Nn Group N.v. · EURONEXT:NN
Nn — Investor Day (November 2017)
148 slides from Nn's investor day presentation, Nov 30, 2017
Slide 1: NN Group Capital Markets Day
NN Group Capital Markets Day 30 November 2017 1
Slide 2: Capitalising on our combined strengths
Capitalising on our combined strengths Lard Friese, Chief Executive Officer 30 November 2017 A.1
Slide 3: Announced today
Announced today NN Group financial targets Other announcements • EUR ~350m cost reduction1 by 2020, • Dividend policy and capital framework reflecting cost synergies from Delta Lloyd unchanged acquisition and existing standalone cost reduction plans • Delta Lloyd integration completed by 2020, with
Slide 4: NN Group is focused on creating value
1 2 3 4 NN Group is focused on We will deliver on the We will continue to We will continue to creating value Delta Lloyd integration drive value by allocate capital improving performance rationally and innovating the business model A.3
Slide 5: NN Group has a clear purpose and defined values
NN Group has a clear purpose and defined values A.4
Slide 6: We have made good progress but some areas require more work
We have made good progress but some areas require more work Successful transition out of ING, acquisition of Delta Lloyd Market positions improved across all regions, distribution capabilities expanded Customer and employee satisfaction improved Increased efficiency through significant expense reduc
Slide 7: We have delivered on group financial targets set at IPO
We have delivered on group financial targets set at IPO Annual earnings1 Administrative expense Increase in RoE3 in Generate free cash available to growth of 5-7% on base in the Netherlands2 medium term shareholders in a range around average in the reduced by 25% (%) the net operating result of the
Slide 8: NN Group's investment proposition is unchanged
NN Group’s investment proposition is unchanged Strong business Transformation in Profitable growth Focus on generating positions and balance the Netherlands in other segments capital and improving sheet earnings • Leading market player • Continued focus on • VNB growth in • Since IPO, EUR 2.3bn • Co
Slide 9: Our financial position is robust
Our financial position is robust Healthy cash capital Financial leverage Strong Solvency II ratio1 All subsidiaries well with a target range of position now capitalised EUR 0.5-1.5bn satisfactory (EURm) • Notional debt • Operating units well reduction of EUR 1bn capitalised at or above 204% 2,489 si
Slide 10: Our priorities going forward are clear
Our priorities going forward are clear 1. Deliver on the Delta Lloyd transaction • Clear roadmap to deliver on the financial and non-financial benefits within the expected timeline • Strengthened competitive positions delivering sustainable cash flow 2. Improve performance further • Improve profitab
Slide 11: NN Group is focused on creating value
1 2 3 4 NN Group is focused on We will deliver on the We will continue to We will continue to creating value Delta Lloyd integration drive value by allocate capital improving performance rationally and innovating the business model A.10
Slide 12: Delta Lloyd transaction built on solid foundations
Delta Lloyd transaction built on solid foundations Pre-deal financial principles Pre-deal non-financial principles • Value creation through synergies • A business we understand • Solid cash flow • Within our risk appetite • Intrinsic value underpinning • Improves our competitive position • Post-deal
Slide 13: The acquisition brings significant strategic benefits
The acquisition brings significant strategic benefits Clear market leader in Doubling size in Dutch Strengthened position in Additional scale in Dutch Life & Pensions Non-life Belgium banking and asset 2% 6% management (EURbn) Total AuM 3Q17 17% 12% 11% 12% 194 50 244 GWP Life & Pensions GWP market
Slide 14: And we expect it to be financially compelling
And we expect it to be financially compelling Attractive Return on Investment Highly cash flow accretive Attractive dividend per share • Large amount of capital • Attractive underlying cash flow • Unchanged dividend policy deployed in an area we know from Delta Lloyd entities • Double digit increase
Slide 15: Transaction benefits will be realised as we integrate the businesses
Transaction benefits will be realised as we integrate the businesses What we have achieved so far Future milestones • Integration of management teams • Complete legal mergers2 in 2018/2019 • EUR ~350m capital synergies • Complete integration of Head Office in 2018 • Initial cost synergies: • Migrate
Slide 16: NN Group is focused on creating value
1 2 3 4 NN Group is focused on We will deliver on the We will continue to We will continue to creating value Delta Lloyd integration drive value by allocate capital improving performance rationally and innovating the business model A.15
Slide 17: Diversified businesses in Europe and Japan
Diversified businesses in Europe and Japan NN Group adjusted shareholders equity1 NN Group operating result before tax of the ongoing business2 3% 11% 10% Netherlands Life Netherlands Non-life 14% Insurance Europe 15% Japan Life 6% 65% 16% Asset Management 60% 0% • After the acquisition of Delta Llo
Slide 18: Improving performance in the Netherlands
Improving performance in the Netherlands Netherlands Life Netherlands Non-life Banking business • ~20% cost reduction by 2020 • ~20% cost reduction by 2020 • ~10% cost reduction by 2020 • Capture opportunities in • Step-change in underwriting • Originate mortgages at changing pension market performa
Slide 19: Driving growth in the international businesses and asset management
