Half Year 2026 Chesnara PLC Earnings Call

August 25, 2026

Speaker #1: Well, hey Jordan, it's you. 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.

Steve Murray: Welcome to the Chesnara H1 2026 Results Presentation. I am Steve Murray, Group Chief Executive, and with me is Tom Howard, our Group CFO. What will we cover today? I will begin with a short overview of what has 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 will then finish with some further detail of what has been delivered so far in 2026 and what to expect going forward. We will 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.

Speaker #1: So, 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.

Speaker #1: 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.

Steve Murray: I will then finish with some further detail of what has been delivered so far in 2026 and what to expect going forward. We will 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.

Speaker #1: And 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.

Steve Murray: The group has delivered another very strong set of financial results over the H1 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. We have been delighted with the early performance of the business under our ownership, with GBP 51 million of operating capital generation and GBP 20 million of cash remittances already delivered.

Speaker #1: 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.

Speaker #1: 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.

Steve Murray: 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. We have been delighted with the early performance of the business under our ownership, with GBP 51 million of operating capital generation and GBP 20 million of cash remittances already delivered.

Speaker #1: 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.

Speaker #1: The next phase of integration and migration activity has been continuing at pace, with a migration of data from HSBC on track for delivery by the end of 2026.

Steve Murray: The next phase of integration and migration activity has been continuing at pace, with a 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 have continued to proactively evaluate and execute management actions in the period. We have 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.

Speaker #1: The UK business has also completed the migration and associated Part 7 of the second Candlelight portfolio we acquired, with these policies now running on our new UK platform.

Speaker #1: 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.

Steve Murray: 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 have continued to proactively evaluate and execute management actions in the period. We have 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.

Speaker #1: 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.

Speaker #1: This has helped support Skildin's largest-ever cash remittance. The addition of Chesnara Life UK to the group has also materially increased the contribution from new business in the first half of the year.

Steve Murray: The addition of Chesnara Life UK to the group has materially increased the contribution from new business in the H1 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 are 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 will take us through the financial results in more detail.

Speaker #1: 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.

Speaker #1: 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.

Steve Murray: As previously highlighted to investors, we are 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 will take us through the financial results in more detail.

Speaker #1: So, let me hand over to Tom, who will take us through the financial results in more detail.

Speaker #2: Thanks, Steve, and 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.

Tom Howard: Thanks, Steve, and good morning, everyone. I am delighted to be reporting a set of very strong results for H1 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 GBP 96 million, and cash remittances increased by 31% to GBP 33 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 GBP 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.

Speaker #2: 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.

Tom Howard: 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 GBP 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.

Speaker #2: Owned 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.

Speaker #2: And 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.

Speaker #2: 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.

Tom Howard: Assets under administration increased to GBP 21 billion, and adjusted operating profits grew by 46% to GBP 31 million. The IFRS balance sheet also grew, with the contractual service margin increasing significantly from GBP 131 million to GBP 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 the 6% increase in the interim dividend to 8.16 pence per share. As I mentioned a moment ago, we are reporting a significant increase in the group's OCG results today. OCG of GBP 33 million arose from robust operating performance across our business units, broadly in line with the prior year results of GBP 32 million.

Speaker #2: This significantly increases the stock of future insurance profits available to the group. And this very strong performance underpins today's announcement of a 6% increase in the interim dividend to 8.16 pence per share.

Tom Howard: This very strong performance underpins today's announcement of the 6% increase in the interim dividend to 8.16 pence per share. As I mentioned a moment ago, we are reporting a significant increase in the group's OCG results today. OCG of GBP 33 million arose from robust operating performance across our business units, broadly in line with the prior year results of GBP 32 million.

Speaker #2: So, 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.

Speaker #2: 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.

Tom Howard: Performance benefited from stronger new business results and our ongoing focus on cost control, with partial offsets from adverse mortality experienced in the Netherlands in Q1 and adverse persistency experienced in Sweden. Our ongoing program of capital optimization actions delivered a further GBP 12 million in benefits to 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.

Speaker #2: Our ongoing program of capital optimization actions delivered a further £12 million in benefits, due to the extension of existing foreign exchange hedging arrangements at Group Center.

Speaker #2: And 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.

Tom Howard: 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.

Speaker #2: 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.

Speaker #2: 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 increased the group's OCG by a further £51 million.

Tom Howard: These impacts are non-recurring in nature and increase the group's OCG by a further GBP 51 million. We continue to have a strong pipeline of capital management actions to support the five-year and the lifetime cash flow guidance we provided to you at the time of the acquisition. Turning to the balance sheet. Over the H1, OCG contributed 73 percentage points to the group's solvency coverage ratio. Non-operating capital items provided a further five 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 2025 results.

Speaker #2: And we continue to have a strong pipeline of capital management actions to support the five-year and the lifetime cash flow guidance we provided to you at the time of the acquisition.

Speaker #2: 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.

Tom Howard: Non-operating capital items provided a further five 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 2025 results.

Speaker #2: 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 2025 results.

Speaker #2: And it also remains significantly above the upper end of our operating range of 140% to 160%, and as a result, we retain hedging to support M&A and other growth opportunities.

Tom Howard: It also remains significantly above the upper end of our operating range of 140% to 160%. 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 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 H2 of this year. The group's own funds increased by 14% to GBP 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 results. The most significant component of the own funds growth arose from the Chesnara Life acquisition, with group own funds increasing by GBP 79 million on day one.

Speaker #2: And we also expect the solvency coverage ratio to remain above the upper end 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.

Speaker #2: The group's own funds increased by 14% to £976 million. As referenced earlier, operating performance was robust and broadly in line with the prior year.

Tom Howard: The group's own funds increased by 14% to GBP 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 results. The most significant component of the own funds growth arose from the Chesnara Life acquisition, with group own funds increasing by GBP 79 million on day one.

Speaker #2: Favorable market conditions supported growth in the value of the group's assets under administration, positively contributing to the non-operating results. The most significant component of the owned funds growth arose from the Chesnara Life acquisition, with group-owned funds increasing by £79 million on day one.

Speaker #2: We expect owned funds growth to emerge from further synergies as the integration and migration activities continue, and we will provide further details on our progress at our year-end results.

Tom Howard: We expect own funds growth to emerge from further synergies as the integration and migration activities continue. We will provide further details on our progress at our year-end results. Group center liquidity stands at GBP 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 GBP 73 million, including GBP 30 million from the Netherlands, driven in part by merger synergies, and GBP 20 million from Chesnara Life. Moving next to IFRS. The IFRS capital base grew significantly by 22% to GBP 850 million. Adjusted operating profits increased by 41% to GBP 31 million, reflecting robust operating performance across our business units.

Speaker #2: Group Central liquidity stands at £271 million after allowing for the funding of the Chesnara Life acquisition earlier this year. Over the half, Group Central balances benefited from higher levels of cash remittances from the business units to centre.

Tom Howard: 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 GBP 73 million, including GBP 30 million from the Netherlands, driven in part by merger synergies, and GBP 20 million from Chesnara Life. Moving next to IFRS. The IFRS capital base grew significantly by 22% to GBP 850 million. Adjusted operating profits increased by 41% to GBP 31 million, reflecting robust operating performance across our business units.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Favorable market conditions also supported the investment results, further improving the IFRS profit before tax, after allowing for the impact of integration and restructuring costs.

Tom Howard: Favorable market conditions also supported the investment results, 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, so the net impact to our P&L is broadly nil. Finally, and importantly, the group's contractual service margin increased significantly from GBP 131 million at full year 2025 to GBP 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.

Speaker #2: 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.

Speaker #2: These charges are deducted by Chesnara at source on behalf of our customers, so 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 2025 to £327 million at the half year.

Tom Howard: Finally, and importantly, the group's contractual service margin increased significantly from GBP 131 million at full year 2025 to GBP 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.

Speaker #2: 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.

Speaker #2: This represents a significant increase in the stock of future profits we expect to emerge from the group's insurance business. So, in summary, this has been a period of very strong financial performance for Chesnara.

Tom Howard: 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 2025. 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. With that, I will pass back to Steve.

Speaker #2: 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 deliver strongly against the guidance that we provided to you at the time of the Chesnara Life acquisition.

Speaker #2: And 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.

Tom Howard: 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. With that, I will pass back to Steve.

Speaker #2: So thank you all. And with that, I'll pass back to Steve.

Speaker #1: Thanks, Tom. The strategic focus we've had over the last few years has continued into 2026. On 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.

