Standard Life (LSE:SDLF) — Full Year Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the STANDARD LIFE PLC investor presentation. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish our responses where it's appropriate to do so. Before we begin, we would decide to submit the following poll. If you'd give that your kind attention, I'm sure the company would be most grateful. And we will now begin the presentation and move to live q and a at the end. Thank you. And I think to myself what a wonderful world.

1:09 I see friends shaking hands Welcome to STANDARD LIFE's full year twenty twenty five results presentation. I'd like to introduce to stage Andy Briggs, Group Chief Executive Officer. Andy, over to you. Thank you, Claire. Good morning and welcome. It was privilege to be here just two weeks ago ringing the opening bell on the London Stock Exchange, and I'm delighted to be here today presenting at STANDARD LIFE PLC.

2:09 For more than two hundred years, Standard Life has been standing beside its customers. And today, as real life for customers is less predictable, our role as a retirement specialist is more important than ever. So to our agenda today, I'll begin with an update on progress on our strategic priorities and the operating momentum we are building across the group. Nick will take you through the detail of our financial performance. I'll then return to outline the strategic developments to come before taking your questions. When we set out our three year strategy in 2024, we were clear on the scale of the opportunity in front of us. Two years on, I'm delighted with the progress we've made. First, we are uniquely positioned in our markets.

2:57 The U. K. Market is one of the most attractive globally for retirement savings and income. Second, strong execution means we're driving better customer outcomes and meeting even more of their needs, deepening our relevance. Third, that in turn is driving profitable growth, which is translating into a stronger balance sheet. We are firmly on track to deliver our 2026 targets. All of this supports strong shareholder returns and creates financial flexibility that gives us more strategic optionality than ever before. Our strategy is underpinned by three strategic priorities: grow, optimize and enhance. Two years into our three year strategy, we delivered material progress across each.

3:49 To grow, we strengthened our products and engagement capabilities. Following product launches in 2025, we now have a full product suite to support customers across all stages of their retirement journey. The launch of our advice proposition and our wide range of digital offerings from our Family Finance Hub to our Mixed Income Builder tool are all helping customers navigate their retirement journey, unlocking the ability to further engage and support households with excellent budgeting and planning options. Within Optimize, our in house asset management expertise continues to enhance returns and deliver better customer outcomes. Deleveraging remains a clear priority, and we're driving progress here. We paid down a further £200,000,000 of debt in December, which was underpinned by business growth improving our leverage ratio to 33%.

4:44 On Enhance, we've delivered £180,000,000 of run rate cost savings, ahead of expectations again as we leverage technology to reshape our organization. Lastly, our migrations are progressing well with 75% of customers now on end state platforms, up from 45% in 2024. To summarize, our colleagues have delivered two years of meaningful operational progress across the board, and I know that there's much more to come from Standard Life. Our strategic progress is translating into strong financial performance across cash, capital and earnings. Operating cash generation has grown at 13% CAGR over the past two years, and we remain confident in mid single digit percentage growth into the long term.

5:37 Our growing business is generating surplus capital, which we are currently using to strengthen the capital position by paying down debt. Even through our deleveraging program, we remain in the upper half of our solvency range. Finally, on earnings, we remain firmly on track to achieve our circa $1,100,000,000 operating profit target in 2026, having delivered another year of strong operational performance. And we continue to grow our dividend, up by 2.6%. Now I've had the privilege of working in this sector for nearly forty years. And maybe it's just me, but I think The U. K. Retirement market has never been this exciting. The £3,600,000,000,000 market is set to grow by 70% over the next decade, driven by structural long term demographic trends, including the aging population and the shift to defined contribution.

6:33 On the top of that, on the right of the side, we see encouraging regulatory and political proposals to create additional tailwinds to our industry. These will accelerate the existing structural growth drivers in the market, so we see growth potential beyond this 70%. Through our active role in shaping the market and the strategy we've defined, Standard Life is well positioned to benefit from these tailwinds. And better still, in the fast growing market, we're the only scale player solely focused across the full retirement and savings life cycle. And our ambition is to grow faster than the market and gain further market share. On this slide, we can see strong flows in each market.

7:21 In Workplace, our ambition is to consolidate our top three position as this market grows rapidly and concentrates down to fewer providers. In Retail, we're looking to move from a top 10 to a top five position, again, in a rapidly growing market. And in Retirement Solutions, we aim to maintain a top five position across individual annuities and PRT combined. Our success is underpinned by our competitive advantages. I will come on to these in more detail later, but I will highlight here that the diversification of our business model across the capital light pensions and savings and capital utilizing retirement solutions brings capital efficiencies and customer benefits. Whether it's joining the workplace for eighteen years or staying and consolidating in retail or securing income in retirement through our Annuities business, we are well positioned to serve our customers and their evolving needs at all life stages.