Driving growth in the international businesses and asset management Insurance Europe and Japan Life Asset Management • Grow VNB through focusing on protection and • ~5-10% cost reduction by 2020 capital-light products • Increase focus on core investment capabilities • Continue to diversify and expan
Slide 20: We are creating the customer experience of tomorrow
We are creating the customer experience of tomorrow Innovating the core • Digital, personal and relevant customer experience Enhancing agility and time to market • 6 Sparklabs for faster time to market of new initiatives • Innovative ways of working implemented across the businesses to deliver custo
Slide 21: Technology is key to accelerating our transformation and enabling innovation
Technology is key to accelerating our transformation and enabling innovation Goals Achievements What’s next? • Speed: accelerating time to • Cloud Migration: first phase • Complete scalable insurance market of new products, completed platform services and features; fast • Agile transformation: agile
Slide 22: NN Group is focused on creating value
1 2 3 4 NN Group is focused on We will deliver on the We will continue to We will continue to creating value Delta Lloyd integration drive value by allocate capital improving performance rationally and innovating the business model A.21
Slide 23: We have and will maintain a strong international footprint
We have and will maintain a strong international footprint • Netherlands: No need for further acquisitions given leading market position; integrate and drive up Return on Capital • Insurance Europe: Strongly positioned in most markets; open to bolt-on acquisitions and portfolio optimisation • Japan:
Slide 24: We operate a diversified set of businesses
We operate a diversified set of businesses • Drive cost efficiency 9M17 Total dividends2 Operate • Improve return on capital Netherlands Life EUR 829m ~65% capital deployed1 • Deliver stable cash flows over time • Good market positions Cost savings target Reshape • Improve results and become Netherl
Slide 25: Our capital allocation decisions focus on creating value
Our capital allocation decisions focus on creating value Invest to realise our ambitions and Invest to strengthen current Invest in value-creating strategy position of our business units opportunities • Innovation • Hurdle rates • Best owner concept • Agility • Market and business position • Risk ve
Slide 26: Key takeaways
Key takeaways 1 Deliver on the benefits of the Delta Lloyd transaction 2 Improve performance further 3 Accelerate the transformation of the business model and drive customer satisfaction 4 Continue rational capital allocation A.25
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Slide 28: Continue sound capital management
Continue sound capital management Delfin Rueda, Chief Financial Officer 30 November 2017 B.1
Slide 29: Strong track record of delivery on IPO targets
Strong track record of delivery on IPO targets +11% 1,435 10.8 Annual 1,227 Increase in earnings1 1,086 8.6 8.1 RoE3 in 905 7.1 growth of 5-7% medium on average in term (%) the medium term (EURm) 2013 2014 2015 2016 20134 2014 2015 2016 -25% Generate free EUR 200m cost 1,019 cash available 877 803 7
Slide 30: Strong capital generation since the introduction of Solvency II
Strong capital generation since the introduction of Solvency II +46% +3% • Since the introduction of Solvency II, SII ratio 239% 204% operating capital generation of -2% -22% -60% EUR 2.0bn +1.4 +2.1 15.9 +1.7 13.3 • Capital flows reflects EUR 0.7bn -1.6 -1.1 ordinary dividends and EUR 0.4bn OF1 sha
Slide 31: We see a range of benefits from the acquisition of Delta Lloyd
We see a range of benefits from the acquisition of Delta Lloyd • Sharing of best practices between NN and Delta Lloyd Commercial • Leveraging separate product offerings onto both customer bases • Cost reductions Efficiency • Improve underwriting and claims handling • Improve reinsurance terms Cash a
Slide 32: EUR ~350m cost reduction target by 2020
EUR ~350m cost reduction target by 2020 Administrative expense base1 to reduce by ~17% • Cost reduction target of EUR ~350m by 2020 of (EURm) which ~50% by 2018 • Reflects cost synergies from Delta Lloyd acquisition and existing standalone cost ~-350 reduction plans 2,024 • Restructuring charges/inv
Slide 33: Balanced contribution to cost reductions
Balanced contribution to cost reductions Cost reductions by segment • Significant overlap in Holding, Bank and Asset Total reduction EUR ~350m Management, representing ~40% of total targeted savings Holding (other) • Dutch Life and Non-life expected to represent NL Life ~55% of total cost reductions
Slide 34: Capital benefits from the combination
Capital benefits from the combination Capital synergies realised of EUR ~350m • Initial SCR diversification • LACDT • Tiering1 Potential additional capital benefits • PIM implementation partly offset by loss of longevity hedge benefit • Risk margin on merger of Solvency II legal entities • Reinsuran
Slide 35: Our capital framework remains in place
Our capital framework remains in place Operating units Cash capital at holding Financial leverage • Manage operating units to • Hold cash capital to cover stress • Maintain financial leverage and commercial capital levels events and to fund holding fixed-cost cover ratios consistent • Surplus capita
Slide 36: Operating units well capitalised and generating capital
Operating units well capitalised and generating capital 4Q15 3Q17 Cumulative • Since 4Q15, business units remitted SII ratio SII ratio remittances EUR 3,059m to the holding company since 4Q15 • Contributions from all segments (EURm) • Includes EUR 65m from DL entities; NN Life1 216% 218% 1,421 contr
Slide 37: Our cash capital remains in target range
