ASR Nederland N.V. (ASRNL) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome again, in our building at ASR. We are very happy to see so many people in the room, and this supports the importance of the topics at hand. I'd like to open our Extraordinary General Meeting and go through a couple of formalities with you at the start. This meeting is being offered in a hybrid form to enable as many shareholders as possible to participate, but no one has taken up the option to attend only virtually. On behalf of ASR Nederland, the following people are participating in this meeting. The full Supervisory Board; and Sonja Barendregt, the Chairman of the Audit and Risk Committee; Herman Hintzen, the Vice Chair of the Supervisory Board; we also have Gisella van Vollenhoven, the Chair of the Remuneration Committee; present Gerard van Olphen; and I'm the Chair of the Supervisory Board, Joop Wijn. In addition, we see the full Board, Jos Baeten, Chair of the Executive Board; Ingrid de Swart, the COO/CTO; and Ewout Hollegien, the CFO. I would also like to warmly welcome the representatives of the Works Council. Glad to have you here. There are also media representatives present. Welcome to you all at this meeting. In connection with agenda Item 4, one of the two proposed candidates for the Supervisory Board, Mrs. Daniëlle Jansen Heijtmajer is present. The second candidate for the Supervisory Board, Mr. Lard Friese, cannot be present due to the EGM taking place at 2 O' clock this afternoon of the Aegon Group. He will therefore join the meeting here via a video link during the discussion of agenda Item 4. We have our notary public Paul from the mail, who is present to oversee the proper voting procedure. He is also a proxy for shareholders who have already cast their votes by proxy. The agenda items to be voted on are agenda item 2. This pertains to the approval of the acquisition of Aegon Nederland and a connection there with certain authorizations for the executive Board. And agenda item 4 is a voting item, the composition of the Supervisory Board. Voting will be done electronically. I'll get back to that later. I note that the notice of the meeting was given in accordance with the law and the Articles of Association. I also note that the meeting can take valid resolutions and decisions. I also know that shareholders have not submitted any proposals for consideration today. A couple of housekeeping announcements. First, kindly put your cell phone on silent, if you haven't already done so. Then this meeting can be followed via a webcast in Dutch and English on our website. And you can also review it at a later point in time. After the meeting, in our lounge area, we will make a lunch available to you if you have questions, not as a shareholder, but as a customer, you can then always address one of our hostesses and they will put you in touch with the right person after the meeting. This was agenda item 1. We'll continue with agenda item 2, which is the proposal to approve the acquisition of Aegon Nederland NV and approval to indeed purchase the shares. This meeting is entirely dedicated to this proposed acquisition in the documents you've been able to read the main elements of this transaction. As agenda item 2, we will first discuss the acquisition itself. In agenda items 3 and 4, we will then discuss some of the agreements that are part of the transaction. The conditional reappointment of our Jos Baeten also the conditional appointment of 2 new members of the Supervisory Board. These are conditions for the closing of the acquisition. The acquisition itself requires the approval of the general meeting of shareholders, both in respect of the acquisition and in respect of the appointments I just mentioned. As you've been able to read in the documents, the Works Council has advised positively on the transaction. The Works Council will not explain this further at this general meeting. You also know that the Supervisory Board was closely involved in the process that led to the transaction currently before us. And the Supervisory Board has also given its approval and strongly recommends voting in favor of this resolution. But before we put it to the vote, Jos Baeten on behalf of the Board -- Executive Board will explain the transaction in more detail. Jos?

