Legal & General Group Plc ($LGEN)

Good morning, everyone, and welcome both to those of you in the room and those joining online. I'm Andy Sinclair, L&G's Chief Strategy and Investor Relations Officer. After many years of following L&G from the outside and sitting in this audience asking questions, I'm delighted to now be part of the team. We've got great businesses, great people, and we understand the need to increase investor engagement. Our running order for today will be as follows: Antonio will open with an update on progress we've made delivering our strategy, along with a summary of our full year results. Andrew will then cover off the financial results in more detail, and then Antonio will be back up to make closing statements before opening to Q&A, at which point, Antonio will be joined by Andrew and the CEOs of our 3 businesses to take your questions. For Q&A, we will be keeping it to 2 questions each. And yes, I totally appreciate the irony that I am limiting you to 2 questions. With that, over to you, Antonio.

Thank you, Andy, and welcome to the team. So good morning, everyone. We've had a strong 2025 with continued year-on-year growth in our headline numbers, which you can see on the page. Excellent earnings growth with core operating EPS up 9%. If you remember, that's at the top end of our guided range of 6% to 9%. Our OSG is up 5% to GBP 1.5 billion. That's an increase in OSG per share of 8%. Our coverage ratio is 210% after the completion of the Meiji Yasuda transaction. And this is a strong capital position that allows us to continue to deploy capital for growth. We are delivering increased shareholder returns with a dividend per share up 2% to 21.79p, and we are starting a GBP 1.2 billion share buyback. This is the largest in our history, following the GBP 500 million share buyback that we did last year and the GBP 200 million that we did back in 2024. We are firmly on track to achieve our financial targets, and we are reshaping L&G into a growing, simpler, better connected business. Put simply, we are doing what I said we would do back in 2024. First, our 3 core businesses are growing. We have delivered another year of impressive new business volumes in Institutional Retirement and in retail. And I'm particularly pleased with the inflection point in the annualized net new revenue in Asset Management, which will translate into positive financial performance in 2026. Second, I promised a sharper strategic focus. Last month, we completed the sale of our U.S. protection business for $2.3 billion to Meiji Yasuda. We are growing the strategic partnership with them, Meiji Yasuda, and they are building a 5% shareholding in L&G. On top of that, since creating the corporate investments unit back in the second half of 2024, we have now completed GBP 1.5 billion of asset disposals. And finally, back in 2024, I introduced a new capital allocation framework and promised stronger returns to shareholders. That's exactly what we are doing through a combination of dividends and share buybacks. I'm particularly pleased with the commercial momentum in our 3 core businesses. In Institutional Retirement, we have written almost GBP 12 billion of PRT volumes globally at a capital strain of 1.6%. We secured large transactions last year with Ford, BP and NatWest. And several of our 2025 wins will have potential for additional PRT follow-on transactions. We've also, as you can see, more than doubled the profit from asset optimization to GBP 331 million. In Asset Management, as I said, we turned the corner from a revenue perspective with GBP 34 million of annualized net new revenue. Private Markets AUM continued to expand now at GBP 75 billion, supported by strong fundraising momentum and strategic partnerships we can -- you can see there on the page as well. This growth has contributed to an increase in our average fee margin to 9.1 basis points. In retail, our workplace DC assets grew by 21% to GBP 114 billion. We had strong net flows and excellent new scheme wins with GBP 3.7 billion to be onboarded to be onboarded over the next 12 months. In retail annuities, we had another strong year at GBP 1.8 billion of new business with an acceleration in the second half of the year. So we are in a stronger position, delivering on our strategy and with good growth momentum. But today, as you've seen, we want to provide you with greater clarity, both on the results themselves and also on our future trajectory. And why now? This is the culmination of the process that I set in train when I became CEO back in 2024 of clarifying our strategy, disposing of noncore assets, establishing rigorous capital discipline and putting in place a refreshed leadership team. So with the heavy lifting now done and as a refreshed team, we have taken important steps to enter 2026 with stronger foundations, ensuring legacy issues are fully behind us. Today's presentation, I said to a few of you outside, will be slightly longer than usual, as Andrew will talk you through the detail of the 3 blocks shown on this slide. First, further transparency on the drivers of our performance, particularly on investment variance and what sits behind it. Second, we are giving you guidance on a 160% to 190% target operating range for our coverage ratio. This is something that many of you have asked for. And finally, we are addressing the resilience of our business model, particularly of our dividend. But before I hand over to Andrew, I will go through a few slides reiterating how positive I am about L&G's future. Our investment case is clear and compelling. First, as you've seen from last year's performance, we have strong market-leading businesses, many of them with more than 20% market share in growing markets that are benefiting from structural tailwinds. Second, we have a synergistic business model that our peers cannot replicate, linking our 3 businesses. And finally, that means that the whole is worth more than the sum of our parts and that we can deliver attractive and sustainable capital returns. So let me go through the 3 key reasons to invest, starting with our market-leading businesses. We have circa 20% or above, as I said, market shares in the 3 markets you can see on this slide, pension risk transfer, retail annuities and DC. Importantly and unusually, each of these markets have strong structural tailwinds and are expected to more than double over the next decade. In PRT, we are the market leader with a position that is difficult to replicate. First, we've been doing this for nearly 40 years and have a track record of smooth execution. Second, we benefit from long-standing relationships with DB clients and their trustees in our asset management business. And finally, we have exceptional asset origination capabilities internally, which are complemented by partnerships like the one we have done with Blackstone. In retail annuities, we see this market more than doubling in terms of flows as more people want to secure income for their retirement. We have circa 20% of this market. And in 2025, we continue to be the #1 provider. Importantly, the number of our own workplace members taking out an L&G annuity grew by over 15% year-on-year, and we expect this trend to continue for years to come. And finally, on the right-hand side, we manage 25% of the defined contribution assets in the market between our asset management and our retail businesses. The market is growing strongly, as you know, and is expected to double by 2034 to GBP 1.5 trillion. As we mentioned at our retail deep dive with Laura back in October. Was it tober? Yes, there is a significant operational leverage in our business as we continue to grow and scale. So we have great positions in growing markets, but what does that mean for us financially? I think of the financials of L&G in 2 ways really, in terms of spread and fee-related earnings. Let me start with the spread earnings. We are the U.K.'s largest annuity provider with a portfolio of GBP 93 billion, which grew 11% in 2025 as we wrote GBP 13.6 billion of annuities between PRT and retail. That book, as you can see, will continue to grow at more than 6% per year. We invest in safe and diversified investment-grade assets and operate with a track record of close to 0 defaults. Given the current geopolitical and macro uncertainty, we want to reassure you about the quality of our book, and Andrew will cover this later. We will also describe the sustainable profits we make from asset optimization and the significant upside that we see as credit spreads widen. We are growing our fee-related earnings from Asset Management and Workplace even faster. Over the next 3 years, we expect them to grow at more than 20% per annum. We have delivered a record ANNR of GBP 34 million in 2025. As I mentioned earlier, the full year revenue impact of that growth will now be seen in our 2026 numbers. We have increased our average revenue margin to 9.1 basis points. As you recall, we went from 7 to 8 and then now from 8 to 9 basis points with a target to be in the double digits by 2028. We are one of the few global asset managers, maybe the only one, increasing average fee margin, and this is because we are shifting our asset mix towards higher-margin products. We are growing strongly in private markets with GBP 75 billion of AUM and on track to beat our GBP 85 billion target by 2028. So we're already at GBP 75 billion. Fees from our workplace business will continue to grow both in retail and asset management as we then continue to grow our assets under administration. So we have leading businesses in growing markets. But as you can see here, these businesses have clear synergies between them. It's the second argument of our investment case. We use scale as a competitive advantage. As the largest asset manager in the U.K., 80% of our U.K. PRT deals are with existing asset management clients. But when we transfer these clients to PRT, as you know, the investment shift -- the investor mix shifts to more direct investments, and therefore, we increased the fees in asset management by 3x. On the right-hand side, you can see that our asset management business manages over 90% of our annuity assets and over 95% of our workplace DC assets. This is pretty unique. This is a strong underpin to our ANNR ambitions. And then beyond the commercial synergies, we also have significant operational synergies across our businesses. You can see there at the bottom, our PRT and retail annuities businesses share investment and customer services teams, creating scale advantages. And also, we make broader investments in technology and AI across all of L&G. And then this is the final argument. This synergistic market-leading businesses will continue to deliver attractive capital returns for shareholders. Back in June of 2024, I promised we would return more to shareholders, and that is exactly what we are doing. At the time, I announced a new dividend and capital return framework for the subsequent 3 years, '25, '26 and '27. We introduced share buybacks, and I committed to return more capital to shareholders over that period that we would have done by maintaining the 5% annual dividend per share growth. You can see that on the right-hand side of the page. So even excluding the GBP 1 billion share buyback that's related to the Meiji Yasuda transaction with our guided dividend growth, we have delivered on that promise. Looking forward, we are investing to meet our growth ambitions and my priority is our growing and sustainable dividend. Beyond that, future capital allocation decisions, including share buybacks, will be assessed at the time and subject to market environment, our views on solvency and opportunities to invest in the business. Overall, you can see on the slide that we are on track to return more than GBP 5 billion of capital to shareholders over the period of '25, '26 and '27, and we will be returning GBP 2.4 billion of that over the next 12 months between dividends and share buybacks. So we have a compelling investment case, and I'm excited about the growth ahead of us with stronger foundations and a new team to execute on that vision. You can see on the slide the appointments I have made with a combination of both internal promotions and external hires. So on that note, let me welcome on stage Andrew Kail for his first set of results as CFO. Andrew, over to you.

