I think there were about six questions on that. I would just like to make a few general comments about the loan portfolio. I think we all feel very relaxed about the composition we get from it – we`ve decided that people don`t want BBB. So we give them BBB and then they come back and say, well, can you give us a BBB-one. We had no defaults in the wallet. So it`s not — it`s more discussed by you than by our rating agencies and regulators. However, given the diversification of our activities, we continue to expect the Group to achieve full-year operating income growth in line with the first half of the year. Our unique business model supports predictable cash flow and capital and funds our progressive dividend. As previously announced, we expect to generate £1.8 billion in capital for the full year. We continue to make significant progress towards our five-year goal and our solvency is stronger than ever, allowing us to capitalize on significant growth opportunities in our business. And third, was it just on the, on LGIM, only with the slightly lower asset base under management, just if you could, give us an update on the cost outlook and cost-to-income ratio for the rest of the year and beyond? Thank you. Rather, it was the model that we said we were going to invest in fintech. Nigel mentioned the nine of them, they will pass.
So yes, I mean, IFRS is the base balance sheet of Solvency II, so it`s going to get through. And so, yes, it would be in excess production. Management measures, I mean very little, so there was a negative investment gap, it`s more on reinsurance management measures, and so we didn`t do the same thing as always, we didn`t put in place the so-called XXX financing for temporary life in the United States, it`s not there. So it will disappear in the second half. So, very few management measures, it continues the question of own figures. Yes. I mean, in terms of DI backbook, it`s backbook and obviously putting the best assets against new deals, and you can see different examples of that. The part of this positive investment gap in the EAA is placed in the book assets and sees that this translates into returns, but also in the liberalization of operations is part of the fact that we have started to apply the new activity, part of which we will continue to include in the book in the future, is a careful consideration of these assets, which are successful. And so, most of that increase actually comes from what we`ve done with assets, whether it`s construction to leasing, et cetera. We want an investment-led recovery here in the UK, everywhere in fact.
We basically believe it is the right thing to do. We would like to see a greater mandate to facilitate investment. And so the fact that the Solvency II ratio is well above 200 is very reassuring, and this raises the question of buybacks, which, although we recently made a comment, in R&S. While we can still achieve a return on equity of 20%, we prefer to continue investing in a very attractive and high-growth company and continue relentlessly. Hello. Thank you. Nasib Ahmed of UBS. Thank you for answering my question. So, first to your capital generation target for 2022 of £1.8 billion. If I double the figure by 1 hour, I come to £1.9 billion and you have management measures that will probably come in the second half of the year.
So, is there any compensation that will bring you to £1.8 billion? And then, on the £25 billion pipeline, what percentage are you exclusive to? I didn`t see that in the post. Sorry if I missed this? The second question is whether you are reaching the high end of your capital generation and cash flow goals. Does it go without saying that you should then be at the higher end of your dividend growth goals? So we are very active in the UK, but we are not disciplined in how we use capital, especially given the different balance sheets and the different capital regime that we have in the US, there are technical differences in terms of returns and margins in the UK and the US, especially in terms of duration and local U.S. statistics. But I think economically, we`re very disciplined in how we use capital. We expect our fixed income portfolio to return to standalone in 2022, as it was in 2020 and 2021. The driver is the increase in operating surplus or capital generation, which is expected to reach £1.8 billion in 2022. This is increasing year over year as the fixed income portfolio grows and we continue to be disciplined when it comes to new trading burdens. However, experience shows that we could take steps to rebalance the portfolio. We would add about 10 percentage points through a partial rebalancing of lower-quality investments, which is in itself conservative compared to our standard sensitivity.
Given the current starting point, it is therefore reasonable to assume that the solvency ratio will be around 190% shortly after this scenario. This shows that our balance sheet is well positioned to absorb a significant credit event should it occur. As Nigel mentioned earlier, we are well positioned to navigate current market conditions and our diversified business model allows us to continue to deliver reliable and consistent value to our shareholders. In the first half, pre-tax profit increased by £1.4 billion year-on-year, but EPS rose 8% to £0.1928 and our return on equity again exceeded 20%. Solvency II`s operating surplus was £0.9 billion, up 14%. And finally, the coverage rate at 212%. This very strong measure demonstrates the strength of our balance sheet and offers the Group choices for future growth opportunities. I`ll do the last one if you want, I mean, again, it`s largely mathematical.
Credit migration is very easy and we saw it in our numbers during the pandemic. It`s very simple because sub-investment grade spreads have widened. So if we model our stress in a stereotypical way, let`s say, well, BBB is downgraded, and then we sell it down and down. So we make a bigger loss the moment we sell them in our model because the spreads are wider than they do. So we`ve seen exactly that in the pandemic, it`s just the calculation of having wider spreads as a starting point. So there`s nothing – we haven`t strengthened it or anything, it`s just the market conditions, the path to traffic. I do not want to tie a pessimistic knot. I want to say it again, we are very confident for 2022, 2023 and beyond, we have a great team, great collaboration, a huge appetite for investment and huge investment opportunities. We are highly motivated to continue to deliver great results for our shareholders and customers as well as for you. Thank you very much. The constant strength and growth is very evident in today`s numbers. The strength of our balance sheet, which has always proven to be very resilient to external economic and political shocks and profitable growth in all our activities.
We are ahead of our five-year cash and capital generation plan, offer unique synergies across divisions, and have an exceptional collaborative management team. I want to thank all our employees for today`s results, while encouraging them to be even more ambitious. Nigel, thank you. Alan Devlin, Goldman Sachs. Two questions. First, capital. What do you think about capital given your high solvency ratio and comments with the jaws of capital generation rising above the dividend? I think in your press release you mentioned for the first time that you would not commit excess capital, and that was in the best interest of efforts to reach shareholders. But given the very high volumes of accounting annuities in your comments that the things you anticipate in three or four years could be adopted sooner, would you use that excess capital to capitalize in that market if you could? Yes. Under Solvency II, our ratio would decrease slightly if all of these LES recommendations were implemented.
And so it`s not something that we think represents a Brexit dividend for the UK. I think that would require us to look more at asset reinsurance than longevity in reinsurance, given the volume currently in the market. This would encourage us to invest outside the UK. Assets too. So we think these are not good results for the UK, but introducing rules that make us less competitive as an industry doesn`t seem like the right thing to do, especially if we think it`s not – there`s a huge need for an investment-led recovery with the largest investor in the UK and a set of rules. that discourages investment in the UK does not seem to be the right political outcome. It`s not that this room is full of hasty and reckless people betting on spreads bets all day. He`s one of the most conservative and thoughtful people we have, and that`s one of the reasons I can sleep well at night. There are so many people in our company who worry about this kind of thing, but it`s not a concern for me. I don`t think we`ve ever had a serious discussion in the board, I`m thinking about the right parameters.
It is relatively new that we have passed another test with a solvency ratio of more than 200% and everyone is happy with it. I think we were the only financial services company with a market cap of over £10 billion, £12 billion to pay a dividend during COVID, so there are a lot of attractive features that we have and how resilient the model is.
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