Nn Group N.v. · EURONEXT:NN
Nn — Morgan Stanley European Financials Conference 2016
25 slides from Nn's conference presentation, Mar 15, 2016
Slide 1: NN Group
NN Group Lard Friese, CEO Morgan Stanley European Financials Conference 15 March 2016
Slide 2: Leading Dutch insurer with strong businesses in European insurance, asset management and Japan
Leading Dutch insurer with strong businesses in European insurance, asset management and Japan Some facts and figures Our brand promise ‘You matter’ • History dating back to 1845 • Strong business positions • Market positions were built organically • Unified international culture with shared best pr
Slide 3: We are continually enhancing customer experience supported by an increased focus on innovation
We are continually enhancing customer experience supported by an increased focus on innovation Netherlands • Withdrawing government leads to a more individual approach in securing people’s financial future • Investing to meet customers demand for digitalised, personal and relevant servicing Insuranc
Slide 4: Our investment proposition
Our investment proposition Strong business Transformation in the Profitable growth and Focus on generating capital positions and balance Netherlands operating leverage in and improving earnings sheet other segments • Committed • Large closed book of • Primarily fee and • Significant cumulative manag
Slide 5: Delivering on the financial targets
Delivering on the financial targets Annual earnings1 Target administrative Increase in ROE3 in Generate free cash available to growth of 5-7% on expense base in the medium term (%) shareholders in a range around average in the medium Netherlands2 of the net operating result of the term (EURm) EUR 70
Slide 6: Robust balance sheet
Robust balance sheet IGD Solvency I ratio Cash capital at holding Fixed-cost coverage ratio1 Financial leverage ratio (%, end of period) (EURm, end of period) (end of period) (%, end of period) 300 320 1,953 13.1x 23.2 21.7 1,413 9.9x 2014 2015 2014 2015 2014 2015 2014 2015 • Dutch regulator approve
Slide 7: Significant capital returned to shareholders since IPO
Significant capital returned to shareholders since IPO SEPT 2015 EUR 156M FEB 2015 2015 INTERIM DIVIDEND JAN 2016 JULY 2014 EUR 200M EUR 250M JUNE 2016 IPO SHARE BUYBACK JUNE 2015 SHARE BUYBACK EUR 341M EUR 193M PROPOSED 2014 FINAL DIVIDEND 2015 FINAL DIVIDEND 2014 2015 2016 FEB 2016 MAY 2015 SEPT 2
Slide 8: Netherlands Life: Focus on reducing expenses, shift to higher yielding assets and de-risking liabilities
Netherlands Life: Focus on reducing expenses, shift 60%1 to higher yielding assets and de-risking liabilities Further reduce administrative Manage our investment margin Generate and upstream capital expenses by 10-15% (EURm) 8% • Prudent investment mix • NN Life has paid dividends of 10-15% • Ongoin
Slide 9: Netherlands Non-life: Focus on underwriting performance and cost reductions
Netherlands Non-life: Focus on underwriting performance and cost reductions 8%1 Further reduce administrative More needed to reach COR Growth ambitions secondary to expenses by 8-12% (EURm) target <97% by 2018 profitability 2015 2014 2013 • Priority is to drive combined 11% ratio to target level: 8-
Slide 10: Insurance Europe: Self-funded growth with operating leverage
Insurance Europe: Self-funded growth with operating leverage 13%1 Product mix focused on life and Leveraging distribution Operational improvement voluntary pensions (APE 2015) platform 4% • Distribution further • Customer satisfaction better than main diversified, mainly through competitors in major
Slide 11: Japan Life: Strong profitability and cash generation
Japan Life: Strong profitability and cash 11%1 generation COLI segment is 21%2 of Product development Operational improvement Japanese Life market by APE Total market EUR 21bn • Broad range of products with • Operating result for 2015 16% track record of innovation increased by 9%4 vs 2014 • Leading
Slide 12: Asset Management: Strategy to grow third party business and benefit from operating leverage
8%1 Asset Management: Strategy to grow third party business and benefit from operating leverage Assets under Third-party strategy Operating leverage Management (EURbn) 195 187 Focus • Investments made in people, 174 • Pure play asset management processes and products, e.g.: • Effective distribution
Slide 13: Strong solvency and disciplined capital framework
Strong solvency and disciplined capital framework Operating units Cash capital at holding 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 • Surplus capital
Slide 14: 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 impact run-off ( ) expected return1 surplus capital Net operating result new business growth ( ) Netherlands Life Netherlands Non-life Insurance E
Slide 15: 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 • Proposed final 2015 dividend of EUR 1.05 per share, bringing full-year 2015 dividend to EUR 1.51 per share Excess cap
Slide 16: Generating value through deployment of capital
Generating value through deployment of capital Options Considerations Return to shareholders • Priority is to deliver on our equity story: • improve the businesses • improve RoE • generate cash and return it to shareholders Organic business growth • All business segments self-funded • Opportunities
Slide 17: We continue to assess our portfolio
We continue to assess our portfolio Japan The Netherlands Leading player in • Netherlands: market leader with capacity to play a Leading positions in COLI2 role in potential industry consolidation Life and Non-life1 • Europe: strongly positioned in most markets Top 3 positions in CEE3 life • Japan:
Slide 18: Key takeaways
Key takeaways 1 We have made good progress since the IPO 2 We will further improve performance across all businesses 3 Our capital position is strong and we aim to maintain a strong balance sheet and solvency position 4 We will return excess capital to shareholders unless it can be used for other va
Slide 19: Appendices
Appendices 19
Slide 20: Interest rate risk management focuses on closely matching liability cash flows
Interest rate risk management focuses on closely matching liability cash flows NN Life asset and liability cash flows1 Managing versus expected liability cash flows • NN Group manages interest rate risk by matching assets and best estimate liability cash flows • We do not specifically hedge the UFR
Slide 21: All segments upstream dividends
All segments upstream dividends Dividends upstreamed by segments/subsidiaries Dividends by segment/subsidiary based on total of (EURm) 2014 and 2015 remittances 2015 2014 Netherlands Life1 807 60 5% Netherlands Life Netherlands Non-life 93 208 13% Netherlands Non-life Insurance Europe2 227 145 Insur
Slide 22: Breakdown NN Group asset portfolio (1)
Breakdown NN Group asset portfolio (1) General account assets at 4Q15 Fixed income portfolio at 4Q15 (total EUR 117bn)1 (total EUR 98bn)2 2% 4% 2% 7% 3% Government bonds 23% Fixed income Financial bonds Equity Corporate bonds 4% 56% Real Estate Corporate loans 84% 3% Other ABS 9% Cash 3 Mortgages Ot
Slide 23: Breakdown NN Group asset portfolio (2)
Breakdown NN Group asset portfolio (2) Fixed income bonds1 by rating Fixed income bonds1 by type of Government bonds by country at 4Q15 (total EUR 70bn) issuer at 4Q15 (total EUR 70bn) at 4Q15 (total EUR 54bn) 2% 1% 0% 2% 2% 7% 11% 15% 10% 5% 34% 5% 17% 21% 15% 3% 78% 3% 13% 33% 3% 9% 12% AAA AA A B
Slide 24: 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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NN Group — Morgan Stanley European Financials Conference 2016 on 6ix