Slide 1: NN Group 1H23 results
NN Group 1H23 results 29 August 2023
Slide 2: 1H23 highlights
1H23 highlights David Knibbe, CEO
Slide 3: Good progress on strategic targets for Customers, Employees and Society
Good progress on strategic targets for Customers, Employees and Society Above market average Net Promoter Employee engagement2 of ≥ 8.0 by 2025 Diversity: Women in senior management Score (NPS-r) of Netherlands and positions3 of ≥ 40% by 2025 International1 by 2025 7.7 7.9 7.9 40% 39% 34% Netherland
Slide 4: Automated call logging using ChatGPT to be rolled out to all call centres
Automated call logging using ChatGPT to be rolled out to all call centres in the Netherlands Call with Agent updates Agent executes GPT-3 Summary customer ticket necessary summarises reviewed by actions call agent Saves up to 3.5 minutes per call 2 million calls per year 7 million minutes per year •
Slide 5: Strong financial performance in 1H23
Strong financial performance in 1H23 Operating capital generation up ~15% reflecting Operating capital generation Value of new business strong business performance and diversification EUR 997m EUR 195m across businesses … 1H22: EUR 869m1 1H22: EUR 257m Solvency ratio Cash capital at Holding … while
Slide 6: Leading position in consolidating Dutch non-life market
Leading position in consolidating Dutch non-life market Dutch non-life market has consolidated Resilient improvement of profitability Future remittances expected to be more after NN acquired Delta Lloyd and Vivat Combined ratio and operating result in line with OCG (EURm) Non-life development (EURm)
Slide 7: Margin accretive growth in Insurance Europe
Margin accretive growth in Insurance Europe Moderate sales growth; GDP growth and .. resulting in stronger VNB growth .. .. translating into OCG over time low product penetration future drivers.. 250 Mid to high 4% 204 231 single-digit 450 31% 183 168 23% 388 22% 318 35% 114 218 44% 42% 2018 2019 20
Slide 8: Pole position to capture opportunities in changing Dutch pension market
Pole position to capture opportunities in changing Dutch pension market New pension law approved in June 2023 Milestones Unique and broad range of pension solutions • All pension plans become DC schemes with Insured DB 2020 Government, employers and life cycle investing employees reach pension Ins
Slide 9: Continued delivery on capital return to shareholders
Continued delivery on capital return to shareholders Dividend per share1 Accumulated payout to shareholders1,2 (EUR) Payout to shareholders since IPO to 31 Dec 22 2.79 2.49 2.33 EUR 7.8bn 2.16 1.90 1.55 1.66 1.51 Interim dividend 2023 0.57 EUR 1.12 per share 2014 2015 2016 2017 2018 2019 2020 2021 2
Slide 10: 1H23 results
1H23 results Annemiek van Melick, CFO
Slide 11: High-quality investment portfolio
High-quality investment portfolio Investment portfolio (NN Group excluding banking)1 • High-quality and conservative investment portfolio (30 June 2023) • Diversified real estate exposure across segments and regions Fixed income 5% • Core profile and strong occupancy rate >95% 3% 3% Real estate • Ab
Slide 12: Solvency ratio at 201% despite real estate revaluations
Solvency ratio at 201% despite real estate revaluations Solvency 11% 0% • Solid solvency ratio at 201% ratio 197% 207% 201% • 1H23 operating capital generation of EUR 997m added -1% -6% 11%-points to the solvency ratio • Market impact was broadly neutral, mainly reflecting 1.0 0.0 0.0 18.9 17.8 18.3
Slide 13: Solid OCG delivery with favourable business mix effects
Solid OCG delivery with favourable business mix effects OCG1 by segment (EURm) 1H23 1H22 Developments 1H23 versus 1H22 Netherlands Life 523 580 Lower investment return and SCR release, less positive experience variance and a lower new business contribution were partly offset by a lower net negative
Slide 14: Operating result also shows strong momentum
Operating result also shows strong momentum Operating result (EURm) 1H23 1H22 Developments 1H23 versus 1H22 Netherlands Life 810 691 Mainly reflecting timing effects in the investment result, higher other insurance results and a higher profit margin, partly offset by a lower technical result Netherl
Slide 15: Strong balance sheet and on track to achieve mid-single digit FCF growth
Strong balance sheet and on track to achieve mid-single digit FCF growth FCF development (EURm) Comfortable cash capital position • On track to achieve mid single-digit FCF (EURbn) growth versus 2021 level mid single-digit 2.1 1.9 • FCF of EUR 832m at 1H23 includes a non- 1.2 1.4 0.8 recurring remit
Slide 16: Key takeaways
Key takeaways David Knibbe, CEO
Slide 17: Key takeaways
Key takeaways Good progress on execution of strategy focused on customers, people and society Robust balance sheet and capital position: solvency ratio at 201% and holding company cash capital at EUR 1.9bn Strong operating capital generation with a year-on-year increase of 14.8% on a like-for-like b
Slide 18: Q&A
Q&A David Knibbe, Annemiek van Melick, Bernhard Kaufmann
Slide 19: Appendices
Appendices @»s
Slide 20: Operating capital generation by source
Operating capital generation by source OCG1 by source (EURm) 1H23 1H22 Investment return 620 702 Life – UFR drag -105 -318 Life – Risk margin release 126 165 Life – Experience variance 27 71 Life – New business 108 102 Non-life underwriting 164 95 Own Funds generation – SII entities 941 817 Non-Solv
