ageas SA/NV (AGS) Earnings Call Transcript & Summary

Hello, ladies and gentlemen. I'm very happy to welcome you to this first edition of our deep dive sessions. I would have preferred to be able to host this event physically in Brussels, as I was hoping that this would give me the opportunity to meet face to face with some of you that I have not had the chance to meet in person yet, but unfortunately given the current context, we had to revert to a fully digital event again. Hopefully, there will be other opportunities in the future, as we intend to organize more deep dive sessions, focusing each time on a different market or on a specific topic. We have developed a solid and profitable business in Asia, consistently and increasingly contributing to the group net results and cash flows over the past years. However, we often get the feedback from analysts and investors that it can be difficult to fully understand our operations and to accurately assess the value created in these markets. The accounting framework is different, and we are limited in our disclosures due to the fact that our partners are often listed entities reporting their results later than us. So the purpose of these sessions is to provide you with very concrete and operational elements to help you get a better understanding of our operations in the region and of the value we create in these markets. This first session will focus on Taiping Life. Our Chinese operations currently account for the main part of our results and cash upstream from Asia. Our partnership with CTIH has been set up 20 years ago and has been consistently strengthened since. Starting with a stake in Taiping Life in 2001, we have expanded over the years to a participation in Taiping Asset Management, Taiping e-commerce and more recently Taiping Reinsurance. Thanks to this successful collaboration, we are today in the unique position of owning 25% of one of the top 10 Chinese life insurers and of having, by far, the largest presence in China among European insurers. To dive into the business of Taiping Life in details, I will leave the floor today to Filip Coremans, our Managing Director, Asia; and to Gary Crist, who is our CEO, Asia. And Gary, who has made -- been part of Ageas venture in Asia since day 1, flied from Hong Kong to be with us today here for this event. So I will now hand over to Gary.

