Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you explain the factors leading to the reiteration of your 2025 operating capital generation guidance despite pressures in China? A: Duncan Russell, CFO, explained that the guidance remains at EUR1.2 billion, supported by favorable equity markets and a strong dollar. While the US, UK, and Asset Management are performing well, the international segment, particularly China, is underperforming due to low interest rates. The overall outlook remains stable for 2025.
Q: What impact do interest rate benefits have on your projections, considering the current reinvestment rates? A: Duncan Russell noted that while they are reinvesting at higher rates, competitive pressures mean much of this benefit is passed on to customers. Therefore, significant benefits in operating capital generation are not anticipated from these higher reinvestment rates.
Q: How are you managing the increased equity sensitivity of the RBC ratio? A: Duncan Russell explained that the increased sensitivity is due to changes in tax position and the flooring of reserves in the variable annuity book. While the RBC ratio is sensitive to equity market movements, it remains at a healthy level, and the company continues to manage the variable annuity book on an economic basis.
Q: What is the current solvency position in China, and is there a risk of needing to inject capital? A: Duncan Russell stated that the local comprehensive solvency ratio in China is 228%, well above regulatory thresholds. However, the low interest rate environment poses challenges, and the company is monitoring the situation closely while exploring management actions to protect solvency.
Q: Are there plans to restructure or dispose of international businesses given their lower return on capital? A: Lard Friese, CEO, emphasized that international businesses are core to the group. While China faces challenges, other markets like Brazil and joint ventures in Spain and Portugal are performing well. The company remains committed to these markets and sees them as integral to its strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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