Steve Murray: Thanks, Tom. The strategic focus we have had over the last few years has continued into 2026. On 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 am pleased to report that we continue to make great progress on both fronts, which I will cover in slightly more detail shortly. Together, Chesnara Life UK and Scottish Widows Europe are expected to contribute around GBP 1 billion of future lifetime cash flows to the group. Tom highlighted earlier a number of the actions we have 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.

Speaker #1: And I'm pleased to report that we're continuing to make great progress on both fronts, which I'll cover in slightly more detail shortly. Together, Chesnara Life UK and Scottish Willows Europe are expected to contribute around £1 billion of future lifetime cash flows to the group.

Steve Murray: Together, Chesnara Life UK and Scottish Widows Europe are expected to contribute around GBP 1 billion of future lifetime cash flows to the group. Tom highlighted earlier a number of the actions we have 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.

Speaker #1: Tom highlighted earlier a number of the actions we've already taken this year to further optimize the group's balance sheet, including in Chesnara Life. Across the group, we continue to have a very full pipeline of actions at our disposal, extending into the medium term.

Speaker #1: We've also been progressing the next phase of restructuring our Dutch business, where run-rate synergies delivered are above our initial estimates. We expect the remaining anticipated cost savings to come through in the second half of the year.

Steve Murray: We have 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 H2. 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 GBP 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.

Speaker #1: 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.

Speaker #1: The addition of Chesnara Life has materially increased the contribution from new business to £12 million. Mavestic has continued to see positive net client cash flows into their unit-linked and risk offerings, and Skilledin has also delivered robust term-life sales.

Steve Murray: The addition of Chesnara Life has materially increased the contribution from new business to GBP 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.

Speaker #1: Whilst we continue to anticipate that 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.

Steve Murray: Whilst we continue to anticipate the vast majority of our growth will come from M&A, we expect the value for 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 are doing to become a more sustainable Chesnara has also been progressing well. We have 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 in 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.

Speaker #1: A useful additional value generator for the group. And finally, the work we're doing to become a more sustainable Chesnara has also been progressing well, with continued efforts to reduce emissions from our investment portfolios, along with more proactive investment in more sustainable solutions.

Steve Murray: We have 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 in 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.

Speaker #1: I wanted to give a further update on where we are with the integration of Chesnara Life UK and the change of control process for Scottish Widows Europe.

Speaker #1: On Chesnara Life, assets under administration and owned funds remain ahead of the estimated pro forma year 2025 numbers that we shared with investors in March.

Speaker #1: 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.

Steve Murray: We were able to take certain planned balance sheet actions in H1, which helped support GBP 51 million of OCG and GBP 20 million of cash remittances from the business. We remain firmly on track to deliver the GBP 140 million of cash generation we guided investors to expect in the first five years of our ownership. Whilst we only completed the acquisition five months ago, we are 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 have completed the staff consultation required in order for us to take the next steps towards implementing our new UK target operating model. We have 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.

Speaker #1: We remain firmly on track to deliver the £140 million of cash generation we guided investors to expect in the first five years of our ownership.

Speaker #1: So, whilst we only completed the acquisition five 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.

Steve Murray: 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 have completed the staff consultation required in order for us to take the next steps towards implementing our new UK target operating model. We have 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.

Speaker #1: 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 we've also completed the first planned QP transfer of staff to SS&C.

Speaker #1: 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.

Steve Murray: 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' separation from Lloyds Banking Group. The change of control application has been submitted, and we are progressing through regulatory review with the FCA. 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.

Speaker #1: 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.

Speaker #1: 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.

Steve Murray: 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.

Speaker #1: 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.

Speaker #1: And 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%, and we have material liquid resources at PLC. We also retain significant, readily available firepower with a successful track record of financing more material transactions.

Steve Murray: 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%, and 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 have 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 five years has provided additional confidence to potential sellers that Chesnara is a company they can trust to get deals done. We have delivered a very strong set of financial results, supporting a 6% increase in the interim 2026 dividend.

Speaker #1: We continue to see a positive M&A market and a 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.

Steve Murray: In the period, we have 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 five years has provided additional confidence to potential sellers that Chesnara is a company they can trust to get deals done. We have delivered a very strong set of financial results, supporting a 6% increase in the interim 2026 dividend.

Speaker #1: The eight deals executed over the last five years have provided additional confidence to potential sellers that Chesnara is a company they can trust to get deals done.

Speaker #1: So, 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.

Steve Murray: 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 have 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 are 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 is a lot to look forward to here at Chesnara. That ends our presentation.

Speaker #1: We have continued to proactively seek out and execute management actions to optimize the Group's balance sheet and resources. These actions have contributed materially to the Group's operating capital generation.

Speaker #1: We continue to anticipate a 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.

Steve Murray: Our M&A pipeline has remained positive, and we are 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 is a lot to look forward to here at Chesnara. That ends our presentation.

Speaker #1: 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.

Speaker #1: And I continue to believe there's a lot to look forward to here at Chesnara. So that ends our presentation. We'll turn now to questions, and we'll start in the room in London.

Steve Murray: We will turn now to questions, and we will start in the room in London. I know there is a number of people with new roles here, which you might congratulate them on shortly. Al Lonie will find a microphone to pick somebody. Who put their hand up first, Tom? Who do you want to start?

Speaker #1: I know there are a number of people with new roles here, which we might congratulate them on shortly, and I'll let you all find a microphone to pick somebody.

Speaker #1: Who put their hand up first, Tom? Who do you want to start? Always Albert. Congratulations on your promotion, Albert, if we haven't said that publicly before.

Tom Howard: It is always Abid.

Steve Murray: Always Abid. Congratulations on your promotion, Abid, if we have not said that publicly before.

Speaker #3: Thank you. I suppose you can always congratulate me next time as well. I've got three questions, if I may. The first one is on OCG.

Abid Hussain: Thank you. You can always congratulate me next time as well. I have three questions, if I can. The first one is on OCG. The OCG was very strong. What elements do you think are repeatable, and how should we think about that for the full year 2026 and full year 2027? If I can ask a sub-part to that, the OCG delivery from the HSBC deal was very strong, and I do not know if that is optically, if it was very strong. If you could just talk to how you are tracking against the GBP 140 million that you were looking to deliver over the first five years, because I think there is a number out there, sort of 51. I just want to get a sense of how those two compare.

Speaker #3: So, the OCG was very strong. What elements do you think are repeatable, and how should we think about that for the full year 2026 and the full year 2027?

Speaker #3: And if I can ask a sort of sub-part to that, the OCG delivery from the HSBC deal was very strong. And I don't know if, optically, it was very strong.

Speaker #3: So, if you could just talk to how you're tracking against the £140 million that you were looking to deliver over the first five years, because I think there's a number out there, sort of £51 million.

Abid Hussain: If you could just talk to how you are tracking against the GBP 140 million that you were looking to deliver over the first five years, because I think there is a number out there, sort of 51. I just want to get a sense of how those two compare.

Speaker #3: I just want to sort of get a sense of how those two compare. And then the second question is on people. I think you have a new Group CRO joining the business next month.

[Analyst]: 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 does that investment into people signal some intent and ambition to be a larger FTSE business going forward? Finally, on the firepower, can you update us on the level of available resources that you have to self-finance another deal before you come back to the markets for additional capital?

Abid Hussain: 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 does that investment into people signal some intent and ambition to be a larger FTSE business going forward? Finally, on the firepower, can you update us on the level of available resources that you have to self-finance another deal before you come back to the markets for additional capital?

Speaker #3: And I might be reading too much into this, but does that investment into people signal some intent and ambition to be a larger FTSE business going forward?

Speaker #3: And then, finally, on the firepower, can you update us on the level of available resources that you have to self-finance another deal before you come back to the markets for additional capital?

Speaker #1: I think that was four questions technically, Albert, but as always, we'll allow it. Absolutely. Yeah, an actuarial three. Shall I start with people, and then do you want to pick up firepower and OCG, including the HSBC part?

Steve Murray: I think that was four questions technically, Abid, but as always, we will allow it. Absolutely. Yeah, and actuarial-free. Shall I start with people and then do you want to pick up firepower and OCG, including the HSBC part? Yeah. It was a good spot. So we went into the market earlier on in the year for a new Group CRO. The previous role holder held both the CRO function and part of what normally is called the chief actuarial sort of responsibilities. So we took the decision to split that role, beef up a first-line chief actuary role that has become more commercial. We have also invested in another person that is going to join Tom's team to support M&A and broader development alongside, as you say, the new CRO, Sue Ann, who is coming in. She has got an extensive CV, tons of relevant experience.