Thank you, Hans. And welcome to everybody. I'm very honored to be here with you even if it is virtually. And I hope you find the next 1.5 hours or so, a couple of hours quite interesting. So let me start with a map of Asia. If we look at the left-hand side, you'll see how we've started off in the region. And then as we move to the right, you'll see the new joint ventures that we've added over the last 7 or 8 years. We started in 2001 in Malaysia and in China. Our partner in Malaysia is Maybank, which is probably the dominant banking sector -- banking group in Malaysia. They had bought a small life insurance company and were trying to introduce bancassurance. They hadn't really achieved the success that they had in retail banking with selling life insurance through the bank network, so they were looking for an insurance company, a foreign insurance company, that understood something about bancassurance at the same time that we were looking for an opportunity to break into the Asian market with the belief that bancassurance would be the core entree for us to get into this sector. We found each other, and I think it's been quite a successful 20-year partnership. The entity in Malaysia was a relatively small insurer not quite making money, and as you can see, we're now the #4 life insurance group in Malaysia and the top non-life insurance company. This includes both conventional insurance and the Islamic form takaful. The second joint venture was Taiping Life, which was a greenfield startup in China which we started at the very end of 2001 based in Shanghai. As Hans said, we're now in the top 10, in fact the #6 life insurance company in China. We'll go into a lot more details on that, obviously, over the course of the rest of the day. The third joint venture was in Thailand, where similar to Maybank, KASIKORNBANK and the Lamsam family, which was the founding family behind both the bank and Muang Thai insurance group, were looking for a partner that could help them unlock bancassurance in the Thai market. So we found that partnership in 2004. Muang Thai Life was the sixth largest life insurance company at that time. It's now #3. Muang Thai Insurance, the non-life part of the insurance arm of the group, was the 15th largest non-life insurance company; and it is now #5 in the market. Moving on from Thailand, we went to the life sector in India, where we partnered with IDBI Bank and with Federal Bank based in Southern India. And that company is now the [ 11th largest life insurance ] company in the Indian market, and we're in the process of restructuring that. If you've been following the news, we've stepped up to 49%. And we're going through a strategic process to relaunch that business, and we hope to substantially improve growth over the next 3 to 4 years. Following India, we moved into both Vietnam and the Philippines in 2015. Vietnam is -- MB Ageas Life is now the sixth largest life insurance company in Vietnam. It's had a tremendous startup. And in the Philippines, our partnership with EastWest bank, we're #15 in that market. In 2019, we partnered with Royal Sundaram in Chennai to add non-life to our Indian experience that stepped up in the Indian life insurance company in 2020. And as Hans said, we invested in Taiping Re in 2020 as well. You'll notice that we've got quite a good stable of partnerships that have exceeded the -- what is the accepted norm of a joint venture for 8 years. This is built on an approach and a structure that I will discuss in more detail later on in this presentation. China and Malaysia both have 20-year durations. Thailand is 17. These have gone through various stresses and changes. We went through the breakup of the Fortis group. There have been management changes at multiple times in both partnerships. And we've expanded the cooperation in each of these joint ventures, which can add stress to the relationship as well. In Malaysia, we acquired Takaful Nasional and merged it with Maybank's entity there. We've moved into Singapore to add life to the non-life company that we started with. In Thailand, we merged Muang Thai Insurance; and Phatra, which was a listed non-life insurance company. We restructured so that KASIKORNBANK could step up its percentage ownership in the joint venture. And we've moved into Vietnam, Cambodia and Laos. In China, we've moved into the asset management sector with Taiping Asset Management, which largely manages the assets of the CTIH group. We added alternate distribution and innovation through Taiping financial services, the e-commerce arm of CTIH. And as we've said, we've moved into reinsurance. If you look at the left of this slide and move across to the right, you'll see the growth in inflows leads to strong results and a dividend upstream. Taiping Life has gone from a greenfield startup, became profitable in year 5. Dividends started in year 2014, and consistently paying out dividends since then. Muang Thai has always been profitable. Etiqa or our Malaysian joint venture started to show sustainable profits early in the joint venture. If you recall, I said it was a relatively small company that was making some losses. Both of them started generating dividends in 2008 and have been consistently paying since then. Vietnam is quite interesting: profitable in year 3, which is astonishing from a greenfield start; positive retained earnings in year 5. With the growth pattern we're seeing, we don't foresee dividends coming out of Vietnam in our next 3-year budget cycle. We're very happy with the results in Vietnam obviously. And while we've enjoyed exceptional historical growth, we can expect these percentages growth to stay. We think we're going to have a very strong future as well. The indicators all point to what we hope will be a bright future. If you look here at the chart on the left, you see premiums as a percentage of GDP. China is at about 4.5%, Malaysia and Thailand just over 5%, India at 4%. And then Vietnam, Indonesia and the Philippines are down below 3%, down below 2%. The world average is 7.5%. Europe, Western Europe, is at about 8%. The OECD average is 9%. Others, just out of interest: the U.S. at 10%, Belgium at 6%, France at 6%, Germany at 6%, Japan 7%, South Korea 9%. So you can see there's a huge amount of potential to grow just by increasing the percentage of insurance as a part of a country's GDP, and then when you add expected GDP growth, you get a dynamic multiplier there. So remember that this chart is showing 2022 forecasts. So these growth rates of 4% for the globe are obviously influenced by coming back from a very low dip from COVID, but with that you still see China substantially above Western Europe and the world and the rest of Asia even stronger than China. So the combination of the two gives us the confidence that we've got -- with the great platforms we've got, we've got a tremendous future in the Asian region. This chart shows growth from 2016 to 2019 and then expected growth 2020 to 2024. You'll note here that you've got Thai life and Thai non-life and the Philippines life in about a 5% growth trajectory over the next 4 years. Malaysia life, non-life; India; and China, all looking quite strong, including Vietnam down at the end. So again this comes from national insurance regulators, GlobalData; another strong supporter for our supposition that our business in Asia is going to continue to grow and continue to be quite bright for us. What I'll go into now is our approach to joint ventures. How do they work? Why do they work? Why do we think joint ventures are sustainable? How do we think we influence them as a minority shareholder in most cases? So this circle is the basis that we've used for both seeking out partnerships and managing those partnerships over quite a long time. It's basically been the same approach for 20 years. What is important is not just how you select the partners but how you interact with them after the partnership has been formed. And in fact, I would say they're of equal importance. A careful, methodical, robust 2-way selection process is quite critical. The keys to our success, I think, if you can break them down into 3 segments, are alignment of interests, both the short term and the long term; shared ambitions, shared visions, shared values. I think Impact24 is a strong example of the way we share ambitions, visions and values with our joint venture partners. Impact24 wasn't designed in a vacuum with Ageas people sitting in this room conjuring up ideas. We work closely with our joint venture partners, with representatives in the joint ventures to come up with these themes, so it's no surprise that there is a great deal of commonality between the strategic ambitions, the goals, the strategies and the tactics that are present in the business plans of our joint ventures and are evident in Impact24. They're very closely aligned. Work streams, I've already exampled with respect to distribution diversification, building a stronger representation of protection products in our overall portfolio mix in the life sector, health insurance platforms, ecosystems; and quite importantly, ESG. We found that ESG resonates quite carefully, quite strongly with our joint venture partners. Malaysia in particular, with Maybank and Etiqa, Maybank Ageas Holdings Berhad, has been a clear leader in Southeast Asia in grabbing the ESG concept and moving forward the initiatives in that realm. So very closely aligned with what we're looking at in Ageas. Equally important is our ability to add value over time, to evolve and to help address emerging [ trends ]. Again Impact24 is quite relevant here, and to our partners, it's key. We've clearly addressed areas of common, mutual strategic significance; and are building and deploying the resources across the joint ventures to help them reach their ambitions. As market conditions change, new technologies come to bear, data becomes more important, so we're moving quite strongly in those areas. I think lastly, flexibility, transparency, mutual respect are critical. And all of those lend themselves to what we as -- firmly believe in our business model is critical. It's local autonomy and empowerment. This goes to the heart of trust and mutual respect. I've worked in Asia for quite some time. It was always frustrating to hear that there was a fire in Chile so you had to stop running textile factories in Indonesia. We don't do that. The local management teams run these companies. We work with them. We help design the strategies. We work on the risk appetites together. We build the framework in which to grow. We hire good people. We support them and let them run their businesses. It's very, very critical to our business model and, I think, to the proven success of the joint ventures that we've got across the region. Secondly is our interaction with our partners. This slide shows you the management interaction we've got, but we've also quite extensive interaction all the way down through the executive committee, the management committee and the regional office in Hong Kong. So Hans and Filip sit on the Board of Taiping Life. They also sit on the Board of Muang Thai Life. Filip is on the Boards of both companies in India. In Malaysia, Antonio sits on the Board. Emmanuel is on the Board in the Philippines. Vietnam is the sole exception, where we share the Board representation with our partners Muang Thai. So I sit -- in addition to some of the other Boards, I sit on the Board in Vietnam. So that gives us the formal relationships that we need through the Board and the Board committees. We also have in -- the management structures embedded in the joint venture agreements. Some of these positions are effectively Ageas positions largely based on finance and risk, but we also have strategic positions which evolve over time based on the demands and the needs at the time. So we have distribution positions. We have operational positions, customer journey positions. It depends on the needs of the joint venture at the time. 80% of our [ secondees ] sit on the executive committee of each of these joint ventures. They are employees of the joint ventures. They report to the CEO of the joint venture. They obviously interact quite a bit with Ageas, but their primary function is to help the joint ventures succeed. In addition, we -- through the regional office, we have extensive programs on work streams related to, as I said, distribution, to product development, to operational excellence, to customer journeys; most of the themes that you see in Impact24, plus themes that are directly related to the specific joint venture. And then all of our joint ventures participate across the various platforms and knowledge-sharing opportunities that we've got through the group where there's more informal communication, if you will, so quite an extensive reach at multiple levels that helps keep the information flow, helps us understand what's going on in the joint ventures, helps them understand what's going on within Ageas and helps us define how we support the business going forward. Now we'll take a closer look at China and Taiping Life. So China Taiping Life started in November 2001. It was a greenfield, had 250 employees, 500 agents, 4 offices based in Shanghai. They're also in Guangzhou, Beijing and Chengdu -- and no customers, not a single sale. Today, 19,000-plus employees, 370,000-plus agents. We're in every province in the country, through 1,400 branches and sales office; and we have over 15 million customers. I think it's a strong track record of growth over the last 20 years. You can see that we've got consistent stable growth in gross inflow. We've gone from about EUR 3.4 billion at the Ageas share in 2016 to almost EUR 5 billion in 2020. It's fed the dividend stream at the end. This is the IFRS results. You can see there's quite a bit of volatility in there compared to especially the dividend flow. Filip will give you a lot more details on what drives the IFRS results, what drives the CAS local accounting results and how that feeds our dividend streams, but you can see quite a nice pattern of dividend flow coming out of China over the last 5 years in particular and going back to 2014. This chart represents the participation we have in different entities within the CTIH group. So the key is obviously Taiping Life, where we own 25%. It's -- represents the bulk of the economic activity within the greater CTIH. CTIH, by the way, is listed in Hong Kong, although it is a mainland Chinese entity, state-owned enterprise but -- listed in and headquartered in Hong Kong. In addition to Taiping Life, our most important entity beyond Taiping Life is Taiping Re, which is relatively new [ about it ]. We've been a shareholder there for about a year. Then we have Taiping e-commerce, where we own 12%. Taiping e-commerce evolved from a telemarketing company into a telemarketing alternate distribution company, so it does a lot of e-commerce. It's got some quite interesting noninsurance shareholders who bring technological skills and expertise to the company, so it's a center of innovation for the Taiping group. And then we have 20% of Taiping Asset Management, which as I said manages the bulk of the assets for CTIH, particularly for Taiping Life, although it does manage third-party assets as well. In Taiping Asset Management, we have the Chief Risk Officer. In Taiping Life, we have the Deputy CFO, the Chief Actuary, the Head of [ Customer Excellence ] who actually sits in the e-commerce company. And then as I said, we're represented on all the Boards, Board committees in each of these various entities. This highlights the cash flows in China, so this is Taiping Life, Taiping Asset Management and Taiping financial services. The cash flows for Taiping Re and the other joint ventures in Asia are not demonstrated here. As you can see, we started in 2001, invested to build growth. In particular, in 2003, we were supporting growth. And then you started to see dividends come out in 2014, which was quite a minimal dividend but still quite psychologically important, and then strong growth as we've moved through 2020 and 2021. Again the dividends are based on local CAS results. The inflows show a strong growth pattern even when you account for the disruptions to the market in 2019 and 2020 due to COVID. Single premium sales, the purple section, have diminished in scale over time. They're largely tactical scales now used in the bancassurance channel, and they're important to help drive the expense margins. We do make money on single premium, but it's regular premium that really drives this company and the renewal book. Regular premiums are 72% of new business, which is up from 49% in 2016; slightly down in 2020, as I said, due to COVID. It really had an impact on customer needs, customer perceptions. There was a less -- more of a reluctance to commit to long-term investments, but a short-term single-premium or [ 2-pay ] product with excess cash, as they were not eating out, they weren't traveling, that made that more attractive for the customers. So you saw a little bit of a rebound in the single premium in the period that we went through in 2019 and 2020. Basically inflows have doubled over the last 4 years or so. Persistency is a key driver of this. It's what drives the renewal book. And you can see Taiping is the line in orange on the top. Their key peers are the gray line, yes, represented in the gray line. And the peers are Ping An, China Life, China Pacific, PICC Life and New China Life. These are the companies that make up the top 5 or 6 in the market. So that's how Taiping compares itself. That's where they're really looking at their key performance indicators. How do they rank against these companies? And every year, we're 5 points or so above this peer group in persistency, but what's very interesting is 2020, COVID, exceptional performance by Taiping Life. We saw the peer group take a dive 3% from 90% to 87%, but Taiping was able to maintain what is an exceptionally great persistency ratio both in banca and in agency. This chart shows where we rank in the top 10. As you'll note, we're the only European insurer represented here. We are #6 with 5% market share, roughly the same size as Taikang and New China Life. This graph only represents the CBIRC methodology, which does not count universal life inflows as premiums. To be fair: Taiping doesn't sell a lot of universal life. Some of our competitors do, but this is the CBRC version of market share. What's important as well is these companies have been consistent. In the past, you've seen some companies come in and come out of the top 10, [indiscernible] in the past, largely built on single premium sales, incredibly low margins. And this rank, our peer group, has been consistent in looking at long-term growth, long-term value creation. Here you're looking at the European insurers in the Chinese market. So clearly Taiping Life is at #1. The darker part of the bar chart shows the percentage of inflow on an ownership basis. So at 25%, our inflow is roughly EUR 5 billion compared to our European peers. What I find quite interesting on the chart is the ownership percentage. We're the only one at 24.9%. In 2001, when we started this journey, you had a choice. You could do 50% ownership, but you would -- restricted to a defined geographic area, with Shanghai, Beijing or Guangzhou being the [ prized regions ]. Or you went the 25% route as a joint venture partner, but you had a national mandate. That, in our mind, was an easy choice, but we were the only investor to take that choice. And I think the implications and the results of that choice are obvious; and we're still very, very happy with the selection made at that time. ICBC-AXA is the only other one on this chart which is below 50%. They made the choice basically the same way we did. We looked at the national [ life license ] and Taiping's capacity to build out a national platform. They looked at ICBC's branch network and said, "This is what is going to drive our ability to outperform the other joint ventures in terms of market share." This chart shows you the premium portfolio mix by product. As you see, we've gone -- this is again on a 100 -- this is on a 100% basis now. So in 2016, we were at EUR 13.5 billion in premiums. And at the end of 2020, we're at EUR 19.5 billion, so 43% growth over that 4-year period, 5-year period. You can see that the accident and long-term health has gone from about 11% of the portfolio to 30% of the portfolio. That's our protection book. The participating products, the par products, have come down from 60% of the portfolio to 40% of the portfolio. That's largely driven by consumer choice, which was triggered by a regulatory change on the types of illustrations you could give in a par product. Certain companies, certainly not Taiping or anybody that you saw in the peer group, had been illustrating returns that were too high. They couldn't meet the customer guarantee, so the regulators stepped in and put a market standard on what illustrations are. That's affected the perception of product attractiveness in the consumer mind, so you see a growth in the traditional life book at the expense of the participating products. I'll give you a little bit of a definition now of what each of these product groups means. So the annuities are mostly annuity-certain savings products. So it's a fixed-term benefit paid on survival or death. It's a much lower risk than what you would think of, of the traditional annuities in the Western market. Long-term health is basically critical illness, which pays a defined lump-sum cash benefit on diagnosis of specific diseases. Traditional life, like par, is whole life or endowment products with benefits paid at maturity or upon death of the policyholder, the difference being, with par, the policyholder also gets a 70% share of the profits coming from mortality and expenses and investments. So that's the difference between these 2 sections. And then the accident and short-term health is critical -- not critical, sorry, more like hospital cash, so paying again a defined benefit upon a specific event, either going into the hospital where they'll pay X amount of RMB per day or upon a specific accident or upon death of the policyholder. Here we're looking at gross inflows by distribution channel. So agency, the orange bars -- the orange part of the bars, are clearly what drives growth in our business. Banca is the sort of yellowish color here. And you'll see it's reduced from 40% of the book in 2016 to EUR 4.2 billion out of EUR 20 billion, so 20% of the book, in 2020. The other is the e-commerce business, the telesales business, brokerage business, but it's clearly the agency channel which drives it, which is quite important. And I'll get into that in the next slide. What Taiping group is focusing on is maintaining its agency force at about 370,000 agents. If you're following the Chinese market, you'll see there's been a decline in agency forces in 2020 and 2021. It's the pressure of COVID and it's looking at -- people are looking at opportunities. Some of them are being Uber drivers, quite frankly, but it's more steady, predictable income than what you can get as a life insurance agent in an environment where it's difficult to meet people face to face. So it's affected the building of agency forces across the market, with Taiping Life being the sole exception. We've actually added agents in 2021, which is the only company that's been able to do that in the market. What we're doing is focusing on stabilizing the agency force, improving activity ratios and improving productivity. The number of agents with first-year renewal premiums over RMB 1 million is up 50% from H1 2021 versus H1 '20, which is a clear example of how the focus on quality is working. Taiping's management team is driven by VNB. It's driven by value, value of new business, value creation, embedded value. And we focus on that. That's what -- the reason why we're really focused on building the agency channel. The banca channel contributes volumes but lower margins. And then as I said, we -- these are niche channels which reach markets that these two can't meet or their experimentation through the e-commerce business. Agency is the single largest driver of VNB by quite a substantial margin: generally over 40% VNB margins in agency; and around 4%, 3.5% in banca. You'll notice that there's been a substantial improvement since 2016, and sustainable, we think, but this is why the focus on agency is so critical to the long-term success of Taiping in the market. This chart focuses only on the change in H1 2020 to H1 '21. You have to understand the dynamics of the calendar in the Chinese market. Q1 is traditionally a period of strong sales with a trade-off of far lower margins, particularly in the bank channel. Insurers are trying to build market share. Banks are trying to build market share. And it's tied around the opening campaigns, which traditionally start as early as October, November the prior year. So as you can see, this is the Taiping new business margins in each channel H1 '20, H1 '21. And banca has had a tremendous improvement in '21. Basically we've gone from a negative 4% to a positive 6%. Agency traditionally comes down lower in H1 and then builds the value in H2, but as you can see, in 2021, we've had a growth in new business margin which again is exceptional in the Chinese market in 2021. Now we'll look at the asset mix for Taiping Life. The chart on the left compares it to the market asset mix, if you will. You'll see that we're a bit more conservative than our peers. We're largely in fixed income, as you would expect. 83% of these bonds are Chinese bonds, mainland bonds, with 99.8% of them carrying a AAA rating under the local rating [ structures ]. It's important to note that Taiping Asset Management has its own internal rating system. This is built on international norms. It was developed with a [ geotechnical support]; and all bonds are assessed against both standards, local and international. Of the international bonds we buy, 92% of those are investment grade. You'll note that equities at 15% are below the market norm of 19%, but they're still higher than what you would expect for a European life insurer. This is to address the fundamental duration mix -- mismatch which you find inherent in the Chinese market. The higher allocation to equities is based on a widely accepted economic theory that, over the long term and despite volatility, equities will generate a higher return than other asset classes. Within our equity portfolio, [ 5 ] of the 15% is held in high-dividend-yield shares that are not actively traded, so it's really a trading book of much closer to 10% or below when you look at this chart. Real estate at 3%, again, is about half of the market norm. And again the nature of our real estate holdings is quite different. They're largely own-use office buildings for Taiping in key cities. There's virtually no exposure to property development, and there was no exposure to Evergrande either. My last slide talks about the strategic goals of Taiping group. They're fully endorsed and closely aligned with Ageas. The core KPI of management, in fact largely the sole KPI for management, is value creation. It's predicated on steady growth at least consistent with the market, targeted higher but not at a trade-off of market share for value. We focus on higher-margin regular-premium products while maintaining the consistently high persistency ratios which you've seen. The goal is to maintain the agency force while improving activity and productivity ratios through enhanced training and improved sales support. Taiping also focuses on continual improvement in risk management and operational efficiencies. Taiping is consistently rated by the CBIRC amongst the best-in-class insurers in China. CBIRC has 3 different types of ratings. The first is the integrated risk rating, where Taiping has an A, which is the top rating you can get in China. They've had it for 14 consecutive quarters. The second rating by CBIRC is SARMRA, the Solvency Aligned Risk Management Requirements and Assessments, where Taiping was rated 83.3 out of 100, placing it in the top 3 when it was last rated. This assessment is part of the cross -- C-ROSS framework, and it's looked at assessing the completeness and effectiveness of an insurer's governance structures. The CBIRC then looks at your ALM capability assessment. Taiping was rated at 95-plus in 2019 and between 90 and 95 in 2020, again placing it in the top ranks of all insurers in China. 2021 has not yet been announced. So that's my presentation for this afternoon. I hope you found it enlightening. And we'll now take a 5-minute break, when Filip will come and join us and dive into the more financial elements of Taiping Life. Thank you for your attention. [Break]

