Welcome to the Chesnara half-year 2026 results presentation. I'm Steve Murray, Group Chief Executive, and with me is Tom Howard, our Group CFO.

What will we cover today? I'll begin with a short overview of what's been delivered in the period.

Tom will then step through the financials in more detail, which now include Chesnara Life, formerly known as HSBC Life UK, for the first time under our ownership. I'll then finish with some further detail of what's been delivered so far in 2026, and what to expect going forward.

We'll have plenty of time for questions at the end of our presentation, starting with the people here with us in RBC's London offices. For those joining online, you can type your questions into the Q&A function via your browsers.

The group has delivered another very strong set of financial results over the first half of 2026, including a substantial increase in the group's operating capital generation. Tom will run through these financial results in more detail shortly, including an overview of where our H1 position is relative to the full-year 2025 pro forma estimates that we shared in March.

Our focused three-pillar strategy, set out on this slide, has continued to serve the group well. We completed the acquisition of HSBC Life UK in January, which is now rebranded as Chesnara Life UK, and we've been delighted with the early performance of the business under our ownership, with £51 million of operating capital generation and £20 million of cash remittances already delivered.

The next phase of integration and migration activity has been continuing at pace, with the migration of data from HSBC on track for delivery by the end of 2026. The UK business has also completed the migration and associated Part VII of the second Canada Life portfolio we acquired, with these policies now running on our new UK platform.

This is the fifth successfully completed migration in recent years. We announced the proposed acquisition of Scottish Widows Europe in February this year, and have completed a significant amount of the preparation required for the expected change of control around the end of 2026.

We've continued to proactively evaluate and execute management actions in the period, and we've also taken further steps to integrate teams and processes across our Dutch business, following the merger of our Dutch entities last year. This has helped support Scildon's largest-ever cash remittance.

The addition of Chesnara Life UK to the group has materially increased the contribution from new business in the first half of the year. Movestic has also added around £700 million of assets under administration and expanded its distribution reach, including a new partnership in Norway.

The best track record of continuous dividend growth in UK and European insurance continues. As previously highlighted to investors, we're announcing a 6% increase in the interim 2026 dividend up to 8.16 pence per share.

This represents a one-off acceleration of the group's historic dividend growth trajectory and follows the 6% increase to the full-year 2025 dividend that we announced in March. Let me hand over to Tom, who'll take us through the financial results in more detail.

Thanks, Steve. Good morning, everyone.

I'm delighted to be reporting a set of very strong results for the first half of 2026. Today's results for the first time incorporate Chesnara Life following completion of the acquisition in January.

Operating capital generation increased significantly by 79% to £96 million, and cash remittances increased by 31% to £73 million. The results reflect a robust operating performance from each of our business units, incremental value from Chesnara Life, and a contribution from capital optimization actions.

Own funds increased by 14% to £976 million, and the Solvency II coverage ratio of 185% is comfortably above the upper end of our operating range. This is also above the pro forma guidance of 180% that we provided to you at the full year.

Our sources of future value continue to go from strength to strength. Assets under administration increased to £21 billion, and adjusted operating profits grew by 46% to £31 million.

The IFRS balance sheet also grew, with the contractual service margin increasing significantly from £131 million to £327 million, reflecting the integration of the Chesnara Life book. This significantly increases the stock of future insurance profits available to the group.

This very strong performance underpins today's announcement of a 6% increase in the interim dividend to 8.16 pence per share. As I mentioned a moment ago, we're reporting a significant increase in the group's OCG results today.

OCG of £33 million arose from robust operating performance across our business units, broadly in line with the prior-year results of £32 million. Performance benefited from stronger new business results and our ongoing focus on cost control, with partial offsets from adverse mortality experience in the Netherlands in Q1 and adverse persistency experience in Sweden.

Our ongoing program of capital optimization actions delivered a further £12 million in benefits through the extension of existing foreign exchange hedging arrangements at group center. As I flagged at our full-year results, we expect that ongoing capital optimization actions will be a recurring source of OCG for the group, and they will, on average, comprise around 30% of the annual OCG results.

Finally, the acquisition of the Chesnara Life book generated significant additional capital benefits for the group. These benefits arose as we embedded the Chesnara Life risk profile into our existing UK reinsurance arrangements and into the group's solvency capital framework.

These impacts are non-recurring in nature and increase the group's OCG by a further £51 million. We continue to have a strong pipeline of capital management actions to support the 5-year and the lifetime cash flow guidance we provided to you at the time of the acquisition.

Turning to the balance sheet. Over the half year, OCG contributed 73 percentage points to the group's solvency coverage ratio.

