Hello and welcome to the M&G plc 2022 half-year results Q&A session. There'll be an opportunity for questions shortly. If you have joined us on the telephone line, please press star one on your telephone keypad. Alternatively, if you've joined us on the webcast, please type your question in the question box on the right-hand side. I will now hand you over to your host, Luca Gagliardi, to begin. Luca, please go ahead. Hi there. Good morning, everyone. For those on the line and those in the room, I'm here today with John and Catherine. John will give a very, very brief introduction, and then we'll be happy to take your questions. John, over to you. Thank you. Look, these are a really good achievement here. Tell us about the momentum. It's about delivery, and how we are very focused on delivering what we say we will do. You know, we've hit all the milestones that we said we would at the merger. Some we've achieved a little earlier than planned. These results today, I think, just a continuum of that momentum. Some of you will notice it. Never mind. Without any further ado, we'll go straight to questions if that's okay. I'll pass the first question to Ria. Ria, over to you. A reminder for those in the room. You need to pull out the microphone as usual and keep pressing the button until you see the red line. If you don't see the red line, people on the line won't be able to hear you. Thanks, Luca. Great results today. Two questions from me. The first is on the dividend. You've committed to the cash spend for the dividend for this year, but how should we think about either the DPS going forward or the cash spend going forward this, depending on whether you're committing to further capital return? Excess capital return assets. The second one is around M&A. I mean, you've been building up M&G Wealth, and I think there was a comment in the statement saying that you've got all the building blocks now for M&G Wealth. Are there any other gaps in the other parts of the business that you think you could acquire or invest in to grow further? So In terms of the dividend, as you said, management of the full year results said they'd like to keep the pound amount of dividend the same. What that means is we've got a GBP 500 million buyback program that we announced at the full year. Obviously, when we reduce the share count, we'll get an increase in the dividends per share. Obviously, that's part of a broader capital management framework, one element of which, John will talk about in a minute. Encouragingly, we've seen a 40% increase in operating capital generation in the first half, which means at GBP 4.86 million, we're well on our way to our GBP 2.5 billion operating capital target. It's also really strong underpin of that cash dividend. In terms of other uses of excess capital, I'll hand over to John to talk about potential impact. We did say that we are very pleased with the progress we've made on M&G Wealth, and that we have building blocks now to start delivering product, not just through fund propositions, but also M&G's mutual fund propositions to clients directly or through intermediary channels. We can still build that out further. You've seen the deal we did recently, a small transaction with Continuum follows from the Sandringham acquisition. All of these are very positive building blocks to increasing our delivery mechanisms to our clients. In terms of gaps, we think that, you know, the acquisition of the platform is really important for us and, through PruFund Planet is already on platform, on that platform. That's a great result. We hope that the PruFund proposition goes on to platform in the second half of this year. That will be a very important driver for sales of that proposition, and it will improve the momentum significantly, as you would expect, right. Otherwise, I suspect that we'll probably do more of the same. We've got Claire in the audience. I don't know if you want to talk about the IFA channels, Claire, and what our thoughts are around that. In terms of the Continuum acquisition, that was just really adding to the scale that we're basically looking to build from an overall kind of advice perspective. We've now got both a restricted and an independent that allows us to be able to encourage advisors as well in terms of broadening that out. We've talked about often a target of 1,000 advisors as being the sort of level from a scale perspective. I think it's important to recognize that is nothing more than an ambition of which we need to kind of play that together with productivity and the use of digital. We announced the launch of hybrid advice at the end of last year. That has been extremely successful in terms of actually improving the productivity. Don't treat that 1,000 advisors as anything more than kind of a sort of. Point that we are looking to basically achieve. We'll do that both inorganically and organically in terms of what we do. Obviously, the partnership with Moneyfarm is also a key part of that in terms of being able to provide the full remit in terms of the access to this market. We'll go over to Farooq, who was the fastest one, raising his hand. Maybe I forgot to mention earlier. I mean, I know all of you very well, but if you can introduce yourself by name and company where you work. Hi. Thanks so much. It's Farooq Younis from JP Morgan. I'm glad I'm fast on the draw, even though I've lost results. Can you talk about your thinking behind the flat nominal dividend? Presumably, your indication here is that, you know, obviously you're doing the GBP 500 million buyback, but you'd like to do more. Can you talk about the parameters around that? Secondly, there's a slide where you talk about your leverage and the GBP 300 million of own funds you set aside. Presumably, that's probably gonna come up against potentially more as you try to push them on as well. I mean, what's your plan around debt and, you know, addressing that earlier than core dates? And just if you could talk around that as well, that's really helpful. Thank you very much. The debt question is probably the easy one of those, and it's really down to economics, right? We've seen interest rates move. They haven't quite come into focus. The way I think about it is when they come into focus, that's when we might do something on the debt front. That means that there's economic advantage to M&G and to shareholders to enter into conversations with bondholders about doing something on a preemptive basis. You know, we talked about our capital framework at the year-end. We discussed that as a potential use of capital that we generate. That's still something. In fact, it's more likely proposition today than