8:23 In Workplace, we're a scale player with 3,000,000 and growing customers. Winning in Workplace requires three things: a leading employer proposition, excellent customer service and scale driven cost efficiency. And we are strong on all three of these. Employers are the key decision makers here, and our leading employer proposition is underpinned by our award winning Master Trust and our sustainable multi asset proposition, one of The UK's largest sustainable default funds supporting millions of workplace members. In 2025, we delivered several sector firsts, ranging from new tools to supporting families to FCA aligned sustainability labeling to Shariah compliant offerings.

9:11 Very high on the agenda for employers is excellent customer service. I hear from employers time and again that the quality of our service is a key differentiator here. I'd like to join some of our workplace pitches, and employers consistently highlight that we genuinely care about every client and member with quality of service their number one priority. And they say this really stands out when they visit Standard Life. This is enabled by our brilliant colleagues and our digital first member engagement reflected in our Epp rating of 4.7 stars, again, with continuous developments. Thirdly, cost efficiency is delivered by leveraging technology and our ongoing migration program, which in turn means our margins continue to expand and are ahead of peers.

10:01 On the right, you will see that our winning workplace formula is translating through to strong outcomes, an excellent Net Promoter Score of 60. We welcomed 247,000 new workplace members in 2025, up from 226,000 in 2024. And we won over 200 schemes in 2025, so this market is key for customer acquisition. Thirdly, workplace assets are up almost 40% in three years, importantly driven by strong positive net fund flows. With £10,000,000,000 of gross flows reached this year, our market share grew well into double digits. So great progress and hugely exciting that this will be further supercharged by market consolidation as minimum fund size is enforced and expected contribution increases.

10:55 Turning to Retail. Success in this market is driven by three things: effective customer engagement, offering products that meet their evolving needs and using digital infrastructure to do all this proactively. We have the first two and a significant opportunity to leverage the third. On the left, we engage customers through multiple channels, including our award winning app and telephony guidance and, of course, the rollout of our advice proposition, which launched last year. Here, we're pleased that we can support customers in providing financial advice for a single flat fee regardless of pot size. Second, our full product suite addresses customer needs and now supports them across their entire savings and retirement journey.

11:43 Distribution has widened as our products are now on both the Quilter and Fidelity platforms and continue to scale with strong investment performance. Thirdly, we have a significant opportunity to leverage digital infrastructure. A key area of focus is building out our Salesforce CRM integration. This is improving our outflows, which Nick will come on to. It gives us deeper insight to support customers so we can proactively help by nudging customers to take to make active decisions to ensure they're doing enough at each stage of their journey to and through retirement. I was caught listening last week and heard a great example. In our new pension consultation service, our CRM system uses propensity modeling to proactively target customers who will benefit from this service.

12:33 The outcomes of our efforts in retail are visible on the right of the page. Our customer satisfaction scores are in the 90s with 93% of customers rating us good or excellent. This is translating to more digital customer engagement with total logins up 50% in two years. Lastly, on this slide, we're seeing positive customer outcomes feed through to flows. Gross retail flows are £7,000,000,000 up nearly £3,000,000,000 over the last three years. But the bottom line is that we're only scratching the surface, and there is so much more to come here. I'm delighted to welcome Angela Byrne as CEO of Pensions and Savings this year as we build the next stage in our journey. In the annuity business, which includes both PRT and individual annuities, winning is all about having a leading employer proposition, excellent member experience and competitive pricing.

13:31 And our strength in all three is why we're winning in these markets. Our comprehensive buy in and buy out capabilities and a full product suite means that we can serve customers however complex their needs may be. Member experience is critical in this market. Members want clarity, speed and service, all of which we provide. Our digital capabilities allow customers to understand their position in real time. For example, our digital quote platform underwrites and returns over 90% of individual annuity quotes within seconds. Our call service rates are excellent versus peers, and we're also Amazon Web Services' largest European insurance client, a testament to our scale. Our diversified business mix is a huge advantage with most peers effectively undiversified monolines.

14:24 We also continue to leverage our in house asset management capabilities to deliver superior returns, particularly through recurring management actions, all of which means we can price competitively and generate attractive returns. All these factors are driving strong outcomes. We nearly doubled our individual annuity market share to 15% from 8% in only two years and expect to grow further. We also wrote our largest ever PRT deal of £1,900,000,000 As outlined earlier on this slide, our comprehensive capabilities, which includes our innovative market leading track record for longevity swap innovations, was key to winning this deal. We are disciplined in our approach to annuities, choosing to deploy up to £200,000,000 of capital and seek value over volume.

