ASR Nederland N.V. · EURONEXT:ASRNL
ASR Nederland — Investor Day (October 2018)
150 slides from ASR Nederland's investor day presentation, Oct 10, 2018
Slide 1: Capital Markets Day
Capital Markets Day 10 October 2018
Slide 2: Today’s presenters
Today’s presenters Jos Baeten Chris Figee Michel Verwoest Karin Bergstein CEO CFO COO COO Philippe Wits Jack Julicher Dick Gort Patrick Klijnsmit Chief Innovation Officer CEO a.s.r asset CEO a.s.r real estate Director Group Accounting, management Reporting & Control 2
Slide 3: de nederlandse
de nederlandse verzekerings maatschappij voor alle verzekeringen
Slide 4: Excel and expand
Excel and expand Jos Baeten Chief Executive Officer
Slide 5: Two exciting years since our IPO
Two exciting years since our IPO Inaugural “textbook IPO” AEX index Cost variabilisation EUR Standard model RT1 issue Consolidation “Abroad is “Up to 12%” for holidays” SII 194% holding cash Generali NL Cost of equity? “it’s 10%” Value over volume NLFI Funeral insurance Largest private landowner COR
Slide 6: Helping our customers is the reason we are in business
Helping our customers is the reason we are in business 6
Slide 7: Helping by doing
Proud of all our employees who make a difference for customers Helping by doing I’m helpful I think ahead and I act decisively These values drive our behaviour 7
Slide 8: a.s.r. at a glance
a.s.r. at a glance Business mix (GWP) 3,800 #3 36% EUR 4.0 billion 2017 employees (fte) 64% founded in leading market multi-brand “helping by doing” 1720; deeply positions and #3 and multi- rooted in Dutch society overall channel distribution; focus on intermediaries Non-life Life +40 net promotor s
Slide 9: Macro trends
Macro trends Technological Environmental & demographic • Ease of use & internet of things • Increased workforce flexibility and • Customer data & data analytics more self-employed individuals • Robotics • Ageing population & increasing life expectancy • Artificial intelligence & machine learning • C
Slide 10: Strong and unique investment proposition still intact
Strong and unique investment proposition still intact Skilled and experienced management focused on execution and delivery 8 1 Strong solvency with high-quality capital Profitable LDI asset management platform Track record of attractive return on equity, with outstanding track record 7 2 capital gen
Slide 11: Our strategic principles drive performance
Our strategic principles drive performance Value over volume Excellence in pricing, Meeting customer Solid financial underwriting and Cost effectiveness needs framework claims management 11
Slide 12: Consistently delivering on IPO promises and ambitious targets
Consistently delivering on IPO promises and ambitious targets Solvency II Operating return on equity S&P Rating (Standard formula, %) (%) 189 196 194 15.6 180 > 160% medium-term target 14.4 14.6 14.7 Up to 12% medium-term target Single ✓ ✓ ✓ ✓ 2015 2016 2017 1H18 194% 2015 2016 2017 1H18 14.7% 2015
Slide 13: Generating attractive capital returns to shareholders
Generating attractive capital returns to shareholders Ordinary dividend Dividend per share (EUR) • Ambition to offer a stable to growing dividend per share 1.63 • Pay-out ratio 45% - 55% of net operating result (after hybrid 1.13 1.27 expenses)1 0.65 Interim • Interim dividend 40% of last year’s tot
Slide 14: Ambitious group targets, positioned for profitable growth
Ambitious group targets, positioned for profitable growth Targets for the period 2019 - 20211 Solvency II Operating return on equity Dividend pay-out ratio (Standard formula) (%) (% of net operating result after hybrid expenses2) >160% 12-14% 45-55% Substantial capital for Per annum Ambition to offe
Slide 15: Ambitious business targets
Ambitious business targets Targets for the period 2019 - 20211 Non-life Life operating result Fee based businesses, operating result2 (%, excluding Health) (EUR million) (EUR million) Combined ratio 94-96% Stable € 40 million Compared to 5% growth EUR 633 million in 2017 per annum thereafter Non-lif
Slide 16: Creating value for all stakeholders, our non-financial objectives
Creating value for all stakeholders, our non-financial objectives Targets for the period 2019 - 20211 Meeting customer needs Sustainable investments Employee contribution to local society (Net promoter score) (in no. of hours) Carbon footprint: % measured of 95% >44 investment portfolio +5% € 1.2bn
Slide 17: Our plan to deliver on the targets
Our plan to deliver on the targets Maintaining Managing Pursuing our financial the value from profitable growth discipline existing businesses in selective areas 17
Slide 18: Maintaining our financial discipline
Maintaining our financial discipline Continued focus on value over volume Maintaining our strong cost discipline Financial discipline in M&A, focussing on SME, 12% ROI hurdle Maintaining strong balance sheet and robust solvency (SF), SII ratio > 160% Rational allocation of capital: deploy or return
Slide 19: Rational approach to capital deployment and return
Rational approach to capital deployment and return Solvency ladder Are we in the on standard formula Deploying capital in growth entrepreneurial zone? Invest in organic growth Inorganic Yes growth in domestic market >160%: entrepreneurial level >140% cash dividend payment level Invest in 120% risk a
Slide 20: Optimising our business mix to manage value and pursue growth
