Nn Group N.v. · EURONEXT:NN
Nn — Bank of America Merrill Lynch Annual Financials CEO Conference 2018
28 slides from Nn's conference presentation, Sep 25, 2018
Slide 1: NN Group
NNGroup NN Group Lard Friese, CEO Bank of America Merrill Lynch conference 25 September 2018
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 before Asset Management tax of the ongoing business1 Netherlands Life • International asset manager • #1 position: 41% market share3 in group • EUR 240bn AuM at 2Q18 3% pensions and 22% market share3 in • Offers a wide variety of a
Slide 4: Integration on track while continuing to enhance the customer experience
Integration on track while continuing to enhance the customer experience Delta Lloyd integration • Legal mergers of bank, asset management and Belgian life completed • Integration of asset management and head office finalised • Most Delta Lloyd products have been rebranded to NN Innovating the core
Slide 5: 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 of
Slide 6: … 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 7: 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 8: Committed to our dividend policy
Committed to our dividend policy Interim dividend per share (EUR) • Priority is a sustainable ordinary dividend per share Final dividend per share (EUR) Total dividend per share (EUR) • NN Group intends to pay an ordinary dividend in line with its medium term financial performance and envisages an o
Slide 9: 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 10: 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 2.9bn • Competitive pos
Slide 11: Appendices
Appendices 11
Slide 12: Netherlands Life
Netherlands Life Pensions Driving efficiency and optimising Delivering significant and reliable (technical reserves 4Q17: EUR 77bn) asset portfolio cash flows over time 10% 11% General account • ~20% cost reduction by 2020 • Remittances from operating Separate account 7% Unit-linked • Optimising ris
Slide 13: Netherlands Non-life
Netherlands Non-life Product mix Combined ratio by business line Implementing multiple initiatives (by GWP FY17: EUR 3.0bn1) to improve combined ratio Fire ~100-105% 2 • Improving underwriting 6M18 D&A 2017 2016 2015 15% D&A ~90-95% performance 33% Fire 23% Motor • Optimise portfolios D&A3 94% 97% 9
Slide 14: Insurance Europe
Insurance Europe Focus on profitable new business Market leading life and pensions Continuing to deepen and diversify (VNB1 by product line, EURm) player across CEE distribution 83 (New sales APE by distribution channel) • Markets with low insurance 72 19 coverage 42% 42% 11 • Strong growth potentia
Slide 15: Japan Life
Japan Life Focus on profitable new business Active in niche COLI market Continuing to expand and (VNB1 by product line, EURm) diversify distribution • Japan is second largest life (New sales APE by distribution channel) 117 market in the world 92 • NN is top 3 player in COLI2 90% 87% segment which a
Slide 16: Asset Management
Asset Management AuM1 by client type Diversified active asset manager Combined entity to benefit from with a distinctive identity economies of scale 10% Third Party 34% Proprietary • EUR 240bn AuM at 2Q18 • ~10% cost reduction by 2020 Other Affilliates • Third party franchise generates • Leveraging
Slide 17: Banking business
Banking business Steady growth in mortgages and Complementary products to NN’s Combined bank to benefit from savings1 insurance offering economies of scale (EURbn) • Facilitating the long-term • ~10-15% cost reduction by 2020 Mortgages savings need in the Netherlands • Self-funded growth Savings 18
Slide 18: Cost reductions of EUR ~400m by 2020 of which at least half by 2018
Cost reductions of EUR ~400m by 2020 of which at least half by 2018 Administrative expense base1,2 Cost reductions by segment (EURm) (Total reduction of EUR 400m) ~-400 Holding 2,024 (other) ~10% NL Life Bank -67 -236 ~10% ~30% -64 -15 -21 1,788 Asset -17 Management -52 ~10% ~1,625 Belgium ~10% FY16
Slide 19: Dividends upstreamed by segments / subsidiaries
Dividends upstreamed by segments / subsidiaries (EURm) 2Q18 1Q18 2017 2016 2015 Netherlands Life1 233 190 1,035 642 807 Netherlands Non-life1 20 1 100 154 93 Insurance Europe1,2 180 2 230 251 227 NN Japan Life3 - - 57 80 74 Asset Management 52 22 96 93 90 NN Re Netherlands 40 40 200 250 185 Other1,4
Slide 20: 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 21: Solvency II movement 2Q18
Solvency II movement 2Q18 +7% +7% +3% • Solvency II ratio increased to SII ratio 213% 226% 226% driven by operating capital -3% generation and market variance +0.6 +0.3 16.8 • Market variance reflects the -0.1 16.2 -0.2 favourable impact from movements in credit spreads and OF1 (in EUR bn) positive
Slide 22: 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 2Q18 (in EURbn) (in EURbn) ratio (in %-points) Interest rate: Parallel shock +50bps -0.5 -0.4 +5% Interest rate: Parallel shock -50bps +0.6 +0.5 -7% Interest rate: 10bps steepenin
Slide 23: 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 deleveraging 1.1 1.0 1.0 opportunity if desired 33% 0.9 at that point i
Slide 24: International footprint
International footprint • Netherlands: No need for further acquisitions 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
Slide 25: Breakdown of investment assets (1)
Breakdown of investment assets (1) Investment assets (NN Group excl. Banking) Fixed income portfolio (2Q18, total EUR 156bn)1 (2Q18, total EUR 132bn)2 2% 2% 3% 5% Fixed Income Government bonds 5% Equity 20% Financial bonds Real Estate Corporate bonds Other 3% Corporate loans Cash 3 4% 54% ABS 11% Mo
Slide 26: Breakdown of investment assets (2)
Breakdown of investment assets (2) Government bonds by rating Government bonds by country (2Q18, total EUR 71bn) (2Q18, total EUR 71bn) 4% 1% Netherlands¹ 13% 13% Germany¹ AAA France¹ 22% 33% AA 14% Belgium¹ 16% A Austria¹ BBB 3% Italy 4% 15% Spain Other 40% 3% 9% Finland 10% Japan Other 1. Before i
Slide 27: 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 of the Dutch Civil Code. In preparing the financial information in this document, th
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NN Group — Bank of America Merrill Lynch Annual Financials CEO Conference 2018 on 6ix