Our cash capital remains in target range Holding company cash capital • We hold cash capital in a target range of EUR 0.5-1.5bn to cover (EURm) the need to recapitalise legal entities in a 1-in-20 stress event and to fund holding costs 1,789 1,500 • This target range has not changed after the Delta
Slide 38: We are comfortable with the level of debt and its maturity profile
We are comfortable with the level of debt and its maturity profile Financial Well balanced maturity profile1 • Financial leverage leverage1 (EURbn) reduced following (EURbn) Senior notes redemption of 1.8 Subordinated notes EUR 405m Fonds 6.1 NutsOhra and EUR 1.1 1.0 575m DL senior notes 33% 1.0 0.9
Slide 39: Optimised capital structure
Optimised capital structure Basic Own Funds vs Eligible Own Funds Tiering Solvency II Eligible Own Funds (3Q17, EURbn) (EURbn) 17.4 15.9 15.9 1.3 0.3 1.0 1.1 Non-Solvency II 2.4 regulated entities 1.9 Tier 3 Tier 2 Tier 1 Restricted Basic Own Non-available Non-eligible Eligible 9.5 Tier 1 Unrestrict
Slide 40: Strong Solvency II ratio driven by operating capital generation
Strong Solvency II ratio driven by operating capital generation +26% +7% • Operating capital generation of SII ratio 241% 204% EUR 1.1bn in 9M17 from Solvency II -5% -4% -60% entities, Japan Life, Asset Management +2.1 15.9 and pension funds, as well as holding +0.8 +0.9 expenses 13.1 -0.9 -0.2 • Ma
Slide 41: Remittances largely driven by own funds generation
Remittances largely driven by own funds generation Own Capital Remittances vs Capital Segment Funds require- Drivers remittances Net operating levels generation ments result Excess return, UFR unwind, release of risk margin, expense reduction Netherlands Life Limited new business and large closed bl
Slide 42: Dividend policy remains unchanged
Dividend policy remains unchanged Interim dividend per share (EUR) • Priority is a sustainable ordinary dividend per share Final dividend per share (EUR) Total dividend per share (EUR) • Expressed as pay-out ratio of 40-50% of net operating result of ongoing business 1.51 1.55 • Double digit increas
Slide 43: Continued focus on earnings improvement, cost reduction and free cash flow
Continued focus on earnings improvement, cost reduction and free cash flow in NN Group targets Indicator New targets Operating result growth1 5-7% Administrative expense base Reduction of EUR ~350m over reduction 2016-2020, of which ~50% by 2018 Over time, generate free cash available to shareholder
Slide 44: Segments continue to target earnings improvement through cost reductions and profitable growth
Segments continue to target earnings improvement through cost reductions and profitable growth Segment Indicator New targets Netherlands Life Operating result Broadly stable1 Netherlands Non-life Combined ratio 97% or below Insurance Europe Operating result Mid to high-single digit growth1 Japan Lif
Slide 45: Key takeaways
Key takeaways 1 We have a demonstrated track record of delivering on our IPO targets 2 We will deliver on the benefits of the Delta Lloyd transaction, including cost savings of EUR ~350m by 2020 3 Capital framework and dividend policy unchanged 4 Target operating result growth of 5-7% and free cash
Slide 46: Appendix
Appendix B.19
Slide 47: Operating result development
Operating result development Segment (EURm) 9M17 9M16 2016 2015 Outlook Netherlands Life 726 547 710 906 • Operating result expected to be broadly stable1: • Investment decisions to improve Solvency II capital generation may negatively impact the IFRS investment margin • Fees and premium-based reven
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Slide 49: Managing risk for value
Managing risk for value Jan-Hendrik Erasmus, Chief Risk Officer 30 November 2017 1
Slide 50: NN manages risk and return within its risk appetite
NN manages risk and return within its risk appetite Risk appetite statements Strategic challenges Strategic Manage our businesses on a risk-return challenges basis to meet our strategic objectives whilst considering the interests of all stakeholders Strong Avoid having to raise equity capital after
Slide 51: We have been actively managing the risks arising from the Delta Lloyd transaction
We have been actively managing the risks arising from the Delta Lloyd transaction Potential risks Mitigating actions • Solvency and cash capital • Significant pre-approach work and pre-deal due diligence on a listed • Integration speed company in our home markets and operational effectiveness • Thor
Slide 52: Strong solvency ratio under our approved internal model
Strong solvency ratio under our approved internal model NN Group SCR (3Q17, EURbn) • NN Group utilises a Partial Internal Model (PIM): • NN insurance entities in the Netherlands on PIM PIM entities 5.0 • Delta Lloyd units and European insurance businesses on the SF entities 3.5 Standard Formula (SF)
Slide 53: Following the Delta Lloyd acquisition, we continue to have a defensive asset mix
Following the Delta Lloyd acquisition, we continue to have a defensive asset mix Assets (NN Group) Fixed income portfolio (NN Group excl. Banking) (3Q17, total EUR 178bn)1 (3Q17, total EUR 130bn)2 2% 2% 4% 7% Fixed Income Government bonds 3% Equity 19% Financial bonds Real Estate Corporate bonds 3%
Slide 54: NN's fixed income portfolio is diverse, high quality
NN’s fixed income portfolio is diverse, high quality and presents opportunities to improve risk return Government bonds by rating Government bonds by country (3Q17, total EUR 70bn) (3Q17, total EUR 70bn) 0% Netherlands¹ AAA 9% Germany¹ AA 13% 13% France¹ 35% A 17% Belgium BBB 13% 17% Austria Other 3
Slide 55: Mortgage books are attractive and well-collateralised