Non-operating capital items provided a further 5 percentage point benefit, with positive investment variances from favorable markets more than offsetting the impact of integration and restructuring costs over the period. After allowing for the completion of the Chesnara Life acquisition, the group's solvency coverage ratio of 185% is higher than the pro forma guidance of 180% that we provided to you at our full-year '25 results.

It also remains significantly above the upper end of our operating range of 140% to 160%, and as a result, we retain headroom to support M&A and other growth opportunities. We also expect the solvency coverage ratio to remain above the upper end of this of this range after allowing for the impact of the Scottish Widows Europe acquisition, subject of course to market conditions and any other significant developments through the second half of this year.

The group's own funds increased by 14% to £976 million. As I referenced earlier, operating performance was robust and broadly in line with the prior year.

Favorable market conditions supported growth in the value of the group's assets under administration, positively contributing to the non-operating result. The most significant component of the own funds growth arose from the Chesnara Life acquisition, with group own funds increasing by £79 million on day one.

We expect own funds growth to emerge from further synergies as the integration and migration activities continue, and we'll provide further details on our progress at our year-end results. Group center liquidity stands at £271 million after allowing for the funding of the Chesnara Life acquisition earlier this year.

Over the half, group center balances benefited from higher levels of cash remittances from the business units to center. Total remittances increased by 31% to £73 million, including £30 million from the Netherlands, driven in part by merger synergies, and £20 million from Chesnara Life.

Moving next to IFRS. The IFRS capital base grew significantly by 22% to £850 million.

Adjusted operating profits increased by 41% to £31 million, reflecting robust operating performance across our business units. Favorable market conditions also supported the investment result, further improving the IFRS profit before tax, after allowing for the impact of integration and restructuring costs.

Tax charges were higher in the period, but this increase was driven solely by higher policyholder tax relating to investment gains on UK bond policies. These charges are deducted by Chesnara at source on behalf of our customers, the net impact to our P&L is broadly nil.

Finally, and importantly, the group's contractual service margin increased significantly from £131 million at full-year '25 to £327 million at the half year. This increase was primarily driven by the inclusion of the Chesnara Life book, where the CSM recognized on acquisition was higher than that assumed in our pro forma estimates.

This represents a significant increase to the stock of future profits we expect to emerge from the group's insurance business. In summary, this has been a period of very strong financial performance for Chesnara.

Today's results show growth across all areas of our financial framework and exceed the pro forma guidance that we provided at full-year '25. Our sources of future value go from strength to strength, and we have multiple levers at our disposal to further optimize the capital base and to deliver strongly against the guidance that we provided to you at the time of the Chesnara Life acquisition.

Finally, the balance sheet remains strong and resilient, and we retain capacity to invest for further growth. This all bodes well for strong, sustained financial performance into the longer term.

Thank you all, and with that, I'll pass back to Steve.

Thanks, Tom. The strategic focus we've had over the last few years has continued into 2026.

At our full-year 2025 results presentation, I underlined the importance of ensuring we deliver the migration and integration of Chesnara Life UK well alongside the work required to support the anticipated change of control of Scottish Widows Europe. I'm pleased to report that we continue to make great progress on both fronts, which I'll cover in slightly more detail shortly.

Together, Chesnara Life UK and Scottish Widows Europe are expected to contribute around £1 billion of future lifetime cash flows to the group. Tom highlighted earlier a number of the actions we've already taken this year to optimize the group's balance sheet further, including in Chesnara Life.

Across the group, we continue to have a very full pipeline of actions at our disposal through into the medium term. We've also been progressing the next phase of restructuring of our Dutch business, where run rate synergies delivered are above our initial estimates, and we expect the remaining anticipated cost savings to come through in the second half of the year.

We continue to see a positive M&A pipeline and have already had a number of interesting opportunities to assess and evaluate so far this year. The addition of Chesnara Life has materially increased the contribution from new business to £12 million.

Movestic have continued to see positive net client cash flows into their unit-linked and risk offerings, and Scildon has also delivered robust term life sales. Whilst we continue to anticipate the vast majority of our growth will come from M&A, we expect the value from new business for the full year 2026 to be around double that of the previous year, a useful additional value generator for the group.

Finally, the work we're doing to become a more sustainable Chesnara has also been progressing well. We've continued to reduce emissions from our investment portfolios, along with more proactive investment in more sustainable solutions.

I wanted to give a further update on where we are on the integration of Chesnara Life UK and the change of control process for Scottish Widows Europe. On Chesnara Life, assets under administration and own funds remain ahead of the estimated pro forma year 2025 numbers that we shared with investors in March.