Speaker #1: So yeah, it was a good spot. We went into the market earlier on in the year for a new Group CRO.

Speaker #1: The previous role holder held both the CRO function and part of what normally is called the sort of chief actuarial sort of responsibilities. So we took the decision to sort of split that role beef up a sort of first-line chief actuary role that's become more commercial.

Steve Murray: So we took the decision to split that role, beef up a first-line chief actuary role that has become more commercial. We have also invested in another person that is going to join Tom's team to support M&A and broader development alongside, as you say, the new CRO, Sue Ann, who is coming in. She has got an extensive CV, tons of relevant experience.

Speaker #1: We've also invested in another person that's going to join Tom's team to support M&A and broader development alongside, as you say, the new CRO, Suan, who's coming in.

Speaker #1: She's got an extensive CV and tons of relevant experience. She's previously worked in a business that was also trying to do M&A, and, cross-jurisdictionally, that business was operating across 20 territories.

Steve Murray: She has been working previously in a business that was also trying to do M&A cross-jurisdictionally. That business was doing it across 20 territories. So Chesnara looks pretty simple, I think, in comparison to what she was covering before. And I think what you have seen from us over the last five years is make a significant investment in the top team. Jackie came in almost three years ago now and is driving that UK business forward. And we have got new leadership right the way across the group that we are doing a terrific job driving the performance. So I think it is a good spot, and certainly our ambition is to become a much larger sort of FTSE 250 company, Abid. I think that is very safe to say. Tom.

Speaker #1: So, CHESNARA looks pretty simple, I think, in comparison to what she was covering before. And I think what you've seen from us over the last five years is a significant investment in the top team.

Steve Murray: Jackie came in almost three years ago now and is driving that UK business forward. And we have got new leadership right the way across the group that we are doing a terrific job driving the performance. So I think it is a good spot, and certainly our ambition is to become a much larger sort of FTSE 250 company, Abid. I think that is very safe to say. Tom.

Speaker #1: Jackie came in almost three years ago now and is driving that UK business forward. And we've got new leadership right the way across the group that are doing a terrific job driving the performance.

Speaker #1: So, I think it's a good spot. And certainly, our ambition is to become a much larger sort of FTSE 250 company. Albert, I think that's very safe to say.

Speaker #1: Tom?

Speaker #3: OCG. So yeah, I mean, if we deconstruct the OCG a little bit, which I think we certainly attempted to do in the presentation: of the 96, 51 is one-off in nature.

Tom Howard: OCG. Yeah, if we deconstruct the OCG a little bit, which I think we certainly attempted to do in the presentation. Of the 96, 51 is one-off in nature. That is the day one acquisition impact of bringing Chesnara Life in. That arises from things like diversification benefits and I think as I mentioned, by moving the Chesnara Life solvency framework onto the Chesnara solvency framework. So it is very much a structural benefit we get from bringing that on. It is material, and it is one-off, and I will come back to that in the context of the 140, which is your second question. If you move that to one side, the other components are what we call the recurring OCG of 33 and then management action. The recurring OCG of 33 is very much as the name suggests.

Speaker #3: So that is the Day One acquisition impact of bringing Chesnara Life in. That arises from things like diversification benefits and things, as I mentioned, by moving the Chesnara Life solvency framework onto the Chesnara solvency framework.

Speaker #3: So it's very much a structural benefit we get from bringing that on. It's material, and it's one-off. And I'll come back to that in the context of the 140, which is your second question.

Tom Howard: So it is very much a structural benefit we get from bringing that on. It is material, and it is one-off, and I will come back to that in the context of the 140, which is your second question. If you move that to one side, the other components are what we call the recurring OCG of 33 and then management action. The recurring OCG of 33 is very much as the name suggests.

Speaker #3: So then, if you move that to one side, the other components are what we call the recurring OCG of 33, and then management actions.

Speaker #3: So, the recurring OCG of 33 is very much as the name suggests. We expect that to be a very reliable indicator going forward.

Tom Howard: We expect that to be a very reliable indicator going forward. So 33 in the H1, I think, not to tell you what to factor into your models, but I think you can take from that something of that nature would be reasonable for the H2. If I draw you back to a comment I made at full year 2025 about how to think about recurring management actions. What I said at the time and this still holds, is that in any given year, we would expect that the recurring management actions will make up about 30% of the total OCG result. So I will not do the maths for you, but I am sure you can work out with a recurring plus 30% sort of gets you to what we would call a recurring sustainable level of OCG before any of these acquisition one-offs.

Speaker #3: 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 reasonable for the second half.

Speaker #3: And then, if I draw you back to a comment I made at full year 2025 about how to think about recurring management actions, what I said at the time still holds: that in any given year, we would expect that the recurring management actions will make up about 30% of the total OCG results.

Tom Howard: What I said at the time and this still holds, is that in any given year, we would expect that the recurring management actions will make up about 30% of the total OCG result. So I will not do the maths for you, but I am sure you can work out with a recurring plus 30% sort of gets you to what we would call a recurring sustainable level of OCG before any of these acquisition one-offs.

Speaker #3: So, I won't do the math for you, but I'm sure you can work out, with a recurring plus 30%, it gets you to what we would call a recurring sustainable level of OCG before any of these acquisition one-offs.

Speaker #3: Then turning to how we think about the 140 – look, we've made a great start against that. So, £51 million on what I call day one alone. We, frankly – I mean, I'm sure my team will thank me for saying this – but we haven't had to do a huge amount to get there because a lot of this was by virtue of bringing the portfolio into our business.

Tom Howard: Then turning to how we think about the 140. We have made a great start against that. So GBP 51 million, on what I call day one alone. I am sure my team won't thank me for saying this, but we haven't had to do a huge amount to get there because a lot of this was by virtue of bringing the portfolio into our business. We automatically generate quite a bit of that benefit. It hasn't yet given us pause for thought around the 140. What we will do is we will come back at full year 2026 and issue an update on how we are thinking about the 140 and the 800. Not least because we have, Jackie will attest to this, we have a little bit of work to do between here and the end of the year to finish the migration program and so on.

Tom Howard: We automatically generate quite a bit of that benefit. It hasn't yet given us pause for thought around the 140. What we will do is we will come back at full year 2026 and issue an update on how we are thinking about the 140 and the 800. Not least because we have, Jackie will attest to this, we have a little bit of work to do between here and the end of the year to finish the migration program and so on.

Speaker #3: We sort of automatically generate quite a bit of that benefit. It hasn't yet given us pause for thought around the 140. What we will do is we'll come back at full year 2026 and issue an update on how we're thinking about the 140 and the 800—not least because, as Jackie will attest to, we have a little bit of work to do between here and the end of the year to finish the migration program and so on.

Speaker #3: So we'll have a much clearer line of sight around the timing of some of the further synergies we expect to get. And I think, while we had been saying as well actually at the time of acquisition, was for that £140 million and £800 million, we weren't expecting that to emerge linearly over the five years in the lifetime.

Tom Howard: We will 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 five years in the lifetime. It would be a little bit uneven. The reason for that is, frankly, we like to be a little bit judicious about when we exercise some of those capital management actions, so timing can be better sometimes, if we delay from a commercial perspective. But we will come back full year 2026 with some more color. Firepower.

Speaker #3: There will be a little bit of— it would be a little bit uneven. And the reason for that is, frankly, we like to be a little bit judicious about when we exercise some of those capital management actions.

Speaker #3: So, timing can be better sometimes if we delay from a commercial perspective. But we'll come back at full year 2026 with some more color.

Speaker #3: Firepower. So, the way we've been running the balance sheet, again, when we talked about the Chesnara Life acquisition, we expected that post-acquisition we would still retain enough firepower to do another Scottish Widows Europe type of transaction.

Tom Howard: The way we have been running the balance sheet, 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 triangulated back to about GBP 100 million, roughly, sterling level of headroom, before thinking about alternative options like debt and equity financing. That position is unchanged. In fact, it's increased, I would say, a bit over the H1. So that 100 you could factor up to maybe something like 130. That's because the solvency ratio has, as we said in our presentations, the 185% is a little bit ahead of where we expect it to be at 180%, because we have had favorable trading and decent markets over that half year. So that's positively bled into solvency headroom.