15:16 This is evidenced by the attractive returns generated with lifetime IRRs on our Annuity business of more than 20%. This strong performance across Workplace, Retail and Annuities is driving growth in our key financial metric, operating cash generation. We are confident of mid single digit OCG growth going forwards. Our £1,000,000,000 of free cash flow has doubled from 2023, now comfortably covering our growing dividend of about £550,000,000 This means dividends and excess cash will both grow as OCG grows, particularly as recurring uses are reducing. 2026 is our final year of using this excess cash to delever.

16:05 So from the end of this year, this financial flexibility will enable us to deploy excess cash to the highest returning opportunities in line with our capital allocation framework. And I'll now hand you over to Nick, who can run through the numbers in detail. Nick? Thank you, Andy, and good morning, everyone. When I stood here a year ago, I talked about how our balance sheet pivot had lagged the strategic business pivot and highlighted the key role that operational performance plays in improving our balance sheet quality and enhancing our financial flexibility. The upgraded 2026 financial targets were set with exactly this in mind.

16:56 One year on, I'm pleased to be reporting a strong set of results for 2025 alongside clear progress on the balance sheet. Starting my presentation with the financial headlines. Operating cash generation grew by 5% to $1,474,000,000 with total cash generation at $1,711,000,000 euros both in line with previous guidance. The solvency leverage ratio improved to 33%, while our solvency cover increased to 176%, remaining in the upper half of our operating range. IFRS operating profit was 15% higher at €945,000,000 supported by asset growth and cost savings, which reached $180,000,000 on a run rate basis.

17:51 Adjusted IFRS shareholders' equity was $3,100,000,000 benefiting from a strong increase in the CSM, which partly offset the negative hedge market related impacts. We have recommended a final dividend of 28.05p per share, up 2.6% year on year, bringing the total dividend for the year to 55.4p per share. This performance puts us firmly on track to deliver all of our 2026 targets. I will now cover the financials in more detail, starting with the performance of our main businesses. Backed by our leading propositions and brand, our pensions and savings business continues to grow assets, margin and profitability.

18:43 Workplace sold €10,000,000,000 of inflows in 2025, 1,500,000,000 of which were from new scheme wins. We have carried good momentum into 2026 with around €1,000,000,000 of wins secured so far this year. Excluding new schemes, gross inflows were €8,500,000,000 highlighting the strong flywheel effect of this business. Outflows reflect the higher asset base and the natural attrition from members taking their pensions. Scheme retentions remain high, with only €200,000,000 of scheme losses for the second year running. In Retail, our gross inflows continue to improve, up 16% to €7,100,000,000 in 2025, benefiting from a greater take up of our drawdown product and a 60% rise in international bond sales.

19:43 Outflows include €5,000,000,000 of withdrawals from customers accessing their retirement savings in the form of annuity income, drawdown payments or tax free lump sums. They also include €2,000,000,000 of internal transfers to more modern retail products. While the remaining outflows are sizable, we expect them to improve as a percentage of AUA as we increase our focus on retention. In the top right, you can see how these flows have combined with positive market effects to lift the overall P and S asset base by 9%. In the bottom half of the slide, I summarize the drivers of the financial performance for this business. We now publish both OCG and IFRS operating profit driver analysis for our main businesses, which enable us to better explain their respective performance and to express their results as a basis points margin on AUA.

20:43 Now given the capital light fee based nature of the P and S business, we consider IFRS operating profit lens to be the most suitable performance measure here. Average AUA grew by 7% in 2025 to 204,600,000,000 which combined with the improved margin of 19 basis points drove operating profit 23% higher to €389,000,000 This performance highlights our scale advantage and operating leverage with further margin improvement expected near term as the full benefits of our cost savings program come through. Our Retirement Solutions business also delivered a strong operating performance in 2025.

21:31 As a reminder, new volumes are not the primary driver of profits here. We run over €40,000,000,000 of annuity assets and it is the management of this large book that drives most of our profitability. We have two main product lines in this business, being individual annuities and pension risk transfers. For individual annuities, product innovation and rising consumer demand saw new premiums grow 20% to €1,200,000,000 which is double the 2023 level. PRT premiums were lower at €3,900,000,000 reflecting reduced market volumes and our disciplined approach to pricing. In a narrow credit spread environment and competitive market, we took the decision to protect economics and forgo volumes.

22:24 Our overall capital efficiency improved in 2025, with a reduction in capital invested outpacing the overall decline in new premiums. As we look forward, our aim is to deploy up to €200,000,000 of capital to annuities this year, provided we secure sufficiently attractive returns. We remain confident in our ability to win in this market with €1,600,000,000 of PRT transactions completed or at an exclusive stage in 2026 so far. The bottom half of the slide depicts the drivers of performance for Retirement Solutions. Given the capital utilizing spread based nature of this business, we consider OCG to be the most appropriate performance measure.

