Asr Nederland N.v. · EURONEXT:ASRNL
Asr Nederland — H1 2022 Earnings Presentation
40 slides from Asr Nederland's earnings presentation, Aug 24, 2022
Slide 1: 2022 half-year results
2022 half-year results ANALYST CONFERENCE CALL 24 August 2022 Jos Baeten, CEO Ewout Hollegien, CFO
Slide 2: Strong financial performance and resilient solvency in HY 2022
Strong financial performance and resilient solvency in HY 2022 • Operating result decreased to € 513m. Underlying business improvement absorbing the impact of Organic capital Operating result Solvency II (SF)2 storms in February and an ongoing normalisation creation of claims following termination o
Slide 3: Executing diligently our medium-term business strategy
Executing diligently our medium-term business strategy Highlights in HY 2022: • Strong organic growth in P&C and Disability combined, while • Acquisition of Sweco Capital Consultants in a.s.r. real estate maintaining best-in-class combined ratio • Improved recognition in ESG benchmarks ISS Oekom (C+
Slide 4: Non-life operating result reflects impact storms and claims normalisation
Non-life operating result reflects impact storms and claims normalisation Operating result (in €m) GWP - P&C & Disability (in €m) • Non-life operating result declined by € 28m. Solid underlying business and underwriting performance more Disability +7.9% than offset the impact from the February storm
Slide 5: Life segment higher operating result driven by higher investment margin
Life segment higher operating result driven by higher investment margin Operating result (in €m) Investment margin (in €m) • Operating result of Life segment increased by € 9m, to € 385m as a result of higher investment margin, Investment margin Technical result and Other Direct investment income Re
Slide 6: Fee-based businesses showing continued growth of operating result
Fee-based businesses showing continued growth of operating result Operating result Asset Management1 Operating result Distribution and Services1 Operating result Holding and Other (in €m) (in €m) (in €m) +8.9% +3.9% 19 16 17 17 -56 -58 HY 2021 HY 2022 HY 2021 HY 2022 HY 2021 HY 2022 • The operating
Slide 7: Solvency and capital position
Solvency and capital position Ewout Hollegien, CFO 7
Slide 8: Robust Solvency HY 2022
Robust Solvency HY 2022 • Solvency II ratio increased with 18%-p, to 214%, after a 5%-p deduction for the interim dividend (€ 131m) and the SBB executed in OCC 11.3%-p, € 428m the first six months of 2022 (€ 75m) 220% • OCC increased by € 56m, to € 428m, mainly -5% due to a decrease of the UFR unwin
Slide 9: OCC development HY 2022
OCC development HY 2022 OCC development (in €m) Business capital generation (€ -7m) 47 428 • Lower contribution from Non-life, reflecting the normalisation of claims and impact of the storms 16 372 • Higher investment returns from optimisation of the -7 portfolio (including renewables) • Improved op
Slide 10: Robust investment portfolio
Robust investment portfolio Investment portfolio € 41.4bn1 (in %) Mortgages LtMV portfolio split2 (in %) • Diversified and robust investment portfolio with skew to quality 6% 3% Government 6% NHG • High quality fixed income portfolio with limited 21% Credits 3% LtMV <85% exposure to BBB-rated govern
Slide 11: Strong balance sheet with ample flexibility
Strong balance sheet with ample flexibility Eligible Own Funds and SII headroom (in €m) Double leverage (IFRS) RT1 T2+T3 Headroom RT1/T2/T3 € 864m € 256m 99.2% 93.2% 1,446 477 7,287 5,364 Unrestricted Tier 1 Restricted Tier 1 Tier 2 Tier 3 Eligible Own Funds 2021 HY 2022 Financial leverage (IFRS) In
Slide 12: Strong solvency and cash support our businesses and dividends
Strong solvency and cash support our businesses and dividends HoldCo liquidity (in €m) • HoldCo liquidity at 30 June 2022 stood at € 437m, in line with a.s.r.’s policy of maintaining capital at operating entities 333 -290 and only upstream to cover dividends, 525 coupons and other Holding expenses f
Slide 13: Capital creation, deployment and return
Capital creation, deployment and return Medium-term capital return commitments: OCC target Dividend1 Share buyback2 Progressive dividend based on €329m for 2021 At least € 100m SBB per annum for 2022- €1.7-1.8bn Progressive ≥ €100m 2024 period Low-mid single digit growth Cumulative 2022-2024 per ann
Slide 14: Wrap-up
a. Wrap-up Jos Baeten, CEO s.r.
