Nn Group N.v. · EURONEXT:NN
Nn — Bank of America Merrill Lynch Banking & Insurance CEO conference 2014
23 slides from Nn's conference presentation, Oct 1, 2014
Slide 1: NN Group
NN Group Lard Friese, CEO Bank of America Merrill Lynch conference London, 1 October 2014
Slide 2: Leading Dutch insurer with strong businesses in European insurance, investment management and Japan
Leading Dutch insurer with strong businesses in European insurance, investment management and Japan Geographical reach Some facts and figures Japan History dating back to 1845 Top 3 player in COLI2 The Netherlands Strong business positions Leading positions in Life and Non-life1 Market positio
Slide 3: Diversified businesses in Europe and Japan
Diversified businesses in Europe and Japan International asset manager; 19% market share in Dutch Life EUR 177 bln AuM as of 2Q14 Managed for cash Approx. 60% of revenues from third party clients Top 3 player in Japanese COLI Strong earnings, stable cash flow Netherlands Life Top 3 pla
Slide 4: Committed and experienced management team
Committed and experienced management team Lard Friese Chairman/CEO 22 years of experience in the financial services industry, most recently with NN Group, ING Insurance (NL) EurAsia Joined 2008 Leadership positions at AEGON, VNU/ACNielsen, Ceska Pojistovna and Generali-PPF Holding Delfin Rueda C
Slide 5: Investment proposition focused on cash generation
Investment proposition focused on cash generation Profitable growth and Focus on generating Strong business positions Transformation in operating leverage in capital and improving and balance sheet Netherlands other segments earnings • Committed management • Large closed book of • Primarily fee and
Slide 6: Impact of low interest rates on capital actively managed
Impact of low interest rates on capital actively managed Netherlands Life asset and liability cash flows Limited interest rate sensitivity across all segments As of 31 December 2013 Limited impact of interest rate shocks on regulatory Assets Discount Curve capital due to cash flow matching of asse
Slide 7: New business shifting to fee and premium-based products
New business shifting to fee and premium-based products New business priced on a market consistent basis reflecting current interest rates Netherlands Low interest rates driving a gradual shift from pure DB to DC and DB hybrid pensions Life Individual life business essentially closed; NN Bank
Slide 8: Fees and premium-based revenues large component of earnings
Fees and premium-based revenues large component of earnings Growth strategy in Europe and Japan geared largely to fee and premium-based products Netherlands Life predominantly spread-based business reflected in relatively large investment margin Pressure on investment margin at Netherlands Lif
Slide 9: Netherlands Life: Focus on reducing expenses, shift to higher yielding assets and de-risking liabilities
Netherlands Life: Focus on reducing expenses, shift to higher yielding assets and de-risking liabilities Opportunity for shift in asset mix Re-risking to maintain a stable investment margin EUR 59 bln1 Low interest rates and run-off of book putting 15% 14% pressure on IFRS earnings Selective re-
Slide 10: Netherlands Non-life: Focus on underwriting performance, cost reductions and growth opportunities
Netherlands Non-life: Focus on underwriting performance, cost reductions and growth opportunities Combined ratio Management actions taken to improve profitability 115% Strategy to improve motor, disability and accident combined ratios 110% Premium rates increases 105% D&A Rationalising claims
Slide 11: Insurance Europe: Self-funded growth with operating leverage
Insurance Europe: Self-funded growth with operating leverage Productivity improvements in distribution platform Successful shift in Life product mix Distribution channel by APE 2013 Focus on protection and fee-based products Higher margins and less capital intensive VNB margin 3.0% and IRR 9.7
Slide 12: Japan Life: Strong profitability and cash generation
Japan Life: Strong profitability and cash generation Opportunities to diversify product range and distribution channels Product mix by APE 2013 Distribution channel Broad range of products, track record of innovation by APE 20131 6% 4% 6% 4% Long-standing distribution relationships VNB margin
Slide 13: Investment Management: Strategy to grow third party business and benefit from operating leverage
Investment Management: Strategy to grow third party business and benefit from operating leverage Global asset manager with strong fund performance Focus on growing third party business AuM (2Q14) Revenues (2Q14) Total AuM of EUR 177 bln at 2Q14 Third-party business - approximately 40% of AuM, bu
Slide 14: Japan Closed Block VA: Capital release from maturing portfolio
Japan Closed Block VA: Capital release from maturing portfolio ~90% expected to have matured by end 2019 Drivers of return to shareholders Fee-based 20 operating Substantial fee-based operating result, earnings EUR 80 mln in 2013 15 + Expected to decline as the portfolio runs off Release of capi
Slide 15: Strategic priorities have been set to reduce expenses, improve earnings and increase ROE
Strategic priorities have been set to reduce expenses, improve earnings and increase ROE Administrative expenses Earnings improvement Increase in ROE • Reduce administrative expenses • Achieve annual growth rate of • Increase the Net Operating in Netherlands Life, Netherlands operating result before
Slide 16: Encouraging progress on delivering on these targets
Encouraging progress on delivering on these targets Administrative expenses1 Earnings improvement2 Increase in ROE3 (EUR mln) (EUR mln) 1,019 -200 22% -75 819 551 450 9.3% 527 7.1% 453 FY 6M13 6M14 Target 6M13 6M14 2013 pro 6M14 2013 2016 forma Capital generation of EUR 507 mln (excluding non-recurr
Slide 17: Solid capital levels and balance sheet
Solid capital levels and balance sheet Commercial capital at Cash capital at holding Leverage operating units • Manage operating units to • Hold cash capital in holding to • Maintain leverage and fixed-cost commercial capital levels cover stress events and to fund cover ratios consistent with Single
Slide 18: Over time, NN Group expects to receive remittances from all segments
Over time, NN Group expects to receive remittances from all segments Over time, remittance Drivers vs. net operating result Regulatory liabilities more conservative than IFRS, realisation of investment spreads over swap incl. gains/losses on real estate and equities to drive cash generation Nether
Slide 19: Annual cash capital generation at holding will be significantly more volatile than operating result
Annual cash capital generation at holding will be significantly more volatile than operating result Cash flow volatility – Temporary items Drivers of temporary volatility High sensitivity to credit spread movements (incl. government spreads vs. swaps); movement temporary as assets held to maturity
Slide 20: Dividend policy in line with strategy of returning cash to shareholders
Dividend policy in line with strategy of returning cash to shareholders 2014 half-year dividend of EUR 175 mln payable in 2015 This dividend payment is discretionary and not based on the dividend policy that NN Group intends to apply for 2015 and beyond From 2015 and beyond, regular and ordina
Slide 21: Over the medium term, NN Group expects to …
Over the medium term, NN Group expects to … 1 Deliver significant cash to shareholders 2 Increase exposure to growth markets and fee business 3 Improve efficiency and profitability of all segments 4 Maintain a strong capital base and de-risk liabilities 21
Slide 22: Important legal information
Important legal information NN Group’s Annual Accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS- EU”). In preparing the financial information in this document, the same accounting principles are applied as in the NN Group N.V
Slide 23: Slide 23
NN Group — Bank of America Merrill Lynch Banking & Insurance CEO conference 2014 on 6ix