Optimising our business mix to manage value and pursue growth Business domains in Non-life with growth potential Asset management related growth businesses Distribution Asset P&C Disability Health Pensions DC & services management Robust and predictable service books Non-core businesses Individual L
Slide 21: Non-life: Managing the value and pursuit of selective (in)organic growth
Non-life: Managing the value and pursuit of selective (in)organic growth Our foundation Our current focus Growth opportunity • Craftsmanship: P&C P&C 2017 • Maintaining superior COR + Add volume / scale on existing • underwriting leadership platform • Optimising portfolio of Generali NL 66% • claims
Slide 22: Life: Managing the value and pursuit of selective inorganic growth
Life: Managing the value and pursuit of selective inorganic growth Our foundation Our current focus Growth opportunity • Restored customer satisfaction • Maintaining a low cost operation Initiate traditional Individual life 2017 through focus on client services by cost reductions and cost + closed b
Slide 23: Asset management: Pursuit of selective (in)organic growth
Asset management: Pursuit of selective (in)organic growth Our foundation Our current focus Growth opportunity Continue buy and build • Long experience with LDI • Leverage niche expertise in selected + approach 2017 higher margin propositions • Differentiation in quality and Own sustainability • Pens
Slide 24: M&A strategy: Opportunities for bolt-on acquisitions
M&A strategy: Opportunities for bolt-on acquisitions • Dutch insurance market is concentrated, opportunities Non-life (2017)1,2 for bolt-on acquisitions exist P&C • Within Non-life circa EUR 4 billion of GWP is captured by EUR 10 billion 14 insurers mid-market players GWP • Within Life circa EUR 20
Slide 25: Conclusion
Conclusion Strong track record in delivering against targets Ambitious new medium-term targets Uniquely positioned to capture profitable (in)organic growth in selective areas Remain committed to our financial disciplines 25
Slide 26: de nederlandse
de nederlandse verzekerings maatschappij voor alle verzekeringen
Slide 27: Quality balance sheet enabling pursuit of profitable growth
Quality balance sheet enabling pursuit of profitable growth Chris Figee Chief Financial Officer
Slide 28: Key messages
Key messages a.s.r.’s businesses create a continuing stream of profits (flow) On top of an already strong stock of capital, both in IFRS and SII terms Whilst staying committed to our disciplined framework We deploy capital in a sensible and profitable manner And/or we distribute capital to sharehold
Slide 29: Strong historical performance driving earnings and dividend per share
Strong historical performance driving earnings and dividend per share Operating result Earnings per share1 (EUR million) (EUR) CAGR: +17% CAGR:+20% 729 3.53 537 622 2.88 2.46 382 1.87 2015 2016 2017 1H18 2015 2016 2017 1H18 IFRS result pre tax Dividend per share (EUR million) (EUR) CAGR: +18% CAGR:+
Slide 30: Favourable developments throughout our business portfolio
Favourable developments throughout our business portfolio Business domains in Non-life with growth potential Asset management related growth businesses1 Operating result Operating result (EUR million) (EUR million) 169 172 10 10 136 7 66 4 12 16 12 3 2015 2016 2017 1H18 2015 2016 2017 1H18 Non-life
Slide 31: Strong return on equity on growing stock of book equity
Strong return on equity on growing stock of book equity Operating result (EUR million) 537 622 729 382 CAGR:+10% 4,493 IFRS equity 4,432 IFRS equity (EUR million) 3,780 3,574 3,526 3,651 Operating IFRS equity 2,883 3,029 2015 2016 2017 1H18 Operating RoE1 14.4% 14.6% 15.6% 14.7%2 1 On average equity
Slide 32: Solvency II and capital management – stock
Solvency II and capital management – stock High Solvency ‘stock’ (SII ratio) “Do we generate Insurance enough?” Nirvana “Do we have enough?” Low Solvency ‘flow’ (capital generation) High 32
Slide 33: Continued growth in ‘stock’ of capital
Continued growth in ‘stock’ of capital Solvency Capital Requirement Solvency II Eligible Own Funds (EUR million) (EUR million) & Solvency II ratio2,3 (%) 43% 45% 46% 43% Market risk1 180% 189% 196% 194% SII ratio CAGR:+2% CAGR:+5% 3,479 3,574 3,374 3,338 6,935 6,826 6,299 2,481 2,728 Insurance 6,076
Slide 34: By any measure, current stock of solvency capital is strong
By any measure, current stock of solvency capital is strong Solvency II ratio ‘as is’ at UFR of 4.05% Solvency II ratio with ‘economic’ UFR of 2.4% (%) (%) 194% 154% 160% 140% @ 2.4% 120% Management ladder 1H18 Internal norm 1H18 At target UFR of 3.6%, Solvency II ratio of 183% Economic UFR of 2.4%,
Slide 35: Robust solvency ratio and balance sheet
Robust solvency ratio and balance sheet SII ratio (1H18) 10 11 10 5 3 0 2 194% -2 -1 -1 -4 -6 -5 -9 -10 -10 -8 -10 -8 -11 -13 VA -10 bps Sovereign spread Corporate credit Interest +100 bps Interest -100 bps Equities -20% Real estate -10% +50 bps spread +75 bps >160%: entrepreneurial level >140% cash
Slide 36: Limited dependency on group level diversification
Limited dependency on group level diversification • a.s.r. benefits from, but is not reliant on the group Range - Solvency II ratios level diversification benefit (2016 - 1H18) • At group level, average diversification benefit is 10% points on SII ratio 220% 1H18 169% 190% 194% • Operating companies
Slide 37: Ample financial flexibility and choice for optimal instrument