it was then, given the move in interest rates. We've also got the GBP 300 million that we set aside for the bond maturing in 2024. That's all pretty clear. In terms of otherwise in capital, look, as I say, we have a number of options around the capital generation. We are a highly capital generative, cash generative organization. We have strong solvency. We, I think, need to demonstrate resilience in these markets. We don't know what the winter is going to bring. It's likely to be pretty choppy, and I'm very pleased with the fact that we have a 214% Solvency II ratio. That's a very good number and, you know, gives us confidence going into whatever lies ahead. There will be opportunities, right? Markets will throw up opportunities, I believe, for us to make acquisitions. Again, if they fit, if they're nailed on strategically, and I hope you can see that everything we've done thus far is nailed on strategically. These acquisitions have had real merit to our strategy. Whether it's that maintaining dividend, we'll likely talk more about it at the full year. We did say at the full year back in March that we wouldn't be making any announcements around the half year, nor do we intend to. Did that cover your question? Thanks. It's Andy Sinclair from Bank of America. First one for me was just on remittances. Slightly lower remittances in H1, about GBP 0.3 billion. Just any reason for that after a pretty good capital allocation last year? And should get more for H2. Second and final one for me is just on With-Profits. PruFunds have held up pretty well in terms of performance in H1. Just really wondered, given the market's volatility, how that's changed dynamics of discussions with advisors as a result. PruFund is just that's been a phenomenal result. At about GBP 253 million. I think first of all, remember that we've actually funded some acquisitions worth GBP 260 million. It's double that when you net off for the acquisitions that we've done in the first half. I think when we look at how we manage capital liquidity across the group, our approach really hasn't changed. When we think about what we can distribute in terms of excess surplus in subsidiaries to the parent, we never like keeping a whole load of excess in subsidiaries. Our framework has always been about distributing up to the parent, bearing in mind the position obviously of the two, subsidiaries. The most meaningful one, obviously, insurance one. Also you'll remember last year, the GBP 1.1 billion did have an unusually large, contribution from PAC. Those are the main factors behind that. I think when you look at the whole liquidity, we've got GBP 1.14 billion, and we obviously are a very capital generative business. We feel very comfortable about the position of the group. Now you answer to me about the proof on the PruFund, I think, delivered. With-Profits, your question was more broadly about With-Profits. Certainly in terms of the performance, which you can see the 20 percentage point outperformance of peers, which is really extraordinary. That's led to this 30% pickup in sales in group, which is also encouraging. Obviously, Claire is looking for more distribution channels for that product, but it obviously is very well positioned. We've obviously had meaningful benefit coming through in terms of underlying capital from our With-Profits businesses. That's about GBP 100 million of the increase we've seen year-on-year. Obviously underpinning that is just the growth in the PBST, which has increased year-on-year. Now, there are a couple of provision moves that you'll have seen, and obviously on the underlying capital move, we also moved a few hedges around. We have had really strong performance, which has led to that growing PBST driving the really strong underlying capital generation that you've seen. I think we feel quite well positioned. I don't know, Claire, if you want to add anything else about the prospects of PruFund. Yes. What the PruFund investment performance that Catherine talked about has been extremely positive, and that is not just about actually you can see the smooth return, but also the underlying returns in terms of what we've actually been able to deliver. From an advisor perspective, the advisors are in a pretty good place. We've made some fairly significant improvements in service. That has generated a lot of the improvement in terms of flow. The market volatility that we've seen, what you can see from this is exactly, it's doing exactly what you'd expect it to do. The other aspect I think that is important around this is a lot of the underlying assets are obviously real assets. In terms of being able to actually deliver the inflation component in terms of the cost of living crisis, this product is absolutely well-positioned in terms of that perspective. As interest rates start to climb, you'll start to see increases in the expected growth rate. Again, that basically provides customers with a great outcome in terms of how they go through that retirement. We're certainly seeing that in terms of how the advisors are reacting. The most important thing, Andy, is that the product is doing what it's expecting because advisors have seen this now for 10+ years, and they're pretty comfortable in terms of how it operates. This time around, it was a different Andrew being the fastest one, so. Hello. It's Andrew Green here. A couple of questions. Am I right in thinking, what is the underlying sense With-Profits? If we could just have the underlying sense behind that. Then the second question on balance sheet. The IFRS equity is GBP 3.9 billion, taking off tax and tangibles at GBP 1.6 billion, and then GBP 650 million of buyback and dividends. The tangible IFRS equity now is about GBP 1.75 billion, and that plays against debt. The leverage there is okay. I mean, are you happy with that level of leverage? Maybe I should take the first one on PruFund because we do not disclose the unsmoothed performance of the fund because obviously this would be an arbitrage opportunity for any customer out there. We have never disclosed that, and unfortunately, we cannot do it. But it hovers within a boundary from the smoothed performance. It hovers around. It clearly moves on a daily basis, but we don't disclose it. On the balance sheet, I think the short answer would be that our main metrics would be on the capital side of things. That's what we focus most on, but I'm not sure if. effects on investors and rating agencies and reg- Since I've been in the role, I've understood people looking at obviously the IFRS position. Certainly, you know, we do focus very much on and obviously engage with our rating agencies. Clearly the regulators