23:12 Our effective management of the in force book compared with our scale, efficiency and expertise in delivering portfolio optimization actions enabled us to sustain the spreads based margin at two nineteen basis points, applied to our growing average AUA of $40,200,000,000 produced OCG of eight seventy nine million dollars up 3% year on year. I will now move to the group metrics, starting with operating cash generation. The OCG increase to $1,474,000,000 dollars was driven by a 6% increase in surplus emergence to €914,000,000 and by another strong performance in delivering €560,000,000 of recurring management actions, driven by our developed asset management capabilities.

24:06 The contribution of the three components that make up these actions are broadly similar year on year, with further detail provided in the appendix. We're confident in achieving our guidance of 500,000,000 recurring management actions each year, as the capabilities and dynamics that underpin this performance are both differentiated and enduring. On the right, you can see the business segment analysis of OCG, which we disclosed for the first time as promised. P and S grew its OCG by 13% to $396,000,000 equivalent to 19 basis points on AUA. Three quarters of this margin reflects the release of in force profit based on real world returns and the benefit of actions to reduce operating costs.

24:56 The balance reflects the uplift from simplifying fund structures. Retirement Solutions accounted for over half of the group's OCG at $879,000,000 equivalent to two nineteen basis points on AUA. This reflects the steady release of capital and spread margins as our liabilities run off and the benefit from both yield re optimization and capital improvement actions. Taken together with profits, Europe and other produce a steady level of OCG at around €200,000,000 per annum. Total cash generation on this next slide combines OCG with cash generated from items that are one off in nature.

25:41 As previously stated, we're targeting 5,100,000,000 of TCG over twenty twenty four to 2026. Two years into this three year period, we have delivered TCG of €3,500,000,000 comprising €2,900,000,000 operating and €600,000,000 non operating capital generation. A further 1,600,000,000 TCG is expected in 2026, primarily from operating sources. On the right, you can see how the $5,100,000,000 cumulative TCG is expected to fund our planned recurring uses and the onetime investment to deliver our strategic priorities over this period, generating $1,200,000,000 of excess cash. This excess is what provides us with the means to reduce our debt stack over the twenty four to twenty six period.

26:35 I would like to spend a moment to take stock of the notable transformation in our ability to generate positive excess cash since 2023. By growing OCG from 1,100,000,000 to nearly €1,500,000,000 and by moderating our recurring uses depicted in blue, we have significantly improved our ability to cover the growing dividend shown in orange and generated a rising level of excess cash, being €296,000,000 in 2024 and €423,000,000 in 2025. We expect this pattern to repeat in 2026, generating around €500,000,000 of excess cash. We deploy excess cash in line with our capital allocation framework, which remains unchanged.

27:24 Our near term priority is to deleverage to our 30% target. We expect to complete this by the end of twenty twenty six, after which this excess will be directed to the most attractive return opportunities across growth investment, targeted M and A and increasing returns to shareholders. We're very optimistic about the potential future opportunities for our group. Turning next to the group's twenty twenty five solvency walk, where I'm pleased to report an improvement in the drivers of solvency capital. After covering recurring uses, we generated €400,000,000 of net recurring capital, mostly in the form of own funds, which added nine percentage points of solvency cover. Non recurring items netted to a small positive amount, which includes a €100,000,000 positive contribution from economics net of hedging.

28:20 Delivering a broadly neutral non recurring component has been one of my key areas of focus since joining the group. As a result, we were able to retire $400,000,000 of debt, while growing both our solvency surplus to $3,600,000,000 and our coverage ratio to 176. Turning next to leverage. Our ratio improved to 33%, reflecting the own funds growth and the €400,000,000 of debt redemptions outlined in the previous slide. We remain firmly in control of our path to 30%, which will be managed within the upper half of our solvency operating range. With our capital emerging in a broadly even pattern through 2026 and with two debt instruments having June maturity or call dates, the in year leverage and solvency ratio paths will not be linear.

29:15 Moving to the IFRS results. Our adjusted operating profit increased by 15% to $945,000,000 Profits from pensions and savings grew by 23% to €389,000,000 while those from retirement solutions increased by 19% to €563,000,000 These performance improvements were driven by business expansion, cost savings and higher investment margins, reflecting the successful delivery of our grow, optimize and enhance strategic initiatives. Turning next to cost savings. Here, we have accelerated delivery from faster progress on migrations and from leveraging technology to enhance our business and adopt a more efficient operating model.

30:02 On a run rate basis, we have achieved €180,000,000 of savings across 2024 and 2025, meaningfully ahead of our planned delivery profile. Savings on an earned basis were €110,000,000 last year, up from the €28,000,000 in 2024. The year on year benefit is therefore £82,000,000 with £55,000,000 coming through our segmental results as operating margin improvements or reduced non attributable expenses. The cost savings that relate to insurance contracts are driving meaningful increases in our CSM. This next slide completes the IFRS basis picture. As you can see in the dotted box, the improved operating profit performance means that we're now close to covering our recurring uses.