Ample financial flexibility and choice for optimal instrument • Balance sheet provides funding optionality Financial flexibility Financial leverage (EUR million, 1H18) (%) • Leverage only to be used for profitable, business-driven, deployment of capital 749 Max 845 35 • Call 2019 pre-financed, unles
Slide 38: Asset and financial leverage compare favourably
Asset and financial leverage compare favourably Asset leverage in perspective Financial leverage in perspective Market risk as % of total SCR1 (RT1+T2+T3) as % of EOF a.s.r. 46 a.s.r. 23 EU Life peers EU Life peers 47 28 average average Min Max Min Max High yielding assets2 as % of Unrestricted Tier
Slide 39: Solvency II and capital management – flow
Solvency II and capital management – flow High Solvency ‘stock’ (SII ratio) “Do we generate Insurance enough?” Nirvana “Do we have enough?” Low Solvency ‘flow’ (capital generation) High 39
Slide 40: Three perspectives on flow
Three perspectives on flow SII ratio 196% -9% 187% 3% 3% -1% 4% 197% -3% 194% 2 3 1 60 (46) (53) 7,026 118 6,947 (92) 6,935 EOF 121 6,826 3,706 0 (24) 0 SCR (108) 3,574 3,574 227 0 3,479 2017 Acquisition 2017 Business capital Release of capital Technical Market & 1H18 pre dividend Interim 1H18 after
Slide 41: Three perspectives on flow over multiple periods
Three perspectives on flow over multiple periods Business capital generation Organic capital creation Total EOF accretion1 1 2 3 (EUR million) (EUR million) (EUR million) 713 377 348 288 264 180 160 410 139 131 2H 179 118 149 197 1H 133 188 79 2016 2017 1H18 2016 2017 1H18 2016 2017 1H18 1 Accretion
Slide 42: Risk Margin from new business relocated
Risk Margin from new business relocated • New business production results in an increase of SCR and Risk Margin Business capital generation – old definition Business capital generation – new definition (EUR million) (EUR million) • Increase of the risk margin from new business was previously part of
Slide 43: Expected organic capital creation growth, driven by business performance
Expected organic capital creation growth, driven by business performance • Target OCC of > EUR 430 million by 2021 Organic capital creation (EUR million) Increase of OCC expected due to: • Profitable growth at Non-life • Continuation of Life excess investment >430 returns (LTIM) 377 • Growth of fee
Slide 44: Clear evidence of delivery and enhancement of flow
Clear evidence of delivery and enhancement of flow Business domains in Non-life Asset management related with growth potential growth businesses • Excellent Non-life COR (95.1% in 2017) and GWP growth of 4.8% • 3rd party AuM increased to EUR 15.6 billion p.a. 2015 - 2017 • Fee based operating result
Slide 45: Capital consumption and value creation in our matrix (2017)
Capital consumption and value creation in our matrix (2017) Business domains in Non-life Asset management related with growth potential1 growth businesses4 • IFRS equity EUR 1,409 million • IFRS equity EUR 48 million • SII Eligible Own Funds 2 EUR 1,648 million • SII Eligible Own Funds n.a. • Operat
Slide 46: Converting 2017 earnings and capital generation into dividends
Converting 2017 earnings and capital generation into dividends Net IFRS earnings Business capital generation EUR 906 million Dividend pay-out ratio EUR 310 million 74 % 45 - 55 % - Incidentals - Capital gains Dividend Net operating result EUR 230 million Organic capital creation (after hybrid expens
Slide 47: Clear dividend distribution track record
Clear dividend distribution track record (in EUR million, %) 2016 2017 1H18 Operating result 622 729 382 IFRS based Dividend base1 415 511 n.m. Payout ratio 45% 45% 40% Ordinary dividend 187 230 92 (in EUR million) (in EUR million, %) Implied pay-out ratio 58% 54% 74% 61% n.m. n.m. Solvency II based
Slide 48: a.s.r.’s holding cash policy
a.s.r.’s holding cash policy Rationale for cash at holding Substantiation of holding cash at year-end A Cover next 12 months of operating holding costs a.s.r. operates in one “No jurisdiction with only one disciplinary regulatory system rationale” + to have excess • Capital and cash is kept at One e
Slide 49: Holding cash policy in practice
Holding cash policy in practice Upstreams per HY Upstreams in relation to Operating result and OCC (EUR million) (EUR million) 190 191 203 185 100 2016 2017 1H18 Life Upstreams 377 508 246 87 % of net op. result1 71% 82% 76% 62 Non-life 52 44 % OCC2 108% 135% 137% SII ratio a.s.r. Life3 182% 186% 19
Slide 50: How we think about capital deployment
How we think about capital deployment Deploy capital in growth a.s.r.’s track record Invest in organic growth • Growth in Non-life business Are we in the • New business initiatives • New product initiatives at Disability entrepreneurial Yes • Repricing of products • Repricing at P&C and Disability z
Slide 51: If no deployment of capital is foreseen in the near future…
If no deployment of capital is foreseen in the near future… If and when… • SII ratio according to standard then… model is in excess of reasonable upper limit and when no profitable deployment is foreseen a.s.r. will distribute excess capital to shareholders in a form that is • for a prolonged period
Slide 52: Track record in deploying and distributing capital
Track record in deploying and distributing capital We generate capital We opportunistically raise capital (EUR million) (EUR million) 300 OCC 348 377 179 2016 2017 1H18 2016 2017 1H18 Hybrid UT1 5,084 5,279 5,393 1,214 1,548 1,541 capital and We deploy capital – examples We distribute capital (% poi