Speaker #3: And that sort of triangulated back to about a £100 million, roughly sterling level of headroom, before thinking about alternative options like debt and equity financing.

Speaker #3: That position is unchanged. In fact, it's increased, I would say, at base over the first half. So that 100—you could factor up to maybe something like 130.

Tom Howard: In fact, it's increased, I would say, a bit over the H1. So that 100 you could factor up to maybe something like 130. That's because the solvency ratio has, as we said in our presentations, the 185% is a little bit ahead of where we expect it to be at 180%, because we have had favorable trading and decent markets over that half year. So that's positively bled into solvency headroom.

Speaker #3: And that's because the solvency ratio is, as we said in our presentations, at 185%, which is a little bit ahead of where we expected it to be—at 180%—because we've had favorable trading and decent markets over that half year.

Speaker #3: So that's positively bled into solvency headroom. And as you've seen from the liquidity presentation, we've got ample liquidity as well. So yeah, we're slightly higher than we were at full year, but in and of that sort of ticket size, around that kind of SWE-type size, is still roughly where we are.

Tom Howard: As you have seen from the liquidity presentation, we have got ample liquidity as well. We are slightly higher than we were at full year, but in and of that sort of ticket size around that kind of SWE type size is still roughly where we are.

Speaker #2: Thank you. Michael.

Steve Murray: Michael.

Speaker #1: So there's a lot to follow on, but one—which is the only criticism that I could find—is Sweden. I know we discussed it, and you were saying, no, there's some good stuff as well.

[Analyst]: So, a lot to follow on, but one which is the only criticism that I could find is Sweden. And then we discussed it, and you were saying no, there is some good stuff as well, but a lot of the time, Sweden kind of is the one number which is a bit lower. So the questions on-

Michael Huttner: So, a lot to follow on, but one which is the only criticism that I could find is Sweden. And then we discussed it, and you were saying no, there is some good stuff as well, but a lot of the time, Sweden kind of is the one number which is a bit lower. So the questions on-Why is not the regulator doing what is expected there? Or what could you do to prompt them a little bit?

Speaker #1: But every time—not every time, but a lot of the time—Sweden is kind of the one number which is a bit lower. So the question is, why isn't the regulator doing what is expected there, or what could you do to kind of prompt them a little bit?

Ben Cohen: Why is not the regulator doing what is expected there? Or what could you do to prompt them a little bit? On the cash, just to push you a little bit harder, my number is bigger than yours, so I was hoping you would say GBP 200 million rather than GBP 100 million plus. But that is because clearly you need some cash to run the business. You cannot run the business without cash. So I would be interested to know how much you actually need as a base number. And then the management actions, but here you obviously said you would tell us more, and you have told us a little bit. Just two side questions. One, the 30%, is it of the total or is it 30% on top? It makes a small difference on the big one, but also what kind of management actions? Thank you.

Speaker #1: On the cash, just to push you a little bit harder, my number is bigger than yours. So I was hoping you would say $200 million rather than $100 million plus.

Michael Huttner: On the cash, just to push you a little bit harder, my number is bigger than yours, so I was hoping you would say GBP 200 million rather than GBP 100 million plus. But that is because clearly you need some cash to run the business. You cannot run the business without cash. So I would be interested to know how much you actually need as a base number.

Speaker #1: But that's because, clearly, you need some cash to run the business. You can't run the business without cash. So I'd be interested to know how much you actually need as a base number.

Speaker #1: And then the management actions, but here you obviously said you’d sell us more, and you’ve told us a little bit. Just two side questions.

Michael Huttner: And then the management actions, but here you obviously said you would tell us more, and you have told us a little bit. Just two side questions. One, the 30%, is it of the total or is it 30% on top? It makes a small difference on the big one, but also what kind of management actions? Thank you.

Speaker #1: First, the 30%—is that of the total, or is it 30% on top? It makes a small difference on the larger figure. Also, what kind of management actions are you referring to?

Speaker #1: Thank you.

Speaker #2: Yeah. Should we maybe take those in order? I'll start with Sweden, and we can talk about—maybe, Michael, we can talk about both the cash capacity, but also where some of the debt capacity sits in the balance sheet, because I think it's useful to understand that, and then the management action point as well.

Steve Murray: Yeah. Shall we maybe take those in order? I will start with Sweden and we can talk about. Maybe, Michael, we can talk about both the cash capacity, but also where some of the debt capacity also is in the balance sheet, because I think it is useful to understand that, and then management action point as well. So when we look at the performance of Sweden the H1 of the year, so we have seen very strong net client cash flows sort of come in. So within the overall economic result, we have seen a sort of negative because the strong levels of business coming in have not offset some of those sort of outflows going out. But I think what we always look at there is what can we control.

Speaker #2: So when we look at the performance of Sweden in the first half of the year, we've seen very strong net client cash flows come in.

Steve Murray: So when we look at the performance of Sweden the H1 of the year, so we have seen very strong net client cash flows sort of come in. So within the overall economic result, we have seen a sort of negative because the strong levels of business coming in have not offset some of those sort of outflows going out. But I think what we always look at there is what can we control.

Speaker #2: So within the overall economic result, we've seen a sort of negative because the strong levels of business coming in haven't offset some of those outflows going out.

Speaker #2: But I think what we always look at there is, what can we control? And I think the fact that the team have expanded distribution, brought in more business, and we have this new sort of partnership which has just started up in Norway.

Steve Murray: And I think the fact that the team have expanded distribution, brought in more business, we have this new sort of partnership which has just started up in Norway. All of those things I would take as sort of positive signs of outflow coming in. And that 700 million of assets under administration increase in the H1 of the year as well is quite a material addition to the size of the business. But it has continued, as you pointed to be a market where we have seen a lot of this sort of transfer and activity going on. We know lots are looking at that and sort of saying it does not feel like that is sustainable longer term, and we certainly share that view.

Speaker #2: All of those things, I would take as positive signs about flow coming in. And that £700 million of assets under administration increase in the first half of the year, as well, is quite a material addition to the size of the business.

Speaker #2: But it has continued, as you pointed out, to be a market where we've seen a lot of this sort of transferring activity going on.

Steve Murray: But it has continued, as you pointed to be a market where we have seen a lot of this sort of transfer and activity going on. We know lots are looking at that and sort of saying it does not feel like that is sustainable longer term, and we certainly share that view.

Speaker #2: We know lots of things like that, and sort of saying it, it doesn't feel like that's sustainable longer term. And we certainly share that view.

Speaker #2: But all we can do is make sure the team's focusing and controlling what they can, making sure the cost management 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 business.

Steve Murray: But all we can do is make sure the team is focusing and controlling what they can, making sure the cost management remains strong, which it has in the H1 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 business. Shall we sort of cash and management actions?

Speaker #1: Do you want to cover cash and management actions?

Tom Howard: So you are right, Michael. We do hold back a buffer within sort of our treasury management policy, and that is broadly to cover expected 12 months worth of expected debt outflows, potential shareholder dividends, working capital, et cetera. So that is why you will see a difference, and that is why your number will be higher than my number, for example, because I like to manage that on quite a prudent basis. In terms of the management actions, 30% of total, so that is probably a slightly higher number than the alternative. Then on the management actions, the types of things that will feed into that recurring management action. We have a program of management actions that we look at over longer term, so sort of five years plus. And the types of things that we are looking at are an extension of things we already do.

Speaker #3: So you're right, Michael. We do hold back a buffer within our treasury management policy, and that's broadly to cover around 12 months' worth of expected debt outflows, potential shareholder dividends, working capital, et cetera.

Speaker #3: So that's why you'll see a difference, and that's why your number will be higher than my number, for example, because I like to manage that on quite a prudent basis.

Speaker #3: In terms of the management actions, it's 30% of the total, so that's probably a slightly higher number than the alternatives. And then, on the management actions, the types of things that will feed into that are recurring management actions.

Tom Howard: In terms of the management actions, 30% of total, so that is probably a slightly higher number than the alternative. Then on the management actions, the types of things that will feed into that recurring management action. We have a program of management actions that we look at over longer term, so sort of five years plus. And the types of things that we are looking at are an extension of things we already do.

Speaker #3: So, we have a program of management actions that we look at over the longer term—so, sort of five years plus—and the types of things that we're looking at are an extension of things we already do.

Speaker #3: So you've heard us talk a lot about foreign exchange. There's still a bit more, I think, we can do on that. You've heard us talk about things like mass lapse reinsurance, where we can reinsure very extreme tail risk events.

