the book where we actually now [indiscernible] a runoff of roughly 2% per annum, You're referring to some numbers of 7% or 8% a while 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 NN. The sorry, there's a lot of talk here. You always 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 NN is related to individual life. Individual life runs off a lot quicker than DB. So that blend despite the run off of individual life historically from 7% to 8% NN got us to 3% to 4% NN.

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. On your solvency position as of today NN, Today, we would expect it to be relatively flattish. Government and corporate spreads have been relatively stable so far, so best guess would still be around that 194%. NN you're right to then add the uplift of the Basel IV introduction of Henan Bank, which is around 3%, which would come on top of that ratio.

Super helpful. Thank you so much.

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

Yes. Hi, good morning. The first thing is on NN 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 where the market is growing by 36% NN. So my question is why didn't you launch that a year NN? Was that more difficult with the improvement order? And also 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 NN this improvement NN, because if NN correct, your your peer got out after about two years. So looking to understand if this is coming up February, March, March NN somewhere around here.

The second question is on longevity. So you said that 50% has been reinsured so far. My understanding was that there was not much that was going to be done beyond that. So when I hear now the €10,000,000,000 I'm wondering how much of it is relating to buyouts So if you could clarify NN 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 it 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're putting through currently? Thank you very much. Yes.

Thank you, Jason.

NN me [indiscernible] longevity. Yes, Japan NN.

Well, it is not common indeed that product approvals, as you might know, Japan, products need to be pre approved before you launch it and there's very tight windows.

So that means you cannot launch three products in a year, for example.

So in general, a launch of NN new product is a big thing because they need to be preapproved. 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're well on track to deal with the business improvement order.

As much as I would like to, we cannot give you any indication of NN.

Q1 twenty twenty three is when this started. And there is many, many business improvements in the market Indeed, we've seen two years. We've also seen longer year longer periods. So from that point of view, NN gives you some data points, but not a lot because like I said, there's multiple business NN also ongoing today. We're doing everything we NN, and we're optimistic, obviously, that we're 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 are getting into that market or we NN have the possibility at least to get NN.

Non life pricing, it's quite a diversified market, I think, in terms of pricing. If you look at D and A, as I was saying, the performance certainly for the Signus portfolio is is pretty good. So there you would expect probably some low single digit price increases. At the same time, there's always experience NN. 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, NN mid- to high single digit. P and C is also quite diversified motor. NN amount of damage and repair costs continue to go up. So on Motor, we've done quite a bit of premium increases last year, in some cases, even more than double digit. And we're still doing premium increases also this year, though a bit lower. Because like I said, we continue to prioritize margin over volume NN Motor is NN it's an important book, but it's also the 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 fire portfolio shows a very healthy combined ratio.

Overall, the message will remain very resilient in premium increases The market is absorbing that. We're not the only one, and that's why we also remain committed to the ninety one ninety three.

Longevity.

Yes. On longevity, we have to distinguish two items. One if we would do a buyout, you typically NN 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 NN. As we indicated before, we would expect that to be roughly a buildup of NOK10 billion over three years' time.

To put it into a capital perspective, in December, we did a €13,000,000,000 deal which brought live 17 percentage points of solvency. So we will now still have a focus on decumulation, which would probably lead to roughly SEK NN build up of liabilities we could use there in the next three years.

Thank you. Very helpful. Just on NN NN If you are looking if you come out of that improvement NN, let's say, whenever end of twenty twenty one, Other NN lot of products that suddenly you need to preapprove 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 product, it's significant and coming out of the order would be great but you would not need to have a big NN in the coming months after that? Just to understand how this works.

Sure. I think there's good news and bad news in this answer. NN, I don't think we need more products. Like I said, it's very difficult in general in Japan NN launch products NN we are actually lucky because we're only in corporate life. If you're in multiple product lines, it's even more difficult because NN need to choose which product line you're going to introduce a product. So we don't need new products. I think we have a short term, we have a cash surrender product, we have a long term NN so we're good to go. It is also but it is good to caution that once this business is proven order is lifted, you don't suddenly your sales are back at the level that they were. We do need to reactivate business partnerships, broker, security houses NN a lot of the distribution partners. We need to start working with them and NN them well again so that they actively start selling also the NN Corporate Life products again. So 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 Knebeth NN any closing remarks.

Yes. Thank you very much, operator, and thank you very much NN on the call. Thank you very much for the interest you've shown. We also heard some compliments, which is also 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 €300,000,000 And obviously, we look forward to continue to engage with you on upcoming roadshows and conference investor meetings and especially, of course, our Capital Markets Day NN May 27, where I hope that we can also personally see you and shake hands we might even offer more better NN 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. [indiscernible]