Thanks, Antonio, and good morning, everybody. I'm delighted to be here presenting a strong set of results for the first time as the group CFO. As Antonio highlighted, today, we're committed to providing greater clarity on the drivers of our performance and the future trajectory. Over the past few months, I've been in listening mode. I've been engaging with investors, analysts and my own team. And it's clear we have an opportunity to provide more clarity on our performance and to reinforce the strength of our investment case. So today, I'll start with our results, and then I'll turn to the foundations that position us for sustained growth. So let me begin with what we delivered in 2025. Our group financial headlines are strong. Core operating profit grew solidly, reflecting the resilience of our earnings base. Core operating EPS grew at the top end of our 6% to 9% target range, demonstrating our commitment to delivering sustainable compounding returns. Solvency II operational surplus generation, OSG, is up 5% year-on-year. And our OSG per share metric is growing at 8%, creating increasing headroom over the 2% dividend per share growth. We're now presenting OSG excluding the amortization of transitional measures on technical provisions. This is to better reflect underlying capital generation. 2024 OSG has been restated. And going forward, we will continue to separately disclose the TMTP amortization. Our pro forma Solvency II coverage ratio remained strong at 210%. That's after the Meiji Yasuda transaction and its related buyback. Now let me take you through our IFRS performance, beginning with each of our businesses. Institutional Retirement delivered a strong result with operating profit up 6% year-on-year, driven by higher releases from our store of future profit and a substantial uplift in asset optimization. Asset Management remained broadly stable at GBP 402 million. But importantly, we now believe we've reached an inflection point in the financial performance of this business. Retail operating profit increased 4% to GBP 447 million, driven by predictable earnings from our insurance entities and similar to Institutional Retirement also benefiting from higher asset optimization. Across the group, expenses and debt costs were flat year-on-year, highlighting continued cost discipline to offset inflationary pressures and ongoing investment in the business. And so as a result, core operating profit is up 6% to GBP 1.6 billion, demonstrating the reliability of earnings from our insurance businesses and the turning point in the performance of our Asset Management business. Investment variances, while improved compared to recent years, continue to be material in 2025 at GBP 771 million. So moving to our business P&Ls. Institutional Retirement delivered another year of predictable high-quality growth. Operating profit increased 6% to GBP 1.2 billion, driven by high release from CSM and the continued strength in the expected investment margin. Asset optimization contributed GBP 258 million, more than double last year and what we believe a sustainable level going forward. Investment variance largely reflects our modeling changes in the year. Across our insurance businesses, this added GBP 290 million to our store of future profits, but generates a day 1 adverse investment variance as we've seen in the past, and this effect will unwind into profit over time. The Institutional Retirement annuity portfolio grew to GBP 75 billion, up 12%, driven by the strong PRT flows. The risk profile remains well matched and new business strain continued at around 1% in the U.K. and 1.6% across all of PRT. This business continues to deliver recurring and capital-efficient growth fully aligned to our strategy. As you can see, PRT continues to grow strongly as we wrote close to GBP 12 billion in 2025. In the U.K., we wrote over GBP 10 billion. That's about 25% market share, and this was written at attractive margins under the capital-light investment strategy. Our overall IFRS new business margin of 6.5% reflects a continued tighter credit spread environment and doesn't capture the increased opportunities this generates for asset optimization, which I'll cover later. Our international PRT business is down on the prior year given an overall slower market in the U.S. But looking forward, I am extremely optimistic about the prospects for our PRT business. Client demand remains high with a GBP 17 billion active pipeline here in the U.K., and we have line of sight of over 10 schemes in excess of GBP 1 billion, and we expect the market overall this year to be circa GBP 50 billion. Asset Management delivered a stable operating profit in 2025 despite the market volatility in the first half of the year. Markets were positive in the second half of the year, setting us up well for what's been a strong start so far in 2026. Revenues grew 4% to over GBP 1 billion, supported by favorable market conditions and continued progress in pivoting the business toward higher-margin strategies. The rebalancing of our product mix continues to take effect with overall fee margin increasing to 9.1 basis points, up from 8.8 basis points last year. However, expenses also increased by 5% as we continue to invest in growth initiatives, digital capabilities and enhancements to our operating platform. And therefore, as a result, the cost/income ratio was 75%. Operating profit from balance sheet investments was GBP 144 million, broadly unchanged from the prior year. Performance included strong contributions from Pemberton and good performance of assets within our digital infrastructure portfolio. The investment variance was more adverse in 2025, driven by in-year performance relative to expected longer-term performance and from revaluations across several assets, of which I'll cover later. As I said, we're at an inflection point in Asset Management's financial performance. U.K. DB, our largest channel, is naturally shrinking. And whilst it continues to support growth in PRT, we've not seen in recent years, we've not been replacing lost revenues quickly enough. We are now seeing higher-margin new channel growth beginning to accelerate. We've generated GBP 34 million of ANNR in 2025, which provides a tailwind to our 2026 revenues. Our targeted cost actions taken in 2025 are also beginning to come through into our numbers, maintaining lower cost growth. Therefore, our current run rate for 2026 shows revenue growth significantly outpacing cost growth, increasing fee-related earnings and reducing the cost/income ratio. Retail delivered another year of positive high-quality growth. Operating profit rose 4% to GBP 447 million, driven by higher release from CSM and risk adjustment and the continued strength in the investment -- in the expected investment margin. Asset optimization added GBP 73 million, more than double last year, similar to Institutional Retirement. Our workplace DC assets grew 21%, supported by strong win rates and our member-focused proposition. And as we outlined at the Retail deep dive, we look at workplace profitability across both asset management and retail combined with an all-in revenue margin for this business around 30 basis points. In retail, Workplace is broadly breakeven before investment spend. And for the first time, we've shown our Workplace Administration profit split on the slide. We expect to invest around GBP 30 million per year on average up to 2028, higher in some years, such as '25 as we focus on member engagement and technology-driven efficiencies. So Workplace is core to our growth story in retail and the wider group. This chart shows the trajectory of the combined profit in Retail and Asset Management that Workplace is expected to contribute over the next decade. This is driven by the scale of our GBP 114 billion assets on which we administrate pensions in Workplace, benefiting from the compounding economics of growing monthly contributions and our high client retention rates. Over the next decade, we will deliver significant operating leverage from tech and operational efficiencies, and we expect the cost/income ratio from these combined to fall to below 50% from its 75% today. The result is a greater than 15% CAGR over the longer term and higher in the short term as we expect to triple our workplace earnings by 2028. And our balance sheet position is strong with a 2025 pro forma Solvency II ratio of 210%. On this slide, I've provided a detailed Solvency II walk for the first time, including both movements in own funds and SCR. OSG from our in-force book added 26 percentage points to the ratio before we paid our dividend and invested in new business. Other variances include the impact from market movements, which is similar to the impact we see under IFRS. Our acquisition of a 75% stake in Proprium had a further 3 percentage points impact on the solvency after allowing for the option to acquire the remaining stake. And our pro forma closing position of 200% post the Meiji Yasuda transaction and is net of the -- the related GBP 1 billion share buyback. This includes a temporary eligibility restriction on Tier 2 owned funds. This is available to us under stress and is expected to unwind over the next 5 years as we continue to deploy capital to meet our growth ambitions. Our results this year reflect both strong operational delivery and continued strategic transition. We've maintained solid momentum across each of our core businesses while simplifying our portfolio and reinforcing capital discipline. Our progress against targets is encouraging. We're on track or ahead on every measure. And I want to take a longer-term view on what I see as the significant opportunities for our business, building on some of the points that Antonio made earlier today. We have great businesses, well positioned in growing markets, which will be enhanced by our synergistic model. This combination will drive compelling returns, and I'm really excited about the prospects for the group. But as Antonio mentioned, we've taken important steps to address some legacy issues, and these are now behind us. We enter 2026 with a stronger, more resilient foundation. And as I mentioned earlier, I've been in listening mode. After many, many conversations with several of you here in the room, it's clear there are aspects of our disclosure that are opaque. Today, I'm taking steps to address this and provide you with greater clarity on our results. In addition, I'll more clearly explain how we think about the longer-term trajectory of capital generation and how we're going to deploy that capital. So let me take you through each of these in turn, including some new disclosures. Over the past 3 years, one recurring feature in our results has been negative investment variances. It's important to unpack to see what's really driving these movements. Not all adverse variances erode long-term value. Some result from positive impacts on future profit. So let me talk you through what's going on here, both in our annuities portfolio and in our shareholder funds. Firstly, modeling and assumption changes in our annuities portfolio. This reflects the mismatch that arises between the impact of reserving changes on today's liabilities compared with calculating these changes using the locked-in discount rates at the time we wrote the business. This mismatch appears as an adverse investment variance, but actually represents a positive contribution to our CSM, increasing the profit that will emerge in future periods. Secondly, market impacts on our annuity portfolio where movements in asset values aren't fully matched to the movements in our liabilities. As interest rates rose in '23 and '24, we saw roughly GBP 700 million of negative variances arise as the fall in asset values was greater than the fall in the liabilities. We hold these assets for their cash flows, not their short-term price. And in 2025, we've seen this start to reverse with over GBP 100 million of net positive movements. The risk we care most about with annuity assets is defaults. And with 99% of the portfolio investment grade, we've seen no defaults since 2008 and even then extremely small at GBP 25 million. Thirdly, the variance that arrives in our shareholder funds from the actual in-year returns versus the long-term expected return that we assume in our operating profit. Over the last 3 years, we've seen around GBP 600 million of cumulative negative variances as the higher interest rate backdrop has caused many asset classes to underperform their long-term averages. Each year, we reassess our return assumptions. And today, our average blended long-term expectation is around 6%, including our cash assets, which we view as appropriately conservative. And finally, revaluation of our balance sheet assets. Specific sectors such as commercial real estate and venture capital have seen more pronounced challenges since 2022. This is reflected through reductions in asset values in line with market movements and views on future performance. And then in addition to the investment variances shown on this slide, we incurred close to GBP 200 million of M&A, restructuring and transformation costs, which we report outside of operating profit. Beyond M&A-related expenses, these costs reflect organizational restructuring and our multiyear transformation programs as we strengthen our operating platform to capture the significant growth opportunities ahead. I expect these costs to remain at around GBP 100 million to GBP 200 million per year over the next 2 years. Following Eric and his team's detailed review of balance sheet investments and asset management alongside my broader assessment of the overall shareholder portfolio, I'm confident that current valuations of shareholder funds are appropriate and materially derisk the balance sheet and earnings from future downward revisions. The dynamics are different across each of the 3 pools of shareholder funds we invest. In corporate investments, we expect our assets to be materially sold down by the end of 2027 at current valuations, further simplifying the balance sheet and reducing exposure to sectors experiencing structural repricing. In Asset Management, we've completed a rigorous review, challenging ourselves on the strategic relevance of our future balance sheet investments. We transferred close to GBP 200 million of assets that no longer meet our strategic or funding criteria into the Corporate Investments unit. The remaining portfolio is well positioned and will drive long-term future value for the group. We remain confident in delivering our asset management profit target of between GBP 500 million and GBP 600 million by 2028. This is now more heavily weighted to high-quality fee earnings as balance sheet investments are expected to generate around GBP 80 million to GBP 100 million of profit, approximately GBP 50 million lower than previously guided. And finally, the balance sheet investments in our insurance entities, where we have delivered strong traded profits and where the fall in assets largely reflects routine disposals for liquidity management. We expect returns to remain stable at around 5% with opening balances broadly unchanged. So that was transparency on where we are today. I'll now add some clearer guidance on the sources of annuity lifetime value and the trajectories of our Solvency II coverage ratio and debt leverage. First, lifetime value from our insurance businesses, a subject definitely close to my heart as the previous CEO of Institutional Retirement. Under IFRS 17, our earnings have become increasingly predictable and reliable with nearly 2/3 coming from the release of our store of future profit. We added GBP 1.2 billion to our CSM in the year through new business and locked in interest. This represents 2% growth on what is already a very large CSM base. However, as we've adapted our investment strategy for writing annuities under a tighter credit spread environment, the sources of value have also shifted with the store of future profit now only telling part of the story. So we are now seeing a growing contribution to our earnings from recurring asset optimization. Writing new business on gilts-based investment strategies over the past 2 years feeds this optionality. While day 1 IFRS profitability metrics are moderately lower due to the lower initial yield, the ability to rotate our investments to capture higher risk-adjusted spreads is scope to deliver increased lifetime value. Asset optimization doesn't require large market volatility. We have the optionality to rotate across ratings, currencies and sectors in credit and in sovereign. A recent example is how we've monetized elevated relative positions in cross-jurisdiction rotations between U.K. and U.S. sovereign bonds. We increased our sovereign exposure, reduced derivative-related exposure and remained cash flow matched and in doing so, delivered tens of millions of earnings and capital with no increase in the capital requirement. In fact, the opposite. We are confident in delivering asset optimization of more than GBP 300 million per year. We believe we have enough optionality across the various components of our greater than GBP 90 billion portfolio to deliver this, and we see opportunity to deliver further upside as and when spreads widen. Turning to Solvency II outlook, where we are well capitalized to invest in future growth. Today, we are sharing with you our medium-term Solvency II coverage target operating range of 160% to 190%. We will continue to deploy capital to meet our growth ambitions and expect to take us into this range compared to where we sit today. How we think about our ratio changes under different market environments. The actions we might take to manage solvency depend on why the ratio is at that level and how we expect risks to evolve from that point. Interest rate hedging is a good example of where we might take action to change our approach as our solvency changes. We're comfortable that we can withstand a variety of market stresses from any point in this range. Below this range, we would seek to respond to be within the range quickly. But this is not an automatic trigger for capital measures. Our dividend is still sustainable at a lower ratio. Our Solvency II balance sheet on debt leverage has increased in the short term to 33%. And that's on a pro forma basis following the sale of U.S. Protection and the related buyback. This sits well within our comfort levels. The ratio is likely to remain around this level for a few years before it declines as the growth in own funds accelerates. All 3 major rating agencies currently have us on strong ratings and stable outlook, reflecting their confidence in our balance sheet position. We have a strong balance sheet, but we are also a highly resilient business in terms of our flows. Our businesses continue to deliver strong, sustainable and increasingly diversified capital generation. On this slide, we outline OSG by business and its trajectory. And in the appendix, we've provided you with more breakdown of this by own funds and SCR. Through our share buyback program, we have returned GBP 700 million since its launch in 2024, and we will return a further GBP 200 million in 2026. As a result of this, OSG per share grew by 8% in 2025, which is ahead of total OSG growth of 5%. We expect growth in OSG per share to continue outpacing OSG through to 2027 post the GBP 1.2 billion buyback. The returns previously generated in our insurance businesses from this excess surplus are being replaced by growth across the group. As this transition completes, OSG will grow below 5% in 2026, returning to greater than 5% by 2028, supported with strong momentum in fee-based earnings. OSG starts from a robust base, adding more than 25 percentage points to our Solvency II coverage ratio each year, reinforcing our balance sheet, supporting shareholder returns and the continued investment in our growth. Overall, we have high-quality, resilient releases from our large existing book and clear visibility on compounding OSG growth through 2028. This clear trajectory underpins our confidence in the sustainability of the dividend. OSG comfortably covers the dividend on a per share basis and grows more rapidly than our guided 2% annual increase in the dividend per share. Our dividend coverage on a net surplus generation basis is sensitive to our in-year new business strain. Given the size of the annuity opportunity in front of us and the long-term potential for OSG growth in later years, we view the investment in new business at the expense of the payout ratio to be a good trade-off in the near term. By 2027, we expect Solvency II net surplus generation to cover our dividend under a range of new business strain scenarios. I want to close by returning to what I said earlier. I am really excited about the prospects for our group. Over the long term, we see a huge opportunity for growth in our core markets, and we're investing today to meet that opportunity. The investment requires some trade-offs in the short term, like on the dividend payout ratio, but these are trade-offs we are happy to make with the long-term sustainable growth of our business in mind. Let me now hand back to Antonio for his closing statements.