Tom Howard: So you have heard us talk a lot about foreign exchange. There is still a bit more I think we can do on that. You have heard us talk about things like mass lapse reinsurance, where we can reinsure very extreme tail risk events. Again, there is more we can do on that. Other areas that we have been less developed on, I would say historically, that we are looking very seriously at, are actually more focused on the investment side of the balance sheet so we can up-risk elements of our portfolio. Our portfolio is now bigger. It is more diverse because we have 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 approval. So that increases the scope and the opportunity around that investment up-risking piece in particular. So expect to hear and see more on that going forwards.

Speaker #3: Again, there's more we can do on that. Other areas that we have been less developed on, I would say historically, that we're looking at very seriously are actually more focused on the investment side of the balance sheet.

Speaker #3: So, we can increase the risk elements of our portfolio. Our portfolio is now bigger and more diverse because we've brought new books into the group.

Tom Howard: Our portfolio is now bigger. It is more diverse because we have 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 approval. So that increases the scope and the opportunity around that investment up-risking piece in particular. So expect to hear and see more on that going forwards. And 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 levers we have at our disposal there.

Speaker #3: We have another book coming into the group later this year as well, assuming we are successful on regular approval. So that increases the scope and the opportunity around that investment, the up-risking piece in particular.

Speaker #3: So expect to hear and see more on that going forward. And 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 levers we have at our disposal there.

Tom Howard: And 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 levers we have at our disposal there.

Speaker #2: I think, Michael, just.

Steve Murray: I think, Michael, just on M&A more broadly in that capacity, I think Tom's spoken very well about that cash piece. We do clearly now have more capacity in the balance sheet to look at debt, and that's probably in the order of circa GBP 150 million, that sort of number. It's never quite exact, depends on the business coming in. Certainly our appetite isn't capped by the available firepower in that capacity. I think we've gone at the market, had great support from investors. So we're looking at a very broad range of deal sizes. Just to give you a sense, I suppose, of how we sort of see that building up and 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 looking at these other sources as well.

Speaker #1: Just on sort of M&A more broadly in that capacity, I think Tom's spoken very well about that cash piece. We do clearly now have more capacity in the balance sheet to look at debt.

Speaker #1: And that's probably in the order of, sort of, circa £150 million— that sort of number. It's never quite exact; it depends on the business coming in.

Speaker #1: And certainly our appetite isn't capped by the available firepower and that capacity. I think we've gone at the market and had great support from investors.

Steve Murray: Certainly our appetite isn't capped by the available firepower in that capacity. I think we've gone at the market, had great support from investors. So we're looking at a very broad range of deal sizes. Just to give you a sense, I suppose, of how we sort of see that building up and 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 looking at these other sources as well. Ben.

Speaker #1: So we're looking at a very broad range of deal sizes, but just to give you a sense, I suppose, of how we sort of see that building up and when Tom's looking at sort of the financial framework and the available firepower.

Speaker #1: We're not just looking at sort of cash at bank; we're looking at these other sources as well.

Speaker #2: Ben.

Steve Murray: Ben.

Ben Cohen: Hi.

Speaker #4: Hi.

Speaker #2: Congratulations on your new role. It feels like a little bit of a step back into the past, doesn't it? But also back into the future.

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

Speaker #4: Backwards to go forwards. Yes, thank you. Yeah, Ben Cohner, obviously. I just wanted to ask a couple of things. The first is really maybe more of a clarification. I think in your prepared remarks, Steve, you said that you've got multiple levers to further strengthen the capital base.

Ben Cohen: Backwards to go forwards, yes. Thank you. Ben Cohen, obviously. I just wanted to ask a couple of things. The first really may be more of a clarification. I think in your prepared remarks, Steve, you said that you've got multiple levers to further strengthen the capital base. Is that a reference to the sort of the bigger debt raise? Presumably it's debt, it's reinsurance. Is there anything that is kind of almost coming out of the book itself that gives you more confidence there? The second question was just in terms of the M&A environment. Could you maybe talk a bit more about the different markets in continental Europe 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 full year? Thanks.

Speaker #4: Is that a reference to the sort of the bigger debt raise? Presumably, it's debt. It's reinsurance. Is there anything that is kind of almost kind of coming out of the book itself that gives you kind of more confidence there?

Speaker #4: The second question was just in terms of the M&A environment. Could you maybe talk a bit more about the different markets in continental Europe versus the UK in terms of size of deals, level of competition, and the sorts of things that are interesting at the moment?

Ben Cohen: The second question was just in terms of the M&A environment. Could you maybe talk a bit more about the different markets in continental Europe 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 full year? Thanks.

Speaker #4: Kind of, what's changed maybe since the full year? Thanks.

Speaker #2: Sure. Shall I pick up M&A, and then do you want to talk about some of the actions available, which might be a little bit of what we've just said with Michael?

Steve Murray: Sure. Shall I pick up M&A, and then do you want to talk about sort of some of the actions available, which might be a little bit of what we've just said with Michael? So, yeah, I think the sort of M&A environment we like is an active one. Because what we tend to find is when more deals are happening, it encourages people to come forward with their portfolios. A deal being done here, sometimes has a knock-on impact over here. So the fact that we've still been seeing in the H1 plenty of M&A happening, we've seen a very large deal in the UK with the Aegon UK and Standard Life transaction, which was very well received by the market. We've seen transactions in continental Europe, including in Germany, being announced as well.

Speaker #2: So, yeah, I think the sort of M&A environment we like is an active one because what we tend to find is, when more deals are happening, it encourages people to come forward with their portfolios.

Speaker #2: A deal being done here sometimes has a knock-on impact over there. So, the fact that we've still been seeing, in the first half, plenty of M&A happening— we've seen a very large deal in the UK with the Aegon UK and Standard Life transaction, which was very well received by the market.

Steve Murray: A deal being done here, sometimes has a knock-on impact over here. So the fact that we've still been seeing in the H1 plenty of M&A happening, we've seen a very large deal in the UK with the Aegon UK and Standard Life transaction, which was very well received by the market. We've seen transactions in continental Europe, including in Germany, being announced as well.

Speaker #2: We've seen transactions in continental Europe, including in Germany, being announced as well. So I think across the broader sort of jurisdictions, both in the UK and Europe, we think there's still plenty of activity.

Steve Murray: So across the broader jurisdictions, both in UK and Europe, we think there is still plenty of activity. If I suppose I cover our territories, and I will include Luxembourg, and then maybe just give a little bit of territories outside of where Chesnara currently operates. So UK continues to be active, certainly in our part of the market. So we still see large international firms, large financial institutions looking to optimize their book. We are still seeing this huge trend of large insurers going after the bulk purchase annuity space. Some interesting transactions that have happened there recently, but people seeing if they can deploy more capital. So we believe they will continue to look at portfolios that they believe maybe do not make a return. Maybe they do not fit with some of the new operating platforms that are coming in.

Speaker #2: If I suppose I cover our sort of territories and I'll include Luxembourg and then maybe just give a little bit of sort of territories outside of where CHESNARA currently operates.

Speaker #2: So the UK continues to be active, certainly in our part of the market. We still see some large international firms and large financial institutions looking to optimize their books.

Steve Murray: So we still see large international firms, large financial institutions looking to optimize their book. We are still seeing this huge trend of large insurers going after the bulk purchase annuity space. Some interesting transactions that have happened there recently, but people seeing if they can deploy more capital. So we believe they will continue to look at portfolios that they believe maybe do not make a return. Maybe they do not fit with some of the new operating platforms that are coming in.

Speaker #2: We're still seeing this huge trend of large insurers going after the bulk purchase annuity space, and there have been some interesting transactions that have happened there recently, with people seeing if they can deploy more capital.

Speaker #2: So, we believe they'll continue to look at portfolios that they believe maybe don't make a return. Maybe they don't fit with some of the new operating platforms that they're coming in.

Steve Murray: When we map that pipeline out over a three-year period, we think there is going to be plenty for us to look at. And the fact that Jackie and the team have made positive progress on that integration and migration activity means we are looking at opportunities now. We believe that given the lag time that you tend to have, as I talked about full year 2025, we are absolutely in a position that we can be assessing opportunities now with a view to those completing somewhere in 2027, in all likelihood. In Europe, so in Sweden, we talked at the full year about there potentially being a couple of opportunities in that market. I think that position remains the same. We have not seen material transactions. We have seen one or two small ones where you have seen some risk books moving around in the market.

