Asr Nederland N.v. · EURONEXT:ASRNL
Asr Nederland — FY2018 Earnings Presentation
42 slides from Asr Nederland's earnings presentation, Feb 20, 2019
Slide 1: Strong performance in 2018, all medium-term targets achieved
Strong performance in 2018, all medium-term targets achieved Jos Baeten, CEO Chris Figee, CFO Analyst conference call 20 February 2019
Slide 2: Strong performance in 2018, all medium-term targets achieved
Strong performance in 2018, all medium-term targets achieved Operating result Solvency II (SF)* Dividend per share Record operating result in 2018 and consistently strong delivery against ambitious targets € 742m 197% € 1.74 +2.0% +1% pts +6.7% Impact January storm more than offset by (FY 2017:
Slide 3: Solid progress in executing our strategy in 2018
Solid progress in executing our strategy in 2018 Portfolio matrix A C Non-life business domains with growth potential Asset management related growth business Exclusive cooperation with Discovery, offering our customers Strong growth of mortgage fund driven by 3rd party mandates, the benefit of
Slide 4: Development of sustainable employability platform in Disability
Development of sustainable employability platform in Disability Optimising underwriting result Pricing & Shortening duration Risk selection of absenteeism Targeting the right Claims & management customer with the right Customer Distribution Providing income during product absenteeism Prevention & ad
Slide 5: Record operating performance in 2018
Record operating performance in 2018 Operating result (in €m) Strong performance in 2018: • Increased result of 728 2.0% 742 • Life (up € 31m), • Asset management (up € 11m) and • Distribution & Services (up € 8m) 384 379 363 343 • Offsetting lower result of 66 106 79 • Non-life (€ -27m, reflectin
Slide 6: Non-life: increase in GWP driven by GNL and solid organic growth
Non-life: increase in GWP driven by GNL and solid organic growth Operating result (in €m) Gross written premiums (in €m) Non-life operating result decreased to € 145m, P&C Disability Health reflecting the impact of the January storm (€ 30 m) and higher level of larger claims in 2018 -15.6% +16.9%
Slide 7: Life: strong increase in investment margin driven by GNL
Life: strong increase in investment margin driven by GNL Operating result (in €m) Investment margin (in €m) Operating result of Life segment increased by 4.9% to Investment margin Technical result Direct investment income Required interest € 664m mainly driven by the inclusion of Generali Result o
Slide 8: Operating result other business segments accelerated
Operating result other business segments accelerated Operating result Asset Management Operating result Distribution and (in €m) Fee-based business delivered € 42m of operating Services (in €m) result, appr. 1% SII accrual +186.3% +53.0% Operating result of Asset Management increased to € 16 25
Slide 9: Consistent performance – delivering on ambitious 2016 - 2018 targets
Consistent performance – delivering on ambitious 2016 - 2018 targets Solvency II Operating return on equity S&P Rating (Standard formula, %) (%) 189 196 197 16.0 180 > 160% medium-term target 14.4 14.8 14.2 Up to 12% medium-term target Single ✓ ✓ ✓ ✓ 2015 2016 2017 2018 197% 2015 2016 2017 2018 14.2
Slide 10: Solvency and capital position
Solvency and capital position Chris Figee, Chief Financial Officer 10
Slide 11: Solvency II: quality of balance sheet
Solvency II: quality of balance sheet Eligible Own Funds (in €m) SII Solvency II ratio 197% based on standard formula* 197% Unrestricted Tier 1 capital: 78% of total own funds 1,044 0 6,924 and 153% of SCR 502 5,379 Ample headroom available within SII framework: - RT1: € 843m - T2 & T3: € 718m
Slide 12: Solvency II ratio movements in 2018
Solvency II ratio movements in 2018 OCC: 10% / € 372m Strong organic capital creation of 10% pts SII 196% -9% 187% 8% 5% -2% 6% 204% -7% 197% (€ 372m) Impact of the acquisition of Generali Nederland 88 represents the adjustment after legal merger and EOF 283 includes among other things the acqui
Slide 13: Sensitivity of SII ratio to UFR
Sensitivity of SII ratio to UFR Stock of SII (in %) Economically, a UFR that is in line with long-term investment returns would be an optimal way to measure capital stock (compare to >100% threshold) 186% 189% 193% 197% 156% a.s.r. currently applies an economic UFR of 2.4% EIOPA aims to lower
Slide 14: Strong balance sheet with ample financial flexibility
