ASR Nederland N.V. · EURONEXT:ASRNL
ASR Nederland — Debt Investor Presentation (February 2018)
21 slides from ASR Nederland's debt investor presentation, Feb 1, 2018
Slide 1: Opening the Euro Currency Market for RT1s
Opening the Euro Currency Market for RT1s Chris Figee, CFO 1 February 2018 FITCH RATINGS Insurance Roadshow 2018
Slide 2: Topics
Topics a.s.r. at a glance Dynamics of Solvency II a.s.r.’s capital strength Quality of capital Rational for RT1 issue Themes for coming years 2
Slide 3: a.s.r. at a glance
a.s.r. at a glance Overview Business mix by GWP • Leading, innovative and diversified insurer in the Netherlands Total 2016: €4.4bn2 • Founded in 1720, deeply rooted in Dutch society • Leading market positions1: #3 overall, #3 in Non-life, #3 in Life • Multi-brand, multi-channel distribution with a
Slide 4: Dynamics of Solvency II: balancing stock and flow
Dynamics of Solvency II: balancing stock and flow High Capital strength (stock of capital) “Do we have Insurance enough?” Nirvana “Do we generate enough?” Low Low High Capital resilience (flow/generation of capital) a.s.r. at a glance Dynamics of Solvency II a.s.r.’s capital strength Quality of capi
Slide 5: a.s.r. delivers capital strength and capital resilience
a.s.r. delivers capital strength and capital resilience … Capital strength Capital resilience Exceptionally strong Solvency II levels Organic capital generation due to business performance • SCR ratio (standard formula): 191% after latest buyback in Sept. • Additive organic Solvency II EOF (€151m in
Slide 6: While Solvency II is robust
… while Solvency II is robust … Own funds (in €m) 6,796 1 Tier 3: 5,587 1,004 204 0.03% Tier 2: 29% SII Tier 1: 194% 165% Unrestricted Restricted Tier 2 Tier 3 Eligible SII tier 1 tier 1 Own Funds Required Capital (in €m) 585 190 -1,757 2.380 -610 3.504 2.716 Market Insurance Counter Opera- Diversi-
Slide 7: And financial flexibility significant
… and financial flexibility significant Tier 3 Tier 2 • Solvency II ratio 194% based on standard formula1 0% • Tier 1 capital: 85% of total own funds and 165% of SCR 15% • Restricted Tier 1 capital grandfathered hybrid capital instruments (first RT1 call date 2019) 3% • Tier 3 capital per 2017 H1 of
Slide 8: Track record of minimal volatility and robust multi-year development
Track record of minimal volatility and robust multi-year development Hybrids Equity Continuous growth IFRS equity (in €m) 4,845 4,275 4,481 701 701 701 3,574 3,780 4,144 2015 2016 H1 2017 Continuous growth of SII EOF1 (in €m) Quarterly evolution of Solvency ratio1 (in % of SCR) 6,796 Range: 6% 6,076
Slide 9: Quality of Capital: The next focus point
Quality of Capital: The next focus point Max 50% RT2 / RT3 of SCR headroom is effectively a function of required RT3 capital including RT2 market risk UT-1 DTA’s will consume Ineligibility not a problem RT3 space; in “all is well scenario”, but eventually also may become a serious reducing eligibili
Slide 10: Beware of the spiral accelerating effect; down is dangerous!
Beware of the spiral accelerating effect; down is dangerous! • Reduced capital requires • Capital enables generation de-risking, reducing future of flow that creates future capital generation capacity capital • Evaporation of vulnerable • Excess returns continue to LACDT components be realized “Sudd
Slide 11: Indicators of positive/negative spiral potential
Indicators of “positive/negative spiral” potential LACDT founded in Restricted Tier 2/3 LACDT dependent Headroom in tangible claims capacity on current and future Restricted Tier 2/3 against fully utilized fiscal profits capacity tax authorities Underwriting and Underperformance Market risk largest
Slide 12: a.s.r. rationale for issuing a Tier 1 Instrument
a.s.r. rationale for issuing a Tier 1 Instrument • Provide effective financing of Generali Netherlands transaction • Create optionality for refinancing of existing grandfathered Tier 1 (€200m notional) with new eligible RT1 • Add additional instrument to capital management toolkit Responsible 1 fina
Slide 13: Selection of key terms of the offering
Selection of key terms of the offering Issuer ASR Nederland N.V. Offered Securities EUR 300m Issue Rating1 BB (S&P) Maturity/First Call Perp-NC10 Interest Optional at the discretion of the Issuer and mandatory upon breach of Solvency Condition, non- Cancellation compliance with Solvency Capital Requ
Slide 14: a.s.r. capital management structure
a.s.r. capital management structure Solvency II ratio well above entrepreneurial level Solvency II management ladder (based on standard model and UFR of 4.2%) 189% 194% Optimal range 180% >160%: entrepreneurial 160% level >140% cash dividend 140% payment level €3,300 million 120% a.s.r.’s risk appet
Slide 15: Distance to trigger breach (1/2)
Distance to trigger breach (1/2) a.s.r. able to absorb shocks Solvency II (%) Solvency Ratio Sensitivities 17 Combined impact 11 12 9 9 194% 6 6 Optimal range 4 3 1 160% -1 -2 -3 -3 Cash dividend payment level -4 -4 140% -8 -7 -7 -10 -10 -9 Risk appetite -11 120% -14 VA Corporate Interest Interest E
Slide 16: Distance to trigger breach (2/2)
Distance to trigger breach (2/2) a.s.r. able to absorb lower UFR levels Solvency II (%) Impact lower UFR stack on a.s.r. in %-pts decline -3 194% -11 Optimal range -21 160% -31 EIOPA Target Range Cash dividend payment level -43 140% Risk appetite 2.20% 2.70% 3.20% 3.65% 4.05% 4.20% 120% 100% 100% Ad
Slide 17: Playbook available to deal with potential stress
“Playbook” available to deal with potential stress What actions could a.s.r. take if breaching 100% SCR? Recovery measures available for an a.s.r. specific event or a market-wide event (liquidity and/or capital)* A. Adjustment of interest rate hedge B. Sale of equity and corporate bonds in exchange
Slide 18: Feedback from investors upfront to the GO/NO GO decision
Feedback from investors upfront to the GO/NO GO decision UK Institutional Do not expect much RT1 supply in the near-term Focus is on understanding the credit and where we like the credit we will express a view down the capital UK Institutional spectrum to maximize yield. RT1 from well rated insurers
Slide 19: Execution highlights of the inaugural RT1 EUR 300m issue
Execution highlights of the inaugural RT1 EUR 300m issue • The innovative transaction was marketed on an Geography distribution stats (% allocation) extremely well attended 3-day European roadshow 4% which attracted 100 investors, contributing to the 7% 1% UK/Ireland France success of the issuance 7
Slide 20: Afterthought, themes for coming years
Afterthought, … themes for coming years Best estimate assumptions Balance sheet metrics • What assumptions in COR, cost level are embedded in • With IFRS 17 inevitable approaching, what metrics will your BEL? Especially in LT liabilities you steer your balance sheet on going forward? • As time passe
Slide 21: Disclaimer
Disclaimer This document has been prepared by ASR Nederland N.V. (ASR Nederland). This document is only being distributed to and is only directed at (i) persons who This document is only provided for information purposes and does not are outside the United Kingdom or (ii) to investment professionals
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