Asr Nederland N.v. · EURONEXT:ASRNL
Asr Nederland — FY2019 Earnings Presentation
44 slides from Asr Nederland's earnings presentation, Feb 19, 2020
Slide 1: 2019 full year results
2019 full year results Jos Baeten, CEO Annemiek van Melick, CFO ANALYST CONFERENCE CALL 19 FEBRUARY 2020
Slide 2: Strong operational performance and robust solvency in FY19
Strong operational performance and robust solvency in FY19 • Increase in operating result of € 109m, up 14.5% mainly driven by Non-life performance Operating result1 Solvency II (SF)2 Dividend per share as a result of favourable claims experience and acquisition of Loyalis € 858m 194% € 1.90 • Revie
Slide 3: Allocating capital to growth and additional distributions to shareholders
Allocating capital to growth and additional distributions to shareholders Solvency II (SF) management ladder Expected allocation of OCC Additional capital returns Additional Capital Return Level Solvency II (SF) > 180% >180% Regular dividend SBB or special dividend Bolt-on M&A / re-risking Halted if
Slide 4: Solid progress in executing our strategy in 2019
Solid progress in executing our strategy in 2019 Portfolio matrix A Non-life business domains with growth potential C Asset management related growth business • Combination of Loyalis, Veherex and Vitality partnership strengthens • Assets under Management (“AuM”) for third parties increased by € 3.2
Slide 5: Delivering on our strategy in pursuit of sustainable value creation
Delivering on our strategy in pursuit of sustainable value creation Financial self-reliance and Vitality and (sustainable) Climate change and energy inclusiveness employability transition Non-financial targets for the 2019 − 2021 period Meeting customer needs Sustainable investments Sustainable inve
Slide 6: Non-life: record operating result and solid organic growth
Non-life: record operating result and solid organic growth Operating result1 (in €m) Gross written premiums (in €m) • Non-life operating result increased to € 226m in 2019, primarily reflecting the high +58.5% +32.6% quality of the portfolio, favourable weather- +5.9% related claims experience and t
Slide 7: Life: solid operating result and strong growth in Pensions DC
Life: solid operating result and strong growth in Pensions DC Operating result1,2 (in €m) Investment margin1,2 (in €m) • Operating result of Life segment increased Investment margin Technical result Direct investment income Required interest by 3.7% to € 696m, driven by a higher Result on costs Amor
Slide 8: Operating result other business segments on track to achieve targets
Operating result other business segments on track to achieve targets Operating result Asset Management Operating result Distribution and Services1 Operating result Holding and Other (in €m) (in €m) (in €m) +48.3% -12.4% 24 26 23 16 -108 -112 FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 FY 2019 • Fee-base
Slide 9: Solvency and capital position
Solvency and capital position Annemiek van Melick, Chief Financial Officer 9
Slide 10: Solvency II: high quality balance sheet
Solvency II: high quality balance sheet SII Eligible Own Funds (in €m) 194% • Solvency II ratio 194% based on standard formula1 1,515 0 7,828 • Unrestricted Tier 1 capital increased by 5,789 524 € 410m to € 5,789m: 74% of total own funds and 143% of SCR, absorbing the reduction of the UFR to 3.9% (-
Slide 11: Solvency II ratio movements in FY 2019
Solvency II ratio1 movements in FY 2019 OCC: 9.8%p / € 370m • Solvency II ratio remained robust at 194% after dividend and 201% before dividend 197% 13% -7% 203% 9.1% 4.0% -3.3% -12% 201% -7% 194% 226 8,095 • Organic capital creation amounts to € 370m, 344 63 which equals 9.8%pts of required capital