Thank you, Andrew. So to close, I'm pleased with our 2025 performance. As you've just heard from Andrew, it was important for us to provide you with greater clarity on the drivers of our financial performance, particularly on the adverse investment variance that you've just addressed and also provide clearer guidance on our future trajectory. I hope you got that from Andrew's presentation. I'm confident that we now have strong foundations with legacy issues fully behind us. So we have positive business momentum. So I've talked about the positive business momentum of 2025. We've carried that into this year into 2026. And this year, we expect to deliver another year of core operating EPS growth at the top end of our 6% to 9% target range. In Institutional Retirement, our PRT pipeline is as strong as we've ever seen it, and we are expecting a bigger U.K. market this year of GBP 50 billion, as Andrew also mentioned. So last year, GBP 40 billion, this year, closer to GBP 50 billion. In Asset Management, we have reached an inflection point with a GBP 34 million of annualized net new revenue last year that will translate into positive financial performance in 2026. This year, we have had good client wins so far with strong revenue momentum. And in retail, our annuities business is continuing the strong performance seen in the second half of last year. Our monthly workplace inflows are compounding steadily. This is a really great business from that perspective. And we still have that GBP 3.7 billion of schemes won last year due to onboard this year. This momentum is a testament to the compelling investment case there that I outlined earlier. First, we have scaled businesses in growing markets and asset management financial performance is turning a corner now in 2026. Second, we have a synergistic model between our 3 core businesses and are adding to that through the partnerships that we've established. We use scale as a competitive advantage, driving efficiencies across the business. And finally, we are delivering sustainable long-term value for shareholders and are firmly on track to deliver our 3-year targets. So with that, Laura, Gareth, Eric will join me on stage to take your questions, which Andy will help facilitate.