Slide 53: Conclusion
Conclusion Business driven flow of new capital Strong stock of capital of HoldCo and OpCo levels Strong resilience of Solvency II ratio Focus on capital deployment with clear return objectives and disciplined execution 53
Slide 54: de nederlandse
de nederlandse verzekerings maatschappij voor alle verzekeringen
Slide 55: Business domains in Non-life with growth potential
Business domains in Non-life with growth potential Michel Verwoest Chief Operating Officer
Slide 56: Overview of Non-life
Overview of Non-life What is in there? Our focus? Non-life insurance: Distribution & Services • Leveraging excellent underwriting capabilities • P&C • VKG, Corins, ANAC, ZZP Nederland, • Organic and inorganic growth opportunities, both insurance • Disabilty Boval/Felison, SuperGarant, Poliservice bu
Slide 57: P&C Leveraging excellent underwriting capabilities
P&C Leveraging excellent underwriting capabilities
Slide 58: Key messages
Key messages Diversified and profitable portfolio with strong positions in the Dutch market Craftsmanship and value over volume strategy leading to best-in-class claims ratio Scalable and cost-effective operation Well positioned to grow, both organically and inorganically 58
Slide 59: Strong position in P&C, especially in intermediary distribution
Strong position in P&C, especially in intermediary distribution Observations on distribution and market participants Top 5 P&C market Dutch P&C market • P&C market is competitive. Limited presence of foreign insurers (2017) distribution channels2 • Low margins and limited organic growth possibilitie
Slide 60: Key components of our combined ratio
Key components of our combined ratio Premium to cover claims, costs and commission Breakdown of a.s.r.’s combined ratio by component Pricing based on target claims Margin • Proven ability to control the claims ratio - average since 2015: 62% • Strong capabilities managing mass claims ratio Costs / C
Slide 61: Disciplined pricing, underwriting and claims management
Disciplined pricing, underwriting and claims management Focus on craftsmanship and service Portfolio management Claims management • Disciplined (re)assessments • Optimised claims handling process • Learning cycle on underwriting, • Best in class in bodily injury claims claims management and fraud ha
Slide 62: COR outperformance driven by craftsmanship and value over volume
COR outperformance driven by craftsmanship and value over volume Performance relative to market (DNB data) 1 (%-pts) 12% 7% 5% 4% 4% 3% 2015 2016 2017 COR GWP a.s.r. reported P&C COR 98.5% 98.5% 95.5% 2015 2016 2017 1 Source DNB, market GWP excl. credit and bail insurance 62
Slide 63: Strong claims track record
Strong claims track record P&C quarterly claims ratio1 (%) Benign Claims ratio impacted by bodily Benign Severe storms weather injury claims weather and heavy weather Severe storms and heavy weather Severe storms Minor and heavy weather storm 67 67 70 61 63 62 60 64 60 64 63 62 58 58 1Q15 2Q15 3Q15
Slide 64: Cost effective operation result of implementing new IT platform and systems rationalisation
Cost effective operation result of implementing new IT platform and systems rationalisation Finalising implementation and conversion of IT platform Operating expenses a.s.r. P&C (EUR million) • Quinity Insurance Solution - administration / claims handling platform Lower operating expenses while inve
Slide 65: Organic growth driven by intermediary distribution and packaged products
Organic growth driven by intermediary distribution and packaged products a.s.r. P&C GWP • Growth of P&C portfolio a.s.r. above market (EUR million) 1,145 1,083 • Positive momentum packaged product in retail 1,004 CAGR 7% market 808 • Average premium per package increased • Increasing number of packa
Slide 66: Added value of our service entities – enhancing product development
Added value of our service entities – enhancing product development and shortening time to market Proposition Focus • Authorised agent in the co- • Strengthening of relationship with insurance market, one of the larger brokers exchange brokers (5% share • Manage and selective growth of including Gen
Slide 67: Use of external data sources to improve underwriting
Use of external data sources to improve underwriting Results (%) Incoming request 365 Rules insurance policy 3% 1% 4% Determining score Check with (external) sources I No risk Write new policy (STP) • Chamber of Commerce II Low risk Assess customer 92% • Land register • Credit check III High risk De
Slide 68: Consolidation of Generali NL strengthens market position
Consolidation of Generali NL strengthens market position Integration of Generali NL P&C portfolio Generali NL 2017 • Integration into operating model of a.s.r. GWP Distribution • legal merger of Non-life completed • co-insurance migrated to Corins Motor Authorised 15% 16% agents • authorised agent p
Slide 69: Conclusion
Conclusion Diversified and profitable portfolio with strong positions in the Dutch market Craftsmanship and value over volume strategy leading to best-in-class claims ratio Scalable and cost effective operation Well positioned to grow, both organically and inorganically 69
Slide 70: Disability
Disability Disability platform servicing the growing demand for sustainable employability
Slide 71: Key messages
