Asr Nederland N.v. · EURONEXT:ASRNL
Asr Nederland — FY 2020 Earnings Presentation
45 slides from Asr Nederland's earnings presentation, Feb 18, 2021
Slide 1: 2020 full year results
2020 full year results Jos Baeten, CEO Annemiek van Melick, CFO ANALYST CONFERENCE CALL 18 February 2021
Slide 2: Strong operational performance and robust solvency in 2020
Strong operational performance and robust solvency in 2020 • Operating result of € 885m up € 27m, driven Operating result Solvency II (SF)3 Dividend per share primarily by higher Life investment margin and strong Non-life performance • Impact COVID-19 limited due to diversification € 885m 199% € 2.0
Slide 3: Delivering on sustainable value creation for all stakeholders
Delivering on sustainable value creation for all stakeholders 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 investment
Slide 4: Overall limited impact of COVID-19
Overall limited impact of COVID-19 Customers Employees Financial results • First focus was a seamless transition to • From one day to the next, some • COVID-19 impact on operating result limited providing full customer support from home and 4,000 colleagues switched seamlessly to at c. € -1m. Negati
Slide 5: Solid progress in executing our strategy in 2020
Solid progress in executing our strategy in 2020 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 € 3.4
Slide 6: Non-life: strong organic and inorganic GWP growth
Non-life: strong organic and inorganic GWP growth Operating result (in €m) Gross written premiums (in €m) • Non-life operating result increased to € 241m, including a € 21m positive COVID-19 effect +6.5% +13.5% • In Disability, COVID-19 resulted in reserve +14.1% strengthening and higher claims. In
Slide 7: Life: investment margin drives higher operating result
Life: investment margin drives higher operating result Operating result (in €m) Investment margin (in €m) • Operating result of Life segment increased by Investment margin Technical result and Other Direct investment income Required interest € 34m, to € 730m, despite a € 22m negative impact due Resu
Slide 8: Operating result fee-based businesses delivering on ambitious targets
Operating result fee-based businesses delivering on ambitious targets Operating result Asset Management Operating result Distribution and Services Operating result Holding and Other (in €m) (in €m) (in €m) +28.8% +9.5% 31 25 23 24 -112 -143 FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 • Fee-based
Slide 9: Solid track record in rational capital management
Solid track record in rational capital management • 2020 regular full year dividend amounts to € 2.04 per share, equal to 7.4% DPS growth. Final dividend amounts to € 1.28 per share • Dividend policy: pay-out ratio of 45% to 55% of the net operating result attributable to shareholders (i.e. net of h
Slide 10: Solvency and capital position
Solvency and capital position Annemiek van Melick, CFO 10
Slide 11: Solvency II: high quality balance sheet
Solvency II: high quality balance sheet SII Eligible Own Funds (in €m) 199% • Solvency II ratio is 199% based on standard formula (FY 2019: 194%) 1,526 0 8,273 • Unrestricted Tier 1 capital increased by € 425m, to 6,213 535 € 6,213m: 75% of total own funds and 149% of SCR, absorbing the reduction of
Slide 12: Solvency II ratio movements in 2020
Solvency II ratio movements in 2020 OCC: 12.2%-pts / € 500m • Solvency II ratio increased 5%-pts to 199%, on standard formula and after capital distributions, 194% -1% 193% 14% 3% -5% 208% -9% 199% 3% 208% before capital distributions 383 8,630 • Robust organic capital creation of € 500m or 568 52 1
Slide 13: OCC development
OCC development OCC 2020 Business Capital Generation (+€ 42m) 131 • Excess returns higher due to spread widening and shift to higher yielding assets 568 500 • Higher income from fee-based business -199 Release of capital (+€ 42m) • Higher contribution from Loyalis (acquisition 2019) Business Capital
Slide 14: Manageable Solvency sensitivities
Manageable Solvency sensitivities SII sensitivities Total impact expressed as % of group solvency ratio • Limited impact of parallel and non-parallel interest rate shocks on 12 SII ratio 6 • a.s.r. uses a combination of cash flow hedging and duration 1 3 hedging to manage interest rate risk -3 • For
Slide 15: Robust and diversified investment portfolio
Robust and diversified investment portfolio Breakdown investment portfolio1 € 52.9bn (in %) Breakdown real estate portfolio (€ 4.5bn) as % Market risk as % of total BSCR3 of total Investment Portfolio (in %) 5% 1% Soft limit 0.9% 44% 44% 50% 8% Rural 0.6% 27% Residential 3.2% 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) S&P IFS rating Hybrids Unrestricted T1 199% 37% A A 1,019 554 8,273 13% 2,060 Tier 3 149% Tier 2 6,213 Restricted Tier 1 Unrestricted Tier 1 EOF RT1 Headroom T2+3 Headroom FY 2020 F
Slide 17: Robust solvency and cash support our businesses and dividends
Robust solvency and cash support our businesses and dividends HoldCo Liquidity (in €m) • HoldCo Liquidity at FY 2020 stood at € 502m, in line with a.s.r’s policy of -271 maintaining cash at operating companies and upstream cash to cover dividends, 657 -75 502 458 -47 coupons and other Holding expens
Slide 18: Wrap-up
>» Wrap-up Jos Baeten, CEO a.s.fr.