Slide 12: Aligning OCC with market and general model improvements
Aligning OCC with market and general model improvements Key changes relate to the LTIM assumptions in business capital Bridge from old to new definition (in €m of capital1) generation: Business capital generation Technical movements • Fixed income (including VA) changes from LTIM assumptions to Rele
Slide 13: Sensitivity of Solvency II ratio to UFR
Sensitivity of Solvency II ratio1 to UFR Stock of Solvency II (in %) • UFR that is in line with long-term investment 185% 186% 190% 194% returns would be a more economical way to 153% measure capital stock • a.s.r. currently applies an ‘economical UFR’ of 2.4% 2.40 3.55 3.60 3.75 3.90 • EIOPA intend
Slide 14: Strong balance sheet with ample financial flexibility
Strong balance sheet with ample financial flexibility Financial flexibility (in €m) Market risk as % of total BSCR1 Solvency II composition (in % pts) Hybrids Unrestricted T1 194% 923 502 43% 44% 38% 7,828 13% 2,039 Tier 3 143% Tier 2 5,789 Restricted Tier 1 Unrestricted Tier 1 EOF RT1 Headroom T2+3
Slide 15: Robust solvency and cash supports our businesses and dividends
Robust solvency and cash supports our businesses and dividends Holding cash (in €m) • Holding cash at FY 2019 stands at € 458m, in line with a.s.r’s policy of maintaining cash -253 at operating companies and upstream cash 501 to cover dividends, coupons and other 487 -435 -236 Holding expenses for t
Slide 16: Wrap-up
Wrap-up Jos Baeten, Chief Executive Officer 16
Slide 17: Diligent execution of strategy delivering multi-year earnings growth
Diligent execution of strategy delivering multi-year earnings growth Operating result1 (in €m) Dividend per share (in €) Non-life Distribution and Services Holding and Other Interim dividend Asset management Life Final dividend CAGR +10.4% +14.5% CAGR +14.4% 858 +9.2% 741 749 1.90 226 1.74 637 143 1
Slide 18: Key take-aways
Key take-aways Strong performance, record operating result in 2019 and 9% DPS growth Solid progress in executing our strategy, demonstrating financial discipline Strong balance sheet, robust high quality solvency with ample financial flexibility Additional capital distribution, € 75m in 2020 and fur
Slide 19: Appendices
Appendices a.s.fr.
Slide 20: Appendices
Appendices A. Financial ratios L. Fixed-income portfolio government credit rating B. Combined ratio per product line M. Fixed-income portfolio corporates and financials credit rating C. Calculation of operating ROE D. IFRS profit vs. operating result per segment N. Details of equities portfolio and
Slide 21: A. Financial ratios
A. Financial ratios Net result1 (€m) Operating result2 (€m) ROE Operating ROE2 972 858 19.1% 14.3% 15.1% 749 669 13.7% FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 FY 2019 Combined ratio3 Solvency II4 Total equity (€m) Financial leverage 95.7% 93.5% 197% 194% 5,479 6,093 26.7% 29.2% FY 20
Slide 22: B. Combined ratio per product line
B. Combined ratio per product line FY 2018 FY 2019 Net earned premiums (in €m) 2,949 3,159 Claims ratio 73.0% 72.1% Non-life segment Expense ratio 7.3% 7.4% Commission ratio 16.3% 15.5% Combined ratio 96.5% 95.0% Net earned premiums (in €m) 814 981 Claims ratio 70.9% 70.2% Disability Expense ratio 8
Slide 23: C. Calculation of operating ROE
C. Calculation of operating ROE (in €m) FY 20174 FY 20184 FY 2019 Operating result (before tax, annualised) 741 749 858 Minus: Interest on hybrid instruments through equity1 48 59 60 Operating result after hybrid costs (before tax, annualised) 693 689 798 Tax effect (25% tax rate) 173 172 203 Operat