Thank you. And remember, it's going to be 2 questions each this time, try to hold yourself back. And if we have time at the end, we'll be able to circle back for a second choice. Remember to say your name and the financial institution you represent, and please wait for a microphone to come around. Farooq, we'll start with you.

Farooq Hanif from JPMorgan. So I will stick to 2 questions. Firstly, can we just think about the sustainability of the buyback? So if you go to the chart on the Solvency II percentage point movement, it's 6 points negative after strain and dividends. It feels like you will have a negative even in 2027. So in that context, if we start approaching the GBP 160 million to GBP 190 million, how do we think about the buyback? I mean what -- you've talked a lot about the sustainability of the dividend, but just kind of how you're thinking about the buyback and what should -- how should we think about it? Second question, thanks for the detailed description of the investment variances. I think that will help a lot. So if we just go to the CIU charges and restructuring, am I right in thinking that you're saying, look, the negatives from that are going to die down in 2026? I mean you've talked about the ongoing project restructuring costs and the markets. But just on that alone, that would be helpful.

Great. So let me start with the sustainability of the -- well, the capital distribution, and then you can add to that, Andrew, and maybe make a point on CIU, which, by the way, the answer is yes, we don't expect more. But so but the new duo here. So look, my priority is a sustainable growing dividend and the sustainability of that dividend. And I was very clear, and that's why I sort of talked slower than usual in that chart where I said, if you go back to 2024 in that chart that I showed you at that time with the numbers that we were doing at that time, I said that in '25, '26 and '27, we would distribute GBP 4.2 billion in between dividends and we would have if we had grown the dividend at 5%. And now with the share buybacks that we've done and the growth of the dividend at 2% we have delivered on that. So I was clear on that. Future decisions, Farooq, to your point, are exactly what I've been saying all along. So that hasn't changed, which is we will look, to your point, at the coverage ratio. And now we actually have a range that we are disclosing to you. We'll look importantly at the market conditions and what are the business opportunities ahead of us. So if we see a fantastic year, I think this year will be a fantastic year for PRT. The strain continues to be low. But if next year, we see that spreads have widened and we've gone back to the old way of writing PRT with a higher strain and still with GBP 50-plus billion in the market, at that time, I will make a judgment on capital distribution, particularly share buybacks. So priority on the dividend, we've said -- we delivered what we said we would do, and we will do the assessment of future -- any future distributions, including share buybacks at the time, which be a year from now. Anything else on that? And then on CIU or IV?

I mean just to reinforce the solvency guidance we've given you the range now, we don't see the bottom of that as a trigger. So that's very much we see our capital policy being achievable within that range, reinforcing Antonio's point about PRT, in particular, where we see attractive markets, deploying capital even at higher levels than we've deployed in the last couple of years, where the margin return is worth it, we see that trade-off as a sensible one. So just reaffirming that. And then reaffirming the corporate investments unit question for, fantastic progress in the last couple of years on the Corporate Investments unit. We mentioned we'd transferred another couple of assets in there, but we're drawing a line today on that. So I just expect that to be 0 going forward.

Quick clarification. Buybacks are possible depending on all of the above between GBP 160 million and GBP 190 million.

Yes, they are possible. Yes, they are possible. So the point I made was we will look at the time where we are on our coverage ratio and what are the growth opportunities at that point and what's the market environment. By the way, on the rest of investment variance, so this is the first line. But also I made the point and you made the point, Andrew, as well, which is this is the combination of 2 years of -- when I first arrived, I looked at everything that's strategic and not strategic. That part is done. That led to the disposal of Cala and other assets. Then Eric arrived and did a forensic review of everything in asset management. So those strategic type of decisions we've taken, those are done. We're also drawing a line under those. What you can expect is now what Andrew described as the more normal IV.

I think on -- I'm sure other look at, we've got 2 pieces on IV. The discount mismatch and the market movements, we'll still expect those to flow through. As I made in the comments earlier, adverse movements there aren't necessarily adverse to profit. They're just -- it's accounting. And then the final piece of investment variance is the M&A and transformational work, and I guided you to expect between GBP 100 million to GBP 200 million in that line for the next couple of years. So that's not 0 guidance. The other asset movements should be.

Next is Mandeep.

Mandeep Jagpal, RBC Capital Markets. Two questions for me as well, please. First one on Asset Management. Good result on the ANNR of GBP 34 million. It seems like a lot of it was from your internal sources. So how much of that is from third parties? And as we head into 2026, where do you see the highest growth potential for external third-party flows and ANNR? And then secondly, on your Blackstone partnership to originate North American private credit, you have the option to invest 10% of annuity premiums. And with all the recent negative headlines in the space, how attractive are you viewing the market at the moment in terms of new deployment and the private credit on your balance sheet at the moment?

Thank you. Thank you, Mandeep. I think, Eric, you should definitely take the first one. And Gareth, can I ask you on the second one. But just one point, and I'm sure Eric will make this point. But when we say internal sources, a big internal source for us is DC money. That's external money. So of course, one is really internal, our annuity book. But the other really powerful side of our synergy, and I think this is an important detail. Yes, we've said that those things are the underpin of our ANNR, but DC money is one of the most attractive channels which we, as L&G have as a captive channel because more than 95% of our DC money comes into -- so that is third-party money, right? So just to be clear on that. Eric and then Gareth.

Yes. Thanks, Antonio. I think that's a good point. And I will answer specifically the question you asked, but I think it's important to put it in the context. And the context is the trend from 2024. So we were at negative 5%. We're up to 34%. Importantly, the synergistic business model, we clearly have gone a step further in '25. So we're really pleased with how much more we can generate, but it existed before. So when you look at the previous minus 5, there was a lot of internal money, whether that's true annuity PRT outcome from that and the third-party money that we generate together with Laura's business to the Workplace Solutions. So I think we need -- I want to put everything in the context because that means by its very nature, the third-party ANNR was frankly above my expectations in terms of how quickly we've turned into a positive number. So to answer your question specifically, roughly half of the GBP 34 million is coming from that IR PRT money, which you could call internal, right? Another 1/3 is coming from the business we do together with Laura. And I just want to underline what Antonio said, this is an area that all of our competitors are desperate to get in. We have the leading market share. So although it is internally generated, it's part of our value-added synergistic business model. This is a true third-party channel that I think we just have an edge on everyone else. So that leaves about 1/3, so call it GBP 10-ish million that is the net result from true arm's length third party. And of course, within that, you're contending with an ongoing negative ANNR in our LDI business because of the natural shift from LDI to PRT. So we're -- in some ways, as that continues to happen, you'll continue to get negative flows out of our LDI business. And to be clear, we're a leader in that space. We will remain a leader. We actually won quite a few new mandates because it's going down, but there's a lot of movement within that. But as we shift to the 3x revenue PRT business, in many ways, that's an affirmation of our model. But when you just look at DB, it is going to naturally shift towards more in-house money. That's a very healthy development. So we've got GBP 10 million or GBP 11 million of really completely arm's length, not linked to the synergistic business model, positive ANNR, taking into account -- I mean, I can give the number. It's roughly GBP 10 million of negative ANNR, which is to be expected from LDI. So in many ways, there's the absolute number, but the change from '24, frankly, happened quicker than I thought it would when I -- when we were talking about this about a year ago.

Exactly. And so look, Eric has been in role for a year. Let's go back to the targets for a second. We said GBP 100 million to GBP 150 million ANNR cumulative, '25, '26, '27 and '28, 4 years. Eric won't like me saying this, but if you just multiply the 34 and you do the 34 every year, just 34 and our plans are more ambitious than that, you'd be at 136 -- so we're well within towards the top end of our range. So at the moment, I'm very, very pleased with the turnaround of the commercial performance that Eric has led. Blackstone and what we're doing, Gareth, and maybe Andrew may want to add to that as well.

Sure. So I'm sure there'll be other questions this morning about the competitiveness of the PRT market. And so right now, I think it's really important to have diversified sourcing channels and Blackstone offers us diversified sourcing channels. And where we see attractive opportunities, then we will add that to what we already are able to generate. So we have made our first investment through the Blackstone partnership, lending money on a triple net lease to a credit that we really like called a hold. We like the credit in the public market, but the private asset offered a significant premium to the public issuance. That's exactly the sort of investment that we want to be making in the current market.

