Nn Group N.v. · EURONEXT:NN
Nn — Investor Day (November 2015)
29 slides from Nn's investor day presentation, Nov 19, 2015
Slide 1: NN Group Netherlands
NN Group Netherlands David Knibbe, CEO Netherlands Insurance Capital Markets Day 19 November 2015
Slide 2: NN Group is well placed in its home market to drive value
1 2 NN Group is well placed in its home Netherlands Life is well positioned to market to drive value grow in the pension market, individual life closed book managed to release capital 3 4 Netherlands Non-life to improve NN Bank can continue to grow while underwriting performance, expense margins rem
Slide 3: At the time of the IPO we set targets…
At the time of the IPO we set targets… On track Netherlands Life: broadly stable operating result vs 2013 over the medium-term More Netherlands Life to drive capital generation by a shift to higher yielding assets to do and expense reductions of ~15% by 2016 More to do Netherlands Non-life: combined
Slide 4: New expense target announced
New expense target announced Administrative expenses Netherlands Life and Drivers expense reduction Netherlands Non-life1 • Further simplification of operational processes and increase of efficiency 733 • Conversion to lower-cost platforms and 297 8-12% straight-through-processing, implementation of
Slide 5: NN Group well placed in its home market with leading positions in Life and Non-life
NN Group well placed in its home market with leading positions in Life and Non-life NN has a strong brand in the Dutch market1.. #1 position …a large customer Base… Dutch Life market2 Total Dutch Household : 30% NN Clients 3.4 mln retail customers and pension participants4 …and a wide range of distr
Slide 6: Customer behaviour is changing, society is individualising
Customer behaviour is changing, society is individualising Customers expect relevant product offerings and Investing to meet customers demand for digitalised service anytime, anywhere personal and relevant servicing • Withdrawing government leads to a more • One on-line portal for customers’ insuran
Slide 7: From product push to customer demand
From product push to customer demand Ambition to be more personal and relevant Invest to create the personal and relevant experience in a digital way Increased interaction, Tailored underwriting personal and relevant based on data and Relevant customer contact service approach Data and analytics ana
Slide 8: NN Group is well placed in its home market to drive value: Netherlands Life
1 2 NN Group is well placed in its home Netherlands Life is well positioned to market to drive value grow in the pension market, individual life closed book managed to release capital 3 4 Netherlands Non-life to improve NN Bank can continue to grow while underwriting performance, expense margins rem
Slide 9: Netherlands Life – leading Life and Pensions company in Dutch market
Netherlands Life – leading Life and Pensions company in Dutch market Pensions Individual Life Closed Block Individual Pensions1 Group Life 85% 15% Unit- Unit linked linked 7% Funeral 18% 4% General Separate account 58% Total technical Traditional Total technical account 20% reserves: EUR 45 bln 78%
Slide 10: Well positioned in large Dutch pension market…
Well positioned in large Dutch pension market… Dutch pension market including Dutch pension market excluding Pension market shifting to DC Industry-wide pension funds Industry-wide pension funds 9% 4% • Dutch pension market is large and 23% stable overall 25% 11% • Dominant position mandatory 62% 66
Slide 11: … with a product offering targeting all market segments
… with a product offering targeting all market segments Hedgeable Defined Benefit (average pay) Asset management Capital efficient insured DC and capability through 9% 4% low cost non-insured DC PPI NN Investment Partners DC roll-over market - Immediate annuity for DC retirees In-house full service
Slide 12: NN Group well positioned to capture growth in changing Pension market
NN Group well positioned to capture growth in changing Pension market Strong base.. ..with focus and execution power.. ..to respond to future developments • Strong brand and • One single DB and DC platform • Shift to DC and PPI leads to capitalisation delivers high level of efficiency increased dema
Slide 13: As the Individual Life Closed Block portfolio runs off, we expect costs to come down
As the Individual Life Closed Block portfolio runs off, we expect costs to come down proportionately Individual Life has delivered unit cost improvement How do we expect costs to come down Maintenance costs1 Individual Life Closed Block (EUR mln) • Reduce costs in line with declining portfolio 185 1
Slide 14: Individual Life Closed Block is less capital intensive than Pensions business
