ASR Nederland N.V. · EURONEXT:ASRNL
ASR Nederland — FY2017 Earnings Presentation
38 slides from ASR Nederland's earnings presentation, Feb 21, 2018
Slide 1: Strong results in 2017, outperforming targets
Strong results in 2017, outperforming targets Jos Baeten, CEO Chris Figee, CFO 2017 Full Year results 21 February 2018
Slide 2: Operating performance in all segments drove strong results
Operating performance in all segments drove strong results Operating result Solvency II (SF) IFRS net result Strong operating performance • Operating result up 17.2% to € 729m, driven by strong performance in all business segments € 729m 196%* € 906m • Increase in dividend per share of 28.3% +17.2%
Slide 3: Executing our strategy and optimising the business portfolio
Executing our strategy and optimising the business portfolio Portfolio matrix A C High Stable cash flows and value-generating businesses with Business enhancement opportunities relatively strong growth potential • Pursuit of profitable growth led to 5.7% increase of GWP in P&C. • Inflow in 3rd party
Slide 4: Increased operating result reflects strong business momentum
Increased operating result reflects strong business momentum Operating result (in €m) 622 +17.2% 729 385 344 323 299 H1 2016 H2 2016 H1 2017 H2 2017 4
Slide 5: All business segments drove strong increase in operating result
All business segments drove strong increase in operating result Operating result (in €m) • Non-life segment Increase in operating result mainly due to improved FY16 FY17 performance in the broker distribution channel, reflecting higher premiums and strong combined ratio Non-life 136 172 as well as f
Slide 6: Favourable underlying development of operating expenses
Favourable underlying development of operating expenses Operating expenses (in €m) • Operating expenses reflect the acquired cost base of Corins, Supergarant and BNG (up € 5m versus FY16) 2.6% and placement fees within the Banking and Asset 569 584 Management segment • Unwavering focus on expenses d
Slide 7: Cost reduction measures on track to achieve medium-term target
Cost reduction measures on track to achieve medium-term target Operating expenses (in €m) Cost reductions: €41m On track to achieve 607 medium-term target of -6 € 50 million 13 32 -18 -23 584 11 578 575 9 575 569 FY15 Acquired FY15 (rebased) CNSC (own Operating FY16 (rebased) CNSC (own Incidentals O
Slide 8: Non-life: benefiting from underwriting excellence and favourable claims experience
Non-life: benefiting from underwriting excellence and favourable claims experience Operating result (in €m) Gross Written Premiums (in €m) • Operating result reflects ongoing underwriting excellence, disciplined cost management and P&C Disability Health favourable operating conditions. Bulk claims r
Slide 9: Life performance: higher operating result driven by investment margin
Life performance: higher operating result driven by investment margin Operating result (in €m) Investment margin (in €m) • Life operating result up 13.2% to € 633m in 2017 Investment margin Technical result Direct investment income Required interest • Investment margin up € 70m to € 510m: additional
Slide 10: Generali Nederland – Closing finalised, integration started
Generali Nederland – Closing finalised, integration started Transaction highlights Generali Nederland – Overview** Combined – Business mix (pro forma) • Bolt-on acquisition in line with a.s.r.’s GWP 2017 € 409m strategy and commitment to deploy Non-life: € 2,892m GWP in 2017* capital for sustainable
Slide 11: Delivering on medium-term targets
Delivering on medium-term targets Solvency II (SF) Operating return on equity S&P rating (insurance business) 196%* 15.6% Single A >160% Up to 12% Single A medium-term target medium-term target medium-term target Combined ratio Non-life Operating expenses Financial leverage 95.1% € 584m 25.3% <97% a
Slide 12: Attractive returns to shareholders