And actually, as you know, this is also Gareth's first time as the CEO here. He was the CIO of the business and of course, succeeded Andrew. So the right guy to be talking about this. He led a lot of the negotiation with the partnership with Blackstone.

Can we go to Dom and then on to Larissa.

Dominic O'Mahony, BNP Paribas. So sticking to the 2, I'll start with just a technical one, which is, if I understand it correctly, the operating profit assumption is driven off a short-term yield, I think a 1-year yield. That's come down quite a lot over the last 12 months. Is that going to be a headwind to earnings into 2026? Hopefully that question made sense. broader strategic question about the corporate investments. It sounds like you're making good progress there. And thanks for the transparency on the way that you're accounting for those and the investment returns on the broader balance sheet. Could you just spell out for us how the proceeds from those disposals are fueling your business? If we go back to the Cala disposal, there wasn't much solvency uplift. But of course, there's plenty of cash coming out of that. And I think cash still coming and presumably further liquidity also from the other disposals. How does that play into the rest of your business and support your ambitions?

Thank you, Dom. You should take both, Andrew. But just to reinforce, I said that in my script, and you may have heard it. So the core EPS growth for 2026, we're again guiding to be at the top end of our 6% to 9% range. So we should talk about the yield. But the overall number, we're guiding towards the top end of the range. Andrew?

Yes. Thanks, Dom. On first question on the yield, no, it's not a headwind for 2026. I mean that's something we -- again, I talked earlier, we've looked at those yields. We look at them regularly, and we're comfortable with those now. So don't view those as a headwind for '26. On the second point on disposals, yes, a number of disposals you mentioned them. I mean those in a sense, you've seen the level of buybacks that we've done. So those have been recycled through, but we've also invested in the business in M&A that we've done. and investing in the PRT business. So we take that into the round as we're thinking through, as Antonio said, what's the investment in the business, what's the dividend ability and how we use that capital. So it's a -- it forms part of the evaluation as to what we do. As we get further proceeds through from CIE, we'll do exactly the same. But for Antonio made the point so that there are -- each of our businesses has investment opportunities behind it because of the future growth that we see. So we're balancing that. We recognize the importance of the dividend and the sustainability of that. And hopefully, the guidance we've given you today is that it's really important we keep growing the business. And therefore, the needs that Gareth, Eric and Laura have to do that, those proceeds are being recycled back where we see the return on our capital being appropriate, and that's not something we made in the presentation, but each decision we take has that IRR calculation at the center of it and saying, is it going to generate the return we need. Otherwise, we think about distribution of that to shareholders.

Yes. This is an important point to stress. We have the capital discipline that I talked about. It's a return on cash and return on capital, and we look at the sources and uses of that cash and liquidity as well as the returns on the business. And that's something we put in place kind of 2 years ago. It's in a really rigorous way. And so all of that goes into that. Thank you, Dom.

Larissa? And then we'll just keep passing along to Andrew.

Larissa Van Deventer from Barclays. On the divisional side, the underlying OSG was flat year-on-year. However, if you look -- you give guidance as to where that may grow to in 2028, which is roughly 7% compound annual growth rate. How do you get confidence in reaching that? What are the key drivers that need to be in place to get there? And then you've mentioned the current gilt environment quite a few times. New business strain was low with spreads narrow and gilts being attractive. How do you see that evolving if gilts continue to come down and spreads widen or do not widen over the next few years? And does that still meet the IRR that you just mentioned?

Get it. Why -- Andrew, don't -- you should take the underlying OSG, but maybe Gareth can also talk a bit about gilts and how that reflects -- impacts all of our businesses, particularly PRT. So Gareth, should take that.

So I thought it was really important we gave you this information. I said I've been listening, I heard this ask a number of times to see that OSG by business. So I'm really pleased we've done that. But as we've done that, as you say it tells the story where the year-on-year growth in those -- in the underlying business ones is actually down in most cases. So why am I confident it grows up? The reason it's down year-on-year is we took surplus assets out of the business in 2024 through dividend remittances, and that's why we use it to fund buybacks and dividends. That's why you see the OSG per share growth growing faster than OSG because effectively, it's those surplus assets have reduced the share count. That's why the year-on-year movement is down slightly. The reason we're confident about the underlying growth in OSG is the growth prospects we've talked about for the business. So in each of those markets, we're expecting to see growth in PRT, as we've talked about, Worplace, asset management Eric talked about. So the underlying OSG growth going forward, the CAGR that you see is driven by the business plans we have in place for the business.

Gareth, gilts.

So over the last year, our investment strategy has been similar to historic in terms of traded assets and private assets, but the traded assets, we've seen a lot more value in structured sovereigns that we have in credit. The spreads have been higher. The capital usage has been lower. So as we look into 2026, as you say, the spread between gilts and swaps has come in. We still think that they are attractive. There comes a point at which they become so tight that then there's an opportunity for us to optimize on the back book and reinvest into credit. So I guess there's a point both for new business, which is we look at the best asset allocation on a go-forward basis between traded credit and structured sovereigns to pair with our private credit. And then there's also the back book, which is that there becomes an opportunity where we can generate more profit in optimizing some of the back book structured sovereigns into credit.

Do you believe that you can make your hurdle rate either way, though?

Yes. So we've done it in the past. If you go back to pre the end of 2024, we did that in the past through investing in credit. And at the moment, we do that through consuming less capital, but continuing to make our returns using more of a structured sovereigns-based strategy.

And I think I may have said this at the half year when we were discussing this that in many ways, we would rather the IRRs were lower, but with slightly higher capital strain so that we generate more pounds, so the trade-off. But we -- everything we do meets that 14% hurdle for every transaction, and particularly for the very large ones that you should expect because we price this one by one, including all the way to our Board. One thing to say that -- to stress is the GBP 300 million in that chart on the back book optimization, the asset optimization, we're assuming -- and we've told you the guidance before of more than GBP 300 million, but assuming that there's no more volatility. So because sometimes I get the question on are you assuming that is the sustainable level. That's why both Andrew and I said with credit spreads widening, we would see more upside in the back book for us to optimize. And so that's -- we're making all of that, and this is -- Gareth is leading this. We're making the back book optimization much more systematic and the GBP 300-plus million is sustainable in any market environment. And if we see credit spreads widening, it has the impact on new business that Gareth mentioned. But on the back book, we would see further upside.

Andrew?

Andrew Baker, Goldman Sachs. So that leads right into my first question, actually. So you mentioned the asset optimization upside from corporate credit spreads widening if that happens. Are you able to give us a sense of sort of what that could look like? So if we see 50 bps, 100 basis point widening, what that upside could look like for asset optimization, both in IFRS and OSG lens? And then also any considerations on the SCR that we should be thinking about there? And then secondly, just on the U.K. strain. So it was 1% at the half year, 1% for the full year. You did a lot more funded Re in the second half. I guess, why shouldn't I expect to see that strain lower given the proportion of funded Re was so much higher in the second half versus the first?

Maybe, Andrew, we'll ask Gareth to talk a bit more about what we're doing from an asset optimization perspective and the upside and maybe you want to add in terms of numbers. Do you want to start, Gareth?

Yes, sure. So it's very difficult to give numbers without knowing what future scenarios will look like. But I think Antonio has already anchored us at the GBP 300 million level with minimal levels of volatility. We would expect to be able to materially exceed that in moments of significant spread widening. So I mean, it's probably easier just to do some modeling on different scenarios, and then we could look at the capital consumption and also the spreads. But broadly speaking, with spreads wider, then going back to Antonio's point, we generate more profit. We're happy to consume some more capital, and we'll continue to generate a return of more than 14% on that capital.

Yes. And it's fair to say both Andrew and I also said we don't want to give specific guidance on what that -- because Gareth is right. It will really depend on what the scenario is. And so -- but we can have a discussion on the sensitivities on that. Do you want to talk about strain as well? So why is the strain 1% and kind of...

Yes. So I mean, I can't do the math in my head, I'm afraid. But the investment mix was not materially different in the second half of the year versus the first half of the year. So I mean, go back to my answer to Larissa's question, our investment strategy over the course of the whole of 2025 was continuing to invest in structured sovereigns on the traded side and private credit on the private side. That continued throughout 2025. And yes, we did increase funded reinsurance, but all of that came out with a 1% strain. I can't do the math in my head I'm afraid.

I agree, Gareth. I'd just say it's -- the asset mix was the same, but the profile of some of the transactions are quite different. So when you have the type of book we have and you have a forward deal landing, those individual transactions influence half year results very significantly and therefore, thinking that through will be.

I was going to say that. So if you look at Ford, EP and NatWest, the 3 that are public and they were on the slide, they have completely different profile. So when we talk about an average 1%, some had actually higher strain with better metrics and some had lower strain but with worse metrics. And so we fundamentally didn't change anything in the strategy. It just happens those are quite lumpy deals and Ford was one in the second half, skewed probably the metrics that way versus the first half.