Speaker #2: Over sort of a three-year period, we think there's going to be plenty for us to look at. And the fact that Jackie and the team have made positive progress on that integration and migration activity means we're looking at opportunities now.

Speaker #2: We believe that, given the sort of lag time that you tend to have—as I talked about, full year '25—we're absolutely in a position where we can be assessing opportunities now, with a view to those completing somewhere in 2027 in all likelihood.

Steve Murray: In Europe, so in Sweden, we talked at the full year about there potentially being a couple of opportunities in that market. I think that position remains the same. We have not seen material transactions. We have seen one or two small ones where you have seen some risk books moving around in the market.

Speaker #2: In Europe—so I would say, in Sweden—we sort of talked at the full year about there potentially being a couple of opportunities in that market.

Speaker #2: 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 book sort of moving around in the market.

Speaker #2: We're seeing a little bit more than that outside of Sweden as well. But it continues to be sort of less active than the UK. But there are a couple of things there that we'll have a choice around, whether we want to participate in.

Steve Murray: We are seeing a little bit more then outside of Sweden as well. But it continues to be less active than the UK. But there is a couple of things there that we will have a choice around whether we want to participate in. The Netherlands having seen a very active market, I would 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 surrounding territories that we could use the operating platform as well. And then Luxembourg, I think we will just repeat what we said at the time of the Widows acquisition. We do believe there is a significant tail of businesses in that market, and we expect to have the opportunity to look at assets there. We do also keep an eye on other jurisdictions.

Speaker #2: The Netherlands has seen a very active market. I'd say at the moment, it's just less active in the short term. Medium term, I still think the middle part of that market will ultimately consolidate.

Steve Murray: Medium term, I still think the middle part of that market will ultimately consolidate, and we do have options with the Netherlands of some surrounding territories that we could use the operating platform as well. And then Luxembourg, I think we will just repeat what we said at the time of the Widows acquisition. We do believe there is a significant tail of businesses in that market, and we expect to have the opportunity to look at assets there. We do also keep an eye on other jurisdictions.

Speaker #2: And we do have options with the Netherlands, or some sort of surrounding territories that we could use the operating platform as well. And then Luxembourg—I think we’ll just repeat what we said at the time of the Widows acquisition.

Speaker #2: We do believe there's a significant sort of tail of businesses in that market, and we expect to have the opportunity to look at assets there.

Speaker #2: We do also keep an eye on other jurisdictions. We've talked about other offshore territories before. Germany is a market that's very large in Europe, and it's sort of impossible to ignore, particularly if you have the sort of growth ambition that we do.

Steve Murray: We have talked about other offshore territories before. Germany is a market that is very large in Europe that it is impossible to ignore, particularly you have the sort of growth ambition that we do. Belgium has been a territory that we have also looked at as well. So, our challenge remains being candid, given that positive M&A environment, to ensure that we are focusing on a small number of things. It would 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 higher probability, and we think will move the dial for the group. On balance sheet, I suppose, levers that you might want to-

Speaker #2: Belgium has been a territory that we've also looked at as well. So, our challenge remains being candid, given that positive M&A environment, to ensure that we're focusing on a small number of things.

Speaker #2: It'd be quite easy for us to spend a huge amount of time on a very large number of opportunities, and part of Tom and my job is to make sure that we remain focused on the things that are higher probability and we think will move the dial for the group.

Steve Murray: It would 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 higher probability, and we think will move the dial for the group. On balance sheet, I suppose, levers that you might want to-

Speaker #2: On the balance sheet, I suppose there are sorts of levers that you might want to consider.

Speaker #3: Yeah, I mean, we've covered some of them when we've covered capital optimization actions. And we've been quite focused up to this point on looking at opportunities to optimize the solvency capital requirements in some areas, so like FX hedges, like mass lapse, and so on.

Tom Howard: Yeah, we've covered some of them when we've covered capital optimization actions. We've been quite focused up to this point in looking at opportunities to optimize the Solvency Capital Requirements in some areas, like FX hedges, like mass lapse and so on. I think on the own fund side of the balance sheet, there are probably two levers that are most interesting for us. I talked about investment up-risking. There's general efficiency initiatives across the group that we're embarking on as well, which will be accretive to own funds over time. But 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 post the Chesnara Life acquisition, actually, the sensitivities, the resilience of the balance sheet has actually improved post the acquisition.

Speaker #3: I think on the own funds side of the balance sheet, there are probably two levers that are most interesting for us.

Speaker #3: I talked about investment up-risking. There are general efficiency initiatives across the group that we're embarking on as well, which will be accretive to own funds over time.

Tom Howard: There's general efficiency initiatives across the group that we're embarking on as well, which will be accretive to own funds over time. But 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 post the Chesnara Life acquisition, actually, the sensitivities, the resilience of the balance sheet has actually improved post the acquisition.

Speaker #3: But actually, in many ways, one of the best ways to strengthen the balance sheet is via scale—and sensible scale. So if you look at what happened post-Chesnara Life acquisition, actually, the sensitivities—the sort of resilience of the balance sheet—has actually improved post the acquisition.

Speaker #3: So we're now a bigger group, but with a more resilient balance sheet. 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 SCR—the Solvency Capital Requirement—was too small.

Tom Howard: We're now a bigger group with a more resilient balance sheet. 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 SCR, the Solvency Capital Requirement, was too small. We were running up against some of those restrictions. As we build more scale, and 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 SCR optimization.

Speaker #3: So we were running up against some of those restrictions. So, as we build more scale—and I would call it sensible scale—that diversifies really efficiently into the group, that will be a source of further capital strength as well.

Tom Howard: As we build more scale, and 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 SCR optimization.

Speaker #3: So, 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 SCR optimization.

Speaker #2: I'm just checking—are there any more follow-up questions, Michael? Yeah? And then we'll go to the phones.

Steve Murray: I'll just check if there's any more questions. Follow up, Michael? Yeah. We'll go to the phones.

[Analyst]: It's just a very little one. The 140 or the 800, do the management actions come on top of that, or are they already included in that? Also, really small, in the number, the 140 and 800, does one include the GBP 20 million cash actually remitted or the GBP 51 operating capital generation? Those would be my two questions.

Michael Huttner: It's just a very little one. The 140 or the 800, do the management actions come on top of that, or are they already included in that? Also, really small, in the number, the 140 and 800, does one include the GBP 20 million cash actually remitted or the GBP 51 operating capital generation? Those would be my two questions.

Speaker #1: It's just a very little one. The 140 or the 800—do the management actions come on top of that, or are they already included in that?

Speaker #1: And then, also, really small in the number—the 140 or the 800—does one include the £20 million cash actually remitted, or the £51 million operating capital generation? Those would be my two questions.

Speaker #3: Yeah. So, on management actions: 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 much better line of sight on what we can deploy and when.

Tom Howard: Yeah. So on management actions, the EUR 140 and EUR 800 had a limited amount of management actions in there. As I said earlier, we will come back in full year 2026 when we have a much better line of sight on what we can deploy and when. The EUR 50 million, in terms of what is emerging compares to that EUR 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. But sometimes we will choose not to remit the cash or maybe not all of the cash because we will decide to leave some of those resources within the business unit, at least temporarily, to fund growth.

Speaker #3: I mean, the £50 million is in terms of how what's emerging compares to that £140 million. OCG is the best prospect to look at.

Speaker #3: The cash remittance is almost a consequence of the OCG, because with cash remittances, basically you have to generate the OCG to create the space to remit the cash.

Tom Howard: 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. But sometimes we will choose not to remit the cash or maybe not all of the cash because we will decide to leave some of those resources within the business unit, at least temporarily, to fund growth. The 20 is a very early proof point, but I would see it as a consequence of the EUR 50 million as opposed to it being the key driver itself.

Speaker #3: But sometimes we will choose not to remit the cash, or maybe not all of the cash, because we will decide to leave some of those resources within the business unit—at least temporarily—to fund growth.

Speaker #3: So, the 20 is a very, very early proof point, but I would see it as a consequence of the 50 million, as opposed to it being the key driver itself.

Tom Howard: The 20 is a very early proof point, but I would see it as a consequence of the EUR 50 million as opposed to it being the key driver itself.

Speaker #2: Yeah. Of course.

Steve Murray: Yeah, of course. Just one more. I am always interested in mortality because obviously I am getting there. But you mentioned Netherlands was not quite as positive.

Speaker #1: Just one more. So you did—I'm always interested in mortality because, obviously, I'm getting there. But you mentioned the Netherlands was not quite as positive.