Mortgage books are attractive and well-collateralised Attractive spreads Strong risk management 6% • Mortgage exposure of EUR 25bn in the insurance 4% entities and EUR 18bn in the banking business at 2% 3Q17 0% • Majority of mortgage assets originated by NN Bank 2003 2004 2005 2006 2007 2008 2009 20
Slide 56: We continue to optimise risk return
We continue to optimise risk return Return on SCR1 Selectively shifting to higher yielding assets (For selected asset classes, in %) • From 2016, EUR ~5.4bn invested in higher yielding assets at NN Life2 Mortgages Real estate Loans Corporate Equities AAA • Within DL Life, EUR 1bn of government bonds
Slide 57: Risk profile largely unchanged following the acquisition of Delta Lloyd
Risk profile largely unchanged following the acquisition of Delta Lloyd SCR by Risk type (standalone, 3Q17) EUR € 0bn € 1bn € 2bn 3bn € 3bn € 4bn • Longevity risk is the largest risk driven by the long duration pension books in the Netherlands Longevity • Risk profile Delta Lloyd generally in line w
Slide 58: Capital held in excess of prospective mortality improvements
Capital held in excess of prospective mortality improvements Life expectancy at retirement1 - males • NN Group has EUR ~100bn of liabilities exposed to longevity risk, mainly in Dutch Group pensions 94 • Dutch life expectancy2, expressed via the CBS 2016 Population observed mortality table, is assum
Slide 59: NN Life has completed a longevity hedge transaction
NN Life has completed a longevity hedge transaction - Illustrative - • NN Life recently entered into an index-based longevity hedge based on the Dutch population Attachment Detachment • The hedge partially protects NN against longevity trend Point Point risk from EUR ~3bn of liabilities • NN remains
Slide 60: NN Group's solvency ratio sensitivities and tolerance
NN Group’s solvency ratio sensitivities and tolerance Δ Solvency II Sensitivities to shocks1 at 3Q17 ratio Tolerance (in %-points) Interest rate: Parallel shock +50bps +6% Interest rate: Parallel shock -50bps -6% Up to 10% Interest rate: 10bps steepening between 20y–30y -6% Credit spread: Parallel s
Slide 61: NN Group's solvency ratio is resilient
NN Group’s solvency ratio is resilient Market movements Impact on Solvency II ratio Financial Crisis • Interest rates -80bps (2008) • Equity markets -45% Positive • Corporate spreads +350bps • Sovereign spreads +20bps (AAA) up to +80bps (BBB) Sovereign Crisis • Interest rates -110bps • Equity market
Slide 62: Sensitivity to interest rate risk remains low and actively managed
Sensitivity to interest rate risk remains low and actively managed Netherlands Life asset and liability cash flows1 • We actively monitor and manage the interest rate (3Q17) duration and convexity risk we are exposed to Assets • Best estimate liability cash flow matching continues Liabilities to be
Slide 63: Japan Closed Block VA portfolio continues to run-off
Japan Closed Block VA portfolio continues to run-off in line with expectations Liabilities are actively managed and hedged (EURbn) Drivers of remittances +0.1 -0.2 +0.2 +0.0 +0.0 -0.1 -0.1 -0.0 0.5 0.5 0.6 0.7 Fee-based operating earnings • Declines in line with portfolio run-off -0.1 0.0 -0.4 -0.4
Slide 64: Key takeaways
Key takeaways 1 Disciplined and rational risk-taking framework 2 Selectively optimising asset portfolio and liability profile to manage risk for value 3 Focus on solvency ratio stability and resilience C.16
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Slide 66: Leading position in the Dutch market
Leading position in the Dutch market David Knibbe, CEO Netherlands 30 November 2017 D.1
Slide 67: Progress since IPO
Progress since IPO Keep operating result Netherlands Life broadly stable Keep investment spread broadly stable by shifting to higher yielding assets, e.g. mortgages Capture growth in pensions Non-life combined ratio of 97% or below Reduce expenses in Non-life, selective growth in D&A Return on Equit
Slide 68: Leverage our leading position in the Dutch market
1 2 Leverage our leading We will deliver on the position in the Dutch Delta Lloyd integration market D.3
Slide 69: The Delta Lloyd acquisition has strengthened our leading position
The Delta Lloyd acquisition has strengthened our leading position Overall market leading position1 Strongest brand2 compared to direct competitors 97% Pensions #1 – 36% market share 80% 80% 66% 55% Individual Life #1 – 24% market share 42% Non-life D&A #1 – 28% market share NN Interpolis Centraal Ae
Slide 70: Leading in terms of scale and relevant customer value propositions
Leading in terms of scale and relevant customer value propositions Omnichannel insurance Bancassurance JV Broad product suite Life and P&C All distribution channels Retail and commercial Retail and Commercial Bancassurance partnership Life and P&C Servicing Retail and commercial Simple direct insura
Slide 71: We continue to transform our businesses to be Digital, Personal and Relevant
We continue to transform our businesses to be Digital, Personal and Relevant Engaging customers in tailored …delivering tangible results …with Delta Lloyd providing ways… at NN… complementary capabilities Relevant Increased interaction, • Significant NPS increase • Innovative BeFrank DC proposition
Slide 72: Innovation drives future growth
Innovation drives future growth Innovating our business of today… … and getting ready for tomorrow • Sparklabs in place to invent new business • Looking for new business opportunities outside opportunities traditional focus, e.g.: • Innovation sparks have led to various scalable • Exploring vitality
Slide 73: Unlocking value potential from the combined company