Before the short break, Gary gave us some useful insights on what insurance in Asia is about and how TPL navigates in that environment and intends to continue to do that in a successful way. [Operator Instructions] We will try to address as many as possible during the Q&A session at the end of this deep dive. Now I can imagine you thinking, okay, "Looks like a compelling story you write together with your partner in China, but how can I track it? How can I track that you're really delivering on the plans you describe? What metrics should I look at as an indicator of the performance in the past and, even more important, the potential of the future?" Let's ask our MD Asia, Filip Coremans, how he looks at it.

Thanks, Veerle. And a very warm welcome to all of you on a quite cold day here in Brussels. So I'm not sure you're missing a lot, other than the closeness of people by not having a on-site session, because we have the first snow today. So indeed what we're going to take in this session is take you through a deep dive in Taiping Life. And Taiping Life is at the core, of course, of our Asian results and operations. And our Asian results and operations are actually at the core of Impact24 score, yes. So those of you who followed it, we expect a lot in terms of growth of contribution from our Asian book, but indeed as Hans and also you indicated, over the last year, we had, I will say, noticed significant challenges in conveying and providing transparent insight in the performance of our Asian operations and certainly in China for various reasons, market volatility, yes; also accounting treatment differences; and the special complex of VIR, yes, value interest rate, which blur, let's say, that picture. And of course, that is not helped by the fact that we only give limited disclosures about our noncontrolled participations, so what we'll try to do today is resolve most of these matters, and maybe also looking forward, but I'll keep that for the end, yes. So the focus of the session this afternoon, the rest of the session, will be entirely on Taiping Life. When we look at the result, as you can see on the slide here, the result of Taiping Life over the last 5 years, I think 2 things stand out, yes. First and foremost, the [indiscernible] indeed, it has been rather positive but undeniably quite volatile. And also there is a noticeable difference between the result under IFRS as it appears in Ageas' books; and the CAS result, the Chinese accounting standard result, the local result of Taiping life. Now the first substantive comment and, I think, that is something to keep in mind is that in the end it is the CAS results that drive dividends and free cash flow out of China, not the IFRS result. And increasingly so, when -- in Impact24, we put more focus on free cash than on dividend payout ratios because we don't know exactly what they will mean on the IFRS results of the future. And secondly, if you look over the last 5 years, the IFRS result tends to be, I would say, structurally more conservative. And this relates actually to what I mentioned before, 3 types of [ accountment ] adjustments that we make at the Ageas level on the CAS result. The first [ accountment ], accounting adjustment we make relates to impairment policies. So under IFRS, in Ageas we have an impairment rule which actually -- where we impair any [ counter that drops ] 25% below its acquisition price at the moment we close our books. We do that 4 times a year. In China, that is done at 50%, and they close only twice a year. So you both have more checkpoints as well as, I will say, a lower hurdle that we apply, which mean that we impair faster. And the best example, and certainly some of you will remember, is in 2020, where you see a huge difference between the CAS results and the IFRS result. That was entirely due to impairments that we took in the third quarter closing, a closing that not -- did not happen in China. And a few days actually, after we took the impairment, there was a rebound, so they were never shown up in impairments in China but did in our results.

Yes. And of course, once impaired, the recoveries are not written back unless the capital gains are realized.

Yes, that is correct. And that actually relates to the second adjustment we made on the accounting has to do with recognizing of mark-to-market gains or not. In China most of the equity is held in what we call for trading, yes, as Gary mentioned. That means the result on that is immediately flowing into the profit and loss account, whether you realize it or not, positive and negative. Under IFRS, we don't do that. We book all our equities and that is consistently so in all our operating entities. And in the consolidation, we [ put ] them all at what is called available for sale, which actually means you keep them at acquisition cost. They don't run into the P&L, the differences. They end up on the balance sheet. They only show up in the profit and loss account when you actually do a transaction when you sell. The third adjustment we make. And that is then also very relevant, I think, in the context of the turmoil we heard about property. We value property, under IFRS, at what we call amortized acquisition costs. So we amortize [ then keep it at ] historical costs but even amortize it a bit. And in China also, property is valued mark-to-market to the profit and loss.

Okay, so 3 elements that add an extra layer of prudency in the IFRS result. If I look at the difference between the CAS and IFRS on those 5 years, it makes a difference of about EUR 300 million. Is this somewhere lost in translation? Or what is going on with it?

Well, it's definitely not lost. It is an accounting translation, I would say, yes, but indeed the cumulative effect over this period that we show here is about EUR 300 million our share. And it is net. And where are they? They are in the IFRS unrealized capital gains. We have more unrealized capital gains in -- under the IFRS accounting treatment than under CAS. They're definitely not lost, but they have not been realized and hence are still on our balance sheet. And so for example, and this may be good to give that as well. At the end of September -- and that is now September, so it was our third quarter closing. The property around which we obviously and certainly you also in investor relations received a lot of questions, for all good reasons, due to the uncertainty about it. The IFRS property book, our share, was about EUR 700 million in book value, but on this we have about EUR 125 million unrealized capital gains which were [ never ] taken to the P&L, whereas in CAS they are marked to market, which is about 18% buffer.

Yes.

And Gary already explained that we do not have any, let's say, exposure to the turmoil sector of construction. We are not exposed to that. It's mainly [ own ] offices and property. And similarly, on the equity book in CAS, everything goes -- or a large portion goes to marked to market to the profit and loss, but in IFRS, we have about an exposure of EUR 3.4 million on Chinese equities, again our share, yes. Everything I will say today will be our share mostly, but there we -- at the end of September, after a turmoil, still EUR 180 million unrealized capital gains as well. So coincidently, the two add up to your EUR 300 million, so I would say lost and found, Veerle.

Thank you. Now looking at the CAS result, ignoring all those accounting noises that we put on it through the IFRS adjustment. The pattern is -- becomes already a lot more stable. Can you...