We were able to take certain planned balance sheet actions in H1, which helped support £51 million of OCG and £20 million of cash remittances from the business. We remain firmly on track to deliver the £140 million of cash generation we guided investors to expect in the first 5 years of our ownership.

Whilst we only completed the acquisition 5 months ago, we're really pleased with the performance delivered so far. Jackie Ronson, our UK CEO, and her team have continued to make great progress on our Chesnara Life integration and migration program of activity.

We've completed the staff consultation required in order for us to take the next steps towards implementing our new UK target operating model. We've confirmed who the role holders will be in our combined UK leadership team and also completed the first planned TUPE transfer of staff to SS&C.

We remain firmly on track to complete the required data migration from HSBC by the end of 2026. Tom and the separate team working on Scottish Widows Europe have continued to push ahead with the work to deliver change of control and deal completion, as well as the planning required for the business's separation from Lloyds Banking Group.

The change of control application has been submitted, and we're progressing through regulatory review with the CAA. Legal completion readiness testing with Lloyds has also been successfully completed, with a large number of completion planning activities also substantially progressed.

We continue to anticipate change of control approval around the end of 2026. The financial framework on the left-hand side of this slide will be familiar to a large number of our investors.

It has served us well and continues to form a core part of our deal assessment criteria. As Tom has highlighted in his presentation, we have material solvency headroom above our target operating range.

Our leverage is substantially below the long-term target of 30%. We have material liquid resources at PLC, and we retain significant, readily available firepower with a successful track record of financing more material transactions.

We continue to see a positive M&A market and pipeline that provides great opportunities to build on our track record of strong deal execution. In the period, we've already had the chance to work actively on a number of opportunities, both in Europe and the UK.

The eight deals executed over the last 5 years has provided additional confidence to potential sellers that Chesnara is a company they can trust to get deals done. We've delivered a very strong set of financial results, supporting a 6% increase in the interim 2026 dividend.

We completed the largest acquisition in our history in January, with the migration of data from HSBC remaining on track for delivery by the end of 2026. We've continued to proactively seek out and execute management actions to optimize the group's balance sheet and resources, which have contributed materially to the group's operating capital generation.

We continue to anticipate change of control for Scottish Widows Europe around the end of 2026. Our M&A pipeline has remained positive, and we're continuing to actively assess acquisition opportunities.

I want to thank colleagues across the group for their continued drive and commitment, which has delivered a very strong financial performance. The group is in a strong position with further opportunities to grow, and I continue to believe there's a lot to look forward to here at Chesnara.

That ends our presentation. We'll turn now to questions and we'll start in the room in London.

Uh I know there's a number of people with new roles here, which we might congratulate them on shortly. Alona, you will find a microphone to take somebody.

Who put the hand up first, Tom? Who do you want to start?

Always Abid.

Always Abid. Congratulations on your promotion, Abid, if we haven't said that publicly before.

Thank you. Uh and I can uh You can always congratulate me next time as well.

Um I've got three questions if I can. Um the first one is on OCG.

The the OCG was very strong. Um what what elements do you think are repeatable and how should we think about that for the full-year '26 and full-year '27?

If I can ask a sort of sub-part to that, the the OCG delivery from the HSBC deal was was very strong, uh and I don't know if that's optically if it was very strong. If you could just talk to how you're tracking against the £140 million that you were looking to deliver over the first 5 years, cuz I think there's a number out there, sort of 51.

I just want to sort of get a sense of how those two compare. Then the second question is on people.

I think you have a new group CRO joining the business next month. I might be reading too much into this, but but does that does that investment into people signal some intent and ambition to be a larger FTSE business going forward?

Uh and then finally, on the firepower, can you update us on the level of uh available resources that you have to self-finance another deal before you come back to the markets for uh for additional capital?

I think that was four questions technically, Abid, but we'll, as as always, we'll allow it. Absolutely.

An actuarial three. Um, shall I start with people, and then do you want to pick up firepower and and OCG including the the HSBC part?

Um, yeah, a a it's a good spot. We, um, we went into the market um, earlier on in the year for a a new group CRO.

Uh the previous role holder held both the CRO function and part of what normally is called the sort of Chief Actuarial um sort of responsibilities, we took the decision to sort of split that role, beef up a a sort of first-line Chief Actuary role that's become more commercial. Um, we've also um invested in uh another person that's going to join Tom's team to support M&A M&A and broader development alongside, as you say, the the new CRO, Siu-Ann, who's coming in.

Um, she's got an extensive um CV, tons of relevant experience. She's been working previously in a business that um was also trying to do M&A um cross-jurisdictionally.

