Good day, ladies and gentlemen, and thank you for joining the ASR IFRS 17 Event Call. At this moment, all participants are in a listen-only mode. After the presentation, I'd now like to hand the call over to Jan Willem Bruintjes. Please go ahead. Good afternoon, everybody. I'm not sure if everyone heard that, but indeed at the end, there will be room for asking questions. My name is Jan Willem Bruintjes of the investor relations team here at ASR. Thank you for joining today's call on IFRS 17. I'm joined here today by Patrick Klijnsmit. At ASR, Patrick is responsible for the IFRS 17 program. Currently, there's already quite some news flow around IFRS 17 and similar to what ASR did in the past, we want to be ahead of the pack in updating the market on these kind of developments. This morning, we uploaded the slides of today's presentation onto our corporate website under the menu investor presentations, and we assume that everyone has them on their screen right now, or at least seen them earlier today. Patrick will give you an update on the IFRS 17 project at ASR along those slides, and after that, he will answer any questions that you might have. We have scheduled for around one hour for this call, with the presentation taking around 25-30 minutes and the remainder is available for Q&A. Finally, before handing it over to Patrick, I would like to point out the disclaimer regarding forward-looking statements in the back of the presentation. Patrick, the floor is yours. Well, thank you, Jan Willem, for your introduction, and welcome to you all at this presentation. In the next 25 minutes or so, I will walk you through our IFRS 17 project. During the presentation, I will address our goals and principles of the project. I will talk about the conundrums and challenges that we've encountered. Well, more or less the goal of the presentation is to give you some insight in the current status of the project and also the direction of travel in the coming months, both in terms of project and in terms of numbers. Turning to slide two. On slide two, you will find an overview of the content I will discuss today. Obviously, a large part of the content is about the balance sheet and the P&L, which under the new standard will change significantly. Along the way, I will also provide some further colors on the specific in the segments and on the expected timelines that we have. I will end with some key takeaways where I will reiterate on special request of Jan Willem, that it's only accounting, and he's right, it actually is only accounting. After that message, I will hand back to Jan Willem for Q&A. Now, turning to the presentation on slide three. When we first started this project in May 2017 already, we made a couple of decisions that to this date still shape the project. First of all, we decided that the economic steering of the business would not change and remains the main focus of our management. As our former CFO, Chris Figee said at that time, it doesn't really matter whether we measure the temperature in Fahrenheit or Celsius to see whether or not it's cold outside. This continued focus on economic steering led to the conclusion that maximum alignment with Solvency II reporting would be sensible from both an efficiency and a managerial perspective. Furthermore, we decided not to spend any undue time and effort in solving specific IFRS 17 induced problems. An example of this is, for instance, that we have elected not to introduce hedge accounting, as hedge accounting would entail a lot of complexity and limitation to our daily business. We also decided to use the momentum of IFRS 17 project to upgrade our finance department to create a future-proof environment. For example, we have replaced our general ledger and now are on SAP. We have fully integrated our reporting, and we have a Tagetik system combining IFRS 17 reporting, Solvency II reporting, and tax reporting in one system. We have new actuarial risk engines for all major business lines, combining both IFRS 17 and Solvency II, really making a step there in the finance department. Finally, an important decision was that we opted for the deferral option of IFRS 9, making sure to have only one transition moment to the new IFRS world to avoid additional confusion because we think there will be confusion enough. Now, turning to slide four, we dive into the origins of the complexity, and that's really the difference between Solvency II and IFRS 17. Well, in theory, they're both market value based standard, and they should not differ too much. In practice, many differences exist between those two standards and making a detailed reconciliation quite difficult. Undoubtedly, the dynamics of IFRS 17 are much more similar to Solvency II than IFRS 4 has ever been, but it's still quite different. It's similar but not the same. A large potential difference between Solvency II and IFRS 17 may result from the application of the discount curve. Under Solvency II, the discount curve is largely prescribed, whereas under IFRS 17, the discount curve needs to be economic. On slide seven, we will deep dive in what economic actually means and what the impact thereof is. Another signature characteristic of IFRS 17 is the existence of a so-called contractual service margin or CSM. Basically, the CSM is a reflection of the expected future profits in the in-force portfolio, and in principle, the CSM will end up in the P&L at the time the insurance service is provided or we provide the coverage. The development of the CSM as a balance sheet item really provides a view on the impact of the assumptions on the insurance liabilities. This may actually be the most valuable metric that