Nn Group N.v. · EURONEXT:NN
Nn — Goldman Sachs European Financials Conference 2019
29 slides from Nn's conference presentation, Jun 5, 2019
Slide 1: NN Group
NN Group Lard Friese, CEO Goldman Sachs European Financials conference 5 June 2019
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 • Active in 18 countries • Unified international culture with shared best practices • Approx.
Slide 3: Diversified businesses in Europe and Japan
Diversified businesses in Europe and Japan NN Group operating result Asset Management before tax1 Netherlands Life • International asset manager • #1 position: 41% market share3 in group • EUR 260bn AuM at 1Q19 7% pensions and 22% market share3 in • Offers a wide variety of actively managed 9% indiv
Slide 4: Highlights 1Q19
Highlights 1Q19 Financial results Operating result Net result Expense savings1 EUR 468m EUR 512m EUR 310m (1Q18: EUR 313m) (1Q18: EUR 399m) (4Q18: EUR 289m) Capital Solvency II ratio Holdco cash capital Free cash flow 213% EUR 2.0bn EUR 183m (4Q18: 230%) (4Q18: EUR 2.0bn) (1Q18: EUR 198m) Commercial
Slide 5: Continuing to improve the business
Continuing to improve the business Commercial momentum in the Netherlands • Higher volume of group pension contracts at Netherlands Life • Premium increases and strict pricing discipline on active renewals in Motor and Fire • Stricter acceptance, pricing and claims handling in D&A New products launc
Slide 6: Integration of Delta Lloyd on track
Integration of Delta Lloyd on track Administrative expense base1,2 Achieved so far (EURm) • Integration of management teams • EUR ~350m capital synergies 1,970 • Legal mergers completed: • Banking businesses and asset management businesses -133 on 1 January 2018 1,837 -289 • Belgium life businesses
Slide 7: Our priorities going forward
Our priorities going forward …. 1. Deliver on the Delta Lloyd transaction • Clear roadmap to deliver on the financial and non-financial benefits within the expected timeline • Strengthened competitive positions delivering sustainable cash flow 2. Improve performance further • Improve profitability o
Slide 8: … to achieve our medium-term targets
… to achieve our medium-term targets NN Group financial targets • EUR ~400m cost reduction1 by 2020, reflecting cost synergies from Delta Lloyd acquisition and existing standalone cost reduction plans • Annual earnings growth of 5-7% on average in the medium term2 • Over time, generate free cash ava
Slide 9: Disciplined capital framework
Disciplined capital framework Operating units Cash capital at holding Financial leverage • Manage operating units to • Hold cash capital to cover stress • Maintain financial leverage and commercial capital levels events and to fund holding fixed-cost cover ratios consistent • Surplus capital to be r
Slide 10: Committed to our dividend policy
Committed to our dividend policy • Priority is a sustainable ordinary dividend per share 0.57 1.51 1.55 1.66 1.90 • NN Group intends to pay an ordinary dividend in line with its medium term financial performance and envisages an ordinary dividend pay-out ratio of 40-50% of the net 1.24 0.95 1.04 ope
Slide 11: Our capital allocation decisions focus on creating value
Our capital allocation decisions focus on creating value Invest to realise our ambitions and Invest to strengthen current Invest in value-creating strategy position of our business units opportunities • Innovation • Hurdle rates • Best owner concept • Agility • Market and business position • Risk ve
Slide 12: NN Group's investment proposition
NN Group’s investment proposition Strong business Transformation in Profitable growth Focus on generating positions and balance the Netherlands in other segments capital and improving sheet earnings • Leading market player • Continued focus on • VNB growth in • Since IPO, EUR 3.8bn2 • Competitive po
Slide 13: Appendices
Appendices 13
Slide 14: Netherlands Life
Netherlands Life Pensions Driving efficiency and optimising Delivering significant and reliable (technical reserves 4Q18: EUR 79bn) asset portfolio cash flows over time 11% 11% General account • ~20% cost reduction by 2020 • Remittances from operating Separate account 6% Unit-linked • Optimising ris
Slide 15: Netherlands Non-life
Netherlands Non-life Product mix Combined ratio by business line Implementing multiple initiatives (by GWP FY18: EUR 3.1bn) to improve combined ratio Fire 1Q19 2018 20171 ~100-105% 2016 • Improving underwriting D&A 14% D&A ~90-95% performance 34% Fire D&A2 96% 94% 97% 90% 24% Motor • Optimise portfo