That business was doing it across 20 territories, Chesnara looks pretty simple, I think, in comparison to to what she was covering before. Um, and I think what you've seen from us over the last 5 years is make a significant investment um in the top team.

Jackie came in uh almost 3 uh years ago now and is driving that UK business forward, and we've got new leadership right the way across the group that were doing a terrific job driving the performance. I think it's a good spot, and and certainly, our ambition is to become a much larger sort of um FTSE 250 company, Abid.

I think that's very safe to say. Tom.

OCG. If if we deconstruct the OCG a little bit, which I think we we certainly attempted to do in the presentation.

Of the 96, 51 is is is one-off in nature. That is the day-one acquisition impact of bringing Chesnara Life in.

Um that arises from things like diversification benefits and, I think as I mentioned, by moving the Chesnara Life um Solvency II framework onto the Chesnara Solvency II framework. It's very much a structural benefit we get from bringing that on.

It's material, um and it's one-off, and I'll come back to that in the context of the 140, which is your your second question. Then if you if you move that to one side, the other components are what we call the recurring OCG of 33, and then management actions.

The the recurring OCG of 33 is is very much as the name suggests. We expect that to be a very reliable indicator going forward.

So 33 in the first half. I think, not to tell you what to factor into your models, but I think you can take from that that something of that nature would be um reasonable for the second half.

Then if I draw you back to a comment I made at full-year '25 about how to think about recurring management actions, um what I said at the time, and this still holds, is that in any given year, we would expect that the uh recurring management actions will make up about 30% of the total OCG result. I I won't do the maths for you, but I'm sure you can work out what what a recurring plus uh 30% sort of gets you to uh what what we would call a recurring sustainable level of OCG before any of these acquisition one-offs.

Um then turning to how we think about the 140. Um look, we've made a great start against that.

So £51 million um on on what I call day one alone. We we frankly, I'm sure my team won't thank me for saying this, but we haven't had to do huge amount to get there because a lot of this was um by virtue of bringing the portfolio into our into our business, we we sort of automatically generate quite a bit of that benefit.

Um it hasn't yet given us pause for thought around the 140. Uh what we will do is we will come back at full-year '26 and issue uh an update on how we're thinking about the 140 and the 800, not least because we've got um Jackie will attest to this, we have a little bit of work to do between here and the end of the year to to finish the migration program and so on.

We'll have a much clearer line of sight around the timing of some of the further synergies we expect to get. I think what we had been saying as well actually at the time of acquisition was for that 140 and 800, we weren't expecting that to emerge linearly over the 5 years and the lifetime.

There would be a little bit of um, it would be a little bit uneven. Um and the reason for that is frankly, we we we like to be a little bit judicious about when we exercise some of those capital management actions.

Timing can be better sometimes um if if we delay from a a commercial perspective. We'll come back at full-year '26 with some more color.

Uh firepower, um the way we've been running the balance sheet uh pre when we again when we talked about the Chesnara Life acquisition was we expected that post the acquisition, we would still retain enough firepower to do another Scottish Widows Europe type of transaction. That sort of triangulated back to about a £100 million roughly sterling level of headroom, um before thinking about alternative options like uh debt and equity financing.

Uh that position is unchanged. In fact, it's it's increased, I would say, a a bit over the first half.

That 100, you could factor up to maybe something like 130. Um and that's because the solvency ratio has, as we said in our presentations, the 185% is a little bit of ahead of where we expect it to be at 180, because we've had, favorable trading and and decent markets over that half year.

That's positively bled into solvency headroom, and as you've seen from the liquidity presentation, we've got ample liquidity as well. We so we're slightly higher than we were at full year, but in and of that that sort of ticket size around that kind of SWE-type size is still roughly where we are.

Michael. Um,

a lot to follow on, but one one which is the only criticism that I could find is Sweden. I know we we discussed it, and and you were saying, no, there are some good stuff as well.

Every time, not every time, but a lot of the time, Sweden kind of is is the one number which is a bit lower. The the questions on on, um why isn't the regulator doing what what what is expected there, or what could you do to kind of prompt them a little bit?

Um, on the cash, just to uh push you a little bit harder, the the my number is bigger than yours, the the uh I was hoping you would say 200 rather than £100 million plus. Um, but that that's cuz clearly you you you need some cash to run the business.

You can't run the business without cash. I'd be interested to to know how much uh you actually need as a as a base number.

Then the management actions bit here, you you obviously said you'd you'd tell us more, and you've told us a little bit. Um, just two two side questions: One, the 30%, is it of the total or is it 30% on top?

Uh, it makes a small difference on a big one. Also what kind of management actions?