Key messages Longstanding top performer in the disability insurance market Multi-disciplinary approach drives excellent performance Clear value over volume strategy, delivering strong combined ratio Access to unique platform of businesses, covering the sustainable employability value chain Well posi
Slide 72: a.s.r. has a strong position in the disability market
a.s.r. has a strong position in the disability market Market observations Market participants1 (%) Total market GWP 2017 • a.s.r. has a no. 2 position 27.9% EUR 3.7 billion 23.9% • Stable market shares with top 3 participants covering ~70% 17.8% • Complex products sold primarily through intermediary
Slide 73: Unique in-house claims management and reintegration processes
Unique in-house claims management and reintegration processes Disability Triangle & Claims Chain Management Portfolio management Claims management • Disciplined (re)assessment of • Excellent in-house claims handling Medical advisor portfolios and reintegration expertise • Benchmarking of risk profil
Slide 74: Strong claims track record
Strong claims track record Disability quarterly claims ratio (%) 75% 79 69 73 70 78 77 67 64 71 65 71 69 72 65 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Claims ratio per quarter Moving average Target claims ratio Out of past 14 quarters, 11 quarters well below 75% Seasona
Slide 75: Clear value over volume approach – willing and able to act decisively
Clear value over volume approach – willing and able to act decisively BeZaVa case1 Sickness leave case Disability case • Government liberalised disability cover for • Sickness leave underperformed in • Significant claims differentials between temporary workers in 2016 2016 / 2017 different risk clas
Slide 76: ‘Doorgaan’ proposition for self-employed individuals
‘Doorgaan’ proposition for self-employed individuals is a unique combination of Health and Disability business Offers several opportunities: Best of both worlds: Key elements of the ‘Doorgaan’ proposition: • Aimed at reducing absenteeism for the self-employed and ✓ employees • Early detection of (th
Slide 77: Unique platform servicing sustainable employability demand
Unique platform servicing sustainable employability demand Optimising underwriting result Health Health Pricing & Shortening duration Risk selection1 of absenteeism Targeting the right & Claims customer with the right manage- Customer Distribution Providing income ment product during absenteeism Pre
Slide 78: Conclusion
Conclusion Longstanding top performer in the disability insurance market Multi-disciplinary approach drives excellent performance Clear value over volume strategy, delivering strong combined ratio Access to unique platform of businesses, covering the sustainable employability value chain Well positi
Slide 79: Appendix
de nederlandse verzekerings maatschappij voor alle verzekeringen Appendix
Slide 80: Disability insurance in the Netherlands
Disability insurance in the Netherlands The market is centered around income protection and is divided into two major categories • Disability of the self-employed (the entrepreneurs): do not have social security concerning disability and can insure disability risk up to retirement age • Group disabi
Slide 81: de nederlandse
de nederlandse verzekerings maatschappij voor alle verzekeringen
Slide 82: Life – robust and predictable service books
Life – robust and predictable service books Karin Bergstein Chief Operating Officer
Slide 83: Key messages
Key messages Low cost operation with focus on customer service Robust and predictable service books provide a base for realising investment margin Track record in consolidations and unlocking synergies Well positioned for next consolidation wave 83
Slide 84: Overview Life – robust and predictable service books
Overview Life – robust and predictable service books What is in there? Our focus? • Funeral, Individual life and Pensions • Consolidation of Dutch closed book market, primary focus on Funeral and Individual life books • Total SCR 2017: EUR 2,741 million; EOF EUR 5,101 million • Optimisation of servi
Slide 85: Strong increase in operating result, driven by investment margin
Strong increase in operating result, driven by investment margin Operating result Investment margin (in EUR million) (in EUR million) 633 440 510 334 559 290 Investment income 1,163 1,250 1,322 684 441 -394 Required interest -829 -810 -812 340 2015 2016 2017 1H18 Technical result (in EUR million) 11
Slide 86: Digitalisation to improve customer service and enhance efficiency
Digitalisation to improve customer service and enhance efficiency Customer service • Client portal with relevant insights into pension prospects • Digital communication with customers • Chatbot enables state-of-the-art customer service Operation • The objective is to realise a high level of straight
Slide 87: Funeral: excellent track record in efficient migrations
Funeral: excellent track record in efficient migrations • Acquired businesses and books have been successfully integrated into the a.s.r. platform • Strong experience curve in Funeral; efficient process, significantly reducing integration period • IT costs stable while onboarding five million polici
Slide 88: Individual life: rationalisation is complex and key to successful migrations
Individual life: rationalisation is complex and key to successful migrations Customer • Rationalisation is based upon balanced decisions across three domains, under the Rationalisation Migration condition that the customer proposition needs to be equal or better • 207 rationalisation decisions have
