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Thank you for standing by, and welcome to the Prudential plc 2025 full year results Q&A audio webcast call. At this time, all participants are in listen only mode. If you wish to ask a question, please press star one on your telephone. I will now hand over to Patrick Bowes. Please go ahead.

Good afternoon, good morning, good evening, everyone. Welcome to Prudential plc's 2025 results analyst and investor call. Before I turn over to Anil Wadhwani, our CEO, and then Ben Bulmer, our CFO, a couple of housekeeping points. A recording of today's call will be available from Tuesday next week. Our full results package is available on our website, and I refer you to the disclaimers and safe harbor wordings in these documents, and they also apply to this call. Anil and Ben will start the call with opening remarks, followed by a Q&A. Also on the call today are Angel Ng, Dennis Tan, Rajeev Mittal, and Naveen Tahilyani. Now let me pass over to Anil, our CEO, to start us off.

Thank you, Patrick. Good morning, good afternoon, and good evening, everyone, and thank you for joining us today. I would like to begin by expressing my sincere thanks to our retiring Chair, Shriti Vadera. Shriti has successfully led the board through a period of significant change for Prudential through economic and political turmoil, and of course, the challenges of the COVID period. She has been a staunch supporter of the management team throughout our transformation journey. I'm very grateful for her leadership of the board and her counsel to me, and I wish her all the very best in her future endeavors. I'm also delighted to welcome Sir Douglas Flint as our incoming Chair, who will take up the role at the conclusion of the AGM.

Douglas has experience of financial services and strong knowledge of the markets we operate in, and I am looking forward to working closely with him. Turning to our 2025 full-year results. I'm very pleased with the high-quality double-digit growth across our key financial metrics delivered in line with guidance and the increased returns for shareholders. This performance reflects the strength of our multi-market, multi-channel business model and disciplined execution of our strategy with a continued focus on writing high-quality new business. Both new business profit and adjusted operating profit after tax per share grew 12%, while gross OFSG and dividend per share were both up 15%. Importantly, we consistently delivered double-digit growth in new business profit in every quarter of 2025. We also successfully completed the IPO of our Indian asset management company and increased our holding in our Malaysian conventional business to 70%.

We continue to demonstrate disciplined capital management and a clear focus on shareholder value, and we now expect to return over $7 billion of capital to our shareholders between 2024 and 2027. Turning to our strategic transformation. We are now three years into our five-year plan and have delivered 18% CAGR in new business profit growth from 2022-2025. We continue to strengthen our capabilities and operational execution to deliver consistent and ongoing quality new business and cash generation. First, we are executing with focus across our distribution, strengthening our agency channel while sustaining strong momentum in bancassurance. Agency is our largest channel, and building and growing a high-quality professional and advisory-led agency force at Prudential scale requires sustained commitment and disciplined execution.

Productivity, measured as new business profit per active agent, improved by 15% in 2022, which I am very pleased with. This has been supported by continued strengthening of our million-dollar roundtable or MDRT pipeline. At the same time, we see further opportunity to increase the number of active agents, specifically in emerging markets in ASEAN, through quality recruitment, segment-specific propositions, and supporting agent activity through technology enablement. Turning to bancassurance, Prudential has a leading bancassurance franchise in Asia. The channel delivered an outstanding year with new business profit crossing a $1 billion mark, representing around 95% of the lower end of its 2027 new business profit objective.

Second, we continue to enhance the quality of new business by deepening customer engagement and improving experience across all touch points, unlocking synergies with our in-house manager, Eastspring, and building on our strengths in health to extend further into protection. Third, we are driving efficient growth by modernizing our technology as well as embedding analytics and AI across agency health and operations to better support our agency force and deliver simpler, better experiences for customers. Finally, we have continued to make good progress in reducing core business related variances, supporting the quality and sustainability of our capital generation. As a result, gross OFSG increased by 15%, marking an important inflection point on the path to meeting our 2027 OFSG objective. While the microenvironment remains volatile, our presence across Asia and Africa gives us access to significant structural growth opportunities.

The strength and resilience of our multi-market, multi-channel model allows us to deliver consistent, high-quality growth and generate sustainable shareholder returns. We will carry the momentum we set for ourselves in 2025 into 2026, and we firmly remain on track to achieve our 2027 financial objectives. Now, I'll hand it over to Ben, our CFO, to walk through our financial highlights.

Thanks, Anil, and hello, everyone. In 2025, we delivered on our guidance, double-digit growth across our key financial KPIs, demonstrating the strength of our diversified multi-channel and multi-market business model. We intend to build on this momentum as we work towards and beyond our 2027 objective year. With higher NBP, further growth in our in-force and asset management result, flat central costs, and the benefits of our strategic and capital actions, we increased our 2025 return on embedded value to 15%. We continue to see scope to improve this as we progress towards our 2027 financial objective, driven by further NBP growth, a return to positive operating variances, and ongoing disciplined capital management. We also reached the inflection point in our capital generation trajectory, with gross OFSG up 15% year-over-year, while our net OFSG is up 22%.

The group's capital position remains highly robust. Our free surplus ratio ended the year at 221% or 204%, excluding the IPO net proceeds, broadly consistent with the 175%-200% normal operating range we've set out. We were pleased that our financial strength and flexibility was recognized by S&P with its upgrade of our financial strength rating to AA. We updated our capital allocation framework in August last year. We gave guidance of greater than 10% dividend per share growth each year from 2025-2027. The 2025 dividend per share increased 15%.

We also announced that shareholders will benefit from additional capital returns over and above the ordinary dividend, starting with $500 million this year and a further return of $600 million expected in 2027. This framework is intended to be enduring, and we thus intend for further additional capital returns in 2028 and beyond. Capital above our established 175%-200% operating range will be assessed regularly and, if deemed excess, returned to shareholders. We plan to return all of the $1.4 billion net proceeds from the IPO process to shareholders to be split half this year, half next year. In January, we launched a $1.2 billion buyback to be completed by the end of 2026 and expect to return a further $1.3 billion in 2027.

We're delivering growth in value and what we believe is a highly attractive returns proposition. We remain focused on growing quality new business with strong underlying capital generation. New business profit grew 12%, and the addition to 2027 capital emergence increased by 16%. The NBP margin expanded 2 percentage points to 42%. Further improvements in our agency performance and increasing the proportion of health and protection business continue to provide opportunities to improve margins over the medium term. The management of our in-force book continues to improve, reflecting actions taken in strengthening our health claims management. We are also benefiting from economies of scale, with total costs growing more slowly than revenues. This positive leverage will allow us to continue to invest in our business on a normal course basis.

We intend, as we've said, to largely complete our capability investment program in 2026 with an investment of between $300 million and $350 million, and we are very confident of returning to positive variances by 2027. In summary, we delivered improving financial performance in 2025 with double-digit growth across our key financial KPIs, consistent with our guidance. The consistency of our operating performance also improved. While there's work to do, we were pleased to deliver double-digit NBP growth in every quarter of 2025. For 2026, we are again guiding to double-digit growth across our key financial KPIs, and we remain very confident in achieving our 2027 financial objectives. With that, I'll pass back to Patrick.

Thank you, Ben and Anil. I'll now hand over to our conference call operator, Jake, who will provide instructions and then open the lines for questions. Please remember to give your name and organization you represent when asking a question, and you're also welcome to submit your questions online. Over to you, Jake.

Thank you. To ask a question, please press star one on your telephone keypad. You will hear a tone to confirm that you are in the queue. If you wish to withdraw your question, you may do so by pressing star two to cancel. Our first caller is Thomas Wang from Goldman Sachs. Your line is now unmuted. Please go ahead.

Thank you. It's Thomas here from Goldman Sachs. Thank you for the opportunity to ask a question. If I can kind of start with a kind of broad question on growth. There's a few kind of surprises I think on this set of numbers. I think China definitely, I remember in the first half our guidance was kind of high single digit NBP growth, but we ended up with something close to 30%. Very strong in second half. I'm just wondering what you see in terms of outlook for 2026. Do you think that we can maintain this momentum into 2026? Secondly, maybe on Hong Kong.

Slightly slower growth in the second half, maybe not surprising, but just want to get your thought on 2026 momentum and how do you see kind of the base effect, how challenging is that? How confident we are getting back kind of to a double-digit or potentially even mid-teen growth in Hong Kong. If I can just sort of related to this, I think the 2025 growth was mainly driven by bancassurance agency channel was just about 4%. I think that's probably tied to Hong Kong as well. Just wondering, can you give a little bit more color on what initiatives to drive that agency growth in 2026? Thank you.

Thanks, Thomas, for those questions. I guess there are three questions, so just bear with me because I guess it's gonna be a slightly long answer as I try to address each one of them. Firstly let me start with the broader outlook. We clearly were pleased with the 2025 outcomes. I thought it was a landmark year for Prudential. Our new business profit grew at 12%. Importantly, it was an inflection point for OFSG that grew at 15%. Our transformation execution is getting sharper as well as clearly our model is underpinned by multi-market and multi-channel. That gives us the confidence to take the momentum that we set for ourselves in 2025-2026.

As Ben mentioned in his opening comments that we are guiding to delivering double-digit growth across our financial metrics for 2026 as well. Now, specifically coming to China. Clearly pleased with the 27% growth on new business profit that we delivered in Mainland China. Specifically pleased with the improved trajectory and momentum that we saw in the second half of last year where both bancassurance and importantly agency delivered strong double-digit growth. At the same time, as you know, Thomas, we have been working very hard to retooling our business and driving quality growth underpinned with strong risk discipline processes. You're starting to now see the evidence of that growth come through. We were also delighted with the fact that our par mix is touched to 40%.

It was close to 15% in the prior year. That's a step in the right direction. That underpins as to how we are managing quality growth with strong risk discipline. I'm not gonna give you market-specific guidance. As I said, the guidance overall is double-digit, and clearly China is gonna play a key part in helping us drive that double-digit performance in 2026. Let me shift gears and talk a little bit about Hong Kong. Firstly, just stepping back. I really like the shape of our Hong Kong business. We grew both mainland Chinese visitor segment and domestic segment, and both our channels, bancassurance and agency grew too.

Our focus at all times has been quality, which was illustrated by the 2 percentage points improvement in margin and our new business profit for full year 2025 grew by 12%. Now, as you pointed out, second half was a bit of an unusual period for us in Hong Kong, given the fact that we were embracing a slew of regulatory changes specifically targeted towards the broker channel. For example, the referral fee cap, the spreading of commission, also the changes that came through on illustration gaps, led to the growth coming in in short term products, largely through the broker channel. Now for us, the focus has been quality new business that generates cash at an accelerated pace. Let me give you a couple of proof points in that.

One, 95% of our business in Hong Kong were in tenures greater than five years, as opposed to an industry average of approximately 40%. We have leadership in Hong Kong on the critical illness business. In quarter three of last year, we established leading position on the health business. Importantly, our Hong Kong renewal premium growth was 15% year-on-year. Our primary channels continued to be agency as well as bancassurance for obvious reasons, because we have a greater influence both on customer experience as well as a higher degree of influence on product mix. Importantly, our agency growth in terms of new recruitment was again greater than 5,000, with our active agent growth in Hong Kong growing at 12% for 2025.

We continue to see demand, both across domestic as well as mainland Chinese visitor segment. Be it in legacy planning products, multi-currency products, as well as health and protection. A combination of these factors gives us the confidence that we will grow our agency, as well as our Hong Kong business in 2020, 2026. Now, to your third question on specifically on agency. Clearly, we are not as pleased with the agency growth as we are with bancassurance. Remember, we are a multi-channel, multi-market growth engine model. Bancassurance has done exceedingly well for us. Our agency clearly came in below expectation. Now, let me step back and just explain and give you a little bit of color in terms of what's going on in our agency channel.

If you look at our three-year growth between 2022-2025, we've delivered a growth of 18% CAGR over the last three years. This has been predicated on the back of a 19% growth in agency and a 12% growth in bancassurance. As I said, I like the complementing nature of agency and bancassurance. There have been years where agency has performed better than bancassurance, and there have been years where bancassurance has performed better than agency. Agency transformation is our number one priority. I'll have Naveen, who heads agency as well as some of our ASEAN markets give you a little bit of color. Let me preface it with a few points. Firstly, there are two specific measures that we are pressing forward on agency.

First is productivity, as is measured by new business profit per active agent. I'm very pleased with the growth that we witnessed last year. It was up 15%. It helped us offset the decline of 11% on active agents. Our active agents was largely impacted by the emerging ASEAN markets of Vietnam, Philippines, Malaysia, and Indonesia. If you go under the hood and look at what the driver of that was, it was largely the new recruitment in these four markets. I'm gonna stop there, and I'm going to have Naveen articulate as to what are we doing about it specifically and illustrate that with a specific example in terms of how we are implementing some of the steps to change the momentum on agency. Yeah. Naveen.

Thank you. Thank you, Anil. First and foremost, over the last few months, as I've had a chance to spend time with our top agents and leaders on the ground, I'm very convinced that we have some very high quality, top-notch professionals working with us, and our agency quality is right up there in these markets. Second, when I look at the different initiatives in our agency strategy, I am fully aligned, and I think we cover all the bases in terms of both the aspects that Anil mentioned, improving the top-tier productivity, as well as looking to enhance the activation and recruitment. Now, the top-tier productivity initiative is already working well. Anil already shared the data points over there.

As far as enhancing activation through quality recruitment, we are focused on creating professional recruitment schemes which work on the right capability building for the leaders as well as agents, supporting them with the right technology and the right propositions. One such example is PRUVenture in Malaysia, where this scheme has scaled up in the second half of last year. For all of last year, this scheme accounted for about a quarter of our incoming class of recruits in Malaysia. What is very interesting to see and very encouraging to see is the fact that the retention as well as the productivity of this incoming class through PRUVenture is significantly higher than those coming through other schemes. For example, particularly on productivity, the productivity of these agents is six times that of the non-PRUVenture recruits.

Our focus right now is to take such professional recruitment schemes with discipline to other markets and make sure we can use that to scale up our recruitment as well as our activation. That's what we are doing. Anil, back to you with that.

Thanks. Thanks, Naveen. Just in closing, Thomas, building and scaling a high-quality professional agency force in Asia, and that also of a size of Prudential, does require consistent commitment and focus and execution. We are absolutely confident and focused on driving the transformation on agency.

Thank you. Okay, next question, Jake.

Thank you. Our next caller is Farooq Hanif from JPMorgan. Your line is now unmuted. Please go ahead.

Hi there. Thanks very much. Just on the point of agency, can you just explain why you don't just use PRUVenture entirely for recruitment? Then can you also talk about the technology arms race, in terms of the digital tools you're giving your agents? My sense was that, and I might be wrong, but you were kind of behind. You've come along, you've invested. Do you feel like you're in line or better than your top competitors when it comes to that kind of technology? Second question is, understanding kind of the remittances. The capital position of your sub seems strong. You've remitted quite a lot of capital.

Can you just talk about why you've remitted so much capital to the holding, given your previous comments that you prefer to keep this, you know, as much capital in the subs, to earn a higher return? What's the outlook here, and how will that impact your investment margin, going forward? My last question is, will underlying variances, so that's obviously excluding the capability investment, will they reach an inflection point in 2026? I mean, they may turn positive or slightly positive, but what can we model in for that, and how does that differ between sort of free surplus and IFRS? Thank you.

Thanks. Thanks, Farooq, and thanks for this question. Let me first take the PRUVenture one, and I'll again have Naveen provide you some greater insights and greater color. I will go to Ben on the remittances and the variances question. First, we have seen great success on PRUVenture, for example, in a market like Hong Kong. The success is what really drove us to now rolling that out in some of the other markets. Again, Naveen has illustrated in terms of the early impact of that witnessed in Malaysia. Our ambition now is to kinda roll that out at a brisk pace across the different markets of ASEAN. I'm gonna stop there and ask Naveen to provide you a greater color, both on the extension of PRUVenture as well as the technology enablement.

Thanks, Anil, and Farooq, thanks for the question. PRUVenture as I said, is a scheme which is about encouraging professional recruitment, both at the leader level as well as at the agent level. To build on the example that Anil already shared of Hong Kong, where this scheme has kind of scaled up over the last year, the increase in number of PRUVenture recruits was 43%, and 2/5 of the incoming class was actually from PRUVenture. Hong Kong is an example of a market where we have successfully scaled up PRUVenture, and of course, we'll continue with these efforts in this particular market. I already illustrated Malaysia, which scaled up in the second half of last year, and we will have the impact of PRUVenture through all of this year in Malaysia.

Exactly as you mentioned, our effort right now is with some customization to take this scheme to the other emerging markets of ASEAN, particularly Indonesia, Philippines, Vietnam, whereas Anil said we've been kind of looking to improve our recruitment and hence our activation. Now, each one of these markets requires a little bit of customization, a little bit of change to the scheme, and we've kind of done that, and we are looking to implement that with discipline as we move forward. That's on PRUVenture and professional recruitment. On technology, we think of technology and agency in two loops. One loop is how do we improve the agent productivity as they think about interaction with their customers. This is about lead management, prospecting, sales, service, and claims management.

The second one is how does an agent and a leader improve their own productivity in terms of realizing what their compensation is, what their action should be, and how do they think about, you know, improving their income? Those are the two loops in which we think about technology and agency. My assessment of where we are today in terms of that technology capability, we are right up there with the best in the market. We have a proprietary platform called PRUForce, you may have heard of this name before, which is now rolled out to all the markets, and we are looking to continuously enhance the capabilities in PRUForce. But as of today, we are pretty good right up there on both of these aspects.

What we are doing now is actually injecting a healthy dose of AI into this in a very practical, targeted manner on both of these value loops, the customer value loop as well as the agent and the leader value loop. An example of that which I want to share is PRUAction, which was pioneered in Singapore last year. This was an AI-enabled performance management system for our agents and leaders to improve their productivity. As we went through this, we saw an increase in productivity of about 15%, which is quite strong, and we are now looking to take PRUAction to all the markets that we have, as far as agency is concerned. That's where the technology focuses, and we'll continue to get better and improve as we move forward.

Thanks, Naveen. Moving to Ben, for the next two questions on remittances and the variances.

Yeah. Thanks, Anil. Hi, Farooq. On remittances, look, I continue to guide you to the 70% ratio in terms of the remittance rate for LBU net surplus generation. You're right. I elected to bring up some stock this year from the Hong Kong business. I do like having a balance of surplus in both centrally and in the businesses. I've said that before. We like to have agility locally. We have stakeholders to manage. That said, I'm not going to leave excess capital in businesses. I will bring that up to center. You're right. It did have a temporal impact on the net investment return in the IFRS result, along with the effects of some China de-risking that we did. Similarly, when you think about earnings, we have a lower sort of central net investment return number as a result of completing that $2 billion stock buyback.

In terms of the underlying variances, I'm pleased with the progress we're making. I think, you know, they're materially improved year-on-year. Now really if you remove the investment in capabilities are fairly close to being neutral. I'm very confident that we're gonna return to those historic pre-COVID norms of positive operating variances within our objective period. Of course, you know, we're a bigger business now than we were. We're very much focused on continuing to drive underwriting profitability. I think you've seen evidence of that, and investing in our capabilities to drive growth and scale. Ultimately this is about operating leverage, and I'm pleased to see renewal premiums up double-digit once again last year.