Slide 21: Remittances from subsidiaries
Remittances from subsidiaries Remittances from subsidiaries (EURm) 1H23 1H22 FY22 FY213 Netherlands Life1 529 520 1,171 1,048 Netherlands Non-life1 106 74 176 123 Insurance Europe1,2 319 133 172 192 Japan Life 68 75 75 146 Banking1 1 112 113 138 Reinsurance business - 45 45 60 Other - - 1 18 Total 1
Slide 22: Solvency sensitivities
Solvency sensitivities Solvency ratio sensitivities to market shocks at 30 June 20231,2 Δ EOF Δ SCR Δ SII ratio (EURbn) (EURbn) (%-points) Interest rate: Parallel shock +50bps -0.3 -0.2 +2% Interest rate: Parallel shock -50bps +0.3 +0.2 -1% Interest rate: 10bps steepening between 20y–30y -0.1 +0.0 -
Slide 23: Holdco cash capital of EUR 1.9bn despite redemption
Holdco cash capital of EUR 1.9bn despite redemption Movement in holding company cash capital (EURm) Free cash flow: EUR 832m • Free cash flow of EUR 832m driven by 1,023 remittances from subsidiaries -18 • Change in debt and loans reflects the -173 -10 repayment of EUR 500m senior notes that 2,081 -
Slide 24: Strong balance sheet with ample flexibility
Strong balance sheet with ample flexibility Eligible Own Funds and SII headroom1 (EURbn) Headroom RT1/T2/T3 Credit ratings RT1 T2+T3 headroom 18.3 Financial Strength Rating 30 June 23 31 Dec 22 headroom EUR 0.5bn 2.0 EUR 1.5bn 0.9 A A Standard & Poor's 2.5 Positive Positive 11.5 1.4 AA- AA- Fitch St
Slide 25: Investment portfolio
Investment portfolio Investment portfolio (NN 30 June 31 Dec % of • Total investment exposure decreased mainly due to a Change Group excl banking)1 (EURbn) 2023 2022 total decrease in the fixed income portfolio Fixed income (excl. mortgages2) 73.7 76.7 -3.0 52% • Decrease in fixed income portfolio w
Slide 26: Details of fixed income portfolio
Details of fixed income portfolio 30 June 31 Dec % of • Core of fixed income portfolio consists of AAA-A rated Fixed income1 (EURm) 2023 2022 Change total government bonds Government bonds2 39.6 42.0 -2.4 28% • A decrease in the value of the fixed income portfolio was Corporates2 23.0 23.1 -0.0 16%
Slide 27: Details of corporate bond and equity portfolio
Details of corporate bond and equity portfolio Corporate bonds and loans by rating Equity exposure including mutual funds (16% of investment portfolio, at 30 June 2023) (4% of investment portfolio, at 30 June 2023) 4% AAA Public equity 14% 6% AA Private equity EUR EUR A Equity in mutual funds1 23bn
Slide 28: Well-collateralised Dutch mortgage portfolio
Well-collateralised Dutch mortgage portfolio Mortgages (excl Banking) 30 June 31 Dec Change % of • ~25% guaranteed, mainly by the Dutch state (NHG1) (EURbn) 2023 2022 total • Very comfortable average loan to value of 55%3, with the vast NHG and other guaranteed1 9.9 10.1 -0.2 25% majority reflecting
Slide 29: Actual losses in our Dutch mortgage portfolio very limited
Actual losses in our Dutch mortgage portfolio very limited Low historical losses in NN Group mortgage portfolio1 • NN Group mortgage portfolio experienced very limited losses (in bps) <10bps during and after financial crisis in line with market 50 • Mortgage losses in Dutch market are low NN losses
Slide 30: Well-diversified and high-quality real estate portfolio
Well-diversified and high-quality real estate portfolio Real estate exposure by segment1 Occupancy rate by segment • Actively managed portfolio; well-diversified (9% of investment portfolio, 30 June 2023) (30 June 2023 upper line versus 31 December 2022) across segments, geographies and 95% investme
Slide 31: IFRS 9/17 - NN continues to steer the business on OCG
IFRS 9/17 - NN continues to steer the business on OCG IFRS 17 has no impact on strategy or targets OCG targets in 2025 • For NN Group, OCG is a better proxy for cash conversion than NN Group1 IFRS 9/17 profits • Focus on Solvency II and Operating Capital Generation (OCG) EUR 1.8bn remains unchanged
Slide 32: IFRS 9/17 - We have chosen for earnings stability
IFRS 9/17 - We have chosen for earnings stability Use of OCI in IFRS 9 and 17 3 accounting models in IFRS 17 • IFRS 9 and 17 allow changes in financial assumptions (mainly changes • NN Group applies each of the three accounting models in IFRS 17 in market interest rates and spreads) to be reflected
Slide 33: IFRS 9/17 - Operating result and CSM
IFRS 9/17 - Operating result and CSM IFRS 9/17 operating result CSM • Operating result on the basis of IFRS 9/17 generally higher than the • CSM represents unamortised unearned profit operating result on the basis of IAS39/IFRS 4 • CSM at transition is highly dependent on Fair Value transition • Mai
Slide 34: IFRS 9/17 - Sustainable CSM growth expected
IFRS 9/17 - Sustainable CSM growth expected Netherlands Netherlands Insurance Contractual Service Margin (EURm) NN Group Life Non-life Europe Japan Life Other • New business contribution of EUR 431m versus a release of EUR 375m, i.e. a net Opening balance 6,850 3,573 355 1,733 1,182 7 growth from bu
Slide 35: Important legal information
Important legal information NN Group’s Consolidated Annual Accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS-EU”) and with Part 9 of Book 2 of the Dutch Civil Code. In preparing the financial information in this document, the
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