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

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

Thank you, Patrick. Good morning, good afternoon, and good evening, everyone. Thank you for joining us today for our 2025 first half results and capital management update. I'm very pleased with our financial performance in the first half of 2025 during which we delivered both high-quality growth and enhanced shareholder returns. We achieved double-digit growth across our key financial metrics in line with the guidance we gave earlier in the year. We have reached an inflection point in our operating free surplus generation, enabling us to update our capital management program and increase shareholder returns. This demonstrates the strength of our business model and its ability to generate sustainable cash returns. New business profit and adjusted operating profit per share both grew 12%. Gross operating free surplus generation grew 14% and dividends per share increased 13%. These results reflect strong momentum across our core markets, the sharpness of our execution and our relentless focus on writing high-quality new business, effectively managing in-force and improving our variances. I'm also very pleased that we have now settled the dividend claim in Malaysia. Having reached an inflection point in our capital generation and reflecting our confidence in the future, we have announced today a capital management update alongside an enhanced capital allocation framework, including the completion by the end of this year of our existing share repurchase program, we expect to return in total more than $5 billion to shareholders between 2024 and 2027. Any initial net proceeds from the potential IPO of the asset management business in India will be in addition to this. Ben will cover our capital management update in more detail. We are now halfway through our strategic transformation launched in August 2023 and are making good progress across our key priorities. We continue to invest to accelerate value…

Thanks, Anil, and hello, everyone. Our first half 2025 financial performance reflects a positive start to the year as we continue to focus on accelerating growth in value and capital generation in line with our strategy. We delivered double-digit growth across our primary financial KPIs. We're on track for our 2025 guidance, and we remain confident in achieving our 2027 financial objectives. Growth in our in-force profit and the ongoing capital return improved our return on embedded value to 15%, and there's more to come. Net of the dividend payment, embedded value per share, excluding goodwill at the end of the period was $13.24, equivalent to GBP 9.66. We've reached the inflection point in our capital generation trajectory with gross operating free surplus generation or OFSG, up 14% year-on- year. whilst our net OFSG is up 20%. As we indicated in March, we've updated our capital allocation framework, reflecting both our strong capitalization and our confidence in the strategic progress we're making, which is driving improved organic capital generation. Let me spend a couple of moments on our capital management update. Our enhanced capital allocation framework reflects a move to a total return orientation in respect of the distribution of our holding company free cash flow. We've updated our guidance for ordinary dividend per share growth rates and announced that from 2026, shareholders will also benefit from additional capital returns. This framework is intended to set a recurring and sustainable basis for returns going forward. In terms of ordinary dividends, our policy is unchanged. We've given guidance of greater than 10% dividend per share growth each year from 2025 to 2027, building on the 13% dividend per share growth in 2024. We will commence additional recurring capital returns in 2026, and we expect a buyback of $500 million in 2026…

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

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

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

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

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

Our next question today comes...

Pardon Drew, we just got one more question.

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

Our next question comes from Larissa Van Deventer from Barclays.

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

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

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

Okay. We can go to the next question.

Our next question comes from Farooq Hanif from JPMorgan.

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

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

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

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

Our next question comes from Nasib Ahmed from UBS.

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

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

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

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

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

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

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

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

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

Our next question comes from Andrew Crean from Autonomous.

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

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

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

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

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

Drew, should we go to the next question?

Our next question comes from Michelle Ma from Citi.

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

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

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

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

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

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

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

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

Andy, maybe I'll go in reverse order, if you like. I think your third question was on China. Actually, CPL used to sell a lot of par business in China many, many years ago. So when you look at the general account assets, and there's that snapshot slide in the appendix to my own slides on that, about 40% of that actually backs par business. In terms of cost of liabilities and where we are today, both actual and expected returns are sufficient to cover cost of liabilities. As you'll appreciate, because it's par, you can vary that cost of liability through time. The business has done a lot of repricing over the years. And I think backing up from a capital management perspective, again, confident that there will be no need to put any further contributions into CPL in 2025. They are continuing to look at actions to drive further resilience on the balance sheet on top of derisking and repricing. And we were pleased that they've been recently awarded status to enable them to issue perpetual debt locally, and that will count to their core and comprehensive solvency. On margins and ability to drive margins going forward, it's basically the 4 points I alluded to earlier. There is, I think, to your point, a seasonality thing. We typically see a greater proportion of bancassurance in the mix. Bancassurance having a very healthy margin and improving year-on-year, but still lower than agency. So as we progress through the year, I think you'll start to see a more positive channel mix come through. That will benefit margins on top of the repricing actions we've taken. And of course, as I said, there's opportunity on the health and protection side as well. We've been pleased with growth in the health space,…

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

Our next question comes from Abid Hussain from Panmure Liberum.

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

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

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

The third question on capital distribution.

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

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

Our final question comes from Thomas Wang from Goldman Sachs.

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

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

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

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

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

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

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