We will continue to focus on cost containment, to also improve with that operating leverage, and that gives us the headroom to then continue to reinvest in the business on a business as usual basis, going forwards. I think you asked about differences between IFRS and TEV. There are some differences in geography, of course, between sort of, you know, VFA and GMM. The key thing to bear in mind there is that about 2/3 of our investment in capabilities are sat in the CSM unlocking number, as opposed to that variance line. Yeah, very confident we're gonna continue to drive very strong variance performance.

Thank you, Ben. Okay. Next question please, Jake.

Thank you. Our next caller is Michael Chang from CGS-CIMB. Your line is now unmuted. Please go ahead.

Hi, thanks a lot. It's Michael Chang here. Can I just check you can hear me?

Hey, Michael?

We can hear you, Michael. Loud and clear.

Okay. Sure. All right. Okay, thanks. Yeah, I really like the results, especially in relation to the Mainland China business. I think it's very impressive what the business has done, especially on the bancassurance front. Could I just get some more clarity? I understand that CITIC has been a great partner as well as SCB, and I think they contribute, if I'm not wrong, 2/3 of the APE. It seems that a lot of investors within the China space right now for the insurers, they are quite focused on this wave of maturing time deposits, which the bancassurance is best placed to capture.

Could I maybe get some color on any initiatives you have in terms of further deepening the relationship with CITIC in terms of maybe more branches as well as with Standard Chartered coupled with any new initiatives in terms of new bancassurance partners? That's the first one, and I think the second one is primarily in relation to the Asia market. I think one of the key structural themes, even more so post the pandemic, has been the very strong demand for wealth management solutions. In the case of the insurers, there's some of your peers who are making the point that maybe third-party channels is a good way to tap this opportunity.

Now, I know that Prudential is extremely strong in the agent channel and the bancassurance channel, but maybe you can just shed some light on your thoughts about using third party channels to tap this work management opportunity and why have you chosen to actually be relatively underweight versus your peers on this front. Thanks a lot.

Thanks, Michael. Let me start with China and I'll go to Angel, who can probably give you a little bit more color on how we are thinking about the China growth and specifically to your point on deposits and the deposits maturity. Because you're right in pointing out that the Chinese economy continues to be a very high savings economy, which in many ways, given the low interest rate environment, speaks to, you know, some of the solutions that we can bring to our customers. I do want to start by saying that, you know, clearly bancassurance has been a key driver of growth for us in China. It's heartening to see that we are now seeing significant traction from CITIC Bank.

This is on account of the focus that Angel has brought in terms of ensuring that there is a segment of branches that are exclusively dedicated to selling CITIC-Prudential Life insurance policies. That has made a dramatic difference in terms of CITIC's contribution to the overall bancassurance sales and the overall sales in Mainland China as compared to some of the previous years. I think interesting to note, our margins on bancassurance are pretty healthy in China, and that again underscores the point that I made earlier to Thomas' question that that is underpinned by the focus on quality and how we would like to grow our new business profit in China. I'm gonna stop there, and turn to Angel to specifically answer your time deposit question.

Thank you, Anil. Thank you for the questions, Michael. You are correct, you know, that Standard Chartered and CITIC both are our strategic bank partner, which are also delivering very good growth rate in 2025. Especially on your questions on CITIC Bank, we've launched the preferred branch model last year with the first 50 branches. Basically is to aim for increasing our wallet share in those branches by giving them dedicated resources like insurance specialists to help the relationship managers to sell the products better. That yield very good results. Into 2026, we are aiming to increase the number from 50 to 100, so basically doubling the number of preferred branch under this model.

The other one, you know, that we are working on is to increase and diversified, you know, our partnership, you know, in the bancassurance channel. We are going to focus, you know, to work on the top ten partners, you know, in the bancassurance channel, so that, you know, we can also repeat, you know, what we have turned out in the CITIC preferred branch model business. The last point that I want to talk about is your point on deposit maturity. We are working very closely with all of our bank partners to capture these opportunities. Especially, we are going into a deeper collaboration with the private bank segments of our bank partners with greater engagement with the high net worth customer, which will increase our average ticket size.

I think these will give us a very solid plan going into 2026 to deliver our business target. Getting back to you, Anil.

Thanks, Angel. Michael, getting on to your next question on wealth management brokers. You know, are we planning to do more there? The short answer is yes. While, you know, our primary channels continue to be agency and bancassurance, for reasons that I articulated earlier, absolutely, we are engaged on a very active basis, which is where we are seeing the greater kind of attraction for wealth management offering. You will see more innovative solutions coming from us in that space. Mind you, one of our key differentiators, and I want to bring this point back, is the complementing nature of bancassurance to agency.

Bancassurance has done well because it continues to attract a certain level of flows from emerging affluent customers as well as high net worth customers. That continues to be a great source for us to engage customers through our preferred or strategic bank relationship partners. Some of them, as Angel mentioned, are not only limited to China, but to the broader Asia and Africa landscape.

Okay. Thank you, Anil. Let's go to the next question, please, Jake.

Thank you. Our next caller is Andrew Crean from Autonomous Research. Your line is now open. Please go ahead.

Hello, everyone. Three sort of numbers based questions. Firstly, you've given on bancassurance that you're 95% of the way to your, the lower end of your target. Could you give the same percentage for agency? Secondly, agency active numbers at 57,000. You were targeting 80,000-90,000 by 2027. Where do you actually think you're going to land on that? Then thirdly, you talked about improving new business profit margins in the medium term from the current 42%. Could you be a bit more specific as to what medium term is and where 42% can go to?

Thanks for those questions, Andrew. So you're right that bancassurance is at 95%, so that allows us a significant level of headroom close to two years in advance of the goal or the objective that we had set for bancassurance. Agency on that same count is roughly about close to 2/3 of the objective that we had set for agency. That also kind of leans into your second question, which is what are we doing about active agents? Naveen was trying to articulate that. The way we are thinking about this, Andrew, is that we're gonna push both the productivity as well as active agents, right?

I don't have a kind of specific kind of mathematical, you know, formula for what I would like to kinda get to. As far as either through productivity or through active agents or a combination of that, we still kinda hit the agency number. That could be different as compared to what we had conceived three years back, but I'm still confident that we will press on both the levers of productivity and active agents to get to the agency outcome that we had set for ourselves for 2027. To your question on NBP margin, I'm going to go to Ben for him to elaborate.

Thanks, Anil. Hi, Andrew. Look, I do think we have opportunity to continue to improve margins. I'm pleased with the performance, not just last year, but the year before as well. That opportunity is fourfold really. Firstly, improving our health and protection product contribution in the mix. Secondly, accelerating agency growth, and you've heard that's a number one transformation priority. Thirdly, really it's back to this point on operating leverage and building scale, and we're seeing that scale coming back. Finally, we'll continue to look to actively reprice propositions, and you've seen activity there.

In terms of why medium-term, maybe a bit of specific guidance. We talked in China about driving a greater proportion of par business. Our margins in China have come down three points year-on-year in 2025. I expect a further reduction in 2026 as we drive a higher proportion of participating business. We're stepping back, though. I do think we continue to have ample opportunity to drive overall group margin.

Thank you, Ben. Jake, over to next one, please. I'm just conscious that we are now at quarter past, so let's make the question snappy, and we'll make the answer snappy.

Thank you. Our next caller is William Hawkins from KBW. Your line is now unmuted. Please go ahead.

Gosh, how to be snappy. Thank you. Could you talk a bit more about some of the non-Chinese markets, please? Anil, your outlook for Indonesia, Singapore, and Malaysia. I mean, are these proportionate contributors to double-digit growth or tailwinds or headwinds? Secondly, please, there's a 20% increase in required capital for the surplus ratio, I think. That feels sort of slightly outsized to your guidance that it should grow roughly in line with new business profit over time. I've got in mind that it should be more like a sort of something over 10% growth in the future. Can you explain, if I'm right, why was there an outsized growth in required capital? And what's the outlook for that metric in the surplus ratio? I'll leave it at that. Thank you.

Thanks, Wills. Let me start with Singapore, Indonesia, and Malaysia. We obviously are looking for all the ASEAN markets to contribute. On Singapore, let me give you some texture. Clearly very strong momentum on sales. In the second half of last year, the sales grew by 19%. The challenge that we had in Singapore was more around product mix, which was skewed more towards savings and wealth, as well as the demand coming from the government-sponsored medical plan, which is known as Shield, got calibrated because of changes in the co-payment rules.

On account of the steps that we are taking, as well as the strengths that we have in Singapore, both in terms of the 1.5 million customer relationships, as well as the distinct strengths across bancassurance, tied agency, and financial advisory channel. We believe that we can grow Singapore to high single-digit on new business profit, if not early double-digit. Indonesia, very pleased, 11% growth on new business profit. Mind you, this is the second year that we've been able to deliver new business profit growth in Indonesia, which is what we had struggled to do that in the prior years running up to COVID and even coming out of COVID. Pleased with that.

It also tells you that we are in a much better position to be able to address some of the challenges on medical inflation, as well as we distinctly see an opportunity, to Naveen's point, in terms of improving our agency momentum. I believe that Indonesia will continue to be double-digit growth. Malaysia, again, was a struggle for us in the first half of last year, but did exceedingly well in the second half of last year. Again, it talks to some of the steps that we took on PRUVenture and how we are retooling our agency. We are seeing that momentum carry forward into 2026 and remain optimistic that Malaysia will come back to deliver double-digit growth as opposed to the 5% new business profit growth it delivered in 2025. I'm gonna go to Ben on your second question.

Yeah. Thanks, Anil. Hi. Hi, Will. The simple answer is it was down to non-operating effects. We had very strong equity market performance in a number of our markets where the local regulatory basis uses economic capital models and also has, as it happens, countercyclical equity risk adjustments. In periods where you have very strong equity performance the risk adjustment increases, required capital grows. Of course, your available surplus also grows. When we look at the free surplus ratio, we take that required capital number over. Of course, we truncate available surplus of what's actually fungible. Really it was down to outsize equity performance in a few markets. Going forward, when you think about modeling required capital, I would guide you again to low double-digit growth rates. Have 12%-13% in mind.

Okay. Thank you, Ben. Okay, Jake, next question, please.

Thank you. Our next caller is Kailesh Mistry from Deutsche Bank.

Oh, hi. Good afternoon. A few questions from me. On numbers, just on China CPL, could you just give us the core and comprehensive solvency ratio post the bond in January? Second one, there's something about a slightly lower CSM release rate in 2026. You know, how much does that go down? Does it go down below 9% or does it stay above? Or alternatively, you can give us the release rates for Indonesia and China, which seems to be driving that. And then thirdly, just on agency, could you just give a little bit more color about this comment in the statement about revamping agency compensation? Are you changing the incentives or is it purely about increasing commissions to make it more attractive, et cetera, et cetera? Thank you.

Thanks, Kailesh. I'm gonna go quickly to Ben for the first two and then Naveen for the agency question.

Thanks. Hi. Hi, Kailesh. If you pro forma for that recent perpetual debt issuance, the business is operating at 3x and 2.3x regulatory minimum levels. More specifically, core is at 150% comprehensive, around 234%. You know, as I've mentioned before, we've increased our sources of local financing. Later in the first half of this year, the business will recapture some existing sub-debt and replace that with perpetual debt, and that will give a further solvency uplift. In terms of your question on IFRS, actually at a group level, you know, the release rate is gonna be marginally lower. You know, in the sort of late 9.4s rather than 9.5s.

Okay. Thank you, Ben. We're over to Naveen.

Great.

On the question on agency compensation, this is a structured initiative as a core pillar of our agency transformation to encourage the two behaviors that Anil already mentioned. One was improving top-tier productivity, and the second one was to enhance quality recruitment. What we have done through last year and this year so far is actually piloted this in a number of markets and put these structured initiatives now in place. In fact, we had pre-tested this with a large number of our agents and leaders. In the pre-testing, it was very well received. Now in the markets where we have actually rolled it out, it's also very well received and the implementation has been quite smooth. This is targeted to both agents as well as their leaders who actually recruit them.

As I said earlier, it's totally aligned to our transformation objectives.

Thanks, Naveen.

Okay, next question, please, Jake.

Thank you. Our next caller is Changazi from Kepler Cheuvreux. Your line is now unmuted. Please go ahead.

Hello. Thank you. It's Fahad Changazi from Kepler Cheuvreux. Thank you for taking my question. Just very briefly on this PRUVenture, which sound very interesting. In terms of what happened in Hong Kong, 2/5 or 2/5 of recruitment, new recruitment came from PRUVenture. What was the number of agents in 2024 and 2025 in Hong Kong? And on the OFSG, just two questions. We have the usual slide where we're looking for 2026 new business profit contributing +$0.5 billion to 2027 OFSG. Can I just— Is that assuming some sort of a mixed shift which accelerates conversion OFSG or is just normal new business profit growth?

The last point on the operating variance, I know Ben mentioned, you know, just positive returning to historic, positive levels. Previously, and you're a bigger company. Previously, you used to give that, chart where it was 0.9% of opening EV from 2011 to H1 2024. In 2024, it was 1.4% of opening EV. Is there any reason not to assume it will be 8% of opening EV, and where should we be landing on that percentage? Thank you.

Thanks. Thanks for the question. Let me go to Naveen to the Hong Kong PRUVenture, and then we'll go to Ben for the two questions on financials.

Sure. On Hong Kong PRUVenture, as I said, PRUVenture is fundamentally a high-quality professional recruitment scheme in Hong Kong. Very pleased to share that last year, which is in 2025 compared to 2024, PRUVenture scaled up by 43%. And 40% of the incoming class of recruits was through PRUVenture. That's where we are on Hong Kong, and I already covered Malaysia. And as I said, we will now be looking to roll this out with the right customizations to other markets.

Thanks, Naveen. Let's go to Ben on the two financials.

On the OFSG production projection slide, I think you're referring to slide 43 on the top right, A, the new business additions. That is the normal profit signature that you're seeing there. We design our products to be very capital efficient. It's about capital velocity for us. We're writing business with a fast monetization profile and short payback period. You know, put simply, the cost of writing the business, whether that's distribution, underwriting, admin, capital requirements or so on, comes through in year one. Then we try to recoup some of those costs through the collection of second-year premiums to match revenue to costs as closely as possible. That's why you have a jump there in the release, and thereafter it's more of a levelized pattern.

I'll be brief on variances. You should have in mind north of $200 million in 2027. As I said, we're now a bigger business. We're very much focused on driving scale and cost containment.

Okay. Thanks, Ben. Conscious time runs on. Dominic, do you want to go next? Jake, could you let Dominic in, please?

Thank you. Our next caller is Dominic O'Mahony from BNP Paribas Exane. Your line is now unmuted. Please go ahead.

Thanks for taking questions and for squeezing me in. I will try to be quick. Three, if that's okay. One is just on your IRRs, greater than 25% is a great number. How does that compare between banker and agency? My guess is that banker is lower, but tell me if that's wrong. The second question is just on the shape of new business, surplus emergence, really following up on Fahad's question. Are you expecting any further change in the shape? It's accelerated in 2025. Should we expect further acceleration in the shape of emergence beyond this? Then the last question on variances. Very clear, and thank you, Ben, for the explicit guidance on the variances in 2027.

If you're already growing, frankly at a very decent clip, I would have thought that you would have already got to the stage where you're getting the benefit of that operating leverage coming through in the variances. Which says to me there must be some relatively substantial negatives coming through still in 2025, offsetting that to get to your -$45 million. What are these? You know, what are the sorts of things that are acting against that? Thank you.

Ben, you want to take that?

Yeah. Thanks. Hi, Dom. Look, I'll start. I'll do it in reverse order if that's okay. In terms of variances, without repeating my earlier comments, you know, the sort of residual negative you're now seeing is a mixture of scale coming back. We continue to, if you like, incubate some of our smaller businesses, so Cambodia, Laos, Myanmar, Africa, for example. Scale is building nicely, as renewal premiums compound. We have further actions in train to drive cost containment, just to give you a little bit of color. It's not simply about revenue compounding. We are focused on structural changes in the cost base through automation, digitization, tech convergence, investing in processes, using centers of scale and excellence.

All with the aim of driving lower net costs going forward. We hope to be able to deploy that leverage into reinvestment in the business. Cash profile, I'm pleased with all the improvements we made over the last few years. I know you're very aware of those as a result of repricing, so I won't repeat them here. I think we do have opportunities to continue to improve the business. We'll look for that from a repricing perspective. You know, mix more health and protection, again, accelerating agency, will all help with that cash profile. To be very clear, I'm not reliant on any change in business profile to get to 2027. You shouldn't read that being inferred into these numbers.

That's because we put the hard yards in repricing savings products a number of years back. We're not reliant on that, comfortable with the 2027 target. On your IRRs, in terms of the products sold, very similar products sold, Dom. At a product level, the IRRs by channel are actually pretty consistent. Differences in the sort of channel IRRs overall are more a factor of mix. You know, as I think you know, the agency channels tends to sell a greater proportion of health and protection. That said, one of the things that has improved our margins and our cash profiles is the success we've had driving health and protection through the bank insurance channel, improving our margins consistently year-on-year. Very pleased with that.

Yep. Thank you, Ben, for that concise answer. We've got a chance for a very last question from Nasib at UBS. Jake, if you'd let him through. We'll take a few offline. I can see a few on the list. We'll come back to them from the IR team. Nasib, if you wanna go ahead.

Thank you. Our next caller is Nasib Ahmed from UBS. Your line is now unmuted. Please go ahead.

Thanks, Patrick. Just two questions from me. Firstly, on Hong Kong market share. I was looking at Hong Kong association data. 2023, you had about 30% market share. I'm looking at agency. Now 2025, you're less than 25%. That's as a percentage of APE. Can you give more color on are you gonna grow back to greater market share in Hong Kong in dollar amounts? Then the second one is on numbers. Ben, you said investment spend is gonna be broadly done by 2026. I think if you kind of add up the numbers, you're maybe left with $150 million of the $1 billion. Are you expecting to spend less than $1 billion in 2027? Is it kind of closer to zero or 50? Thank you.

Thanks for those questions, Nasib. On Hong Kong market share, again, I want to kind of go back to the emphasis on quality growth, right? That is where our focus has been. Within that, those parameters, yes, we absolutely would like to grow our market share, and we do have plans to do that. At all times, our underpin will be quality growth as well as cash generation. Again, just to illustrate that point, we did improve margins despite the activity that we saw on different fronts in Hong Kong by two percentage points, which is a good illustration. I gave some other stats to illustrate the point as to the discipline that we are adopting in focusing on quality growth in Hong Kong.

What we are interested, Nasib, is market share of new business profit and market share of profitable growth in Hong Kong as opposed to simply driving sales, market share. As I said, broadly within the construct of quality, absolutely we'll be driving a greater level of market share. Ben, you want to take the last one?