IFRS 17 adds to the current metrics to assess the performance of insurers. As you can see, the movement of those assumptions ending up in the balance sheet pretty clearly. Apart from the differences stemming from the discount rate and the CSM, there are also some technical differences in terms of, for instance, risk adjustment versus the risk margin. Get back to that later. There are differences, obviously, in terms of foreseeable dividends and goodwill, between Solvency II and IFRS 17. Furthermore, the Solvency II standard formula is sometimes a bit more prescriptive as IFRS 17 is in terms of assumptions. Well, at the end of the day, as you can see also on the left-hand side of the slide, Solvency II and IFRS 17 will likely be quite similar, but the composition will differ, as you can see, in this picture. Now turning to slide five. In slide five, I will bombard you with some theoretical concepts which are very relevant to the implementation of IFRS 17, but I will try to do this quickly and painless. First of all, when we apply IFRS 17 to a group of policies, it must be decided which measurement model should be used. The default option is the general model, and that's, well, up to the name, general model. The general model can be used for all kinds of long-term insurance and is the model which is most frequently used. It's also most frequently used by us. In the general model, the contractual service margin is created. The drawback of this model is that it completely overhauls the presentation of the insurance contracts and is quite a lot of work to implement. For short-term business, such as P&C, a simplified model is available as an option. Another option. This so-called premium allocation approach is much easier to implement and does not include the creation of a CSM. That is actually kind of makes sense, because, well, the release and creation of the CSM would be in the same reporting period as it is short-term business. No CSM in the premium, the premium allocation approach. Finally, for the unit-linked business, but actually all our participating contracts, the variable fee approach must be used. For these types of contracts, the servicing of the policy and the related investment fee is considered to be the dominant characteristic, exceeding the importance of any insurance component within those types of contracts. When we decided on the measurement model, the next step is to decide on the transition method, and we make the transition to IFRS 17 on the first of January 2022. Basically, we are in an IFRS 17 year already, and we will recreate the reporting over 2022 on an IFRS 17 basis after we finish the IFRS 4 closing. The basic principle of IFRS 17 is that it should be fully retrospectively applied, so going back to the moment at which the policy was written. In some cases, it would actually mean the application of a new standard from policies dating back for more than 50 years. Obviously, this basic principle probably makes a lot of sense in the tranquility of the IASB offices, but it does not make a lot of sense or is at least very difficult to implement in real life. Consequently, most of the time when we use historical data or when historical data is available, the so-called modified retrospective approach is applied. You should not underestimate the impact of a retrospective application. It means that you determine the profitability for policies written for every single year in the past using the discount curve and assumptions of that time. At ASR, for instance, we start a retrospective application for our funeral portfolio in 2002 already. 20 years. We fully recreate 20 years on the new IFRS 17 basis. That process takes more than a month in runtime, with literally billions of data fields to be used and created. An enormous task. Although we have the ability to go back quite a long time for a funeral, thanks to the fact that it's a very stable and long-running business, the historical data needed for the retrospective approach in many cases is simply not available or highly difficult to create. In these cases, a fair value transition approach can be used. The basic idea of the fair value transition is that you determine the value of the insurance liabilities as if a third party would acquire these. Basically, how much money does another insurance company want to take the liability off my hands? As obviously, insurance companies want to make some money as well, an implicit profit assumption is included in such a calculation. That leads to kind of an intriguing dynamic. That is, if we use a fair value transition approach for loss-making contracts, these loss-making contracts will be profitable again, after transition with a positive CSM. Unfortunately, of course, it's a zero-sum game. If you have a positive CSM resulting from the transition, the fair value transition of loss-making policies, this would result in a negative impact on equity at transition. Now turning to slide six. On slide six, we bridge from IFRS 4 to IFRS 17, and you can see on the bottom right side the bridge for our insurance liabilities of our life book. We start out with the IFRS 4 technical reserves as we currently publish them, and then we take out both the shadow accounting reserve and the realized gain reserve. Those are basically corrections for realized and unrealized fair value changes of assets that under our shadow accounting regime, have been added to the technical reserves in the past. Furthermore, we take out, in this case on the life book, we take out our own pension scheme, which is treated under IAS 19 at group level. Then we end up with IFRS 4 on tariff rates, which we discount the future cash