I do this with quite some pride. We achieved this together with our new colleagues from Aegon. And thus, in the Netherlands, a beautiful leading insurance company will appear. A leading insurance company and those who have attended our AGMs more frequently know that we lead our company from the 4 important stakeholders, a leading insurance company, which serves the 4 categories of stakeholders. I will address this in a moment. A leading insurance company also that from the outset, we'll have a strong and healthy balance sheet. This has been a parameter of management for a long time. And this is important for the policyholders as well. And therefore by means which is, this transaction will have a leading insurance company with a strong balance sheet acting in the interest of the 4 stakeholders. Let me first dwell on the 4 stakeholders for a moment. First for our customers. Internally, I always say that customers give us our daily bread and without them we have no [indiscernible]. Why do we think and believe that this transaction serves the interest of our clients? First of all, we'll have a large beautiful Dutch company with a strong balance sheet, a company that maintains focus on the Nederland, a company that in the future in terms of products that we have on the shelf to say, simply will have a broader range of products, meaning even more clients will feel attracted to the new ASR, the NewCo and also a company as I said before, with a very strong balance sheet. The second stakeholder we see as important are the employees. Without our employees, we cannot serve our customers. And once again, for them, this is a beautiful transaction, and this shows in their reactions within ASR and within Aegon. Our employees see that this is going to be a wonderful combination, after the completion of the integration. This means that there will be a large Dutch company with even more opportunities for personal development and for growth. And of course, we also see the concerns of employees because integration always brings the fear what this may mean for someone's job and the way we see it at the moment is the following. Looking at the labor market, which is extremely tight at the moment. Looking at the number of job offers that we have within Aegon Nederland and the number of job offers within ASR. Looking also at the afflux of staff, I mean, it's of pensioning or retirement or people deciding to look for the jobs. We are not as much concerned about scaling down the number of employees. But rather our concern is how to make sure we keep sufficient qualified staff on board to make this operation a success. A third stakeholder that is really important to us. And obviously, all of them are at the same level, but they have to cover them one-by-one, is investors or shareholders. We think that for shareholders, this is a very positive transaction. We have a long-term management perspective. And if you look at the financial value creation that is achieved by means of this transaction, you see that for shareholders, this is an extraordinary transaction. If you look at the capital generation, I'll come back to this in a moment. You can see that there will be a huge step-up and for the long run, this will be a beautiful deal. Add to this, the fact that by means of the transaction, the fact is that, we will stop the share buyback for the moment and that we have compensated this immediately by means of a step-up in dividends. You see that the ambition for dividend also has been increased an annual growth of 5% to 7%. We believe that for shareholders, the transaction is attractive as well. The fourth stakeholder will always take into account is the Dutch society. We're an old Dutch company. We celebrated 300 years of existence with this year, although it actually was back in 2020. And we always try and see how we are placed in the Dutch society, because we believe that if society turns away, you have no reason to exist as a company anymore. And I understand that you can't perform well in the eyes of everyone. But if you look at the positioning of a.s.r., particularly in the field of sustainability, we dare declare that with the future 25% market share 1 of every 4 customers is a client of a company really serving sustainability. And in the new structure, we'll have the possibility to make an even greater impact in making the Nederland more and more sustainable and also our ambitions look towards the rest of the world. So we believe that for all 4 stakeholders, this is a transaction that benefits the short term, but also particularly the long-term interest. Now let me turn to the next slide, please. a.s.r. for years, has had a strategy. And I believe it's worthwhile to see why this is not just a transaction we carried out, because we had the opportunity but that this is a transaction that matches the long-term strategy. We use the illustrations for this. And this illustration, for instance, was used in December 2021 to present the 3-year strategy. I won't talk you through every point. Let me highlight a few features which demonstrates, in our view, why or that demonstrate why we believe this transaction matches our strategy. First of all, we are a major non-life insurance company in the Netherlands. And by means of this transaction, we had a beautiful portfolio from Aegon and we'll have an even stronger position in terms of non-live and invalidity insurances. Then we have pensions. The pension landscape is going to drastically change in the Netherlands in the future years. If the Senate will adopt the legislation on the shelf, we believe that the insurance company will have major opportunities in the pension landscape. a.s.r. already had a strong position as PPI as a DC, a pension insurance company. Now we mainly serve the mid-size as smaller companies. If I look at the added value of Aegon to this combination, first of all, we TKP. This is a large player in terms of administrating pension funds. I also see a very strong pensions operations in PPI, but also in the large companies in Netherlands. Combining these makes us one of the largest players in pensions in the Netherlands. That's the position one wants to have in the light of the changes coming our way in legislation. So pensions once again fully matches our strategy. The next point, unfortunately, in the Netherlands for a long time, we have seen life shrinking individual life insurances are no longer concluded or written down since 2026. We want to serve our customers in the best possible way, efficient, possible way. Now two large books of life portfolios come together. And this is important for the solvency and therefore, the servicing of customers in the long run. Another important issue is distribution. We still use intermediaries for distribution. We also have direct sales that most of our revenues are related to intermediaries. And if you look at the results of the Aegon transaction, you see that 2 beautiful distribution companies are added to the family, meaning we cover the Netherlands very nicely, all regions and we also have the possibility to strengthen sales and service sales of new insurances and serving existing customers. Then capital. I mentioned it in my introduction. This combination creates an insurance company, very, very strong balance sheet. We indicated in the communication that the startup is 190%, 190% plus solvency, but we still use a standard model for calculating the solvency. That's a very strong starting position now. Where can there be a negative impact of the transaction, that is the M&A strategy. We always stated that a.s.r. wants to have organic autonomous growth. And we want to have smaller and midsized acquisitions. And thus, we want to remain a major player. Together with the Supervisory Board, we, as the Executive Board said that the focus for the coming years is going be gathering together, bringing together these two companies, ensuring that they become one company fast with one corporate culture. And during this period, we don't want to be detracted, distracted rather by other acquisitions. For the coming 2 years, we will be less active in the field of mergers and acquisitions. So this is something impacted by this transaction. I think all-in-all that we can really defend this transaction. This was not just an opportunity, but actually something that matches our long-term strategy. So where do we find ourselves at the end of the transaction? After closure, after 2 companies becoming 1 company, we will have a company that is the largest in the Netherlands. Now that's never a purpose in itself, but it's a pleasant side effect in terms of ability or professional ability. Also, if you look at the direction the pension system is taking, you see that pensions, PCR, a field to where we have a leading position. Same applies to PPI insurances or pensions where we are -- have a leading position. And if you look then at the mortgages, you have 2 flows. Banks have short terms. So mortgages 4, 5 to 7 or 9 years and insurance companies covering a long-term position. If you look at the position and the combination after closure, we will be the largest mortgage company and the insurance companies. We're #2 in terms of individual life. This is the closed book of the existing portfolios in that field, will be #2. And then we have pensions. DB also is where we are #2. If you look at P&C, so this is non-life, cars, fire insurance, et cetera. We are a very good #3. And we certainly see opportunities for growth there in the coming years. Then the financial side of the transaction, you had an opportunity to read about this. Still, let me highlight a few features. First of all, the price that we want to pay for 100% of the Aegon Nederland shares. This is EUR 4.9 billion and when we announced the transaction, we indicated that EUR 2.2 billion will be paid in cash consideration. And given the ride on the day before transactions, which was EUR 2.49 billion, you see that devaluation of the part paid in shares is EUR 2.4 billion, brings us to EUR 4.9 billion. You can calculate it better than me. By now, the cash component has gone down to EUR 2.2 billion, not because we have renegotiated with Aegon, but because Aegon said that if you issue new shares, which has been done now, we would like to have the 29.99%, and that means that they have received some additional shares, they will pay for them, and