Aegon N.V. (NYSE:AEG) Q2 2023 Earnings Call Transcript

Aegon N.V. (NYSE:AEG) Q2 2023 Earnings Call Transcript August 17, 2023

Operator: Good day, and thank you for standing by. Welcome to the Aegon First Half 2023 Results Call. [Operator Instructions] Please note that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Hielke Hielkema, Investor Relations Officer. Please go ahead.

Hielke Hielkema : Thank you, operator, and good morning to everyone. Thank you for joining this conference call on Aegon’s first half 2023 results. My name is Hielke Hielkema from Aegon Investor Relations team. With me today are Aegon’s CEO, Lard Friese; and CFO, Matt Rider, who will take you through the highlights of the first half year, our financial results and the progress that we are making in the transformation of Aegon. After that, we will continue with a Q&A session. Before we start, we would like to ask you to review our disclaimer on forward-looking statements, which you can find at the back of the presentation. And on that note, I will now give the floor to Lard.

Lard Friese: Thank you, Hielke, and good morning, everyone. We appreciate that you are joining us on today’s call. Today, we present our results under the new IFRS 9 and 17 accounting standard for the first time. But first, let me run you through our strategic developments and commercial momentum. We have a lot to talk about. So let’s move to Slide #2 for the achievements in the first half of 2023. We have started the next chapter in Aegon’s transformation delivering a successful Capital Markets Day in London in June. We closed the transaction with a.s.r. in July and have started the €1.5 billion share buyback program associated with the deal, which we expect to complete before the end of June 2024. In addition, we still intend to reduce our leverage by up to €700 million in the same time frame, and we’ll update you on that when appropriate.

On the strategy front, we continue to take steps to transform our business. We have increased our financial stake in our Brazilian joint venture, we expanded our partnership with Nationwide Building Society in the U.K. and extended our asset management partnership with La Banque Postale in France. The sale of our remaining Central and Eastern European businesses have been closed, and we have announced the sale of our stake in our joint venture in India. We are now fully focused on 3 core markets, 3 growth markets and 1 global asset manager. We’re also delivering on our commitments to continue to reduce our exposure to U.S. Financial Assets and to improve the level and predictability of capital generation. Transamerica has been able to execute an additional reinsurance transaction, encompassing 14,000 Universal Life policies with secondary guarantees.

This will free up approximately $225 million of capital, which will be used for management actions to further reduce our exposure to Financial Assets over time. It also significantly improves our risk profile, together with the prior similar reinsurance transaction, the total of 25% of the statutory reserves backing these policies have now been reinsured. Turning to our results over the first half of 2023. The operating results now reported under the new accounting standards, IFRS 9 and 17, increased by 3% compared with the first half of 2022. This was driven by increases in the U.S., the U.K. and the International segment, which more than offset a decreasing operating result in Asset Management. Operating capital generation before holding, funding and operating expenses increased by 13% compared with the first half of 2022, reflecting business growth in our U.S. Strategic Assets, together with improved claims experience.

Turning to our commercial results. Transamerica performed well. We delivered strong sales growth in all of our U.S. Strategic Assets. The U.K. Workplace Solutions platform continued to deliver strong growth and sales increased in our partnerships in China and Brazil. The results of our Asset Manager and our U.K. Retail business continued to be negatively affected by adverse market conditions. Recently, we have announced our intention to move Aegon’s legal seat to Bermuda. Subsequently, the Bermuda Monetary Authority will then assume the role of group supervisor. Today, we have convened 2 extraordinary general meetings to be held at the end of September to seek shareholder approval for the move. Finally, on our path to increase the dividend to around €0.40 per share over the year 2025, we have increased the 2023 interim dividend to €0.14 per share, up more than 25% compared to the 2022 interim dividend.

This is testament to our strong financial position and prospects. Before I move on to the results, I want to recap the priorities we presented at the recent Capital Markets Day in London on Slide #3. We have defined 4 key priorities to create value for our shareholders during the second chapter of Aegon’s transformation. The first of the near-term priorities we announced in June has already been achieved. We have closed the transaction with a.s.r., and we now own a nearly 30% strategic stake in the Dutch market leader. Moving our legal seat to Bermuda is the next step ahead of us on our journey to transform the group, and we are on track to accomplish this. We presented our plans to increase Transamerica’s value and to capture the opportunities in the U.S. middle market.