Yeah. Hi, Nasib. So yeah, look, it's our plan to largely complete the investment in capability program in 2026. We'll be investing a further $300 million-$350 million. And this investment essentially covers, you know, foundational dimensions. I'm not expecting material amounts in 2027, and we're being very disciplined about our spend. And as I mentioned earlier on the call, you know, our focus is on driving operating leverage, and that enables ongoing investment in capability in the normal course of business beyond the target period.

Okay. Thanks, Ben, very much. Jake, I'm gonna pass back to Anil to close the call. He's just got some very closing remarks.

Thanks, Patrick, and thanks everyone. Enjoyed the questions, and hopefully, we were able to provide you a greater level of detail and insight. We have made good progress in our transformation journey, and clearly, this would not have been possible without the dedication and the hard work of our people, our agents, as well as our partners. I'm very proud to work alongside them every single day in the way we support our customers, communities, and shareholders. A few of us will be on the road, so we will get an opportunity to meet with you face-to-face and would be happy to kind of get into further details and further conversations if we haven't been able to answer some of those points.

We look forward to updating you on the first quarter business performance in early May, and as I said, look forward to seeing you when we are on the road. Thank you and goodbye.

Thank you for attending. You may now disconnect your lines.

Good morning, everybody, and thank you for joining us on today's Prudential Half Year Results 2025. My name is Drew, and I'll be the operator on today's call. [Operator Instructions] It's now my pleasure to hand over to Patrick Bowes to begin. Please go ahead when you're ready.

Thank you, Drew, and good afternoon and good morning to everyone. Welcome to Prudential plc's Half Year 2025 Results Analyst and Investor Call. Before I turn the call over to Anil, our CEO; and Ben, our CFO, a couple of housekeeping points. A recording of today's call will be available from Tuesday next week, and our full results package is available on our website. Anil and Ben will start the call with opening remarks, followed by a Q&A, as you've just heard. And just a quick word on recent developments we have shared with the market already regarding the potential listing of our shares in ICICI Prudential Asset Management Company. We published the draft prospectus on the 9th of July. However, we remain under a number of restrictions as to what we can say about this, given the next stage of the process is to undergo a series of regulatory reviews. We will provide you with further updates in due course. With that, let me pass over to Anil, our CEO, to start us off. Anil?

Thank you, Patrick. Good morning, good afternoon, and good evening, everyone. Thank you for joining us today for our 2025 first half results and capital management update. I'm very pleased with our financial performance in the first half of 2025 during which we delivered both high-quality growth and enhanced shareholder returns. We achieved double-digit growth across our key financial metrics in line with the guidance we gave earlier in the year. We have reached an inflection point in our operating free surplus generation, enabling us to update our capital management program and increase shareholder returns. This demonstrates the strength of our business model and its ability to generate sustainable cash returns. New business profit and adjusted operating profit per share both grew 12%. Gross operating free surplus generation grew 14% and dividends per share increased 13%. These results reflect strong momentum across our core markets, the sharpness of our execution and our relentless focus on writing high-quality new business, effectively managing in-force and improving our variances. I'm also very pleased that we have now settled the dividend claim in Malaysia. Having reached an inflection point in our capital generation and reflecting our confidence in the future, we have announced today a capital management update alongside an enhanced capital allocation framework, including the completion by the end of this year of our existing share repurchase program, we expect to return in total more than $5 billion to shareholders between 2024 and 2027. Any initial net proceeds from the potential IPO of the asset management business in India will be in addition to this. Ben will cover our capital management update in more detail. We are now halfway through our strategic transformation launched in August 2023 and are making good progress across our key priorities. We continue to invest to accelerate value creation across our markets, actively pursuing structural growth opportunities as well as addressing areas that need improvement. We have invested $400 million in targeted initiatives, including modernizing our technology, processes and capabilities. Through these investments, we are accelerating our platform improvements, enhancing customer engagement and driving operational effectiveness at scale. They are underpinned by an increased focus on the use of data, predictive analytics and AI across the business. We are investing to make Prudential a stronger future-ready business. While the macro environment remains volatile, we are very well positioned given our multichannel and our multi-market franchise. This is demonstrated by our broad-based new business profit growth, including 16% growth in our Hong Kong market and 34% growth in Indonesia. We have clear plans to continue to strengthen our performance, including in distribution and addressing areas of underperformance. Our multichannel distribution model is one of our greatest strengths, and we have a good balance between agency and bancassurance. Agency is our primary distribution channel, and we have one of the largest forces in the Asian insurance industry. We see significant value in further strengthening it. Our agency strategy focuses on driving high-quality profitable growth through quality recruitment, career progression towards MDRT and digital capabilities that boost both productivity and activation. Further developing our agency capabilities and accelerating our performance is a top priority for us, and we are activating bespoke change management programs in our markets. In bancassurance, the continued focus on strategic relationships and training has underpinned our strong performance with 14 markets delivering double-digit growth in new business profit. We have also recently successfully activated our new partnership with Bank Syariah Indonesia. We are also building on the foundation of our health transformation efforts to further accelerate growth in health and protection sales. These efforts will be instrumental in unlocking the next phase of sustainable, high-quality growth. Reflecting on our strategic progress and investments in the growth drivers of our business, we are confident we will carry the momentum in the second half and beyond. This keeps us firmly on track to achieve our 2027 financial objectives. Today, I'm delighted to be joined on the call by the leadership team responsible for our businesses and would now like to hand it over to Ben Bulmer, our CFO, to walk through the financial highlights. Ben?

Thanks, Anil, and hello, everyone. Our first half 2025 financial performance reflects a positive start to the year as we continue to focus on accelerating growth in value and capital generation in line with our strategy. We delivered double-digit growth across our primary financial KPIs. We're on track for our 2025 guidance, and we remain confident in achieving our 2027 financial objectives. Growth in our in-force profit and the ongoing capital return improved our return on embedded value to 15%, and there's more to come. Net of the dividend payment, embedded value per share, excluding goodwill at the end of the period was $13.24, equivalent to GBP 9.66. We've reached the inflection point in our capital generation trajectory with gross operating free surplus generation or OFSG, up 14% year-on- year. whilst our net OFSG is up 20%. As we indicated in March, we've updated our capital allocation framework, reflecting both our strong capitalization and our confidence in the strategic progress we're making, which is driving improved organic capital generation. Let me spend a couple of moments on our capital management update. Our enhanced capital allocation framework reflects a move to a total return orientation in respect of the distribution of our holding company free cash flow. We've updated our guidance for ordinary dividend per share growth rates and announced that from 2026, shareholders will also benefit from additional capital returns. This framework is intended to set a recurring and sustainable basis for returns going forward. In terms of ordinary dividends, our policy is unchanged. We've given guidance of greater than 10% dividend per share growth each year from 2025 to 2027, building on the 13% dividend per share growth in 2024. We will commence additional recurring capital returns in 2026, and we expect a buyback of $500 million in 2026 and a further return of $600 million in 2027. And as we've previously said, capital above our established 175% to 200% operating range will be assessed regularly and if deemed excess, then capital will be returned to shareholders. Lastly, we expect to complete our current $2 billion share buyback by the end of this year. Overall, this means we are planning to return to shareholders over $5 billion between 2024 and 2027, and this is before assuming any initial net proceeds of the proposed IPO of India Asset Management business. In terms of financial performance in the period, we remain focused on writing quality new business with strong underlying capital generation. Our product IRRs remain above 25%, and our shareholder payback periods are less than 4 years. The $1.3 billion in new business profit added over the period, up 12%, reflects our continued focus on quality, driven by our actions to reprice products and improve mix. The NBP margin expanded 2 percentage points to 38% compared with the first half of last year. As a result, the addition to 2027 capital emergence from first half 2025 new business increased by 27% year-on-year, much faster than APE growth during the same period. Management of our in-force book continues to improve with variances between actual and expected cash flows before investing in capabilities continuing to meaningfully reduce. Underlying this improvement are a range of ongoing actions, including repricing, enhanced claims management, cost containment and the benefits of a return to higher-margin new business growth. We expect our core operating variances to return to our historic positive levels in 2027. In summary, as a result of the financial performance and execution to date of our strategy, we remain confident in achieving our 2027 financial objectives. With that, I'll pass back to Patrick to open the Q&A.

Thank you to Ben and Anil. I'll hand over to our conference call moderator, Drew, who will provide instructions and then open the line for questions. Over to you, Drew.

[Operator Instructions] Our first question today comes from [ Michael Chang ] from CTSI.

I'd like to say congrats on a very solid set of results. I primarily have 2 questions. The first question relates to the agency business. I really like the chart on Page 10 of the slide pack because it gave an idea in terms of areas of strength as well as areas of improvement and areas of improvement typically means that you do have plans for improving those areas. So if I can just focus on maybe the 2 major markets, say, Mainland China, areas for improvement. What's the outlook on that front? Because I think it was flagged in the results release that there are a number of regulatory changes which are occurring right now. But then it would also flag that in terms of agent numbers, agent growth was actually quite strong in terms of new agency recruits, up 45%. So maybe you can elaborate a bit more on the Mainland China business. And then in terms of areas of strength, Hong Kong clearly stands out. Agency new business value growth is very solid. And in terms of agency recruitment, it's been strong for a number of years. So maybe you can shed some light on the profile of these recruits and how sustainable is the strong agent growth? Then my second question would relate to capital management. So capital management, Ben, I appreciate the detail given on the capital management framework, the buyback amount for 2026 and '27. But maybe you can shed some light on how these amounts are determined because Investors, they do focus on sustainability. They actually might like to understand if we were to project going forward because the free surplus generation, the value of in-force monetization that is all disclosed. How should we think about the framework for future buybacks? Is it something like one of your peers who buy 75% of net FSG or other considerations? And maybe also related to that, on Page 6, in that there's a chart on the total capital returns in 2026 and 2027. Does that mean that the Indian AMC IPO, should it go ahead, the capital will be returned over 2 years?

Thanks, Michael. Let me start with the agency question and I will then flip it to Ben to answer the capital management one. So firstly, at a high level, we, as you know, have a significantly strong balance between agency and bancassurance. And within that, we clearly understand that agency is an area of key focus for us given the fact that it continues to be our primary acquisition channel contributing to 55% of new business profit growth. Specifically to your question on Mainland China, we have a change management program that we have instituted in China. You rightly pointed out that our new recruits are up 45%, very much in line with the focus that we have employed on quality recruitment. And we have launched our PRUVenture program, which is our flagship quality recruitment program in China. I think we are starting to now see some early evidence of that change management program come through with our active agents up 6%. And I believe based on the measures that we are putting in, the agency channel in China will start to complement the strong bancassurance performance that we continue to see in China Mainland, and that's on account of our strong relationships, both with CITIC Bank as well as with Standard Chartered. With respect to regulatory changes, and again, this is very much in line with what we had expected. I think the regulatory changes are very much focused on ensuring greater retention of agents, ensuring that the agents have a decent source of income, which is kind of spread over a period of time. And again, this is not at -- it's pretty much in sync with what we are trying to do, which is drive quality, resulting into greater activation and greater productivity. In terms of your Hong Kong question on agency, very pleased, by the way, firstly, with the Hong Kong performance. I like the shape of our Hong Kong performance. Good balance between agency and bancassurance, good balance between domestic and MCV. And if you remember, when I got into my role 2.5 years back, I had flagged off that we would like to strengthen our performance in domestic to complement our MCV. And towards that, our active agents are up 11%. Our productivity -- NBP per active agent is up 4% and our recruitment continues to be on track to deliver greater than 4,000 new recruits in 2025. So very much like the shape of our Hong Kong business and the measures that we are taking and remain highly confident that we will carry the trajectory that we set for ourselves in first half into the second. I'm now going to flip it to Ben for the capital management question.

Yes. Thanks, Anil. Michael. So in terms of capital management, the update reflects our confidence in our business model. Really, the strength of our balance sheet and also the progress we've made in our strategy means we've reached the capital inflection point. That's enabled us to then pivot to a total return proposition. As I mentioned in my opening remarks, that's funded by sustained annual net capital generation. And you need to remember to apply the 70% remittance to the holding company. There's a few slides in my deck, Michael, that set out the building blocks to enable you to project that. But to keep things simple, we've given numerical guidance to the end of 2027. I think the important point is we provided a durable framework. Sustainability has been very important to us when thinking about this. We're a double-digit growth company, not just in value, but also in the conversion of that value to cash and capital generation. So we expect growing capital generation. The Board will regularly review the quantum and form of the additional returns to ensure that's in the best interest of all of our shareholders. And as we've said, they'll additionally review any residual capital over and above that 200% free surplus ratio. And if that's deemed excess, that too will be returned to shareholders.

Our next question today comes...

Pardon Drew, we just got one more question.

I think I missed Michael's third question, India AMC returns. So Michael, as you heard at the top of the call, we're under regulatory restrictions as to what we can say about the timing and quantum of those returns. You're right, they've been included in our slides. You should take that as indicative.

Our next question comes from Larissa Van Deventer from Barclays.

Two quick questions from my side, please. The first one on outlook and the second one on margin, which will -- which relates to the outlook. You said that you have reached an inflection point in capital generation, which gives you confidence in your ability to generate sustainable cash returns. What is the key driver of that confidence? And then also, what are the main risks to not reaching your 2027 objectives? Related to that, your margin expanded by 2.3 percentage points, but it is still over 19 percentage points lower than that of one of your key competitors. Recognizing that the geographic footprint distribution would impact the margin, but how much scope for margin improvement do you consider possible that will be derived from scale benefits, product mix, cost cutting and the like, please?

Thanks, Larissa. Let me take the first question on outlook, and then I will flip it to Ben for the margin question. So as I mentioned in my opening comments that we remain highly confident to carry the trajectory of the first half into the second. And the results that we were able to deliver in first half underscores the strength of our business model, double digit pretty much across all the matrices. Our results are obviously are driven by the relentless focus that we are employing on writing quality business as well as the focus on converting that quality business to cash. And we like the balance between bancassurance and agency. I did mention earlier that bancassurance continues to perform quite well. I am not satisfied on agency performance in a few of our markets. Hong Kong, Singapore, Indonesia, stable to growing on agency, but I think we have a potential in markets like Malaysia and Vietnam, where industry-related challenges are not only impacting Prudential, it's impacting the whole sector. And we have a very clear line of sight in terms of actions to be able to change the momentum in these couple of markets. I've already kind of spoken to the opportunity in China. And again, we have a specific change management program on agency in China that, again, I'm confident will start to show some demonstratable results. And again, a combination of this plus the investments, Larissa, that we are making in the growth drivers of our business, be it expansion of our distribution. Just to give you one example there, we are yet to fully activate the Bank Syariah Indonesia partnership. That's a significant partnership for us in a critical market. And we're just kind of getting started there, focusing on customer experience, growing our health and protection business. And that kind of gives us the confidence that not only will we be able to deliver the 2025 guidance, but it firmly keeps us on track to delivering the 2027 objectives, both on new business profit and on cash. Ben?

Thanks, Anil. So on margins, we continue to see the opportunity to improve medium term. I was pleased to see another 2 points of margin improvement come through at the half year. That's on top of the 2 points you saw last year. And in short, the way we look at this is a fourfold opportunity. Firstly, repricing, and you've seen considerable activity here. And that's benefiting the cash flows and their contribution to 2027 quite visibly. Secondly, I think to your point, operating leverage and building scale. I'm pleased in the first half of the year to see renewal premiums up 11%. And so there's a scalability in growing expense allowables coming back into the platform. And then finally, improved health contribution, health and protection contribution in the mix and an improved agency contribution. So I think plenty of opportunity medium term for us to continue an improving trajectory margins-wise.

Okay. We can go to the next question.

Our next question comes from Farooq Hanif from JPMorgan.

I'm looking at slide, which shows your capital generation converting to free cash flow. And obviously, you're not sort of giving a payout ratio guidance here. You're looking at your situation every year to work out what your recurring buyback will be. But it seems to me that you're going to have a big jump, obviously, in 2027 in your net free surplus generation because you get to your targets, you don't have investment cost anymore, which will then drive very high or a big jump in free cash flow, I'm hoping to the holdco. Does that mean in 2028, there's a potential here for a leap in what you are able to pay in your buyback? My second question is, I mean, looking overall, correct me if I'm wrong, but it looks like your active agents are sort of flattish to down, but your productivity of the agents is up a lot at 10%. Can you give us kind of a guide to where that's going, those 2 metrics in the future, but what's driving those? And then very quickly, what's driving your banca margin improvement? And is there scope for further margin improvement in banca?

Thanks for your question. I'll flip it to Ben to start with the first question on OFSG conversion, and then I'll come to active agents and banca margins, if that's all right. Ben, do you want to?

Yes. So you're right. I mean, growing capital generation translates into materially higher growing holding company free cash flow. As I mentioned in my video, that acceleration in gross OFSG between '24 and '27 means we're broadly doubling holding company free cash flow over the period. The total returns we set out are funded by sustained annual net capital generation. And we are paying out the majority of the flow. As I mentioned earlier, we've not given numbers beyond 2027, but I think provided an enduring framework and the building blocks to help get that.

Thanks, Ben. Farooq, if I may go to your question on active agents. So the way we think about growing our agency new business profit is through 2 levers, right? One is to drive active agents and the second one is to drive productivity. And you're absolutely right in pointing out that the 10% new business profit per active agent gain that we saw offset the decline that we saw in active agents. Now I did refer to some of the measures that we are putting in place to energize our active agents and specifically in the ASEAN markets like Malaysia, like Vietnam, like Philippines, I think these are large agency markets that require and have the opportunity for us to drive greater activity. Again, the focus areas are very much what we had referred to earlier, which is quality recruitment, ensuring that we are investing in our technology platform, both to drive activity and productivity as well as uptiering our agents to MDRT. We are the second largest MDRT force globally. And our MDRTs increased by 3%. So we will press both the levers, active agents. And as I said, I'm confident that the measures will start to show an improvement on active agents. But we also, on the other hand, have the productivity lever to be able to, as I said, drive both these to the goals that we have for 2027. Banca margins, again, yes, Banca again, doing very well. And in my view, Banca targets probably will be achieved well in advance of the 2027 guidance that we've given. So that, in many ways, kind of creates a little bit of a headroom and an opportunity for us. The margins were driven by a few factors: one, product mix. Second is we have referred to some of the pricing actions. So they were applicable both on agency and bancassurance. So that obviously translates to a better outcome. And then the geography mix, right? Hong Kong obviously had a bigger share or a bigger contribution in the first half. So a combination of these factors, Farooq, led to the Banca margins being higher.

Our next question comes from Nasib Ahmed from UBS.

Firstly, on the perimeter of the business, you had the exits in Africa. Is there anything more in terms of the geographies that you would like to exit in Africa or elsewhere? And then related to the perimeter, you've got the Malaysian dividend issue resolved, but you still don't own 50% of the business, roughly 50%. Is there a way to get that back onto the books and pay the third party? That's kind of around the perimeter. Second question around variances. Ben, you mentioned you want to get back to the historical positive levels. In 2020, I think it was more than USD 200 million. Is that kind of the level that we're thinking of in 2027? And then finally, on the $1 billion capability investment, you're halfway through the plan and you've only invested $400 million. I think I know you mentioned in the past, you won't -- if you don't need to, you won't spend the full $1 billion, but it seems like the run rate is a little bit lower than the $1 billion. Is that the right way of thinking about that one?