Attractive returns to shareholders Dividend per share (in €) • Proposed 2017 dividend of € 1.63 per share, an increase of 28.3% on the 2016 dividend per share 1.63 • Ambition to offer a growing dividend per share 1.27 +28.3% 1.13 • Pay-out ratio of 45% led to € 230m dividend pay-out 0.93 0.65 • Inte
Slide 13: Solvency and capital
Solvency and capital Chris Figee, CFO
Slide 14: Multi-year equity and EOF movement
Multi-year equity and EOF movement IFRS equity (in €m) SII EOF* (in €m) 6,826 6,299 6,076 1,548 5,433 1,214 1,204 1,001 4,481 4,275 701 701 5,084 5,279 4,872 4,432 3,574 3,780 2015 2016 2017 2015** 2016 2017 Hybrids Equity Hybrids Unrestricted Tier 1 * After deduction of (proposed) dividend payments
Slide 15: Robust Solvency II and significant financial flexibility
Robust Solvency II and significant financial flexibility Own funds (in €m) • Solvency II ratio 196% based on standard formula* SII 196% • Unrestricted Tier 1 capital: 77% of total own funds and 1,042 0 6,826 152% of SCR 506 5,279 • Restricted Tier 1 capital increased as a result of the issuance of R
Slide 16: Strong capital accretion in 2017
Strong capital accretion in 2017 Capital accretion (in € m) • a.s.r. businesses amassed € 1,146 of solvency capital in 2017 through solid operational performance, capital release, favourable financial markets and other sources 1,446 • Created capital was applied for re-risking, hybrid capital cost,
Slide 17: Solvency ratio movement in FY17
Solvency ratio movement in FY17 Organic capital creation: 9% • Strong organic capital creation of € 377m, 11%-pts SII € 377m – Solid operating performance of business segments 6% 2% 203% generated 8%-pts SII, reflecting mostly strong -7% technical results in Non-life and investment returns 8% -3% 19
Slide 18: Sensitivity of SII ratio to UFR
Sensitivity of SII ratio to UFR Stock of SII (in %) • Group Solvency ratio of 196%, based on standard formula* 193 196 • EIOPA will be lowering the UFR towards the current 174 185 150 162 target of 3.65% while lowering the UFR by 15 bps per annum. Target UFR for 2018 is 4.05% • Lowering UFR would le
Slide 19: Strong and resilient balance sheet
Strong and resilient balance sheet Solvency II composition (in %) Financial flexibility (in €m) Financial leverage (in %) Hybrids Unrestricted T1 196% Tier 3 Tier 2 814 697 25.2 25.3 30% 6,826 15% Restricted Tier 1 Unrestricted Tier 1 152% 5,279 FY17 EOF T1 Headroom T2+3 Headroom FY16 FY17 S&P lever
Slide 20: Unencumbered access to pools of liquidity
Unencumbered access to pools of liquidity Cash remittance (in €m) • Holding cash of € 463m at year-end 2017, safely above the year-end target of € 350m 300 -255 -37 • Total shareholder return of € 442m in 2017 -75 -187 518 • Strongly capitalised operating companies: -155 463 353 o Strong track recor
Slide 21: Wrap-up
Wrap-up Jos Baeten, CEO de nederlandse verzekerings maatschappij voor alle verzekeringen
Slide 22: Key take-aways
Key take-aways • Strong operating result - a record year - driven by strong performance in all business segments • Combined ratio of 95.1% reflects continued focus on cost and underwriting discipline • Operating return on equity at 15.6%, since IPO ahead of target of ‘up to 12%’ • Resilient, high qu
Slide 23: a.s.r. Capital Markets Day 10 October 2018
Save the date… a.s.r. Capital Markets Day 10 October 2018 Utrecht 23
Slide 24: IR contact details
IR contact details Email: ir@asr.nl Michel Hülters +31 (0)6 15 49 95 69 Barth Scholten +31 (0)6 30 44 15 71 Vincent Uriot +31 (0)6 10 44 82 34 24
Slide 25: Appendix
Appendix A. Financial ratios B. Combined ratio per product line C. Calculation of operating ROE D. Operating result per segment E. SCR movement during 2017 F. Sensitivities Solvency II ratio G. What would 2017 ”market consistent” OCC estimate look like..? H. Investment portfolio I. Details of fixed-
Slide 26: A. Financial ratios
A. Financial ratios Net result (€m) Operating result (€m) ROE Operating ROE 906 622 729 21.2% 14.6% 15.6% 659 17.0% FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 Combined ratio (%) Solvency II* Total equity (€m) Financial leverage 95.6% 95.1% 189% 196% 5,432 25.2% 25.3% 4,471 FY16 FY17 FY16 FY17 FY16 FY17