Strong balance sheet with ample financial flexibility Solvency II composition (in % pts) Financial flexibility (in €m) Financial leverage (in %) Hybrids Unrestricted T1 197% Tier 3 843 25.3% 26.7% 30% Tier 2 718 6,924 14% Restricted tier 1 1,546 Unrestricted tier 1 153% 5,379 FY 2018 EOF T1 Headroom
Slide 15: Robust Solvency and cash supports our businesses and dividends
Robust Solvency and cash supports our businesses and dividends Holding cash (in €m) Holding cash at FY 2018 at € 394m – in line with a.s.r’s policy to maintain holding cash to cover dividends, coupons and other holding expenses for the current -273 463 395 year. 394 -143 -48 Cash was mainly prov
Slide 16: Asset and financial leverage
Asset and financial leverage Asset leverage in perspective Financial leverage in perspective Market risk as % of total SCR* (RT1+T2+T3) as % of EOF 46 23 22 43 FY 2017 FY 2018 FY 2017 FY 2018 Risky assets** as % of Unrestricted Tier 1 Financial leverage 105 106 25.3 26.7 FY 2017 FY 2018 FY 2017 FY 2
Slide 17: Wrap-up
Wrap-up Jos Baeten, Chief Executive Officer 17
Slide 18: Solid increase in dividend reflecting confidence in 2019 outlook
Solid increase in dividend reflecting confidence in 2019 outlook Dividend per share* (in €) Proposed full year dividend amounts to € 1.74 per share, an increase of 6.7% 6.7% Taking into account the interim dividend of € 0.65, a final 1.74 dividend of € 1.09 per share remains 1.63 The pay-out r
Slide 19: Key take-aways
Key take-aways Strong performance in 2018, record operating performance in 2018 Consistent delivery against ambitious targets since 2016 Solid progress in executing our strategy in 2018 Strong balance sheet, robust high quality solvency with ample financial flexibility Increase in dividend
Slide 20: Q&A
Q&A Jos Baeten, CEO Chris Figee, CFO 20
Slide 21: Appendices
Appendices a.s.fr.
Slide 22: Appendices
Appendices A. Financial ratios J. Fixed-income portfolio government credit rating B. Combined ratio per product line K. Fixed-income portfolio corporates and financials credit rating C. Calculation of operating ROE L. Details of equities portfolio and real estate portfolio D. Operating result per se
Slide 23: A. Financial ratios
A. Financial ratios* Net IFRS result (€m) Operating result (€m) ROE Operating ROE 906 728 742 21.2% 16.0% 14.2% 655 13.7% FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 Combined ratio (%) Solvency II** Total equity (€m) Financial leverage 95.1% 96.5% 196% 197% 5,432 5,479 25.3% 26.7
Slide 24: B. Combined ratio per product line
B. Combined ratio per product line FY 2017 FY 2018 Claims ratio 72.8% 72.9% Non-life Expense ratio 7.6% 7.3% Segment Commission ratio 14.7% 16.3% Combined ratio 95.1% 96.5% Claims ratio 72.4% 70.8% Expense ratio 7.8% 8.4% Disability Commission ratio 10.6% 11.6% Combined ratio 90.9% 90.8% Claims rati
Slide 25: C. Calculation of operating ROE
C. Calculation of operating ROE (in €m) FY 2017 FY 2018 Operating result (before tax, annualised) 728 742 Minus: Interest on hybrid instruments (1) 48 59 Operating result after hybrid costs (before tax, annualised) 680 683 Tax effect (25% tax rate) 170 171 Operating result after hybrid costs (net of
Slide 26: D. Operating result per segment
D. Operating result per segment Investment Investment IFRS profit IFRS profit Incidentals Incidentals before tax before tax Operating Operating related related result result FY 2017 FY 2018 Non-life 241 70 - 172 159 16 -2 145 Life 931 271 27 633 805 144 -2 664 Asset Management 4 - -2 6 15 0 -1 16 Di
Slide 27: E. IFRS equity and SII EOF multi-year development
E. IFRS equity and SII EOF multi-year development IFRS equity (in €m) Solvency II Eligible Own Funds* (in €m) 6,826 6,924 6,299 1,548 1,546 5,433 5,479 1,215 1,001 1,001 4,481 701 5,279 5,379 5,084 4,432 4,478 3,780 2016 2017 2018 2016 2017 2018 Hybrids Equity Hybrids Unrestricted Tier 1 * After ded
Slide 28: F. SCR movement in FY 2018
F. SCR movement in FY 2018* FY 2017 3,706 FY SCR decreases in FY SCR increases in Market risk -296 Market risk: Market risk: • Interest rate risk • Real estate risk Counterparty default risk -109 • Equity risk • Currency risk Insurance risk Health: Insurance risk Life -151 • HSLT risk and HNSLT risk
Slide 29: G. Sensitivities Solvency II ratio
G. Sensitivities Solvency II ratio 12 9 7 7 4 0 1 197% -2 -3 -5 -4 -5 -6 -6 -9 -9 -9 -9 -9 -11 Optimal range -14 >160%: entrepreneurial level VA -10 bps Sovereign Corporate credit Interest +100 bps Interest -100 bps Equities -20% Real Estate -10% spread +50 bps spread +75bps >140% cash dividend Tota