Thanks, Nasib. Why don't we take the variances question first, and then I'll come back to the perimeter question as well as the Malaysia one. Ben, you want to get us started on the...

Yes, happy to do that. So you will have seen in our results that setting aside investment in capabilities, our business as usual variances have more than halved. And as I said earlier, I'm expecting to return to that historic pre-COVID norm of positive variances within our objective period. you're broadly right in terms of your quantum. I'm confident we're going to get there. We're continuing to focus on driving underwriting profitability across the business. We're now seeing much improved claims experience, thanks to a lot of management actions. We're continuing to invest, as you know, in capabilities to drive both growth and scale. And to that end, renewal premiums are growing very strongly. And finally, we have opportunities around cost containment and operating leverage. And one example of that, if you like, is the positive jaws between net OFSG growth rates and gross OFSG growth rates because we are containing central costs, and we'll continue to do that going forward. So I think we've got plenty of opportunity -- confident we're going to get back to our historic strong positives in 2027.

Thanks, Ben. Nasib, coming to your exit in Africa, in terms of the Francophone market, yes, so that is also a good illustration of the focus that we are employing on deploying shareholder capital where we believe we have a more than fair chance to win and scale. And we did see that opportunity in the Francophone markets. The Anglophone markets are doing well. In fact, in the first half, those markets still continue to grow north of 20%. And as I've said that as the businesses evolve and get more matured in Africa, they provide us the potential to complement the growth profile of the markets and that we have in Asia. And that is something that, again, the management team is quite focused on in driving forward. To your Malaysian question, yes, so we are happy with the settlement of the claim. We will look at opportunities, but I can't speak too much to it. Needless to say, they have to be commercially viable and in the interest of shareholders. But as I said, I can't comment further on that topic.

Okay. Drew, we can go to the next question. Maybe you should just remind the audience how to send questions online in case they've got a bad connection or anything. I've got a couple of questions that have come in already, but perhaps you could just explain to people how they should submit questions online.

[Operator Instructions] Our next question comes from Dominic O'Mahony from BNP Paribas.

I've got 3, if that's all right. The first is just on new business and any impact you're seeing at all on appetite for U.S. dollar- denominated product. I had thought maybe there would be some disruption from some of the geopolitics and the currency movements. Actually, the MCV business has been very strong. Just any reflections on what you're seeing in terms of appetite. The second is, thank you for the disclosure on the 2027 contribution from the new business, the plus 27% is super strong. I wonder if you might just unpack it a little bit. It's clearly well ahead of the new business profit growth we're running forward a year, which gives you a small positive as well. But what else is going on in there? Is it that the shape of the service emergence is coming forward in time? Anything else you could do to unpack that would be great. And then the last question is just a clarification really on dividend policy specifically. You've been very clear that, that's -- it's unchanged, but maybe I misunderstood it before. If we just flow through the OFSG net of strain and central items, you have a very, very large increase through to 2027. And I think consensus and I have EPS growth in excess of 20% last time I checked. Should I be a bit more nuanced in the way I think about this? So for instance, a big contributor is the change in the variances from negative to positive. Should I be looking through that? Or actually, would you say, no, no, go back to the headline net FSG and that's a good guide for the dividend?

Thanks, Dominic. Let me start with the new business question, specifically on MCV and whether the attraction has faded away in terms of U.S. dollar products. The short answer is no, and we continue to see strong demand. The traffic flows on MCV in the first half grew 10% as compared to same period last year. I think the core demand drivers continue to be intact, whether that's the propositions that we offer in Hong Kong, the multicurrency options, including the U.S. dollar as well as there is a natural attraction for the health and protection infrastructure that Hong Kong has to offer. So we continue to see that demand continue and haven't kind of seen any of the volatility that you alluded to impact the customer demand coming through in the MCV segment. To your second question, I will flip it in a moment to Ben. So yes, the 27% improvement in terms of cash contribution to 2027 objectives for the cohort of business that we wrote in '24, again, underscores the focus that we are employing on quality new business that accelerates to cash. And I think that's an important differentiator. And this comes on the back of the improvement that we saw last year of 36%. I'm going to stop there and kind of flip it to Ben to see whether he has any further comments to give you a little bit of color on that and then to the dividend policy.

Yes. Thanks, Anil. So pleased really to see the 27% increase on the back of the 36% increase a year ago. This is driven by repricing. It's driven by repricing of some health products, but largely savings products. And the importance of repricing savings products essentially makes this channel agnostic, if you like. It benefits both channels. And it's repricing that's driven a lot of margin improvements last year and this year. And as Anil touched on earlier, is driving margin improvements on the banca channel. There's a little bit, Dom, in terms of the changing of the timing of cash flows, but also the absolute level of profits to the shareholder from some of these products. Clearly, we need to look at things carefully to balance shareholder returns and policyholder returns. But thus far, I'm pleased with the progress we've made. And we'll continue to look for opportunities for repricing. I think one of the key things, Dom, to take away is the confidence the repricing has given me in terms of our 2027 OFSG objective. And in short, that means whilst there's opportunities looking forward to continue to improve our business mix, more H&P, more agency, I'm not reliant upon that as a result of the savings repricing that we've done. To your question on dividend policy, I think the short answer is yes in terms of the look-through to your specific point. Really, you should view that guidance in the context of the total return proposition that we've set out. So in short, growing annual net capital generation supports a minimum level of growth in total ordinary dividend per share across '25, '26 and '27 and then the $1.1 billion of additional returns over and above that. There is no change to the group's dividend policy. And in a nutshell, that's to grow broadly in line with net OFSG over the medium term. So we've looked through the upswing, if you like, you get in the acceleration of capital generation as a result of variance switching to positive in the interest of a prudent and sustainable dividend path. That guidance we've given in terms of growth rates is intended to build on the 13% the Board declared last year.

Our next question comes from Andrew Crean from Autonomous.

Coming back to a question which I don't think you answered, which was what is the timing of the remaining $0.6 billion of investment in the business as to how that hits '25, '26 and '27 was one question. The second question is around the active agents. Could you say what the fall in the active agent numbers was in the first half '25? And also what you expect the growth rate in active agents to be in '26 and '27, please?

Thanks, Andrew. So let me give you a little bit of color on the $1 billion investment program that we announced 2 years back when we announced our new strategy. So as I mentioned previously, we've invested $400 million to expand our distribution to enhance our customer experience capabilities to modernize our technology platform as well as we successfully have now been able to stand up the health business, and that's kind of putting us in a position of strength, both in terms of growing our health business, Andrew, but also being able to successfully mitigate some of the challenges that we are seeing on account of the regulatory changes that are impacting the health business. You could expect another $100 million to $120 million by the end of this year. And for 2026, we are expecting to invest another about $200 million to $250 million. And that is really what we wanted to aim for because the majority of the investments we wanted to book in by 2026, so that you then kind of start to see the flow-through impact in '27 and beyond '27. As we get into '27, you will see some reductions kind of come through. But as I said, at all times, we are very conscious of the fact that we are building capabilities that are going to give us enduring returns over a period of time. And to the extent that we can meet our 2027 objectives more efficiently, then that kind of opens up optionalities for us. In terms of your active agents, our active agents was down 7% year-on-year. As I look to '26 and '27, we are looking at a growth rate of about 7% to 10% is what we would kind of gun for on a year-on-year basis. And by the way, as I said, based on the measures that we have taken, we expect that to improve in the second half of this year going into '26 and then further going into '27.

Okay. Drew, I'm going to go to the online questions I've had, and it's from William Hawkins at KBW, who has 2 questions. One is -- he got 2 parts to it. The first part is, is there any seasonality in terms of the split between agency and banca that we expect for 2025, given that there was some seasonality in 2024. And therefore, will the 2025 H1 figure change in any way as you go through to the rest of the year? And then secondly, are there any particular key drivers by market or product or distribution channel that will influence the growth momentum from now until the end of the target period? And then the finance question, which is, how do you think about the remittance ratio? And are there any ways that you feel that you can affect the remittance ratio? Are there any particular actions that you're imagining that you're going to be able to undertake? So those are the 2 questions from William.

Thanks for those questions. And let me start with the seasonality question. So again, the short answer is yes. We typically kind of see first half skewed towards bancassurance. And as we kind of transition to the second, the skew kind of changes more towards agency. We saw that last year. I don't believe you're going to kind of see a different trend this year. And again, as I said, to my mind, that's kind of unique about us because we have scale both on bancassurance and on agency. And importantly, we have been able to demonstrate that we can deliver respectable margins on bancassurance, including the 6 percentage points that we saw in terms of margin improvements on bancassurance in the first half of this year. Key drivers, yes, there is both distribution as well as new product ideas. Just to kind of illustrate one example of that, I did refer earlier that we still -- we haven't still activated the Bank Syariah Indonesia partnership fully. Bank Syariah Indonesia is one of the largest bank and the largest Syariah bank in Indonesia, 230 million Muslims, clearly underpenetrated. We see that as a significant opportunity to drive sustained momentum in an important market in a strategic market like Indonesia. Likewise, I did make reference on the fact that we are focused on driving quality agency recruitment. And we are again seeing some good traction under our PRUVenture program, which now contributes to 7% of the total new recruits. And as we keep rolling out these to different markets, I believe there is an opportunity for us to improve the mix of the quality recruits. And I think that's important for us because the productivity of these agents are to the tune of about 4 to 5x as compared to agents that don't come through this program. And I think that's again going to be an important driver of growth as we kind of think about the second half as well as '26 and '27. And again, on product ideas, I again made a reference specifically in Singapore. We did launch multiple products focused on health and protection and high net worth. We did see the traction. as we kind of closed out the second quarter. And we believe that, that traction will continue into the third quarter. And that's why my confidence that Singapore will come back in the second half of this year. And likewise, we have new products in Indonesia. We have new products in Hong Kong. And again, as I said, it takes a little bit of time to get to maturity, but remain confident that both on distribution and product, we have enough ideas to be able to drive our momentum forward. I'm going to go to Ben on remittance ratio.

So William, in terms of how we think about the total return proposition and the key levers to drive that. I mean, ultimately, it comes back to focus on shareholder value creation and accelerating holding company free cash flows. So the building blocks being, of course, quality new business, management of the in-force book and capital discipline, exactly the same building blocks that I expect to accelerate our return on embedded value. Once you've used those building blocks and allowing for that operating range, as we've said, 70% of that capital generation comes to Holdco. The returns are then the majority of this flow. And as I said earlier, this is an enduring framework. We're a double-digit business. Sustainability is important to us. So I think really, they are the key drivers.

Drew, should we go to the next question?

Our next question comes from Michelle Ma from Citi.

This is Michelle Ma from Citibank. So congratulations on a very solid set of results. So my first question is about Hong Kong. So Hong Kong in the first half growth rate about 15%, and it's already achieved double digit in the first quarter. So we try to back out the second quarter trend. It seems like it's around like 20% something. It's a little bit against our observation on the ground because the whole Hong Kong life insurance industry is really booming in the second quarter. So I just want to understand, is there any like technical reasons behind this a little bit slower than my expectation growth for Hong Kong? Is that because the underwriting process takes time and some of the June policies maybe will be counted in July. So yes, the first question is I want to check on the Hong Kong second quarter trend. And also after the change of illustrative rate cap, how is the momentum in the third quarter? So have we experienced some notable drop in the demand, especially for MCV business? And how is the new product margin versus the pre- change version? This is the first question. The second question is to John. So Mr. John joined the company, I think, about 3 months of time. So I just want to get your initial thoughts on your view how you compare PRU with your previous industry experiences. And according to your observation, what's the strength of PRU? And what are the areas you believe you will particularly focus on?

Thanks, Michelle. Allow me to first answer the Hong Kong question, and you had multiple questions within the Hong Kong question, and then I'll go to John and ask him to provide his perspective and his observations. So going back to where I started on Hong Kong, I like the shape of our Hong Kong business. I like the balance between agency and bancassurance. And remember, Michelle, 90% of the mix on new business profit in Hong Kong is delivered through agency and bancassurance. And that's important for us. Why? Because it allows us to control the customer experience. Importantly, it allows us to control the margins, which improved by 1 percentage point. And as I said, I also like the balance between the domestic and MCV, which was one of the key objectives that I had to be able to provide the counterbalance on the strengths that we have on MCV by boosting our volumes in the domestic segment. You're right to point out and your math is correct, that our quarter 2 new business profit improved to 20%. And there is one important factor that I would like to leave with you, and we mentioned that previously, is that our focus continues to remain on quality new business that converts to cash on an accelerated basis. And towards that, overall, the cohort of the business that we wrote in '24 -- in '25, sorry, contributed to greater than 27% as compared to the cohort of business that we wrote in the first half of 2024. So I think that balance is important for us and something that we intend to keep as we go into the second half as well as into 2026. The illustration caps, you're right. I think it's a healthy step and a step in the right direction by the regulators. And again, we haven't kind of seen impact of that come through as we've kind of transitioned to quarter 3. And on product margins, as I mentioned earlier, we don't see an impact as well in the second half. Our product margins are -- continue to be quite robust. And as I said, it improved by 1 percentage point in the first half of this year. I'm going to kind of quickly turn to John, John, any comments that you might have?

Thanks, Anil. First of all, I won't comment on our competitor, but when I come to Prudential, what I think, first of all, we have very strong brand in Asia. And we have one of the largest agency in Asia, second largest MDRT. So that's the 3 foundation we're going to build up. But as you know, for agency, we are not looking for magic. We're looking for basics. So what we're going to continue to drive is driving further productivity and further activation ratio. We're going to continue to drive our MDRTs and then we're going to continue to drive our quality recruitment. So I'm very, very excited in the market now, very low penetration. So it means a lot of opportunity for us to grow. In the meantime, our customers still prefer a face-to-face agency to -- as a choice of purchasing. So that's the huge opportunity for us.

Michelle, just one additional comment to your earlier question on Hong Kong. I should have mentioned that while we have significant strength in bancassurance and agency, we are also looking at building our relationship with quality set of brokers, but at the same time, also being very watchful of some of the regulatory changes that are likely to impact the broker channel. So for example, the referral fee cap that's likely to get in force as of October 1 as well as the spreading of commission that's likely to come in force in January. I thought I would probably add that to just give you a little bit of extra color.

Thank you Anil. Drew, I'm just conscious of time. We've got a few more questions to come. Maybe we'll go to the next one online, please. Sorry, on the conference call.

Our next question on the conference call comes from Andrew Sinclair from Bank of America.

Three for me, please. First on capital management. You talked about the potential additional returns in excess of 200%. But it looks to me that even with what you've announced today, even if the dividend grows well in excess of 10%, you're still going to be miles above the 200% top end of that range for the foreseeable future. So what is the time scale and plan to get into that 175% to 200% range that you said is the right place to operate? Second, just on the new business margin seasonality. I think you said it should improve kind of quarter-on-quarter through the year. Just any color in any particular regions where you think there should be material changes in margins where we shouldn't expect any margin improvement through the rest of '25? Or just any color there? And third was just on Mainland China. Good to see the mix evolving towards par products. Just can you give us a little bit of a reminder of where we are kind of on the back book of, I guess, non-par? Where is the earn yield? Where is the reinvestment rate? And what's the average guarantee on that book today would be helpful.

Thanks, Andy. I'm going to kind of flip it to Ben. And then if there are any additional comments that I might have, I'll come on the back of that, Ben?

Andy, maybe I'll go in reverse order, if you like. I think your third question was on China. Actually, CPL used to sell a lot of par business in China many, many years ago. So when you look at the general account assets, and there's that snapshot slide in the appendix to my own slides on that, about 40% of that actually backs par business. In terms of cost of liabilities and where we are today, both actual and expected returns are sufficient to cover cost of liabilities. As you'll appreciate, because it's par, you can vary that cost of liability through time. The business has done a lot of repricing over the years. And I think backing up from a capital management perspective, again, confident that there will be no need to put any further contributions into CPL in 2025. They are continuing to look at actions to drive further resilience on the balance sheet on top of derisking and repricing. And we were pleased that they've been recently awarded status to enable them to issue perpetual debt locally, and that will count to their core and comprehensive solvency. On margins and ability to drive margins going forward, it's basically the 4 points I alluded to earlier. There is, I think, to your point, a seasonality thing. We typically see a greater proportion of bancassurance in the mix. Bancassurance having a very healthy margin and improving year-on-year, but still lower than agency. So as we progress through the year, I think you'll start to see a more positive channel mix come through. That will benefit margins on top of the repricing actions we've taken. And of course, as I said, there's opportunity on the health and protection side as well. We've been pleased with growth in the health space, 16% compound 2024 through 2027. So we'll continue to focus strongly on that. In terms of, I think your first question then was capital management and potential returns in excess of 200%. I mean, as you're seeing, we've not changed that target corridor of 175% to 200%. That reflects both risk appetite and the nature of our business. I'm expecting to operate slightly above the upper end of that on the back of today's announcement. And there will be a practicality element to this as well, Andy, in terms of needing to earn stress and remit surplus up to group to fund then shareholder commitment. So there's always an element of timing. In terms of the 200% pre-surplus ratio review trigger. I mean that's something the Board will regularly review. And what they do there is to look at sort of capital over and above that ratio over the medium term, and we'll think to opportunities to reinvest, but look to market conditions as well. I think today was about returns from flow. In terms of returns from stock, the most obvious example will, of course, be the IPO, a corporate event. But the Board will review capital over and above that 200% ratio, as I say, on a regular basis.

Thank you, Drew. We've just got 2 more questions, I think. If you just bring them in.

Our next question comes from Abid Hussain from Panmure Liberum.

I've still got 3 questions left, I think. The first one is on management actions. So really good to see that the new business profit growth and margins improving. And it feels like you've delivered that despite all of the businesses yet to fire on all cylinders. I think you called out some of the actions that are left to take. But I'm just wondering if you can sort of call out the actions or any additional actions that you're yet to take, but specifically the impact that, that will have on the margin improvement or scale or both of new business going forward? So that's the first question on management actions. And the second question is on the net OFSG. Good to see that the cash conversion from new business is improving. And so I think we should expect faster growth in the net operating free surplus generation number relative to the gross number. But I'm just wondering what sort of delta are you expecting between the gross and the net growth? Is it sort of a material delta? Or is there something else that we need to consider in that mix? And then the final question is on capital distributions. I suppose at what share price would you stop a share buyback? At the current share price, it makes sense to me that you continue with the share buyback. I think you're still trading below embedded value and sort of whichever the metrics you're focusing on. But if the stock moves up another 50%, it's moved up some 50% year-to-date, but if it moves up over your time frame, another 50%, does that shift the thinking?