Our ambition is to build America’s leading middle market life insurance and retirement company. Over the coming 3 years, we will increase both the level and the quality of capital generation from Strategic Assets while reducing our exposure to Financial Assets. At the same time, we will continue to strengthen the U.K. and Asset Management businesses, and we will invest in growing the joint ventures we have in International and Asset Management. The final priority announced at our Capital Markets Day relates to our capital management. We will continue to be rational and disciplined allocators of capital looking to utilize our significant financial flexibility at the holding to create value for our shareholders. With the strategic priorities clearly set, let’s move on to our commercial momentum in the first half of 2023, starting on Slide #4.

I would like to start with the progress made by World Financial Group or WFG, our vast life insurance distribution network, one of the two focus areas in our U.S. Individual Solutions business. Our ambition is to increase the number of WFG agents to 110,000 by 2027, but at the same time, improving agent productivity. Momentum remains strong with a number of licensed agents having grown to 70,000 by the end of June, an increase of 20% compared with a year earlier. In addition to extending WFG’s distribution reach, we are taking actions to improve the productivity of the agency sales force. The number of multi-ticket agents, these are agents selling more than 1 life policy over the last 12 months, has increased by 12% compared with the year earlier.

Transamerica’s market share of life insurance products sold by WFG in the U.S. remains high. This is due to the improvements we have made to the service experience for WFG agents, combined with the continued competitiveness of Transamerica’s products in this distribution channel. Slide #5 addresses the second focus area of our U.S. Individual Solutions business. We are investing in both product manufacturing capabilities and the operating model in order to position the Individual Life insurance business for further growth through WFG and third-party users. As you can see, commercial momentum remained strong in the first half of the new year. New Life sales increased by 17% compared with the first half of last year, largely driven by higher Indexed Universal Life sales within WFG.

In the first half of 2023, New Business Strain increased by 12% compared with the first half of 2022. And the Earnings On In-force increased 35%, reflecting the strong growth of this portfolio. So let’s move to Slide #6, where we show the progress made in the U.S. Workplace Solutions retirement plans business. Transamerica aims to increase Earnings On In-force from its Retirement business by leveraging its capabilities as a record keeper with the ambition to materially increase the penetration of the ancillary products and services it offers. Sales momentum remained strong in the first half of 2023. Net deposits for midsized plans increased 32% over the same period last year, benefiting from both strong written sales in previous periods and lower withdrawals.

We also saw good growth of our General Account Stable Value products as well as Individual Retirement Accounts, in line with our strategy to grow and diversify our revenue streams with the Workplace Solutions segment. In the first half of 2023, the Earnings on in-force of our Strategic Assets in the Retirement Plans business were USD 45 million, which was an increase of 20%, mainly from the General Account Stable Value product. Let’s move to Slide #7, the United Kingdom. In the first half of 2023, net deposits in Workplace channel amounted to a record high of GBP 1.5 billion, an increase of 36% compared with the first half of last year. Sales momentum in Workplace remains strong. In the Retail channel, on the other hand, commercial results were weak.

The macroeconomic environment continued to negatively impact investor sentiment across the industry. As a result, net outflows amounted to GBP 1.1 billion in the first half of 2023, more than in the same period of 2022. Annualized revenues lost on net deposits amounted to GBP 6 million for the quarter. This was predominantly due to the gradual runoff of the traditional product portfolio, which was partially offset by revenues gained on net deposits in the Workplace channel. I’m now turning to Slide #8 to comment on the challenging performance of our Asset Management business. Market conditions remain challenging, which led to third-party net outflows in both Global Platform and Strategic Partnership segments. Combined with adverse market movements and unfavorable currency movements, Assets Under Management declined by 7% compared with the end of June 2022.

Encouragingly, we saw improvements in third-party net deposits towards the end of this half year. Operating capital generation declined compared with the first half of 2022. This was driven by lower net deposits and unfavorable market movements despite lower expenses. Let’s move on to our growth markets on Slide #9, where we continue to see steady progress. New Life sales in our growth markets increased by 45% compared with the first half of 2022. This was largely driven by our business in China following the relaxation of the country’s COVID-19 measures. We also recorded good growth in Brazil. Non-life premium production in Spain and Portugal rose 6% as weaker demand for Property and Casualty Solutions was more than offset by growth in Accident and Health insurance.