Yes. And then just to add, Andrew, on the SCR, just to say what -- when we look at asset optimization opportunities, we are very much factoring in the impact on the SCR. Some rotations are worth doing because they're effectively capital free. Other ones, there's a strain that we have to take into account. And therefore, again, come back to the 14% IRR, we're always looking to say, is the rotation capital accretive? And if it is, then we're likely to proceed. And therefore, SCR is very central to that deliberation.

Kailesh?

Kailesh Mistry, Deutsche Bank. A couple of questions. First one is -- sorry, on the solvency ratio. At the bottom end of the target, the 160%, what happens at that point? Does the dividend come under stress? Does it affect your ability to write new business? And secondly, just going back to Slide 30, on the first 2 lines of that slide, is it possible to provide any sensitivities around that to help with the modeling interest rates, credit spreads, et cetera?

Yes. Andrew both but reassuring that the dividend is not at risk in that situation.

So yes, just reiterating the comments I made just a few minutes ago. As we get towards the 160, clearly, we're marching. I think it's really important to remember, we have to look why we're there and the market environment that we find ourselves in around that position because that will likely determine some of the management actions we would take. But as I said before, this is not a trigger point at 160, the dividend is sustainable, and we are comfortable operating at that level. We're just making a point. It's our target operating range. And where the business to fall below that, we would look at actions to get us back into that range. But it's not triggering of the dividend.

And historically, we've been close to those levels where the market was -- we continue to be above most of competitors in the market. So it will depend, as Andrew says, on how we get there. Did we answer your second question because you were both related.

Disclosure...

It would depend where we're in. One management action available to us to manage our solvency ratio is to change the level of new business we write depending on the strain environment. So in theory, the answer is yes. But again, given we're comfortable at that level, and as Antonio says, we operated at that level before, depending on why we found ourselves at that level, we'd still be expecting to write new business.

And I think a key difference of what we're seeing today versus the last 6 times I stood in front of you in different scenarios was we are giving the 160 to 190 million. So we are saying deliberately that we want to be within 160 to 190, which implies that we're writing business and we are growing PRT, and that's why the solvency -- one of the reasons why the solvency comes down.

So Kailesh, sorry, you had the second question about sensitivities as well. I think the answer to that is we'll have a look, and we haven't disclosed anything today. We won't be disclosing anything in the presentation, but absolutely, we'll take that into account. Michael?

Do you have a number for the stressed solvency? So [indiscernible] gives a figure, 197, they say that's actually the number you should manage your -- they manage themselves on. And then the second question is, I was curious, I spoke to -- excellent IR this morning, and they highlighted the very strong new business in the second half, a strong run rate in individual annuities. I just wondered if you can talk a little bit about more the growth and also the IRR. I'm always curious because I'll be buying one of these.

We have some people outside. And so we can just -- we can take care of that, and Laura will be very happy. Definitely, retail annuities, Laura, you should address that in the run rate of the second half. First question, do you want to take that? Yes. Actually also I didn't quite catch the question. Yes. So can you repeat the first part?

The stress solvency. So if you were in the GFC, answer would be today and they say that's the number they manage themselves. They don't use stress number. I just wondered what is your best number today.

We don't look at the business that way. So it's not -- I can't give you, Alex, the 197 ours is something else. It's the range that we think about. And as I said before, why we find ourselves in that range depending on the market conditions. So there's no singular 197 figure that I would...

But what we do, so we do also ourselves with the Board and then with the regulators, we do also, which is basically the stress -- so to reassure you, when we look at our 5-year plan, we look at all the different scenarios and what could happen. And we are still comfortable that everything that we're talking about, including the GBP 1.2 billion buyback is in the back of stressing our numbers to different scenarios. So -- but we can maybe pick that up afterwards.

I think what we would say is we are happy through that 160 to 190. We're happy to operate in the 160s. We're happy to operate in the 180 even with -- even in the 160s, we're happy to grow our dividend. We're happy to invest in growing new business. So we're happy with throughout that range, bearing in mind that there could be stresses after that. And as Andrew said, like the reasons why we're at a certain ratio will depend, -- have we had a big credit cycle, have we had government bond yields down 200 basis points or up 100 basis points. It will depend why we're there, how we act.

And Laura, individual annuities.

Individual annuity. So yes, so we predict that decumulation flows will sort of double over the next decade. And I think just looking back at the last 2 years, where on average, we've seen individual annuities grow on average 20% each year. As Antonio said, we had a really strong second half of last year. So a run rate of about GBP 1 billion, having had, I suppose, a slightly slower run rate in the first half of about GBP 0.8 billion, but actually a really strong start this year. So our run rate is pretty much where it was at the second half of last year and certainly where it was in 2024. So in terms of your question on IRR, we do have an internal target of 14%. So everything needs to meet that hurdle rate.

And then we then manage the individual annuities with the bulk annuities in one big annuity business. And so they have to all meet the target hurdles. There was one statistic that I mentioned that also reinforces. So the majority of what we do is still with clients that are not necessarily L&G clients. But I mentioned that we had a 15% year-on-year increase of workplace customers taking an individual annuity. And if you fast forward, the average age of our book is 42 years old on the workplace.

About 42.

Yes, exactly. It's 1 year later, but still 42. I guess we're getting a few younger people. And -- but as they get closer to retirement, there's more and more people that want to take an individual annuity to your point earlier about it's actually a really good thing to do. And there is an important potential for us that we haven't yet seen. It's still a very small percentage of our own customers that are getting to the age where they take individual annuities. But as we continue to grow workplace, that's a massive upside. And so it's a 15% year-on-year increase on a small number, we see that trend continuing for a real long term.

I'm just going to say one extra point, Michael, on the solvency. The sensitivities aren't exactly the same. If you're at 165 versus if you're at 210, the sensitivities change as well. So it's not exactly the case if we apply the exact same sensitivity to that point. Andrew, the front.

It's Andrew Crean for Autonomous. Could I ask a couple of questions? Firstly, your comment that by 2027, the net surplus generation will cover the dividend. At what point of cover would you be prepared to start growing the dividend in line with the growth in net surplus generation, bearing in mind that the operating variances have been consistently a dumping ground of negative hits below the net operating or net surplus generation. That was one question. The second question was on Workplace. Profits went down from GBP 60 million to GBP 55 million, I think, all total, including asset management. What was going on there? And why do you see them trebling to GBP 180 million by 2028 on that basis?

So Andrew, thank you. So on your first question, there's 2 sides to that. One, what we're trying to do today is draw a line on some of those hits, to your point that we've had. In terms of the dividend itself, I will need to be standing here in front of you next year, telling you how the dividend is going to grow in '28, '29, '30, right? So we've given you the '25, '26, '27, the 2% growth with the share buybacks. You're right, the underlying business is growing faster than how I'm growing the dividend at the moment, but I'm not yet at the stage to actually tell you what the next 3-year plan is, but it is it is very much in my mind and something we need to discuss as a team and with our Board, how are we going to -- what's going to be the capital distribution policy going forward for '28, '29 and '30.

So I think you said you -- this year, you're drawing a line under the investment variance. What I was talking about is the negative operational variances, which sit below -- I don't think you've talked about that.

No, you're right. But from a dividend perspective, your first comment, we're going to, in the second half of next year, outline what the next 3-year plan is going to look like. And I appreciate not giving you more guidance on what that is. But we've said that the OSG per share grew at 8% last year and it's growing at more than 5% going forward. So it gives you a sense of where the underlying business is growing.

And Andrew, just if I could maybe add on the operating variance, we gave some disclosure of that on the solvency walk earlier in the slide pack. large components of that map directly to the IFRS investment variance I was talking about earlier. So drawing a line under those variances for IFRS is drawing a line under those for Solvency II. And the other major components of those other variances that you referred to, outside of the GBP 100 million to GBP 200 million I guided around the transformational projects, then those won't recur either. So we are -- when we're drawing a line, we're making a very significant statement around those variances under Solvency II as well as IFRS.

Yes. Workplace responded to the second question. So workplace profits, and we are comfortable that it will triple in the 3 years. 2/3 of that is in asset management, 1/3 is in workplace. But Laura, do you want to address that?

Yes. No. I mean, I think the -- obviously, the profits will come through scaling efficiently. We are doing a lot -- making a huge amounts of investment actually at the moment through our digital channels and into our proposition, which will sort of tail off and allow us to run the business more efficiently. We talked a little bit at the Capital Markets event about our customer agent desktop, which is effectively embedding Magentic AI into operations. So that will be a big source of that sort of efficiency, if you like. So I think we're sort of well on track to improve those profitability and the efficiency of the business.

[indiscernible].

They are. Yes. And that's the number that triples. So if you remember that you have it there in front of you, Slide 24. So it doesn't help that it doesn't have the actual numbers in it. But you see that I was using the 2024 numbers when Laura stood up. Those are -- that's still our guidance. So from '24 to sort of '28, so for '25 to '28, it triples before investment, but we also gave guidance that it will be a bit lumpy. It was high the investment last year, but that investment is now reducing because a lot of the heavy lifting we've done, including in technology is now done.