Yes, yes, yes, of course. It's logical that the pattern is more stable because, okay, first and foremost, this is what the Taiping Life management is steering the company on, but it is still quite volatile. And it is also good for the rest of the story to understand better what the CAS result actually is composed of. How does Chinese accounting standards work? And what you will find out is that this is very similar to what we're going to experience under IFRS 17 when the new accounting standards on insurance come in, yes. For the sake of simplicity, you could break up the CAS result in, let's say, 3 components, first. It's the expected profits, yes, which is mainly determined by a concept which is called residual margin and which has the connotations on [ CSM ] in IFRS 17, but I'll explain a bit more in detail, yes. Next, we have the variances, and you can break them up in two. We have the investment variances, which is actually deviations in terms of real investment income, realized investment income, in 1 specific year from what has been assumed in the expected result. And the expected result has a stable assumption, whereas in reality as we know, markets move up [ and down ], certainly because they have mark-to-market. You realize capital gains or losses. You have impairments or not. That will end up in investment variances. And then you have the other operational variances where you say, yes, when I think about an expected result, I have assumptions on mortality, we reinsurers, charges, lapses, all technical components, also our expenses. And this component [ crafts ], again, the difference between the actual and the assumed in the underlying expected profits. And then finally we have valuation-based changes which are a one-off impact. And one recurring one-off impact which has also not been helping to make things transparent has been the valuation interest rate. So -- but I will come back to these components. So the concept of the residual margin. So let's have a bit more look at that engine behind expected profit. What is the concept? So under CAS, under Chinese accounting standards, this residual margin actually captures the value of new business when it is sold, the accounting value of new business, the present value of all future profits that you think to make out of the contracts that you sell. They do not end up in the profit and loss account. They are first put on the balance sheet and then amortized over the life of that contract, so it's actually a buildup of future profit coming, expected profit coming out of any business is added there. And on a yearly basis, that rolls forward, yes. So on the balance sheet, you have the residual margin over the last year. Part of it is released and ends up into the profit and loss account. And then you add the new business of that year. That's what you see on the right-hand side of the slide, yes. So every year, the new business is added and a portion of the back book is taken into the P&L. And then you have indeed, it is mentioned, there are also an effect of unwind of discount, yes.

And so to -- at what speed does this residual margin release to the accounting?

Well, the release of the residual margin is driven by the duration actually, yes, of the contracts that are still on the balance sheet, yes. And to give some guidance because otherwise it's difficult to get a feel for it: Today, I will say the average duration of the residual margin on the balance sheet of Taiping Life is around 11 years. So it has come up a little bit because, as Gary indicated, we try to sell more and more long-term products rather than the shorter-term products. So it has increased a bit. It used to be closer to 10, but now I will say it's about 11 years. So that mean [ 1/11 ], more or less, is released on a yearly basis. And the discount rate used in the [ roll forward ] is about 3.5%. And all the rest is actually coming from new business, yes.

Okay. And so...

So if you look here at the buildup of that residual margin. Over the last 3, 4 years, 3 years, yes, it has a CAGR of about 18%. You can see how strongly that is building up. And this is also the main engine, I will say, the core of the CAS results. The rest is the variances, yes.

Okay. And with this residual margin on the balance sheet going up, we can assume that also the release to the result will go up.

Yes. Obviously this is the future profit to be released or part of the future profit to be released, of that expected profit, that I talked about. It's the main, it's the lion's share that will drive that in future. So of course, you have to sell the right products to add value, yes. And if they unwind, they will come onto the profit and loss.

Okay, very comforting message. Thank you. Now there's one other thing you already mentioned and, I'm sure, that our audience would like to get a bit more their head around is the VIR.

The valuation interest rate story. Every quarterly closing for the last 2 years, I think, we make side comments on the valuation interest rate. Now of course, low interest rates -- and that, we all know, are never good for life insurers. And there all depends on our rigor to manage the ALM gap and take the right decisions there; and in pricing, yes; and I -- selling the right product mix. And I think Gary already indicated in his presentation that there Taiping is obviously very much focused on it, yes. So they are amongst the top 3 actually in terms of the ALM ratings in China. And they focus a lot on longer-term value-adding products which are rightly priced to extend that growth of residual margin but also create value of new business, but indeed the VIR has been -- let's say it's a different animal. It's something that we don't know. You see here the movement of the 10-year bond yields in China. And indeed they have been coming down over the last years, although they have come in cycles, yes. And you also see the VIR which is here projected. That I think is the orange line, which is the 750-day average of that yield curve. So for this year, by the way and because it's not on the slide -- and I shared it already at our previous analyst meet, yes. This VIR is trending further downwards because -- we all know interest rates in China have come down further, and they're now hovering around 2.9%. And that VIR tends -- trends towards 3.1% by the end of this year. And the impact that -- last year was EUR 116 million. This year, we forecasted, but I have to say something, yes, about it. And we [ shared it with you ]. We expected to land around EUR 180 million, at the end of 2020. So quite hefty impact of the VIR. So -- but maybe go to the -- yes. Let me explain a little bit how this mechanism works and why we tend to say that, part of the VIR, [ we'd ] overestimate the interest rate impact. Because that is quite an important message [ that you'll hear ]. So first, as you -- foremost, the VIR applies only on the non-par book, but you can see here that non-par, the nonparticipating, so that's the part of the balance sheet that does not participate in profit sharing, has been growing over the years. And also, the VIR, it is calculated as a 750-day average. We said that but not of one rate of yield curve. So there I know that it is sometimes frustrating and also for us difficult to predict because it's not just the movement of one rate that you have to assess. It's the movement of the volume on the balance sheet on which it applies as well its curve effect. So I know it's a complex affair, but our message is actually don't worry too much about it. Put it aside in your analysis when you want to understand the true underlying performance. And the reason is the following, yes. In -- this adjustment of the valuation rate only is applied on the liabilities, on the obligations. That means, if interest rates go down, that VIR is only used to revalue your obligations, but on the assets side nothing moves. Your assets are not revalued because, most of the assets, and I'm talking about the bulk which is the fixed income, they are valued at held to maturity. Held to maturity, that means they stay at their original price you bought them. And [ you see the coupon come ] for the term that they're in there. So it's quite a different picture. The whole impact of discounting on the whole liabilities ends up in your P&L, but your assets, there is no compensation unless, of course, you realize capital gains, but on held to maturity on -- maturity fixed income, that is not possible. So slowly but certainly, the investment income margin that you make for the residual term of these assets will increase and will add actually to the investment variance we talked about, but it will positively contribute. But the effect of the VIR immediately in the P&L is there, so it's to a large part non-economical. There is one beautiful thing about VIR, though, yes, once you have applied that there's no more ALM risk because, after a while, you have put everything already at marked to market, while your assets are still at their historical yield, yes. Now the VIR impact. So what I want, meant to say is please take it out. Or in the back of your mind, keep that in mind, that, that is partially artificial, but I can also give one comforting message. Looking forward under IFRS 17, this will disappear. That difference will no longer be there because both will be assessed equally or at equal methods. And so I would say, yes, you have to bear with us and with the people in China for another year on this VIR effect, at least in IFRS.

Okay. Again, IFRS 17, then it's only 1 year to go, but it is still a year to go, so in the meantime, what should investors be looking at then?

Yes. So let's take us through the next slide, if you want. And if we -- if you listened carefully -- and it's also something we actually share, but we did not share it in figures. We share it in our comments in the closing calls with our investors. What you actually should understand is, when we take out the VIR, which we said is the main base change we make which automatically comes in, and when we take out the IFRS adjustments on mark-to-market capital gains but also our realized capital gains under IFRS, which is typically what we talk about in the investor calls, what is actually left? Actually what is left is the expected profit mainly and the other operational variances. And so what we gave as guidance as underlying looking through all that volatility of VIR and capital gains is actually a view on where the true performance, the underlying performance not distorted by VIR and/or, yes, on yes-or-no realization of capital gains, where it is trending to. It is the engine of the profit. And it's also the basis on which we make, yes, our budgets; on which we look whether that evolves well because the rest is to some extent, yes, noise and market fluctuations. So this underlying result, and we did the back calculation of it over the last 5 years as well. Here you can see a lot more stable buildup. The CAGR of these underlying profits over this period has been around, I think, 17 years -- 17% at least. And you can see that it provides this true look. Now this is something that we will continue to provide. And maybe we will put it more explicitly in our investor relation packs, looking forward, or at least that's what we think we should do.

Okay, so that's underlying results. We talked about the importance of CAS for dividends and also in the context of dividends, of course. Anything to share on the solvency position of TPL?

Yes, quite a bit. You have here the solvency evolution of Taiping Life over the last 1, 2, 3, 4, 5 years. And you can see that -- first and foremost, the available capital. And this is not operational, but it is the total available capital of the company or it's the own funds that they have grown with about 21% a year. And keep in mind this is after dividend payout because Gary showed that they pay about 30% dividends every year. Otherwise, it would be a little bit higher, though, yes. And that -- they have been able to put these growth rates that we saw, close to 20%, down with maintaining a solvency ratio above 200%, so funding the growth; as well as doing the dividend payout ratio of 30%, 35%. So I think, moreover, and then -- and this is an important announcement I can share because it just happened. So Taiping Life is one of the few -- or was, until yesterday, one of the few unleveraged insurers in China, yes. So all this funding have been pure equity. And they have been able to fund the growth and dividend out of that only, and they stayed above 200% solvency. Now this morning, they announced the [indiscernible] of a book building on a supplementary Tier 1 instrument, a 10-year, [ non-call 5 ], which [ has been ] successfully closed. It is a CNY 10 billion issuance which they closed at [ 3.61 ], which is quite cheap. They have -- Taiping Life has an A+ rating on Fitch, so very good. And that will complement and strengthen the solvency further with about 9%. Now mind you they're -- still have ample room to do that, but till now it has never happened. This puts only 16% of their theoretical capacity of additional funding is being consumed. In China, the rules are mainly it can go up to 100% of the net assets, which I think is not their purpose, yes, because they're -- they will predominantly be driven by maintaining a good rating as well, but what I want to say is that we're quite confident, yes, on this combined growth and dividend upstream capacity for the future; and that they have really shown a very, very nice own funds development.

Yes, okay. So that's, of course, under the current framework. We all know that there is something new upcoming. What are the relevant topics for TPL that are under discussion in the C-ROSS II?

Yes, C-ROSS II you're talking about indeed, yes. Now I would say, together with you and with everybody probably on the call, we are eagerly awaiting obviously clarity on the outcome of the CBRC exercise on the solvency [ review ]. Everything we say is speculation because it has changed quite a few times. And we will see what comes, but let me just take 3 points that have been in debate for the last months and which I think are the most relevant for us because many relate to quality of the assets and it's not our concern. The asset quality of Taiping has been very good, so it's not there that we expect the most impact. One is about the 750-day averaging. The VIR is used not only for liability valuation on the par book -- the nonpar book in accounts but also in solvency for both par as well as nonpar. There is a discussion whether the 750 should be shortened. That will create more volatility, by the way, yes. And on the asset side, as far as we understand, there would be no material changes. That means this HTM and -- the held-to-maturity book would stay HTM. And the AFS book, available for sale, because they have a little bit; and the others would go marked to market, but what would pay off is good ALM discipline. And also there Taiping Life scores well. There is an ALM gap, but they do better than their peers because they are thinking about putting for the -- let's say, the stress test for the ALM capital charge using a full MTM, mark to market, on both assets and liabilities to assess the real risk, yes. And then at the capital side, there is one thing we talked about, residual margin. They would, they will probably move to a test where they will only recognize maybe 30%, 50% of the residual margin to check whether the company, without that, will be able to support the minimum solvency capital requirements, but that is not relevant for dividend and I think we will be way above that. But indeed these are developments we also eagerly await, but we are confident but awaiting clarity, I will say, yes.