Slide 19: Key take-aways
Key take-aways Strong business performance in all segments Solid progress in executing our strategy, on track to meet medium-term targets Strong balance sheet, robust solvency with ample financial flexibility Solid track record in rational capital management 19
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 result (€m) ROE (in %) Operating ROE (in %) 972 858 885 19.1% 15.1% 15.3% 657 11.7% FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 Combined ratio1 (in %) Solvency II2 (in %) Total IFRS equity (€m) Financial leverage (in %) 93.5% 93.6% 19
Slide 23: B. Combined ratio per product line
B. Combined ratio per product line FY 2019 FY 2020 Net earned premiums (in €m) 1,466 1,492 Claims ratio 62.4% 58.2% Property & Casualty Expense ratio 8.2% 8.1% Commission ratio 26.3% 26.2% Combined ratio 96.9% 92.5% Net earned premiums (in €m) 981 1,182 Claims ratio 70.2% 77.4% Disability Expense ra
Slide 24: C. Calculation of operating ROE
C. Calculation of operating ROE (in €m) FY 2018 FY 2019 FY 2020 Operating result (before tax, annualised) 749 858 885 Minus: Interest on hybrid instruments through equity1 59 60 48 Operating result after hybrid costs (before tax, annualised) 689 798 837 Tax effect (25% tax rate) 172 203 209 Operatin
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 FY 2019 (in €m) FY 2020 (in €m) Non-life 292 102 -37 226 261 38 -18 241 Life 913 243 -27 696 747 139 -122 730
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) 8,273 6,313 7,828 6,093 1,004 6,827 6,925 2,060 5,433 5,479 1,004 2,039 1,001 1,001 1,548 1,546 5,089 5,309 6,213 4,478 5,789 4,432 5,279 5,379 2017 2018 2019 FY 2020 2017 2018 2019
Slide 27: F. SCR movement in 2020
F. SCR movement in 2020 (in €m) FY 2019 4,035 SCR decreases in SCR increases in Market risk 205 Market risk: Market risk: • Concentration risk • Interest rate risk Counterparty default risk -57 • Spread risk • Equity and real estate risk • Currency risk Insurance risk Life 83 Insurance risk Life: Co
Slide 28: G. Sensitivities Solvency II ratio
G. Sensitivities Solvency II ratio 13 8 6 2 3 3 0 1 1 0 199%1 -1 0 -2 -3 -5 -4 -4 -5 -8 >180%: threshold additional -11 -10 -11 -11 -10 capital distribution VA Sovereign spread Corporate Interest Interest Equities Real estate Mortgage spread -10bps +50bps credit spread +50bps -50bps -20% -10% +50bps
Slide 29: H. Sensitivities Solvency II ratio – to UFR
H. Sensitivities Solvency II ratio – to UFR Stock of Solvency II (in %) • EIOPA intends to lower the UFR towards the 192% 195% 199% current target1 of 3.5% in steps of max. 15bps 179% 151% 165% per annum • Lowering the UFR would lead to lower “stock” of capital but would increase organic 2.00 2.50 3
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 FY 2020 Delta % of total effects Fixed income2 32.0 35.2 3.2 67% • Solid fixed income portfolio with AAA/AA rating and corporates and financial with A rating Equities 2.6 2.7 0.1 5% • Acq
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 FY 2020 Delta % of total with selective peripheral sovereign exposure NHG 3,380 3,278 -3.0% 33% LtMV < 55% 1,450 1,645 13.4% 17% • The increase in value of the fixed in
Slide 32: K. Dutch mortgage portfolio, strong return with low risk