Thanks, Abid. So Abid, let me start with the first question, and I'll flip it to Ben for the second and the third one. So on management actions, clearly, pleased, right? And as you can tell, this is a big focus area for the global executive team to be able to drive the right quality -- and towards that, I mentioned it, Ben referred that as well, that some of the repricing actions that we have taken both across savings and health and protection products are starting to flow through, interestingly, both in the agency channel as well as in the bancassurance channel. I think if you look forward, just to kind of keep things simple, as we see greater traction on agency and agency being higher margin than bancassurance, that would be a good driver. And if we get a better balance between -- or I should say, a higher proportion of agency versus bancassurance, that will have a knock-on impact on health and protection mix as well. So there is where the engines of margin improvements lie. And that's really what we are trying to kind of focus on in addition to some of the repricing actions that we alluded to in the previous part of the conversation. Ben, net OFSG and capital distribution.

So in terms of net OFSG, Abid, yes, I'm pleased with the geared effect that you see coming through. In short, that represents lower growth rates in central costs. And as I mentioned earlier, we're going to continue to contain central costs. Of course, you got in this period, a lower growth in terms of new business strain versus that gross OFSG. When you project forward, I guess, in terms of the building blocks, there's obviously the acceleration of the gross number to our objective. required capital, I'd guide you to early double- digit growth. On strain, giving you the other components, that's going to increase broadly in proportion to our new business volumes. And I'd guide you to H1 '25 strain as a percent of APE to being a pretty sensible jumping off point. And then as I say, central costs remaining fairly flat.

The third question on capital distribution.

Price all we start. I think we're a long way -- long way off that.

Okay. Thank you, Drew. Let's go to the last question for this afternoon.

Our final question comes from Thomas Wang from Goldman Sachs.

A couple of questions, hopefully short ones. Firstly, sort of first half agency NBP, I think, up 4%, mainly -- so growth was mainly driven by bancassurance. I think Hong Kong agency is up double digits. So I just want to understand which market kind of showing kind of weakness in agency channel in the first half. The second point, on the -- I think I'm looking at Page 52 of this presentation, the required capital actually up about -- looks like about 10% in the first half. Just want to understand how we should think about this required capital growth over the next couple of years because 10% just in a 6-month period looks relatively fast, which might put some constraint to your free surplus given the 200% ratio. So any color here would be helpful.

Thanks, Thomas. So going back to the agency point, and as I mentioned earlier, you can't kind of paint agency performance with a single brush. We believe that Hong Kong, Indonesia, Singapore stable to growing. And again, you can see the quality of that business as well as some of the actions kind of result into some high-quality outputs for us on agency. I think the markets that have been challenging for us have been Malaysia and Vietnam on account of some of the industry-led changes that's impacting the entire sector, and you can see that more broadly reflected in the entire industry. And we have, again, action plans and feel confident that we will be able to convert that momentum. It will take us a couple of quarters, specifically in these 2 markets of Malaysia and Vietnam. In China, we have a change management program that I alluded to. We are striving very hard to make agency complement the strong growth that we continue to witness on the bancassurance channel. We are starting to see some green shoots. So for example, our active agents in China was up 6%. Our recruitment was up by north of 40%. And that kind of gives us the confidence that we are on the right track because, again, China continues to be an important focus area as we manage the balance between quality growth and prudent risk management. I'm going to stop there and go to Ben for the last question.

Yes. Thanks, Anil. Thomas, so on required capital growth, when you think about modeling going forward, I suggest you use very early double-digit growth rates.

Okay. I think that takes all the questions. I just -- Anil, do you want to just do a closing comment, and then we'll call the call.

No, firstly, thank you for joining us, and thank you for the questions. Ben and I are going to be on road shortly. So we will be seeing many of you in person, and we look forward to continuing the conversations. But thank you very much for joining us today.

Thanks very much, Drew. You can close the call.

Thank you all. That concludes today's call. You may now disconnect your lines.

Good afternoon, and good morning. It's Patrick Bowes speaking. Welcome to Prudential's 2024 Results Analyst and Investor Call. Before I turn the call over to Anil, our CEO; and Ben, our CFO, a couple of housekeeping points. A recording of the call, it will be available from Tuesday next week. As usual, our full results package is available on our website. And Anil and Ben will start the call with some opening remarks before we then go to Q&A. As you will understand, we're under restrictions as to what we can say about the evaluation of the potential listing of ICICI Prudential Asset Management company. So please bear with us until we can update you with more information. Please note that we're also holding an additional meeting for sell-side analysts next week. This will be an ideal opportunity to raise further technical questions you may have, for example, on TEV. Today, we also have the leadership team responsible for our businesses with us, namely Angel, Dennis, Solmaz, and Bill. So we would encourage you to focus on business questions for this call. With that, let me pass over to Anil, our CEO, to start us off. Anil.

Thank you, Patrick. Good morning, good afternoon, and good evening, everyone. Thank you for joining us today. I'm delighted to present our full year 2024 results and provide an update, as promised, 18 months into the execution of our current strategy. 2024 was a year of good progress. New business profit grew 11%, in line with our 2024 guidance to $3.1 billion. We generated $2.6 billion of gross operating free surplus generation as expected. And adjusted operating profit after tax was up 8% per share. We are laser-focused and driving consistent growth by writing quality new business, more effectively managing our in-force book and improving our variances. We have continued our focus of building and transforming Prudential to realize its full potential. Our strategy is being executed swiftly and effectively with an unwavering commitment to driving long-term sustainable value for all our stakeholders. Since announcing our strategy in 2023, we have substantially reset our focus on the three pillars of customer, distribution and health. We have been building and modernizing our capabilities through targeted investments, including digitizing and harmonizing our core operations and infrastructure. We are focused on building momentum in our agency channel across our markets by prioritizing quality recruitment and through improving agent activation and tech-enabled productivity. We are already seeing benefits with 4,000 more agents activated in the second half of 2024. In Health, we are making significant progress, and I'm pleased to announce today our plan to establish a joint venture in India with the HCL Group promoters family office vehicle, Vama Sundari Investments. Pending receipt of the requisite regulatory approvals, we will build a stand-alone Indian health insurance business on an organic basis. The outlays are expected to be modest and fully included in our existing capital management plans. Together with this partner, we will seek to address the growing health care needs of the Indian consumer. Our investments in capability are transforming our ways of working across all aspects of our business, and I'm pleased with the results that they are delivering. We believe during 2025 and into 2026, we will further evolve our capabilities to a level that will position us strongly for accelerated growth. The long-term growth trend inherent in our Asian and African markets are reasserting themselves, creating significant opportunities for us as an integrated life and asset manager. There is continued and growing demand for long-term savings and protection products across all our markets, while customer needs for wealth management and retirement planning are evolving, particularly in our higher-income Asian markets. We are very disciplined in our capital allocation decisions and through applying our capital management framework, we are delivering accelerated returns to our shareholders. We are demonstrating this in several ways. First, we have increased dividends per share, which is up 13%. Secondly, we launched a $2 billion share buyback program in June last year, which represented 8% of our outstanding stock. We have now brought forward the expected completion date of our program to end of 2025, well ahead of our original mid-2026 schedule. We are confident that 2025 is going to be the inflection point for growth in our free surplus. Our pro forma free surplus ratio is just above the upper end of the guided range. We intend to update you on our capital management plans at our half yearly results in August. Value creation and total shareholder returns are key imperatives for the management team and an ongoing area of focus for us. Thirdly, in February this year, we announced that we were evaluating a potential listing of our Indian asset management company involving the partial divestment of its shares, subject to market conditions, requisite approvals and other considerations. It is intended that following the completion of such a divestment, the net proceeds would be returned to our shareholders. We are relentlessly executing our strategy, seizing structural growth opportunities across our markets and investing to accelerate our value creation. We have made significant progress so far, and I am excited about how much more we can achieve. I will pass you to Ben now, our CFO, to cover the financial highlights. Ben?

Thank you, Anil, and hello, everyone. I wanted to briefly highlight just three things. Firstly, we have today provided guidance for 2025. We expect to deliver growth in new business profit, operating earnings per share, gross operating free surplus generation and dividends per share in excess of 10% this year. Since 2022, we've grown NBP 21% compound on a TEV basis. Our stock of future earnings, the contractual service margin has grown at the upper end of our guidance at 9% Eastspring's profit growth has been double digit with accelerating net flows, and we are focused on controlling central costs, giving confidence that growth in operating profit per share will be in excess of 10%. That stacking of successive cohorts of quality new business and our ongoing actions to improve cash generation and reduce operating variances have led to an inflection in our operating free surplus generation. You can see in my slides that the release from the Life in-force block, the largest component of this metric is expected to be up 13% in 2025, accelerating growth in free cash flows. Our dividend policy is unchanged, so growth in dividend will follow growth in net operating free surplus generation. And of course, we plan to continue with a scrip dividend option on the Hong Kong line as before. Secondly, we have confidence in our gross operating free surplus generation accelerating towards our 2027 objective. The building blocks to this are set out in my presentation. They also demonstrate that by simply repeating 2024 levels of business for the next three years and returning to neutral variances, allowing for the completion of the investment in capabilities program, we would deliver just under GBP 4 billion in 2027. Clearly, however, we expect to add to that number through growth in new business and assets under management and improving cash flows returning to positive operating variances by focusing on cost containment and disciplined repricing. And I think the actions taken in 2024 demonstrate our ability to attain the 2027 objective. Finally, as promised, we shift to the traditional embedded value basis for embedded value reporting from our 1Q business update. Today, we provided you with extensive TEV disclosures to help you with this. TEV margins in 2025 are expected to be broadly stable on 2024. But over time, we see scope for progress supporting further improvements in return on operating embedded value. Just to remind you, there is no change to our NBP growth rate objective to 2027 and nor our gross OFSG objective of at least GBP 4.4 billion. With that, I'll pass back to you, Patrick, to open the Q&A.

Thank you, Ben and Anil. So let me hand over to the conference call moderator, Lauren, who will give you some instructions and then open the lines. Please remember to give your name and the organization you represent when asking a question. And as before, you can also submit questions online. Over to you, Lauren.

[Operator Instructions] Our first question today comes from CGS International Securities. Please state your name and proceed with your question.

Hi. My name is Chuen Ong from CGS International Securities. I've got 2 questions and the result was quite solid. First question relates to the high confidence you have in the inflection point of the OFSG and the implications that has for dividends. And I think that was Slide 51 of the presentation pack. Can you just elaborate a bit on the fairly exponential growth in terms of the OFSG in terms of the inflection point and what gives you that confidence? Because essentially, I think that equates to a 19% percent CAGR from 2024 level all the way up to 2027 and hence, the implications that has for dividend because 2025, you've got a more than 10% growth rate for DPS. And it does look like if this is indeed an inflection point, then that DPS growth can only accelerate from here, say, maybe to even 15% to 20% guidance by the time we hit 2027. So that's the first one. Second one just relates to the Page 17 of the results of the financial statements, whereby there was talk about the effective tax rates in FY '24 was 17%. But in 2025, I think Hong Kong, which is the largest region for Prudential is implementing global minimum tax or BEPS too. Can you maybe elaborate on what kind of impact that could have? And how should investors think about the impact on that for OpEx as well as new business profits?

Let me start, Michael, and thanks for those 2 questions, and I'll pass to Ben to provide you some additional color both on OFSG and the tax question. But I just wanted to kind of just step back and talk a little bit about where we are in our journey. 2023, as you reckon, was a year of big reset for us once the COVID measures abated. 2024 is when we started to press our transformation forward. I believe that as we go through 2025, we will see a level of maturity in our transformation program that is going to cause the acceleration as we go through 2025 into 2026. And I meant both for our new business profit -- stop there and hand it over to Ben for his comments.

Yes. Thanks, Anil. Michael. So let's take the OFSG question first, if I may. So you're right. On Slide 51, our path to our 2027 gross OFSG objective. 2025, while we've always said is the year of inflection. You will have seen we're guiding you to double -- and that's based on business already on our books at the end of 2024 and in fact, the earlier slide, Michael, Slide 50 shows the expected transfer up 13% of $2.7 billion. And we have a long history of actuals being in line with the expected transfer. The confidence in the acceleration of growth rates is essentially down to the shape of the stacking in new business cycle that's set out on Slide 51 in the red box there. You will have no doubt noticed in 2024, whilst new business profits grew 11%. The contribution to expected 2027 OFSG grew 36% year-on-year. And that was as a result of the repricing I flagged at the interims. So in short, the cash signature on our new business cohorts is much improved. In addition to that, later in the deck, you will have seen that our operating variances whilst negative, setting aside the investment in capabilities have halved year-on-year as we continue to focus on cost containment and medical claims. So as I mentioned in my opening comments, if you look at the building blocks on the slide, you can see that if we simply repeat 2024 levels of business over the next three years and return to neutral variances, we'll deliver just under GBP 4 billion of OFSG in 2027. Clearly, that's not our aim. We guided you to new business profits growth of in excess of 10% this year. We'll continue to focus on growing our assets under management. We remain focused on repricing. I have some repricing tailwinds that are yet to come through these numbers. We'll focus on cost containment and repricing. So look, I'm very confident in attaining the 2027 OFSG objective. Your point on dividend, and I set out in my slides, the transition of that OFSG to holding company cash flow through a payout ratio of 70%. The dividend policy -- operating free surplus generation. Ultimately, it's clearly -- it's for the Board to determine the dividend. But I'd encourage you to consider our capital and cash trajectory in the context of the capital management framework we set out and our aim to build long-term shareholder value. And I think our actions last year demonstrate this in terms of total returns. Your second comment or question rather, was on, I think, effective tax rates. So the effective tax rate of 17% in full year '24 is pretty much in line with my long-term expectations. We had a lower effective tax rate in 2023 because we were able to reflect a deferred tax asset on some U.K. tax losses. In terms of BEPS or OECD minimum tax rates, I'm not expecting a material impact on our effective tax rates. The rules are quite complex. But if investment returns are in line with assumptions, then not expecting any material changes on that 17% as a go-forward number.

Just to clarify, it was a remittance ratio rather than a payout ratio. Remittance from the business unit up to the holding company. Okay. Back to you, Lauren.

Our next question comes from HSBC.

I've got three questions. The first one is on the new business margin. I appreciate Ben mentioned a stable margin in 2025. But just looking out over the plan period, is it possible to get into the mid-50s like one of your peers? And if so, what are the main markets and actions that will help deliver this improvement? Also on the margin, it looks like there's some seasonality in the quarterly progression in 2024. What's driving this? And is it specific markets? And two, should we view these as fairly typical of how business will evolve going forward? The second question is back to Slide 51 and 50. Just wanted to understand what's the breakup of the $299 operating variance by the major components. So I don't know, expense persistency, lapse, that sort of thing. And I appreciate you're confident this turns positive in 2027. But linking this to Slide 11, what are the economics from an earnings and a cash perspective of increasing the customer retention rate from 87% to 90% to 95% as you say on that slide? The third question is very quickly on India, the Health business. How much are you investing for your 70% stake? Have you committed to investing more down the line? And does this come from the $1 billion investment budget, which includes health. And if you would just talk a little bit about the vision for that business, the products and services you plan to offer and is there are any synergies that you can extract by cross-selling from your existing JVs?

Thanks, Kailesh. Thanks for those three questions. Let me start with your first question on the drivers of new business profit margin. And I see 2 specific opportunities for us. One is the growth in health and protection mix. And again, if you look at our 2024 results, our new business health mix improved by 1 percentage point, both on sales and on new business profit. And that is something that is an ongoing area of focus, specifically as we build greater capabilities and expertise on our health business as well as train our agents to drive a greater mix of protection business. The second is agency. Agency is absolutely the primary focus for us. And if you look at the progress that we made on agency in the second half of last year, we had a jump of 4,000 active agents in second half versus first half. And again, on account of the number of initiatives that we have on agency, be it improving the quality of recruitment, tech enablement, training, our tie-up with MDRT, we feel that we will see an accelerated pace on agency into 2025. Your Part B of that question was seasonality, yes, you're absolutely right. So for example, quarter one has a seasonality of the jump-start sales in China as well as typically what we experienced in quarter one is a higher percentage of bancassurance. And those seasonalities will pretty much kind of flow through quarter-on-quarter pretty much on expected lines, what you would have witnessed in 2024. I'm going to stop here and go to your OFSG question as well as operating variances. Ben?

So Kailesh, on variances, Slide 52 gives you the breakout, if you like, of about $0.3 billion you were referring to 51 million. So of the $299 million, $175 million is the investment in capability. The remaining $124 million basically relates to expense overruns. That really falls into 2 pieces. We've got about $60 million to $70 million relating to start-up businesses, businesses that are yet to attain any scale, if you like. That's Africa, Laos, Myanmar, Cambodia, for example. The remaining portion is also expense overrun related. But we're seeing that start to close up that gap versus our long-term assumptions. Post-COVID, now we're starting to see renewal premiums ramp up significantly. We've got 7% growth year-on-year and taking now $19 billion of renewal premiums. So we've got confidence that's going in the right direction. And candidly, focused on what we can control. So we've done a lot of work repricing, driving underwriting profitability. We continue to invest in our capabilities to drive profit growth and operating leverage. We've got more focus on cost containment actions, but we'll continue to pursue those. So good confidence in operating variances getting back to our historical norms of a decade of positives pre-COVID. In terms of your question on improving customer retention, I'm pleased to see the improvement there in the rate, up 1%. broadly 1% equates to about $100 million in [VIV].

Thanks, Ben. If I may move on to the India health question, Kailesh, and I'm going to start and then ask Solmaz, who is closely associated both with India and health to offer his comments. So we are delighted with the partnership with HCL Group. HCL has a great stature and great reputation in the Indian market. We believe that we can harness the synergistic value of what Prudential gets in terms of insurance expertise, but at the same time, combine that with HCL's strengths, both in terms of technology as well as their Health Care business. So we are excited about the potential to serve the underserved needs of the Indian consumer. The outlay, as I mentioned in my opening comments, is going to be modest. So we have ruled out the inorganic route. We are going to grow this business on an organic basis, and it's going to be obviously over a period of time. And our outlook for this business is to be a top-tier player when it comes to delivering customer experiences and profitability. So customer experience is obviously to our customers and profitability to our shareholders. I'm going to stop there and see Solmaz, if you have anything additional to add.

Thank you, Anil. Look, just maybe a few points to add. We think that our investments in health overall throughout PRU will help us to create a right to win in the health insurance market in India as well. So we know that the Indian health insurance customer experience is not great, as Anil mentioned. This company will be digitally led and will be extremely customer focused. We think there is a few things that we can bring to the equation. And frankly, we are encouraged by our discussions in India that we can make a difference. And this company will be razor sharply focused on growing quickly to scale and make a difference in the customer experience so that we win the hearts and minds of the health insurance customers in India.

Kailesh, is that okay? Okay. Lauren, should we go to the next one?

Our next question comes from Citigroup.

This is Michelle Ma from Citi. So my questions are mainly on the Hong Kong business side because earlier this year, HKIA introduced a new regulatory requirement regarding benefit illustration for participating products. For example, Hong Kong dollar denominated 6.0% and then Hong Kong dollar, 6.5%. May I have a sense on what's the general current illustrated rates are being used by core Hong Kong and how does this change going to affect your business? So that's the first question. Second is there are also a lot of market talks regarding to a very high commission paid to broker channel. And it's kind of likely later this year, we may have some -- also some cap on how much can be paid to broker channel insurance products, so maybe like 60%. So is that going to happen? What will be the impact on the business?