Okay. Any other metrics that you look at in relation to value creation?

Yes, yes. You put it already there on the screen. You're faster than my shadow, Veerle, but -- that, I know. Yes, yes, I'm going to sound a little bit old fashioned here, yes. So I bring embedded value back to the picture. Now allow me. I know it has fallen maybe a little bit out of fashion in Europe. And that's also because we have the free capital generation, the own fund generation under Solvency II which is kind of substituting it, but I can trust -- you that, in Asia, value of new business and embedded value are still the mainstream indicators that people are following because of the growth nature of the market. And embedded value, in the end, and I hope that everybody still is aware of the concept, is the present value of future free cash flows. That's both from the results side as well as the capital release related to it because, when your book runs-off, also your solvency capital becomes again [ available ]. So it's the combined free cash flow discount and say this is embedded on the balance sheet. And VNB obviously is the prime indicator for the additional value created [ in here ] by the new business, very similar, of course, to the concept of the residual margin which then is released but obviously with completely different discount rates and so on and so on. So when we think about driving value forward, we think about, yes, creating embedded value; and certainly also the present value of future value of new business, focusing on selling the right products, pricing them right. And I can tell you, and Gary already mentioned it, the entire management of Taiping group or certainly in Taiping Life because more for life companies is really driven by VNB targets. So if you look at results or the outcome of that: The embedded value of Taiping Life has shown a CAGR also of 17%. So we see a lot of 17%, 18% CAGRs over the last 5, 6 years there, yes, and again after dividend because dividend is already out there. So a pattern that follows closely the growth of the residual margin, as you could expect. Now just to be completely clear and certain for those who are aware about the embedded value concept in China. The embedded value is on a -- TEV, a traditional embedded value, based, not MCEV. And the 3 main assumptions which are used by Taiping Life but across the market is important to know as well. They do it on a 100% solvency ratio, C-ROSS ratio. They tend to use investment income assumptions around 5%. And the [ risk ] discount rates [ and they relate it ] is around 11%. And that is most of the peers Gary talked about disclose this as well, Taiping Life also. So you'll also find on the sheet here the corresponding "value of new business" metrics for these years.

Okay. And then to round up before we start Q&A, Filip, what would be your key messages?

Yes, it was -- this was a short but rather technical chapter, and it's also to provide you both the frameworks as well as the metrics. I'm very well aware of that. But I hope, certainly for analysts and also for investors, digital gives a lot more insight in what drives and what has driven the performance of China. And my first key message to all of you is, I make a pledge of more and better disclosures. All the metrics you see here on the sheet actually, we will share with you. There is only one caveat. Many of them are only available on a half year basis, so we cannot do this every quarter because some of our companies only closed, and this is already the case in China, they do their half year results publications. And we also will do it after, of course, our partners have closed their books because some of them are listed entities. But that's understood. But you can expect this type of metrics, all of them to be shared with you at least on a half yearly basis. And the underlying one, Veerle, I think we should also share with our investors and analysts on paper, so they have the figures, not just in the feedback. I think this will help giving them better insight.

Yes, let's do that.

But then my key message is, if you listen to the story of Gary and myself here is, first and foremost, related to results. It is important to look really through the IFRS and cash result into this underlying evolution. It is driven by expected result, and hence the residual margin release, and the real operating performance. It puts the value interest rate, the [indiscernible] impact into the right perspective. But at the same time, it remains a notch conservative when we talk about this underlying because we don't take any capital gain realization into account. And my -- it's a fact there are other assets on the balance sheet that do rely on capital gains from time to time to reflect their full performance. Secondly, related to dividend and free cash flow. Cash results will drive it and the payout ratio that we have seen over the last years of around 30% to 35%, we believe are likely sustainable. This is based on course of years of strong available capital or our own fund generation, which have led to a solvency ratio still above 200%. After years of strong growth, after years of dividend payment and also after incorporating the impact of lower interest rates that we have seen in the solvency ratio as well because it does impact it as well. And then year-to-date, Taiping Life, as for the first time, issued a subordinated instrument. It has the capacity to continue doing that for quite some time to increase further its leverage in support of future growth and capital fungibility. And on CRS, too, the effects, we are confident. But as I said, we await further clarification. And on value and value assessment, we, at least at Ageas and also on Taiping, we focus both on embedded value, but certainly on the value of doing business. I think this is the case for most of the peer in the Asian region. They drive Taiping Life management actions for value. They're in cascade, as I said, in the management KPIs, and there is a strong focus increasingly so on quality over quantity, on selling the right products at the right price. So I think we have gotten comforting messages about that also from Gary. And in fact, the CBRC, this morning's new government framework that they released, has everything to do with that as well. And then to sum it completely up. All these indicators that we talked about, they've shown significant CAGRs over the last 5 to 6 years. Even despite, I would say, in the last year, the COVID and macro turmoil. So my conclusion is that China, that is very much still a growth market. Taiping Life is still a growth company. And our partnership with CTIH is still expanding, and I would say, stronger than ever. It's certainly broader than ever. So we are truly satisfied with the performance to date. But I think more importantly for today, we are very confident long-term investors in China.

Thank you. Okay. Let's now take again a 5-minute break before we go into the Q&A session. You can still write questions in the chat, and we would like the analysts to move to the MS Teams tool. Talk to you soon. [Break]

Right. We're back. What questions did we receive, Veerle?

Well, let's first go for a live question. It's coming from Michael Huttner from Berenberg. And you're on mute, we think, Michael?

No, I'm back. I'm back. I'm back. It's such a pleasure. I only had 2 questions. The first one is if you include 2021 half year number, those CAGR you spoke about, are they still around 17%? Are we significantly lower? And the second, and I may be completely wrong. When you do the embedded value of Taiping Life and you compare it to the market cap of China Taiping, and of course, you've got to make adjustments in businesses. But effectively, the market in Hong Kong, this is not us. This is not least repeat analysts in London, is only valuing Taiping Life's embedded values quarter. What's -- where is that coming from?

Yes. And I'll take this -- that second question first because I think -- I noticed that many people use CTIH and then a proxy of it to valuate Taiping Life. I see that regularly in reports, say it's also convenient because that is listed and so on and so on. But we should not forget that CTIH is not Taiping Life. The first, first substantive comment on that. CTIH is 75% of Taiping Life. So if I see sometimes multiples being taken 75% of CTIH, they're actually talking 50% of Taiping Life in the -- mechanically, so because we have 25% of Taiping Life. Secondly, CTIH has a lot of other activities, but mainly also a completely different capital structure. As I said till now, and it will now change a little bit with the rights issue this morning, Taiping Life is a pure equity funded. CTIH has historically always been composite funded. That means that the free cash flows out of Taiping Life all go into shareholders where in, well, 75% of them end up in CTIH. But in CTIH, the onflow has to cater for their capital structures. So it is not correct, actually, to look at CTIH as a proxy of Taiping Life valuation. Actually, the right work to be done is to look at a good valuation of Taiping Life and then think through what is the value of CTIH. But anyway, that is not my job. But you see it's not correct to mix the 2. So there's a lot of -- the whole Non-Life operations in China are in CTIH, there's nothing to do with Life. And then the other point, and I leave that for your -- and certainly for the analysts' more capable assessment. I mentioned that one of the key assumptions is 100% solvency ratio, right? That is not necessarily leading to a straight-through valuation, yes. That I leave to experts to make corrections for that, and that actually explains partially from 2 angles.

I have a question about the CAGR, including now. Does it change from the 17% to -- or 18%?

Allow me to say that I don't know the CAGRs by heart. But I would expect them to be maybe a notch lower, but not too much. But looking forward, yes, it could be that growth is certainly, for the next year, a bit less. And we have seen GDP. Pressure is certainly there in China. There's also a bit of regulation change coming in. But the fundamentals are there. And of course, as I said, we will report on it. So we reported our underlying on the first half, but we did not report all the other metrics that we introduced today. They are available, though, so I can also refer to the CTIH website because some of these components you will find back there. Taiping Life also just released its 9-month embedded value report, if I'm not mistaken, or the 6-month embedded value data. But we will try to collect this data and comprehensively share them with you, but starting from the year-end announcements. So we are -- forward-looking CAGRs is always difficult to predict. But our core message, and this is why I ended my speech, which was saying, look, look, we are confident long-term value investors. This is a story about middle class and income development in China. It is not about a short-term volatility and regulatory measures. We will see these CAGRs go up. GDP can be depressed for 1 or 2 years. Interest rates can be low, but at one point, they cannot go lower anymore. They can still go down, all these things are true. We will lift through. But the long-term picture on China as a valuable and a value-creation story for insurance is undeniably there from our perspective.

Okay. Was that okay, Michael? Yes? Okay. Next question, we will get from David Barma.

My first question is on the business mix and the slides you showed at -- in the first part of the presentation. Can you give us a sense of the different new business margin levels in the big categories of product lines? And then linked to that, could you just remind us the inflation exposure in the protection side and the health business, please? And then my second question is on interest rates. And sorry, I missed the last few minutes of the core presentation. Could you just repeat what the interest rate assumptions are for your main -- the main metrics you look at? And then lastly, if I may, more generally on the non-Chinese businesses. As your JV partners grow and mature, how do you see Ageas? How do you see your involvement in the companies evolve?

On the involvement in the companies, maybe Gary, that is something for you?