flows and then end up with the market value, the IFRS 17 value. Then to get to the IFRS 17 balance sheet on the present value of the future cash flows, so the insurance liabilities, we add the risk adjustment to account for future uncertainty caused by non-financial risks. This is more or less similar to the risk margin under Solvency II. It's important to mention here that if those risks do not materialize, the risk adjustment at the end of the day will end up as a future profit. Of course, we have the CSM again reflecting the profit embedded in the portfolio. We have the resulting equity, which depends on the CSM, the risk adjustment, the market value of the liabilities, and of course also the other side of the balance sheet, which are the assets. Simultaneously with IFRS 17, we also implement IFRS 9, so the assets also undergo a bit of revaluation. Although it is a significant number, the impact is still quite or is still limited to the revaluation of mortgages and loans. If you compare it to IFRS 17, there's a lot less change on the asset side than on the liability side. All in all, I think it's fair to assume that the asset valuation under IFRS 9 will be quite similar to the valuation under Solvency II, but again, similar and not the same. Moving to slide seven. There's number one driver of IFRS 17 outcome, and that is the discount curve. The discount curve is highly relevant, has a large impact on equity, future profitability, and even in many cases, is really a trade-off between stock and flow. The choice of the discount rate heavily impacts the influence of market movements in our numbers. In case of differences between insurers, it will also heavily impact the comparability of future IFRS 17 results. Currently, it seems that two general schools of thought exist. One is an approach which is quite similar to Solvency II, and especially to recent discussions of EIOPA on this subject, where a first smoothing point is introduced, while also market observations of, for instance, 20, 30 years are included. Some peers even seem to adhere to the Solvency II curve as such, optimizing of course then between the alignment between IFRS 17 and Solvency II. You can wonder whether that curve is really economical. Another school of thought considers that there is enough market data available to construct a reliable discount curve with a last liquid point of 30 years. Apart from your view on the markets, the choice for a 30-year last liquid point curve can be very practical if you, for instance, use hedge accounting and hedges on a 30-year point need to be effective from an accounting point of view. That may be a good reason to use a 30-year last liquid point. ASR currently considers a curve with a first smoothing point of 20 years, the most reliable and most economical curve, taking into account, of course, all market observations in the years thereafter. In the graph on the bottom of the slide, you can see the various curves. The dotted line, of course, is the risk-free curve. Then we have the Solvency II curve in green, and in yellow there is a first smoothing point curve, 20 years. You can see that the yellow curve is quite close to the green Solvency II curve. Then in gray is the last liquid point 30 years curve. Well, it's obvious from this picture that this curve is a bit more of a wobbly curve, so we don't feel it's a very good representation of the economics. Apart from the choice between the last liquid point and the first smoothing point, there are also other determinants of the curve, such as the illiquidity premium, the credit risk adjustment, and the UFR. Some of those differ somewhat from the Solvency II building blocks, like the use of the liability illiquidity premium in IFRS 17 versus the VA in Solvency II. Really in terms of shape of the curve, the last liquid point, first smoothing point discussion is by far the most relevant. Now turning to slide eight. Slide eight is the last slide of the balance sheet, but also the first slide where we show some numbers. Here, we show a rough estimate of how our 2020 balance sheet would have looked if IFRS 17 was applied. For this high level calculation, we have used a 20-year first smoothing point curve, and we have cut quite some corners in terms of transition method. Basically, we assumed application of the fair value transition more or less across the board. Of course, market circumstances in 2020 were quite different from last year, let alone today. Nevertheless, we believe that the numbers provide a relatively good indication of at least the direction of travel towards an IFRS 17 world. Well, in the graph you can see that IFRS 17 is much more aligned with Solvency II than IFRS 4 was. Especially the insurance liabilities differ quite a bit from IFRS 4, due of course, to the fact that we use a discounted cash flow methodology in IFRS 17 versus the tariff rate approach of IFRS 4. We expect, as mentioned before, that the assets will be quite similar under Solvency II and IFRS 9, although smaller differences may arise depending on very specific valuation rules. This doesn't really move the needle. In the calculation here, the risk adjustment is lower than the risk margin under Solvency II. An important reason for this is the discounting. The risk margin under Solvency II is calculated excluding the VA, while the risk adjustments under IFRS 17 it is discounted, including a liability illiquidity premium. The liability illiquidity premium is basically the asset illiquidity premium times the application ratio, which is determined by the specifics of the insurance liabilities on which the risk adjustment is calculated. The differences in terms of