Operating capital generation of the International segment, excluding TOB, increased by 27% as a result of new business growth. On Slide #10, you’ll see that we maintain a high pace on the transformation of Aegon and sharpening of our strategic focus. The transaction with a.s.r. has been closed and disentanglement solutions are in place. As the new combination moves forward, we expect a significant synergy to be realized from which our shareholders will benefit. Aegon U.K. has extended their partnership with Nationwide Building Society and will onboard Nationwide’s advisory business early next year. This supports Aegon’s U.K. strategy to be the leading digital platform provider in the workplace and retail markets and to drive forward our pension and investment propositions.

Aegon Asset Management and La Banque Postale have expanded their partnership in the asset manager La Banque Postale Asset Management through 2035. We have also participated in the capital raising to fund La Banque Postale Asset Management’s acquisition of La Financière de l’Echiquier, a French asset manager. The acquisition will consolidate La Banque Postale Asset Management’s strong market position. In Brazil, we have increased our economic ownership stake in the life insurance joint venture, Mongeral Aegon Group from 54% to 59%. This puts us in a stronger position to benefit from the growth in that market. We also took significant steps in our strategy to exit subscale or niche positions. We have closed the sale of our remaining Central and Eastern European businesses, first announced in 2020 and have announced the sale of our stake in the India business.

The final topic I want to address on Slide #11, is the intended transfer of our legal seat to Bermuda. Bermuda Monetary Authority or the BMA is to assume the role as our group supervisor after this. Given the importance of this topic, I want to address the rationale behind this development. Following the closure of the transaction with a.s.r., Aegon no longer has a regulated insurance business in the Netherlands. And under EU Solvency II rules, Dutch Central Bank can no longer remain a group supervisor and a new group supervisor is required. Various options were explored. Some options were, however, not feasible for various reasons. For instance, in some jurisdictions, does not have a meaningful business presence. In others, the financial reporting requirements do not align with our accounting framework or prevailing regulatory uncertainty would not provide a stable basis for the execution of our global strategy.

After consulting the members of the college of supervisors, which consists of the different supervisors, which regulates our local entities, the BMA informed us that it would become Aegon’s group supervisor if we were to transfer our legal seat to Bermuda. Transferring the legal seat to Bermuda and being regulated at the group level by the BMA is consistent with our strategy outlined at the recent Capital Markets Day. Bermuda has an established well-regarded regulatory regime and has experience in regulating insurance groups and companies with an international presence. The regulatory regime has been granted equivalency status by both the EU and the U.K. and has been designated as a qualified and reciprocal jurisdiction by the U.S. National Association of Insurance Commissioners.

The transfer of the legal seat to Bermuda allows Aegon to maintain its headquarters in The Netherlands, where we have the experience and the talent to manage this international company. It also allows us to maintain our listings on Euronext Amsterdam and the New York Stock Exchange, bringing stability to our shareholders and to remain a Dutch tax resident. On Slide #12, this addresses the governance consequences of the intended transfer of our legal domicile. Following the transfer to Bermuda, Aegon N.V. will become Aegon Limited, a Bermudian company. This means that the basis of Aegon’s bylaws will be established on Bermudian law and governance practices. At the same time, we remain committed to applying well-recognized international governance standards.

Aegon will preserve its current governance principles to the extent possible and practical in view of the redomiciliation and where appropriate to the context of Aegon’s international footprint. This includes Aegon’s commitment to take into account the long-term interest of the company and all its stakeholders. We conducted an extensive engagement process with our shareholders and other stakeholders following the initial announcement in June. We have listened carefully to the feedback we received and made a couple of changes to the proposed bylaws on the basis of that dialogue. Aside from the other voluntary commitments through strict governance, we had already announced, we have added further binding rights for shareholders in terms of approval of major transactions and on the Board’s remuneration policy.

These changes and all other relevant information have been published on our corporate website today as part of the complication documents for the Extraordinary General Meetings during which investor approval for the transfer of the legal seat will be requested. I now hand over to Matt for the results of the first half of 2023. Matt, over to you.

