ASR Nederland N.V. · EURONEXT:ASRNL
ASR Nederland — FY2015 Earnings Presentation
36 slides from ASR Nederland's earnings presentation, Feb 18, 2016
Slide 1: Annual results 2015
annual results 2015 Strong result for a.s.r. in 2015 Chris Figee CFO Jack Julicher CIO Financial Markets 18 February 2016
Slide 2: Disclaimer
Disclaimer Cautionary note regarding forward-looking statements This presentation contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters
Slide 3: Key messages
Key messages Results • Operating result (before tax) increased to € 521 million (2014: € 417 million), due to better underwriting results in both Life and Non-Life • Net result increased to € 601 million (2014: € 423 million), due to improvement in operating result and capital gains and fair value i
Slide 4: Strong increase in Operating result
Strong increase in Operating result Operating result increased by € 104 million to € 521 million across all segments: Non-Life segment (€ 14 million), Life segment (€ 85 million) and other segments (€ 5 million) IFRS Profit before Tax 2015 780 IFRS Profit before Tax 2014 534 Investments - 371 Invest
Slide 5: Key figures
Key figures Operating result (€m) Net result (€m) Dividend (€m) 170 139 521 601 417 423 2014 2015 2014 2015 2014 2015 Operating ROE * ROE Solvency II ratio (standard model) ** 17.2% 13.9% 175%-195% 11.0% 11.7% c. 185% c. 170%* 2014 2015 2014 2015 2014 2015 * Calculation of the Oparting ROE,see slide
Slide 6: Continued containment of underlying cost base
Continued containment of underlying cost base Operating expenses (€m)* Number of internal employees (FTEs)** (exclusive of provision for restructuring expenses) CAGR: -4% 603 CAGR: -6% 567 530 575 524 56 4,264 4,088 3,789 519 3,650 3,513 344 3,306 2011 2012 2013 2014 2015 Dec. 2011 Dec. 2012 Dec. 20
Slide 7: Strong development of net result and operating result
Strong development of net result and operating result Operating result (before tax) (€m) Net result (€m) 2014 2015 2014 2015 Non-life Non-life 169 Non-life 153 Non-life 169 155 Life 299Life Life Life 349 555 434 Banking & asset Banking & asset 4 8 Banking & asset Banking & asset management managemen
Slide 8: Non-life segment: increasing operating result
Non-life segment: increasing operating result due to improving claims handling process and lower operating expenses Combined ratio below 100% for all Non-life product lines Operating result (€m) Gross written premiums (€m) • Strong operating result. Increase due 2,359 2,350 to improved underwriting
Slide 9: Life segment: operating result and GWP improved
Life segment: operating result and GWP improved Operating result (€m) New production (€m APE) • Operating result increased € 85 million to € 434 million. Mainly due to non- 434 140 recurring one-off negatives in 2014 349 Single premiums 50 92 • Net result up € 256 million to € 555 million (2014: € 2
Slide 10: Strategic acquisitions
Strategic acquisitions Inorganic growth / scale in pensions & funeral business Discontinued operations Natural hedge of mortality and longevity risk De Eendragt (pensions) AXENT (funeral) Nivo (funeral) (part of) Real Estate a.s.r. acquired 100% of the a.s.r. acquired 100% of the a.s.r. acquires Niv
Slide 11: Non-Insurance activities
Non-Insurance activities With effect as of 1 January 2015, a.s.r. changed its segment Other into four separate non-insurance segments Banking and Asset Management • Operating result before tax developed from € 7 million in 2014 to € 12 million in 2015 • Net result increased from € 4 million in 2014
Slide 12: Non-Insurance results
Non-Insurance results Bank & Asset Distribution Holding and Real Estate Non Insurance Management and Services Other Development (€m) (€m) (€m) (€m) (€m) 12 3 Operating result 7 2 -78 Continued -93 operations xx -102 -93 2014 2015 2014 2015 2014 2015 2014 2015 Net result (IFRS) -7 -7 Run-off -94 -94
Slide 13: Robust and well-diversified investment portfolio
Robust and well-diversified investment portfolio Assets (€ billion, fair value) * Dec. 2015 Dec. 2014 Composition investment portfolio Dec. 2015 Fixed income 24.5 24.1 Fixed income 0% 18% Equities Equities 2.7 2.0 Real estate Real estate 2.8 3.0 Mortgages / Loans 8% Other Mortgages / other loans 6.5
Slide 14: Continuous high-quality of fixed-income portfolio
Continuous high-quality of fixed-income portfolio at current low interest rates Key highlights Mortgages Dec. 2015 Dec. 2014 Delta (€m, book value) * LtFV < 75% 1,160 965 20% • De Eendragt and AXENT portfolios are incorporated and aligned with the a.s.r investment policy. Increase in assets partly o
Slide 15: Further diversification of equities portfolio and real estate