discounting. Well, we can see IFRS equity moving a bit towards Solvency II, but still lower than Solvency II. Apart from the fact that IFRS 17 has a CSM, whereas the future profit is already basically included in the Solvency II own funds, there's also a difference because of the discount rate applied. That really is it can be quite different as we have seen in the previous slide on the discount curves. Finally, there's a number which is not on the slide, simply because there's no comparison, and that is the CSM. In this specific 2020 calculation, the CSM number would have been around EUR 2.0 billion. Again, here the reminder that the figures are highly indicative and that corners were cut in the transition method applied. This is likely to influence the CSM and possibly also the equity, given that there is some trade-off between those metrics. Nevertheless, with these numbers, we give you a bit of a feel which way the IFRS 17 numbers are moving. Now, turning back to some theory in slide nine. In slide nine, we talk about the P&L under IFRS 17, and the P&L changes significantly. One of the most notable changes is the fact that our concept of turnover, so our growth within premium, is not the starting point of the P&L anymore. I can assure you that the lack of this concept of turnover, which is really a measure of our commercial success, is one of the most difficult concepts to get across to the organization. The P&L under IFRS 17 basically consists of three elements, the insurance service result, the finance result, and as every P&L should have, other. I will talk about IFRS, the insurance service result and the finance result. Starting with the insurance result. The idea of profit recognition under IFRS 17 is to align the recognition with the services rendered and the claims incurred. The contractual service margin is released when the service is provided or more practical, when we actually run the risk and our clients actually benefit from the coverage. The insurance service result does not only include the release of the CSM, but also the release of the risk adjustment. The simple rationale here is that if we have provided the service, we no longer run the risk of deviations from the assumptions. Apart from the release of the CSM and risk adjustment, the incurred claims and expenses are also part of the insurance service result. This is actually a two-step process. First, the expected claims are part of the insurance revenue, and the difference with the expectations is added to the insurance service result as part of periodical rebalancing. Then turning to the finance result. The finance result is largely determined by the fair value movements of assets and liabilities, and as such, highly dependent on the yield curve developments and other market movements like spreads. We expect quite some volatility within the finance result. Although theoretically, the impact of fair value changes in assets and liabilities should mitigate one another, we still expect a very volatile IFRS 17 result. The stability compared to IFRS 4 will be lower. Due to the expected volatility, we have continued focus on an operating result, and we will talk about this a little bit more on the next slide. Now turning to slide 10. At the moment, we have not finalized the definition yet, and we are really curious what our peers are planning to do. Our current thinking is that we use the insurance service result as a stable basis, replace the IFRS finance result by the excess return methodology of the OCC, and then, just as we do today, take out the incidental items. Then we end up with the operating result under IFRS 17. This will result in a number that will provide a good insight in the development of the business on one hand, while staying close to the Solvency II concept of OCC on the other. There are some significant differences with OCC. You can see that on the bottom of the slide. Differences include some of the building blocks of the discount curve applied, but also obvious differences such as the CSM under IFRS 17 and the SCR release under Solvency II. Now turning to the easiest slide in the presentation, slide 11, and that's about the timelines. Although at this moment we do not have any final number yet, IFRS 17 reporting will also apply to this year as we need to publish comparative figures on our 2023 reporting. As mentioned earlier, the transition date to IFRS 17 is the first of January 2022. We are currently working on our final dry run, making sure systems function properly and we can create numbers when we need to. This summer, we plan to start with constructing the opening balance, which can actually be quite a job, especially for portfolios for which a long retrospective period is applied. After we have an opening balance, we will run our quarterly figures, running the full year figures on IFRS 17 basis immediately after the publication of our IFRS 4 annual result. This way we are in shape to report our 2023 numbers on an IFRS 17 basis. As mentioned in our Capital Markets update on December 7 of last year, we will translate our targets to IFRS 17, and we'll communicate this before the summer of 2023. Finally, for our half year 2023 results, that will be the first time we will have an official presentation on IFRS 17 basis. Now to slide 12 to wrap it up. First of all, as I mentioned in the introduction and promise to Jan Willem, it is only accounting. IFRS 17 undoubtedly provides additional perspectives on the company, but from an economic point of view, rest assured we will run the company with the same focus and the same diligence as we have done in the past. Yes, there will be a significant change in