30:52 The uncovered portion last year was only €29,000,000 significantly better than the €182,000,000 in the previous year. The 2026 operating profit target of €1,100,000,000 will comfortably cover recurring users. And by 2027, we expect to cover all uses, enabling us to grow our contribution to shareholders' equity before economic variances. Non operating items include €264,000,000 reflecting the planned investment spent to deliver our strategic priorities. This is expected to normalize to below $100,000,000 after the end of our current investment program. Adverse economic variances of $6.00 $4,000,000 were almost entirely driven by negative marks on equity hedges following a 19% blended rise in markets.

31:47 As I have previously explained, this is a known consequence of our hedging strategy, which protects cash and solvency capital, but gives rise to an accounting mismatch volatility under IFRS. Specifically for 2025, the six zero four million euros represents an accounting timing effect and is not an economic loss. This is because the negative equity hedge effects from the rising markets is booked in full through earnings, while the related positive effect from higher future fee revenues will come through earnings over time. You can clearly see these future benefits elsewhere in our financials, and I will come back to this on the next slide. Adjusted shareholders' equity, shown on the right, stood at €3,100,000,000 at the end of twenty twenty five.

32:38 While this is still a partial picture, it remains the most relevant measure of a life insurance balance sheet under IFRS as it includes the future store of value of insurance contracts. I refer to it as a partial picture because it excludes the investment contract value in force, which is recognized in our solvency capital. Let me now demonstrate where the offsets to the $6.00 €4,000,000 adverse economic variance are evident elsewhere in our financial results. The related benefits are captured within two stores of value, the first being the insurance contract CSM and the second being the investment contracts value in force, which forms part of the Solvency II owned funds.

33:25 Both of these are significant in size with a combined value of almost €10,000,000,000 on a pretax discounted basis. Both have increased at a strong double digit rate since 2023, driven firstly by our operational actions to drive flows, reduce costs and improve risk adjusted yields, but also from the equity market appreciation over this period. In 2025, positive market effects accounted for €100,000,000 of the increase in pretax CSM and for €500,000,000 of the increase in the value in force. These stores of value will come through earnings in future years and provide a strong underpin to our performance trajectory for many years to come.

34:13 Turning briefly to dividend, where our approach remains unchanged. We're a highly cash generative business. We operate a sustainable and progressive policy and have a strong track record of consistent dividend growth. The metrics that the Board considers when undertaking the annual dividend assessment are repeated on this slide, being OCG, solvency coverage ratio and parent company distributable reserves, which stood at €5,800,000,000 at end twenty twenty five. These metrics remain at very healthy levels. So to conclude, we have made significant progress last year in growing our operating cash and earnings metric and we have improved the quality of our balance sheet. This performance puts us firmly on track to deliver all of our 2026 targets.

35:03 Our business is now tuned to generate sizable recurring excess cash, which will enable us to complete our deleveraging this year and provide us with enhanced strategic and financial flexibility thereafter. Thank you for your attention. I will now hand you back to Andy. Thank you, Nick. So we're two years into a three year strategy. And while I'm encouraged by the progress we've made so far, I'm focused on the year ahead and delivering on our promises for 2026. In Q4, we'll come back and talk to you about what next, but the broad strategic direction will be in line with our current vision. When we started this strategic plan, we set out a clear vision to be The UK's leading retirement savings and income business.

35:56 We began building out the capabilities shown here to achieve this vision. The green ticks highlight areas where we've made material progress or are complete. We've streamlined our group structure, optimized asset management, completed the rollout of our full product suite. The light blue box at the top shows our next area of focus, as I outlined earlier, a digitally enabled and personalized customer interface focused on data, guidance and advice. This is more about building capability rather than material investment. We delivered a strategic vision by executing on our strategic priorities, so let's move on to what that means for 2026. Under Grow, we're further enhancing our technology and customer engagement capabilities.

36:46 Our Salesforce CRM platform gives us a richer view of customer needs, enabling us to proactively nudge and support them at key life stages when decisions matter most. Targeted support will be a further unlock going forward as we engage more deeply with customers, supporting them in making the right decisions as they journey to retirement. We're focused on scaling our products and deepening our intermediary partnerships, widening our access to potential customers. While for Workplace and Annuities, it's about continuing to deliver excellent performance. For Optimize, we remain firmly on track for our leverage target, and we will bring more assets in house, which increases certainty of delivering recurring management actions.

37:34 Lastly, on Enhance, we'll complete our cost savings target and and we'll progress our migrations with only 25% of customers to be transitioned to their end state platforms. We're also embedding technologies into our culture. We want AI to enhance the human skills, judgment and expertise that make us great. Let me finish by bringing this all together and reminding you why Standard Life is winning today and why we will continue to win. Across the top of the page, engaging with our customers, combined with our capital and cost efficiencies, uniquely positions us to win in this exciting market. Starting with Customer Engagement, we delivered over £15,000,000,000 of net fund flows in Workplace over the last three years. This was barely in positive territory when I started six years ago.