Thank you for both your questions. So let me kick it off, and I'm going to ask Ben to offer and supplement with his comments. So adapting to regulatory change is simply part of doing business. And we believe that both the regulatory changes that you alluded to are only going to make the Hong Kong insurance industry and sector much stronger. In terms of impact on the benefits illustration, we believe that it will not have any impact on us. In terms of the commission to the broker channel, if you look at the composition of our business mix, we are largely focused on agency and bancassurance. These are channels through which we can have a better control on the customer experience that we impart to our customers. Broker channel is roughly about 10% of our new business profit. We are engaging some quality brokers. And at all times, our focus is to write high-quality business that converts to cash. You heard Ben speak to the fact that the cohort of business that we wrote in 2024 had a much better profile in terms of cash signature. It was up 36% year-on-year versus 2023. So both these practices in my view, will only foster for healthier competition. And I think it will only make the Hong Kong insurance sector stronger. Ben, any?

No, I'd just add to that. Thanks, Anil. Michelle, that we welcome the release of the practice note by the IA. We're ready for that effective date. I'd agree that it strengthens Hong Kong's reputation as a healthy competitive market. And we're not expecting the illustration caps to have any impact on our business.

Our next question comes from JPMorgan.

Farooq Hanif from JPMorgan. I just want to clarify on your dividend policy because there is sometimes a juxtaposition capital position between EPS and nominal dividend, I think. So if you are growing your net operating free surplus duration by more than 10% and also executing buybacks, should we allow for that lower share count to add to dividend growth? Just some clarification on whether you mean EPS growth or nominal dividend growth, that would be helpful. Secondly, when we look at that trajectory of net free surplus generation, I mean, the gross is going to grow by 19%, but with the leverage on the new business investment, clearly, the kind of the net free surplus generation could potentially grow even faster than that. So I'm just kind of thinking whether you are willing to sort of track that level of growth if indeed it comes through in how you pay dividend. And then I guess, finally, on the kind of health business that you have with this new JV with HCL. Can you talk a little bit about what kind of HCL brings to the party? Because obviously, I can't think of a better market to have a Health Insurance business in where you're bringing new propositions to the market. But what is it that HCL is bringing in terms of its investment to growing that franchise?

Thank you for your questions. We're going to first start with the first question. And Ben, if you want to take it. I'm not sure whether you got the second question because the voice was a bit muffled. So we might ask you to ask the second question again. And I got your India Health question as well. But Ben, do you want to kind of start with the first question on dividend policy?

Yes. So I think it was about the 2025 guidance. And sorry, it was a really kind of crackly line. In terms of sort of 2025 and you'll see this in respect to 2024 as well, we -- the guidance was targeting the dollar number. And if you recall, we gave an underpin of 7% to 9%, which then equated into, if you like, a 13% DPS. So for '25, that's about the dollar number. I'm afraid your second question, I just didn't hear at all but the line was really poor. But maybe I'll hand over to Anil to talk about India Health.

Yes. Let us get to India Health and if we can get you back on the line and request you to ask the second question again. But where I started on the India Health business was we are obviously delighted with the partnership with HCL. HCL has a level of scale and presence, great reputation in the Indian market, one of the largest tech companies. So clearly, the first significant quality and capability that HCL gets to the table is on technology. And you heard Solmaz speak to the fact that digital will be a big part of how we deliver health insurance in India. I think the second one is HCL also owns a Health Care business, and they have significant partnerships and tie-ups with corporates in India. So again, that could be a major leverage point for us in terms of how we think about distribution and reaching customers. And third is about customer experience. And again, given their presence in different parts of India, how we fashion and think about delivering customer experience to an Indian consumer, I think, would be very beneficial in the way we craft the value proposition for our Health business. I'm going to stop there and just go back to you and request you to just ask the second question again, please.

I hope the line is a bit clear and apologies for that. So I was just -- thanks -- I think you're suggesting it's nominal growth in dividend that's linked to net operating free surplus generation. But going back to an original question, gross OFSG to get to your target has to grow 19% CAGR. But net free surplus generation after new business considering your targets, potentially will grow even faster than that. So I'm just, I guess, having a reality check in my own head that if your net free surplus generation is growing at those really quite high levels, just a reality check that you would be willing to grow your dividend at those really quite decent double-digit levels to track that given that, that would be a departure from I guess, Prudential history. So that's just -- that was kind of what I was getting at, the fact that net free surplus generation is probably going to be an even stronger growth number than growth.

Got you. Thanks, Farooq. We could hear the question clearly. So you're right. The net number grows at a faster rate. That's essentially there's a geared effect on keeping central costs flat over the period. In terms of how to think about that, I think the best way to think about that is in terms of the existing capital framework, total returns, the importance of that to sort of management team and building shareholder value. And as I mentioned earlier, we'll come back in August with our capital management plans.

Lauren, let's get to the next question.

Our next question comes from Barclays.

This is Larissa Van Deventer from Barclays. Two quick questions from my side, please. The first one on Singapore. The government recently announced changes in the MediShield scheme that will see premiums increasing over the next few years and then see government support decline after that. If you could please give us some insight on how you see that impacting your business, that would be helpful. Second question, you mentioned that you will address capital distribution in detail in August. But if you could give us a sense of your preference between buybacks, special dividends and investment for growth. And then actually, if I may, if you can give us a sense of your outlook on China that with respect to insurance momentum in the near term and also the impact of any past and potentially pending regulatory actions, please?

Thank you, Larissa. So let me start with the Singapore question first, and I will ask Dennis to offer his comments as well. So we have been adopting a very disciplined approach to our medical book management in Singapore, disciplined annual repricing. We, in fact, took certain new initiatives on claims based pricing, even during the COVID era as well as we have a comprehensive hospital network strategy. I guess the important piece to note here, Larissa, is that we have been running a profitable health business in Singapore for many, many years. And I guess the disciplines that we have been adopting puts us in a very strong position to be able to address the health opportunity in a profitable manner in Singapore. Dennis, I wanted to check if there are any additional comments that you may have.

Thanks very much, Anil. In Singapore, we continue to remain a preeminent player in the Shield space and we will continue to work with the health authorities and all ecosystem partners to manage this business and specifically in terms of rising inflation costs for the medical situation. And like what Anil talked about in terms of disciplined pricing as well as coming up with our first claims-based approach to the portfolio and a hospital network strategy that has been very effective for us. We continue to deploy these things to make sure that we will add value to our policyholders at the same time, managing the expenses and the claims expense throughout this whole journey. We note that for last year, we also continue to really be among the top 2 players and in fact, now emerging as the top player in terms of coming up with new lives being insured on a periodic basis, and we'll continue to invest in this business for shareholders. Thank you. Back to you, Anil.

Thanks, Dennis. So Larissa, let me go to your shareholder return question. So, as you would have noticed, we are very focused on creating shareholder value and focused on total shareholder returns. As part of that, we've upped the dividend. Our dividend per share has grown by 13%. We've also accelerated our $2 billion buyback program to end by 2025. And additionally, on top of it, we are exploring the potential listing of our India AMC. And again, our intention is to return the net proceeds of that to our shareholders. I think the focus that we have is on total shareholder returns. And as Ben mentioned in his previous comments, we will come back and update you on our capital plan at the interims. In terms of China, I think on China, let me step back and give you a little bit of color in terms of what's going on and the way we are thinking about our China business. So we have been on a journey ever since quarter 2 of 2023 to shift our product mix. The good news is that we are seeing some significant progress. And just to illustrate that through some data point, our business mix in China last year moved to par, 15% of our business mix was participating as opposed to 5% in 2023. The important statistic is in quarter four of 2024, our participating mix business was 40%. And that has continued into quarter 1 of this year. And we believe that we will see further progress on our participating mix business in China. We are managing high-quality growth. And at the same time, we continue to be very prudent in terms of risk management in China. And as we transition to 2025, you can expect our China business to grow on similar lines, which is high single digit on new business profit for 2025. I'm going to stop there and check Ben or Angel, if there are any additional comments that you might have?

Nothing for me.

Okay. Lauren, should we go to the next question?

Our next question comes from BNP Paribas.

Three from me if that's okay. One, just on the capital dynamics. I think, Ben, in the past, you've suggested that the capital requirement would grow low double digits over the plan. From here, do you see any reason that the capital requirement on new business would grow at a different pace to new business? Is there any expectation that the capital intensity of the business getting higher or lower over the next couple of years? Second question, just on health pricing regulation. There was an announcement, I think, in Malaysia relatively recently. Are you able to get all the health pricing through that you wanted to? Then I think you mentioned that there was a bit more repricing to come. But maybe you could just comment a bit on the trajectory there. And then third business-related question. Just in Hong Kong, if one looks at the regulatory published statistics on new business, it looks like your share in APE terms at least, is a bit lower now than it was pre-COVID. My guess, but it's only a guess, is that within Hong Kong, the business has moved a bit more towards savings as interest rates, particularly on the dollar have gone up and that, for instance, banks are more likely to pick up that relatively low value, high-volume business. Is that what's going on? Or is there something else that explains the business trajectory there?

Thanks, Dom. Why don't we start with Ben first on capital dynamics, and I will tee up the health and then go to Solmaz and then I'll come back to the Hong Kong one. Ben?

Yes. Thanks, Anil. Dom. So in terms of capital, I continue to expect low double-digit growth going forward. That growth in required capital is mostly driven by new business written. I think that the required capital contribution from new business is around about 12% in terms of APE terms. And you saw a growth of required capital of about 12% in 2024. So no significant changes there. You want me to talk about health repricing?

Let me tee up Health and then I'll kind of go to Solmaz. So Dom, on Health, as you know, as part of our new strategy, we've been very focused on building health capabilities and expertise. And we believe that it has put us in a strong position to be able to deal with some of the regulatory changes coming through. In fact, we believe that we have the first-mover advantage given some of the disciplines that we have adopted more recently. But I'm going to go to Solmaz for him to provide some additional color.

Thank you, Anil, and thanks for the question. Well, indeed, we are very delighted to have invested to build our capabilities in the Health function so that we can cope with the recently introduced cap on pricing in Malaysia very well. And just as a reminder, we have already started the medical repricing last year. So we are working with BNM. And I'm pleased to inform that we have agreed on a repricing schedule with BNM. And our assumptions in the plan are in line with this agreed schedule. Also, pricing is not the only tool that we have in order to manage costs and premium increases. We have introduced co-pay products before the repricing came along. And this also speaks to our preparedness vis-a-vis our competitors. So we are calm and focused with dealing with the repricing cap. We think it's -- we are ahead of competition. And with our investments in health according to our strategy over the last 18 months, we are very well positioned to deal with this in a very good way. Back to you, Anil.

Thanks, Solmaz. So let me go to the Hong Kong one. So -- our growth in Hong Kong, Dom, was 15% for the full year on an ex economic basis. We did see a significant pickup in the second half from a year-on-year comparative. The first half comparators were challenged because of the resurgence that we saw where we outgrew the market in 2023. At all times, our focus has been on writing high-quality business that has better cash generation. And we are focused on market share of new business profit and profitability as compared to sales. And again, a good evidence of that was the improvement in margins of 7 percentage points in Hong Kong. The Health and protection mix improved by 3%. And even if I were to kind of double-click on the quality piece, within the MCV segment, we have now greater than 40% of the APE market in some of the more profitable segments of critical illness and medical. So as I said, Hong Kong is our flagship business. We have invested and continue to invest in expanding our distribution, a very strong brand, very focused on product innovation. And we remain highly confident of the momentum as we enter 2025 in Hong Kong.

Okay. Thanks, Dom. It's Patrick [Lauren]. I'll pick up. I've got 1 question that's come in online from Rhea at Deutsche Bank, who can't join us, but I will take the questions that she hasn't -- that haven't already been asked. There's 2 parts to this. The first one is, how should we think about the description more than 10% growth when thinking about the IFRS EPS and the TEV new business profit trajectory to 2027? And the second question is on leverage. And the question is your leverage appears to be, in Rhea's words, benign. How do you think about this when looking at the future and including deploying capital, you had some indications in your capital management program about the times that you would use leverage. Could you clarify? Those are the 2 questions.

Okay. I'll take those then. So I mean, firstly, on leverage. Look, we target AA financial strength. We're comfortably within that. We've got capacity there, some flexibility. Clearly, we're always going to look to optimize our balance sheet longer term. I'd note that our Asia peers have similar ratings. So comfortable with targeting the AA financial strength. I think the question on sort of IFRS.

IFRS on growth.

Yes. Look, as I said in my opening comments at the top of the call, I'm really pleased with sort of compound new business profits to date. Our CSM has grown at the upper end of the range we've given compounded at 9% since 2022. So we're confident in strong earnings growth. And clearly, the key elements of that are the release from that CSM, I'd expect stable unwind. New business additions will broadly track. Obviously, you need to allow for some more normalized unwind on top of that. The risk adjustment release is more or less the same rate as the CSM release rate. And we continue to see -- expect Eastspring to grow in line with average FUM. And I think I briefly mentioned earlier our intention to very much contain central costs going forward. So I hope that's helpful by way of modeling guidance.

Thank you, Ben. Okay. Lauren, back to you. And I believe we have a next question, please.

Our next question comes from Bank of America.

It's Andy Sinclair from Bank of America here. A few for me and lots of good stuff in the pack there today. First, a couple of questions on China. No further capital injections in '25 is a constant statement. Good to hear with lower yields. But can you tell us what's the duration gap that you have in Mainland China between assets and liabilities. And just any color on that would be really helpful. Second, sticking with Mainland China. I see the lower discount rate, which I guess is why new business margin went up when we move to TEV to all other regions going down. But can you tell us anything about other assumptions, things like growth assumptions. I was probably a little bit surprised to see new business margins going up in Mainland China. So just any more color that you can give us there. And third, just kind of digging into that, the new business profit growth targets. I guess where we are from '24 to '27 is implicitly around something like 11% to 19% new business profit CAGR from '24 to '27. Just can you give us a little bit more context as to what would be lead you to be at the top end or bottom end of that range. What kind of macro assumptions would tie into the top and bottom end?

Thanks, Andy, and thanks for those three questions. So let me start with China, and I'll have Ben and Angel add any comments that they might have. And I'll come back to the new business profit and the way we are thinking about it. So in China, as I said, we have been on a journey to kind of change our product mix. And we've been very focused on driving high-quality new business, but at the same time, continued focus on prudent risk management. We don't believe that we will require a capital injection this year. But I'm going to turn to Ben for him to provide you some extra color, including addressing your duration gap and lower discount rate and NBP margin question.

Okay. Thanks Andy. So let's start on sort of duration and injections. I mean you're right, not expecting any further injections in '25. And the business has taken a lot of actions to improve its solvency position. We're continuing to work with the business to build greater resilience. And just a reminder, at the group level, we have a rolling interest rate hedge, which over the course of last year actually offset about 70% of the injections we've made into that business over the last 2 years. Duration-wise, liabilities are diverse. We've got protection there as well as savings and pensions. And I think, as I've said before, on the savings side, about half of the liabilities are benefits, you can vary with investment outcomes. We've pivoted heavily towards par successively repriced. On the investment side of things, the business has de-risked, taken on more duration. And there's the usual slide in the back of the pack on asset breakdown. But about 80% of assets are now in fixed income, a majority of that in [govies] and state-owned enterprises and the govies, we've got modified duration of 20 years plus. So that with the sort of ongoing actions and then at a group level, the interest rate hedge helps really mitigate against sort of rate falls. But more to do, and the business will continue to actively look to strengthen its asset liability position going forward. Yes, on China margins.

Are you able to give the duration gap to get the actual number.

So new business, Andy, a couple of years duration gap having pivoted. As I say, when you think about the entirety of the business, you need to think about the group level hedge. And that's been pretty effective thus far in offsetting the amounts of capital we put in. On your margin question, is that -- So on an EV basis, ex economics, we built margin. And that was through product mix shift. We've got more H&P. There were also, of course, if you recall, regulatory changes around commissions. That's helped build margin. On a TEV basis, the China margin is 48 points. That's slightly lower year-on-year because we changed our long-term interest rate assumption down 50 basis points. And I think you've seen clearly, the RDR is built on that. So the RDR of 8.9% we're applying is that plus effectively a 6% risk premium. So we'll continue to look at our assumptions as we do. But at the moment, I'm comfortable there's appropriate prudence in the China RDR.

Andy, I'm just going to ask Angel if she has any further color to add in terms of just the quality of business and how we are approaching China going forward?

Yes. Just want to add a couple of points here. Just to reiterate that we are very committed to shift from guaranteed interest to par savings product to manage the ALM as well as the capital challenges, given China interest rate environment could be -- continued to stay lower. Enhanced pension as well as protection products will help us to protect margin as well as to help cash generation. So we are very committed on the product strategy. On the other hand, I also want to pick up Ben's point that banca created very strong NBP ex econ pickup of 28% behind a very strong margin pickup of 19 points to 61%. So that helps in our margin improvement as well. Lastly, in terms of our duration, so just to mention one point is more than half of our in-force book in China has variable liability cost. So together with the change of the mix of the new business will help to improve the risk profile of the business.

Thanks, Angel. So Andy, going to your last question on new business profit. So again, the way I'm thinking about our progress is 2023 was a year of reset, 2024, progress on transformation. And as we go through 2025, we will attain a level of maturity on the progress leading to acceleration. We have given guidance on not only new business profit, but some of the other matrices as well, including operating profit per share, OFSG as well as dividend per share. And we believe that we will see an acceleration as we kind of go through 2025 into 2026 on account of the maturity of our program. The reason I feel confident is because we are looking at it from a lens of three things: one, managing the quality of our new business. And again, it's come through in different -- at different times in the conversation, focusing on quality that converts to cash. And again, 36% improvement in terms of the new business cohort that we wrote in terms of cash generation versus the new business cohort that we wrote in 2023. Managing in-force. And again, we've taken a number of steps, repricing of both savings and medical products introducing new innovative products like the claims based pricing, the progress that we have made on Net Promoter Score. So all our top 10 markets are in now the upper two quartiles with five markets being in the upper quartile. And again, that has significant implications in terms of retention as well as cross-sell rates and repeat sales to our customers. And last but not the least, Ben spoke to reducing variances. And again, as we think about building our operations and technology platform, we believe that we have opportunity to drive further efficiency on our business volume. So we are not managing the business to the lower end of the guidance. We have capital flexibility to drive our business on an organic basis. And again, very confident with the momentum that we established for ourselves.

Okay. Lauren, next question, please?

Our next question comes from Autonomous.

Three questions, if I can. Firstly, the capital management discussion you're going to have in August. Can I just be clear on that? I mean you've laid out a capital framework, but not a capital policy in terms of distribution. I know AIA has laid out a 75% payout of net OFSG there. Is that what you're going to address in August? Second question, on your new traditional embedded value basis, I see that for the in-force, you grade from the current spot rates up to your long-term rates over time. But for your new business profits, you actually assume the long-term rate immediately, something I think AIA doesn't do. Could you tell us what your traditional embedded value in new business profit would be if you use a graded approach rather than assume the long-term rates immediately? Then thirdly, back to Slide 51. I'm just looking at the return on free surplus and the asset management profits outlook for 2027. Because if you continue to do buybacks, your cash will go down and therefore, the net return on free surplus could go down. And if you sell the ICICI Indian business, that represents about half your Eastspring profits. So would you still -- would -- should we be looking for lower contributions from those 2 elements rather than higher contributions as you put in the slide?