this will be deducted from the cash component agreed on initially, meaning that the cash financing amounts to EUR 2.2 billion. I'll come back to this in a moment. Now from the shareholder position, the following is important. What will the new combination bring them? Shareholders currently are trying to understand what the capital generation capacity of this insurance company. And what is the use of this capital. Some has reinvested and some is also were paid out as a remuneration for the capital made available. And that means that the capital generation of the company is committed of a.s.r. stand-alone entering '25, it's about EUR 700 million. We'll move to EUR 1.3 billion in 2025 as a result of the combination of the companies. So you see that the financial merits of the transaction from the shareholder perspectives are excellent. We always stated that we will do nothing at this company that does not generate a return on investment of at least 12%. The starting position of this transaction unlevered. So without taking stock of financing by debt capital is 14%. And as a result, we already have an ROI that is above 12%. And you may already know that we have issued some additional capital. So part of the transaction will be financed with debt capital meaning that the ROI on the transaction actually is around 20% or even higher, meaning that this is a transaction we can account for financially. Dividend has been mentioned already, let me not repeat myself. But obviously, this transaction will bring synergy. When you merge two companies, you have some overlap, you have all kinds of systems in non-life, in professional ability. So this will have to be used in integration products, maybe the office housing will have to be made more efficient. And finally, the company also will have slightly less or fewer employees. But our problem, as I said, is not how to lose them, but how to keep them. And we believe that 3 days after a transaction, there will be an efficiency of EUR 185 million at least. Now going forward, what does this mean for a.s.r.'s profile? This is a complicated slide, but let me comment briefly. If you look at the current distribution in revenues between life and non-Life, we have 70% in non-life and 30% in life. In the new combination, there will be more balanced, you'll see that 60% of revenues will be generated from non-life and 40% will be generated from life. In terms of profitability, it's the other way round at the moment. About 65% is generated by life and 35% by non-life. In the future, that will be a 70-30 ratio changing, therefore, in terms of revenues, the profile, and also profitability. So for instance, if you have profits from other activities of life, it remains unchanged, meaning that for the long run, we are very happy about this transaction. Now let me turn to a number of transactional terms. The arrangements we have achieved with Aegon, I won't talk you through all of them, but let me mention a few of them. First of all, what are we buying actually? We are buying the Aegon Nederland Holding, which includes all the insurance activities of Aegon Nederland. It also includes TKP. It includes 2 intermediaries for distribution companies, and it also has Aegon Banking or the -- as it is called the Knab Bank. This is the activities so we are buying. Price has been mentioned, financing should also be mentioned. This is the concern of shareholders, very nice this transaction, but how are you paying for it? Well before announcing the transaction within the Executive Board and the Supervisory Board, we stated that we want to have certainty as soon as possible about transaction. So on the day of announcement, we used the right -- you already gave us to issue up to 10% of the equity in shares, the ABB, as we call it in Dutch and this was more or less EUR 600 million of additional capital. And some weeks later, we saw an opportunity to issue some additional debt capital because Aegon Nederland is being transferred without any debt giving us more possibilities to issue Tier 2 or Tier 3 debt capital. And we have the possibility to withdraw EUR 1 billion from the market, EUR 1.6 million has been now financed externally EUR 250 million because Aegon is paying for shares, it's buying additionally. And as I said before, EUR 500 million will be used on balance sheet net debt means that we have a need for EUR 150 million. And we take an opportunistic view on this. We'll see what is the best way forward, whether it should be taken from the balance sheet, whether there should be a temporary loan from a bank or where we should issue our capital, which on EUR 2 billion is no problem, this amount of EUR 150 million now. Aegon also has a partnership that was agreed upon. They are a worldwide asset manager. We are a great Dutch asset manager. And we agreed that Aegon over the coming 10 years will do the asset management in a number of categories for us. These are not the assets we have on our own balance sheet. We want to cover them ourselves. But this is about mortgages, for instance, and we have made a beautiful arrangement with the Aegon Group about managing those assets. Important in such a transaction is the following, and that is something the staff asked about what about the brand? Lots of people have an emotional link with the brand, and we understand this perfectly. Some people who've been working with Aegon for a long time, I want to know whether the brand will disappear. The fair answer is yes. In time, Aegon will disappear as an insurance brand from the Dutch market. It will be pretty quick for non-life and the professional disability, and for our mortgages and life, the agreement is that for the coming 3 years, we will be able to use the Aegon brand, which is a very strong brand presence in those market segments. We made governance agreements as well. It's customary that in such major transactions or transactions where a shareholder acquires a major position, additional arrangements are achieved. We did so with Aegon. First of all, 2 supervisory directors that will join the Supervisory Board after closing of the transaction. You are about to vote on this, but also, we have a number of governance rights that are specifically issued. So these are not right as a shareholder but the rights that are related to the membership of the Supervisory Board. We thought these demands were reasonable. Looking at the existing rights, you see that they are in line with the interest of shareholders. This is about situations that, in our perception, as Executive Board would be exceptional and would never be required, because if you dilute capital or if you significantly change your dividend policy, usually when things are getting worse, usually, there is a cause for that. And we assume that such circumstances will not occur over the coming years. And therefore, we, as a group could accept those specific rights over a limited period of time. They, as you could read, are connected to the 20% and 10% shareholder ship, but we concluded at the end of the day that they also serve the interest of all other shareholders. So from that perspective, we had no problems. Then about the extraordinary rights, exceptional rights, which brings us to the end of my presentation, what's the further process? We hope, obviously, that the shareholders today will enthusiastically support the transaction and all the other points on the agenda. If that is the case, we can move towards the closure and the acquisition for all permits. This transaction is subject to a number of permits. We need to go to the Dutch Financial Markets Authority that supervises competition on the Dutch market. We have to go to Dutch Central Bank. And because there is a bank, we also have to go to the European central banks and the asset manager, supervisory body, so over the coming period, we will have to continue talks with all these bodies, talks that have already been started, of course, aiming to receive the necessary permits. And we hope that on the first day of Q3, we can have all the permits and do them on the first day, the closing, which meaning the keys of Aegon Nederland will be handed over to a.s.r., and then the real job starts, which is merging both companies, creating a single corporate culture. We assess that it will take us 3 years. And without talking you through the entire integration process, I want to highlight a few points. First of all, we think that the professional disability and other non-life, which is mentioned here as DB and DC is something that will be done in -- they will be merged within 2 to 3 years. That should be done. If you look at individual life, you see that this transaction means that the partial internal model used by Aegon will be maintained for the Aegon portfolio at least, but that we will also try to make our portfolio partial individual. And we will do this before we do the conductive legal merger of pensions and life. This will take at least 2 years, we think it could also be 2.5 years, meaning that the a.s.r. books of life policies will have this partial individual approach. And this is why the integration of pensions and life will take more time. And this is from PIM, there's a Dutch guy called Pim Pam Pet, but that's not related I think. But if the PIM can be applied to pensions and life, we assume that Individual Life will achieve this within 3 years and pensions probably will need more time given the fact that at the same time, we need to effectuate the transition of Life under the Pension legislation. And at the same time, we want to keep serving our customers and be available for the customers. In conclusion, I want to say the following. This is a transaction we are proud of, that we are happy about. A transaction that we have achieved with a very good relationship with Aegon. Obviously, there have been some tough moments, but that is normal in such a process. And in the end of the day, I think we ended up with a great result. And if I look at the way the transaction has been received from the day of its announcement, I'm confident that we have found a sweet spot, as we say in the jargon, meaning that for a.s.r. shareholders, and that's who I'm addressing today. But also the Aegon's shareholders have a good deal. And this is why the Supervisory Board and the Executive Board warmly recommend you support the transaction today. Thank you.