Slide 16: Insurance Europe
Insurance Europe Focus on profitable new business Market leading life and pensions Continuing to deepen and (VNB1 by product line, EURm) player across CEE diversify distribution • Markets with low insurance (New sales APE by distribution channel) 168 coverage 141 37 • Strong growth potential given 4
Slide 17: Japan Life
Japan Life Focus on profitable new business Active in COLI2 market Continuing to expand and (VNB1, EURm) diversify distribution • Japan is second largest life (New sales APE by distribution channel) insurance market in the world 214 • Top 3 player in COLI segment 90% 87% 194 77% which accounts for 3
Slide 18: Asset Management
Asset Management AuM1 by client type Diversified active asset manager Combined entity to benefit from with a distinctive identity economies of scale 9% Third Party 33% Proprietary • EUR 260bn AuM at 1Q19 • ~10% cost reduction by 2020 Other Affilliates • Third party franchise generates • Leveraging o
Slide 19: Banking
Banking Steady growth in mortgages and Complementary products to NN’s Combined bank to benefit from savings1 insurance offering economies of scale (EURbn) 18 18 • Facilitating the long-term • ~10-15% cost reduction by 2020 savings need in the Netherlands • Self-funded growth 14 14 • Offering frequen
Slide 20: Dividends upstreamed by segments / subsidiaries
Dividends upstreamed by segments / subsidiaries (EURm) 1Q19 2018 2017 Netherlands Life1 200 837 1,035 Netherlands Non-life1 1 108 100 Insurance Europe1,2 2 299 230 NN Japan Life - - 57 Asset Management 44 177 96 Banking1 20 10 2 NN Re Netherlands - 150 200 Other 2 12 98 Total 269 1,593 1,818 1. Incl
Slide 21: Remittances largely driven by own funds generation
Remittances largely driven by own funds generation Own Capital Remittances vs Capital Segment Funds require- Drivers remittances Net operating levels generation ments result Excess return, UFR unwind, release of risk margin, expense reduction Netherlands Life Limited new business and large closed bl
Slide 22: Solvency II movement 1Q19
Solvency II movement 1Q19 +5% SII ratio 230% 220% 213% • Solvency II ratio of 213% reflects -9% -6% -6% operating capital generation offset by market variance and the EUR 500m +0.4 17.2 share buyback +0.3 16.7 -0.1 16.7 -0.5 • As of this quarter, operating capital generation includes the accruals of
Slide 23: Sensitivities of the NN Group Solvency II ratio to specified shocks
Sensitivities of the NN Group Solvency II ratio to specified shocks Δ Solvency II Δ OF Δ SCR Sensitivities to shocks1 at 4Q18 (in EURbn) (in EURbn) ratio (in %-points) Interest rate: Parallel shock +50bps -0.6 -0.5 +8% Interest rate: Parallel shock -50bps +0.7 +0.6 -7% Interest rate: 10bps steepenin
Slide 24: Financial leverage position and maturity profile
Financial leverage position and maturity profile Financial Well balanced maturity profile • Next maturing debt is leverage1 (EURbn) EUR 300m senior (EURbn) Senior notes notes in 2020, giving 1.8 Subordinated notes additional 6.1 1.1 deleveraging 1.0 1.0 0.9 33% opportunity if desired 0.6 0.5 0.6 at
Slide 25: International footprint
International footprint • Netherlands: No need for large scale M&A given leading market position; integrate and drive up Return on Capital • Insurance Europe: Strongly positioned in most markets; open to bolt-on acquisitions and portfolio optimisation • Japan: Strong niche position, organically buil
Slide 26: Breakdown of asset portfolio (1)
Breakdown of asset portfolio (1) Assets (NN Group excl. Banking) Fixed income portfolio (4Q18, total EUR 157bn)1 (4Q18, total EUR 134bn)2 2% 1% 4 3% 5% Fixed Income Government 5% Equity 21% 4 Financial Real Estate 4 3% Corporate Other Cash3 53% ABS 16% Mortgages 85% 6% Other Loans 1. NN Group asset
Slide 27: Breakdown of asset portfolio (2)
Breakdown of asset portfolio (2) Government bonds by rating Government bonds by country (4Q18, total EUR 71bn) (4Q18, total EUR 71bn) 5% 1% Netherlands¹ 14% 12% Germany¹ AAA France¹ 22% 31% AA 15% Belgium¹ 15% A Austria¹ Italy BBB 3% 14% Spain Other 4% 41% 10% 11% Finland 2% Japan Other 1. Before im
Slide 28: 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, th
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NN Group — Goldman Sachs European Financials Conference 2019 on 6ix