profit recognition, especially for portfolios under the general model. After we get used to it will probably provide some additional insights compared to current metrics. Yes, there will also be significant additional volatility in the finance result, and that reflects the market circumstances. We will provide an operating result to give a view on the result of the underlying business. A bit on the bright side, the number will be closer to the way we currently report our OCC. No, we will not change any of our capital returns, return policies, nor will we change the way we look at our products or businesses. Commitments stand whether we report in Fahrenheit or Celsius. Yes, it's fair to assume that we all need some time to get used to the dynamics of the standards, understand what our peers do, how things can be compared, and if they can be compared at all. We're pretty sure that where it starts will not be where it ends. For the coming years, we will all probably be in some uncharted territory trying to make sense of the numbers that we see. Turning to the good news. Luckily, we still have Solvency II and OCC, which will be a sound basis to assess our performance during the transition period and probably also for many years thereafter. With this comforting message, I hand over to Jan Willem for Q&A. Thank you, Patrick, and thank you for keeping your promise that it's just accounting. I thought it was an interesting update on the IFRS 17 project here at ASR, and I believe it was a very clear presentation, but I'm sure there's some people on the line that do have some additional questions. Before I hand over to the operator to open up the line, I would like to stress that we only have the remainder of the hour left for questions, so about half an hour. I would therefore like to ask everyone to limit a question to two questions per person. If there's not enough time to answer all the questions, you can always contact, IR after this call, and we will be happy to help you in any way we can. That said, operator, would you open up the line for Q&A, please? Of course. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Please press star two to remove yourself from the queue. Again, it is star one if you would like to ask a question. Let's go ahead and take our first question from Farooq Hanif. Please go ahead. Hi, everybody, and I'd just like to thank you for doing this because, even though we've all been talking about it's just nice to, for you to tell us that it's only accounting. Thank you for that. Two questions. First one, although it's, I'm guessing it's gonna be easy for us to deduct the CSM and risk margin, or remove them, sorry, from equity, on the balance sheet. Will it be also easy for us to see the impact of both on P&L so that if we wanted to kind of do a best estimate type of view and embedded value type of view, we could do that? That's question one. Question two is related to that. It feels like because of the higher illiquidity premium, potentially, because of the difference in risk margin that you have higher up front new business value recognition, you know, on the own funds under IFRS 17 compared to Solvency II. Is that also correct? Thank you. Well, thank you, Farooq, for your questions. Of course you're very welcome. Yes, it is only accounting. About that accounting, would it be easier to deduct the impact of the CSM and the risk adjustment in the P&L? Well, when we publish the results, you will see the movement of the CSM and the risk adjustment. It will be very difficult at this moment to predict the movements of those items because it really depends on when we actually plan to or when the insurance coverage is actually provided. Of course, we are a very mixed company, so with a lot of different policies and different types of policies in there. Prediction there is difficult also for us at this moment. When we actually publish the numbers, then it will be quite easy to see. It will actually be a line item. In terms of your second question, I don't want to be disappointing, but actually it can go both ways. It is not really a fixed answer that I can give you too. There are differences, but it can work out both ways. Okay. Just one quick, I know it's only meant to be two, but very quickly, would you be required to present some kind of guide to how the CSM will be released generally by product or by business unit or some sort of guide so that we can see that potential future profit recognition? Yeah. It's part of the notes, and it will be by segment at least. You will get some more insight in the CSM. I think actually what I mentioned in the presentation, the CSM as the movements in the CSM on the balance sheet can actually be a quite an interesting feature of IFRS 17 just to make a comparison between insurance companies. There will be some notes on the movement of CSM on a segment basis. Great. Thank you very much. Thank you. We'll move on to our next question from Cor Kluis. Please go ahead. Hello. Good evening. Good afternoon. This is Cor Kluis of ABN AMRO. Thanks for the presentation. Very interesting and educative. Two questions. First of all, a very simple one. It's the unit linked part. You used it in the VFA model. In which line will that be shown on slide nine? Will it be in the CSM, the risk adjustment, or in other results? Could you elaborate on where the fees from the unit linked will be reported? Second question is more conceptually between Solvency II OCC and IFRS 17 operating results. Because in OCC, Solvency II, of course, you have EUR 80 million-EUR 90 million posting effect in OCC from the SCR release. That's of course not applicable for IFRS 17. Could you explain