Slide 27: B. Combined ratio per product line
B. Combined ratio per product line FY16 FY17 Claims ratio 72.0% 72.8% Non-life Expense ratio 8.3% 7.6% Segment Commission ratio 15.3% 14.7% Combined ratio 95.6% 95.1% Claims ratio 69.9% 72.4% Expense ratio 8.5% 7.8% Disability Commission ratio 9.8% 10.6% Combined ratio 88.2% 90.9% Claims ratio 93.0%
Slide 28: C. Calculation of operating ROE
C. Calculation of operating ROE (in €m) FY16 FY17 Operating result (before tax, annualised) 622 729 Minus: Interest on hybrid instruments 1 45 48 Operating result after hybrid costs (before tax, annualised) 557 681 Tax effect (25% tax rate) 144 170 Operating result after hybrid costs (net of taxes,
Slide 29: D. Operating result per segment
D. Operating result per segment Operating result: Profit before tax adjusted for Investment Investment Incidentals Incidentals IFRS profit IFRS profit before tax before tax Operating Operating i. Investment-related income: income for own account of related related an incidental nature (for example r
Slide 30: E. SCR movement during 2017
E. SCR movement during 2017 FY16 3,338 FY SCR decreases in FY SCR increases in Market risk: Market risk: Market risk 240 • Currency risk • Equity risk Counterparty default risk 45 • Real estate risk • Concentration risk Insurance risk Life 61 Insurance risk Life: Insurance risk Life: Insurance risk
Slide 31: F. Sensitivities Solvency II ratio
F. Sensitivities Solvency II ratio 14 12 11 12 10 2 3 1 196% -2 -1 -1 -5 -9 -8 -11 -10 -11 -13 Optimal range >160%: entrepreneurial level VA -10 bps Corporate credit Interest +100 bps Interest -100 bps Equities -20% Real Estate -10% spread +75bps & VA +21 bps >140% cash dividend Total impact express
Slide 32: G. What would 2017 market consistent OCC estimate look like..?
G. What would 2017 ”market consistent” OCC estimate look like..? (in €m) >700 >650 56 128 165 377 9 599 Excess 298 returns Other 79 OCC 2017 Actual spreads on Assume 7% pre-tax Actual achieved OCC at ’market Exclusion of 2017 ’market fixed income incl VA return on equities return on equities consist
Slide 33: H. Investment portfolio
H. Investment portfolio Assets (in €bn, fair value)* FY16 FY17 • Re-risking of the investment portfolio: from government Fixed income 26.0 23.8 bonds to credits, equity, mortgages and real estate to optimise return on solvency capital Equities 2.2 2.6 • Real estate: Sale of six non-core assets of th
Slide 34: I. Details of fixed-income portfolio
I. Details of fixed-income portfolio Highlights Mortgages (in €m, book value) * FY16 FY17 Delta • The core of the portfolio consist of AAA government bonds, with selective peripheral sovereign exposure. LtFV < 75% 1,561 1,833 17% FY17 saw a general decrease in exposure to the asset class as a whole,
Slide 35: J. Details of equities portfolio and real estate portfolio
J. Details of equities portfolio and real estate portfolio Highlights Equities (€m) FY16 FY17 Delta Equities 1,793 2,142 19% Equities • Re-risking during 2017 as well as favourable equity markets resulted in the increase in equity exposure Private equities 82 64 -21% • Continuation of the active hed
Slide 36: K. Life segment book development
K. Life segment book development Life reserves development (in € bn) Life reserves (in € bn) • Individual Life book has decreased by more than Individual Life € 2 billion since 2014. Pension book has increased more Reserves Pensions than € 3 billion since 2014 due to buy-outs and regular excl shadow
Slide 37: L. Investment contribution Life segment
L. Investment contribution Life segment (in €m) H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 • Direct investment increased in 2017 despite lower interest rate environment Direct investment 530 473 505 476 521 479 income* • The regular decrease in direct investment income was offset by an inflow i
Slide 38: 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