Slide 24: D. IFRS profit vs. operating result per segment
D. IFRS profit vs. operating result per segment IFRS profit Investment Operating IFRS profit Investment Operating Incidentals Incidentals before tax related result before tax related result FY 20181 (in €m) FY 2019 (in €m) Non-life 159 16 0 143 292 102 -37 226 Life 805 144 -10 671 913 243 -27 696 As
Slide 25: E. IFRS equity and Solvency II EOF multi-year development
E. IFRS equity and Solvency II EOF multi-year development IFRS equity (in €m) Solvency II Eligible Own Funds1 (in €m) 7,828 6,093 6,924 6,827 2,039 5,433 5,479 1,004 1,548 1,546 1,001 1,001 5,089 5,789 4,432 4,478 5,279 5,379 2017 2018 2019 2017 2018 2019 Hybrids Equity Hybrids Unrestricted Tier 1 1
Slide 26: F. SCR movement in FY 2019
F. SCR movement in FY 20191 (in €m) FY 2018 3,523 SCR decreases in SCR increases in Market risk 472 Market risk: Market risk: • Concentration risk • Interest rate risk Counterparty default risk -91 • Equity and real estate risk Counterparty default risk • Spread risk Insurance risk Life 225 Insuranc
Slide 27: G. Sensitivities Solvency II ratio
G. Sensitivities Solvency II ratio 13 11 8 7 3 0 1 1 194%1 -2 -5 -4 -6 -7 -6 -10 -10 -10 -10 -9 -11 Optimal range -13 >160%: entrepreneurial level VA -10bps Sovereign Corporate credit Interest +100bps Interest -100bps Equities -20% Real estate -10% spread +50bps spread +75bps >140% cash dividend Tot
Slide 28: H. Solvency II ratio movements in FY 2019 (new OCC definition)
H. Solvency II ratio1 movements in FY 2019 (new OCC definition) OCC: 13.3%p / € 501m 197% 13% -7% 203% 13.9% 2.4% -3.0% -15% 201% -7% 194% 63 526 33 8,095 -114 7,828 176 7,587 -267 487 6,924 307 4,035 0 4,035 218 3,741 0 0 -13 3,523 0 FY 2018 Hybrid Acquisition FY 2018 Business Release Technical Mar
Slide 29: I. Bridge OCC CMD target
I. Bridge OCC CMD target OCC target CMD OCC FY 19 and new target • CMD OCC target of >€ 430m to be realised in 2021. With the Loyalis acquisition this was effectively raised to € 465m for 2021 > 500 501 465 • When adjusting for the lower interest rate environment as of FY 2019 compared to October Lo
Slide 30: J. Investment portfolio
J. Investment portfolio • Increase in total portfolio value, and fixed Assets (in €bn, fair value)1 FY 2018 FY 2019 Delta % of total income in particular, mainly due to the acquisition of Loyalis and market effects Fixed income 26.4 32.8 6.4 67% • Fixed income also includes € 0.8bn Equities 2.2 2.6
Slide 31: K. Details of fixed-income portfolio
K. Details of fixed-income portfolio • The core of the portfolio consists of AAA government bonds, with selective Mortgages (in €m, book value)1 FY 2018 FY 2019 Delta % of total peripheral sovereign exposure NHG 3,073 2,887 -6.0% 41% LtMV < 55% 1,155 1,356 17.4% 19% • The increase in value of the fi
Slide 32: L. Fixed income portfolio government credit rating
L. Fixed income portfolio government credit rating Market value governments1 (in €m) 0-1 1-2 2-3 3-5 5-10 10-20 20-30 30+ Total Delta % of total AAA 682 391 196 434 1,239 1,508 2,379 57 6,885 428 50% AA 569 460 359 410 824 841 736 1,237 5,434 1,125 40% A 1 3 16 75 162 40 0 14 312 -440 2% BBB 245 1 6
Slide 33: M. Fixed income portfolio corporates and financials credit rating
M. Fixed income portfolio corporates and financials credit rating Market value credits (in €m) 0-1 1-2 2-3 3-5 5-10 10-20 20-30 30+ Total Delta % of total AAA 447 190 125 119 166 67 0 0 1,114 517 9% AA 146 76 187 323 410 221 0 0 1,363 71 11% A 423 287 704 1,259 1,953 412 0 0 5,039 584 41% BBB 389 32
