Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you explain the deterioration in the attritional loss ratio in Belgium's PNC segment in the second half of 2024 and comment on the competitive dynamics in the Belgian PNC market? Also, regarding Asia, should we expect tax rates to normalize in 2025, and how much of the cash guidance for 2025 is expected to come from Asia? A: The deterioration in the PNC combined ratio in Belgium was due to a one-off adjustment related to the updated indicative tables for lump sum settlements in motor business. This adjustment was slightly higher than expected. As for Asia, we anticipate tax rates to return to normal levels in the long term, around 2026-2027. For 2025, we expect the tax rate to be closer to China's corporate tax rate of 25%. Regarding cash generation, Asia is expected to contribute between 850 million and 900 million, with China accounting for about 10% of the total upstreaming.
Q: China's cash generation was lower in 2024 compared to 2023 due to low interest rates. Should we expect this trend to continue in 2025? A: We do not have final numbers yet, but we expect a stable dividend in the short term and a rising dividend in the mid to long term. China currently represents only 10% of our total cash generation, so it is not significantly material. We expect the trend to follow the previously announced trajectory.
Q: Can you provide more details on the asset-liability duration gap in Taiping Life and the development of the cost of liability versus investment income yield? A: Our partner does not disclose the duration gap, so we cannot provide specific details. However, the investment result is expected to decrease over the long term due to the duration gap. The investment result received support this year, but the gap will impact the investment result over time.
Q: Regarding the operating capital generation slide, there is a 1.3 billion figure marked as market impact from interest rates in China. Could you explain this, and what would happen if interest rates remained at the current level of 1.8%? A: The positive market impact is due to the revaluation of assets when interest rates decrease, as liabilities are valued with a 750-day average rate. If interest rates remain at 1.8%, it would impact the solvency, but our partner does not disclose specific market-consistent figures, so we cannot provide detailed projections.
Q: Can you comment on the net operating profit guidance of 1.3 billion for 2025, given the 6-8% EPS target, and the impact of Chinese interest rates on EPS targets? Also, what are the business implications of the new Belgian government? A: The 1.3 billion guidance is a starting point for the year, considering uncertainties and a margin for tax rate adjustments in China. We remain confident in achieving the 6-8% EPS growth over the EA 27 cycle. Regarding the Belgian government, there are positive developments in pension schemes, but we await further details on tax changes and cap regulation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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