Unlocking value potential from the combined company Pole position to win in Dutch Scale allows to structurally Disciplined bank strategy Pensions market improve Dutch Non-life business • Cost reduction through synergy • Better placed to compete in fast • Increased scale allows for benefits growing D
Slide 74: Leverage our leading position in the Dutch market
1 2 Leverage our leading We will deliver on the position in the Dutch Delta Lloyd integration market D.9
Slide 75: We have set clear principles for the integration of Delta Lloyd
We have set clear principles for the integration of Delta Lloyd Integration principles Progress to date • NN operating model is leading • Selected office locations vacated and available for sub- • First migrate, then upgrade letting; rebranding of other buildings in progress • Quick decision making
Slide 76: We have set ourselves the following milestones
We have set ourselves the following milestones 2018 – One front-end 2019 – One back-end 2020 and beyond – Optimise further • DL business rebranded to NN • Integration and legal mergers1 • Migration and rationalisation of • One set of products completed for Life and Non-life products finalised • Sing
Slide 77: Expense reductions mainly along four themes
Expense reductions mainly along four themes Synergy Remove overlapping operational and commercial activities Simplify IT landscape, decommissioning of systems EUR ~350m1 Variabilise expenses e.g. through outsourcing whilst increasing agility Digital Increase use of online and straight- through proce
Slide 78: We will continue to drive performance improvement and cash generation
We will continue to drive performance improvement and cash generation Netherlands Life Netherlands Non-life Banking business • Broadly stable operating result • Combined ratio of 97% or • ROE of 10% or higher over the medium term below • ~10% cost reduction by 2020 • ~20% cost reduction by 2020 • ~2
Slide 79: Key takeaways
Key takeaways 1 Leverage our leading position in the Dutch market 2 Continue to drive Digital, Personal, Relevant strategy, whilst improving operating performance and cash generation 3 Deliver on the Delta Lloyd integration and our expense reduction targets D.14
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Slide 81: Decisive action in Non-life
Decisive action in Non-life Leon van Riet, CEO Netherlands Non-life 30 November 2017 E.1
Slide 82: Strong footprint of Netherlands Non-life; Delta Lloyd integration; Roadmap to improve P&C results
1 2 3 Strong footprint of Delta Lloyd integration Roadmap to improve Netherlands Non-life P&C results E.2
Slide 83: Introduction Netherlands Non-life
Introduction Netherlands Non-life Key highlights • Leading position in the Dutch market: (EURm) 9M171 20162 20152 • Individual and Group D&A GWP 2,026 1,578 1,534 • P&C SME and Retail • Multi-label distribution of health insurance Administrative expenses 280 281 292 • Innovative offerings via Sparkl
Slide 84: Strong footprint in Dutch Non-life market
Strong footprint in Dutch Non-life market #1 23.4% market share in Non-life market1 in D&A 12% D&A #1 28.3% market share #2 11% P&C #2 21.6% market share in P&C • Motor #2 18.0% market share NN DL • Fire #2 27.5% market share 23.4% market share Total market EUR 13.0bn GWP EUR 3.0bn premium2 Well pos
Slide 85: Broad presence in market
Broad presence in market Diversified product mix1 Strong multi-channel distribution1 Highly recognised brands… 7% 17% 8% 32% D&A 14% 45% 24% 27% 26% P&C Regular brokers Mandated brokers D&A Fire Motor Other P&C Bancassurance Direct channel EUR 3.0bn GWP Other …and partnerships • Leading D&A business
Slide 86: Integration challenges and mitigating actions
Integration challenges and mitigating actions People Product Systems Distribution Challenge Challenge Challenge Challenge • Maintain and combine • Rationalise product • Legacy rationalisation • Maintain share of talent and culture offering and maintain enabling substantial wallet with brokers market
Slide 87: We have set ourselves the following milestones
We have set ourselves the following milestones 2017 2018 2019 2020 and beyond • Management team • Rebrand DL label to • Legal merger of • Integration of P&C integrated NN and Movir NN Non-life and SME • Initiation of 3-year • All new business on DL Non-life1 • IT landscape simplified P&C performance
Slide 88: Selective businesses performing well, P&C requires improvement
Selective businesses performing well, P&C requires improvement Good historical performance of D&A, with opportunity to Fire ~100-105% further improve ~90-95% combined Roadmap to improve P&C SME and combined ratio retail results ratio • Improve underwriting Motor • Optimise portfolios ~110-115% • Pre
Slide 89: Leverage market leading position in D&A
Leverage market leading position in D&A Market leader in D&A with 28% Backdrop market share1 • Good historical performance; higher inflows and lower reintegration in NN NN and DL Individual Disability in 3Q17 (Combined ratio 1H17: 89.6%, 3Q17: 105.8%) • Average combined ratio below market average2 9
Slide 90: Strong franchises OHRA, ABN AMRO Insurance and ING
Strong franchises OHRA, ABN AMRO Insurance and ING Combined ratio OHRA1, ABN OHRA: #2 direct writer and consistent low combined ratio AMRO Insurance1 and ING • Cost efficient direct writer ~96% • Successful, award winning online proposition ~95% ~95% ~93% • Offering non-life, health and banking prod
Slide 91: Improvement of P&C required
Improvement of P&C required No. 2 in Dutch P&C market with Backdrop 22% share1 • Poor historical performance of P&C SME and retail NN2 NN and DL3 • Consistent with historical market underperformance (average combined ratio Motor in Dutch market 109%5) 101.0% 104.8% 108.0% 107.3% • Consolidation tren
Slide 92: Implemented actions starting to bear fruit