how we have to look at it, how the capital release shows up in your IFRS 17 operating results? Will it not be visible in the IFRS 17 operating results, and we should add that separately? Those are my two questions. Thank you, Cor, for your questions. In terms of the unit linked policy, it will primarily show up in the insurance service results. There will also be a little bit in the finance result, I think, as part of the investment income. Your second question is actually quite simple to answer. There is no SCR in IFRS 17, so there will also not be a similar SCR release in there. Basically the benefits that ASR, because the Dutch insurance companies have more of a runway than some other insurance companies abroad. The benefits of you know, bringing the book down and the capital release that comes through, that's not reflected in any way in IFRS 17. The capital benefits, the release of capital basically from that we can basically hedge ourselves. Well, yes. Basically you are correct. Of course there are other elements in IFRS 17, like the risk adjustment release and the CSM release, which are not a part of Solvency II movements, which are not in the OCC and are in the IFRS 17 result. There are differences. In general, if you have a run-off book, then the importance of the SCR release might be larger than the other elements. I'm not quite sure if you can state that as a for the whole Dutch market. I doubt that actually. There are differences, risk adjustment release, CSM release versus the SCR release, definitely. Okay, wonderful. Thank you. Thank you very much. We'll move on to our next question from Farquhar Murray. Please go ahead. Hi, everyone. Just one, well, two sets of questions from me. Just coming back to slide seven and the two schools of thought on the discount curve. It seems clear you're in the 20-year school, but eventually a decision will have to be made there. Could you just outline what will swing you from one to the other? How likely do you think it is that ASR ends up taking the 30-year route as a possibility? To the degree you can, how material is that going to be to the equity and earnings? Presuming it's very much a stochastic transfer conversation. I'm presuming equity down materially, but earnings up for the future. I just wondered if you can venture a magnitude on that. Thanks. Well, thank you, Farquhar. As I understand, you are currently enjoying your popcorn, so hopefully I'll make it worthwhile. The school of thought that we are in is obviously the 20-year, and that's not because we feel like it's because we did a pretty thorough analysis of how the market looks like and what in our vision is an economic curve. We looked at all market observations. We looked at bid-ask spreads. We looked at the dynamics of the market in the 30-year spectrum. All in all, we came to the conclusion that a 20-year first smoothing point, with of course a significant impact of the market observations thereafter, will be the most economic and logical and fair curve to use. Would there be reasons to swing us to another curve? Well, if the whole market decides on another curve, and we are the only one on the 20-year for a smoothing point curve, that would be definitely a reason to reconsider. At this moment, it seems that the schools of thought are still, you know, quite apart from one another. We truly believe that from an economic point of view, looking at more or less the time value of money and how the curves develop, that they're working with a 20-year first smoothing point curve with significant emphasis on market observation thereafter are important. How material is it? It isn't. It is material. If we go from the Solvency II curve to the 30 years last liquid point curve, there will be significant differences. You are right. It is also a trade-off for a large part, not completely because there are some technical differences. There are also a trade-off between stock and flow. How material really depends on the moment in time, but it is definitely material. Okay. Just one final follow-up, actually. To the degree that we've got a difference in schools out there, I mean, I'd have thought there's a logic towards the 20-year Solvency II type curve. You're suggesting the 30-year school is kind of driven a bit by the hedge accounting. Are those guys a particular geography? Just to understand where they're coming from. Well, this is of course hearsay and trying to figure out how the market is working. We come from the opinion from the thought and the analysis that we think that the 20-year first smoothing point is a logical curve. We try to figure out if there are people or companies which are focusing on a 30-year curve, what could be the reason of that. One of the reasons that we could think of was that it would be very logical to use such a curve if you have hedge accounting. Hedge accounting is quite restrictive in terms of the hedge effectiveness. It may be very helpful to use that type of curve in that specific case, but that does not make it economical. That makes it practical. That's why we deducted more or less this logic. Okay, perfect. I do love popcorn. Thanks. We'll take our next question from Benoît Pétrarque. Please go ahead. Good afternoon. It's Benoît Pétrarque from Kepler Cheuvreux. Yeah, two questions on my side. The first one is just, you know, conceptually and based on all the experience you've built up since 2017. If you think about Solvency II versus IFRS 17 on the equity side, so you've provided the two figures. You know, which one is the most economic? Which one translate the better economic reality? I mean, both have pros and cons adjustments, but which one, as market