are an incredibly important stakeholder. When we've seen the leverage move in the quarter on the solvency basis, upon which we look at leverage, obviously there's been a huge impact in this period from the very material market moves that we've seen. Our debt position hasn't changed. That movement down to low 30s%, 31% once you adjust for GBP 300 million, is something we're comfortable with. We've said we'd be happy with sort of temporary variances above our target of 30%. I think, you know, the management team, and we said that at full year, is comfortable, very comfortable with this approach to looking at leverage on the solvency basis rather than the IFRS basis. Obviously, there have been, as I said, meaningful market moves in both over the period. Our ratings haven't been adjusted. If you go back to 2020, we've probably been on that basis. That's why we just Catherine. Ashik and then Dom, because you've consistently put up the hand quite fast, but you're always second. Thank you and good morning, everyone. This is Ashik Musaddi from Morgan Stanley. Just a couple of questions. First of all, on management actions, I mean, this half we saw about GBP 67 million, and it had been a very volatile half. How would you categorize the GBP 67 million for the half? I mean, would you say it's a good result, or could have been more, or, is there any pipeline you can share, for the year? Because at least it is an important part of your, capital generation metric. Second thing is, retail flows or wholesale flows have been, pretty strong. I mean, GBP 0.8 billion, which we haven't seen for quite some time. What would you say were there any lumpy business in that? Or was it pretty stable? Is there any outlook you can share, how it is looking for second half? Any thoughts on that would be helpful. The third one would be on cost. I mean, over the results season, we have seen quite a few asset managers, struggling on the cost side, as well as on the revenue side. When I look at your results, I mean, it kind of came pretty well in line with expectations. So how do you think about cost in second half? I mean, do you think there is any catch up on the cost that needs to be done in second half? Or would you say your, the first half is more or less good indicator? Thank you. three and Jack two. Yes, look, I think I mentioned in, I think in the first question, that the operating capital generation of GBP 33 million up 40% is pleasing for us, given it shows we're on track for our external target. We do like driving underlying performance. We do focus very much on that metric. When we look at the management actions we delivered in the six months, yes, they came in at around GBP 67 million, and that is in line with our expectations. We feel very comfortable about what we can deliver over the course of the year. Obviously, we typically review all the longevity assumptions, even in the second half of every year. We have the CMI 2020 tables that we'll need to assess against our assumptions. You'll remember that the period a year ago in the first half of 2021 was very lumpy in terms of management actions. Really meaningful numbers coming through there. Yes, the number of GBP 67 million and the opportunities which we see in the near-term business, we're comfortable around them, and it's very much in line with our expectations. It is lumpy, right? I mean. Yes. You know, we'll take opportunities when they arise. If it doesn't fall within the period, we don't get excited about it. If I can put it that way. Jack, you want to take the question close. You can have slide 11, Luca. The approach to wholesale asset management, we've talked about it for the last couple of years. It's a consistent approach to improving flow positions, and you can see that that's starting to happen. Four-pronged approach, tackling performance, which was weak a couple of years ago, has now improved considerably. Value for money, looking at the pricing which we've dealt with as well. That is no longer an issue when we talk to our wholesale clients and intermediaries. Launching new propositions and revitalization of that proposition base, also bringing in new talents in the equities business in order to reinvigorate that side of our activities. We've seen some very good inflows into equities in the first half. Investing in distribution and developing these core relationships with our wholesale intermediary clients that we can then do a number of different strategies with them rather than just one or two. Some of those multi-spoke. All of these things are starting to work, and we've seen that in the first half with positive flows. The second half, we would expect also to continue with that momentum. It's something that we've been focused on for a couple of years in a very systematic way, and it's starting to come through as we would expect. If you take that in context of what's happened in the wider market, I think. Take the costs now. On costs. I think it's a natural follow on from just hearing about the really strong turnaround in the wholesale business. You're absolutely right. Within asset management costs were up about GBP 40 million year-on-year. Now, it's important to remember that about half of that was from the consolidation of our South African joint venture. The remainder is split broadly 50/50 between some inflation and then some investments which Jack talked about to grow the business. I think it's really encouraging that we've seen the fruits of this strategy and these investments come through, and that the business has got momentum. Revenues are up 7% year-on-year within asset management. I think what I said in my speech this morning is that over the longer term, you would expect the cost income ratio to move down. I think we've been very selective and focused on where we're investing. Really importantly, it's made the business much more diversified and much more resilient, which is why we've managed to, I think, deliver a relatively good performance in this period, particularly notable in the turnaround in the wholesale business. I think to make the point in relation to delivery. Performance, we spent this money. It's not tied to my resources. The performance is there and the revenue improvement is there. That's what we focus on when we say. Thank you very much. Dom, over to you. Dominic O'Mahony, BNP Paribas Exane. So three questions. Just on Wealth and I suppose related to retail asset management. There are some indications that cost of living crisis is leading people to pull money away from savings and pensions. I'm wondering whether you're seeing any signs that potential phase changing. More into the financial side. Kathryn, one