Thanks, Andrew, so I'm going to go to Ben on the capital and the TEV question. But let me start with your question on IAMC. So you're right that the IAMC potential divestment would have an impact on free surplus, but it's manageable. We are not, as a consequence of that, changing our guidance for free surplus generation between 2022 to 2027, which is something that Ben alluded to as well. So we believe that it's fully manageable given the trajectory that we've set for ourselves. I'm going to go to Ben on the capital framework and the TV question.

So Andrew, so on TEV, in terms of grading, we trend to long-term assumptions over a 10- to 15-year period. There's essentially a three-year half-life that gets applied. I think the other point I'd note is that on an average weighted sort of long-term interest rate assumption, they're about 40 bps below current rates. And you can see that in the disclosures. So there's some overs and unders in that regard. I think when we think of monetization, if you like, and as you well know, when we move to TEV, of course, the cash flows remain the cash flows, but the fund earned rate or assumed fund earn rate changes slightly for the move to long-term rates. But if you compare both of those monetizations with one another, applying the slightly different FERs, they're within 2.7%, I think, 2% to 3% so broadly comparable. On capital management, I don't really want to sort of front run that discussion. We'll come back and tell you in August.

Okay. Next one, Lauren.

Our next question comes from UBS.

From UBS. So I think I know you answered Andrew's question on asset management as management, but on the free surplus, maybe I missed that with the buybacks, if you can clarify that. But my 2 questions are on basically Slide 17 on the strategic pillars. If you look at agency number of productive agents, active agents, 65,000, you're targeting 80,000 to 90,000, and you're saying you're going to accelerate that. How are you going to do that? Is that going to be organic training agents or getting them more productive? Or are you going to get some agents from competitors onto your books? And then on the NPS score, if I look at the trajectory over the last couple of years, you're improving NPS score in geographies, getting the top quartile in one geography every year. You still got a lot to go on to get to the 10 for '27. If you use the run rate over the last couple of years, you don't get there. So any color on how you're going to get to the 10 geographies in top quartile as well.

Thanks, Nasib. So I think the AMC point, let me start with that first. So as I mentioned, yes, the potential divestment would have an impact on free surplus, but it's manageable, and it does not change our free surplus target. So I simply wanted to kind of reiterate that. On agency, let me start, and I'll go to Solmaz for providing additional color. So as I said, agency continues to be the #1 priority for us. And we were happy to see the momentum that we established 67,000 active agents in the second half of 2024 versus 63,000 in the first half. The first half of 2024 was going to be challenging because of the comparatives that we had with the 2023 resurgence, specifically in Hong Kong. So the real question is, what are we doing to drive the active agent. And there are 3 things that I want to leave with you. One is our focus on high-quality agents. And again, our new recruits was up 9%. We have a strategic recruitment program which is PRUVenture. And again, if you look at the sales growth of PRUVenture agents, they grew by 34% year-on-year as compared to the 7% sales growth that we saw at an overall company level. So again, a key focus area for us. Second is our partnership with MDRT, creating bespoke training programs and bespoke recognition programs to drive both activity as well as create a level of inspiration with our agents to become a part of the MDRT Club. And lastly is our enterprise-wide tech enablement. And again, we were pleased to see the new business profit per active agent grow by 5%. Solmaz, any additional color that you would like to add?

Thank you, Anil. Maybe just one point. We are continuing to be focused, as Anil mentioned, the core points on organic growth of our productive agency base. So that's our primary focus. We're going to be very disciplined about any inorganic opportunities. So we will be very focused on growing our profitability of our channels. So we are going to be very focused on organic, therefore. If opportunities arise, we would assess them based on this framework. Just one more data point. In Hong Kong, for example, we had our number of active agents grow up by 15% in 2024, which was great, and we're looking to continue this in other countries as well. Back to you, Anil.

Thanks, Solmaz. Nasib, let me go to your Net Promoter Score question. So happy with the progress, five markets in top quartile versus four in 2023 and three in 2022. But also note that we are only 18 months since we started the execution of our strategy. And we believe that on account of the maturity that we are likely to witness as we go through 2025 on the efforts that we are making in our technology infrastructure in focusing on both customer and agent experience because agent experience is one of the biggest drivers of customer experience. We believe that we will get to the Net Promoter Score target that we have for our top 10 markets. And again, just to reiterate, all our 10 markets are now in top 2 quartiles. So we've not only seen progress in the in one market going to top quartile, but we've kind of seen a range of outcomes and positive movement across our markets in net promoter score. So we feel very confident about the progress that we are making.

Thank you, Anil. We've just got time for two more questions. Let's go to the next one, please. Lauren.

Our next question comes from Panmure Liberum.

I've got two or three questions, if I can. I'll be quick given the time. The first one is on the IRRs. Great to see that the improvement there of the IRRs coming in above 25% on the new business that you're adding at the moment. Just wanted to sort of dimension that how does that compare with what you've been adding over the last 2, 3 years? And do you want to get this back above 30%? I recall in the past, pre-COVID times, the number was above 30%. So the trajectory on that, please? And what's the main sort of two, three themes driving the improvement? Is it the repricing that you called out and the cost containment? And if it's mainly the repricing that's driving that, can the PRU brands still command a premium on pricing for customers? Or is there some sort of repercussion on the flip side on retention levels? So that's the sort of first question. Apologies, it's slightly long. The second one is coming back to the OFSG. What's left to do to contain those negative variances? I appreciate they're coming down. Is it now a case that the actions that you've taken will just sort of come through, will earn through. So again, the pricing and the cost containment actions that you've already taken, will that transpire to positive variance over the next couple of years? It feels like most of the actions you need to take have been taken. But just any additional color around the edges on that, please? And then the final one is on capital allocation. It's interesting to see you call out the potential listing and partial divestment in the Indian JV, the asset management JV. Would you like to call out any other businesses where you think you might crystallize value?

Thanks, Abid. We'll try and address them in the sequence that you asked. So we're going to go to the IRR one first. So I'll go to Ben. And then on the repricing and cost containment, which specifically impacts our health business, I'll go to Solmaz, and then we'll take the last 2 questions. So Ben, do you want to kind of start with the first one?

Yes. Thanks,. So in terms of IRRs, actually, we have seen a decent improvement year-on-year. If you look at our monetization, you can basically solve back to an IRR using a PCR of 100% in the 40s. So it's pretty good. What I've quoted you the sort of in excess of 25 is allowing for the free surplus ratio operating range. So pleased with the impacts. The repricing, yes, I think it's sustainable. We continue to have very strong persistency, so pleased with that. And so no concerns from that perspective. Actions on OFSG and improving negative variances. So there's more to come in terms of cost containment, driving scalability, efficiency, operating leverage. Stepping back, when we think about our investment in capabilities, ultimately, we're driving an acceleration in cash flows and looking to drive that operating leverage that comes with that. So there's plenty more to come on that front.

Thanks, Ben. And I'm going to go to Solmaz on the repricing and the cost containment. Solmaz?

Thanks, Anil. So the question on whether we can continue to command premium pricing, especially when it comes to Health. Well, first of all, it's important to note that we are as a payer in the context of Health Insurance on the side of our customers. Our NPS signals that we have the trust of the customers and our brand is supporting that. The brand perception of our customers in all of our markets, especially in Health, but then also in India, is helping us to, of course, have repricing actions without creating distrust with our customers. Yes, we have to reinforce that point. We have to work on this every single day, but this is one of our promises of our brand, and we are very keen to protect that.

Thank you, Solmaz. Abid, to your last question on whether there are any other businesses, the short answer is no. The focus, as I said, continues to remain on total shareholder value, and that is going to be front and center for the management team as we go through 2025 and beyond.

Thank you. Lauren, let's go quickly to the very final question, please.

Our final question today comes from Goldman Sachs.

Thomas here from Goldman Sachs. A couple of questions. I'll be quick. Firstly, just to clarify, I think you mentioned the negative variance attributed a lot to expense overrun in Africa and also in other places. Can you just clarify, so there's not much medical negative sort of variances related to medical products anymore? Is that already turning into maybe a flat or positive territory? And the second thing, just on the OFSG from new business contribution. It's good to see that new business contribution in the first few years actually growing faster than BEP. Can I just check or any more color you have in terms of what type of products or which market that's helping to drive that kind of improved capital efficiency for new business portfolio?

Thanks, Thomas. I'll go to Ben. I guess the short answer on variances is you're right. But I'll have Ben provide some additional color, and then we will wind it out with the OFSG question.

Yes. Thanks, Thomas. So yes, there's -- it's not about medical variances. It's about expenses, hence, my comments on continued focus on cost containment. Stepping back in terms of the Med book, we have a very healthy long-term view of the profitability of that business across our markets, and we'll continue to actively manage that business that Solmaz has talked to. New business contribution and ways to continue to improve that. So I mean, very much aligned with our strategy, and that is increasing the amount of agency sales within the business mix. You will have seen from one of my slides that agency typically has a much higher health and protection contribution within the mix, and that has a much stronger PVNBP margin than savings products. More broadly, we'll continue to focus on health and protection and drive that within the banca channels. I do, as I mentioned earlier, have some repricing tailwinds that will continue to help in terms of new business additions to 2027 OFSG. And I think finally, in terms of country mix shifts, there's potential there for an even stronger signature as we look forward. So again, to reiterate, confident in 2027 objective.

Thanks, Ben. Let me pass to Anil for some closing remarks. And obviously, you can contact the IR team if we can help you with any further questions. Over to you, Anil.

Thank you, Patrick, and thank you, everyone, for the questions. Ben and I will get on the road. So we are looking forward to seeing many of you in person, and we can carry on the conversation from there. We will be providing a first quarter business performance update on 30th of April and an update on our capital management plan with our interim results in August. And again, once again, thank you very much for your questions, and have a good rest of the day. Thank you.

Thanks very much.

Hello, I'm Anil Wadhwani, CEO of Prudential, and I'm delighted to give you an update on our First Half 2024 Results and the progress on the execution of our strategy announced 12 months ago. We are building momentum while addressing known challenges and identifying areas for continued improvement. As a reminder, we set out clear strategic and financial objectives to create shareholder value, driving high-quality sustainable growth and cash returns to our shareholders. Building on the last year's 47% growth rate, our new business profit for the first half grew by 8%, excluding economic effects to 1.5 billion. We are pleased with this performance given we are lapping the strong first half 2023 competitor when the border between Hong Kong and the Chinese mainland reopened. New business profit growth for the first half was high-quality and well diversified. We achieved growth in both health and protection and savings new business profit with bank assurance new business profit increasing by 28%. The benefits of our disciplined focus on quality and sustainability, including product and repricing actions, was evident from the improvement in new business profit margin ex economics. Our large and growing, enforced portfolios supported an encouraging 9% growth in operating profits. Our gross operating free surplus generation was very much in line with our expectations. Driving total shareholder return is a priority for us. This includes ensuring we have the right portfolio mix and that our organic and inorganic investments meet our required rate of return. We are deploying our capital in a disciplined manner, retaining sufficient flexibility to invest in quality new business growth and strategic initiatives, and all while delivering sustainable shareholder returns. Reflecting our robust capital position and in line with our updated capital return framework, we launched a $2 billion buyback program in June to return capital to shareholders. And as part of our dividend policy, we are pleased to announce a first interim dividend for 2024 of 188 million, up by 9% compared to the previous year. We are confident in the outlook for the second half of 2024. This is supported by several key factors. First, we delivered 6% growth in APE in the first half of 2024 on top of the 37% achieved in 2023. Second, we have seen sales momentum in June and coming into the second half of this year as the base effects of the first half 2023 comparators ease. And third, this momentum is broad-based and diversified across various markets and both across agency and bank assurance channels. We are seeing encouraging early results from our capability build and actions we are taking to drive quality sustainable growth. For the full year 2024, we expect new business profits to grow at a rate consistent with the trajectory needed to meet our 2022 to 2027 new business profit growth objective. And most importantly, we remain confident in achieving our 2027 strategic and financial objectives. As set out in our strategy, which we launched 12 months ago, we are strengthening our capabilities across our pillars and enablers and reinforcing our talent-based strength with senior leadership appointments in key areas. We aim to create long-term sustainable value for all our stakeholders, including our customers, employees, shareholders, and communities. And as a reminder, we have 2027 ambitions for all these. Our strategy is multi-year, so over the medium term, our progress won't necessarily be linear. There will be some areas moving more quickly than the others. Through last year and into the first half of this year, we have taken decisive actions. We have identified issues and their causes of underperformance more effectively and we have implemented corrective measures. Our goal is to ensure the company operates more efficiently and more consistently. We are taking the hard decisions which will ultimately lead to high-quality sustainable growth, improved margins and generate operating free surplus for reinvestment and shareholder returns. Our recent actions include repositioning our business in China in anticipation of both regulatory and macroeconomic changes. We were the first to move on repricing, and our decision is beginning to bear fruit on achieving a different product mix. And we are starting to see our China business turn around. Consumer demand for protection and retirement products continues to be robust and we have a good product range to offer which is well aligned with the recent regulatory moves. In health, we stood up a new operating model and have introduced medical repricing in Indonesia and Malaysia. We are investing in new talent, launching new products for our customers, and renegotiating contracts with healthcare service providers. Critically, we are working to build a stronger health insurance front book while enhancing the quality of our back book. And finally, we are investing in our digital estate, the technology and processes that enable our businesses. We want to drive convergence across markets and create economies of scale. Let me share some highlights of what we have accomplished in the first half of this year and outline our focus for the next 12 months. We have a clear purpose to be the most trusted partner and protector of today's generations and the generations to come by providing simple and accessible financial and health solutions. Because of this, customers are at the center of what we do every day. At the core of our strategy is a relentless commitment to enhance the customer experience by building efficiency in the business. Our customer initiatives across the group are focused on delivering differentiated customer experience that builds advocacy and trust for a lifetime. Let me share an example with you. In Malaysia, we launched an enhanced customer digital servicing platform through services. By building in self-service capabilities and other enhancements, we have improved registration by 2x and the transactional Net Promoter Score of new customers has increased by 7 points. We are pleased with the improvement in customer satisfaction and will continue to deploy pro services across the group, including nine markets, over the next 12 months. By refining the customer experience, we are enhancing customer retention and creating opportunities to do more with the same customer, generating significant value for Prudential. Our agency network is the lifeblood of our business, and optimizing this capability with technology is crucial to achieving our 2027 aspiration. We are confident about the underlying drivers of agency. We are seeing parts of this channel delivering good results, but are also cognizant that we have more work to do in certain markets. PRUForce, our upgraded agency platform that enhances agent effectiveness is seeing great adoption rates by our active agents. We are going to deploy PRUForce in all the relevant markets and encourage higher module adoption rates. Let me give you two important examples of these modules. First, we are supporting quality recruitment with PRUVenture, an enhanced trading program for agents who see insurance as a long-term career. Currently, only 10% of our rookie recruits come through this PRUVenture program, but those agents contribute to 40% of APE from new recruits, an impressive result. We plan to scale PRUVenture into new markets and are accelerating the adoption of this program, particularly in the markets of Hong Kong and Vietnam. Second, PRULeads is our agency performance management module, equipped with intelligent profiling and allocation to prompt activities for conversion. In the first six months, 2 million leads were passed through PRULeads with conversion at 8%, contributing to a 49% increase in sales from Leads managed through this module. We see there is a big opportunity to further drive the productivity of our new agents as we expand this capability across our key markets. I'm also looking forward to welcoming our new Chief Agency Officer starting October, who will be driving our agency strategy forward. Our bank assurance relationships continue to deliver consistent growth as we collaborate to introduce new products to a broader customer base. We cultivate strong partnerships, enabling us to align incentives and create mutual value across this important channel. This approach is delivering results for us, evidenced by the 15% growth in health and protection new business profits. We are also expanding our capacity in underserved markets. For example, our partnership with CIMB in Thailand is already showing promising results, contributing to 6% of the first half bank assurance APE sales for that market. One area of focus over the next 12 months is better integration into our existing bank assurance partnership platforms. Integration enables us to develop better propositions tailored to different customer segments and helps us identify and acquire new to prove customers more effectively. Additionally, we continue to seek further agreements with in-country bank assurance partners across ASEAN to diversify our distribution network and we remain optimistic on locking in important partnerships before the end of this year. In our health business, where we have implemented a new operating model, we are focused on meeting the significant growing demand for health products. We are launching new propositions while undertaking disciplinary pricing and cost management strategies to ensure long-term sustainability of our health book and to address medical inflation. We now have claims-based pricing and regular repricing discipline in all our key health markets. This is a good example of how we are taking the learnings from one market, in this case Singapore, and applying it to the others. While early days, our health business will be a significant lever for us, and we will continue to invest behind it with new features and value-added services. We plan to strengthen our preferred healthcare provider network through priority partner in key markets as well as expand on track renegotiations with service providers. This will help improve health outcome for our customers. On technology, we are committed to leveraging technological innovation to create value for our stakeholders. We are modernizing our technology infrastructure across our markets with investments in data, analytics, and global platforms. One initiative we are focused on is scaling AI. We have built a pipeline of around 100 use cases, which we are working on deploying across the organization. AI will help us to drive progress in our strategies to enhance customer experience, drive technology power distribution, and improve access to quality healthcare. In the past two weeks, we have announced an expanded partnership with Google Cloud to create and support Prudential's AI Lab. This is first-of-its-kind for the insurance industry in Asia and Africa. The AI Lab will focus on using AI to solve business and customer challenges and increase our speed to market. In people and culture, we have made 33 strategic appointments to strengthen our leadership team with top tier talent into mission-critical roles. These are pivotal to driving our strategic initiatives forward. I would like to highlight three in particular. Ken Rappold, coming on board in April to lead our transformation. Anette Bronder, who joined us in May to lead global operations and technology. And we have recently announced Angel Ng, who will be joining us in October to lead our Greater China business alongside customer and both. I'm proud of these appointments also contributing to our target of 40% representation of women in our Group Leadership Team by the end of 2026. And this reflects our ongoing commitment to a diverse workforce. We will continue to strengthen our organizational model, succession pipeline and talent development to support our high-performance culture. These are just some of the initiatives we have underway. Prudential is a unique franchise, with a 176-year legacy and the trust of over 18 million customers. Our extensive and diverse presence across Asia and Africa allows us to tap into nearly 1 trillion of growth opportunity over the next decade. We hold top three positions in 10 Asian life insurance markets and are the only large Asia-focused insurer with significant scale in both agency and bank assurance channels, alongside an in-house investment arm managing 247 billion in assets. These are strong foundations and our clear strategy underpins our confidence in creating significant value for our stakeholders. One year into our strategy, I continued to be very impressed by the strength and the breadth of our organization and I firmly believe that Prudential is a great franchise that has not yet realized its full potential. We have been building momentum over the past year in executing our strategy while addressing known challenges and identifying areas of continued improvement. Our focus remains on driving high-quality, sustainable growth and delivering cash returns to our shareholders. I am pleased that in the first half of 2024, we achieved high-quality new business profit growth of 8%, building on the strong growth seen in 2023 of 47%. Our outlook for full year 2024 new business profit growth aligns with our expectations from the start of the year. It is supported by the broad and diverse sales momentum we see going into the second half of this year. Looking further ahead, we continue to be confident in achieving our strategic and our financial objectives for 2027. Thank you for your continued support. We are looking forward to sharing more updates at our quarter three results in November.