38:26 Our group rebrand has brought our strongest brand to the fore. Walking around our offices last week, it's been really energizing to see how enthusiastic colleagues are about the name change and what it means for us. With 12,000,000 U. K. Adults a customer of STANDARD LIFE group, we are uniquely positioned to engage them about their futures. Looking ahead, we will proactively support far more of our customers, helping them and further turbocharging our growth. Moving This is particularly important in our capital utilizing annuities business. The fact that we're more diversified than peers is a key driver of our lifetime IRRs of greater than 20%, which is attractive compared to those peers.

39:13 These IRRs are supported by recurring management actions driven by the excellent asset management capability that we've built. Looking ahead, we will manage more assets in house, and we continue to explore strategic partnerships here. Thirdly, our cost efficiency continues to strengthen as we grow. This is particularly important in our capital light pensions and savings business. Our sector leading margin expansion from 11 bps in 2023 to 19 bps in 2025 reflects the scale of our business and how we leverage technology. It compares favorably to our major peers who typically report single digit margins here. And looking ahead, we will utilize technology investments as we scale and drive operating leverage further.

40:02 I'm very confident that we will continue to win given these competitive advantages, which will drive our growing operating cash generation over the long term. To summarize, we operate in one of the most attractive retirement and savings markets in the world, and our strengthening competitive advantages means we are well placed to benefit. Our strong execution is delivering better customer outcomes, and all of this is translating into shareholder returns and provides attractive financial flexibility. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. Jo, as you can see there, we have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions. But if I may now hand over to you to chair the q and a with the team. And if I pick up from you at the end, that'd be great. Thank you.

40:58 Thank you, Jake. Could you start by explaining which is better for Standard Life shareholder value, higher or lower interest rates? Mick, do want take that one? Thank you for your question. Higher interest rates is generally a positive thing for for our industry. It and and therefore, by by definition, for Standard Life as well, that higher interest rates, annuities, individual annuities become more attractive from a consumer's perspective. And at higher interest rates, people are able to save for the long term accessing the the high yields that are available, particularly at the long end of the curve. So so, generally, higher interest rates are good good for the industry and good for standard life.

41:48 Thank you. For the 25% of policyholders who are not yet on their end state platforms, do you expect to transfer all of these over, and what's the timetable for that? So I'll I'll take that one. So, I mean, the first thing I'd say is we're still offering good quality service to those to those customers. So think that that that that's important and very important to us that we give consistent good quality service. We do expect to transfer the remaining 25% across, and we expect to do that by the end of next year. Thank you. Looking at the m and a landscape, Aegon UK business seems to be a scale opportunity to grow your pensions business. Would you agree with that? And what other m and a opportunities would you think were would could be attractive?

42:35 So so what what I'd say to that is that what what what's changed is five or six years ago as as Phoenix Group, when we were a closed book consolidator, we we were shrinking each year unless we did m and a. So you could argue we we needed m and a. Now that we've built out really strong organic growth capabilities, we're no longer in a position where we need m and a. We've got a very attractive organic future, and it definitely makes the bar higher for considering m and a given we have organic growth opportunities that we can allocate capital to. Having said that, we we would look at any business that comes to market, and we would consider it for the perspective of of strategic fit But does it does it fit well strategically? Does it bring capabilities that that are beneficial?

43:20 And and look look at it financially as well. I won't comment on any specific potential opportunities. Would you consider extending your growth overseas? So I I'd say that's unlikely in certainly in the short to medium term just because The UK market is so attractive. So and and the reason for that is is that pensions of The UK used to be defined benefit. That sort of closed down twenty odd years ago. And since then and that used to sit outside the world of life insurers such as STANDARD LIFE. So since then, the money's been building up in in our world through workplace pensions, through retail retail wealth, and then the the legacy of closed defined benefit schemes buying out through pension risk transfer business.

44:05 So as a result of that, we'd expect the assets in the sector to grow 70% over the next decade. Then there's a series of political and regulatory tailwinds that will make that growth even more. And given our scale position, we think there's there's a huge opportunity in that in The UK. That's our primary focus. It seems that investors are quite concerned about the decline in IFRS shareholders' equity. How would you counter these concerns? Well, thank you. As I as I explained in the pre prepared remarks, the IFRS balance sheet is only a partial lens of the of the economic capital picture of this organization. So I would counter these concerns by saying that you should refer, which is what we do, to refer to the solvency balance sheet of standard life. This is the basis on which we're regulated, the basis on which we make capital deployment decisions, the basis on which we support and underpin the dividends to our shareholders.