Individual Life Closed Block is less capital intensive than Pensions business How do we expect capital to be released Expected run-off of Solvency Capital Requirement (SF)1 • Under Solvency I, minimum required capital was EUR ~1.1 bln (100% basis) 100% • Under Solvency II, the SCR is EUR ~1.0 bln1,
Slide 15: NN Group is well placed in its home market to drive value
1 2 NN Group is well placed in its home Netherlands Life is well positioned to market to drive value grow in the pension market, individual life closed book managed to release capital 3 4 Netherlands Non-life to improve NN Bank can continue to grow while underwriting performance, expense margins rem
Slide 16: Netherlands Non-life – focus on underwriting improvement and cost reductions
Netherlands Non-life – focus on underwriting improvement and cost reductions Diversified portfolio and distribution mix1 Management actions taken to improve profitability • Strategy to improve motor, disability and 1% 7% accident combined ratios • Premium rates increases 11% • Rationalising claims h
Slide 17: D&A – improvements coming through
D&A – improvements coming through Development combined ratio Actions taken, more to do Measures taken 110% • Claims handling processes further rationalised 102% 97% 97% • Applying more stringent underwriting criteria 22% • Differentiated premium adjustments Group income 24% 23% 22% protection • Prem
Slide 18: Motor – needs further improvement
Motor – needs further improvement Development combined ratio Actions taken, more to do Measures taken • Focused portfolio management, e.g. individual approach frequent claimers, termination large car 107% 105% 111% 108% fleets, introduction usage-based car insurance 31% 32% 31% • Premium rate increa
Slide 19: Fire – more to be done
Fire – more to be done Development combined ratio Actions taken, more to do Measures taken • Daily business monitoring by risk committee 107% • Use of experts for underwriting, workshops, renewal 101% 97% 94% and an increasing number of inspections to prevent 41% fraud 41% 40% • Stricter requirement
Slide 20: Investing in our underwriting capabilities and customer satisfaction
Investing in our underwriting capabilities and customer satisfaction Market potential Net Promotor Score1 from -7 to +3 • Changes in D&A market (e.g. new flex market) offers -7 opportunity to grow 2013 • Capture selective growth opportunities in Belgium +3 • Dedicated workforce to increase sales via
Slide 21: NN Group is well placed in its home market to drive value
1 2 NN Group is well placed in its home Netherlands Life is well positioned to market to drive value grow in the pension market, individual life closed book managed to release capital 3 4 Netherlands Non-life to improve NN Bank can continue to grow while underwriting performance, expense margins rem
Slide 22: NN Bank - focus on building scale and improving profitability
NN Bank - focus on building scale and improving profitability Steady growth in mortgages and savings (EUR bln) Complementary products to NN’s insurance offering 10 • NN Bank facilitates the long-term savings need in the Netherlands 8 • Offers frequent points of contact with our customers and cross-s
Slide 23: NN Bank has multiple outlets for its mortgage production
NN Bank has multiple outlets for its mortgage production 1 Retain mortgages on own balance sheet: CET1 phase-in ratio of 14.2%, a leverage ratio of 3.9% and a diversified funding base including bank annuities and securitisations allows for more on-balance loans 2 Transfer to NN Life and Non-life NN
Slide 24: Key takeaways
Key takeaways NN Group is well placed in its home market to drive value and further innovate 1 the business 2 The Dutch units remain committed to delivering on their targets Netherlands Life is well positioned to grow in the pension market, individual life 3 closed book managed to release capital 4
Slide 25: Appendix
1 Appendix: Netherlands Life committed to medium term target 2 Appendix: Netherlands Life shift to higher yielding assets
Slide 26: Netherlands Life committed to medium term target
1 Netherlands Life committed to medium term target 2013 2014 9M14 9M15 Outlook Investment margin 557 630 455 681 • 2015 relatively high driven by private and public equity dividends (Investment spread1) (104 bps) (111 bps) (108 bps) (143 bps) • Investment spread volatile, however expected to be broa
Slide 27: Netherlands Life shift to higher yielding assets
2 Netherlands Life shift to higher yielding assets Asset mix Netherlands Life Steps taken EUR 55 bln1 EUR 61 bln1 • Shift to higher yielding assets to maintain investment 11% spread broadly stable 12% 16% • Investments in 22% 21% • Mortgages and Loans which still offer relatively 18% high spreads •
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, the
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