Slide 30: H. Investment portfolio
H. Investment portfolio • Re-risking of the investment portfolio: from government bonds to credits, mortgages and real estate to optimise returns Assets (in €bn, fair value)* FY 2017 FY 2018 Delta % total • Increase in total portfolio value, and fixed Fixed income 23.8 26.5 2.7 63% income in particu
Slide 31: I. Details of fixed-income portfolio
I. Details of fixed-income portfolio • The core of the portfolio consist of AAA government bonds, with selective Mortgages (€m, book value)* FY 2017 FY 2018 Delta peripheral sovereign exposure NHG 3,807 3,547 -6.8% • The increase in value of the fixed income portfolio is mainly due to the acquisitio
Slide 32: J. Fixed income portfolio government credit rating
J. Fixed income portfolio government credit rating Market value governments* (€m) 0-1 1-2 2-3 3-5 5-10 10-20 20-30 30+ Total FY delta AAA 185 810 456 528 1,033 1,041 2,385 49 6,487 -174 AA 214 596 570 428 630 586 549 737 4,310 1,016 A 70 51 1 179 198 154 99 0 752 344 BBB 59 46 1 387 223 30 29 0 775
Slide 33: K. Fixed income portfolio corporates and financials credit rating
K. Fixed income portfolio corporates and financials credit rating Market value credits (€m) 0-1 1-2 2-3 3-5 5-10 10-20 20-30 30+ Total FY delta AAA 80 93 192 126 57 50 0 0 597 -23 AA 113 117 99 374 445 172 0 0 1,320 211 A 325 359 350 1,339 1,490 503 134 0 4,501 273 BBB 212 258 354 1,029 1,640 337 0
Slide 34: L. Details of equities portfolio and real estate portfolio
L. Details of equities portfolio and real estate portfolio Highlights Equities (€m) FY 2017 FY 2018 Delta • Re-risking during early 2018 and subsequent de-risking in respect of equities in late Equities 2018, combined with lower markets resulted in an decrease in equity exposure Equities 2,142 1,803
Slide 35: M. Calculation of asset leverage
M. Calculation of asset leverage (€m) FY 2017 FY 2018 Equities 2,566 2,245 Real estate* 1,884 2,414 BB bonds or below 278 274 Preference shares 321 308 Fixed income funds (not rated & high yield) 334 329 Mortgages with LtMv >110% 166 132 Total risky assets 5,549 5,702 Unrestricted Tier 1 5,279 5,379
Slide 36: N. Life segment book development
N. Life segment book development Life reserves development (in €bn) Life reserves (in €bn) Reserves Individual Funeral Excl (un)realised gains reserve 25 Pensions 42 20 40 15 38 10 36 5 34 0 32 2016 2017 2018 2016 2017 2018 Reserves - FY 2018 (€ 41 bn) (Un)realised reserves development (in €bn) Pens
Slide 37: O. Life segment investment contribution
O. Life segment investment contribution (€m) H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 Direct investment income* 505 476 513 479 529 519 Amortisation realised gains reserve 119 150 161 161 155 159 Total investment contribution 624 626 674 640 684 678 Required interest on liabilities** -423 -38
Slide 38: P. Medium term group targets (2019 – 2021)
P. Medium term group targets (2019 – 2021) Targets for the period 2019 - 20211 Solvency II Operating return on equity Dividend pay-out ratio (Standard formula) (% of net operating result after hybrid expenses2) >160% 12-14% 45-55% Substantial capital for Per annum Ambition to offer a stable to growi
Slide 39: Q. Medium-term business targets (2019 – 2021)
Q. Medium-term business targets (2019 – 2021) Targets for the period 2019 - 20211 Non-life Life operating result Fee based businesses, operating result2 (excluding Health) (€ million) Combined ratio 94-96% Stable € 40 million Compared to 5% growth € 633 million in 2017 per annum thereafter Non-life
Slide 40: R. Medium term non-financial objectives (2019 – 2021)
R. Medium term non-financial objectives (2019 – 2021) Targets for the period 2019 - 20211 Meeting customer needs Sustainable investments Employee contribution to local society (Net promoter score) (in no. of hours) Carbon footprint: % measured of 95% >44 investment portfolio +5% € 1.2bn Impact by 20
Slide 41: IR contact details
IR contact details Email: ir@asr.nl Tel: +31 30 257 8600 Michel Hülters, Barth Scholten & Vincent Uriot 41
Slide 42: Disclaimer
Disclaimer Cautionary note regarding forward-looking statements laws or regulations and/or changes in the interpretation thereof, including without limitation Solvency II, IFRS and taxes; (17) changes in the policies of governments and/or regulatory or The terms of this disclaimer ('Disclaimer') app