Asr Nederland N.v. · EURONEXT:ASRNL
Asr Nederland — H1 2017 Earnings Presentation
33 slides from Asr Nederland's earnings presentation, Aug 30, 2017
Slide 1: Strong performance first half year 2017
Strong performance first half year 2017 Jos Baeten, CEO Chris Figee, CFO 2017 First half year results 30 August 2017
Slide 2: Results driven by strong operating performance in all segments
Results driven by strong operating performance in all segments, benign claims experience and favorable financial markets Operating result Solvency II (SF) IFRS net result Strong operating performance • Operating result up 28.8% to € 385m, driven by solid performance in all business segments € 385m 1
Slide 3: Executing our strategy and optimizing the business portfolio
Executing our strategy and optimizing the 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 • External placement in ASR Dutch Mobility Office Fund f
Slide 4: Increased quarterly operating result reflects strong business momentum
Increased quarterly operating result reflects strong business momentum Operating result (in € mln) • Quarterly operating result H1 2017 at a higher level then each quarter of H1 2016. 28.8% • Adjusted for seasonality effects (e.g. dividends) and one-offs, quarterly operating result still significant
Slide 5: All business segments drive strong increase in operating result
All business segments drive strong increase in operating result Operating result (in € mln) • Non-life segment (+ € 44m) H1 2017 H1 2016 Increase operating result mainly from an improved performance in the mandated broker distribution channel and from the favorable weather condition in Non-life 106
Slide 6: Operating expenses remained stable absorbing additional cost base
Operating expenses remained stable absorbing additional cost base Operating expenses (€ mln) Non-life expense to premium ratio (in %) -0.4% • Operating expenses decreased and absorb additional cost base of acquisitions and higher 284 283 8.4 6 current net service cost of our employee pension Acquisi
Slide 7: Non-life: ongoing underwriting excellence benefitted from favorable claims experience
Non-life: ongoing underwriting excellence benefitted from favorable claims experience Operating result (in € mln) Gross written premiums (in € mln) • Increase operating result reflects favorable +71.0% +5.6% operating conditions and continuously improving 106 1,474 underwriting. Weather conditions t
Slide 8: Life performance: driven by investment margin
Life performance: driven by investment margin Operating result (in € mln) Investment margin (in € mln) +14.6% • Investment margin up € 58m: additional yield (+ € 259 16m) due to expansion of swap portfolio (swap- 314 201 Amortized spread hedging program) and rerisking (mortgages, 274 46 realized gai
Slide 9: Delivering on medium-term targets
Delivering on medium-term targets Solvency II (SF) Operating return on equity S&P rating (insurance business) 194%* 17.4% 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 93.6% € 283m 23.5% < 97%
Slide 10: Solvency and capital
Solvency and capital Chris Figee, CFO 10
Slide 11: Multi year equity and SCR movement
Multi year equity and SCR movement IFRS equity (in € mln) SII EOF* (in € mln) SCR ratio* (in %) 4,845 6,796 194% 189% 4,481 6,299 180% 4,275 701 6,076 1,208 701 1,214 701 1,204 4,144 5,588 3,574 3,780 5,085 4,872 2015 2016 H1 2017 2015 2016 H1 2017 2015** 2016 H1 2017 Hybrids Equity Hybrids Equity *
Slide 12: Robust Solvency II and significant financial flexibility
Robust Solvency II and significant financial flexibility Own funds (in € mln) 6,796 • Solvency II ratio 194% based on standard 1 1,004 formula* 5,587 204 • Tier 1 capital: 85% of total own funds and 165% of SII SCR. 194% • Restricted Tier 1 capital grandfathered hybrid capital instruments (first cal
Slide 13: Life segment Solvency II
Life segment Solvency II Life segment Solvency II (in € mln) 148 SII 486 -1,007 187% 1,362 -464 2,261 5,207 2,787 Market risk Insurance risk Counterparty risk Operational risk Diversification LACDT Total SCR Life EOF Market risk (in %) Insurance risk (in %) 7.2% Interest 3.6% Mortality 14.1% 12.7% E
Slide 14: Capital accretion
Capital accretion Capital accretion (in € mln) • a.s.r. businesses amassed € 690m solvency capital in H1 through solid operational performance, capital release, favorable financial markets and other sources. 180 • Created capital was applied to re-risking, hybrid 333 capital cost, absorbing the effe
Slide 15: Solvency ratio movement in H1 2017
Solvency ratio movement in H1 2017 Organic capital creation: €193m 199% 4% -5% -1% • Strong organic capital creation of € 193m or 6%- 3% 194% pts of SII – Solid operating performance of business segments 4% generates 4%-pts SII, reflecting mostly strong 189% technical results in non-life and investm
Slide 16: Sensitivity of SII ratio to UFR
Sensitivity of SII ratio to UFR Stock of SII (in %) 194 173 183 191 • Group solvency ratio 194% based on standard 163 formula* 151 • EIOPA will be lowering the UFR towards current target of 3.65% while lowering the UFR with 15 bps per annum. Target UFR for 2018 is 4.05% • Lowering UFR would lead to
Slide 17: Sensitivities group solvency ratio