Speaker #3: Yeah, so we had some seasonality in the Netherlands. And look, we see that across the book. So the way we actually set the assumptions is on the basis of a long-term expectation.

Tom Howard: Yeah. So we had some seasonality in the Netherlands, and look, we see that across the book. The way we are actually set the assumptions is on the basis of a long-term expectation, and you will have periods, and it is often the winter periods where you see these little spikes in short-term activity relative to those long-term assumptions. So what we did was we recorded that negative variance in the first quarter. What we saw in the second quarter actually was the experience pretty much reverted to that longer-term mean. So you will tend to see those bumps. Sometimes it is actually positive. You will have periods where the sort of emerging mortality is actually better than your long-term assumptions. But we thought it was appropriate to call that out because it is a feature of the experience in the H1.

Speaker #3: And you will have periods, and it's often the winter periods, where you see these little spikes in short-term activity relative to those long-term assumptions.

Speaker #3: So, what we did was we recorded that negative variance in the first quarter. What we saw in the second quarter, actually, was the experience pretty much reverted to that longer-term mean.

Tom Howard: So what we did was we recorded that negative variance in the first quarter. What we saw in the second quarter actually was the experience pretty much reverted to that longer-term mean. So you will tend to see those bumps. Sometimes it is actually positive. You will have periods where the sort of emerging mortality is actually better than your long-term assumptions. But we thought it was appropriate to call that out because it is a feature of the experience in the H1. But 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 the Dutch mortality rates.

Speaker #3: So you will tend to see those bumps. And sometimes it's actually positive—you'll have periods where the sort of emerging mortality is actually better than your long-term assumptions.

Speaker #3: But we thought it was appropriate to call that out because it is a feature of the experience in the first half. But 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 the Dutch mortality rates.

Tom Howard: But 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 the Dutch mortality rates.

Speaker #2: Okay. Should we go to questions online?

Steve Murray: Okay. Should we go to questions online?

Speaker #4: Yeah. You've got some questions for 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?

Operator: Yeah. We've got some questions from webcast. First question is from Brian at Hardman & Co. Can you expand on the mortality experience in Scildon? Are the HT cost savings from the Netherlands merger already accounted for in OCG capital?

Speaker #2: Do you want to pick up both? I think we probably just dealt with mortality, Brian. I'm conscious you probably typed that before Tom's last answer, but do you want to pick up on the cost savings?

Steve Murray: Do you want to pick up both? I think we've probably just dealt with mortality. Brian, I'm conscious you probably typed that before Tom Howard's last answer, but do you want to pick up sort of the cost savings?

Speaker #3: Yeah, so the short answer is yes. The OC really feeds through in two ways. It feeds through in the OCG numbers that we're recording for Scildon, which is our Dutch business.

Tom Howard: Yeah. The short answer is yes. It really feeds through in two ways. It feeds through in the OCG numbers that we are recording for Scildon, which is our Dutch business. We saw those come through last year actually, more significantly than this year, because that is when the bulk of those savings were delivered. But where you also see it, and I talked a moment ago about the fact that cash, there is a little bit of a lag effect on cash remittance, so you have to generate the OCG and then you decide to remit it. One of the reasons why we have had a remittance of EUR 30 million from Scildon, which is actually the highest remittance in its history, is that that additional OCG, which was generated over the last two years as the management team went through that process, is now available for distribution as cash.

Speaker #3: We saw those come through last year, actually more significantly than this year, because that's when the bulk of those savings were delivered. But where you also see it—and I talked a moment ago about the fact that with cash, there's a little bit of a lag effect on cash remittance.

Speaker #3: So you have to generate the OCG, and then you decide to remit it. The reason why we've had a remittance of £30 million—one of the reasons why we've had a remittance of £30 million from Schilden, which is actually the highest remittance in its history—is that the additional OCG, which was generated over the last two years as the management team went through that process, is now available for distribution as cash.

Tom Howard: One of the reasons why we have had a remittance of EUR 30 million from Scildon, which is actually the highest remittance in its history, is that that additional OCG, which was generated over the last two years as the management team went through that process, is now available for distribution as cash. And that has been a really helpful contribution to this H1 year's result as well.

Speaker #3: And that's been a really helpful contribution to this first half-year's result as well.

Tom Howard: And that has been a really helpful contribution to this H1 year's result as well.

Speaker #2: The sort of the second half of the sort of remaining synergies are sort of lower than what we've delivered. So there’ll be a little bit more to come through, but not at the same sort of level that Tom’s alluded to over the last 18 months.

Steve Murray: The second half, the remaining synergies are lower than what we have delivered. So there will be a little bit more to come through, but not at the same level that Tom has alluded to over the last 18 months. Thank you, Brian.

Speaker #2: So thank you, Brian.

Speaker #4: Thank you. Next question comes from Ming at Times Capital. Could you please provide some color on Sweden's adverse lapse experience? There seems to be more frequency.

Operator: 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 is adverse lapse experience in most years. Was this reinsurance a one-off, or could you do more like you do in the UK?

Speaker #4: I recall that in 2021, we benefited from a reinsurance of mass lapse experience, but since then, there has been adverse lapse experience in most years. Was this reinsurance a one-off, or could you do more, like you do in the UK?

Speaker #2: So you're absolutely right, Ming. And that sort of mass lapse reinsurance that was deployed is very, very similar to the mass lapse that we've been using in the UK as well.

Steve Murray: You are absolutely right, Ming. That sort of mass lapse reinsurance that we deployed is very similar to the mass lapse that we have 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 will 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 have already put that treaty in place there. There is not a sort of significant amount more that we can do there.

Speaker #2: And what that allows us to do is reinsure, particularly some of the tail risk, so that you don't have to hold a lot of capital around it.

Speaker #2: So, 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.

Speaker #2: But ultimately, we've already put that treaty in place there. So there isn't a sort of significant amount more that we can do there. In terms of what's driving some of these trends in the market, there's a there's a lot of business sort of being transferred around by some of the large brokerage firms into sort of newer solutions.

Steve Murray: In terms of what is driving some of these trends in the market, there is a lot of business sort of being transferred around by some of the large brokerage firms into sort of newer solutions, and we have 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. We have seen periods where actually that transfer activity has been sort of very close to back in line with that longer term assumption, and this period has been a little bit higher again, but certainly not as significant as we saw a couple of years ago. That is really the activity that we are seeing on some of the longer standing parts of the unit link book. What we look at is sort of the in and the out around that.

Speaker #2: 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.

Speaker #2: And we've seen periods where actually that transfer activity has been very close to back in line with that longer-term assumption in this period.

Steve Murray: We have seen periods where actually that transfer activity has been sort of very close to back in line with that longer term assumption, and this period has been a little bit higher again, but certainly not as significant as we saw a couple of years ago. That is really the activity that we are seeing on some of the longer standing parts of the unit link book. What we look at is sort of the in and the out around that.

Speaker #2: It's been a little bit higher again, but certainly not as significant as we saw a couple of years ago. So, that's really the activity that we're seeing on some of the longer-standing parts of the unit-linked book.

Speaker #2: What we look at is sort of the in and the out around that. So as I said earlier, we've seen very good sort of flows into the business.

Steve Murray: As I said earlier, we have seen very good sort of flows into the business. We are winning more than our fair share of the market. Historically, our market share has been around sort of 4% to 5% of that particular part of the market. I would say at the moment, based on our intel, that we are doing a little bit better than that in terms of transfers in. It is the net economic impact, though, has remained slightly more negative in the period because what is leaving the business is about higher margin than what is coming in. The team are very focused on continuing that sort of successful expansion of distribution, managing their costs well, and I think those are the two key actions that we need to ensure we keep taking with Movestic.

Speaker #2: So, we're winning more than our fair share of the market. Historically, our market share has been around 4 to 5 percent of that particular part of the market.

Speaker #2: 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.

Speaker #2: It's the net economic impact, though, that has remained slightly more negative in the period, because what's leaving the business is at a higher margin than what's coming in.

Steve Murray: It is the net economic impact, though, has remained slightly more negative in the period because what is leaving the business is about higher margin than what is coming in. The team are very focused on continuing that sort of successful expansion of distribution, managing their costs well, and I think those are the two key actions that we need to ensure we keep taking with Movestic.

Speaker #2: The team are very focused on continuing that sort of successful expansion of distribution and managing their costs well. I think those are the two key actions that we need to ensure we keep taking with Movestic.