thing you said earlier was you try to push cash up through the structure. I wonder if you could just help us understand a bit more about the binding constraints on cash remittance. Is it really as simple as solvency position within the entities like PAC? Are there other constraints? I mean, for instance, asset that PBS seems very big, and presumably it's not, but it is, but that would be helpful. You may say you can, you know, pass this on to a full year. But in terms of uses of surplus capitals, come back to leverage again on your own metrics is I think barely enough to target, but I wonder whether it would be fair to assume that shareholder terms priority to debt redemption while the ratio is above that will actually. For the first, I can take a few of those. The first question on have we seen any change in savings patterns? I think I'll hand over to Clare, and then I'll take the others. What's interesting is the period most customers basically go to review of their finances, typically around the tax year end. What we did see in that period was a slight pickup in terms of draw down amounts, in terms of people actually accessing their cash. Post that, we've seen no real change in terms of that trend. Now, one of the things I think that's really important as we go down the kind of post compulsory annuitization is a lot more customers are now in draw down than they would have done historically. One of the things we're very focused on is fund exhaustion, for example. We are looking at different mechanisms in terms of, for example, how much we highlight that to customers, but also we're also looking at guarantees as an example, because as interest rates start to improve, what we can start to do is make those much more commercially viable, particularly with the size of With-Profits fund that we have. There are a number of different options that we're basically exploring at the moment, and we're one of the few in the market who's got the expertise and the kind of structures to be able to do that in terms of offering it. What I would say at the moment is we're predominantly a mass market and mass affluent player, so we don't see some of the trends that I would say some of the kind of higher net worth or the sort of affluent where you see a lot more impact and volatility in the market. That cost of living point in terms of just being able to afford is critical in terms of our customer base. Next one. Back to how we think about remittances and how we manage capital liquidity across the group. This is something I did a fair bit in my old role as well. It's actually just a really similar approach when you've got regulated subsidiaries. You want to make sure that you obviously run those subsidiaries prudently in terms of all their metrics. They'll have a number. Certainly, solvency capital liquidity metrics are important. The approach is really consistent from what the group has had historically. As I said, last year did have a very, very unusual, you know, unusually large distribution from the insurance subsidiaries. We are capital generative, as you know. We've delivered really strong numbers in the first half. We feel very comfortable. Obviously, we can see how well supported the dividend is. When we talk about an intention for full year baseline cash dividend, again, feel really confident around that given what we've delivered in the first half and given my earlier statements also around confidence in management actions in the second half. Now it's an interesting question, obviously, that's appeared in among our peers as well, given the meaningful market moves that we've seen. It does mean that the composition of the capital base can move depending on what happens with markets, which obviously, you know, drove a meaningful move in own funds in this period. We've seen growth in the PBSD, which is good news because it's come from very strong With-Profits performance. Looking forward, we still feel very comfortable around the capital generation capacity of the group and the distributions to the market. Now if you step back and look again around the question around leverage, which does get a lot of focus, it's quite interesting. I think I look at that capital management framework that the group put out for the full year and think it's very compelling for all our stakeholders. We really value financial strength. We like having, as John said, a 214% solvency ratios today. We also like having flexibility, and flexibility is also prudent from a regulatory perspective, from a business perspective to capture opportunities. We've delivered very strong capital generation. We have got the ability to potentially deploy that GBP 300 million. And as John said, we have seen what happened to credit spreads. Obviously, you've seen that also in our numbers today. We understand certainly very well what we could potentially do. We will take into consideration all of the stakeholders and importantly do what's also driving shareholder value. We've delivered. The management team has delivered enormously for shareholders. John can quote the numbers of how much we've returned since listing. I think that certainly the total shareholder return through buybacks, and more importantly, the underlying strong dividend is meaningful. We like being in a strong position today. We know we're capital generative, and we've got optionality and flexibility around that GBP 300 million, and we will continue to monitor the balance sheet position and do what's right when we take into account all of those considerations. You want the number to the penny? I'm kidding. Just to make the point on this, though, I don't really see that you mentioned that shareholders would take a backseat to debt repayment. That's not the way we see it. We've got these four planks on from a capital framework perspective, and they're all to the advantage of shareholders, we believe. Therefore, there will be a moment when actually well, I say there will be a moment. I expect there will be a moment when the debt question will actually play well in terms of value for shareholders in terms of reducing debt, given where markets are and where they're heading. That's the way we think about it. We have a couple of questions from the people online. I promise we'll exhaust all questions, but I'm just typing one second to the emails. I'll ask one, well, two from Andrew Baker from Citi. The first one is, what has been the initial flow experience from the PruFund product, which Andrew has called Future+ in Europe? And, based on your initial analysis, what solvency impact are you expecting from the UK Solvency II review? It's still early days with Future+. It's