Asr Nederland N.v. · EURONEXT:ASRNL
Asr Nederland — H1 2020 Earnings Presentation
44 slides from Asr Nederland's earnings presentation, Aug 26, 2020
Slide 1: 2020 half-year results
2020 half-year results Delivery on ambitious targets Jos Baeten, CEO Annemiek van Melick, CFO ANALYST CONFERENCE CALL 26 August 2020
Slide 2: Solid operational performance and robust solvency in H1 2020
Solid operational performance and robust solvency in H1 2020 • Strong operating result with a small decrease of € 18m (-3.9%), with limited impact of Operating result1 Solvency II (SF)2 Interim div. per share COVID-19 (c. € -3m) • Combined ratio3 at 92.9%. GWP organic € 446m 199% € 0.76 growth of 6.
Slide 3: Robust solvency supports continued capital return
Robust solvency supports continued capital return • Postponed final dividend for FY2019 and share buyback programme are being resumed • 2020 regular interim dividend amounts to € 0.76 per share, 40% of originally proposed FY 2019 dividend • Dividend policy: pay-out ratio of 45% to 55% of the net ope
Slide 4: a.s.r. delivers on sustainable value creation
a.s.r. delivers on sustainable value creation Financial self-reliance and inclusiveness Vitality and (sustainable) employability Climate change and energy transition Non-financial targets for the 2019 − 2021 period Meeting customer needs Sustainable investments Sustainable investments Employee contr
Slide 5: Overall limited impact of COVID-19
Overall limited impact of COVID-19 Customers Employees Financial results • First focus on seamless transition to full • From one day to the next, some • COVID-19 impact on operating result customer support from home and efficiently 4,000 colleagues switched seamlessly to limited – c. € -3m. Negative
Slide 6: Solid progress in executing our strategy in H1 2020
Solid progress in executing our strategy in H1 2020 Portfolio matrix A Non-life business domains with growth potential C Asset management related growth business • Combination of Loyalis, Veherex and Vitality partnership strengthened • Assets under Management (“AuM”) for third parties increased by €
Slide 7: a.s.r. announces acquisition of remaining stake in Brand New Day IORP
a.s.r. announces acquisition of remaining stake in Brand New Day IORP1 • a.s.r. expands its stake in BND IORP and Net purchase price Net operating result becomes the full owner • DC market share is expanded to c. 15% € 51m € 8m • BND IORP is originated in 2011, has 145k Funded with cash After synerg
Slide 8: Strong series of operating results, driven by balanced business mix
Strong series of operating results, driven by balanced business mix Operating result1 (in €m) • Whilst focusing on improving efficiency within its Life business a.s.r. has 464 also further diversified its business model by increasing fee income from c. -3 Asset Management and Distribution and Servic
Slide 9: Non-life: stable operating result and strong organic growth
Non-life: stable operating result and strong organic growth Operating result1 (in €m) Gross written premiums (in €m) • Non-life operating result remained stable at € 124m, including € 23m positive COVID-19 effects +0.7% • Disability business impacted by COVID-19 related +18.8% claims in individual d
Slide 10: Life: solid operating result and strong growth in Pensions DC
Life: solid operating result and strong growth in Pensions DC Operating result1 (in €m) Investment margin1 (in €m) • Operating result of Life segment decreased by only € 9m Investment margin Technical result and Other Direct investment income Required interest to € 361m despite € 25m negative impact
Slide 11: Operating result fee-based businesses delivering on ambitious targets
Operating result fee-based businesses delivering on ambitious targets Operating result1 Asset Management Operating result1 Distribution and Services Operating result1 Holding and Other (in €m) (in €m) (in €m) +27.3% +14.9% 15 13 12 11 -53 -67 H1 2019 H1 2020 H1 2019 H1 2020 H1 2019 H1 2020 • Fee-bas
Slide 12: Solvency and capital position
Solvency and capital position Annemiek van Melick, CFO 12
Slide 13: Solvency II: high quality balance sheet
Solvency II: high quality balance sheet SII Eligible Own Funds (in €m) 199% • Solvency II ratio 199% based on standard formula1 (FY 2019: 194%) 1,524 0 8,193 • Solvency II ratio at UFR 2.4% increased to 159% (FY 6,136 533 2019: 153%) • Unrestricted Tier 1 capital increased by € 347m to € 6,136m: 75%