Slide 15: Key take-aways
Key take-aways Solid financial performance, operating result absorbing the impact of the storms and normalization of claims Strong commercial momentum in P&C, Disability and Pensions DC Resilient balance sheet, higher solvency with very strong growth in organic capital creation High-quality and well
Slide 16: Appendix
Appendix
Slide 17: Appendices
Appendices A. Financial ratios L. Details of Corporates and Financials bond portfolio B. Combined ratio per product line M. Fixed Income portfolio Government credit rating C. Calculation of operating ROE N. Fixed Income portfolio Corporates and Financials credit rating D. IFRS profit vs. operating r
Slide 18: A. Financial ratios
A. Financial ratios Net result (in €m) Operating result1 (in €m) ROE Operating ROE1 454 442 532 513 15.4% 13.9% 17.7% 13.7% HY 2021 HY 2022 HY 2021 HY 2022 HY 2021 HY 2022 HY 2021 HY 2022 Combined ratio2 Solvency II ratio3 Total equity (in €m) Financial leverage 90.2% 92.8% 196% 214% 7,385 6,660 24.
Slide 19: B. Combined ratio per product line
B. Combined ratio per product line HY 2021 HY 2022 Net earned premiums (in €m) 752 788 Claims ratio 54.1% 60.0% Property & Casualty Expense ratio 8.2% 8.2% Commission ratio 26.3% 26.4% Combined ratio 88.6% 94.6% Net earned premiums (in €m) 637 691 Claims ratio 74.5% 73.6% Disability Expense ratio 7.
Slide 20: C. Calculation of operating ROE
C. Calculation of operating ROE (in €m) 2020 HY 2021 2021 HY 2022 Operating result (before tax)1 1,064 1,026 Minus: Interest on hybrid instruments through equity2 48 48 Operating result after hybrid costs (before tax) 1,016 978 Tax effect (as of 2022 25.8% tax rate (was 25.0%)) 254 252 Operating res
Slide 21: D. IFRS profit vs. operating result per segment
D. IFRS profit vs. operating result per segment IFRS profit Investment Operating IFRS profit Investment Operating Incidentals Incidentals before tax related result before tax related result HY 20211 (in €m) HY 2022 (in €m) Non-life 169 2 -11 179 105 -35 -10 150 Life 399 22 1 376 536 121 31 385 Asset
Slide 22: E. IFRS equity and Solvency II EOF multi-year development
E. IFRS equity and Solvency II EOF multi-year development IFRS equity (in €m) Solvency II Eligible Own Funds1 (in €m) 7,385 8,273 8,189 7,828 1,004 6,660 7,287 6,313 2,060 6,093 2,061 1,004 2,039 1,004 1,004 1,923 6,381 5,657 6,213 6,127 5,089 5,309 5,789 5,364 2019 2020 2021 HY 2022 2019 2020 2021
Slide 23: F. SCR movements in HY 2022 (in €m)
F. SCR movements in HY 2022 (in €m) FY 2021 4,185 SCR decreases in SCR increases in Market risk -721 Market risk: Market risk: • Interest rate risk • Currency risk Counterparty default risk -72 • Equity risk • Property risk • Spread risk Insurance risk Life -317 Insurance risk Life: Counterparty def
Slide 24: G. Sensitivities Solvency II ratio
G. Sensitivities Solvency II ratio Total impact expressed as % of group solvency ratio +5 214% 0 0 -2 -1 SII ratio (%) -4 -7 -7 -9 -8 -9 VA Sovereign Corporate Interest Interest Interest Equities Equities Real estate Mortgage Inflation -10bps spread credit spread +50bps -50bps steepening -20% + 20%
Slide 25: H. Sensitivities Solvency II ratio – UFR
H. Sensitivities Solvency II ratio – UFR Solvency II ratio (‘stock’) • For 2023 EIOPA intends to keep the UFR at the current target of 3.45%¹ 188% 198% 207% 212% 214% • Lowering the UFR would lead to lower ‘stock’ of capital but would increase organic capital creation (‘flow’) because of reduced UFR
Slide 26: I. UFR drag methodology
I. UFR drag methodology • The absolute value of the UFR benefit in Solvency II Own 20Y EUR SWAP1 (in %) Funds and therefore the unwind of the benefit (UFR drag) 3.0 depends on; 2.5 • The current level of interest rates and 2.0 • The shape of the curve 1.5 • UFR benefit amortised over time, resulting
Slide 27: J. Investment portfolio
J. Investment portfolio • Decrease in fixed income was mainly due to Assets (in €bn, fair value) FY 2021 HY 2022 Delta1 % of total market effects, largely driven by strong increase in interest rates Fixed income 32.2 21.2 -11.0 51% • An increase in real estate portfolio as a result of Equities 3.0 2
Slide 28: K. Details of fixed-income portfolio