actually called Future+ in Europe. You know we are piloting this in Italy. We're working with Intesa Sanpaolo, a very strong partner. We are going through the process of educating the sales force and so on and so forth. The results and investment returns like we had on the screen earlier will only promote the proposition. It will take time. We saw that in the UK. Everybody knows that proposition was available in the UK market for some years before it took off. Circumstances change, and that I'm confident will happen. We're also rolling it out in Ireland, mentioned that previously. We'll just stick with those two markets until we have proof of concept, because I think that will be more helpful, more advantageous for our commercial discussions with future partners in other markets, going forward. It's going well, but don't expect to see, you know, huge scores on the doors at any time. Another question. Solvency II reform. Look, there's a lot said. I haven't seen much in terms of output, but there's a lot said. We are engaged with industry forums and so on. We talk to regulators. People know our views. It's not hugely impactful to our business. We don't write the sort of business that is gonna be impacted by that. That said, if things were to play into the hands of private asset managers, then that would be great from our perspective, because it would mean that that business would get yet another shot in the arm. But I think from our perspective, it's something we watch. It's something we're interested in, not hugely impactful. Three questions from Steven Haywood from HSBC. The first one, any updates on management changes, particularly with the Chief Executive Officer and Chief Investment Officer? Second question, CMI 2020 calibration in the second half. Do you foresee any particular impact or trends? Probably positive, but what about current volatility in it? The second question is on CMI 2020. Third question is about management action, which I think was partly addressed earlier. Any change to the expected run rate? Steven quotes a number between GBP 150-200 million a year as a sustainable level of management actions. I'll take the first one, and two others. On the question of Chief Executive Officer succession, as you would imagine, the process is ongoing. It's being led by the chair. We'll make an announcement about that in due course when the time's right. In the meantime, though, you'll be pleased to know that my, or maybe not, that my hand is very firmly on the tiller of this company and will remain there until a new Chief Executive Officer is appointed. In terms of Jonathan leaving, he'll be around for quite some time yet, I'm pleased to say. I think it will be up to the new Chief Executive Officer to worry about how he's replaced, being irreplaceable. On the longevity question, I appreciate this has come up before. I'm not going to give too much more specific guidance, apart from I think it's too early to say at the moment or identify sort of any clear trends. I think we'll wait to see what comes out. We're not guiding to anything particularly meaningful or special here. We're not expecting anything particularly unusual than you would have seen previously. Obviously, we know we've had meaningful longevity releases in the past. Obviously also over the last few years, we've been continuing to work on our underlying model as well. That's another aspect of that. I guess just back to management action, and in terms of the guidance that has been given before, I think that was... That guidance was given across both assets trading and longevity assumptions. If you look at the asset trading, I think as we've said, in the comments that we're absolutely on track. We feel very comfortable about what we can deliver also in the second half. You've seen that we have a really strong track record in management action. I think we feel very confident that we can continue to deliver there across those various levers, hedging trading, that you know we have at our disposal. Last point on CMI20, obviously we book short-term experience variances in each result. So obviously, experience variance and mortality in each fund would have already been booked in these numbers. So when COVID was at its height, clearly that had more of an impact. In terms of long term trends, it's fair to say that it's probably still too early to judge on that. Last person that submitted questions online, and then we'll move back to the room. Charlie Beeching from KBW. First question is probably for you, Catherine. Are you likely to change your balance sheet hedging approach at all with interest rates seemingly set to continue rising? So that would be the first one. The second one, have you had any further thought of disposing of part or all of the heritage book? Does this remain core to the strategy? It says the heritage book, but I think it possibly implies the new book. That's a very new one. Third and final, which I think Jack already partly addressed earlier. Do you expect net positive flows in the second half of the year, given a more positive outlook for institutional and the mandate wins? We typically never guide on flows, but if you can add a little bit more color on that. I'd start with the thoughts around how we feel about the position of the balance sheet in terms of hedging. As you know very well, we've got two broad hedging programs. We have an equity hedge that hedges the shareholder transfers that shareholder gets. That's been obviously pretty beneficial given what we've seen in terms of the market, and I think that's working very well. You'll be aware we did adjust it a couple of years ago, but I wouldn't expect us to change the approach to equity hedging. On the interest rate side, you've seen that we have obviously got interest rate hedges on. We're very much focused across all of our hedging programs on protecting the solvency capital position. That is the primary objective, looking at the solvency capital and protecting that. There has been some negative moves, obviously, given the meaningful backup we've seen in the sterling swaps this first half on that interest rate hedging, but we're prudently protecting for downside risks. You've obviously seen net-net overall, the benefit we have received from a rising rate environment. We do continue to look at the structure of the hedging programs, their composition, and we'll be as efficient as possible, but very much focused on protecting the solvency position of the group. I was worried that I wouldn't get that. Thanks for it. The answer is simply no. We haven't changed our mind. We still think that it's the right thing for us to hold on to that book, for