K. Dutch mortgage portfolio, strong return with low risk Borrowers with arrears in mortgage History of credit losses a.s.r. portfolio (in bps) • Historic credit losses were very low. In general, payments1 in NL market (in ’000) there is a high payment morale and social security is usually enough to
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 FY 2020 Delta % of total • The increase of € 325m in the Corporates and Financials portfolio was Automotive 482 488 6 4% mainly due to transactions and positive revaluations B
Slide 34: M. Fixed Income portfolio government credit rating
M. Fixed Income portfolio government credit rating Market value governments (in €m) 0-1 1-2 2-3 3-5 5-10 10-20 20-30 30+ Total Delta1 % of total AAA 679 173 285 348 1,042 1,635 2,617 184 6,964 80 49% AA 836 175 106 314 993 926 839 1,371 5,560 126 39% A 130 15 44 141 198 37 0 17 582 270 4% BBB 213 14
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 368 55 47 46 131 58 0 0 705 -410 6% AA 85 184 174 176 370 126 0 0 1,116 -248 9% A 377 689 837 1,217 1,810 298 0 0 5,228 189 43% BBB 635 563
Slide 36: O. Details of equities and real estate portfolio
O. Details of equities and real estate portfolio Highlights Equities (in €m) FY 2019 FY 2020 Delta • During H1 2020, equity markets declined sharply due to COVID-19 and Equities subsequently bounced back in H2, resulting in an overall increase in equity exposure Equities 2,059 2,288 11.1% • Continua
Slide 37: P. Calculation of asset leverage
P. Calculation of asset leverage Risky assets (€m) FY 2019 FY 2020 Equities 2,607 2,736 Real estate1 2,615 2,601 BB bonds or below 341 350 Preference shares 320 316 Fixed income funds (not rated & high yield) 265 333 Mortgages with LtMV >110% 52 20 Total risky assets 6,200 6,357 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 55 25 50 20 45 15 40 10 5 35 0 30 2017 2018 2019 2020 2017 2018 2019 2020 Total Life reserves – FY 2020 (€ 50bn) (Un)realised gains rese
Slide 39: R. Life segment investment contribution
R. Life segment investment contribution (in €m) H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 Direct investment income1 529 519 535 527 562 528 Amortisation of realised gains reserve 155 159 161 137 132 145 Total investment contribution 684 678 696 664 694 673 Required interest on liabilities2 -40
Slide 40: S. Track record in stable investment margin
S. Track record in stable investment margin Investment margin (rhs) vs. Basic nominal Life provision (lhs), in €m • Investment margin has been stable over past years • Additional margin realised by optimising exposure to illiquidity premium (e.g. mortgages) • Successful bolt-on M&A strategy has incr
Slide 41: T. Medium term group targets (2019 – 2021)
T. 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 42: U. Medium term business targets (2019 – 2021)
U. 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 43: V. Medium term non-financial objectives (2019 – 2021)
V. 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) 95% Carbon footprint: % measured of > 44 investment portfolio +5% € 1.2bn Impact by 2
Slide 44: IR contact details
IR contact details Email: ir@asr.nl Tel: +31 (0)30 257 86 00 44
Slide 45: Disclaimer
Disclaimer Cautionary note regarding forward-looking statements liquidity; (12) consequences of a potential (partial) termination of the European currency: the Euro or the European Union; (13) changes in the frequency and severity of insured loss events; (14) catastrophes and terrorist related event