45:13 Partial view, and there was a slide in the presentation that highlighted these stores of value that fall outside that IFRS equity, which are growing, which are substantial and are are growing in value. Can you please explain simply exactly what the analyst concerns are on leverage? Yeah. I'm happy to pick that up. So so I I I would say that that the concerns on leverage are significantly reducing as we bring our leverage ratio down. So, at the start of last year, we were 36% leverage ratio. At end of last year, we got it down to 30% sorry, 33%, and we have a target at the end of this year of 30%. 30% is broadly in line with peers, so that's a level at which I think, you know, most of the market would would be content.

46:04 And because we've really increased our free cash flow so so our free cash flow a couple of years ago was 500,000,000. Last year, it was 1,000,000,000. Now we paid out 550,000,000 of that as dividend, but there was over 400,000,000 of excess. We expect that that excess cash in 2026 to be 500,000,000, therefore, and we're in a very strong position to complete the deleveraging down to 30%. And so it's it's getting much less in terms of questions from analysts now because they can see we're on a clear path. Nick, they seem to talk about different types of leverage ratios. Why are you comfortable with the one that you choose? Because it's anchored on on our economic balance sheet. Therefore, it's right for our business. It's used by one or two other of our our competitors.

46:53 But the the important thing for me has always been that not only does the ratio screen in in sync with with the rest of the market, which when we get to 30, it will do, 30%, but also that we, as a business, are generating enough cash and capital each year. And you've seen our our operating cash generation is at nearly at 1,500,000,000 to comfortably cover the the interest burner the burden of holding of holding that debt. And and in our case, it's it's covered north of six times. So we're comfortable. We we, you know, we are comfortable both with the definition and also the the directionality of of our debt stack, which is downwards.

47:45 Is there a trade off emerging between maximizing IFRS profit and cash? I have to take that that that question of priority. No. The the the two metrics are just at the operating level. It's just two different set of rules that to count the same cash flows. Our business is highly cash generative. We generate each year roughly a 220 basis points minus spread margin of the 42,000,000,000 of annuity assets that that we manage, and we generate a 19 basis points margin on the 212,000,000,000 of pensions and savings assets that that we manage.

48:32 Those are good proxies for cash. They come through solvency based metrics, and they come through in a slightly different way on our on our IFRS metrics. But, you know, cash generation is is key for for our business, and that's what we prioritize. The government wants to see more UK investments being made by pension funds. Where do you stand on this? Our focus here is entirely on what is in the best interest of our customers, and and we do believe that at the moment in The UK, UK pension savers have a a a significantly underweight private market and productive asset investment. So we're keen to increase that because we think it will lead to better outcomes for customers, and that's why we set up future growth capital, a joint venture with Schroders focused specifically on this market. And we've said we're looking to invest 10 to 20,000,000,000 of our customers' money into that over the next decade.

49:33 Can you talk through your priorities for excess cash? Will you be investing more in the business before you look at share buybacks? Well, our priority in 2026, in other words, this year, is to generate the cash and to complete our deleveraging program. We are now in the fortunate position, as Andy said earlier, that we have a number of different opportunities to deploy cash. We'll be entirely value rational in the way in in what we prioritize, and we will go after the opportunity that increases fastest and most prominently the intrinsic value of our business. You're targeting OCG growth of mid single digits. When you update the market later this year, will you be increasing that estimate?

50:25 So I think mid single digits growth in OCG is is an attractive proposition from a, you know, business and shareholder perspective. We've consciously focused on delivering our twenty twenty six targets, and and we'll we'll not say any more in terms of the wait until the update in q four of this year. How will you achieve your ambition to have a top five position in the retail space? So the two two areas of focus. One, part of that market is through intermediaries, wealth managers, independent financial advisers. And what we're doing there is we're developing propositions that those advisers want to recommend to their clients. And things like our international bond was up 60% last year.

51:11 Our smooth managed fund is now available on the Quilter platform, which is the the the largest advisory platform in in in The UK. But but, actually, the bigger opportunity because it's only 10% of these customers would pay fees for independent financial advice as they journey to and through retirement. The other 90% won't do that, and they're likely to turn to their one of their existing providers. At one in five of the majority customers of STANDARD LIFE group, for each pound they have with us, they have £3 elsewhere. And, basically, we've got the ways with the right products. We've got the ways to engage with customers. What we need to build out is to do that much more proactively so that we are reaching out to customers at the right point on their journey to and through retirement with the right proposition for them so that they turn to us rather than elsewhere to consolidate and and journey to and through retirement.