K. Details of fixed-income portfolio • The core of the FI portfolio consists of AAA and AA government bonds, Mortgages (in €m) FY 2021 HY 2022 Delta % of total with selective peripheral sovereign exposure and investment grade NHG 3,539 3,008 -15.0% 28% corporate bonds LtMV <55% 2,418 2,833 17.2% 26%
Slide 29: L. Details of Corporates and Financials bond portfolio
L. Details of Corporates and Financials bond portfolio Comments on Corporates and Financials portfolio Corporates portfolio (in €m) FY 2021 HY 2022 Delta % of total • The decrease of € 2.7bn was mostly due to changes in valuation as a result Automotive 459 293 -166 3% of increased interest rates, ac
Slide 30: M. Fixed Income portfolio Government credit rating
M. Fixed Income portfolio Government credit rating Market value governments (in €m) 0-1 1-2 2-3 3-5 5-10 10-20 20-30 30+ Total Delta1 % of total AAA 439 105 61 376 627 1,432 1,105 66 4,210 -1,813 48% AA 164 175 50 143 599 758 695 1,262 3,845 -1,337 44% A 28 39 17 41 201 52 7 8 393 -194 4% BBB 147 55
Slide 31: N. Fixed Income portfolio Corporates and Financials credit rating
N. Fixed Income portfolio Corporates and Financials credit rating Market value credits (in €m) 0-1 1-2 2-3 3-5 5-10 10-20 20-30 30+ Total Delta2 % of total AAA 633 88 13 20 59 117 0 0 930 -69 10% AA 82 78 49 184 164 64 1 0 622 -320 6% A 674 347 477 795 1,244 225 2 0 3,764 -1,225 39% BBB 948 518 705
Slide 32: O. Details of equities and real estate portfolio
O. Details of equities and real estate portfolio Highlights Equities (in €m) FY 2021 HY 2022 Delta Equities • Total exposure to Equity decreased by € 338m, primarily driven by lower equity markets Equities 2,554 2,216 -13.2% • Continuation of the active hedging policy for the illiquid part of the po
Slide 33: P. Calculation of asset leverage
P. Calculation of asset leverage Risky assets (€m) FY 2021 HY 2022 Equities 2,985 2,669 Real estate1 2,809 2,959 Renewables 118 177 BB bonds or below 250 262 Preference shares 311 291 Fixed income funds (not-rated & high yield) 643 620 Mortgages with LtMV >110% 7 2 Total risky assets 7,123 6,979 Unr
Slide 34: Q. Life segment book development
Q. Life segment book development Life reserves development (in €bn) Life reserves (in €bn) Individual Pensions Funeral Reserves Excl. (un)realised gains reserve 30 52 25 50 48 20 46 15 44 10 42 40 5 38 0 36 2019 2020 2021 HY 2022 2019 2020 2021 HY 2022 Reserves – HY 2022 (€ 38.9bn) (Un)realised rese
Slide 35: R. Life segment investment contribution
R. Life segment investment contribution (in €m) H2 2019 H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 Direct investment income1,2 527 562 528 543 531 556 Amortisation of realised gains 137 132 145 144 156 149 reserve Total investment contribution 664 694 673 687 687 705 Required interest on liabilities3 -
Slide 36: S. Recognition for ESG performance improved strongly over the years
S. Recognition for ESG performance improved strongly over the years1 2022 #2 #5 #8 B A C+ (prime) #3 #1 2018 #13 #12 #13 B BB C- #22 #1 World World World D- CCC D- Dutch Dutch Insurance Insurance Insurance to A to AAA to A+ Insurance Insurance 1 ESG ratings as at 24 August 2022 36 2 VBDO ranking rel
Slide 37: T. Medium term group and business targets (2022 – 2024)
T. Medium term group and business targets (2022 – 2024) Core Group targets1 Organic capital Operating return Solvency II ratio Dividend2 Share buyback3 creation on equity (standard formula) >160% € 1.7-1.8bn 12-14% Progressive ≥€ 100m Substantial capital for entrepreneurship Cumulative 2022-2024 Per
Slide 38: U. Medium term non-financial objectives (2022 – 2024)
U. Medium term non-financial objectives (2022 – 2024) Targets for the 2022 – 20241 period Sustainable Sustainable Sustainable Sustainable Sustainable insurer insurer employer investor investor Net Promoter Score Public recognition as a Employee engagement Carbon footprint reduction Impact investment
Slide 39: IR contact details
IR contact details Email: ir@asr.nl Tel: +31 (0)30 257 86 00 39
Slide 40: Disclaimer
Disclaimer Cautionary note regarding forward-looking statements outsourcing; (11) changes in the availability of, and costs associated with, sources of liquidity; (12) consequences of a potential (partial) termination of the European currency: the Euro or the European Union; (13) changes in the freq