Thank you.

Should we maybe take those in order? I'll start with Sweden and um we can talk about do we Michael, we can talking about both the cash capacity, but also where some of the debt capacity also is in the balance sheet, I think it's useful to understand that, and then um management action point as well.

Um so so when we look at the performance of Sweden in the first half of the year, we've seen um very strong net client cash flows sort of come in. Um so within the overall economic result, we've seen it sort of negative because the the the strong levels of business coming in haven't offset some of those uh sort of outflows uh going out.

Um, but I think what we always look at there is what can we control? I think the fact that the team have expanded distribution, brought in more business, we have this new uh sort of partnership, which is just started up in Norway, um all of those things, I would take as sort of positive signs of that flow coming in, and that £700 million of assets under administration increase in the first half of the year as well is is quite a material um addition to the to the size of the business.

It but it has continued, uh as you've pointed to, to be a market where we've seen um a lot of this sort of transfer and lapse activity um going on. We know lots of people looking at that and sort of saying it doesn't feel like that's sustainable uh longer term, and and we certainly share that view.

All all we can do is make sure the team's focusing and controlling what they can, making sure the cost management remain remains strong, which it has in the first half of the year, and the team are actively working on expanding that sort of distribution opportunity further, and seeing if they can drive some further efficiency from the uh from the business. Um, do you want to cover cash and uh management actions?

Yeah.

You're right, Michael. We we do hold back um a buffer uh within sort of our treasury management policy, and that and that's broadly to cover expected 12 months' worth of expected debt outflows, potential shareholder dividends, working capital, etc.

That that's why you will see a a difference, and that's why your number will be higher than my number, for example, because I I I I I like to manage that on quite a prudent basis. Um In terms of the um management actions, 30% of total.

That's probably a slightly higher number than the alternative. Um And um then on the management actions, the types of things that will will will feed into that recurring management actions.

We have um we have a program of management actions that we look at over the longer term, sort of 5 years plus. Um And the types of things that we're looking at are an extension of things we already do.

You've heard us talk a lot about foreign exchange. There's still a bit more, I think, we can do on that.

Um You've heard us talk about things like mass lapse reinsurance, where we can reinsure very extreme tail-risk events. Again, there's more we can do on that.

Um Other areas that we've we have been less developed on, I would say, historically that we're looking very seriously at, um actually more focused on the investment side of the balance sheet. We can up-risk elements of our portfolio.

Our portfolio is now bigger. It's more diverse because we've brought, new books into the group.

We have another book coming into the group later this year as well, assuming we are successful on regulatory uh approval. That increases the scope and the opportunity around that investment up-risking piece in particular.

Expect to hear and see more on that going forwards. That is the kind of thing that lends itself very much to a recurring management action as well, just given the nature of the sort of thinking behind some of the uh the levers we have at our at our disposal there.

I think, Michael, just just on sort of M&A more broadly in that capacity, I think Tom's uh spoken very well about that cash piece. We do clearly now have more capacity in the balance sheet to look at uh look at debt.

Um and that's probably in the order of uh sort of circa £150 million, that that sort of number. It's it's never quite exact.

Depends on the business coming in. Um and certainly our our appetite isn't capped by the available firepower and that capacity.

I think, we've we've gone to the market and had great support from investors, we're looking at a very broad range of of of deal sizes. Just to give you a sense, I suppose, of of how we sort of see that building up, and when when Tom's looking at sort of the financial framework and the available firepower, we're not just looking at sort of cash at bank.

We're we're looking at these other sources as well. Uh,

Ben.

Congratulations on your new role. It feels like a little bit of a step back into the past, doesn't it, but back to the future.

Hi.

Backwards to go forwards. Yes.

Thank you. Uh yeah, Ben Cohen at RBC.

I just wanted to to to ask a couple of things. The first really maybe more of a clarification.

I think in your in your prepared remarks, um Steve, you said you said that you've got multiple levers to to further strengthen the capital base. Is is that a reference to to the sort of the bigger debt raise?

Is presuming it's it's debt, it's it's reinsurance? Um is there anything that is kind of almost kind of coming out of the book itself that that that gives you kind of more more confidence uh more confidence there?

Um the second question was just in terms of the the M&A environment. Could you maybe talk a bit more about um the different markets in continental Europe uh versus the UK in terms of size of deals, level of competition, the sorts of things that are interesting at the moment, kind of what's changed maybe since the since the full year?

Thanks.

Sure. Should I pick up M&A, and then do you want to talk about um sort of some of the actions available, which might be a little bit of what we've just said with with Michael?