Slide 14: Solvency II ratio movements in H1 2020
Solvency II ratio1 movements in H1 2020 OCC: 7.3%-pts / € 298m • Solvency II ratio remained robust at 199% after capital distributions 194% -1% 193% 7% 3% -2% 3% 203% -4% 199% • Robust organic capital distribution of € 298m or 315 8,372 7,3%-pts of required capital (HY19: € 299m) driven by increased
Slide 15: Robust and diversified investment portfolio
Robust and diversified investment portfolio Breakdown investment portfolio € 52.0bn (in %) Breakdown real estate portfolio (€ 4.2bn) as % Market risk as % of total BSCR3 of total Investment Portfolio (in %) 5% 1% 0.8% Soft limit 44% 43% 50% 8% Rural 0.7% 3.2% Residential 27% Retail 1.6% Offices 15%
Slide 16: Strong balance sheet with ample financial flexibility
Strong balance sheet with ample financial flexibility Financial flexibility (in €m) Solvency II composition (in % pts) Solvency II ratio entities1 (in % pts) Hybrids Unrestricted T1 199% SCR 1,252 3,128 1,001 535 37% 186% 8,193 13% 158% 2,057 Tier 3 149% Tier 2 6,136 Restricted Tier 1 Unrestricted T
Slide 17: Robust solvency and cash supports our businesses and dividends
Robust solvency and cash supports our businesses and dividends HoldCo Liquidity (in €m) • HoldCo Liquidity at HY 2020 stood at € 608m, in line with a.s.r’s policy of -51 -67 608 maintaining cash at operating companies 297 and upstream cash to cover dividends, 458 -29 coupons and other Holding expens
Slide 18: Wrap-up
>» Wrap-up Jos Baeten, CEO a.s.fr. 18
Slide 19: Key take-aways
Key take-aways Wellbeing of employees and customer service have top priority Strong performance absorbing COVID-19 impact and continuing dividend payments Solid progress in executing our strategy, demonstrating financial discipline Strong balance sheet, robust solvency with ample financial flexibili
Slide 20: Appendices
Appendices a.s.fr.
Slide 21: Appendices
Appendices A. Financial ratios L. Details of Corporates and Financials bond portfolio B. Combined ratio per product line M. Fixed Income portfolio government credit rating C. Calculation of operating ROE N. Fixed Income portfolio Corporates and Financials D. IFRS profit vs. operating result per segm
Slide 22: A. Financial ratios
A. Financial ratios Net result (€m) Operating result1 (€m) ROE (in %) Operating ROE1 (in %) 540 464 446 22.2% 17.0% 14.8% 233 8.0% H1 2019 H1 2020 H1 2019 H1 2020 H1 2019 H1 2020 H1 2019 H1 2020 Combined ratio2 (in %) Solvency II3 (in %) Total equity (€m) Financial leverage (in %) 93.5% 92.9% 194% 1
Slide 23: B. Combined ratio per product line
B. Combined ratio per product line H1 2019 H1 2020 Net earned premiums (in €m) 712 743 Claims ratio 63.6% 53.7% Property & Casualty Expense ratio 8.3% 7.7% Commission ratio 25.5% 26.3% Combined ratio 97.4% 87.8% Net earned premiums (in €m) 452 585 Claims ratio 70.4% 81.5% Disability Expense ratio 8.
Slide 24: C. Calculation of operating ROE
C. Calculation of operating ROE (in €m) H1 20194 H1 2020 Operating result (before tax, annualised) 927 891 Minus: Interest on hybrid instruments through equity1 59 48 Operating result after hybrid costs (before tax, annualised) 868 843 Tax effect (25% tax rate) 220 217 Operating result after hybrid
Slide 25: 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 H1 2019 (restated)1 (in €m) H1 2020 (in €m) Non-life 173 67 -17 123 112 -6 -6 124 Life 465 101 -6 370 236 -2 -
Slide 26: 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) 8,193 7,828 6,309 6,093 6,827 6,924 2,057 5,479 1,004 5,433 1,004 2,039 1,001 1,548 1,546 1,001 5,089 5,306 6,136 5,789 4,432 4,478 5,279 5,379 2017 2018 2019 H1 2020 2017 2018 2019
Slide 27: F. SCR movement in H1 2020
F. SCR movement in H1 20201 (in €m) FY 2019 4,035 SCR decreases in SCR increases in Market risk -1 Market risk: Market risk: • Equity and real estate risk • Interest rate risk Counterparty default risk -24 • Spread risk Counterparty default risk Insurance risk Life 91 Insurance risk Life: Insurance
Slide 28: G. Sensitivities Solvency II ratio
G. Sensitivities Solvency II ratio 18 11 9 7 3 0 1 199%1 -3 -3 -3 -5 -6 -6 -5 -9 -8 -10 -11 -11 -11 >180%: threshold additional -13 capital distribution VA -10bps Sovereign Corporate credit Interest +100bps Interest -100bps Equities -20% Real estate -10% spread +50bps spread +75bps >160%: entreprene
Slide 29: H. Sensitivities Solvency II ratio – to UFR