Tom?

Thomas Bateman from Mediobanca. One of the slides, I think changed was on asset management and just on the investment cost there. I think one of the things that probably missed today was the overrun on investment costs. I'm not quite sure what the guidance is, whether it's incremental or what the total is. Can you just clarify what you think the investment is into the asset management business at the moment? And then the second question is, my understanding is that you weigh the capital strain about 100% rather than the solvency ratio target. If you were to weigh it the new solvency ratio target, when would the dividend cover be covered under NSG? And I ask because the eligibility of the leverage of the debt doesn't seem to be temporary to me as long as NSG is not covering the dividend. And similarly, I don't really see how you can continue to do buybacks after 2027. because of that reason. So yes, when does it cover the dividend under the full capital strain?

Andrew, you should take that. On the asset management question, Tom, can you clarify, maybe you got it, but you were saying it's -- was it the investment variance that you're talking about in Asset Management?

I think you gave guidance before of GBP 50 million to GBP 100 million. And I think people take that as...

Yes. The returns on the balance sheet investment.

GBP 50 million to GBP 100 million investment.

The cost investments, sorry.

My understanding is that it's incremental actually, not a kind of annual spend, it's GBP 50 million potentially on top every year, and that's...

Yes, absolutely right. Sorry, sorry, on that. So we should start it there. So I was more -- so when we talked about the costs in Asset Management, we said we were investing in the business at GBP 50 million to GBP 100 million. That's the number I gave before Eric's arrival. When Eric then did this Capital Markets event, he was saying actually, we're spending less than that at the moment. But you're right, we didn't include it on the slides. So do you want to talk about how are we investing? And also there's this slide that Andrew showed on the revenues that was said indicative. The revenue is growing more in 2026 than the costs. And so both of those.

Yes. No, it's a great -- and it's true, we skipped the slide. I think we are par for the course for last year. I feel like the answer I had last year would be the same this year. The GBP 50 million to GBP 100 million, we are in a growth strategy. So I really appreciate the potential flexibility if we saw a real investment opportunity. But in our build, buy and partner strategy, the GBP 50 million to GBP 100 million really is around the build, which is organic. And when I look at what we already have in place, we will continue to make incremental investments. I feel extremely comfortable with never having to get out of the GBP 50 million to GBP 100 million range. And as of now, again, my prediction for '26 is we won't hit the bottom end of the range, just like last year. That's the sense. We don't have any particularly material spend in an area that would make me feel we have to be well into that range. It's a lot of little things we're doing to continue to grow the top line, and it seems to be adding up to well below that range.

Yes. And originally, they were incremental. Remember, Tom, we were saying it was every year, we're going to do another 50 million to 100 million was, let's say, 75, 75, 75. We are spending less than that incrementally. So we've been much more cost conscious since Eric's arrival in Asset Management because to be honest, we need to -- those jaws need to go the other way. Eric has closed them in the first year. So the revenues and costs are growing roughly at the same level. We -- they now need to cross. We need in 2026 for the revenues to grow more than costs.

Yes, it's worth. And maybe why that slide is not up. The way we look at...

'24 actually...

Yes, it's really holistically. In other words, we need to keep our overall growth in costs within a range that we're happy with. That has to include this number as well, but we look at it in the round. And the important thing, I think Antonio underlined it is we need to see the revenues growing faster than the cost from here on in. And the only reason why you'd see us up the investment spend specifically is because we can see a direct line to higher revenues. That's how we think about it.

Andrew?

So Tom, thanks for the question. I might want to pick up with the team on the detail, but just a couple of observations. On the eligibility restriction, I mean, that exists because our Tier 2 owned funds are capped at 50% of the SCR. So as we grow OSG that grows own funds, that effectively starts to reduce. And therefore, it's temporary because we grow our way out of it. And then I think as we have guided, we will -- ASG will cover dividend by 2027 and then grow significantly after that. So in terms of working you through your question, we'll pick up with the team afterwards. But it is temporary and NSG is covering dividend by '27 and beyond.

Yes. We're actually an interesting obsession where the more capital-intensive the business we write, the faster we start qualifying again because the SCR rises faster. So own funds generation is actually covering the dividend today, but then we choose to invest a lot of that in growing our SCR and growing our business. And as we grow the SCR, the restriction is 50% of the SCR. So the more we grow the SCR, the faster that comes back comes back over time, but we'll catch up in the detail.

And actually -- and today, I appreciate we're giving you much more information than usual, so we can also, at the end, kind of with Andy and the team kind of follow up on any more specific questions. Thank you, Tom.

Will?

William Hawkins from KBW. I'm sure there's a lot of work that's gone in behind the scenes. Back to Workplace, please. getting the commentary so far, but I'm still a bit uncertain about the flows that we're seeing in Workplace because you did GBP 6 billion in the full year, which implies about GBP 2 billion in the second half of the year, quite a step down from GBP 4 billion in the first half. So I'm not sure in retrospect, if I'm sort of missing some big issue of seasonality or if there's some other kind of driver around that. So understanding a bit more about workplace flows would be helpful, please. And then secondly, sorry, because there's so much helpful stuff that you've said. The core guidance for this year of core EPS rising 6% to 9%, I mean my back of envelope is you're going to get most of that from the buyback. So the implication is either that your guidance is hugely conservative or that the absolute earnings figure isn't growing very much. And if that's the case, I can't figure out myself what the headwinds or one-offs have just been.

Yes. So Andrew, you should address the EPS, but the underlying core earnings are growing, first point. And yes, we have -- bear in mind that we start the largest buyback in our history, which was starting this week, the first tranche of it. And so you have a 12-year -- 12-month -- you have quite a long period where -- so not -- the EPS itself is not -- is going to be impacted more in 2027 than in 2026. So when we actually look at the math that you were doing in your mind, there isn't a massive -- there's half of it, but there isn't a massive EPS upside from the GBP 1.2 billion because a lot of this is going to be done throughout 2026. So we can actually give you the exact numbers because, of course, we have that behind it. But do you want to add on that and then we should come to the workplace.

Just going to reiterate the point you just made. I think if you look at our operating profit growth by business, as I said before, we're on track or ahead on all targets. So those are growing positively. And the point you just made, Antonio, is that the buyback really has a bigger impact in '27 and '26 just because of the timing of it. And therefore, I suspect that's flowing through your numbers.

Yes. We're giving additional disclosure because the buyback is quite big. So on every week, we'll have it on the investor.

We'll have a tracker.

We'll have a tracker on the website. I'm not sure if we said that already. So -- which will track exactly what -- where we are on the GBP 1.2 billion, and it will give you a sense of how it's impacting the EPS. On the GBP 6 billion, there is a lot that we've done last year, as I said, that is coming into 2026.

Yes. No, I mean there's no sort of seasonality at all impacts in the business. I suppose the 2 main sort of inflows, if you like, are the regular contributions, which are very sort of regular and predictable. The scheme wins can be a bit lumpy like PRT. So in the GBP 3.7 billion that we talked about that we actually won last year, but will not fund until this year. There was sort of, for example, there was a GBP 2 billion scheme in there. So it does tend to be a little bit lumpy in terms of the sort of new business wins, if you like. And sort of very -- for us, we have a 99% client retention rate. So sort of no big outflows, if you like. So it really was just the sort of timing of when we won those sort of some of those bigger deals.

Yes, which goes back to 2024. So in 2024, we won some of the schemes that funded in the first half of 2025. There were more of those funding in the first half of 2025 than in the second half of 2025. But this -- we have it in the slide, the GBP 1 billion monthly contributions, as Laura says, there's no seasonality. The -- well, they just keep on increasing actually because the book is bigger.

I'd kind of go for Abid and then Asad.

It's Abid Hussain from Panmure Liberum. I'll limit it to 2 questions. The first one is on bulk annuities. Could you just talk to what the competitive landscape is now in the U.K. versus the last couple of years given the increased capital and capacity being deployed across the industry? And then is that then driving the margins down? Or are the margins coming down because of the tighter credit spreads and the business mix that you're writing? That's the first one. And then the second one, can I just come back to the net surplus generation? Just trying to understand and work our way through this in terms of which numbers we should be focusing on? Is it excluding or including TMTP? Should we be thinking about 100% Solvency II cover or 160% Solvency II cover on new business strain? And then ultimately, where do you want that net dividend cover to get to in the medium to long term?

Andrew, you should take that. But Gareth, you start -- can you start with the competitiveness of -- by the way, I feel super proud that we are at 25% of the market in 2025. And so we somehow just skipped through that and the GBP 10.4 billion. I think great Andrew and Gareth as well and the team before. But can you talk about it going forward? And we get a lot of these questions given the new entrants.