Speaker #4: Thank you. Next question comes from Vissu at TCS to Legenda. How does Chesnara Group view its strategic priorities for new business growth and open-book product propositions?

Operator: Thank you. Next question comes from Visu at TCS Diligenta. 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?

Speaker #4: Particularly in areas such as onshore investment bonds.

Speaker #2: Yeah. So, on the onshore investment bond particularly, I think we've been very clear with the market that that remains, and will continue to be, a priority for us in the UK.

Steve Murray: Yes. So on the onshore investment bond particularly, I think we have been very clear with the market that remains and will continue to be a priority for us in the UK. We have been really pleased with the performance, both of the Countrywide bond and the Chesnara Life bond in the H1 of the year. That sort of GBP 7 million new business contribution that you will see in the results is a strong result. Not least given that we sort of changed the brand on that Chesnara Life business in the early part of the year. The sales and business development teams have had to be out there sort of talking about that, making sure people understand who Chesnara Life are. So I think that result is a good one. And look, that is adding some additional value to the group that we did not have access to before.

Speaker #2: We've been really pleased with the performance of both the Countrywide Bond and the Chesnara Life Bond in the first half of the year. That sort of £7 million new business contribution that you'll see in the results is a strong result, not least given that we changed the brand on that Chesnara Life business in the early part of the year.

Steve Murray: Not least given that we sort of changed the brand on that Chesnara Life business in the early part of the year. The sales and business development teams have had to be out there sort of talking about that, making sure people understand who Chesnara Life are. So I think that result is a good one. And look, that is adding some additional value to the group that we did not have access to before.

Speaker #2: So the sales and business development teams have had to be out there, sort of talking about that, making sure people understand who Chesnara Life are.

Speaker #2: So, I think that result is a good one. And look, that is adding some additional value to the group that we didn't have access to before.

Speaker #2: One of the things that Jackie and the team will evaluate in the medium term is whether there might be some adjacencies off the back of that sort of onshore bond.

Steve Murray: One of the things that Jackie and the team will evaluate in the medium term is whether there might be some adjacencies off the back of that sort of onshore bond. But that has been a nice sort of add-on, and that capability that came from the Chesnara Life deal has been very helpful in the H1. More broadly, we have seen a good performance from Sweden and the Netherlands in the H1 of the year. And provided that we can demonstrate to ourselves that there is a sustainable level of return that meets our hurdles, we are very happy to keep writing that new business. I did say in my prepared remarks, however, that we did feel still that acquisitions are going to drive a very large part of the growth in this business, given the positive M&A pipeline that we are seeing.

Speaker #2: But that’s been a nice sort of add-on, and that capability that came from the Chesnara Life deal has been very helpful in the first half.

Speaker #2: More broadly, we've seen good performance from Sweden 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.

Steve Murray: And provided that we can demonstrate to ourselves that there is a sustainable level of return that meets our hurdles, we are very happy to keep writing that new business. I did say in my prepared remarks, however, that we did feel still that acquisitions are going to drive a very large part of the growth in this business, given the positive M&A pipeline that we are seeing. But it remains an important part of the strategy as that third strategic pillar that we have.

Speaker #2: I did say in my prepared remarks, however, that we still feel acquisitions are going to drive a very large part of the growth in this business, given the positive M&A pipeline that we're seeing.

Speaker #2: But it remains an important part of the strategy—it's that third strategic pillar that we have.

Steve Murray: But it remains an important part of the strategy as that third strategic pillar that we have.

Speaker #4: Thank you. There are no further questions from the webcast, so I'll hand over to you for any closing remarks.

Operator: Thank you. There are no further questions on the webcast, so hand over to you for any closing remarks.

Speaker #2: Yeah, we'll go back to Michael for one more.

Steve Murray: We'll go back to Michael for one more.

Speaker #3: Just one, because—so I think in terms of—I'm trying to think in terms of operating leverage. So, you have a deal with Essence SNC.

[Analyst]: Just one because I'm trying to think in terms of operating leverage. You have a deal with SS&C that effectively you share in the economics. The more cost saves they drive, the more you can share in as well. Is there a kind of discontinuity upwards? In other words, where you suddenly jump up and say, "Ooh, we've suddenly got an extra 50." I mean, I'm making numbers up. How far are you away from that point?

Michael Huttner: Just one because I'm trying to think in terms of operating leverage. You have a deal with SS&C that effectively you share in the economics. The more cost saves they drive, the more you can share in as well. Is there a kind of discontinuity upwards? In other words, where you suddenly jump up and say, "Ooh, we've suddenly got an extra 50." I mean, I'm making numbers up. How far are you away from that point?

Speaker #3: Effectively, you share in the economics. So, the more cost savings they drive, the more you can share in as well. Is there a kind of discontinuity upwards?

Speaker #3: In other words, where you suddenly jump up and say, "Ooh, we've suddenly got an extra 50—I mean, make numbers up." But how far are you away from that point?

Speaker #2: Yeah, so post that—and I'll be slightly careful of what I say because, obviously, there are commercial agreements in place, and Jackie, our UK CEO, is in the room, so she can throw something at me if I go too far on this.

Steve Murray: Well, I'll be slightly careful of what I say, because obviously there's commercial agreements in place, and Jackie, our UK CEO is in the room, so she can throw something at me if I go too far on this. But the way that we've set that arrangement up is you're absolutely right. We wanted to make sure that if we 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 certainly 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 partner in this space. I think that arrangement feels like it's been working quite well. We will see with that HSBC Life UK book.

Speaker #2: But the way that we've set that arrangement up is, you're absolutely right—we wanted to make sure that if we grew the business further, we'd get a benefit from scale.

Speaker #2: But also that SS&C would make more money as well. And I think we've certainly been party to arrangements in the past where, if you don't have that win-win scenario, you don't get the investment and support from your partner in this space.

Steve Murray: I think we've certainly 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 partner in this space. I think that arrangement feels like it's been working quite well. We will see with that HSBC Life UK book.

Speaker #2: And I think that arrangement feels like it's been working quite well. We're starting to see we will see with our HSBC Life UK book now, Chesnara Life coming on, we get into the sort of next tier of sort of efficiency in rate cards and things like that.

Steve Murray: Chesnara Life coming on, we get into the sort of next tier of sort of efficiency in rate cards and things like that. That will sort of open up that operational leverage that you talk about. Look, obviously, if we then bring other books in as well, we'll get that sort of compounding benefit. 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 and integration. We've got a sort of busy pipeline, obviously, particularly with that very large migration happening this year. But there are still further books to pull onto the platform. We're pleased with that relationship.

Speaker #2: So that will sort of open up that operational leverage that you talk about. And look, obviously, if we then bring other books in as well, we'll get that sort of compounding benefit.

Speaker #2: One of the benefits that we continue to get is working alongside SS&C on acquisitions. So the more work that they can be doing with us upfront, it gives us more confidence, both in terms of the pricing of the deal but also the timelines for migration and integration.

Steve Murray: 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 and integration. We've got a sort of busy pipeline, obviously, particularly with that very large migration happening this year. But there are still further books to pull onto the platform. We're pleased with that relationship.

Speaker #2: And we've got a sort of busy pipeline, obviously, particularly with that very large migration happening this year. But there are still further books to pull onto the platform.

Speaker #2: So we're pleased with that relationship. They've really liked to support us elsewhere across the group. 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." And I'm sure they'll continue to provide as strong support through the second half of the year.

Steve Murray: They'd really like to support us elsewhere across the group. 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 sure they'll continue to provide us strong support through the H2 of the year. Well, I think that's all for just now. Thank you everybody for joining our half year results presentation. We appreciate you attending and thanks for the questions in the room. We hope you have a great rest of the day, and we will see you, if not before, at the full year results presentation in March 2027. Thanks very much.

Speaker #2: Well, I think that's all for just now. So, thank you, everybody, for joining our half-year results presentation. We appreciate you attending, and thanks for the questions in the room.

Steve Murray: Well, I think that's all for just now. Thank you everybody for joining our half year results presentation. We appreciate you attending and thanks for the questions in the room. We hope you have a great rest of the day, and we will see you, if not before, at the full year results presentation in March 2027. Thanks very much.

Speaker #2: We hope you have a great rest of the day, and we will see you, if not before, at the full-year results presentation in March 2027.

Browse all earnings call transcripts

Half Year 2026 Chesnara PLC Earnings Call

Request TrialDemo

Chesnara PLC

Earnings