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Matthew Rider : Thank you, Lard, and good morning, everyone. Today, we are reporting our results under the new IFRS 17 and 9 accounting framework for the first time. It’s been a huge endeavor over the past years to prepare for this shift. So I wanted to start off by thanking the many colleagues who are involved in this process. As you can see, we’ve provided a lot of new disclosure and it will likely take you some time to digest it and get comfortable with the new standard. Implementing the new framework also in the context of the a.s.r. transaction, has met some changes to our processes. For example, we’re reporting a week later than we did last year and now half yearly. Beginning with our full year 2023 results disclosure, our financial reporting calendar will move even later to accommodate, bringing in the results of a 30% shareholding in a.s.r. on an IFRS 17 basis.

We also will move our expense assumption review process to the fourth quarter for all business units in order to leverage our budgeting process. At this moment, we are not publishing IFRS 17-based sensitivities, but we will do so by the time we publish our 2023 annual accounts. So with that, I want to walk you through the overview of our financial results starting on Slide 14. The operating result increased by 3% compared with the first half of 2022. Increases in the U.S., the U.K. and the International segments were partially offset by a decrease in Asset Management. Operating capital generation before holding, funding and operating expenses increased by 13% compared with the first half of 2022. This was driven by the U.S. and reflects business growth of Strategic Assets and improved claims experience.

Free cash flow in the first half of 2023 amounted to €287 million and mainly reflects remittances from the U.S., the U.K. and Aegon’s asset management joint venture in China in the first quarter. Cash capital at the holding decreased to €1.3 billion at the end of June 2023 as planned, as remittances from the units were primarily offset by capital returns to shareholders. Our gross financial leverage was stable at €5.6 billion. The group Solvency II ratio decreased by 6 percentage points since year-end 2022 to 202% due to a number of items, including the deduction of the interim dividend, a reduction of eligible owned funds due to tiering restrictions, previously disclosed onetime items and unfavorable market movements. The latter notably includes the impact of lower real estate valuations in The Netherlands.

Nevertheless, our capital position remains strong and the capital ratios of our main units remained above their respective operating levels. Let’s move on to the operating result on Slide 15. The group’s operating result was €818 million, which is an increase of 3% compared to the prior year period. The operating result for the U.S. increased by 4% in the first half of 2023 or 3% in local currency terms. This increase was driven by an improvement in mortality claims experience, but largely offset by a decrease in the net investment result, partly from higher interest expense on short-term variable rate borrowings. The noninsurance operating result benefited from growth in both Retirement Plan and WFG. Over the same period, the operating result from the United Kingdom increased by 24% in local currency.

This was driven by an improvement of the net investment result as a result of favorable market movements, which more than offset the impact of the planned transfer of the protection business to Royal London. In our International segment, the operating result increased by 9%, predominantly due to our growing businesses in Spain and Portugal and Brazil. Finally, the operating result from Aegon Asset Management decreased by 34% in constant currency terms compared with the same period of 2022. The decrease was driven by lower management fees in both global platforms and strategic partnerships and despite a lower operating expense, which included reduced variable remuneration accruals. Slide 16 shows the net result over the first half year of 2023.

Nonoperating items totaled a loss of €180 million, driven in equal parts by realized losses on investments and net impairments. Realized losses on investments were primarily recorded in the U.S. and stemmed from the sale of bonds in the context of the reinsurance, a part of this SGUL portfolio as well as to facilitate a reduction of short-term borrowings. Net impairments were driven by an increase of the expected credit loss balance in the U.S. due to an update of economic forecasts. Other charges amounted to €870 million. In the U.S., other charges amounted to €574 million. These were driven by investments in the Life operating model and the restructuring of an earn-out agreement with the founding WFG [indiscernible]. It also included the impact of model and assumption updates in the U.S. These impacts were in line with what we had indicated at the recent Capital Markets Day.

Other charges also included a €110 million charge related to the first half of 2023 results of Aegon The Netherlands, which was driven by an impairment as a result of the reclassification of these activities as held for sale. Another €110 million charge relates to a book loss on the remaining activities in Central and Eastern Europe following the completion of their disposal. I will now turn to Slide 17 to address the development of Aegon’s Contractual Service Margin, or CSM, in the first half of the year 2023. New business CSM creation amounted to €0.2 billion, mainly driven by growth of the Individual Life portfolio in the U.S., partly offset by the reinsurance of the U.K. protection book. The CSM release of €0.5 billion was mainly driven by the runoff of the Financial Assets in the U.S. and of the traditional book in the U.K. Negative claims and policyholder experience variance was driven by unfavorable experience in Individual Life and unfavorable lapse and utilization experience in variable annuities, both in the U.S. The main driver for the decrease of the CSM in the U.S. was the impact from assumption changes in the Americas, as was previously announced.