all the reasons that I've mentioned multiple times before. I think in the current environment, even more so in some respects. About the heritage books, you've got the need to but the other bit is the traditional With-Profits fund, which obviously is an integral part of the overall With-Profits fund, but also include PruFund, so you cannot really partition. Yeah. Nice theoretical exercise to do, and I don't think anyone is. Jack, on flows looking forward, maybe more on sentiments. It's slightly leveling. We talked a bit about the wholesale side. This is obviously the other bit, institutional. That's got a very long history of positive flows. The first half was quieter. You know, markets were turbulent. Some of our institutional investors were sitting on their hands a bit. I'm pleased to say that in July, we had a couple of different wins. We've got the Capital Solutions and the private assets down in the bottom right there. I'm speaking to the head of the institutional this week, and things seem to be returning to normal. You know, we don't give any further guidance on what to expect, but it feels better than it did in the first. Thank you very much, Jack. Larissa, you've been very patient. Well, all of those that haven't asked questions have been patient with waiting. Larissa, over to you. Thank you very much. On capital generation, about use of capital at the moment. How do you see the composition evolving over time? At some point, would it actually make sense? We have never sort of avoided controversy on that topic. If we see an opportunity and it makes economic sense, and that might happen as a result of Solvency II, not to the extent I've heard about, but that might then that is something we could consider because we have the team of people, we run the business, we understand it very well, and we have a terrific brand in that market. It's always an option. You know, if you're asking will it at some point precipitate the change in our portfolio? It could well, but not for some years, in my opinion. Makes sense. You've seen the run-off of that book. We've shown you that before, and it's a very valuable asset. Could there come a time? Sure. There could also come a time when we would add Works. It's also the expected return on the excess asset struck at the beginning of the year. You'll know what's happened to rates this year. The market has been very volatile, but certainly that should be, you know, reasonably supportive in terms of expected continuation of that strong expected return on those assets sitting in the annuity book, albeit with very, very much over the longer term, clearly a declining run-off profile. Do you believe that the other operations? The business that Claire runs, certainly we're very encouraged by the prospects there. We've talked about the longer term potential in Future+ in Europe, which we're really excited about. The results from asset management today show business that's got real momentum across wholesale and institutional with great franchises. Obviously we know that there are clearly inflation cost headwinds there, but we're really encouraged by the potential to grow earnings in that business over time. One, Dom, so you wait. Nasir and then Alan. Hi, thanks. I've got only one left. This is Nasir Deen. On IFRS 17, given what you've done internally, what kind of impact have you had and is it just a case of kind of adding your accumulated surplus to your IFRS and does that become the sort of IFRS 17? Is that the way you're looking at IFRS leverage as well because you've got a big surplus. On IFRS 17, it's obviously a project that is big for us and all our peers. Got a lot to do, but we're in a good spot at the moment. In terms of the impact on the business, obviously we aren't nearly as impacted as many of our peers, as you know. Luca is looking at what we might do in terms of guiding the market on the impacts on M&G when it comes in at the beginning of January. With the expectation that several people will be coming out in the final quarter of this year. In terms of more details and more technicalities around how the various parts work, it's probably worth some initial guidance that Luca can take you through offline. Obviously we'll be waiting until we more formally give something out to the market later this probably. Thanks. Alan Devlin, Goldman Sachs. A couple of questions on PruFund. I know in the past you've said it's you know the sales been held back because it's a complex deal and you know with COVID and the uncertain markets sales have been low in the last couple of years. You've given the improvement in sales this half. Is it starting to get easier to sell that product? And what's kind of the outlook for sales you know now it's on the platform now you've launched in Italy and Ireland et cetera. Do you expect that momentum to continue? And presumably the strong performance in H1 actually is better for forward sales because obviously they've just happened and the advisors can start to sell it. Secondly, also PruFund you mentioned, you know, in Italy and Ireland, the proving the concept. You know, for you guys, what is the How would you prove the concept? What's going to be success for you're looking for in the Future+ or in Italy and Ireland? Thank you. Just kind of standing back in terms of the last couple of years in terms of PruFund flows. There were a couple of things that were basically driving some of the trends. Firstly, DB transfers were a big element in 2017 and 2018. They were about 25%-30% of our flows during that period. Obviously what's happened with some of the regulatory pressure is we've now got a lot less IFAs who are actually able to make those DB transfers. Those volumes have come down. The actual demand for it just ends up over a longer period. PruFund is an ideal proposition in the context of a DB transfer. That's one element. The second piece is what we've seen is through the pandemic, a lot more customers and advisors have wanted to do things digitally for the obvious reasons. What that's done is effectively generated quite a lot of advisor consolidation because a lot of the advisors, as we all know, are closer to retirement. Fundamentally what they're saying is they've got to put investment into their business. That as a result, a lot of them have put themselves up for sale. That's why we're seeing the consolidation that we've seen. What that's also doing is shifting flows onto platforms. There's been a shift from off-platform to on-platform over the last 15 years that has accelerated as the advisors have accelerated. That has been the big driver to why, if you go back to 2017, 2018 and compare to where the flows are