Well, that applause, I hope points to a very smooth continuation of this meeting. Thank you, Jos, for this explanation. Ladies and gentlemen, you now have the opportunity to ask questions. [Operator Instructions] I hope that was clear and I give you the floor.

Thank you. I'm Gerben Everts, I speak on behalf of the Dutch Shareholders' Association, VEB, on behalf of many individual shareholders, about 30,000. So I cannot give you the actual names with 2 points so many million shares in hand. First, let me compliment Mr. Baeten with respect to the presentation he's just given. A presentation that was well prepared and was given freely. This shows us the intrinsic motivation of a.s.r. and that is something that we are very happy about. This AGM has support of very many shareholders. And this shows that this insurance company should remain in the Netherlands. And that is what we indeed are fighting for and what the shareholders support. Now this transaction is -- and sounds very good economically. It's a very good transaction for everyone, for the brands, for the mission of both organizations, for the strategic direction that is now actually chosen and followed. The life insurances show that profits are not in trying to sell more, but in achieving synergies and economies of scale. And indeed, following up on all the policies in the next 10 to 15 years. Furthermore, Aegon has the opportunity in other markets to focus on more profitable segments of their business, and that is something that we only support. We appreciate the synergy advantage. But I do have a couple of questions a bit more than 2, but not more than 5 on my list. Synergy advantages, very important for the shareholders. The dividend of the Aegon share is going to reduce in the coming 3 years, synergy advantages of EUR 180 million are to be realized, and that is the outlook I believe that, that is per year. I hope that you can confirm that. And then we will see that back in the calculations of what actually remains for the a.s.r. and Aegon shareholders. And that it will be reflected in the stock exchange when 2 parties come together, mostly 1 goes up, the other goes down. But in this case, both went up. And I think that supports the rationale behind all of this. The benefits. In the Netherlands, we're very good at strategic thinking, also policy thinking, the government. For example, organizes the strategy and also the funds, but implementation is obviously where things become tricky because you will have to reshuffle positions. You have a lot to do. Do you have any guarantees for us? What steps did you take to ensure the operational availability? And also, the swiftness with which real results can be achieved in synergy? Are you ready for all of this operationally? This is something very practical that we wish to learn about this transaction. Another risk. A couple of permits are still outstanding and not small ones, the DNB, the Dutch Competition Authority. For us, it is important to understand the Partial Internal Model, the PIM. This is what the free took from National Netherlands to Aegon and which is now coming back via Aegon into a.s.r.. Capital demands and solvency demands can be reduced if you can indeed convince the authorities that this model is better than the standard model. For us, it is important that the Dutch National Bank actually agrees to that. What is your main argument? What are your expectations? Is there anything concrete behind this? Do you have any kind of promise from the DNB that this capital transaction can take place? My third question on governance. Interesting, what you explained on your slide. It is something that we had to digest first. In the end, for the coming 5 years, the 2 positions in the Supervisory Board are reserved for Aegon and certain other influencers are agreed upon. We understand that this is part of the negotiations. We're not against the appointments, but the fact that the existing Chair of Aegon and the previous Chair of Aegon Nederland, who has a veto right for the coming 5 years. With respect to important strategic decisions at a.s.r. is a tricky situation in governance, because you sell something, you should take your hands from a time for a new management, Lard Friese is, of course, the successor, will still have this veto right for 5 years. This in the governance relationship with a Chair of the Supervisory Board, depending on a veto right over an individual Supervisory Board member is not easy. And this is a question to the Supervisory Directors. Do you believe that the dynamics are insured in such a way that this will not become a difficulty? Obviously, we understand that the Supervisory Board at the moment, knows what direction they want to maneuver in. So this can all be quite difficult. I'd like to hear your comments on that. Another question, 5 years, this 99.999% interest remains and the veto right, what on earth is going to happen afterwards? We wish to have the whole situation open. The veto rights off the table and the appointment nominations from Aegon off the table as well so that we get normal governance by a.s.r. Another point with respect to what Mr. Baeten said I read the shareholder circular yesterday, the ones issued by Aegon and a.s.r. Aegon was very clear, said that during 5 years is if Mr. Baeten does not remain until the end, Aegon has the right to have a confirmative vote on the new CEO. This wasn't in the shareholder circular of a.s.r. I believe that wasn't omission. I hope that we can correct it here. What kind of promise can Mr. Baeten give us in this respect, that after closing, he will serve a full term of 5 years? And what promise can Mr. Wijn give us that, that is his intention as well? We believe that is very important. We hope that we get clarity and that no process of trying to find a new Chair of the Executive Board or the Supervisory Board will interrupt the next 5 to 6 years. And we do hope that we can get some assurance there. Those were my questions. I'm afraid that were a bit more than 2, but that was it.