This includes the removal of the morbidity improvement assumption and an increase in inflation assumptions in Long-Term Care, partly offset by the benefit of the expected premium rate increase program. In addition, the impact of investments we will make into a more customer-focused operating model for Life was reflected in the assumptions and reduced the CSM. Markets had a favorable impact on the CSM for products accounted for under the variable fee approach primarily variable annuities in the United States. At the end of the first half of the year 2023, the CSM stood at €8.3 billion. Let me now turn our view on capital on Slide 18. Operating capital generation before holding, funding and operating expenses increased by 13% compared with the first half of 2022.

Earnings on In-force before holding expenses increased by 26% compared with the prior year period. Greece was driven by Transamerica and reflects improved claims experience and growth of our Strategic Assets. The increase in Earnings on In-force was partly offset by higher new business stream compared with the last year, mainly from growth in the U.S. This is in line with our ambition to drive profitable growth in our U.S. Strategic Assets. The release of required capital was broadly stable compared with the first half of 2022. In conclusion, we remain well on track to meet our guidance of at least €1 billion operating capital generation from the units in 2023. On Slide 19, I want to walk you through the development of the capital ratios of our main operating units.

Compared with year-end 2022, the U.S. RBC ratio increased slightly to 427% above the operating level of 400%. Operating capital generation contributed favorably to the ratio, more than offsetting remittances to the holding. Market movements had a marginally positive impact with benefits from favorable equity markets being largely offset by fund basis risk. Onetime items had a negative impact. These were driven by the investments made in Strategic Assets and the annual model and assumption updates, which reduced the RBC ratio by 13 percentage points. We guided at the Capital Markets Day for a negative impact of in total around 20 percentage points on U.S. RBC ratio. We, therefore, expect to reflect the remaining negative impact of around 7 percentage points in the RBC ratio in the second half of this year.

The impact of credit impairments and rating migrations on the RBC ratio remained negligible in the first half of the year. The solvency ratio of Scottish Equitable, our main legal entity in the U.K. decreased by 3 percentage points to 166%. This reflects the negative impact from market movements and remittance to the U.K. intermediate holding. This remittance was subsequently used in part to fund the acquisition of Nationwide’s advisory business. Let me now turn the page for an update on our Financial Assets on Slide 20. Here, we summarize the continued value creation from our Financial Assets. In July, we reinsured 14,000 Universal Life policies with secondary guarantees, also known as SGUL policies, through a reinsurance transaction, reducing exposure to mortality risk.

This has freed up $225 million of capital, which we will use to further reduce our exposure to Financial Assets, in line with our plan to expedite the runoff of these exposures. The benefit of the reinsurance will be recognized in 3Q 2023. Together with the prior reinsurance transaction undertaken, a total of 25% of the statutory reserves backing the SGUL portfolio has now been reinsured. In Long-Term Care, our primary management actions are rate increase programs. Since the start of the year, we have obtained regulatory approvals for additional rate increases worth USD 86 million. This represents 12% of the new target of $700 million worth of premium rate increases that we had announced at the Capital Markets Day. We will continue to work with state regulators to get pending and future actuarially justified rate increases approved.

In the first half of 2023, we extended our track record of successfully hedging the targeted risks embedded in our variable annuity guarantees, achieving 98% hedge effectiveness. The capital employed in our Financial Assets was stable compared to the end of 2022 at $4.1 billion. During the first half of 2023, releases were realized on the Universal Life and fixed annuity blocks. These were offset by increases in required capital on variable annuities and the higher allocation of alternative assets to the LTC block. On Slide 21, you can see that cash capital at the Holding decreased to €1.3 billion during the period, which is still in the upper half of the operating range. Free cash flow for the period was in part offset by the impacts of the divestitures and acquisitions Lard talked about earlier.

Cash outflows in the first half of 2023 were mostly related to capital returns to shareholders. We completed the €200 million share buyback program and returned a further €232 million to shareholders through the 2022 final dividend. Let me now turn the page for my concluding slide. In summary, we continue to deliver on our plans and the results over the first half of 2023 show that we continue to make good progress and that we are on track to achieve our 2025 financial targets. And with that final note, I now pass it back to you, Lars, for your concluding remarks.