We are now one year into the execution of the strategy we set out last August and are continuing to drive the operating improvements needed to deliver our targeted growth in value and capital generation. We continue to focus on driving quality new business, adding 1.5 billion of new business profits or NBP, up 8% ex-economics despite the elevated half year 2023 comparator. Our balance sheet remains in very good shape with a robust capital position and sufficient flexibility. We’ve continued to deploy capital in line with the high-return allocation priorities we have set out, including at the end of June, announcing a 2 billion share buyback. We remain focused on future capital generation drivers, both in terms of new business and our in-force book. We continue to take meaningful actions to enhance these, including but not limited to, pricing and product actions to move new business capital generation profiles far closer to pre-2023 norms. Our IFRS operating profit grew 9% in the period, and underlying CSM growth remained within our 6% to 9% guided range. Starting from our first quarter 2025 update, we will shift to a traditional embedded value or TEV basis for our embedded value reporting. In the meantime, we will give an indication of TEV comparator results in our remaining 2024 reporting. This starts today by providing an indication of the effects of adopting TEV at the 31 December 2023 balance sheet date, as well as on new business written in that year. Note that our 2027 4.4 billion gross operating free surplus generation objective and our NBP compound growth rate objective of 15% to 20% from 2022 to 2027 are unchanged. Finally, the actions we are taking to improve the quality of our new business, variances, and growth in asset management profits gives me continued confidence in the achievement of our financial objectives. Turning to delivery in the period and implying consistent period-on-period economics to better discern underlying operating performance, our new business profits grew 8% in the first half. On a reported basis, including the effect of economics, NBP is up 1%, and EEV operating profit grew 9%. Despite growth in embedded value earnings, embedded value per share declined by 4%. This includes reflecting an adjustment to recognize a 49% non-controlling interest in our Malaysia conventional business following the surprising Federal Court ruling in July. This adjustment applies from this financial year. With respect to capital and dividends, our gross operating free surplus generation, whilst down 4%, is in line with the trajectory we set out to our 2027 objective. The free surplus ratio introduced when we updated our capital management framework earlier this year is down 10 points from year-end at 232%. This reflects the payment of the 2023 second interim dividend and non-operating effects, partially offset by net operating capital generation. In terms of capital returns, we announced our 2 billion buyback in June, and in line with our dividend policy, the 2024 first interim dividend per share is up 9%. Our IFRS operating profit is up 9%, with insurance profits up 6%. Underlying CSM growth was 9% on an annualized basis. This includes the favorable impact of a new reinsurance treaty. Excluding this, underlying growth of 8% continues to be within our guided range. The 1% reduction in operating profit per share again reflects the Malaysian court ruling and the resulting increase in non-controlling interest. Excluding this effect, operating EPS growth would have been 9%, applying a normalized tax rate to both periods. From a value creation perspective, we remain focused on quality. On our reported active EEV basis, where we reset our economic assumptions to the relevant government bond yield at each balance sheet date, NBP is up 1%, impacted by interest rate movements. Removing this volatility to provide a clearer picture of the underlying business trends, NBP ex-economics grew 8%. The growth rates referenced on this slide are ex-economics. The 8% NBP growth reflects the benefits of the group's diversification by channel and strong product capability despite an elevated comparator and a mix shift towards bank assurance and savings products. Strong bank assurance NBP in this half has helped offset a weaker agency year-on-year growth, owing to the high base effects in Hong Kong and Mainland China. Whilst higher relative bank assurance and savings product growth would ordinarily lead to a contraction in margin, the benefit of our disciplined quality focus and pricing actions is evident from the 5 percentage points added to the half year ‘24 new business margin. These pricing actions were across a number of markets, including Hong Kong, Singapore and Mainland China, and are beneficial to both capital generation as well as NBP margin. Looking forward, the elevated comparators we flagged in respect of the first half will dissipate as we move into the second. And as Anil said, we've seen sales momentum in June continuing into the second half of the year. As we continue to deliver on our operational transformation objectives, this will drive growth in agency and also our health and protection business, providing further channel and product mix tailwinds to margins. This supports our confidence in reaching our NBP and OFSG objectives. The benefit of our broad geographic footprint is evident over the first half of 2024, with seven Asia markets and seven Africa markets delivering growth in NBP on an ex-economics basis. Hong Kong remains a key driver with NBP growth of 9% ex-economics, despite the year-on-year reduction in sales, as we focus on quality, sustainable growth. In the Chinese Mainland visitor segment, average case sizes were stable compared to the second half, but below the first half of 2023. Lower Mainland Chinese visitor sales were partially offset by robust domestic production, which grew 13%. Hong Kong margins were 4 points below the 72% year-end outcome, as the headwinds of higher interest rates at the end of June were partially offset by pricing and product mix. Our bank assurance channel, in particular, continues to make very good progress, increasing health and protection mix to 17% of sales, up 7 points compared to last year. On an ex-economics basis, Hong Kong margins expanded from year-end by about 4 points to 76%. Our growth markets segment delivered another strong performance, with NBP up 17%, led by a continued broadening of distribution of our very successful power product suites in Taiwan and in Thailand, driven by new product launches and the new CIMB Bank Assurance Partnership. Singapore momentum continues to build, with NBP up 12% year-on-year, supported by agency and bank assurance sales growth of 18% and 15%, respectively. In Mainland China, CPLs, NBP contracted 2% on an ex-economics basis, as lower sales were largely offset by an improved margin. The 15% reduction in sales volumes reflects a high comparator, resulting from our decision to reprice ahead of the market at the start of the second quarter of 2023. CPL's bank assurance momentum has improved, with sales volumes doubling relative to the second half of 2023. On the agency side, momentum improved in the second quarter. CPL's overall margin, ex-economics grew 6 points, again driven by our focus on product mix. On a reported basis, the margin was 35% as a result of lower interest rates. In Malaysia, NBP was stable, as a reduction in agency NBP was offset by growth in bank assurance. Finally, in Indonesia, new business profits reduced 18%, impacted by the ongoing effects of regulatory changes impacting investment link products and our own repricing actions. These actions, along with a claims-based pricing offering launched in the second quarter and ongoing negotiations with healthcare providers, are to ensure that our medical book remains sustainably profitable. Embedded value operating profit growth was driven by a higher in-force result reflecting business growth in 2023. We also saw improving, albeit still negative, operating variances. About half of the variances represent our ongoing investment to enhance our capabilities. Eastspring delivered improved profits up 9% after tax. Combined, this resulted in EEV operating profit growing 9% and an ROEV of 11%. To aid comparison with peers, we have restated the ROEV calculation using the start period equity excluding goodwill and intangibles as the denominator. Non-operating movements reflect FX translation headwinds and negative economic effects. The latter were driven by higher interest rates in most markets and lower rates in Mainland China, only partially offset by positive equity market performance. Lower rates, as seen in a number of markets since the end of June, would mechanically reverse this. Continuing to drive growth in NBP, improving in-force variances and ongoing capital discipline remain key to enhancing our returns on embedded value. The Group's capital position is robust. As the execution of the buyback only commenced on 24 June, with 18 million returned by the end of the period, this had a minimal impact on our capital position. We expect to complete 0.7 billion of our share buyback by the end of this year. Our regulatory shareholder cover ratio stood at 282%, with a surplus of 15.2 billion. The moderate reduction from year-end reflects the net impact of underlying capital generation, offset by investment in new business, the payment of the 2023 second interim dividend and non-operating effects. The Group's free surplus stock was £7.9 billion, down from the £8. 5 billion at the start of the year. The free surplus ratio of 232% was down 10 points from year-end, both essentially reflect the same drivers as regulatory capital. I will return to this shortly. As I mentioned earlier, gross OFSG was 1 4 billion, in line with the path to our 2027 objectives and includes 0.1 billion of investment in capability enhancement. Business unit remittances of 1.3 billion for the period include an element of stock being brought up to the group, and for this year have been very much weighted towards the first half. Strong remittances in the period, partly offset by the payment of the 2023 second interim dividend lifted holding company cash to 4 billion. Note that our end June liquidity position is not yet materially affected by the buyback or the 0.2 billion impact of the payment of the 2024 first interim dividend. Finally, our leverage remains comfortably within the AA range and we retain sufficient financial flexibility. I'll now turn to how we've deployed the capital we generated in the period. As I mentioned, in-force capital generation was in line with our expectations. This reflects the Group's high-quality and profitable stock of in-force business, which generates a predictable flow of capital available for deployment. You can see that the in-force emerging capital generation of 1.2 billion is consistent with the overall 2024 expected return of 2.4 billion. Along with asset management profits and reduced adverse variances, our underlying in-force capital generation was 1.5 billion. Note that in our accounts, our gross free surplus generation of 1.4 billion is presented net of investment to enhance our capabilities. We then deployed this according to our stated capital management priorities, investing 0.4 billion in high-quality new business, adding NBP of 1.5 billion, 0.1 billion in enhancing our capabilities in line with our strategic plan, and a further 0.1 billion in restructuring costs. Finally, we paid the 0.4 billion 2023 second interim dividend, along with 0.1 billion of interest payments to our debt holders. We introduced the free surplus ratio with our Capital Management Update in June. We define this in terms of capital resources as the addition of group free surplus and the required capital of our life business divided by the life required capital. Our normal operating range is between 175% and 200%. And with our 2023 year-end position at 242%, we announced the 2 billion capital return via a buyback. From an operating perspective, the key drivers of the ratio are gross in-force capital generation, less the impact of new business strain. The gearing in the ratio amplifies the effect of new business strain. In the period, the other main factors were the payment of the 2023 second interim dividend and non-operating effects impacting free surplus, reflecting the combination of higher interest rates in many markets and lower rates in Mainland China. As I mentioned, the buyback impact in the period is minimal. On a pro forma basis, if the entire $2 billion buyback is deducted, the ratio would be approximately 200%. Looking forward, other than the execution of the buyback, the key drivers of the free surplus ratio development will be retained operating free surplus and the development of life-required capital. As I previously mentioned at the recent Capital Management Update, we continue to expect to operate at the upper end of the 175% to 200% operating range over the next few years. Monetizing the value of in-force book into capital generation is a critical measure for us and a proof point that value added is real. This is why we introduced two financial objectives in August last year, growth in NBP and a gross OFSG capital generation target of above 4.4 billion in 2027. We have shared the trajectory of gross OFSG we expect to deliver over the objective period before, and this is shown on the left-hand chart. By way of reminder, in the early years, the trajectory is relatively flat, reflecting both the impact of slower new business growth through the COVID period, adverse variances, and the cost of our investment in capabilities. From the end of 2025, we expect an acceleration of growth towards our target, driven by the combined effect of higher profitable new sales, an improvement in variances as repricing and other actions take effect, growth in asset management earnings, and the completion of our investment in capabilities. You can see these effects coming through in our half year 2024 performance. The expected OFSG transfer from in-force business is down 8% to 1.4 billion and is the cumulative result of lower new business sales over the COVID period. Operating variances remain negative, albeit better than the prior period, and include 0.1 billion of investment in our capability program. We expect further improvement over the next years driven by repricing and the benefits of the full implementation of our health strategy. Finally, asset management earnings were up 9%, driven by average FUM growth of 6%. Looking forward, continuing to grow profitable, high-quality new business is key, both to our 2027 NBP objective and our gross OFSG objective shown on the left. The other building blocks towards this objective include the investment return on free surplus, our asset management profits, and the elimination of adverse operating variances. New cohorts of profitable new business add to the level of expected future OFSG. The chart illustrates how the OFSG we expect to emerge in 2027 from business in-force at the end of 2021 builds year by year with each cohort of new business. Importantly, the contribution of new business added in the first half of 2024 to the level of expected OFSG in 2027 is up 12%, ahead of the 6% growth in new sales. This is shown on the right. These positive OFSG jaws reflect the same product and pricing actions that benefited NBP and the NBP margin, despite a relatively lower new business contribution from our agency channel and health business. If you have used our 2023 new business monetization schedule to project our growth in gross OFSG to 2027, keep in mind that the 2023 cohort has a slower expected cash emergence than the 2022 cohort. This impacted the 2027 year OFSG edition, which in relation to new APE, was appreciably below that in 2022 and is shown on the left-hand chart. This was a deviation from historical norms resulting from changes to country, product and channel mix. There are various factors here, including in Hong Kong, where we capitalize on strong demand for savings products from Mainland Chinese visitors, and in Vietnam and mainland China, for reasons we've highlighted before. We expect the positive new business cash flow momentum evident in the first half of this year to continue, illustrated in the chart on the right. The full effect of pricing actions taken in the first half will emerge over the rest of the year, lifting the rate of OFSG added in relation to APE to be more comparable to 2022 levels. This, along with the benefit of growth in our agency channel and health business improving mix, will enhance future cash generation. These new business pricing actions, coupled with our ongoing efforts to return to net positive variances, growth in asset management and our ambitions for agency and health, give us continued confidence in reaching our 2027 objectives. Anil has outlined the actions we are taking to support and enable the execution of our strategy, including the billion-dollar investment in enhancing capabilities. To date, we have invested 230 million to the end of June 2024, 130 million in the latter part of 2023, and 100 million over the first half of this year. We continue to expect another 150 million to 200 million investment in the second half of this year and a further 250 million to 300 million in 2025, with the balance being invested in 2026. Around 60% of our investment to the end of June has been focused on distribution. Within distribution, our investments have focused on quality recruitment through PRUVenture and driving technology-enabled productivity through our agency platform, PRUForce. On the bank assurance side, we are very focused on customer penetration and driving the overall contribution of health and protection sales upwards. About 30% of our investments have been directed towards our customer pillar. In addition to PRUServices, we are also deploying a customer engagement platform to automate and personalize customer engagement and marketing. This platform is live in Singapore and Thailand and we intend to roll this out across seven businesses over the next 12 months. Finally, in terms of health, we have made significant strides to onboard new capabilities, address medical inflation issues, and launch new customer propositions. Over time, these will drive improved consistency of execution, increased productivity, improved customer experience, and increased operational efficiency, all acting to accelerate sustainable value creation. Turning to our IFRS results, profitable new business in half year 2024 grew the CSM by 1.2 billion and combined with the unwind of the CSM balance increased the CSM by 2 billion. The new business CSM result includes a favorable one-time effect from a new reinsurance treaty of 84 million. On an annualized basis, the CSM release rate was 9.9%, similar to the pattern seen previously. Underlying growth, excluding the reinsurance treaty benefit, continues to be within the 6% to 9% guided range, which, as I have said before, is consistent with our NBP 2022 to 2027 growth objective. Economic and other variances reflect the impact of a higher discounting effect in the Hong Kong business for variable fee products, and on the operational side, similar drivers to our embedded value result, including the CSM share of investment to enhance our capabilities and adverse persistency in Vietnam. Overall, the CSM declined by 2%, driven by economic and FX headwinds. Based upon current interest rates, we would expect to see these effects moderate. Group operating profit grew 9%, driven by a 6% increase in the insurance results shown on the left. The CSM release continues to account for the majority of our IFRS insurance operating profit and reflects the high-quality and predictable nature of our earnings. The net investment result of 0.6 billion reflects the long-term return on assets backing equity and capital and the long-term spreads on GMM business. Long-term rates are applied to the opening value of assets and therefore increases in assets reflecting business growth and positive market movements in 2023 have led to an increase in this income. Turning to the Group P&L on the right. Higher segment profit and stable corporate center costs lifted group operating profit growth to 9%. Eastspring’s operating profit was up 8% before tax. At group level, we continue to expect restructuring costs for full year 2024 to be similar to full year 2023 before reducing towards historical levels with the completion of investments to enhance Eastspring’s operating model and our back office efficiency and scalability. And looking ahead, I'd remind you of the mechanical reduction in investment yield from lower central cash balances as the buyback is executed. Finally, we reflect the impact of negative short-term fluctuations through our P&L rather than OCI. These fluctuations reflect the impact of interest rate movements on GMM liabilities and surplus assets, along with lower interest rates in mainland China. Since the half year, given subsequent interest rate movements, some of these effects will have reversed. As I mentioned in March, having completed the IFRS 17 project, we have been actively considering TEV and have now decided that starting from our first quarter 2025 update, we will shift entirely to a traditional embedded value or TEV basis. This will enhance the transparency of underlying growth trends in the business and allow greater comparability with our Asia peers. This is an accounting change that does not affect the economics or ultimate cash flows earned by the business, it is substantially about discounting. Consequently, there is no change to business strategy, definitions of free surplus, or how we manage our capital and our dividend policy. Conversion centers around three things. The first and dominant impact is an increase to risk discount rates up 2.3 percentage points to 8.2% on a weighted average basis comparable to our peer. This is despite our UK style with profit offerings with relatively limited risk to the shareholder and conservatively set equity risk premier. Second, we have introduced long-term risk-free interest rates aligned to the Group's long-term assumptions. And third, we've accounted for future recurring head office costs within the embedded value calculation. The net effect of these changes at end 2023 results in a group TEV of 34.2 billion, equivalent to 1,241 cents, or 973 pence per share, and a full year 2023 TEV NBP of 2.3 billion. Mechanically, while these changes result in a lower EV, they also result in a higher return on embedded value, or ROEV, which we have estimated increases for full year 2023 to between 13% and 14% from 12% on an EEV basis. Looking forward, we see scope to increase this ROEV by delivering NBP growth, eliminating adverse variances, growing our asset management earnings, and managing our capital with discipline. Further details and accompanying notes are provided in the appendix to my slides. As I mentioned, TEV is an accounting change. The actual cash flows delivered do not change. Under TEV, with a higher discount rate, the dollar value of NBP is reduced. There is no change to our NBP growth objective, which remains a CAGR of 15% to 20% between 2022 and 2027. On a TEV basis, the implied 2027 NBP objective range is 3.4 billion to 4.2 billion. There is no change to our capital generation objective of over 4.4 billion of gross OFSG in 2027. In summary, we are working hard to deliver the operating improvements needed to deliver sustainable growth in value and capital generation. We continue to focus on driving quality new business, with NBP up 8% ex-economics despite the elevated half year 2023 comparator. Our balance sheet remains in very good shape with a robust capital position and sufficient flexibility. We remain particularly focused on future capital generation drivers, both in terms of new business and our in-force performance. Starting from our first quarter 2025 update, we will shift entirely to a TEV basis for our embedded value reporting. Our 2027 gross OFSG and NBP CAGR objectives are unchanged. Finally, the improving quality of our new business, the management actions we are taking, and our continuing sales momentum give me continued confidence [Ends Abruptly].