Well, you do represent quite a number of shareholders. So I've allowed you to finish. I'll hand over to Jos Baeten for the first answers.

Let me follow up in the sequence of your questions. Operationally, a.s.r. is ready. Of course, I cannot prove everything beforehand. I do know what our experience is and why we are confident that after closing, we could indeed take the necessary steps. Since 2015, we've been through quite a number of acquisitions. I understand not in the scope that we're looking at now. But from those acquisitions, we've understood what to do with the life and non-life books with the various parts of our operations. Next to that, next to the members in the Supervisory Board, we're going to be joined by very capable people from Aegon. And there are people there too who are very experienced in integrations, that is true for our staff, services for our businesses. From that point of view, if you look at the integration as a big pie, we are going to cut that pie into pieces that we can actually swallow. So that in the integration, for example, of the non-light portfolio, we believe that the automation decisions we've taken in the past, the dependence between the various businesses at a.s.r. is quite low. So the life business doesn't have to wait for integration on the side of non-life. A, we have a lot of experience. B, we're used to making plans and monitoring them; and C, we have capable teams on both sides that can ensure that this actually takes place. Looking back on all acquisitions in the past, I cannot really point to anyone of which we would have to say now that they did not work out. Of course, I understand that larger companies aren't easy, but we do have the conviction that we can deliver and perform based on the experience and earlier acquisitions and the lessons we've learned from there. A second question with a number of sub questions was about the permits and the authorities. It's -- it doesn't work like it does -- we've, of course, prepared all of this. And we have a team that took that up very seriously. And that during the preparations of this transaction had sufficient contact with the authorities. We do need to accomplish those and get those permits specifically, we -- that will require some more work, we agree with respect to the partial internal model. Until the closing, this PIM model for the life book of Aegon, we are going to see to it that we can maintain that, not more than that because the process is quite extensive. We have good consultations with DNB, Dutch National Bank. They cannot give us guarantees beforehand, but we have ensured that this supervisory authority has given us the guidelines so that we can deliver the content. We put together clean teams of people from Aegon and ASR that can talk about this. So that at closing, we can guarantee that the value, the solvency value that we've indicated in the PIM can be maintained. The next step that we're going to take. Our own life business is also going to be shifted to the PIM model. You just said that this PIM model was taken from NN to Aegon, but that is not the case. This is an Aegon model. It's not an NN model anymore. So our own Life segment is going to be transferred to that PIM than other risk insurances. We're going to add some portfolios there, and we're going to put the whole non-life book on the PIM as well. This is going to take 3 to 4 years. We hope that the life business is going to work quicker. We cannot give any guarantee. DNB isn't giving any guarantees either about the solvency that, that will -- that those efforts will reach in the end. So it's not about reducing solvency. It's about making the risk profile better fitting. So no guarantees have been given or will be given but we are convinced that this will have a positive impact on solvency. A lot of analysts write about this. I can't do much more than quote what they are saying. They say solvency increased by 25% points. If you transfer to PIM, Aegon Nederland is already on the PIM. And for the combination, we can calculate about the 1/2 plus extra because we're going to put non-life on it. So at road shows, we're saying 15% solvency uptake. Then a question asked of the Supervisory Board. And part of the question was my personal commitment. If the Chair agrees, I would like to answer this directly. If I hadn't had a commitment that I wouldn't be sitting here today with a full conviction of the positive benefit of this transaction. We had talks about that, too. You mentioned the term of 5 years for CEOs are or their terms are mentioned in the appointment and nomination. I committed to that term with 2 conditions that I will have to remain healthy. And that secondly, the Supervisory Executive Board and the employees will still have to be content with me. If that is not the case, then I will have to hand back my mandate. The Supervisory Board gives Mr. Baeten the full commitment and also his whole team. And we will get back to the point of appointing and continuing the appointment until the shareholders' meeting of 2026. We'll put that to the vote in a little while. The experience of Jos Baeten in the area of integrations of bringing together insurance businesses, this experience is well known for everyone here. And that means that in the executional certainty, we believed it was a very good idea to ask your spartan to stay on board for a longer period of time. And this isn't an easy decision because it's a very heavy job, but we have received that commitment from Mr. Baeten, and we are very happy about that. With respect to the new Supervisory Board nominations and 2 additional supervisory directors. This was a request from the side of Aegon. And we actually have no problem whatsoever with it. I can make this sound even more -- I can put this in more positive words. We believe these 2 Aegon Directors are a very valuable addition. And we understand why Aegon Nederland came with this request. For Aegon Nederland, for the Aegon Group, this is quite a step. I don't want to use any other words because that's going to be explained by Aegon this afternoon at their meeting. This is quite substantial. And the substantial interest in a.s.r., the employees, the customers, all stakeholders, very understandable that this question was put forward. 2 of the 7 Supervisory Boards, 28%, interest, 29.9%. So we believe that this was in the line of expectations. And moreover, Mrs. Jansen Heijtmajer is going to join the nomination and ESG Committee. This is a committee in the Supervisory Board in which we discuss staff and HR issues. The Works Council in their recommendation supported this with their enhanced advisory rights. And we also believe that if you look at the fact that a good integration for all employees is important than this addition to the committee is very valuable. Mr. Friese will join the Audit and Risk Committee. He just discussed the importance of the PIM model. I can mention quite a number of examples why we believe this is a very valuable addition to our Board. We had very extensive conversations to get to know both individuals. They are a very professional, very agreeable in are the contact and strong characters, and we enjoy that at ASR Nederland. Nobody is made of sugar, and we cannot believe that we will land in difficult situations. These are individuals that will engage and commit themselves in the coming years. I hope that I've given you sufficient answers. All of this will have to be legally established and laid down. The legal side has been looked into. And I believe that when we come to the appointment of those 2 directors, we can discuss that.