Slide 89: Track record in IT migration in Individual life to SaaS platform
Track record in IT migration in Individual life to SaaS platform • New target IT platform (SaaS) has variable costs and ensures that No. of 2015 2016 2017 2018 2019 IT costs decline in line with the decline of the Individual life book policies HLS (BPO/ITO) • Experience curve and rationalisation dec
Slide 90: Generali Life integration proceeding ahead of plan
Generali Life integration proceeding ahead of plan • a.s.r.’s system and platform is the target operating model for all portfolios • Eight new rationalisation decisions had to be made, other 2018 2019 2020 decisions based on prior decisions GWP 2017 • Funeral integration finalised on 1 July, well ah
Slide 91: Track record of value-creating acquisitions and realising synergies
Track record of value-creating acquisitions and realising synergies Business line Book acquired No. of Policies Reserves GWP Funeral October 2018 15,000 EUR 20 million EUR 2.2 million Individual life / February 2018 561,000 EUR 3.5 billion EUR 96 million Funeral / Pensions Funeral March 2016 286,000
Slide 92: Strong progress on cost reductions while basic provision increased
Strong progress on cost reductions while basic provision increased Basic provision OPEX • Due to the acquisitions of De Eendragt, Axent (2015), Nivo (EUR million) (2016) and Generali NL (2018), the basic provision1 increased • Cost reductions realised through product rationalisation, 39,000 250 migr
Slide 93: Relatively stable best estimate development at Life segment
Relatively stable best estimate development at Life segment • Best Estimate Liabilities (BEL) at the Life segment expected to decline by 2.4% per annum1 38 CAGR -2.4% • The Individual life book is expected to decline by circa 50% in the 34 next 10 years 30 • The Pensions book is expected to be stabl
Slide 94: M&A strategy: opportunities for bolt-on acquisitions
M&A strategy: opportunities for bolt-on acquisitions • Despite a high level of concentration in the Dutch Life insurance Life (2017)1,2 market, opportunities for bolt-on acquisitions exist in midsized market segment EUR 13 billion • Within Life circa EUR 20 billion3 of technical provisions is on the
Slide 95: Conclusion
Conclusion Low cost operation with focus on customer service Robust and predictable service books provide a base for realising investment margin Track record in consolidations and unlocking synergies Well positioned for next consolidation wave 95
Slide 96: de nederlandse
de nederlandse verzekerings maatschappij voor alle verzekeringen
Slide 97: Innovation based on customer-centric approach
Innovation based on customer-centric approach Philippe Wits Chief Innovation Officer
Slide 98: Key messages
Key messages Customer-centric approach is core to our digital and innovation strategy Investments are made in a sensible manner and funding is based on stage gate process Partnering with specialised venture capitalists Technology has to be agile, plug and play for future developments 98
Slide 99: Taking a customer-centric approach is the central premise
Taking a customer-centric approach is the central premise Cooperation Logic We look at trends that will change the lives of consumers… Ease of use Big data 99
Slide 100: We serve our customers personally, timely and fluently
We serve our customers personally, timely and fluently Volume: Volume: Plethora of conversations Value: Integration of portfolios and systems Digital conversational algorithms at digital platforms 1:10,000 1:1 1:1 1:1 1:1 1:1 1:1 1:1,000,000 1:1 1:1 1:1 Chatbot 1:1 1:1 1:1 APIs 1:100,000 1:1 1:1 1:1
Slide 101: Chatbot combines both customer satisfaction and cost efficiency
Chatbot combines both customer satisfaction and cost efficiency 25% Increase in site visits 2.5 million per year Recognised by internet experts 73% through prestigious prizes of visitors find their answers (was 50%) 40 NPS increase 101
Slide 102: We are taking our chatbot one step further …
We are taking our chatbot one step further … We learn about customer behaviours on a daily basis Our chatbot is the foundation for improved and customised services With our dialogues, we are well on the way for …with voice the era of voice 102
Slide 103: RPA taking over repetitive tasks while saving costs and freeing up time
RPA taking over repetitive tasks while saving costs and freeing up time P&C example: 93% reduction in handling time Building flexible architecture enables switch to new robots 103
Slide 104: We focus on two themes where we can add value
We focus on two themes where we can add value Living longer Prevention Higher goal a.s.r. enables people to prepare a.s.r. identifies risks, removing underlying themselves for having a better life drivers instead of insuring them • Existing products • Lower claims ratios Earnings model • New product
Slide 105: Funding: accelerating our value machine by spending wisely
Funding: accelerating our value machine by spending wisely Develop concept Build business Scale up Expand ‘Seed’ Acceleration Growth investment investment investment Angel funding Stage gates • Develop viable business • Prove business model • Organise for scale • Disrupt the market Target case & pla
Slide 106: Leveraging and co-creating with VC funds to find the best opportunities
Leveraging and co-creating with VC funds to find the best opportunities 106
Slide 107: Prototyping and building start-ups to drive the future value of a.s.r.
