ASR Nederland N.V. · EURONEXT:ASRNL
ASR Nederland — H1 2018 Earnings Presentation
34 slides from ASR Nederland's earnings presentation, Aug 29, 2018
Slide 1: Continued solid performance
Continued solid performance Jos Baeten, CEO Chris Figee, CFO Analyst conference call 29 August 2018
Slide 2: Continued solid performance in H1 2018
Continued solid performance in H1 2018 Operating result Solvency II (SF) * Dividend Solid operating performance • Operating result of € 382m in line with last year, despite the impact of the January storm (€ 31m) € 382m 194% € 92m and exceptionally favourable claims experience in (interim dividend)
Slide 3: Executing our strategy and optimising the business portfolio
Executing our strategy and optimising the business portfolio Portfolio matrix A C High Stable cash flows and value-generating businesses with Business enhancement opportunities relatively strong growth potential • Migration of 353,000 policies from GNL Funeral portfolio to the • Milestone of 50,000
Slide 4: Continued solid operating results
Continued solid operating results Operating result (in €m) • Strong operating result of € 382m, in line with H1 2017 • Impact of January 2018 storm of € 31m in Non-life -0.8% • Higher results from Life (+€ 26m), Bank & Asset 385 382 Management (+€ 6m), Distribution & Services (+€ 2m) 344 and Holding
Slide 5: Non-life: Consistently strong underlying performance
Non-life: Consistently strong underlying performance Operating result (in €m) Gross written premiums (in €m) • Operating result of € 66m (H1 2017: € 106m) due to P&C Disability Health the impact of the January storm (EUR 31m) and the exceptionally favourable claims experience in the -37.7% +16.5% co
Slide 6: Life: Strong gain in operating result, mostly sustainable
Life: Strong gain in operating result, mostly sustainable Operating result (in €m) Investment margin (in €m) • Operating result increased by € 26m to € 340m Investment margin Technical result Direct investment income Required interest (+8.3%) mostly due to an increase in the investment Result on cos
Slide 7: Other segments: increased operating results across the board
Other segments: increased operating results across the board Operating result Bank and Asset Operating result Distribution and • Operating result of the B&AM segment showed a Management (in €m) Services (in €m) strong increase of € 6m to € 11m. This was driven by a gain in Asset Management (+€ 4m) a
Slide 8: Consistent performance – delivering on ambitious targets
Consistent performance – delivering on ambitious targets Solvency II (SF) Operating return on equity S&P rating (insurance business) 194%* 14.7% Single A >160% Up to 12% Single A medium-term target medium-term target medium-term target Combined ratio Non-life Operating expenses Financial leverage 97
Slide 9: Solvency and capital position
Solvency and capital position Chris Figee, Chief Financial Officer 9
Slide 10: Increased equity while absorbing dividends and acquisitions
Increased equity while absorbing dividends and acquisitions IFRS equity (in €m) SII EOF* (in €m) 6,826 6,935 6,299 1,548 1,541 5,433 5,494 1,214 1,001 1,001 4,481 701 5,279 5,393 5,084 4,432 4,493 3,780 2016 2017 H1 2018 2016 2017 H1 2018 Hybrids Equity Hybrids Unrestricted Tier 1 * After deduction
Slide 11: Robust Solvency II and significant financial flexibility
Robust Solvency II and significant financial flexibility Own funds (in €m) • Solvency II ratio 194% based on standard formula* SII 194% • Unrestricted Tier 1 capital: 78% of total own funds and 1,038 0 6,935 151% of SCR 503 5,393 • Ample headroom available within SII framework: – RT1: € 845m – T2 &
Slide 12: Solid capital accretion in H1 2018
Solid capital accretion in H1 2018 Capital accretion (in €m) • a.s.r. businesses amassed € 617m of solvency capital in H1 2018 through solid operational performance, capital release, favourable financial markets and other 617 sources • Created capital was applied for hybrid capital cost, business de
Slide 13: Solvency ratio movement in H1 2018
Solvency ratio movement in H1 2018 OCC: 5% / € 179m • Strong organic capital creation of 5%-pts SII (€ 179m), 196% -9% 187% 3% 3% -1% 4% 197% -3% 194% which absorbed the January storm. GNL contributed € 7m to organic capital creation • Impact of the acquisition of GNL represents the 60 EOF adjustmen
Slide 14: Sensitivity of SII ratio to UFR
Sensitivity of SII ratio to UFR Stock of SII (in %) • Economically, a UFR that is in line with long-term investment returns would be an optimal way to measure capital stock (compare to >100% threshold) 183% 194% 174% 154% 162% • a.s.r. currently applies an economic UFR of 2.4%, an increase from the
Slide 15: Strong balance sheet with ample financial flexibility
Strong balance sheet with ample financial flexibility Solvency II composition (in %-pts) Financial flexibility (in €m) Financial leverage (in %) Hybrids Unrestricted T1 194% Tier 3 845 749 25.3% 25.4% 29% Tier 2 6,935 14% Restricted tier 1 1,541 Unrestricted tier 1 151% 5,394 H1 2018 EOF T1 Headroom
Slide 16: 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 the end of H1 2018 declined to € 463 229m, mainly driven by the GNL cash consideration 195 -195 and the dividend payment to shareholders -143 • Downstream towards Life and Non-life entities has -91
Slide 17: Wrap-up
Wrap-up Jos Baeten, Chief Executive Officer 17
Slide 18: Key take-aways
Key take-aways • Strong operating performance • Robust solvency and ample financial flexibility • Integration GNL well on track • Consistently strong performance – delivering on ambitious targets a.s.r. Capital Markets Day – 10 October 2018 18
Slide 19: Q&A
Q&A Jos Baeten, CEO Chris Figee, CFO 19
Slide 20: Appendices
Appendices a.s.fr.