May I come forward and say that I don't have any further questions. I believe your answers were quite extensive and quite clear. They show the character of the -- or the nature of this transaction and of a.s.r as a company.

1 answer. Your question also was what will happen after 5 years. Now if Aegon after 5 years is still shareholder at 29.9%, they will just be a normal shareholder and all special rights will then be gone. Thank you.

My name is [ Stephens ]. A number of questions have been asked. The supervisory authorities were discussed, but the ECB approval wasn't mentioned yet. I'm a bit older and I have experienced quite a lot. At times, remind me of the situation in Utrecht, when the insurance company of Utrecht and the National Netherlands Insurance Company merged. The question was always, which one was the largest? Aegon almost never come about because other insurance companies in the day wanted to cooperate, but that didn't happen. Now they are all coming together. And I always view these movements very critically. And I'm not the kind of person that only compliments others. So I started calculating. I took the billions, EUR 13 billion if you add up and that means amounts to about 13%. And now Aegon Nederland, I arrived at EUR 3 billion to EUR 3.5 billion. Now let's assume that synergy effects are disappointing, at least partially. Then I am afraid that you're not going to achieve the 12% capital demand. This is quite an expensive transaction. How did you arrive at the amount necessary? What kind of negative effects did you take into account? The stock exchange rate can change. That can be an advantage or disadvantage. Then buffers, 100% used to be the requirement. And I hope that the requirements now can be reduced. If you base everything on the standard model, then those buffers can be reduced by how much? Can you mention the percentages? And can you give us the positive influence on the returns? Then artificial intelligence. Artificial intelligence is the buzzword at the moment. How are you going to approach that? And how will the Dutch National Bank deal with it? Also with respect to European legislation. Next question. How large is your dependence on large foreign insurance companies, where a reinsurance is possible, but where larger players may want to pick the cherries off the cake. Those were my questions.

I'll hand over to Baeten.

Those were quite a number of relevant questions. This is a whole process that we tackled as a team of 3, and Ewout is responsible for the financials, can explain how we arrived at the evaluation.

You asked about the 14% and the synergies that might be disappointing and that the -- this can be under pressure then. Sales synergies, et cetera, I'd like to give you some background to those numbers. Now the steps that we took departed from the Aegon company as it is at the moment. We did a book evaluation. We're able to assess the company, made our own business plan based on how Aegon is set up in the Netherlands at the moment. This leads us to a capital generation expectation at EUR 530 million. We then looked into the synergies we were expecting in the coming years. And you can count -- you can add that to the profits or deducted from the invested capital, because the synergies in the Life business are not in profitability, but in a higher solvency. That is how this expresses itself. That is why in the presentation, the invested capital reduces based on the synergy realization. If you add that together, you arrive at an expected capital generation of EUR 600 million and an invested capital of EUR 4.3 billion. Here, we depart from the assumption that we can do the synergy realization, and we've based all of that on what Jos just explained. Sales synergies. We haven't taken that into account in this business model. We looked into economies of scale, different pricing so that maybe 10% of today's sales are going to be lost. We haven't taken into account that our sales will actually increase because of the market consolidation. We think that it is very important and also sensible not to bank on all of that. So we took it out of the calculations. We believe that we've presented a very balanced ROI and that the numbers fit to that.

So how do you come to this profit of [ EUR 9 billion ] and something billion looking on these key figures?

I came only to EUR 3.25 billion. It all depends on the way you use these key figures. Indeed, we used a number of components. One, which I see is the most appropriate is the fact that you will make a fundamental taxation of the company looking at the cash flows within the company. You can look at multiples for sure. But this is more like a check. But first of all, the fundamental valuation must be made -- are based on the cash flows. And the best is to have access to the books to check the cash flows and then to extrapolate them and this gives you a going concern value. This is a fundamental check. And then you look at the multiples, whether they match and the conclusion is that looking at the multiples based on the fundamental taxation, we have selected appropriate value. Let me mention a few multiples. We look among other things, at the valuation compared to the equity. This is unrestricted capital. And this is the most determining multiple in insurance companies. And you see that in the historic context, it is pretty low, which gave us the comfort that the fundamental taxation of valuation we implemented was done correctly. This is how we go about this. So it's really about what you see in cash flows. Now maybe then the ECB?

AI.

Artificial intelligence. Well, first of all, let me answer this question by saying that Aegon has a lot of knowledge about this on how to use this wisely in a.s.r, for instance. So we have a pool of people that can be very useful for both companies to NewCo. And a number of frameworks are used in the industry and also in a.s.r. First of all, we have the ethical framework yesterday, this was covered in the Daily News. And the insurance industry has incorporated these ethical standards. We must be aware of the values and the freedom we want give to technology. Secondly, we should be aware of an ethical office or ethics office we have in a.s.r. that helps us think about the practical application of AI. We are looking for the balance between the way AI can be used in our processes. And for instance, customers like it when things are filled out without having to do it themselves and our staff are happy not to do repetitive work. So we try and use this, but we also try and make sure we can always check whether what happens in technology matches reality. This is how we deal with AI. And this is the way we believe we can use the combination of AI and human intelligence in the future.