I think so so the sort of M&A environment we like is an active one, cuz what we tend to find is when more deals are happening, it encourages people to come forward with the portfolios. A deal being done here sometimes has a has a knock knock-on impact over here.

The fact that we've still been seeing in the first half plenty of M&A happening, we've seen a very large deal uh in the UK with the Aegon UK and Standard Life uh transaction, which was very well uh received by uh by by the market. Um, we've seen transactions in continental Europe, including in in Germany being being announced as as well.

I think across the the the the broader sort of jurisdictions, both in in UK and Europe, we think there's still plenty of activity. Um, if I suppose I cover our our sort of territories, and I'll include Luxembourg, and then and then maybe just give a little bit of sort of territories outside of where Chesnara currently operates.

UK continues to be to be active, certainly in our part of the the market. We still um see sort of large international firms, large financial institutions looking to optimize their book.

We're still seeing this huge trend of large insurers going after the bulk purchase annuity space. Some interesting transactions that have sort of happened there recently, but people seeing if they can deploy more capital.

They we we believe they'll continue to look at portfolios that they believe maybe don't make a a return, maybe they don't fit with some of the new operating platforms that are coming in. When we sort of map that pipeline out over sort of a 3-year period, we think there's going to be plenty for us to to look at.

The fact that sort of Jackie and the team have made positive progress on that integration and migration activity means we're looking at opportunities now. We we believe that given the sort of lag time that you tend to have, as I talked about full-year '25, um we're absolutely in a position that we can be uh assessing opportunities now with a view to those sort of completing somewhere in in in 2027 uh in all in all likelihood.

Um, in Europe, I would say so in in Sweden, we sort of talked um at the full year about the potentially being a couple of opportunities in in that market. I think that position remains the same.

We haven't seen sort of material transactions. We've seen one or two small ones, where you've seen some risk books sort of moving around in the market.

We're seeing a little bit more then outside of um of Sweden as well, but it continues to be sort of less active than the UK, but there are, there's a couple of things there that we'll have a choice around whether we want to participate in. Um, the Netherlands has seen, having seen a very active market, I'd say at the moment is just less active in the short term.

Medium term, I still think the middle part of that market will ultimately consolidate, and we do have options with the Netherlands of some sort of surrounding territories that we could use the operating platform as well. Um, and then Luxembourg, I think we'll just repeat what we said at the time of the um the Widows acquisition.

We we do believe there's a significant sort of tail of businesses in that uh in that market, and we expect to have the opportunity um to to to to look at look at assets there. Um, we do also keep an eye on other jurisdictions.

We've talked about other offshore territories before. Um, Germany is a market that's very large in in in Europe that that that's sort of impossible to uh to to ignore, particularly you have the sort of growth ambition that that we do.

Belgium has been a territory that we've also looked at as well. Um, our challenge remains, being candid, given that positive M&A environment to ensure that we're focusing on uh a small number of things.

It'd be quite easy for us to be spending a huge amount of time on a very large number of opportunities, and part of Tom and I's job is to make sure that, we remain focused on the things that are a sort of higher probability and we think will move the dial for the uh for the group. Um, on balance sheet, I suppose sort of levers that you might want to.

We've we've covered some of them and in when we've covered capital optimization actions, and we've been quite focused up to this point in looking at opportunities to optimize the solvency capital requirements in in some areas. Like FX hedges, like mass lapse, and so on.

I think on the own funds side of the balance sheet, one of the um they're probably two levers that are most interesting for us. I I talked about investment up-risking.

There there's general efficiency initiatives across the group that we're embarking on as well, which you know will be accretive to own funds over time. Actually, in many ways, one of the best ways to strengthen the balance sheet is via scale and sensible scale.

If you look at what happened uh post the Chesnara Life acquisition actually, the sensitivities, the sort of resilience of the balance sheet has actually improved uh post the acquisition. We're now a bigger group, but with a more resilient balance sheet.

Um And actually some of the scale benefits that we got from the Chesnara Life acquisition allowed us to recognize more own funds that previously we weren't able to recognize because frankly, our our SCR, our solvency capital requirement was too small, we were running up against some of those restrictions. As we build more scale and what I would call sensible scale that diversifies really efficiently into the group, that will be a source of further capital strength as well.

When you have that successful M&A strategy alongside a range of capital optimization actions as well to boost SCR, you end up really broadening the jaws between that own funds growth and and SCR optimization.

I'll just check if there's any more question. A follow-up, Michael?

Yeah. Then we'll uh we'll go to the phones.

It

it's just um a little one. The um um the 140 or the 800, does that um do the management actions come on top of that, or are they already included in that?