Further diversification of equities portfolio and good performance of real estate portfolio Key highlights Equities (€m) * Dec. 2015 Dec. 2014 Delta • Equities increased as the portfolios of De Eendragt and AXENT were Equities 2,278 1,745 31% Equities integrated, and due to rising stock markets Priv
Slide 16: Key messages Solvency and Balance Sheet management
Key messages Solvency and Balance Sheet management SCR Level SCR Level: • Group solvency ratio midpoint estimate of 185% (after proposed dividend) using standard model Movements: The group solvency ratio increased due to: • Business performance • Transitional measure in equity risk • Issuance hybrid
Slide 17: Capital development
SCR Capital development Level IFRS Equity SCR EOF after deduction dividend ECAP EOF after deduction dividend IFRS Equity increased SCR Eligible Own Funds increased ECAP Eligible Own Funds increased • IFRS net profit • Based on midpoint estimate of 185% • Organic capital creation • IAS 19 actuarial g
Slide 18: Solvency II key figures 2015
SCR Solvency II key figures 2015 Level • The movement of own funds and required capital is based on the 1,000 6,129 midpoint estimate of the group 4,925 solvency II ratio of 185% (based on 204 standard model, after proposed dividend) Own funds • Tier 1 capital comprises 84% of total own funds • Tier
Slide 19: SCR ratio vs Operating ROE
Movements Development of SCR ratio vs Operating RoE SCR ratio versus Operating ROE 200% c. 185% • Solvency II ratios based on FY the midpoint estimates 15 >160% optimal range 180% c. 170% FY 13.9% • SCR developments: 14 Due to change in regulatory SCR ratio 160% changes the group solvency >140% = ca
Slide 20: Group solvency ratio movement
Group solvency ratio movement* Movements (%) 11 10 Methodology changes 7 14 15 16 6 5 6 9 c.185 c.170 2014Q4 after Organic growth Market Hybrids & Business LAC DT Transitional Look Through Cost allocation Other Dividend 2015 2015Q4 after dividend developments acquisitions developments measure Life d
Slide 21: Transitional measure equities risk and look through
Transitional measure equities risk Movements and look through Transitional measure • Solvency II allows for application of transitional rule for calculation of equity market shock for specific (sub)sets of equities • The transitional rule defines a smaller downward shock of 22% that migrates in the
Slide 22: Loss Absorbing Capacity of Deferred Taxes
Loss Absorbing Capacity of Deferred Taxes Movements • Solvency II allows for inclusion of loss absorbing capacity of deferred taxes (‘LAC DT’) as deduction of required capital. The Solvency II standard formula does not recognize the concept of fiscal unity • Deduction of required capital by LAC DT c
Slide 23: Processing expenses in technical provisions Life
Processing expenses in technical provisions Movements Life • In estimating the best estimate liabilities, insurers should also take into account the costs that are made to service these policies in the future (‘all expenses that will be incurred in servicing insurance and reinsurance obligations’, a
Slide 24: Volatility Adjustment
Volatility Adjustment Sensitivities • The VA was introduced to the solvency II framework as an add-on to the discount curve. The VA is designed to ‘prevent pro- cyclical investment behavior’ and ‘mitigate the effect of exaggerations of bond spreads’ • The VA currently (as of 2015 Q4) stands at 0.22%
Slide 25: Sensitivities group solvency ratio
Sensitivities* group solvency ratio Sensitivities (%-points) 16 8 10 9 10 7 5 5 200% 3 2 -1 -3 >160% optimal range 180% -5 -4 -7 -12 -10 -10 -17 -16 160% >140% = cash dividend payment UFR Equities Real Credit Interest Interest Model level -100 bps -20% estate spread +100 bps -100 bps bandwidth 140%
Slide 26: Balance sheet management
Balance sheet management Operational Remittance 500 • As an illustration in 2014 and 2015 a.s.r. remitted resp. € 356 400 million and € 467 million of 222 capital to the holding company; 300 after this current solvency 156 +31% levels still exceed management 200 targets • Operational remittance 245
Slide 27: Financial risk indicators remain at a strong level
a.s.r.’s financial risk indicators remain at a strong level Financial leverage ICR • Hybrid capacity headroom more than € 1 billion 23.9% * 25.1% 14.6x 11.2x * 8.8x ** 9.8x ** 2014 2015 2014 2015 Double leverage S&P holding rating 121% * 102% BBB+ BBB+ For calculation of the 2014 2015 2014 2015 rati
Slide 28: 2015 objectives and achievements
2015 objectives and achievements Objective: further improve and differentiate on financial performance • Very strong financial result; a.s.r. delivered € 521 million operating profit and 13.9% