Asr Nederland N.v. · EURONEXT:ASRNL
Asr Nederland — FY2016 Earnings Presentation
38 slides from Asr Nederland's earnings presentation, Feb 22, 2017
Slide 1: Delivering on promises, a.s.r. reports successful 2016
Delivering on promises, a.s.r. reports successful 2016 Jos Baeten (CEO) Chris Figee (CFO) 2016 full year results 22 February 2017 1
Slide 2: Delivering on promises – strong financial performance
Delivering on promises – strong financial performance Operating result Solvency II (SF) Dividend Financial results driven by strong operating € 599m € 187m performance • Operating result reflecting continuous strong 189%* underwriting skills including the contribution +11.5% +9%-pts +10.0% from the
Slide 3: Execution of strategy: optimizing our business portfolio
Execution of strategy: optimizing our business portfolio Portfolio matrix Current profit contribution High Low A C Stable cash flows and value generating businesses, with relatively Business enhancement opportunities strong growth potential • Acquisition BNG Asset Management completed, adding 3rd pa
Slide 4: Strong increased operating result in the year …
Strong increased operating result in the year … Operating result (before tax) (€m) Main drivers of operating result increase: Non-life 169 Non-life 136 • Non-life segment (€ -33 million): operating result lower due to tailwind in 2015 of equalization Life 441 Life 551 Health. In 2016, headwind of ha
Slide 5: … and during the year
… and during the year Quarterly operating results (€) stable at high level … … underpinned by solid and profitable combined ratios (%) 160 150 157 Target <97 96.4 132 2.2 94.9 2.2 94.2 Hail & water claims 16Q1 16Q2 16Q3 16Q4 16H1 16H2 5
Slide 6: Continued containment of underlying cost base
Continued containment of underlying cost base Operating expenses (€m)* Number of internal employees (FTEs)* (excluding the provision for restructuring expenses) 604 574 3,489 3,461 29** 5** 194 Recent 196 acquisitions 575 569 3,295 3,265 2015 2016 2015 2016 * Excluding SOS International and Real Est
Slide 7: Non-life segment: combined ratio remains strong
Non-life segment: combined ratio remains strong Combined ratio below 100% for all Non-life product lines Operating result (€m) Gross written premiums (€m) • Last year’s operating result was 2,350 2,433 supported by incidental tailwind from 169 equalization in the Health business. 16 Health 6169 593
Slide 8: Life segment: further performance improvement
Life segment: further performance improvement Life liabilities 2016 (€40 billion) New production (€m APE) • Portfolio composed of € 40 billion Funeral 152 insurance liabilities DC Pension 42 12% 7% Individual 92 • Growth new production (APE) mainly 40% 26 attributable to acquisition of funeral portf
Slide 9: Life segment: strong results
Life segment: strong results Operating result (€m) breakdown • Operating result increased due to acquisitions, 551 stable result on investments and increased release Swaptions (shadow acc.) from realized gains reserve (shadow accounting) 441 Additional inv. result & M&A – Other (technical) sources:
Slide 10: Non-insurance results
Non-insurance results Banking & Asset Distribution Holding and Other / Real Estate Development Management (€m) and Services (€m) Eliminations (€m) (€m) 12 12 Continued operations 3 -88 2 -102 Operating result 2015 2016 2015 2016 2015 2016 -10 Run-off -91 Net result (IFRS) 2015 2016 17 Discontinued o
Slide 11: Medium-term targets delivered or even more
Medium-term targets delivered or even more All business lines achievements in line with or better than targets Solvency II (SF) Operating return on equity S&P rating (insurance business) 189%* 14.1% Single A > 160% Up to 12% Single A medium-term target medium-term target medium-term target Combined
Slide 12: Attractive returns to shareholders
Attractive returns to shareholders Increasing net operating results (ex hybrids) … … and growing dividend Operating result Dividend per after tax & hybrids share (DPS)** per share (EPS)* 1.87 2.46 2.77 0.93 1.13 1.27 415 187 € 175m 170 IPO guidance 369 139 1.17 280 2014 2015 2016 2014 2015 2016 • Ba
Slide 13: Financial update
Financial update Chris Figee (CFO) 13
Slide 14: Increase in operating result
Increase in operating result + € 62 million Operating result 2015 537 Operating result 2016 599 Investments 413 Investments 171 Incidentals -144 Incidentals 68 IFRS Profit before Tax 2015 806 IFRS Profit before Tax 2016 838 Bridge IFRS Profit before tax to operating result • Operating result is IFRS
Slide 15: Well-diversified and solid investment portfolio
Well-diversified and solid investment portfolio Assets (€ billion, fair value) * 2015 2016 Key developments Fixed income 24.5 26.0 Equities 2.7 2.2 • Shifted portfolio from equities to credits, mortgages and real estate to Real estate 2.8 3.2 optimize return on solvency capital Mortgages / other loa
Slide 16: Solvency and capital
Solvency and capital 16
Slide 17: Key developments in cash and capital
Key developments in cash and capital Solvency II (SF) Capital accretion Organic capital creation Dividend 189%* € 475m € 301m €187m + 9%-pts 14% on SCR 9% on SCR Day-one 180% after dividend € 288m +10% 2015 - Strong solvency ratio development (+9%p. after dividend) - Capital accretion of € 475 milli
Slide 18: Multi year equity and SCR movement
Multi year equity and SCR movement IFRS equity SCR EOF* SCR ratio* 189 6,299 6,076 5,208 1.214 4,259 4,471 1.204 180*** 3,703 701 701 701 701 3,770 c. 170** 3,558 4,872 5,084 3,002 4,507 2014 2015 2016 2014 2015 2016 2014 2015 2016 Equity Hybrids Equity Hybrids * After deduction of (proposed) divide
Slide 19: Group solvency key figures FY 2016
Group solvency key figures FY 2016 11 6,299 1,010 5,073 204 • Group* solvency ratio 189% based on standard formula • Total Tier 1 capital: 84% of total own Own funds funds • Total Tier 1 capital: 158% of SCR Unr. Tier 1 Restr. Tier 1 Tier 2 Tier 3 Eligible Own Funds • Significant further headroom av
Slide 20: Solvency ratio movement in 2016
Solvency ratio movement in 2016 194 Organic capital creation: €301 mln 5 -5 -4 6 189 7 180 2016 Operational Net release Technical Market & FY2016 before Dividend FY2016 day-one capital of capital movements operational dividend after dividend generation developments 20
Slide 21: Solvency II movements
Solvency II movements 6,486 180 -187 • Operational capital 98 -110 generation largest 6,299 contributor to own funds development and increase in SCR Own 242 ratio funds 6,076 • Run off of life book increases Own Funds and reduced required capital • Technical 3,374 movements consist of UFR unwind (ow
Slide 22: Going forward: Organic Capital Creation definition in line with market standards
Going forward: Organic Capital Creation definition in line with market standards Operational Technical result capital Market and portfolio Excess return New set of assumptions 2017 generation consistent excess (bps) spreads Non operating holding costs Core sovereign bonds -20 Hybrid costs Quarterly
Slide 23: Alternative view on capital: capital accretion
Alternative view on capital: capital accretion Sources • Current Organic Capital Creation definition includes • Operational capital generation Operational Capital Generation, Net release of Capital, Technical Movements less Costs of Hybrids • Net release of capital € 674m • Using this definition Org
Slide 24: Impact interest rates on stock and flow of Solvency
Impact interest rates on stock and flow of Solvency Interest rates Sensitivity SII ratio to lower UFR Solvency II • a.s.r. increasingly takes an economic view (%) 189 189 190 178 on hedging interest rate exposure “STOCK” 187 166 • Lowering UFR would lead to lower ‘stock’ 154 of capital but also incr
Slide 25: Important observations on Solvency
Important observations on Solvency LACDT • DNB published new guidance on LACDT; representing interpretation of delegated acts • Implementation at the latest 30/06/2017; limited use of ‘future fiscal profits’ as way to No adverse impact substantiate LACDT position per 31/12/2016 foreseen • a.s.r. alr
Slide 26: Delivering on promises – strong financial performance
Delivering on promises – strong financial performance Operating result Solvency II (SF) Dividend Financial results driven by strong operating € 599m € 187m performance • Operating result reflecting continuous strong 189%* underwriting skills including the contribution +11.5% +9%-pts +10.0% from the
Slide 27: Contact details
Contact details Investor Relations ir@asr.nl Michel Hülters T +31 (0)6 15 49 95 69 Barth Scholten T +31 (0)6 30 44 15 71 27
Slide 28: Appendix
Appendix A. Financial ratios B. Combined ratio per product line C. Calculation of operating ROE D. Operating result per segment E. Key metrics breakdown F. Sensitivities on group solvency ratio G. SCR movement during 2016 H. Details fixed-income portfolio I. Details equities and real estate portfoli
Slide 29: A. Financial ratios
A. Financial ratios Net result (€m) Operating result (€m) ROE Operating ROE 620 659 599 537 14.4% 14.1% 17.8% 17.0% 2015 2016 2015 2016 2015 2016 2015 2016 Combined ratio (%) Solvency II * Total equity (€m) Financial leverage 180%** 189% 4,259 4,471 95.0 95.6 Commission 25.1% 25.2% 15.0 15.3 Expense
Slide 30: B. Combined ratio per product line
B. Combined ratio per product line 2016 2015 Segment Non-Life Claims ratio 72.0% 71.1% Expense ratio 8.3% 8.9% Commission ratio 15.3% 15.0% Combined ratio 95.6% 95.0% Disability Claims ratio 69.9% 69.5% Expense ratio 8.5% 8.8% Commission ratio 9.8% 11.3% Combined ratio 88.2% 89.6% Health Claims rati
Slide 31: C. Calculation of operating ROE
C. Calculation of operating ROE (€ in million) FY 2015 FY 2016 Operating result (before tax) 537 599 Minus: Interest on hybrid instruments (1) 45 45 Operating result after hybrid costs (before tax) 492 554 Tax effect (25% tax rate) 123 139 Operating results after hybrids costs (net of taxes) 369 415
Slide 32: D. Key metrics breakdown
D. Key metrics breakdown Operating result Q1 2016 Q2 2016 Q3 2016 Q4 2016 Non-life 32 30 37 37 Life 121 152 127 152 Banking and Asset Management 0 0 2 0 Distribution and Services 8 2 2 0 Holding and Other / Eliminations -29 -24 -18 -31 Total a.s.r. 132 160 150 157 Operating result H2 2015 H1 2016 H2
Slide 33: E. Operating result per segment
E. Operating result per segment Operating result: profit before tax adjusted for (i) investment income of IFRS profit before tax IFRS profit before tax an incidental nature Investment related Investment related (including realized Operating result Operating result capital gains, impairment losses an
Slide 34: F. Sensitivities group solvency ratio
F. Sensitivities group solvency ratio 14% 11% 14% 2 8% 3% 5% 8% 1% 189 >160% optimal range 1,8 -3% -2% -2% -5% -1% -11% -9% -10% -7% -9% -14% -23% -20% 1,6 >140% = cash dividend UFR VA Equities Real estate Credit spread Interest +100 Interest -100 payment level -100 bps -10 bps -20% -10% +75 bps bps
Slide 35: G. SCR movement during 2016
G. SCR movement during 2016 H1 reduced of SCR H2 reduced SCR FY reduced SCR • Equity risk • Longevity risk • Lapse risk • LACDT • Lapses risk • LACDT • Costs risk • Currency risk • Currency risk • LACDT • Costs risk • Diversification • Counterparty risk • Health risk • Lapses risk • Health risk • Eq
Slide 36: H. Details fixed-income portfolio
H. Details fixed-income portfolio Key highlights Mortgages (€m, book value) * 2015 2016 Delta LtFV < 75% 1,160 1,561 35% • The core of our portfolio consist of AAA government bonds, with selective peripheral LtFV < 100% 574 753 31% sovereign exposure. 2016 saw an increase in exposure in Spain and Ir
Slide 37: I. Details equities portfolio and real estate portfolio
I. Details equities portfolio and real estate portfolio Key highlights Equities (€m) 2015 2016 Delta Equities 2,278 1,793 -21% Equities • De-risking because of lower market risk budget specifically in the first half of 2016 by, amongst others, a reduction of the equity exposure Private equities 76 8
Slide 38: Disclaimer
Disclaimer Cautionary note regarding forward-looking statements The foregoing list of factors should not be construed as exhaustive. Any forward-looking Certain of the statements contained herein are not historical facts, including, without statements made by or on behalf of ASR Nederland speak only