H. Sensitivities Solvency II ratio1 – to UFR Stock of Solvency II (in %) • UFR that is in line with long-term investment 192% 195% 199% returns would be a more economical way to 159% measure capital stock • a.s.r. currently applies an “economical UFR” of 2.4% 2.40 3.50 3.60 3.75 • EIOPA intends to l
Slide 30: I. Investment portfolio
I. Investment portfolio • Increase in fixed income was mainly due to market Assets (in €bn, fair value)1 FY 2019 H1 2020 Delta % of total effects Fixed income2 32.0 35.1 3.1 68% • Acquisitions of VvAA and Veherex added € 0.4bn of assets to the portfolio Equities 2.6 2.4 -0.2 5% • Decrease in real es
Slide 31: J. Details of fixed-income portfolio
J. Details of fixed-income portfolio • The core of the FI portfolio consists of AAA and AA government bonds, Mortgages (€m) FY 2019 H1 2020 Delta % of total with selective peripheral sovereign exposure NHG 3,380 3,521 4.1% 38% LtMV < 55% 1,450 1,559 7.5% 17% • The increase in value of the fixed inco
Slide 32: K. Dutch mortgage portfolio, strong return with low risk
K. Dutch mortgage portfolio, strong return with low risk History of credit losses on guaranteed History of credit losses a.s.r. portfolio (in bps) • Historic credit losses were very low, in general mortgages market1 (in bps) there is a high payment morale and social 20 Peaks during security is usual
Slide 33: L. Details of Corporates and Financials bond portfolio
L. Details of Corporates and Financials bond portfolio Comments on Corporates portfolio Corporates portfolio (in €m) FY 2019 H1 2020 Delta % of total • The increase of € 346m in the Corporates and Financials portfolio was Automotive 482 490 8 3.8% comprised of € 509m of transactions and € -163m of r
Slide 34: M. Fixed Income portfolio government credit rating
M. 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 Delta2 % of total AAA 326 355 297 305 1,304 1,562 2,653 61 6,862 -23 48% AA 927 422 273 350 984 862 915 1.320 6,051 616 42% A 5 16 30 125 197 36 0 15 424 112 3% BBB 198 10
Slide 35: N. Fixed Income portfolio Corporates and Financials credit rating
N. 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 Delta2 % of total AAA 414 135 58 96 160 70 0 0 933 -181 8% AA 107 89 186 282 388 144 0 0 1,196 -167 10% A 330 625 824 1,253 1,769 338 11 0 5,150 112 42% BBB 520 4
Slide 36: O. Details of equities and real estate portfolio
O. Details of equities and real estate portfolio Highlights Equities (in €m) FY 2019 H1 2020 Delta • During H1 2020, equity markets declined sharply due to the COVID-19 and Equities subsequently bounced back partially, resulting in an overall decrease in equity exposure Equities 2,059 1,968 -4.4% •
Slide 37: P. Calculation of asset leverage
P. Calculation of asset leverage Risky assets (€m) FY 2019 H1 2020 Equities 2,607 2,377 Real estate1 2,615 2,414 BB bonds or below 341 375 Preference shares 320 312 Fixed income funds (not rated & high yield) 265 254 Mortgages with LtMV >110% 52 35 Total risky assets 6,200 5,766 Unrestricted Tier 1
Slide 38: Q. Life segment book development
Q. Life segment book development Life reserves development (in €bn) Life reserves (in €bn) Individual Pensions Funeral Reserves Excl. (un)realised gains reserve 30 50 25 45 20 15 40 10 35 5 0 30 2017 2018 2019 H1 2020 2017 2018 2019 H1 2020 Reserves – H1 2020 (€ 50bn) (Un)realised reserves developme
Slide 39: R. Life segment investment contribution
R. Life segment investment contribution (in €m) H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 Direct investment income1 513 479 529 519 535 527 562 Amortisation of realised gains 161 161 155 159 161 137 132 reserve Total investment contribution 674 640 684 678 696 664 694 Required interest
Slide 40: S. Medium term group targets (2019 – 2021)
S. 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 41: T. Medium-term business targets (2019 – 2021)
T. 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 42: U. Medium term non-financial objectives (2019 – 2021)
U. Medium term non-financial objectives (2019 – 2021) 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 2
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 developments; (10) changes in the implementation and execution of ICT systems or outsourcing; (11) changes in the availability of, and costs associated with, sources of liquidity; (12) consequences of a potential (partial) termination o