Prototyping and building start-ups to drive the future value of a.s.r. 107
Slide 108: Conclusion
Conclusion Customer-centric approach is core to our digital and innovation strategy Investments are made in a sensible manner and funding is based on stage gate process Partnering with specialised venture capitalists Technology has to be agile, plug and play for future developments 108
Slide 109: de nederlandse
de nederlandse verzekerings maatschappij voor alle verzekeringen
Slide 110: Leverage capabilities for growth of third party investment services
Leverage capabilities for growth of third party investment services Jack Julicher CEO a.s.r. asset management
Slide 111: Key messages
Key messages Strong asset manager, using key competences and track record Two unique platforms; growing asset base supporting third-party investments Dutch player focusing on pensions funds, insurers, government-related institutions, charities and family offices Diversified growth with distinctive S
Slide 112: Skill set has been developed through buy-and-build strategy
Skill set has been developed through buy-and-build strategy 2014 2017 Conversion of EUR 1.4 Conversion of Falcon products billion of life policies into (EUR 700 million) & DC dedicated mutual funds products into one single fund range (AuM EUR 1.5 billion) 2009 2011 2016 Licence to manage Launch of a
Slide 113: Strong track record and consistent outperformance of benchmarks
Strong track record and consistent outperformance of benchmarks Performance vs benchmarks Euro government Performance Benchmark Euro credits Excess returns on LTIM (%) (%) 8.2 8.2 11.0 10.9 7.3 7.1 7.5 Return on 6.8 5.0 4.6 4.2 LTM (bps) Capital 4.4 4.1 3.1 3.1 3.4 1.7 1.8 1.8 1.4 Equity 330 10% 0.8
Slide 114: Growing asset base, supporting third party investment services
Growing asset base, supporting third party investment services Asset base has grown, both internally and for third-parties Total AuM (EUR billion) Internal growth due to acquisitions and market developments 57.7 • Yield improvement by shift towards fewer liquid assets and 52.3 53.7 diversification 4
Slide 115: Two unique platforms, building on competences and track record
Two unique platforms, building on competences and track record Track record of managing assets for a.s.r. Unique set of competences a.s.r. Asset Management a.s.r. Real Estate AuM EUR 52.5 billion AuM EUR 5.2 billion (EUR 38.3 billion internal, EUR 14.2 billion 3rd party) (EUR 3.7 billion internal, E
Slide 116: Growing operating result thanks to growth of third party investments
Growing operating result thanks to growth of third party investments Market and business developments Operating result (EUR million) • Increase of profitability by: 10 • Realising synergies by integrating internal portfolios into acquired businesses • Introduction of new products • Insourcing of act
Slide 117: Local player focusing on pension funds, insurers, government-related institutions
Local player focusing on pensions funds, insurers, government- related institutions, charities and family offices Mortgage funds ESG funds Balanced mandates/funds LDI/Overlay Real estate funds Pension funds ✓ ✓ ✓ ✓ ✓ Insurance companies ✓ ✓ ✓ ✓ ✓ Government related ✓ ✓ Charities/family offices ✓ ✓ ✓
Slide 118: Distinctive SRI proposition interesting for third parties
Distinctive SRI proposition interesting for third parties Policy Exclusions Positive selection Active voting Engagement Targets policy • International • Weapons • Alpha source • Voted at 93% of • Dialogue with • Measuring carbon standards • Nuclear energy • Risk factor AGMs management footprint for
Slide 119: LDI matching proposition built on experience as investment manager for a.s.r.
LDI matching proposition built on experience as investment manager for a.s.r. Unique set of competences • Determine interest rate hedging strategy • Transaction execution, including collateral & liquidity management • Investment universe • Pre- and post-trade compliance monitoring • Integrated portf
Slide 120: Mortgage sourcing and management expertise attractive for third parties
Mortgage sourcing and management expertise attractive for third parties • Leveraging 50+ years of a.s.r. experience in Dutch mortgage loans • Launched in Q2 2017; EUR 1.2 billion invested within 12 months • Guaranteed mortgages subfund and a higher return profile subfund • Long term investment profi
Slide 121: Growth of ‘capital light’ DC pension business
Growth of ‘capital light’ DC pension business Developments in new DC Market developments in DC • Over 60% of DB contracts renewed to DC in 2017 • New legislation as from 2016 481 607 • Introducing new product in 2018 273 • Further shift towards DC expected to go forward AuM 74 (EUR million) 2015 1 2
Slide 122: Conclusion
Conclusion Strong asset manager, using key competences and track record Two unique platforms; growing asset base supporting third-party investments Dutch player focusing on pensions funds, insurers, government-related institutions, charities and family offices Diversified growth with distinctive SRI
Slide 123: de nederlandse
de nederlandse verzekerings maatschappij voor alle verzekeringen
Slide 124: a.s.r. real estate
a.s.r. real estate Dick Gort CEO a.s.r. real estate
Slide 125: Key messages
Key messages 125 years of experience in investing in real estate, resulting in high-quality EUR 5.2 billion portfolio Unique, low risk, rural portfolio of EUR 1.4 billion with long lasting, inflation indexed leasehold contracts Strong track record of attractive and stable investment income Unique sk
Slide 126: Real estate platform based on 125 years of experience and expertise
Real estate platform based on 125 years of experience and expertise 126
Slide 127: Unique rural portfolio providing stable rental income
Unique rural portfolio providing stable rental income Rural portfolio • Well diversified EUR 1.4 billion rural portfolio across the Netherlands (Ha x 1,000) 35.6 37.0 32.5 32.9 33.8 32.2 • Long term leasehold contracts 27.9 29.0 30.0 30.8 31.3 31.3 31.0 24.3 25.7 • Stable investment return, augmente
Slide 128: Core investment portfolios in which third party investors can participate
rd Core investment portfolios in which 3 party investors can participate1 2011 2013 2016 ASR Dutch Prime Retail Fund ASR Dutch Core Residential Fund ASR Dutch Mobility Office Fund ~ EUR 1.5 billion, divided over > 200 assets ~ EUR 1.2 billion, divided over circa 5,000 units ~ EUR 0.3 billion, divide
Slide 129: A reputable international client base, in addition to a.s.r.