today, that's the big drivers. That was the reason why we acquired the Ascentric platform in 2020. That's why we've just launched PruFund Planet on the platform in July. We've had an amazingly positive response to that. Number of leads that advisors have come to us. We even had flow come straight in from a platform on day one. That's unheard of in terms of a platform. The one thing you've got to remember is the platform sale is a holistic sale where you basically plumb that platform into the advisor business and into us. That typically takes somewhere between three to six months. Then it becomes less of a transactional process and more of something where you're part of the business model in terms of the advisor. We should start to see the impact of that, but it's probably gonna be 2023 rather than 2022 in terms of, in terms of where we go. We're also looking at putting PruFund Growth and PruFund Cautious onto the platform as well towards the end of the year in terms of that piece. Overall, we are very much optimistic. You saw the performance, I mean, the performance is stellar. The market, as the volatility of the market makes it very positive. As I talked about earlier on, we're also thinking about guarantees in the context of where interest rates are in terms of those different markets. In terms of the optimism, in terms of the future, absolutely. If you then go to Future+, yes, the feedback that we've had in terms of the market and the agents on the ground in Italy has been very, very strong. Those banks, as if you look at the amount of cash that's on deposit in bank accounts, again. All the dynamics and the opportunity are absolutely there. As John said, it takes time, and we're talking about thousands of agents, and we're talking about a very innovative new product that haven't been in the market, and that will take time in order to kind of bed down and get the full momentum in terms of what we're looking to do. The Irish market is a bit different because it's more akin to the UK market. There's a lot of things that we can learn and leverage in terms of the Irish market. Yes, overall, I would say we're feeling very, very optimistic in terms of the future. Yeah. To Luca's point around the With Profits fund. The With Profits fund is one block of assets. You have not got GBP 60 billion that basically backs PruFund. It basically backs the full traditional With Profits. When you look at the different tranches, all they are is combinations of blocks of assets in terms of where you go. Absolutely, we can use the track record, although as you will get, you know, the agents, they really wanna see what is the actual funds that the customers are gonna go. The longer we get a track record, the better. For example, when we saw a unit price downwards adjustment on that fund, about a month, six weeks ago, that went down very, very well in the Italian market because it was actually significantly lower than the market had gone down. What that was doing is proving to the agents this actually does what you expect it to do in those situations. Yeah, it's very much doing exactly what you'd expect. Thanks, Luca Gagliardi. Morning. Mandeep Jagpal, RBC Capital Markets. Just one question left for me as a follow-up on institutional outflows. I understand the pipeline here is good in terms of inflows, but in terms of potential redemptions, is there a threat here due to pension schemes accelerating their de-risking over the next few months and years due to the improvements in funding levels that we've seen year to date? This could either be in the form of moving from growth assets into LDI, or actually deciding that they're now in a position to buy out DBs. Take that one. I mean, there is a challenge to our existing business. What I would say is that if you look at some of the positive flows that we've seen in the first half and actually in the second half of last year. On the public fixed income side, particularly, we're getting very good traction with institutions outside of the UK in Europe. If you look at the last six months of last year, a significant portion of those inflows were large institutions in France and Germany. Part of the approach to diversification and investing in our international business, particularly in Europe, is that those core fixed income capabilities that we have are sort of strategies that institutions in Europe are looking to invest in as well. That's positive. We haven't really seen the letup either in the interest in private assets. Again, you know, we've traditionally been strong in the UK, but again, we're seeing significant flows there from institutions in Europe. There is much more of a diversification to that side of our activity on the institutional side. Yeah. I mean, when we've talked about investing internationally, in the you know, we're protecting the strength that we already have in the UK. We think Europe is the area where we're developing in the short to medium term. Longer term, some of the relationships that we're developing with institutions in Asia are also showing some positive flows. This is particularly true in Japan, but also elsewhere. We think the business is pretty well poised in terms of its diversification away from the UK, which was a you know, a specific plan that we had at the start when we demerged. Over the course we acquired a team-based team some time ago, and it's not just about the public. It's also the team-based acquisitions and making sure we've got the investment capabilities to drive the business as we hope. That principally is internationally. Before going back to Dom and Andrew, there's one more question online from Fahad, Mediobanca. He has two questions. The first one being, should we start looking at pro forma leverage? E.g., if you earmark more money for debt reduction, we don't have to wait for leverage to actually come down before capital return. Second question is, you've only done GBP 150 million of the buyback so far. Would consolidation be the faster way to distribute? Take this one also. Look, I think in terms of the leverage position, and we just did think it might be helpful to adjust the GBP 300 million of those numbers, which is what gave the 31%, also gave the higher number. Look, I think for the moment, what we've said is we've got GBP 300 million that gives us valuable optionality. We've got a 2024 bond that's putable. We've got other securities, and we're watching market spread. I think I wouldn't encourage people to think we'll earmark more. As John said, we like having a strong solvency position. We have invested very selectively to accelerate strategies where we've got gaps. We've seen that most importantly