Slide 34: N. Details of equities portfolio and real estate portfolio
N. Details of equities portfolio and real estate portfolio Highlights Equities (in €m) FY 2018 FY 2019 Delta • During 2019, multiple trades took place and overall, the market value of equity markets Equities rose, resulting in an overall increase in equity exposure Equities 1,803 2,059 14.2% • Conti
Slide 35: O. Calculation of asset leverage
O. Calculation of asset leverage Risky assets (in €m) FY 2018 FY 2019 Equities 2,245 2,607 Real estate1 2,414 2,615 BB bonds or below 274 341 Preference shares 308 320 Fixed income funds (not rated & high yield) 329 265 Mortgages with LtMV >110% 109 48 Total risky assets 5,678 6,196 Unrestricted Tie
Slide 36: P. Life segment book development
P. Life segment book development Life reserves development (in €bn) Life reserves (in €bn) Individual Funeral Reserves Excl. (un)realised gains reserve Pensions 30 50 45 20 40 10 35 0 30 2017 2018 2019 2017 2018 2019 Reserves – FY 2019 (€ 47bn) (Un)realised reserves development (in €bn) Shadow accou
Slide 37: Q. Life segment investment contribution
Q. Life segment investment contribution (in €m) H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H2 2019 Direct investment income1 513 479 529 519 535 527 Amortisation of realised gains reserve 161 161 155 159 161 137 Total investment contribution 674 640 684 678 696 664 Required interest on liabilities2,3 -
Slide 38: R. Medium term group targets (2019 – 2021)
R. Medium term group targets (2019 – 2021) Targets for the 2019 − 20211 period Solvency II Operating return on equity Dividend pay-out ratio (Standard formula) (% of net operating result after hybrid expenses2) > 160% 12-14% 45-55% Substantial capital for Per annum Ambition to offer a stable to grow
Slide 39: S. Medium-term business targets (2019 – 2021)
S. Medium-term business targets (2019 – 2021) Targets for the 2019 − 20211 period Non-life Life operating result Fee based businesses, operating result2 (P&C and Disability) (€ million) 94-96% Stable € 40 million Combined ratio Compared to 5% growth € 633 million in 2017 per annum thereafter Non-lif
Slide 40: T. Medium term non-financial objectives
T. Medium term non-financial objectives Targets for the 2019 − 20211 period Meeting customer needs Sustainable investments Employee contribution to local society (Net promoter score) (in no. of hours) Carbon footprint: % measured of 95% > 44 investment portfolio +5% € 1.2bn Impact by 2021 investment
Slide 41: U. Recognition in ESG benchmarks and ratings
U. Recognition in ESG benchmarks and ratings BBB 76 52 #1 Global industry Global industry European industry Dutch Association of average: BB average: 60 average: 39 Investors for Sustainable Dev. C (prime) B 73 #1 Global industry Global industry Global industry average: D average: B- average: 47 Dut
Slide 42: V. Redefining Operating result: VOBA recognition of Loyalis
V. Redefining Operating result: VOBA recognition of Loyalis • On 1 May 2019, ASR Nederland N.V. announced the completion of its acquisition of Loyalis N.V. (hereafter referred to as ‘Loyalis’) • With the acquisition of Loyalis and under the IFRS3-standard (‘Business combinations’), balance sheet ite
Slide 43: IR contact details
IR contact details Email: ir@asr.nl Tel: +31 (0)30 257 86 00 43
Slide 44: Disclaimer
Disclaimer Cautionary note regarding forward-looking statements laws or regulations and/or changes in the interpretation thereof, including without limitation Solvency II, IFRS and taxes; (17) changes in the policies of governments and/or regulatory or The terms of this disclaimer ('Disclaimer') app