I didn't see the national news yesterday.

Well, this is Ms. De Swart. There was a very clear item on the risks and the possibilities of AI.

Well, then I should have used that as a base on the question. I thought you were following the news.

Then we have the last question, Mr. Davidson. This is about the way we look at foreign insurance companies on the Dutch market. Well, if you look historically, this is not a source for concern because we have seen many foreign companies come to these markets with low rates, high losses and then leave quickly. We are concerned about something else that we see happening, not foreign insurance companies entering Dutch market aggressively, but Dutch parties that are not really insurance companies. You asked about AI. We see companies in the world now that have so much data and as far as we know, usually these companies are in the U.S., but can't rule out China or even Russia. But let me stick to the U.S. They have so much data that can very easily catch the best business. And the concern is, as you said, that parties may enter the market that are not on the supervisory bodies in the Netherlands that can offer rates for our customers that basically have no risk, and therefore, can become customers at a very low rate, making that the core function of an insurance company, which is pooling risks and adding price. That means that the product or service becomes accessible to the largest possible number of players. If all the best business disappears, it becomes more and more difficult to play that role. And then the price you have to charge to customers is increasing. We discussed this with the regulators. And I refer to legislation that is on its way. We also discussed this through our organization, the association of insurance companies in Brussels. And it's good to see that both the Dutch regulator and the European Central Bank as far as I can see, recognize the risk that the Dutch authorities recognize the risk and that as a fruit of our activities over the past months, there is a growing understanding that we need to be very cautious with this and that this needs to be laid down in law, making sure that parties cannot simply catch the best business and make life very difficult for the remaining consumers. And I'm not sure whether we can change the tide, but I'm already happy that there is a growing awareness that we can't let this happen simply like that.

Well, 1 more question.

No, you already asked your questions.

No, but 1 question wasn't covered, Mr. [indiscernible] that's the EU. About the buffers.

Yes, my apologies. The -- [indiscernible] the approval of the ECB. And this is the statement of no objection. This is something that is done through the Dutch Central Bank. So Dutch Central Bank will issue a recommendation to the European Central Bank about issuing a statement of no objection about taking over these financial activities and it will be on the dormant of the ECB. So this is part of the large procedure that we hope to conclude in Q3 having the necessary approval. And as for the buffers, I think the buffers -- you asked whether they can be reduced. If we look at the capital and dividend policy, you see that we're not going to deviate from that policy in the light of this acquisition. So we will maintain our policy. And let me remind you of this policy. Basically, it means that everything that is about 140% solvency ratio can be paid out as dividends. It is placed in the dividend account and everything above 160% will be allocated to the entrepreneurial zone. So this is a zone that allows us to queue further invest in the company. And then we have a limit of 175% that allows us to buy back shares. And in the light of this transaction and also in the light of the current policy, we decided to temporarily disconnect this because if over the coming years, we are going to focus on achieving synergy on further strengthening the brand. And aiming to be the same company we are today, but large, we will not be buying back shares.

Good morning, ladies and gentlemen. My name is [ Jay ] I am from Amsterdam. I read in the shareholder circular of a.s.r. that the fairness opinion has been conducted by, one by business bank, UBS. And this case generated some results because in the Aegon shareholders circular, I read that they had 2 banks conduct a fairness analysis. So why have you limited yourself to one opinion? And then additional question, in the presentation, I read that UBS also has provided a bridge facility to a.s.r., and since it's the same per bank, I was wondering whether this is not creating any similarity of conflicts of interest.

First about the bridge financing. This was not only with UBS. It was done jointly by 4 banks, and that already covers the risk of conflicts of interest. My apologies. And we offset for one bank because in earlier transactions, we also limited ourselves to one bank. And I think if you want to know why we -- why Aegon chose 2 banks, I think that's a question you can rest to their board. We've been using one bank for many years because in our assessment that is sufficient. In addition, CEO or Chair, we have been supervising the process as the Supervisory Board and in the subcommittee where there is investment banking in the Board. This has been supervised and we didn't feel the need either to involve a second investment bank because we deemed the procedure to be well balanced and extremely solid lease setup.

Thank you, Chairman. My name is [ Frank Jansen ]. I represent the FNV Trade Union. And first of all, I would like to thank Jos Baeten for his comments. Let me take off my glasses because I can't read with them. We, as union are not only involved in agreeing on labor conditions, we're also shareholders as a.s.r.. And we are also, by the way, Aegon shareholders. Let me mention that. We think that the policy on the ESG is extremely important in mergers and acquisitions. And we, as shareholder, therefore, has several questions. But before I turn to the questions, I would like to emphasize that all questions we are asking are based on the information that has been shared with the shareholders. That is of a public nature. So not the information that has been shared with the responsible manager within the FNV Union. An acquisition of this scope falls under the behavior rules of the Socioeconomic Council. And this means that union should be involved at some point in time that it can still influence the achievement of the acquisition and that the Works Council can take stock of the opinion of the unions. For the details on legislation, I can refer to Article 9 -- 4 of the behavior rules of the Dutch Socioeconomic Council. From the information provided, we learned that on October 21, the Works Council issued a recommendation and that the stock exchanges were informed on October 27. Please correct me if I get this wrong. Yes, please go ahead. In the information provided, we read nothing about the rules of conduct for mergers. And this leads to a number of questions. First of all, why does the a.s.r. information that has been provided in light of transaction [indiscernible] and governance. We don't read that these rules apply to this acquisition. When have the unions being involved in the acquisition? What was the conclusion of the unions about this acquisition? And how does the way a.s.r., acted relates to these rules of conduct or there were the unions have been involved? How could the Works Council takes stock of the opinion of the unions? And here, I'm not looking at the Works Council, but that you now have you safeguard this process in the procedure of acquisition?