A reputable international client base, in addition to a.s.r. 129
Slide 130: Healthy AuM growth and returns
Healthy AuM growth and returns AuM development 2015 – 1H18 • Income driven core funds, with inflow from new external investors (EUR million) 1,508 1,523 1,419 1,344 1,358 1,421 1,256 • Growth in AuM driven not only by revaluations but also by new 1,145 1,207 1,162 981 investments 820 • Total returns
Slide 131: Increasing AuM and third-party investments drive fee income
Increasing AuM and third-party investments drive fee income Growth in third party asset management (EUR million) third-parties 5,044 5,226 4,638 a.s.r. 4,210 1,568 3,848 3,966 3,987 1,531 3,756 3,759 1,318 403 772 977 1,319 1,017 3,563 3,321 3,513 3,658 3,076 2,742 3,009 2,891 1H11 2011 2012 2013 20
Slide 132: Conclusion
Conclusion 125 years of experience in investing in real estate, resulting in high-quality EUR 5.2 billion portfolio Unique, low risk, rural portfolio of EUR 1.4 billion with long lasting, inflation indexed leasehold contracts Strong track record of attractive and stable investment income Unique skil
Slide 133: de nederlandse
de nederlandse verzekerings maatschappij voor alle verzekeringen
Slide 134: Life disclosures
Life disclosures Patrick Klijnsmit Director Group Accounting, Reporting & Control
Slide 135: Key messages
Key messages Service book of Life segment offers stable foundation for future profitability Acquisitions counter small underlying decrease in service books Profitability in service books primarily driven by investment margin Other sources of profitability under pressure, but carefully managed 135
Slide 136: Life basic provision expanded by acquisitions
Life basic provision expanded by acquisitions Development of service book (IFRS) Basic provision increased from EUR 28.0 billion to EUR 35.2 billion (+ EUR 7.2 (EUR billion) billion). Acquired provision bases • 2015-2016: total EUR 3.5 billion 45 • 2018 - Generali NL: EUR 3.5 billion 40 EUR 2.8 bill
Slide 137: Development of Life segment P&L – investment income is key
Development of Life segment P&L – investment income is key Operating result Operating result driven by: (EUR million) Strong and relatively stable investment income, despite low interest 2015 2016 2017 1H18 rate environment Direct investment 1,003 981 1,000 529 • Strong solvency providing room for m
Slide 138: Conclusion
Conclusion Service book of Life segment offers stable foundation for future profitability Acquisitions counter small underlying decrease in service books Profitability in service books primarily driven by investment margin Other sources of profitability under pressure, but carefully managed Historic
Slide 139: Implementing IFRS 17
a.s.r.\__ de nederlandse verzekerings maatschappij voor alle verzekeringen Implementing IFRS 17
Slide 140: Key messages
Key messages Introduction of IFRS 17 implies a complete overhaul of insurance reporting Future earnings determined by transition strategy, contractual service margin and discount rate setting a.s.r. opts to implement IFRS 9 (assets) and IFRS 17 (liabilities) simultaneously a.s.r. project at full spe
Slide 141: IFRS 17: radically changing external reporting
IFRS 17: radically changing external reporting Comparing balance sheets (liability side) Complex reconciliation between metrics Multiple differences between IFRS 17 and Solvency II: • Discount rates applied • Other assumptions applied Shareholders’ Available equity • Risk adjustment vs risk margin O
Slide 142: Choices to be made – measurement approach
Choices to be made – measurement approach General Model Premium Allocation Approach Variable Fee Approach To deal with participating business Why is it The default model for all To simplify for short-term which meets certain criteria including ? needed? insurance contracts contracts with little vari
Slide 143: Choices to be made – transition approach
Choices to be made – transition approach Available transition approaches: Modified approach: When not Inception date Transition date all historical data are available but some information about historical cash flows is Full retrospective available or can be application: When When constructed histori
Slide 144: Choices to be made: discount rate and matching
Choices to be made: discount rate and matching Discount Rate Under IFRS 17 discount rates should: 1. reflect the time value of money and financial risks 2. be consistent with observable current market prices 3. exclude the effect of factors that influence observable market prices, but do not affect
Slide 145: a.s.r. project at full speed
a.s.r. project at full speed Project setup Done System architecture Interpretation of standard Dry run In progress Data retrieval IFRS9/17 dynamics 145
Slide 146: Conclusion
Conclusion Introduction of IFRS 17 implies a complete overhaul of insurance reporting Future earnings determined by transition strategy, contractual service margin and discount rate setting a.s.r. opts to implement IFRS 9 (assets) and IFRS 17 (liabilities) simultaneously a.s.r. project at full speed
Slide 147: de nederlandse
de nederlandse verzekerings maatschappij voor alle verzekeringen
Slide 148: IR contact
IR contact Michel Hülters Barth Scholten Vincent Uriot Email: ir@asr.nl Tel: +31 30 257 8600
Slide 149: 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
Slide 150: Capital Markets Day
Capital Markets Day 10 October 2018