Nn Group N.v. · EURONEXT:NN
Nn — Investor Day (November 2015)
20 slides from Nn's investor day presentation, Nov 19, 2015
Slide 1: NN Group Financial and capital update
NN Group Financial and capital update Delfin Rueda, Chief Financial Officer Capital Markets Day 19 November 2015
Slide 2: We have made good progress on achieving the financial targets set at the IPO
1 2 We have made good progress on Our capital position is strong and will achieving the financial targets set at the also remain so under Solvency II IPO
Slide 3: Good progress on targets set at IPO
Good progress on targets set at IPO On Annual earnings1 growth of 5-7% on average in the medium term track On Over time generate free cash available to shareholders in a range around track the net operating result of the ongoing business2 On Increase in ROE3 in medium term compared with 2013 pro-for
Slide 4: Delivering on our financial targets and generating cash
Delivering on our financial targets and generating cash Operating result before tax of the ongoing business Free cash flow generation (EUR mln) (EUR mln) 2014 9M15 960 1,031 +20% +43% 806 905 1,184 1,086 450 161 133 140 130 826 108 158 199 148 Net Free cash Net Free cash 176 128 Other operating flow
Slide 5: Expense reduction target of EUR 200 mln achieved, new target expense base
Expense reduction target of EUR 200 mln achieved, new target expense base in the Netherlands of EUR 700 mln by 2018 Administrative expenses of Netherlands Life, Pressure on expense base, investments needed Netherlands Non-life and Corporate/Holding entities (EUR mln) • New expense reduction target w
Slide 6: Capital framework remains unchanged under Solvency II
Capital framework remains unchanged under Solvency II 1 Operating units 2 Cash capital at holding 3 Financial leverage • Manage operating units to • Hold cash capital in holding • Maintain financial leverage commercial capital levels to cover stress events and to and fixed-cost cover ratios • Surplu
Slide 7: Operating units well capitalised and generating capital
1 Operating units well capitalised and generating capital 2013 2014 9M15 Legal entity / Solvency I Capital Net Solvency Capital Net Solvency Capital Net capital Segment ratio generation capital I ratio generation capital I ratio generation flows (EUR mln) (excl. net flows (excl. net flows (excl. net
Slide 8: All segments upstream dividends
1 All segments upstream dividends Dividends upstreamed by segments/subsidiaries Dividends by segment/subsidiary based on total of (EUR mln) 2014 and 9M15 remittances 2014 9M15 Netherlands Life 60 546 6% Netherlands Life Netherlands Non-life 208 90 Netherlands Non-life 13% Insurance Europe1 145 181 3
Slide 9: Cash capital at holding improved since the IPO
2 Cash capital at holding improved since the IPO 1,031 Free cash flow 450 Free cash flow1 1,172 710 -125 -15 -31 296 1,619 674 1,363 1,413 -792 -3 -200 -1,313 -116 Cash capital Cash Dividends Capital Other Capital flow Change in Cash capital Dividends Capital Other Acquisitions Capital flow Change i
Slide 10: Cash capital buffer
2 Cash capital buffer EUR 1.6 bln Hold cash capital at holding to cover stress events and to fund holding costs Freely available • Stress events (1-in-20 years scenario) cash capital • Level of holding cash capital requirement not fixed • Driven by solvency capital level and risk position of busines
Slide 11: Financial leverage has remained stable since IPO, ratios improved
3 Financial leverage has remained stable since IPO, ratios improved Financial leverage (EUR bln) Leverage: 24.0% Leverage: 22.4% • Successfully externalised our debt at attractive rates FCCR1: 6.5x FCCR1: 13.2x 3.7 3.7 • Refinancing of EUR 0.8 bln ING hybrids and 0.4 0.4 Senior debt issued by EUR 0.
Slide 12: We have made good progress on achieving the financial targets set at the IPO
1 2 We have made good progress on Our capital position is strong and will achieving the financial targets set at the also remain so under Solvency II IPO
Slide 13: All units strongly capitalised in Solvency II
All units strongly capitalised in Solvency II Solvency II Solvency II Legal entity Solvency II ratio Own Funds1 SCR (SF) 3Q15 (SF) (in EUR bln) (in EUR bln) NN Group 13.5 6.32 214% NN Life 7.4 4.2 176% NN Non-life 0.6 0.5 122% NN Re 1.1 0.3 312% NN Life Belgium 0.5 0.3 187% NN Poland Life 0.5 0.2 31
Slide 14: Split of Solvency II Basic Own Funds
Split of Solvency II Basic Own Funds Basic Own Funds vs Eligible Own Funds 3Q15 Tiering Solvency II Basic Own Funds (EUR mln) (EUR bln) 14.6 0.8 Tier 3 DTA 1.1 Tier 2 sub debt 14,607 1.8 Tier 1 hybrid capital 13,450 1,157 0 10.9 Tier 1 core capital Basic Own Non-available Non-eligible Eligible Own 1
Slide 15: Remittances under Solvency II in line with Solvency I
Remittances under Solvency II in line with Solvency I Drivers remittances Solvency II Segment SCR development1 Own Funds Reduction Remittances vs Net impact run-off ( ) expected return1 surplus capital operating result new business growth ( ) Netherlands Life Netherlands Non-life Insurance E
Slide 16: NN Life Solvency II Own Funds development 9M15
NN Life Solvency II Own Funds development 9M15 NN Life Own Funds1 (in EUR bln) 9M15 Opening2 6.7 Expected return 0.2 Change in interest rates 0.0 Market performance 1.9 Change in credit spreads 1.3 Other (e.g. new business, model Change in equity 0.6 -1.1 and assumption changes) Net capital flows3 -
Slide 17: Committed to our dividend policy
Committed to our dividend policy Ordinary dividend • In line with medium term financial performance • Dividend pay-out ratio of 40-50% of IFRS net operating result ongoing business Excess capital • Distributing excess capital to shareholders, unless it can be used for other value creating opportunit
Slide 18: Key takeaways
Key takeaways Continue to improve business performance in line with targets and focus on 1 efficiency 2 Capital framework with focus on generating cash for shareholders unchanged 3 Under Solvency II we remain very well capitalised Dividend policy remains to return excess capital to shareholders unle
Slide 19: 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 on the Dutch Civil Code. In preparing the financial information in this document, the
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