Sure. Yes. So I think if you go back to what I was talking about with the circle and then with the management structures and what have you. As long as we stay true to those ambitions and values and the way we behave, I think our involvement is going to remain quite active, and we'll be able to continue to add value to the partners. And as long as we're not obstructive, as long as we're seen as being able to contribute ideas, being able to contribute resources, being able to contribute to the plans and the ambitions of our partners, then we're important partners for them. And we've gone from largely being seen as somebody who understands bancassurance, maybe -- then all of a sudden, risk management. Oh, wait a minute, Ageas understands quite a bit about risk management as well, actually. And we're actively contributing now to the agency channels. We're actively contributing to data analytics to IT, to the way data is structured, data architectures. So across almost all domains, customer journeys, we've got projects going with the joint ventures. So as long as we can continue to evolve, then we'll continue to be relevant to our partners. And let's face it, that's the job of a corporation, even if we don't have partners.

Yes. I fully agree. Now you may or may not know, but my left hand -- or my right and I have -- as MD Asia, I have Gary on the left hand. I have Gilke Eeckhoudt, which is a Chief Development and Sustainability Officer. And actually, that whole organizational setup is there to create value-adding services to partners and to operating entities in innovation, knowledge sharing, development, R&D co-investment, exactly aimed the fact that we have to stay attractive, that we have to continue reinventing ourselves all the time to stay attractive to our operating entities, even to our controlled operating entities as well as to the partners. That's the reason to exist of Ageas. We are not a financial holding, we are quite actively involved. And I mean, that is part of our partnership model. It's at the essence why our joint ventures are there for so long. Now on your other question, I'm going to avoid a little bit answering the detail because first and foremost, I think that is the job of CTIH to provide that type of granular insights on product by product margin. It is not something we can do this event. That is something that should happen there. On the other one, on main assumptions that are underlying some of the metrics that we showed, I will share with you, which we will now repeat those that I said, on the residual margin discount unwind, roughly, roughly, because it changes with VIR and with interest rate. But roughly, today, it's close to 3.5% on composite. The guarantees, you didn't ask it, but I'll give them. The guarantees that we currently have on participating new business is about 2%. The -- on the nonparticipating one, I think, is around 2.75%. That is on new business written. And actually, on the book in-force, it's slightly lower, but that -- I don't know whether Taiping discloses -- anyway, I'll give you. On par, it's 1.7% is the guaranteed rate on the back book and on nonpar, it's 2.7%. And the IRRs on the asset yields that they're realizing still foresee sufficient margin. I cannot say anything other than that. But there are still at least 60, 70, 80, actually more, 90 bps above these and on the par, obviously, a lot more. In the calculation of embedded that is disclosed by Taiping in their Life in its embedded value report. But the investment assumption is roughly around 5%. They also provide some sensitivities on some of these assumptions in their report. And the risk discount rate used in the embedded value model by Taiping, and actually across virtually all the main peers, is 11%. So kind of 6% risk charge on top of the "risk-free" 5% that they assume. They provide combined sensitivities on lowering the risk discount rate as well as the assumed investment income. They are public information, but I don't know them by heart.

Thank you, David. And over to Nasib.

Sure. Can you guys hear me okay?

Yes, we can hear you.

Yes. So a couple of questions here. And it's very enlightening and encouraging that you're going to provide more embedded value disclosure. So my first question is around that. So are you going to provide operating metrics as well, like free surplus generation more aligned to Solvency II on an EV basis? And are you going to provide more disclosure on the other Asian business as well, as you say why you use metric in Asia? So that's question #1. Second question is just on the policies and the products sold in the past by China Taiping. So you talked about guarantees just now. Interest rates were a bit higher. Are there any legacy products with higher interest rate guarantees? And what proportion of sort of the back book is that high guarantee legacy product? And then finally, on sort of China new business flow. So they've been weak this year. And a couple of reasons that have been given for that is government schemes and million medical insurance. So just your thoughts on impact on China Taiping from that?

Yes, I'll start with your first question because, indeed, we are very, very much aware that we need to provide additional insights. That's why we organized these deep sessions. And there will be a second one organized by the Investor Relation team on our other 2 main businesses and adjacent, in Thailand and Malaysia. We'll have another session like this in April, I believe -- somewhere in April, that is coming up. Will we provide operational more granularity than the metrics I've shown -- what we've shown today? I would not guarantee that. Why I say that? Because of course, it is something that has to be provided by the listed party entity as well. Now that being said, there is more available and we will also relate with the Investor Relations team of our partners to see whether or not we could jointly disclose more. It's more a matter of timing than a matter of granularity. We have to respect listing requirements in all the countries of our partners, that's obvious. But I think this will be already a major step forward. Yes, we will do it for China, separate from our other operating entities and maybe the other operating entities, we'll bulk it together or we'll also break it up. It depends on how we can practically organize it, taking into account all regulatory requirements related to listed entities. But that's what we are working on.

On the other questions, with respect to the guarantees in the book. Let's focus on par because that's the bulk of the portfolio. And up until a few years ago, that was the bulk of new sales for -- I think products that had guarantees as well. It's regulated. So what you had in the past was a regulation that capped it at 2.5% as a headline number. But if you dig down into the details, that gets you the 1.7% and the 2% that Filip referred to. There was a relaxation on the guarantee that took it up to a max of 3.5%. Taiping never went there. So when you look at the Taiping portfolio, think of the 2.5%, which means the 1.7% and the 2%. In terms of the sales questions that you asked, indeed, there has been a drop-off this year. Several factors at play. Let's talk first about critical illness. So what you had was a repricing of the critical illness product a couple of years ago. That depressed demand. You also had a huge demand because of when COVID first came out. So there was actually a large swath of the population that's got critical on this product. And then indeed, what you referred to, this government-sponsored product that's targeted at the lower middle class and economic groups below that. So that's absorbing some of the capacity there as well. So that's had an impact on the volumes overall.

But in all fairness, I am not convinced that 2021 are the best reference years to look through the long-term cycle. But indeed, there has been also -- there's also the new regulation which is going to come up on more professionalization in the agency channels, something we actually really like because we have been -- and Taiping Group has also been focused on to create more professionalism in that channel. For the long run, that is good, but in the short term, of course, it may hamper low-quality sales, that's what disappears. But that doesn't change the long-term picture of China. It may create short-term weakness in growth patterns like we've seen this year.

Specifically to the regulation. So what they're doing is capping some of the commissions. They're driving new recruits into agency force to drive simpler products so that they get some experience and some knowledge about the industry. They're blocking what are absurd sales practices. So you have to buy a product as an agent if you want to be recruited. I'll buy a product from Filip, and he'll buy a product from me so we can meet quotas. That's all being banned, and we're incredibly happy with that. If you look at the Taiping Life agency force, 20% of the force has been on service for less than a year, 20% between 1 and 2 years, 40% 3 to 5 years and 20% more than 5 years. So the average tenure is over 3 years. So most of this won't impact a vast bulk of the Taiping sales force. It's exactly addressing the types of activities and the types of training, the types of behaviors, that Taiping is encouraging anyway. You may see a short-term uptick in first year sales expense just to support new agents as they come on board. But the assessment that we've done is over a 5- to 10-year period, sales expenses should not go up in the channel as an average over that period of time.

Okay. Let's take a question that came in from the chat, and it will be for you, Filip. Under IFRS 17, will the net profit for TPL look quite similar to the current underlying IFRS results you highlighted?

I -- unfortunately, it's too early to tell. But it will have similar features. But one important thing, yes, indeed, to some extent. But I cannot guarantee that. But IFRS, we will have a separate session altogether by the time all that comes clear by probably the end of next year. But in nature, it will go in that direction. But whether the exact amounts will be, honestly, too early for me to respond to that question. . There's too many optionality in IFRS 17, actually. There's still choices to be made whether we will let things flow through P&L or whether things will flow through OCI. And then the question is what do you define as a result. In combination, of course, they stay the same, but it's too early to tell. I'm sorry.

Okay. Let's move to Fulin, then.

Hopefully, just 2 quick questions. The first one -- maybe 3. The first one is I guess I understand the VIR is more kind of presentational. However, I think the underlying concern is what's exactly economic impact from lower interest rates? Because arguably, lower interest rate -- lower bond, lower government bonds means lower returns from the portfolio, which means lower margin. I guess that is the key question. So how is that lower margin being addressed in the reporting numbers over there? Is it in the underlying results? Or is it in the -- sorry, you have like [ CSM ] stuff, what's the name, residual margins, I guess, the first question. And the second question is under IFRS 17, if I remember -- sorry, if I understand correctly, all the 3 differences you explained between Ageas and the Taiping will disappear? Or will it stay? Or it will be something completely different because both of you moving to IFRS 17? Okay. That's my second question. And my third question, which hopefully, just a quick one, is it right to -- so you will disclose more kind of disclosure, but any of them is -- will be go together with the quarterly results? Or is it more like ad hoc additional information in terms of the quarterly results? Is it just the normal matrix we will have?

Right. I almost forgot the first question, but I'll...

The low interest rate.

Yes. No. There is no denying that low interest rate, and I said that also in my speech that low interest rate is not good for Life insurers, provided -- depends on what products you sell. You've also seen that Taiping also has moved more and more towards protection. So that is a reality everywhere. But products and new business margins that we have shown, that is with the current interest rates. So that is not with a hypothetical rate, the value new business figures that we saw. And indeed, in all fairness, there has been a little bit of pressure there because if you look at the figures and then you start to think it through, they have not grown so much over the last year. It actually came down a little bit in 2020. Also this year, the whole market, and I'm not specifically talking about Taiping, has been struggling a bit to keep up value new business figures. There is interest rate pressure in there, and that's the first place where you see it. The -- obviously, insurers can reprice. Let's not forget that in China, as we just said, guarantees are still at a higher range. But it is something that -- and you know it better than I do, actually, that in China will require a hard end of CBRC to give in. But that is still possible. And the second thing, and also not to forget, specific for Taiping Life, we use -- and that's also very technical, but on the valuation interest rate impact, many of our peers, and they all seem to have better solvency ratios and so on and so on, all good. But they have used higher volatility adjusters. There is this what they call the illiquidity premium. And the illiquidity premium used by Taiping is one of the lowest in the Chinese markets, only 25 bps. So also, there is still some maybe not flexibility, but all these things come into play. But in the end, it is rigor in pricing, selling the right products that still have margins and trying to manage your ALM gap that much. The level of the interest rate will then less -- be less impactful. Of course, you can also argue that cost of capital goes down when interest rates go down. And given the fact that I saw that Taiping Life has, this morning, been able to issue a EUR 10 billion bond at 3.61 10-year noncon 5. That's what I mean, and so cost of funding is also coming down. So plays at both sides. But discipline and rigor in pricing and product is important.