Lard Friese: Thank you, Matt. Let me summarize today’s presentation with the final Slide #24. Aegon has entered the next chapter of its transformation from a position of strength. We have concrete ambitions and plans to move forward with our strategy as we presented at the Capital Markets Day in June. Operating capital generation growth was strong in the first half of 2023. Commercial momentum remained strong in our U.S. Strategic Assets, in our U.K. Workplace activities and in our International growth markets. More work needs to be done on Asset Management and our U.K. Retail business. We will address our ambitions here with you in 2024. The next important milestone will be the Extraordinary General Meetings in September to receive shareholder approval for the transfer of our legal seat to Bermuda.

We are convinced that the proposed move is in the interest of shareholders and provide stability for the group to continue to execute upon its announced strategy. If you have any questions on this process, we have published detailed documents on our corporate website. Feel free to reach out to the IR team if any questions remain. I want to be clear that the redomiciliation process will not distract us from what is most important: accelerating the execution of our strategy, driving growth and creating value by reallocating capital from Financial Assets to Strategic Assets. Let me conclude by reiterating my confidence that we will deliver on our strategic commitments and financial targets. We are committed to become a leader in investment, protection and retirement solutions, and we have a clearly articulated strategy to achieve this.

I would now like to open the call for your questions. [Operator Instructions] Operator, please open the Q&A session.

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Q&A Session

Operator: Thank you. [Operator Instructions] We will now go to our first question. And your first question comes from the line of Andrew Baker from Citi.

Andrew Baker : So the first one is on the OCG. Are you Just able to provide moving pieces on the OCG versus the previous €270 million quarterly guidance and what we see the normalized run rate going forward? And I guess within this, can you just talk a little bit about the New Business Strain because my understanding from CMD was that this was expected to grow over time? It looks like 2Q specifically, it declined €20 million or so. So how should we be thinking about this going forward? And then secondly, just on the CSM growth. I look at the new business and interest accretion, this looks lower than the CSM release in the first half. So I appreciate some of this is driven by mix between Strategic and Financial Assets. So just wondering if you are able to provide a sense of the sort of normalized CSM growth expectations for the Strategic Assets versus the Financial Assets going forward?

I’m just really trying to get a better picture of how you’re positioning the growth story against sort of the CSM that’s declining from the Financial Assets drag going forward?

Lard Friese: Thank you much, Andrew. Matt, over to you.

Matthew Rider : Thanks for your questions, Andrew. I can pick up the OCG one, first. So the bottom line, I will just tell you, the guidance that we had provided for last quarter of around €270 million OCG per quarter is still the same guidance, and I can walk you through the moving pieces. So in the — in the second quarter, we reported €328 million of operating capital generation. But within that, we had some very favorable claims experience, €35 million worth, vast majority of which is coming from mortality claims experience in the U.S. We also had that lower New Business Strain of about €10 million that I’ll come back on in 1 minute. And then we also had about €10 million of favorable underwriting variances in the U.K. So if you do the sums, then you’ll come to a — what we think of as a clean run rate for the quarter of €273 million, which is pretty much spot on with the guidance that we gave for the first quarter.

Now for your second question, you clearly noted the reduction in the New Business Strain, although it’s actually coming from the Retirement Plans business. So we’re still seeing continued growth in New Business Strain from life insurance, which is where we want to see it because we’re issuing profitable new business there. But in the Retirement Plans business, you may have seen that we had like quite a large net deposit number in the first quarter, and it was lower in the second quarter, and we hold capital against that. So that’s the reason for the lower New Business Strain. On the — let’s go through the CSM interaction here a little bit. And I want to call out — and we’ll do it at a group basis, but it’s largely the same, by the way, in the U.S., the same kind of explanations.

What we did at the group level is we added a CSM for new business of about €194 million, and we had a corresponding CSM release of €483 million. So what we’re seeing is that the new business CSM that we’re putting on is lower than the release that we’re getting on the CSM on the in-force block. The biggest driver of that is the fact that the CSM that we actually have, vast majority of it is related to the Financial Assets. And these are closed block assets that are going to run off over time. So just to give you an idea, so we have about, let’s say, in the U.S., about a little bit over €7.1 billion of CSM. Of that, 72% of it is sitting in the Financial Assets and only the balance is sitting in the Strategic Assets. And if you look at the CSM release for the second half of the year, more than 80% of that was driven by the Financial Assets portfolio.