Clear question. I give the floor to Mr. Baeten, who is the Chair?

Let me start with the dates you just mentioned. I assume that the dates are correct. October 27 is correct for sure. I don't exactly remember the date of the Works Council recommendation, but I think October 21, it sounds relevant, and it's not relevant whether it's 1 or 2 days before. I think you're aware of the fact that in the eyes of FNV union the merger and acquisition rules have been followed insufficiently. You have submitted a cut plate or have intended -- expressed your intention to do so. And I think that since then, we have entered into constructive talks with the unions, and it has been a fair dilemma. I can imagine your position. Traditionally, we -- despite some clashes with unions have a very good relationship with the Dutch trade unions, and looking at the base CLA that we concluded, I think we had a very good cooperation with FNV and we actually could express our enthusiasm on the stage together with FNV. So despite this good relationship, why didn't we involve the unions at an earlier stage? Well, this is a transaction between 2 listed companies and 1 of the 2 companies has a listing in the United States. And very stringent rules apply to such companies, and we are proud of the fact that there has not been a single leak not through investment banks, lawyers, the Works Council, no leaks. And we kept the circle of confidence as small as possible. So everything we could cover internally, legally we covered because we wanted to involve a few people from outside a.s.r. as possible. And in the light of these arguments, we decided that only on the morning of the transaction, the unions can be informed. We would have preferred to do it differently. But in the light of the weighing of interest, we made that particular choice. And I can perfectly imagine that the unions didn't like it. But in the light of our -- of the reasons I mentioned, this was our choice. I think that from that point, we have entered into very good talks. There has been a session. And I think that FNV indicated that before the end of this month, they will give a substantive reply to see whether the questions that I have highlighted, have received an adequate answer.

Very clear comment. But still, the question remains on the table how the Executive Board or the Supervisory Board has safeguarded the need for the Works Council recommendation to take stock of the opinion of the union. In the light of your reply already guess the answer, but I want to hear.

Formally speaking, the Works Council could not take stock of a recommendation of the unions because there was no such recommendation. So they couldn't.

Clear. Thank you for that very clear answer. Then two additional questions, if I may, or two remarks. I think Mr. [ Stephens ] said something about the synergy benefits of EUR 185 million. I've consulted the documents on how the EUR 185 million were calculated. It remains a guess for me and for us and FNV. However, we see in real life and experiences that in 3 out of 4 acquisitions, synergy benefits are presented in a too positive light and that they are disappointing. So we'll live and see, but let me make that remark in the light of the question of the previous question. And then another question, which has been answered in part. How does the ASR Supervisory Board intend to safeguard the independence of Supervisory Board now a right of veto has been granted to an Aegon representative on some issues.

Well, I think the other point can be taken as noted. But let me answer your question. Part of it is about the people themselves. If you have personal conflicts of interests as a Supervisory Director, you are to act in line with the regulations of the Supervisory Board and our situation. The specific rights, as discussed, are expected to be a subject of a substantive debate between the Barclays. So in our assessment, this will not lead to dynamics that will push us in the wrong direction. This is mainly about dividend policy, but also about some other matters. So our assessment is that as long as we have a debate on the substance and before these are kind and professional people, we will come to a solution. And I can take you through all the rest, but that will mean reading out. We have a legal document that is binding for all the supervisory directors, be the dependent or independent and the added value that we see in the individuals coming from Aegon, we think that it's only an added value. It's a clear comment. And I don't think we have to discuss the qualities or the skills of individuals here. But the impression may be created of independence on paper that dividend, for instance, is a difficult issue for supervisory directors because here, you can have double interest and I can only second your words, meaning that if there is a conflict for interest, there needs to be careful and balanced acting, but we do have a concern there.

I share everything you said up to the word concern. We don't have that concern. And there also is an overarching point, which is that every supervisory director is to serve the interest of the company.

My name is [ Hank Brink ]. I think I'm the last person this morning. #6 is on its way, anyway.

Okay. Please ask your questions to the chair, I will manage the floor.

First of all, I want to congratulate you with this acquisition. I am -- I have high expectations as an ASR shareholder that you will give us, shareholders wonderful results. And as we said before, this is a win-win situation. Two companies with different strategies playing in different leagues. a.s.r., as I said before, wants to be the best party offering insurance products in Netherlands and Mr. Baeten very properly said that it's not only about the best risk but also about higher risk because maybe these people need insurances more than people who have in a good position and never have any damages. And also, Aegon wants to focus on growth markets worldwide. And that's a different league. You can win both the matches or both leagues. You can also help each other, because you play in different leagues and therefore, both can win. I have some questions left never the last. First of all, the EUR 4.4 billion acquisitions, some needs to be better understood. I want to like to know more about the future balance sheet expectations, and I don't have the data. I can calculate by taking the current balance sheet. But still, the problem is that I don't have the Aegon data separately from the annual statements. And therefore, I have a few questions. Could you indicate how much goodwill will be added to the balance sheet or how much will have to be written down, for instance, the Aegon brand that will disappear in 3 years, it will have to be written down. So how much value do you allocate to these brands -- to this brand. So a few words, please, about goodwill. And then in my simple mind, I think that it will be 13.8 million additional shares in October and Aegon will have 57 million. So that's 1.5 billion to the number of current shares. So 50% more shares in a company that is twice as large. And then you would expect that there should be twice as many shares or a doubling in the equity. And then you are approaching the magnitude of the share price. So you will have 1.5% increased equity and not a doubling of equity in my simple mind. And I thought that you wanted to bring the Solvency II solvency above 190%. But I can't understand what the balance sheet will look like. Is this really is beyond me? And if you would have shared more data about this in the shareholder circular, I would have understood. But now I simply don't get it.

Should we go through Jos to Ewout immediately?

Sorry, I have covered your questions.