Okay. Filip, what about the IFRS adjustments under IFRS 17?

Yes. I'm looking across the room to the CFO of Asia, whether he can help me. He's waving at me, but I can't read his sign language. But I said, yes, we hope that virtually all differences will disappear, yes. There is no reason for them to be there, except potentially on property because property is not IFRS 17, it's not IFRS 9. It is IFRS, I forgot the number, I think 14 or something, 14. And so that is a different IFRS. So that difference is not necessarily going to disappear. It could, but it's not -- so we are absolutely looking forward to close these accounting gaps between China and IFRS for sure. And so we'll do our ultimate best to close them. But there's a few I cannot guarantee. Discussion is still ongoing. By the end of the year, we hope to provide a lot more clarity on that.

And on the timing of the more disclosures that we will give. Filip already mentioned during his talk that it would come when our partners have disclosed their results. So they will come a few weeks after we issue our reports...

Except the underlying.

Except for the underlying, indeed. I see we also have Robin van den Broek who would like to ask a question.

Yes. I would like to come back on the valuation question of Michael, the first one. And maybe it's just an observation or maybe you can have a response. I'll leave that up to you, but if I make the corrections that you suggested, I think the P/E multiple on your IFRS earnings is still below 10x, which doesn't really seem to be reflective of the growth of the business. So there seems to be more elements than just capital structure and 75% ownership of the holding to make the valuation of Taiping group that poorly. So I was hoping that maybe you'll have a chance to give a little bit more color there. But for us analysts in Europe, of course, it's hard to ignore that feature. So that's the first. Secondly, and sorry to come back on IFRS 17 again. But HSBC came out with some numbers on how IFRS 17 is likely to impact their numbers, and I'm aware there's a lot of choices to be made. But part of the story seems to be that high growth, yes, it's sort of punitive in the transition towards IFRS 17. Can you maybe allude a little bit on that? Third question is more on the demand that you sketched on investment margins versus the VIR dynamics, I think are interesting. I mean you take a hit on day one and then your investment margin should go up. Can you give us some sensitivity on how big these impacts can be going forward? Maybe on the back of the size of the book? And the running coupons that the book is attracting? And the last one, also maybe for Hans. I see he's a bit on the side, and he looks like he wants to get in this. So I'm going to give him a question as well which relates a little bit to the strong share price performance we've seen very recently, which seems to be also felt a little bit by M&A speculation. In the past, you've always been quite outspoken to want to be independent. Can you maybe talk a little bit about the levers you have to protect yourself against the hostile takeover? And secondly, I was just wondering, given the strong share price move we've seen, if you would be in talks with any party, would the regulator force you basically to come out with a statement, given that this rumor seems to be price sensitive? Sorry to take -- to ask a lot of questions, but...

Yes. I have a bigger problem remembering all the parts of your question because I'm nothing to write. So I'm looking at Veerle to repeat. But allow me to immediately park IFRS questions. I said already 3x now that this is still something that we are looking into, that we will come with detailed analysis by end of year. We -- I'm not going to make any substantive comments on IFRS. I think it's also a better place for our CFO than for the Managing Director of Asia. We wanted to give the insights into the Chinese business, not -- I know, of course, we gave a lot of figures and facts because before we gave none. It's not a guarantee. I can honestly also not professionally answer that question. The other one, the first one was?

The valuation with the P/E lower than 10.

Yes. There are 2 things that we're going to [ update ]. I'm not going to do a valuation exercise here on my partner. I just gave the information, I think, which is necessary to [ vary ] Taiping Life, and I leave it up to you to think through multiples on EV, VNB or discounts which should be there based on the assumptions I gave. In all fairness, I'm also aware that it's not 100% of that EV that is the right multiple because of the 100% solvency assumptions, for instance, in there. But that is not up to -- we don't make valuations of our companies, and certainly not of our partner. What you have to look at is capital structure and other activities, which they do disclose so because they are listed. The profit signature of Taiping Life is quite different. As I said, then the one from CTIH, there's a lot of other activities in there, and their capital structure looks quite different. Their dividend payout ratio is -- and is different. So I think there are many reasons indeed. It's not just -- but I can honestly not do the valuation of my partner in Life. That would not be fair.

Okay. Then your question for me on share price performance. There's a lot to say about share price performance, and I always hear now there is an immediate link with some speculation and rumors around takeover and making a bit. But let me first go to the performance itself. Remember, if you look at this year, on the end of June results, we had a slight miss, well not too small leader, but 40 million miss, mainly becoming from, at that moment, our Asian business. And we saw a very significant correction of the share price at the same time in combination with the floodings in Belgium in combination with the uncertainty in the Chinese market on the real estate and the property market. So all this came together, and I'm talking now about July, August, where we saw a quite significant correction. If we then go into the 9 months results, there we have seen actually a performance of 60 million above consensus. So actually, for the right reasons, actually, I would assume the share price to bounce back up. And that was on indeed, I would say, accelerated by some of the rumors and the latest rumor that we have all seen is the report on BNP and the impact of Basel IV on BNP owning issuance operations, of course, at the same time, in combination with the announcement that they would sell their American businesses and bringing, I would say, a nice amount of money for them and cash. Well, first of all, the analysis on Basel IV and how it builds further interest for banks to invest in issuance, that's right. So I think it is a correct and objective analysis. There is still something else on BNP acting and moving first of all. The timing of the report is well ahead of any potential sale of BNP. So I think it would actually not be very wise to spread that in the market today because that sale is only starting and ongoing. And actually, I have no idea when closing could happen. Secondly, it's a vote of confidence. We are very great -- another of the great partnerships is with BNP in Belgium that is working very well. And I think BNP is very happy with the way we develop the business in Belgium together. If you ask me, I would be very surprised by a hostile approach by BNP, Energia as BNP and Belgium has very strong, long-standing relationships. I don't think that would happen in a very hostile way. And in history, when we have seen BNP moving on the Belgian markets, that was not at what I would call our current share prices. That was in other times when the share price was in a completely different zone. And maybe I can conclude with one of the analysts report. I read one of your reports by saying, "Okay, we have seen the share price bouncing back with these rumors, but the report also ended. What happens when the rumors fade away?" And then the report said, "Well, highly likely the share price might stay at these levels without the rumors because that would be a better reflection of the value of the group after the announcement of the 9 months results." So I would not only link it to a speculation. I think there is also an element of performance in there.

Okay. Let's move to Benoit Petrarque.

Yes. Yes, so the first one, I wanted to come back on the interest rate sensitivity of Taiping Life. It seems that the embedded value sensitivity to lower rates -- and by the way, also the NBV also is more pronounced than peers. So I've seen like 50 bps down on the rate is 14% on embedded value and minus 24% on new business value. So I was trying to understand why Taiping will be more sensitive to lower interest rates. Is there a bigger mismatch eventually on duration? Is there anything special we should be aware of? The second one is more on the kind of asset quality. And I think CTIH actually disclosed an alternative asset portfolio of 14% of total assets. I'm not sure where this portfolio is sitting. I think it relates mainly to infrastructure and property development debt. So I was wondering if you could put some light on this kind of alternative portfolio, which is quite common, by the way, in China. And do you see any risk on the shadow credit exposure in China potentially for the Taiping Life? And then the last question will be on the agency basically. Could you give us a bit details on the agent attrition, like this year? And also the kind of commission rate to agents? There is already some pressure on that. Because the way I see it now, after your explanation that the regional margin is very actually ultimately sensitive to the persistency basically if Ageas will keep selling over time. So could you maybe answer those questions on Ageas? That will be very useful.

Can you start with that one, Gary?

On the agents? Sure. Yes. Actually, in 2021, the Taiping agency force has grown. So it is the only, amongst the peer group, where they've been able to not just stabilize it, but marginally grow it. You've seen all the other large companies see an attrition in the size of the agency force. So we're quite impressed and happy with the performance of agency management in Taiping life. And the tenure of the agents that I've given you as well, 20% of them less than a year. Those are the vulnerable ones. Those are the ones that are they going to be able to build a career and survive. So again, I think we're pretty good there. Taiping spent a lot of time over the last 5 to 6 years, in particular, prior to that, working on specialty designing product to help agents get comfortable selling simpler sales products, actually quite well aligned with the regulatory environment that's going to take place if the speculation on the new regulations coming out is real. So attrition, it's not there. We're not seeing the growth we're used to see, but they are stable. Commission rates for agents by product, I don't have that information. What I do know is that based on the analysis we've done on what we think the new regulation will look like, the overall cost of the channel will not go up over an average cost between 5 and 10 years. As I said, there may be some special incentives through campaigns or what have you, to keep new agents to keep the income levels of new agents up so that they can build a career as life insurance agents, but I don't think it's going to raise the overall cost to the channel.

Now on the question you asked on sensitivities, I'm just looking at the report where, indeed, investment return discount sensitivities is closed on 50 bps, is 13% on VIF, on value in force. 13% on value in force and about 24% on new business value. I -- honestly, I do not -- I cannot compare it with competitors. One thing I know, obviously, is that Taiping is using this lower volatility adjuster, but I don't know whether that would impact it. And the other thing, of course, they sell a lot of regular premium long-term business, a longer-term business, more sensitive to this. Other than that, I cannot immediately think why it would be because I said before -- or Gary said it at least, that if we look at the risk ratings they get on their ALM, I think that is as good as you can get it in China. It's also not possible to completely close the gap, so they constantly bring it down. On the riskiness of the asset mix, we track that rigorously. They're not more risky than their peers, not at all, actually. We did not have any accidents in that book for a long time. So I honestly could not, myself, explain why they would be more sensitive. Maybe other than that their book is longer, the product range they sell longer because that is more sensitive to interest rate. But we can maybe have a look at whether we can find more information for you to our Investor Day.

And then there was a question about the alternative assets.

Question on the real estate exposure.

On the alternative assets and what the quality of that -- what is actually in there? What type of investments are in there? And what's the quality of those investments?

Again, that's something I think Taiping doesn't provide a lot of detail on. So we're going to have to park that. . But on the real estate exposure, I mean, the bulk of the real estate exposure is to own use office buildings. They do have some real estate debt. I said it was minimal. No exposure to people like Evergrande or the other groups that have been in the news. The bulk of what they do with real estate debt is with state-owned enterprises. So it seemed to be quite high quality. But it's -- as a percentage of the overall portfolio, it's still not terribly relevant.