Then also really small um in in the in the number, the 140, the 800, does one include the £20 million cash actually remitted or the 51 operating capital generation? Um That that those would be the the the my two questions.

Yeah. On management actions, the the 140 and 800 had a limited amount of management actions in there, and as I said earlier, we will come back at full-year '26 when we've got a a a much better line of sight on what we can deploy deploy and when.

Um the I mean the £50 million is in terms of of how the um what's emerging compares to that 140, OCG is the best proxy to look at. The cash remittance is almost a consequence of the OCG, because with cash remittances, basically you have to generate the OCG to generate the space to remit the cash.

Sometimes we will choose not to remit the cash, or or maybe not all of the cash, because we will decide to leave some of those um resources within the business unit, at least temporarily, to fund growth. Um, the the 20 is a very, very early proof point.

I would see it as a consequence of the £50 million as opposed to, it being the key driver itself.

Yep. Of course.

Just one more. You did um I I'm always interested in mortality because obviously I'm getting there.

The um the um the um um But you you you mentioned um uh Netherlands was not quite as positive?

We had some seasonality in the Netherlands. Look, we see that across the book.

Uh, the way we and our actuaries set the assumptions is on the basis of a a long-term expectation, and you will have periods, and and it's often the winter periods, where you see these little spikes in short-term activity relative to those long-term assumptions. What we what we did was we we recorded that negative variance in the first quarter.

What we saw in the second quarter actually was the the experience pretty much reverted to that longer-term mean. You, you will tend to see those those bump.

Sometimes it it's actually positive, you know. You'll have periods where the sort of emerging mortality is actually better than your long-term assumptions.

We've we've, we thought it was appropriate to call that out uh because it is a, a feature of the experience in the first half. I think the pleasing thing from our perspective is that it did confirm our view that that was likely to be seasonal rather than symptomatic of, a longer-term deterioration in in the Dutch mortality rates.

Okay. Should we go to questions um online?

We've got some questions from the webcast. First question is from Brian at Hardman & Co.

"Can you expand on the mortality experience in Scildon? Are the H2 cost savings from the Netherlands merger already accounted for in OCG capital?"

Do you want to pick up both? I think we've probably just dealt with mortality, um, Brian.

I'm conscious you probably typed that before Tom's uh last answer, but do you want to pick up sort of the the the cost savings?

The short answer is yes. The the the O and it it really feeds through in two ways.

It feeds through in the um OCG numbers that we're recording for for Scildon, which is our Dutch business. We we we saw those come through last year actually uh more significantly than this year, because that's when the bulk of those savings were delivered.

Where you also see it, and I talked a moment ago about the fact that cash there's a bit of a lag effect on cash remittance, you have to generate the OCG and then then you decide to remit it. Um the reason why we've um had a remittance of £30 million, one of the reasons why we've had a remittance of £30 million from Scildon, which is actually the highest remittance in its history, is that that additional OCG which was generated over the last 2 years as the management team went through that process, is now frankly available uh for distribution as cash.

Um and that's been, a really helpful contribution to this uh first half-year's result as well.

The the sort of second the the second half, the sort of remaining synergies are are sort of lower than what we've delivered, there'll be a little bit more to come through, but not at the same sort of level that that Tom's alluded to over the the last 18 months. Thank you, Brian.

Thank you. Next question comes from Ming at Times Capital.

"Could you please provide some color on Sweden's adverse lapse experience? This seems to be more frequent.

I recall 2021 benefited from a reinsure of mass lapse experience, but since then, it's adverse lapse experience in most years. Was was this reinsurance a one-off, or could you do more like you do in the UK?"

It's so you're you're absolutely right, Ming. Um and that sort of mass mass lapse reinsurance that we deployed is very, very similar to the mass lapse that we've been using in the UK as well.

What that allows us to do is reinsure particularly some of the tail risk that you can have to hold a lot of capital around. There'll be some things that we can do in Sweden to sort of optimize that, particularly if we can continue to grow policy numbers.

Ultimately, we've already put that treaty in in in place there, there isn't there isn't a sort of a significant amount more that we can do there. In terms of what's driving some of these trends in the market, there's there's a um there's a lot of business sort of being transferred around by some of the large brokerage um firms into sort of newer solutions, and we've seen that sort of spiking up and down a little bit.

We strengthened, you might remember, our long-term assumption around transfer rates a couple of years ago. Um and we've seen periods where actually that transfer activity has been sort of very close to back in line with that longer-term assumption.

In this period, it's been a little bit higher again, but certainly not as significant as we saw uh a couple of years ago. Um so so so that's really the activity that we're seeing on some of the longer-standing parts of the unit-linked book.