Sure. I'm impressed that it's 1104, and that's the first time we've had the competitive landscape question. So the market is competitive. The market has been competitive for a long time. And if you think about what's been happening over the last couple of years, then one of the changed competitors, if you like, has been one of our most formidable competitors for a long time as well. So we expect the market to continue to be competitive, but not materially different to what we've seen in 2025 in particular. So then on to new business margin. The first thing just to say is to reiterate that we are making our return on capital. All of our deals have got to make our 14% hurdle. And so we are continuing to write in a price disciplined way. But you're right, and you alluded to this in your question that the reason that the margins are a bit lower is because we're using less capital-intensive investment strategies and buying optionality for the future. And so the way that you would expect that to change would be if you -- if we continue to write low capital strain, relatively lower spread investments to back our business, then you'd expect the numbers to start out low and then give more optimization opportunity in the future. And if credit spreads start to widen, then you'd expect that new business margin to grow again and to perhaps have less future opportunity because we'll crystallize more upfront.

I would say one thing about the new entrants. They are certainly very rational and sophisticated. And so the sophisticated part could worry you, but the rational part actually is reassuring. I mean they have the same return hurdles we have or higher actually, if you think about their own shareholder structures. So we expect -- you were mentioning PIC as one of our competitors. PIC is already one of our biggest competitors. So we expect -- it's a market maybe different from some of the parts of retail and others where sometimes you have competitors coming to the market in a slightly more rational way. We are a big player in the U.S. as well, as you know, where we compete against those same competitors. And everybody tends to behave in a very -- it's a very professional market and mostly a very rational market. So we feel reassured by that as well. NSG covering dividend by 2027.

Just let me talk about the TMTP and why we've done that. The reason we made that adjustment this year and to be really transparent is we're trying to -- because we've guided for the first time on the OSG by business, that TMTP adjustment will run out over time. It can be sort of volatile in places. And therefore, we wanted to give you a cleaner underlying view of what each business was generating and where the run rate would go. The reason we've then transparently disclosed that is you can just add it back if you need to, you can see where it goes. So that drive, therefore, to give that transparency was the important one. And using that basis, that was -- and we talked here about OSG rather than NSG because that's by business, that growth in per share OSG in particular, is what gives us the confidence on the dividend coverage, which is 2%. And then, of course, NSG depends on the strain environment that we're finding ourselves in, which obviously impacts Gareth and Laura's business. To the point of dividend coverage, I think I made some comments earlier about the -- in terms of things like payout ratio, it's a decision we are currently comfortable with the payout ratio. It will trend down over time. But currently, we are comfortable with the payout ratio that we have, recognizing the short-term trade-offs on the amount of strain we're going to deploy against new business. So that's where we're co. And back to NSG, yes, it covers the dividend by 2027 onwards.

Nasib?

Nasib Ahmed from UBS. PRTs in new business. there's different ways to cut it. You've got IRR, you've got IFRS new business, you've got lifetime value. What is the kind of the bottom on the IFRS new business value where you say, okay, I'm going to walk away. I'm not making enough pounds, as Antonio you said, on the IRR. I'm still meeting 14%. You could do more structured sovereigns, still meet the 14%. But is 6.5% the bottom where you say, okay, if I go lower than this on IFRS margin, I'm going to walk away. Question number one. So question number two, on Slide 38. You give the 2028 OSG underlying of GBP 1.4 billion. And then you've got to add management actions on top. Am I adding GBP 300 million? Or you did GBP 238 million last year? And then you had GBP 172 million of balance sheet optimization. Is that GBP 410 million equivalent to the GBP 300 million? Or is it GBP 238 million going to GBP 300 million?

I'll give that to you, Andrew, in a second. But on the first one, look, there are many constraints. And not only that, when we look at -- the beauty of this business is that we price in a very specific way deal by deal. And so every deal has a different make in terms of how many deferred kind of duration, et cetera. But the binding constraint is the IRR of 14%. So what the deal can't -- whatever way we structure it, if it has more funded R less, we have the pound of capital that we're deploying needs to be above 14%. But when we approve it, and you may want to add to this, Gareth, there's lots of -- there's many more than those metrics. But from my simplistic view as the group CEO is, is this capital -- this pound of capital better deployed here versus in those 2 other businesses, we need to look at the return on capital and the return on cash. So from a PRT perspective, it needs to meet that. And so there is yes, there are many, many deals last year where we didn't bid or where we bid and we didn't win because if we were -- and we are the largest player in the market. So I'm very conscious that we need to have that pricing discipline. Actually, the #1 objective I have from the Board is pricing discipline, not market share of volumes because we want -- we want to maintain the health of the market from a profitability perspective. Do you want to say something on that, and I'll come back.

Maybe one more thing just to kind of bring to life. So if you imagine we're bringing one of our bigger deals to discuss with Antonio and Andrew and then on to the Board, then we've got our base metrics that we're underwriting on, but we then also look at what might happen over the lifetime of the business. And so one of the things we did over the course of last year was we slightly reduced the duration of some of the credit that we're investing in, which gives us a little bit more optionality later on. And in some of the scenarios, let's say that we were pricing scenario which hit the 14% IRR, but had a relatively lower IFRS new business margin. One of the things that Antonio and Andrew would definitely ask is what are the numbers that can drive those up over time. And so if we see that there is more optionality that we're able to access in that particular deal, then that might make us feel more comfortable underwriting at a lower headline IFRS new business margin, but with the opportunity to be able to go and redeploy in the future. And that was definitely the case for some of the deals that we looked at over the course of last year.

Slide 38.

Yes. I mean just -- this is definitely one for the team to work through. So think about the GBP 331 million number that we disclosed in the GBP 300 million, that's an IFRS number, and that's for asset optimization. When we disclose asset optimization on a Solvency II basis, one important adjustment is that gets disclosed net of tax. So you have to sort of translate the numbers through a different basis. What we've done on this slide is embed the asset optimization OSGs within the underlying business. So you see that coming through and then other management actions sit on top of that. So the equivalent of the GBP 331 million on a sort of pretax basis is -- sorry, on a post-tax basis is sitting in the charts and other actions will sit around that.

And if that's not clear, we can talk to you -- we spent a lot of time on this chart, meaning we didn't just put this together yesterday. So there is sort of -- there's a lot of thinking on -- but I appreciate that there's a lot of new numbers. So we can take you through that, Andy.

The last couple of minutes left. We've got some questions online. I think Fahad's questions have already been answered there. So I'm just going to take 2 follow-ups in the room. So Andrew and then Andrew.

We only have...

It's not just Andrew thing.

Exactly, yes, exactly. There's a bias there towards the Andrew.

Okay. One question. Sorry, thank you for giving me the extra shot. Listen, you've just done 9% EPS growth for '25. You're doing 9% again, you say for '26. You say that share buybacks will be more impactful for '27. So why not raise the 6% to 9% guidance?

We'll think about it. So look, I think we are -- we gave a 6 -- so the serious answer is in June of 2024, I gave guidance for 3 years, '25, '26 and '27. And our #1 focus is to deliver on those numbers. I've said here on stage, I'd love to beat the targets that we've announced. But as we continue to deliver, we're not changing the guidance, but I want to beat our targets. Thank you. Andrew?

Just a quick question. So the modeling and assumption changes, so the negative variance that you mentioned, was that longevity? And I guess if it is longevity or I guess if it's not as well, how are you thinking about longevity going forward given where, I guess, mortality trends are going in the U.K. Is that -- how should we think about the risk of at some point having to strengthen longevity reserves, not the next couple of years, but down the road?

So yes, this is the first line of Page 30, which are the ones that we said we focus a lot on the other 3 lines, which are the ones that are more that we require more explanation. But on the modeling changes.

Broadly, no, it's not longevity, those changes. It's more around we did some cash flow, some change to our cash flow modeling, the principal change around persistency. On longevity, yes, I think we've disclosed we use a CMI '23 table, but we have taken in '25 was a light year for death. So taking -- that's -- our experience has been overlaid on to '23, and we'll continue that process going forward. But short answer to your question is no, it's not really driven by longevity changes this year.

Well done to everyone in the room for keeping 2 questions. Just one final question has actually just come through online. It's from Markus Rivaldi from Jefferies, which is just given the level of Tier 2 debt restriction, is there an appetite to consider liability management to rightsize Tier 2 and accelerate debt deleveraging? Andrew?

So been working closely with the treasury team. There are no shortage of help us, including from many organizations in the room to help us suggest how we might manage some of our sort of treasury and capital requirements. So the answer to that question is we are looking at the mix of Tier 2 and Tier 1 and financing structures that optimize the balance sheet.

A great point to end on. But look, thank you for all of your questions. I know we've covered a lot today, actually even more than usual. I'm very happy with the progress that we're making and the strong foundations that we've been stressing that we have to build on for 2026 and beyond. We'll see you back here on the 5th of August for our half year results. Andy was saying this, our Investor Relations team is available. If you have any follow-up questions, I appreciate some of the questions today and the numbers as you digest them. Thank you for coming today, and see you.