Is that okay, Benoit?

We can try to...

Yes. Yes, it will be great to follow up on the alternative assets because it should be quite significant.

Okay. Perfect. We also have Iain Pearce who would like to ask a question.

They're mainly around the agency force. I was just wondering if you could provide a bit more color around how you expect that to develop, especially given sort of the challenges you've seen at peers? And how do you expect the productivity of that agency force to grow as well going forward? And then on the agency force, just wondering why the persistency of your agents is so much higher than the market.

It's -- yes, it's 20 years of focus on persistency. It's a machine. It's been a KPI since day one. They've got a very rigorous system of following up almost at every touch point in the sales process, and that's been going back for over a decade. So it's -- how are you -- what was your interaction with the agents like? Did you understand what he was talking about or she was talking about? Do you understand the product and asking questions about the product they bought to make sure they understood what they bought? So it's an incredibly rigorous, complete process that's been in place for a long time.

I can add to that because as a member of the Board, the Chinese regulator very often gives scores on different elements, like scores on your compliance, scores on agency management, scores on the development of your risk management. And I think it's a matter of culture, Taiping Life, each and every report I see coming out of the regulator in the Board, Taiping Life scores very, very high. So I think they have a high discipline on a qualitative development of business, including a qualitative agency force.

I've got to say, I mean, I look at these -- you expect to see [ banca ] relatively high up in the '90s and you expect the agency down in the 80s somewhere. To see them effectively equal, and equal over 15, 20 years, is astonishing. It is really down to the -- this being a main KPI of the group. . Then going back to your questions on how do we see the agency evolve, given the pressures under the channel. Yes, it's a little bit difficult to say where we're going to be 12 months from now. We can say what our ambitions are, which is to stay at 370, somewhere between 370, 400 agents -- 400,000 agents. The training programs that are in place for activation of new agents are being continually looked at. Taiping engages quite regularly with recognized global trading companies. At Ageas, we work with them on agency seminars, working with the agency leaders. We've had a traditional annual convention. Taiping always qualifies a single large -- as you would expect, given the scale of their agency force, but they're always sending several hundred of their leaders to our Asian convention. We've done that this year virtually. Again, focused on recruitment, focused on activation, focused on training. So we believe, based on past experience, that retention of agents, activation of agents, will continue to be good, that persistency will continue to be good. The challenge will be to improve productivity. The challenge will be to move a step up in the socioeconomic classes where they're targeting in their segmentation. But those are all active projects that are underway. And based on past performance, we've got confidence that they'll pull it off.

Okay. Let's move to Cor Kluis. Cor, you had some questions?

Yes. Good afternoon. A lot of extra insights absolutely. I got a few questions on, first of all, interest rate risk. We all hope already for 2 decades that rates will go up, but they continue to go down. So also in China, it's going down somewhat. Could you give some insight on the asset duration and the liability duration? In the past, you've given some, I think, years of duration and also on the asset duration, what do you assume for equities? Because some people think the duration is zero and some people think it's very high for equities. So yes, asset and liability ratio for Taiping Life. And secondly, on Taiping Life on the asset side, their 15%, of course, is invested in equities. In China, that's a little bit less than peers. But internationally, it's still quite material, obviously. Could you give a little bit more insight on that? Is this all invested in China? Is it in certain sectors? Or is it just index investing? A little bit more insight in the equity portfolio of Taiping Life. And the last one, just to understand a little bit how it works at Taiping, on an incentive basis for the people who work there. Do those people also own shares in the company? Or does it work in a different way there? That's from my side.

Let me take the easiest question first. Do they own shares in the company? No. It is a state-owned enterprise. More than 15 years ago, there was a plan to do that, but it was -- had to be dropped because of regulation. So no, management is not incentivized through share ownership.

Let me take the difficult question, Cor. On asset liability mismatch and how it is evolving. Obviously, I cannot share what Taiping Group doesn't share on that, that is very clear. But they do make some statements around it, and I also made a few. And so first and foremost, they are, as I said, among -- rated among the top 3 in terms of their management. So it could definitely, by comparison to peers, should give you some comfort. And effectively, their duration gap has been coming down quite significantly, in fact, over the years. It's still material. Why is it still so material, and what is it in nature is because they have positive cash flows, actually. These companies in China, and don't forget that, they're still young. They have no cash outflows in the first years. And in terms of asset liability management, there is always a bit of a struggle because instead of an outflow, you have an inflow. The premiums coming in, in the first year, they still definitely exceed vastly the cash outflow. Now that's going to take another, I would say, 3, 4 years before the market reaches a tipping point. So they should actually lend money and then put it long. But that is as far as I'm aware, not allowed in China. So -- but that's actually the challenge of the duration gap and of course, the lack of very long-dated paper. But the duration gap is every year coming down almost with, I would say, half a year. So they're doing their best. And I don't know whether they disclose their duration of their assets, but that is above 9 years now. I don't think they will find it a problem to say that, but the real asset book is over a 9-year duration, which is quite long in China and of good quality. So most of it is -- I think they do whatever they can to keep that under control. And then the final comment on that, I explained the impact of VIR. So the factor through P&L., there is no ALM -- or rather at least interest rates go down a little bit. But the mark-to-market impact is gradually factored in when their assets are HTM. So the VIR impact already takes into account, in over 750-day averaging, the ALM risk. So immediately taken to P&L, actually. Even more than because it's also for the matched portion, it does it. So these are all circumstantial comments. I cannot give exact figures on this. I'm so sorry, Cor.

On the equity portfolio. So on the equity portfolio, as I said, 5 out of the 15 is long term. So these are the high dividend yield stocks, mainly banking stocks that are paying 5% or 6% yields on dividend. We expect that allocation may increase as you move into IFRS 9. The remainder, there is an element of private equity in there as well. So again, those are more long-term held. To the best of my knowledge, these are Chinese equities, that there's not an allocation to offshore equities. And if you look over a 7-year period, I mean they're not -- they don't do index tracking. But over a 7-year period, they have outperformed the CSI 300. Obviously, certain years aren't quite as good as others. But over the period, they've outperformed the CSI 300. And they largely follow sector strategy. So they've been outside of technology, thank goodness. Weren't in the education funds or education companies, so -- and yes, they've avoided the property developers.

Okay. We have one question that come in through the chat, a bit more on the products. Can you give some more explanation on the differences between the participating policies and the traditional? And also, is there something in the portfolio that compares to what we know in Europe as a guaranteed interest rate saving products?

I'm trying to get my head around the question, but the screen has gone blank.

That's a chat question.

Oh, okay, that's why. Their par products and our par products, when we talk of profit sharing procedures, they are not different. There is a specific profit sharing rule in China, but we already said that. But in terms of profit design, they're no different. What -- and I don't know from where the [ chat ] going because our countries differ. But things like we have been selling a lot -- used to sell a lot in Belgium, for instance, 8-year guaranteed contracts with hardly any protection, yet you will hardly find there. That is not what we are selling in China. These pure saving products are rarely there from that nature. There are a lot more insurance components in it. So I don't know whether that answers the question, but there is a -- it's from that angle with the whole life, accident health, CI, there is a lot more protection components in it. And all life, you can say, it's partially an inheritance as well as a long-term investment product. But still, there is a risk component in it, which we don't have in the shorter term saving products that we used to sell, for instance, in Belgium for the withholding tax of [indiscernible] -- that is -- that does not exist.

China, the par product in China is -- it's a 70-30 split. In Malaysia and Singapore, you've got a 90-10 split, so a major difference. You're really only looking at the mortality profit and the expense profit and some of the investment return on the policyholder front. So it's very more -- it's much more tightly defined on what the participating components are than you would see in other markets as well.

Thank you, and thank you all to participate to this event. I hope it was interesting that you learned a lot about our activities in Asia and how to look at the financials. I know that there are still some follow-up questions in the chat and from the analysts. But as usual, just -- you can direct them to the IR team. There are -- and so we'll be available to answer your questions. One person here hasn't been talking a lot, Hans. What are your 5 -- or 4 or 5 key takeaways from what Filip and Gary have been telling this evening?

Well, let me start to say thank you to you and the whole team and Filip and Gary for preparing and presenting this. I've seen the nervousness over the last few days, but I can tell you, it was very well prepared, very detailed. But also, I think, very comprehensive for all of this. So I'm happy to share with you a few of my takeaways and I hope also your takeaways. First of all, in China, we are not sailing blind. We have a very good understanding of the business we are developing together with our partner in that very big market with a lot of potential. Secondly, for 20 years, we have believed in the long-term development of the Chinese issuers' market. So when I was there at the early days then it was after Gary, Gary is even longer. But we were at the very, very beginning of the development of this market. If we see we are standing now, we believe that the future still has this potential of long-term positive development and growth of the market. This year, we celebrate 20 years of partnership with CTIH and Taiping Life. And it is a partner we love to work with, a partner who respects us and who we can absolutely respect and we have an excellent relationship with. And the only thing actually we all would have loved now is to be able to step on the plane to fly to Shanghai and to celebrate together with our partner the 20 years of partnership. Number 4 is, okay, there is volatility. There is volatility also due to reporting, there is volatility due to financial standards. But I think and I'm convinced that Filip has been able to show you that behind this volatility, there is a stable growth story with a solid performance both in profit as well as in value creation. Number 5 is Taiping Life, and that I can testify for my own participation in the Board of Directors. It is a company within the Chinese market which is locally highly respected also by the regulator how, together with its partner, together with us, it has been developing the life insurance business in the Chinese market. And we see that in multiple waitings that are coming on, amongst others, from the regulators to the senior management and the Board of Directors of Taiping Life. And last but not least, and I think that's an important takeaway for you, I think Gary and Filip has been identifying some key KPIs for you that can -- that gives you the opportunity to better track how we are developing this business going forward. And as promised at the launch of Impact24, we will turn them now into more frequent disclosures with you, timing, frequency all has to be defined. Gary and Filip will continue this work to be able to present you a similar story for the other participations we have in Asia. And by then, we should be able to give you a very solid dashboard with key KPIs so that you can also track how our business is developing in the [ mean time ]. So these are a little bit my 6 takeaway. Thank you for being present for us for a long session, but I think it was a very interesting and inspiring session, and I wish you a very pleasant continuation of your day. Thank you.