Slide 21: Appendices
Appendices A. Financial ratios B. Combined ratio per product line C. Calculation of operating ROE D. Operating result per segment E. SCR movement in H1 2018 F. Sensitivities Solvency II ratio G. Investment portfolio H. Details fixed-income portfolio I. Details equities and real estate portfolio J. L
Slide 22: A. Financial ratios
A. Financial ratios Net result (€m) Operating result (€m) ROE Operating ROE 397 368 385 382 19.2% 17.4% 15.5% 14.7% H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 Combined ratio (%) Solvency II* Total equity (€m) Financial leverage 93.6% 97.1% 196% 194% 5,432 5,493 25.3% 25.4% H1 20
Slide 23: B. Combined ratio per product line
B. Combined ratio per product line H1 2017 H1 2018 Claims ratio 71.6% 73.6% Non-life Expense ratio 7.5% 7.4% Segment Commission ratio 14.5% 16.1% Combined ratio 93.6% 97.1% Claims ratio 74.6% 71.8% Expense ratio 7.9% 7.8% Disability Commission ratio 9.4% 11.6% Combined ratio 91.9% 91.2% Claims ratio
Slide 24: C. Calculation of operating ROE
C. Calculation of operating ROE (€ in million) H1 2017 H1 2018 Operating result (before tax, annualised) 770 765 Minus: Interest on hybrid instruments (1) 45 60 Operating result after hybrid costs (before tax, annualised) 725 705 Tax effect (25% tax rate) 181 176 Operating result after hybrid costs
Slide 25: D. Operating result per segment
D. Operating result per segment Operating result: Profit before tax adjusted for Investment Investment Incidentals Incidentals IFRS profit IFRS profit before tax before tax Operating Operating i. Investment-related income: income for own account of related related an incidental nature (for example r
Slide 26: E. SCR movement in H1 2018
E. SCR movement in H1 2018 HY SCR decreases in HY SCR increases in FY 2017 3,479 Market risk: Market risk: Market risk -63 • Interest rate risk • Real estate risk • Spread risk • Equity risk Counterparty default risk 37 Insurance risk Life: Insurance risk Life: Insurance risk Life 118 • Lapse risk •
Slide 27: F. Sensitivities Solvency II ratio
F. Sensitivities Solvency II ratio 11 10 10 5 2 3 0 194% -2 -1 -1 -4 -5 -6 -9 -8 -8 -11 -10 -10 -10 Optimal range -13 >160%: entrepreneurial level VA -10 bps Sovereign Corporate credit Interest +100 bps Interest -100 bps Equities -20% Real Estate -10% spread +50 bps spread +75bps >140% cash dividend
Slide 28: G. Investment portfolio
G. Investment portfolio Assets (€ bn, fair value)* FY 2017 H1 2018 Delta % total • Re-risking of the investment portfolio: from government Fixed income 23.8 25.7 8.0% 61.2% bonds to credits, mortgages and real estate to optimise returns Equities 2.6 2.6 0% 6.2% • Increase in total portfolio value, f
Slide 29: H. Details of fixed-income portfolio
H. Details of fixed-income portfolio Highlights Mortgages (€m, book value) * FY 2017 H1 2018 Delta • The core of the portfolio consist of AAA government bonds, with selective peripheral sovereign exposure. LtFV < 75% 1,833 1,905 4% 18H1 saw a general increase in exposure to the asset class as a whol
Slide 30: I. Details of equities portfolio and real estate portfolio
I. Details of equities portfolio and real estate portfolio Highlights Equities (€m) FY 2017 H1 2018 Delta Equities 2,142 2,186 2% Equities • Re-risking during early 2018 and subsequent de-risking in late H1 2018, combined with slightly higher markets resulted in an increase in equity exposure Privat
Slide 31: J. Life segment book development
J. Life segment book development Life reserves development (in € bn) Life reserves (in € bn) Individual Reserves Pensions excl shadow 30 Funeral 45 20 40 10 35 0 2015 2016 2017 H1 2018 2015 2016 2017 H1 2018 Reserves - H1 2018 (€ 42 bn) (Un)realized reserves development (in € bn) Pensions DB Funeral
Slide 32: K. Life segment investment contribution
K. Life segment investment contribution € million H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 Direct investment income* 530 473 505 476 513 479 529 Amortisation realised gains 61 99 119 150 161 161 155 reserve Total investment contribution 591 572 624 626 674 640 684 Required interest on
Slide 33: IR contact details
IR contact details Email: ir@asr.nl Tel: +31 30 257 8600 Michel Hülters, Barth Scholten & Vincent Uriot 33
Slide 34: 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