Sensitivities group solvency ratio 17 11 12 9 9 6 4 3 194% -1 -2 -4 -4 -8 -7 -10 -10 -11 -14 VA -10 bps Corporate credit spread Interest +100 bps Interest -100 bps Equities -20% Real Estate -10% +75bps & VA +21 bps >160% optimal range Total impact expressed as % group solvency ratio Impact on requir
Slide 18: Strong and resilient balance sheet
Strong and resilient balance sheet Solvency II composition (in %) Financial flexibility (in € mln) Cash remittance (in € mln) 194% 29% 6,796 1,195 747 Year-end 6% -159 254 Target 353 -153 350 Tier 3 159% Tier 2 -93 202 5,587 Restricted tier 1 Unrestricted tier 1 H1 2017 EOF T1 Headroom T2+3 Headroom
Slide 19: Wrap-up
Wrap-up Jos Baeten, CEO 19
Slide 20: Key take-aways
Key take-aways • Strong operating performance, driven by solid performance in all business segments • Underwriting and claims handling skills, combined with financial discipline, drive market- leading and profitable combined ratio, each product line ahead of target • Life continues to represent an i
Slide 21: IR contact details
IR contact details Email: ir@asr.nl Michel Hülters +31 (0)6 15 49 95 69 Barth Scholten +31 (0)6 30 44 15 71 Vincent Uriot +31 (0)6 10 44 82 34 21
Slide 22: Appendix
Appendix A. Financial ratios B. Combined ratio per product line C. Calculation of operating ROE D. Operating result per segment E. SCR movement during 2017 F. Investment portfolio G. Details fixed-income portfolio H. Details equities and real estate portfolio I. Life segment development of book J. I
Slide 23: A. Financial ratios
A. Financial ratios Net result (€m) Operating result (€m) ROE Operating ROE 381 397 385 20.9% 17.4% 19.2% 14.9% 299 H1 2016 H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 Combined ratio (%) Solvency II* Total equity (€m) Financial leverage 96.4% 93.6% 189% 194% 4,835 25.2% 23.5% 4,471 Commi
Slide 24: B. Combined ratio per product line
B. Combined ratio per product line H1 2016 H1 2017 Segment Non-Life Claims ratio 73.2% 71.6% Expense ratio 8.4% 7.5% Commission ratio 14.8% 14.5% Combined ratio 96.4% 93.6% Disability Claims ratio 72.3% 74.6% Expense ratio 8.4% 7.9% Commission ratio 9.5% 9.4% Combined ratio 90.2% 91.9% Health Claims
Slide 25: C. Calculation of operating ROE
C. Calculation of operating ROE (€ in million) H1 2016 H1 2017 Operating result (before tax, annualized) 598 770 Minus: Interest on hybrid instruments (1) 45 45 Operating result after hybrid costs (before tax, annualized) 553 725 Tax effect (25% tax rate) 138 181 Operating results after hybrids cost
Slide 26: D. Operating result per segment
D. Operating result per segment Operating result: profit before tax adjusted for IFRS profit before tax IFRS profit before tax Investment related Investment related Operating result Operating result (i) investment related income: income for own account of Incidentals Incidentals an incidental nature
Slide 27: E. SCR movement during 2017
E. SCR movement during 2017 H1 SCR declines in: H1 SCR increases in: 2016Q4 3,338 Market risk 182 30 Market risk: Market risk: Counterparty default risk - Currency risk - Equity risk - Interest rate risk Insurance risk Life -4 - Counterparty risk Insurance Risk Life: Insurance Risk Life: Insurance r
Slide 28: F. Investment portfolio
F. Investment portfolio Assets (€ billion, fair value) * FY 2016 H1 2017 • Re-risked the investment portfolio: from government Fixed income 26.0 23.9 bonds to credits, equity, mortgages and real estate to Equities 2.2 2.4 optimize return on solvency capital Real estate 3.2 3.2 Mortgages / other loan
Slide 29: G. Details fixed-income portfolio
G. Details fixed-income portfolio Key highlights FY H1 Mortgages (€m, book value) * Delta 2016 2017 LtFV < 75% 1,561 1,817 17% • The core of the portfolio consist of AAA government bonds, with selective peripheral LtFV < 100% 753 840 12% sovereign exposure. 2017H1 saw an general decrease in exposure
Slide 30: H. Details equities portfolio and real estate portfolio
H. Details equities portfolio and real estate portfolio Key highlights FY H1 Equities (€m) Delta 2016 2017 Equities • Re-risking in the first quarter of 2017 by an increase of the equity exposure, partially Equities 1,793 2,113 18% reversed after june because of lowered perceived attractiveness Priv
Slide 31: I. Life segment development of book
I. Life segment development of book Life reserves development (in € bln) Life reserves (in € bln) 20 • Individual Life book has decreased by ~€ 2 billion Pensions 40 since 2014. Pension book has increased more than € 2 billion since 2014 due to buy-outs and regular 16 Individual Reserves interest ac
Slide 32: J. Investment contribution Life segment
J. Investment contribution Life segment € mln H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 • Despite the declining interest rate, direct investment income was up in 2016 and in H1 Direct investment income* 530 473 505 511 521 2017. Amortization realized gains reserve 61 99 119 150 161 • The regular decre
Slide 33: Disclaimer
Disclaimer Cautionary note regarding forward-looking statements Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking statements. These statements may be identified by words such as