What we look at is sort of the in and the out around that. As I I said earlier, we've we've seen very good sort of flows into the into the business, we're minute we're winning more than our fair share of the the market.

Historically, our market share has been around sort of 4% to 5% uh of that particular part of the market, and I would say at the moment, based on our intel, that we're doing a little bit better than that in terms of transfers in. It's the net the net economic impact, though, has remained slightly more negative in the period, because what's leaving the business is at a higher margin than what's what's coming in.

The team are very focused on continuing that sort of successful expansion of distribution, managing their their costs um well, and I think those are the two key actions that we need to ensure we keep taking uh with with uh with Movestic.

Thank you. Next question comes from Visu at TCS Dindigenta.

"How does Chesnara Group view its strategic priorities for new business growth and open-book product propositions, particularly in areas such as onshore investment bonds?"

Yes. On on the onshore investment bond particularly, I think we've been very clear with the market that that that remains uh and and will continue to be a a priority for us in the UK.

We've been really pleased with the performance both of the Countrywide Bond and the Chesnara Life bond in the in the first half of the year. That sort of £7 million uh new business contribution that you'll see in the results is a is a strong uh result, not least given that we sort of change the brand on that Chesnara Life business in the early part of the year.

Um, the sales and business development teams have had to be out there sort of talking about that, making sure people understand who Chesnara Life um are. The so I think that result is um is a good one.

Um, and look, that that that is adding some additional value to to the group that we didn't have access to um before. Uh, one of the things that Jackie and the team will will evaluate in the medium term is whether there might be some adjacencies uh off the back of that sort of on onshore bond.

It it that's been a nice sort of add-on, and that capability that came from the uh the Chesnara uh Life deal has has been very helpful in the first half. Uh, more broadly, um we've seen a a a good performance from from Sweden uh and the Netherlands in the first half of the year, and provided that we can demonstrate to ourselves that there's a sustainable level of return that meets our hurdles, we're very happy to keep writing that new business.

Um, I did say in my uh prepared remarks, however, that we did feel still that acquisitions are going to drive a very large part of the the growth in this business, given the positive M&A pipeline that that we're seeing. Um it remains, an important part of the strategy as that third strategic pillar that we have.

Thank you. Um there are no further questions from the webcast, I'll hand over to you for any closing remarks.

Yep. We'll go back to Michael for for for one more.

Just one cuz it's um so, I think in terms of I'm trying to think in terms of operating leverage. I you have a deal with the SS&C that effectively, you share in the economics.

The more cost savings they drive, the more you can share in as well. Is there a kind of um discontinuity upwards?

In other words, where you suddenly jump up and say, "Oh, we've we've suddenly got an extra £50" making numbers up, but is it and how far are you from away from that point?

Post the, and I'll I'll be slightly careful of what I say, cuz obviously there's commercial uh agreements in place and and Jackie, our UK CEO is in the room, she she can throw uh something at me if I go go too far on this. The the way that we've set that arrangement up is you're absolutely right.

We wanted to make sure that if if we uh grew the business further, we'd get a benefit from scale, but also that SS&C would make more money as well. I think we've all we certainly have been party to arrangements in the past where if you don't have that win-win scenario, you don't get the investment, the support from your uh from your partner in this space.

I I think that arrangement, uh feels feels like it's been working quite well. We're starting to see, oh we will see, um with that HSBC Life UK book, um now Chesnara Life, coming on, we get into the sort of next tier of uh sort of efficiency in in rate cards and and and things like that.

You so that will sort of open up that operational leverage that you that you talk about. Um, and look, obviously if we then bring other books in as well, we'll we'll get that sort of compounding um benefit.

We one of the benefits that we continue to get is working alongside SS&C on acquisitions. The more work that they can be doing with us up front, it gives us more confidence both in terms of the pricing of the deal, but also the timelines for migration uh and integration.

We've got a sort of busy um sort of pipeline, obviously, particularly with that very large migration happening this year, but there are still further books to put onto the the platform. We're we're pleased with that relationship.

Um, they'd really like to support us elsewhere across the group. Um Jackie and I are continuing to say to them, "Show us that there's going to be great delivery this year, and we'll be very happy then to have those follow-on conversations."

I'm I'm sure they'll continue to provide us strong support through the second half of the year. I think that's all for just now.

Thank you, everybody, for joining our half-year results presentation. Um we appreciate you uh attending, and thanks for the questions in the room.

We uh we hope you have a great uh rest of the day, and we will um see you, if not before, at the full-year results presentation in uh in March uh 2027. Thanks very much.