Implemented actions starting to bear fruit Delta Lloyd intermediary retail Risk profile NN SME Fire portfolio Selected price increases P&C portfolio outsourced in 1Q17 structurally improved implemented in 2017 • Expense reduction in areas of • Premium increases SME ~4% GWP Price underwriting, IT sup
Slide 93: We have identified tangible actions to improve P&C
We have identified tangible actions to improve P&C Key actions to improve underwriting result >100 improvement actions being implemented1 • Premium adjustments • Tighten policy conditions • Strengthen centralised underwriting oversight Fire • Specialised task-forces installed to evaluate # actions A
Slide 94: Expense reduction driven by synergies and system rationalisation
Expense reduction driven by synergies and system rationalisation Administrative expenses Netherlands Non-life (EURm) Expense reductions targeted across Non-life business ~-20% • Remove overlapping operational and 481 commercial activities • Simplify IT landscape, decommission ~25 IT platforms by 202
Slide 95: 97% or below combined ratio target
97% or below combined ratio target Combined ratio development1 Target to be achieved through combination of: • Expense reductions (~20%) NN NN and DL • Past and future premium adjustments (effect 102.9% realised over 12-24 months) 99.6% • Portfolio optimisation 97.4% • Investments in data as well as
Slide 96: Key takeaways
Key takeaways 1 Leverage strong footprint in Dutch Non-life market 2 Solid plan for integration of Delta Lloyd resulting in ~20% expense reduction by 2020 3 Clear roadmap to achieve a combined ratio of 97% or below E.16
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Slide 98: No. 1 life insurer in the Netherlands
No. 1 life insurer in the Netherlands Michel van Elk, CEO Netherlands Life 30 November 2017 1
Slide 99: Netherlands Life - introduction
Netherlands Life - introduction Key highlights • Largest in-force client base and broad (EURm) 9M172 20163 20153 distribution capacity in the Netherlands • Well positioned in Dutch pension market GWP 2,373 2,231 2,689 • Solid financial position, significant contributor to Administrative expenses 366
Slide 100: Combined strength of NN and Delta Lloyd
Combined strength of NN and Delta Lloyd NN #1 Market shares DL in Life Group Pensions2 PPI3 Individual Life2 APF4 16% 10% 830 20% 19% Active brokers 8% 17k 15% 18% Employers 2m Market GWP EUR 6.0bn Market GWP EUR 1.9bn Market GWP EUR 7.7bn Market AuM EUR 2.1bn Pension Participants • Strong brands an
Slide 101: Netherlands Life is well positioned to capture opportunities
Netherlands Life is well positioned to capture opportunities Strong base… …in fast changing market ...to capitalise on opportunities • Powerful brands • Group Pension new business • Strong base in fast changing • Large in-force client base in shows material shift to capital- market gives us opportun
Slide 102: Our products target all segments of a shifting pension market
Our products target all segments of a shifting pension market Hedgeable Defined Benefit products Asset management • Large installed client base with 39% recurring GWP market capability through share, strong customer relation and tailored product offering NN Investment 7% • Help customers migrate fro
Slide 103: We have set ourselves the following milestones
We have set ourselves the following milestones 2017 2018 2019 2020 • Management team • Integrate organisations • Legal merger of NN Life • Migration of majority integrated • DL Life migrated to PIM1 and DL Life1 of Individual Life • Interactive dialogue • Rebrand DL label to NN • Conversion new syst
Slide 104: Netherlands Life continues to target significant expense reduction
Netherlands Life continues to target significant expense reduction Administrative expenses (EURm) • Both NN and DL have strong track record in ~-20% reducing expenses, whilst improving customer 591 experience • Unit costs have been managed in line with the declining portfolio • Combined group has gr
Slide 105: Integration challenges and mitigating actions
Integration challenges and mitigating actions People Service/Product Systems/Operations Distribution/Client Challenge Challenge Challenge Challenge • Integrate two large • Combine best of both • Integrate, rationalise • Keep trust of the workforces worlds to create winning and optimise IT eco- marke
Slide 106: Optimising risk return
Optimising risk return Netherlands Life asset mix • NN Life invested EUR 8bn since IPO in mortgages, General account Industry corporate bonds and real estate funded by transfers assets (%) 9M171 20142 20163 Aim of separate accounts, new premiums and sale of Government bonds 46% 52% 43% government bo
Slide 107: Capital released as portfolios decrease over time
Capital released as portfolios decrease over time • Both NN Life and DL Life have significant Run-off SCR (excluding renewals and new business)1 individual life closed book (EUR 29bn) and group (EURm) pension back book (EUR 69bn) liabilities 3,500 • Capital backing the SCR will be released 3,000 app
Slide 108: Key takeaways
Key takeaways 1 Proven track record in reducing expenses whilst improving customer experience 2 Optimise asset portfolio to improve risk return and capital generation 3 Run-off of closed books provides predictable capital release over a long period 4 Well positioned to capture opportunities in the c
Slide 109: Appendix
Appendix F.12
Slide 110: Netherlands Life committed to medium-term target
Netherlands Life committed to medium-term target EURm 9M171 9M16 2015 2014 2013 Outlook Investment margin 631 578 825 630 557 • Investment margin in NN portfolio continues to be pressured by reinvestments of maturing higher book yield investments in a lower interest rate environment (Investment spre