in that Claire's talking about in wealth, but obviously responsibility we're really excited about in asset management. We have got the share buyback, which as you said, is just under GBP 150 million in terms of what we've done so far. I wouldn't at the moment think about any other aspect of earmarking more. I think we're comfortable with where we are at the moment. On the share buyback, I'm not 100% sure I understood what the question was. As opposed to buying shares in the open market as a means to return the capital faster to shareholders. What we're doing is a proven technique. Yeah. that to reduce the share count. It's chugging along well. We'll see how it goes. If that forms any future action, then it forms future action. Dom, you are the first one of the second round, and then I promise there won't be a third round. Dominic O'Mahony, BNP Paribas Exane. The first question, this may sound cheeky, but it's extraordinary how strong the support. Was there an element of positioning that drove that? I'm not asking for the natural number, hopefully actual something that helps us understand why spectacularly. And if you could, how have you marked to market the real assets within that? And then the second question is, I think in previous presentations you gave us the coming out of the insurance book, up to GBP 10 billion. I haven't seen the slide deck. Forgive me if it's another move. It is not in the deck simply because, in a way, the number will always move because of return assumption of return, excess assets and so and so forth. We also feel it's such a long profile and such a big number that it's not worth updating it every six months. You know, once a year is probably. You know, it would have not changed massively between January and now. That's basically the short answer to the second point. Our last John. I mean, I think you need to add the slide up before you even finish the question. It is this that I think makes the difference, and it always has been. The strategic asset allocation that the team and it's a pretty big team that devises the SAA on this strategy. Think long and hard about it. It is this that creates somewhere between 80% and 90% of the value of the return. Then, of course, given the size of the fund and the breadth of what we're able, both geographically and from an asset class perspective, what we're able to invest in. That's the result. I'm guessing that means that actually because so much is non-sterling, the performance in sterling is very, very strong, visibly. Well, you're right to point out that there's a considerable international dimension here, and we manage our own assets both in North America and in Asia as well as Europe. Yeah, it's a blend. It's Andrew Green again. I was a bit flummoxed by the Solvency II move, the market movement. Help me. How an outsider sees this model. Then I suppose getting on from there feels baffling. Good. Go to 28. Okay. Because we put in the background. Yeah, yeah. The update is since given. This gives you the shareholder solvency sensitivities on the left and the PruFund on the right. Look, I think in terms of the market movements, obviously, we've had a meaningful reduction in the PruFund as well when you look at which I look at slide 29. I think there have been not really meaningful moves obviously across equities, across rates, across credit. When you look at how the capital position has moved, sometimes you have some interactions between some of these sensitivities. I think it would be broadly in line in terms of where we've seen benefits and when we've seen market-driven movements. Obviously, we've got the annuities surplus assets, credit spreads have widened by 50-odd basis points, rates are higher as anticipated. We've got interest rate hedges on, which are prudent to protect against downside risks. As I said, we do continually monitor those. We also have benefit from the equity hedging that we put on, non-shareholder transfers. I think the sensitivities might have moved, but. Obviously we need to look at, when you look at the overall solvency position, there's sometimes second-order effects and moves, you know, impacts between the various external macro numbers that impact our solvency capital position together with the hedging and then obviously the own funds. I think at the moment what I'd say is that we are mindful about, and no one's asked about inflation. I did say it in my comments, that we from a balance sheet perspective, we do feel that the inflation risks are hedged in terms of the amount of inflation-linked annuity assets are matched by liabilities, so the balance sheet is in a well-protected position. Obviously mindful around cost headroom. I covered that in some earlier comments on, with regard to just cost management and cost discipline across the group. Look, we continually monitor the appropriateness of how we manage the risks that we face. I think, you know, we feel pretty comfortable with where we are today, but we're very alert that it is a very uncertain macroeconomic environment. We've seen the inflation numbers for the U.K. We constantly monitor that we've got the appropriate level of protection on, and hence, you know, you see these sensitivities that we updated today. If you could, give sensitivities the other way. Are they symmetric? 'Cause everything there is sensitive. We've said it in the past and that hasn't changed. They're roughly speaking symmetrical. I think what has happened in H1 is that the magnitude of the movements were such that there were other second order effects in play, right? The broad direction was what you would've expected. Maybe the magnitude is slightly different, but broadly speaking they are thereabout. You'll notice that we have just updated the sensitivities. They've moved a little bit, again, because market moved. Looking forward, you should use this. We are not providing a mark-to-market update on the solvency simply because there hasn't been that much time since the end of the period, right. While at full year, we've got two months and a half before results. Now it's only, you know, five or six weeks. Sorts of movements that those are generally valid a bit, but not too much. When I first looked at this, I obviously wanted to see what the rates stock sensitivity was. But this is where we're exposed, which is why they've kept the sensitivities on the downside. We exhausted all the questions, all the questions online. I'll check, but yes. I think we've also covered everyone's questions in the room. Thank you very, very much and I guess see you in March. Thank you. This concludes today's call. Thank you for joining. You may now disconnect your lines.