participants, you think we should closely follow if you want to follow kind of the economic reality of things? That would be the first one. The second one is basically on the IFRS operating results. You know, is that fair to assume this is slightly higher than your OCC, current OCC figure if we exclude then the SCR release, obviously, which is not relevant. OCC ex SCR release, will that be, well, slightly below the current operating result on the IFRS 17? I guess it's getting close versus what we were used to see before on the IFRS 4, but I was wondering what could be the gap roughly. Thank you. Well, thank you for your questions, especially the conceptual one. I think one of the issues with IFRS 17 that it has become a bit too conceptual. I think there are elements in IFRS 17 which are highly logical and are theoretically correct. The problem with IFRS 17 that there's no basis yet. There's no benchmark, there's no uniform way to deal with it. If you would look at the economic value of the company, I would recommend looking at Solvency II, because we all understand Solvency II, and we've learned over the last couple of years how to compare Solvency II. One could state that IFRS 17 would be theoretically better, but because of the many choices we make there, it will take quite a lot of time before we can actually compare that in a sensible way. Solvency II would be my guess. In terms of operating results, would that be higher? Yes, it might be. If you exclude the SCR release and I can still leave in the CSM release, then it seems logical that that would generally be the direction. I would not state that that's the case 100% of the time. Yes, generally, yeah, if you average it out over 20 years, probably higher. Yeah. Thank you. Just to follow up on that. I guess these operating results in terms of volatility on the IFRS 17. The volatility will be quite limited or comparable to what we are used to see on OCC, or will that be also a bit more than OCC in terms of volatility? Well, I'm pretty sure that it's less volatile than the basic IFRS 17 result. That's why we make it. IFRS 17 result itself, of course, is very much determined by market movements, but still in the IFRS 17 operating result, there will be some reflections of market volatility as well. There will be some resulting volatility like impact of UFR, et cetera. Generally speaking, it will be much closer to the operating result under IFRS 4 than the IFRS result as such is to the IFRS result as such under IFRS 4. Those operating result concepts will differ less than the basic IFRS result concepts. All right. Thank you very much. As a reminder, it is star one if you would like to ask a question. Please signal by pressing star one on your telephone keypad. We'll go ahead and take our next question from Sui Lin Ling. Please go ahead. Hello. Hello. Thank you. I have just two questions. The first one I think is you touched upon, but just want to clarify. So you will have CSM amortization and risk margin. Well, not called a risk adjustment amortization. So would you be able to give us like a pattern of this amortization? Are they going to be more front-end loaded, back-end loaded or really like a linear kind of amortization? And then are these two kind of amortized using the same, let's say carrier or different ones? So that's first thing. Then secondly, trying to understand, are there any like secondary impact we should be aware of by implementing IFRS 17, for example, for M&A? It does sound like in the future if you acquire a book which is completely using a different choice of, like all the choices you made, then does that mean that integration of that book would be actually taking more time and costs? That's the first like secondary impact I can think of. Then secondly, are there any like tax impacts from the fact that your profit pattern are different? That's two questions. Okay. Siu Ling, thank you for your questions. In terms of write-off pattern, the write-off really of CSM and risk adjustment really depends on when the service actually is provided. That there's really a difference in terms of type of policy. For instance, if you have a funeral policy, then the service is provided much later in time than we have a disability policy, for instance. It's not easy to say which one or what the pattern is. In general, if you have a run-off book, it will be declining on a linear basis. Again, not our complete book is a run-off book, far from it. There is a pattern in there, but it highly depends on the policies. The second question is also an interesting question in terms of the secondary impact on M&A. What you see first starting out with the operational side of it. As part of the IFRS 17 project, we have invested quite a bit in the future-proof making the finance department future-proof. The ability to deal with such M&A in terms of systems, processes, et cetera has been upgraded on the back of this project. Apart from that, of course, the interesting question is what will happen in terms of a takeover. I think one of the interesting dynamics here is that you will probably get quite a bit of CSM from the acquisitions that you do. For instance, if we look at our earlier acquisitions of Generali and Loyalis, we have also gathered quite a bit of CSM, which ends up in the opening balance sheet from those acquisitions in the past. There are some positives in there. It is only accounting, so I'm not sure if that's really the primary driver of any valuation of M&A. In terms of tax, basically there is no impact at all because the tax doesn't use IFRS 17 in the Netherlands. There is a separate tax framework for that. I hope that answers your