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Slide 112: Asset manager with distinctive capabilities
Asset manager with distinctive capabilities Satish Bapat, CEO NN Investment Partners 30 November 2017 1
Slide 113: NN Investment Partners
NN Investment Partners Key highlights Key financials • Asset manager with EUR 244bn AuM (EURm) 9M171 20162 20152 • Third party franchise generating over 60% of revenues Fee income 387 463 496 • Stable remittances to the Group • DLAM (Delta Lloyd Asset Management) integration Administrative expenses
Slide 114: Combined strength of NNIP and DLAM
Combined strength of NNIP and DLAM EUR 244bn AuM and Fees by client type AuM and Fees by asset class AuM (3Q17) AuM1 Fees2 3% AuM1 Fees2 4% 11% 12% 13% EUR 387m 15% 18% 28% Revenues 35% (9M17) 54% 20% 62% 75% 50% 60% AuM3 Third Party Other Affiliates Equity Multi-assets 4 or 5 Morningstars Proprieta
Slide 115: Asset management within NN Group
Asset management within NN Group Manager of insurance Co-develop investment Gathering of Earnings and cash flow general accounts & distribution third-party assets diversification capabilities • Advice on asset • Play in the life-cycle • Distinct third-party • High RoE and low- allocation savings and
Slide 116: Predominantly European footprint
Predominantly European footprint Institutional Retail • Top 5 positions in the Netherlands, Belgium and selected CEE countries • Service and support of NN insurance businesses • Opportunities for growth, e.g. in Italy (Retail), Germany and France Affiliate (Institutional), as well as Japan (Institut
Slide 117: Strong performance on selected capabilities
Strong performance on selected capabilities • Flagship multi-asset and EMD products in the highly marketable Morningstar 4 to 5 stars rankings • Action taken on underperforming areas by strengthening teams and improving investment processes 1. Numbers for performance score based on internal NNIP dat
Slide 118: There are several themes impacting the industry
There are several themes impacting the industry Low rates / low growth Demographics DB to DC shift Regulation and technology • Pressure on active • Retiring baby boomers • Rapid change in • High pace of managers’ & rising millennials in composition of regulatory and performance developed markets pen
Slide 119: Our response is to focus on distinctive capabilities
Our response is to focus on distinctive capabilities Multi-Asset & Solutions Fixed Income Distinctive Equity Innovation themes • Leverage on strong • Expand current spread • Narrow fund range, • ESG embedded across asset allocation skills offerings focused on higher the whole investment • Strengthen
Slide 120: Efficiency benefits expected
Efficiency benefits expected ~5-10% 381 • Regulatory approval obtained for legal • Legal merger of NNIP restructuring and DLAM entities • Renegotiated contracts • Dutch fund integration with service providers completed • Portfolio on-boarding • DLAM systems Expense base 2017-18 2019-20 Target front
Slide 121: Integration challenges and mitigating actions
Integration challenges and mitigating actions People Products Systems Distribution Challenge Challenge Challenge Challenge • Retention of key • Integrate fund ranges • System integration • Client retention employees between the two • Engagement companies • Business continuity Approach Approach Appro
Slide 122: Key takeaways
Key takeaways 1 Diversified active asset manager with distinctive identity 2 Increased focus on core investment capabilities 3 Adding scale with DLAM – integration substantially complete by mid-2018 4 Adding value to NN’s insurance and pension business G.11
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Slide 124: Accelerating growth in Europe and Japan
Accelerating growth in Europe and Japan Robin Spencer, CEO Insurance International 30 November 2017 1
Slide 125: Insurance International serves 11m customers in 11 countries
Insurance International serves 11m customers in 11 countries NN’s international footprint International businesses • Largely organically built • Trusted brand and strong customer relationships • Large and professional distribution channels • Generating cash and funding their own growth Insurance Eur
Slide 126: We have been transforming our businesses through four key strategic priorities
We have been transforming our businesses through four key strategic priorities Disciplined capital Expand/deepen/ Growing customer base Differentiate through deployment at portfolio diversify distribution through innovation excellent customer and product level experience • Exited areas where • Trans
Slide 127: Delivered strong financial results and driven value of new business
Delivered strong financial results and driven value of new business Operating result before VNB Net remittances1 ROE tax (EURm) (EURm) (EURm) (%) 367 248 257 9.9% 10.4% 9.8% 8.5% 263 102 190 192 133 199 135 101 57 146 175 128 77 90 57 9M14 9M17 9M14 9M17 9M14 9M17 9M14 9M17 • Europe: mid-single digi
Slide 128: Build on our four strategic priorities and accelerate performance
Build on our four strategic priorities and accelerate performance 2014 - 2016 2017 2018 2019-2020 Financial management Product profitability, VNB, capital allocation Strategic clarity & choices Protection, bancassurance, digital Strategic execution Delivering on strategic priorities • Digitalisation
Slide 129: Disciplined capital deployment in Insurance Europe
Disciplined capital deployment in Insurance Europe Managing portfolio Managing new business Managing back books (Return by country1) (VNB by product line, EURm) (technical reserves) Protection Capital light and low guarantee 102 Pension Above 1% guarantee rate Unit linked Traditional savings 37% 39%
Slide 130: Disciplined capital deployment in Japan Life