52:05 Are new competitors in the pension risk transfer business reducing the available margins to you? We we haven't seen that as an issue to date in terms of new competitors there. It it may well emerge over over time. But the real advantage that we have at STANDARD LIFE is that, you know, most, if not all, of our competitors in the pension risk transfer market are are monolines. And because we're a multiline player with a big workplace and retail business, we get capital diversification as a result of that, and therefore, we are more capital efficient. And that's why our last lifetime internal rates of return on annuities are over 20%, which which is ahead of peers. So, you know, we're we're thoughtful about new entrants into the market, but but so far, we've been able to maintain attractive margins ourselves.

52:55 If shareholders' equity does go negative, can you really still pay a dividend, and does the regulator care about this? We see no practical limitations to any of our capital deployment plans, including payment of dividend. Shareholder equity poses no such practical limitations even if it turns negative. And and from a regulatory perspective, their focus is on the solvency balance sheet. That's that's their balance sheet if you like. They set the solvency to the solvency UK rules. That that's their focus. 38% of the shareholder credit portfolio is in illiquid assets, and 3,700,000,000 is in private credit. How much of a concern is this given the recent market focus?

53:42 We we're very we're highly selective in in our approach to any onboarding of any liquid assets, including the the private corporate credit. The that that particular portfolio is, as you say, 3,700,000,000 in in size. So it's a relatively modest proportion of our overall asset asset base. It's 99.8% investment investment grade. Less than 20% of that 3,700,000,000 is exposed it is originated in The United States where it seems to be the the most noise at the moment in relation to private private credit.

54:30 And none of that, none of our investments are in the software space, which is which has come under scrutiny. So we are comfortable with the credit quality. We and and are highly selective on what we onboard on our balance sheet. Can you talk about the rationale of the rebrand of the group name? So the the rationale is is that it basically brings our our strongest and most trusted brand to the forefront. And I think it better describes for all audiences what what we are now. So Phoenix historically was seen as a as a closed book consolidator. You know, we are now a customer orientated, purpose led, organically growing retirement specialists that we think standard life better describes that that that going forward.

55:23 Can you explain the increase in your individual annuities market share? So there there there's sort two two parts to to individual annuities. There there's a a relatively smaller part that we used to do, which is where a customer had, for example, an older with profit product that had a guaranteed annuity option. Therefore, you offered that annuity in retirement. And up till two years ago, that that was the annuity business we did. But we saw that that this was a really important proposition for customers, particularly as they they get customers get into their seventies a lot a lot like the, you know, the confidence of knowing they've got a guaranteed income for life. So we launched our own, individual annuity into the open market rather than just for for for the guaranteed annuity options, and that's been very successful. So we've got a top three player now with, 15% market share, so we're we're very pleased with the the progress we've made there.

56:20 You talked about political and regulatory tailwinds. Can you explain in workplace specifically, how these proposals will help and impact standard life? Yeah. So there's there's two in particular I I would draw out for for workplace. One one is that the government is legislating that if your workplace pension arrangement is below £25,000,000,000 by 2030, you're no longer gonna have a license to trade effectively. And so what that's going to do, the workplace market is already really attractive. It's growing very strongly already, but it is gonna concentrate down the market share to a smaller number of bigger players. And, obviously, as a top three player, we expect STANDARD LIFE to be a a big beneficiary of that. But the other key political review, if you like, going on is considering pension adequacy because, you know, in spite of the the the scale of the market and the strong growth, only one in seven people in The UK are saving enough for decent retirement.

57:19 So the government has set up an independent commission to review pension adequacy. It is our expectation that they will conclude that the automatic enrollment contribution rates to workplace pensions need to increase from from the current 8% level, which I think will be better for customers in terms of getting a better retirement income, but also we we would benefit given the the scale of our our workplace pensions book. Thank you very much. That's all of the questions online. I'll just hand back to you for any closing remarks. Thank thanks very much, Joe. Well, first of all, thank you all very much indeed for taking your time to to join us today. We we really appreciate your your your support and your interest in in in our business. I mean, if if I try to summarize three key points, the the first is that, you know, while while there's a lot of uncertainties in the world, particularly at the moment, the The UK retirement savings and income market, the market we play in, it it it has has never been this good. It it's it's large. It's growing strongly. It's a really attractive marketplace, and we have unique competitive advantages as we covered in the presentation that leave us really well placed to benefit from that attractive growth in the market. The second thing I would say is is in the context of that, we're executing on our strategy.

58:31 We're delivering strongly, and that means we're meeting the needs of more more needs of more customers as they journey to and through retirement. And then finally, that that in turn is driving strong growth in our our organic operating cash generation, our operating profit, which is enabling us to strengthen the balance sheet and will give us really excellent financial flexibility going forward. So that those will be the summary messages. Thank you again. Thanks very much indeed again for your time, and we'll we'll look forward to catching up up again soon. Thank you. Perfect, guys. That's great. If I may just jump back in there, and thank you very much indeed for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order the management team can really better understand your views and expectations.

59:16 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of Standard Life PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.