questions. Can I have a follow-up on the first one? Are there any like a is the regulator or any of the like industry association giving you some guidance on how to amortize the CSM? Obviously it's products, but more product like depends. Are there like say okay everyone like for funeral we amortize like this way and any kind of industry discussions going on? Well, not that I'm aware of, and actually this is quite clearly described in IFRS 17. You should release the contractual service margin at the time that the service is provided. The only discussion that we can have is a discussion with, for instance, our auditor on what the perception is of service provided. There can be discussion, but that is basically an accounting technical discussion, but there is no guidance or any. I don't also think no reason that our supervisor is has any opinion on this. It's really accounting. Thank you. We'll go ahead and take our next question from Andrew Baker. Please go ahead. Great. Thanks for taking my question. Just one follow-up for me on the discount curve, if that's okay. It's really around do you have any line of sight into what discount curves your peers are using prior to first reporting under IFRS 17? Or I guess in the event that you are different in your discount approach, then will you be in a situation where you sort of roll out using one approach and then potentially have to rebase everything in the following period? Thank you. We are trying to work out what well peers in general, not only Dutch peers, but European peers in general are doing. Then again, that's why we came up with the two schools of thought. There is of course a risk or a. Well, actually, I don't think it's a risk. It would be a very good thing if there would be a market practice. There is a in terms of risk, there is a risk that there will be a market practice which deviates from whatever we choose. It will become clear in perhaps not even the coming year, but in a couple of years thereafter, that we slowly move to a similar environment. I think also the perception of economic malaise may change a bit because what we've seen in the last couple of years are interest rate movements or interest rate curves, which are not always, well, really economic and perhaps are even a bit more driven by market disruption. There is a reasonable expectation that at a certain point of time, this migrates or could migrate, and yes, that would potentially impact the way we do things. The discount rate that we start out with, so the discount rate for our transition, is really a discount rate that we have to pick this year or actually in the coming weeks or months. I think many of our peers will do that as well. We all do that more or less blind, without knowing exactly what is in the market, which I think is not a very good element of IFRS 17, but it's the way it is at the moment. Great. Thank you. We'll move on to our next question from Marcus Rivaldi. Please go ahead. Thanks for the call, everybody. Quick question for you. Are you looking to manage the finance result volatility through a presentational approach? Generate this operating result figure, or is it also having effect when you think about under IFRS 9, your approach to what assets you find attractive to invest in and therefore which assets don't fail the SPPI test? Is the interaction between IFRS 9, IFRS 17 changing your approach to what you're investing in at this point in time? Thanks. Now this is an easy question. Definitely not. The way we deal with the volatility in the finance result is to explain it, to have an operating result which is understandable and reliable, to give you insight in what happens with the IFRS result, but not to do any other trading because of that. That is really one of the things at the onset of the program that we decided on. It would not change our economic steering. If we think it is a good investment in terms of economics, we will still do that whatever happens to the IFRS 17 or IFRS 9 impact. Great. Thank you very much. We'll take our last question from Benoît Pétrarque. Please go ahead. It's Benoit again. Sorry. Just wanted to make sure that you have some discussion, at least in the Netherlands, to kind of align between NN, Aegon, and yourself, the methodologies. Can we expect a high degree of alignment between all the kind of approaches and, you know, curves, what's, you know, everything you might use there? Or do you think we can still have the big negative surprise of having three insurance companies using different bases under IFRS 17? Thank you. Well, Benoit, there is, as a part of the insurance, what we call the Verbond van Verzekeraars, so the insurance Association. Yeah. Thank you. Yeah. At the end of the call, I'm always searching for words. But yeah, the association there, we are talking about this. But this is a large, very large project with many different choices to make with companies which are different as well in terms of the set of or the products that we have. So to be quite honest, yes, hopefully, we do. I think realistically, there may be differences on significant subjects when we first report on it. Yeah. Thank you. That was our last question. I would now like to hand the call back over to our speakers for any closing or additional remarks. Thank you very much, operator. Thanks to everyone joining the call today. I hope we all learned something and we enjoyed ourselves doing it. Yeah, I think this was it from our side. If there are any additional questions, please reach out to the IR team. Furthermore, have a nice day. Goodbye. Bye-bye. With that does conclude today's call. Thank you for your participation. You may now disconnect.