Disciplined capital deployment in Japan Life Managing new business JGAAP earnings profile new sales Portfolio development (VNB by product line, EURm) (9M17 VNB of EUR 146m) COLI JGAAP operating earnings1 COLI - Financial solution COLI - Risk protection 146 77 77% 2014 2016 86% 23% 1 3 5 7 9 11 13 15
Slide 131: Continue to deepen and diversify our distribution in Insurance Europe
Continue to deepen and diversify our distribution in Insurance Europe New sales APE by distribution VNB development Highlights channel (EURm) Bank + tied agents Other • Significant value generated by Bank Tied agents Other bancassurance partners 102 41% 42% 42% • Continue to deepen 37% relationships
Slide 132: Continue to expand and diversify our distribution in Japan Life
Continue to expand and diversify our distribution in Japan Life New sales APE by distribution VNB development Highlights channel (EURm) Bank IIndependent Bank Independent agents1 • Expect higher sales from Sumitomo agents 146 bancassurance relationships including 5 megabanks 91% 90% 32 87% 78% 77 •
Slide 133: Accelerate growth through innovation
Accelerate growth through innovation Underwriting and Data analytics hub • Targeted investments to support growth of protection products through improved customer insight and segmentation • Data analytics hub set up in Czech Republic serving International markets • Driving improvements in underwriti
Slide 134: Differentiating customer experience
Differentiating customer experience Innovative propositions • Modular protection propositions, leveraged across International markets through shared product design principles • Building a scalable European platform for individual long-term savings • Leveraging banking product propositions across Eur
Slide 135: Accelerated growth leading to higher operating results and remittances
Accelerated growth leading to higher operating results and remittances Segment Indicator IPO targets New targets Insurance Europe Operating result growth1 Mid-single digit Mid to high-single digit Remittances vs net operating result Japan Life Operating result growth1 Low to mid-single digit Mid to
Slide 136: Key takeaways
Key takeaways 1 Strong delivery across all areas of strategic focus and related financial targets 2 International businesses well positioned to accelerate growth and generate value 3 Managing the portfolio for value and deploying capital to innovate our businesses 4 Increase remittances through incr
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Slide 138: Building a sustainable business in Belgium
Building a sustainable business in Belgium Jan Van Autreve, CEO NN Belgium / Delta Lloyd Belgium Life 30 November 2017 1
Slide 139: Belgium Life - introduction
Belgium Life - introduction Key highlights Key financials (EURm) 9M172 20163 20153 • Complementary transaction in Belgium GWP 531 444 398 • Creating #4 player in the Belgium Life Insurance Administrative expenses 72 52 50 market1 Operating result before tax 32 19 22 Technical reserves (EURbn) 15 6 6
Slide 140: Well positioned after complementary acquisition
Well positioned after complementary acquisition #4 Life GWP (EURm)1 Market share • Significant market share in Life in Life Market 15,234 Protection and Unit-linked NN + DL 1,117 7.4% Pension business segment 850+ NN 425 2.8% • Large client base offering up/ Active brokers 4.5% DL 692 cross sell opp
Slide 141: Opportunities in the Belgian market
Opportunities in the Belgian market Protection market opportunity Pension market opportunity Distribution opportunity • Increasing need for protection • Ageing population and low • Bank and broker are the • Valued mortality and disability state pension provision dominant market channels solutions in
Slide 142: Integrating and improving the businesses
Integrating and improving the businesses • Total cost reductions of ~15-20%, driven by ~15-20% 137 • Aligned organisation and products • Legal merger • Step by step IT integration • Digitalisation of processes • Agile way of working Expense base 2017-18 2019-20 Target 20161 2020 Clear product and va
Slide 143: Integration challenges and mitigating actions
Integration challenges and mitigating actions People Product/Service Systems Distribution Challenge Challenge Challenge Challenge • Retention • Different • Complex IT • Different distribution • Engagement distribution landscape, legacy channels, low NN • Business continuity channels and systems bran
Slide 144: We aim to significantly improve our VNB…
We aim to significantly improve our VNB… Product mix improvement Improvements through product mix and cost reductions (APE1) • Strong increase in VNB driven by: • APE growth of Life Protection and Unit-linked Pension products Protection and Unit-linked • Strong decrease in Traditional savings Tradit
Slide 145: …while optimising our in-force book
…while optimising our in-force book SCR run-off profile Traditional savings1 Optimising our capital base (EURm) • Total SCR2 of EUR 0.8bn at 4Q16 (EUR 0.6bn related to capital intensive 700 Traditional savings) 600 • Total SCR reduced in 2017 driven by Group and 500 Individual Life de-risking and ma
Slide 146: Key takeaways
Key takeaways 1 Combination of NN and DL creates a sustainable profitable business 2 Integration to drive significant cost reductions 3 Focus on profitable Life Protection and Unit-linked Pension solutions 4 Optimise capital employed and contribute to group remittances I.9
Slide 147: Important legal information
Important legal information All figures in this document are unaudited. Small differences are possible in the tables due to rounding. Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward-l
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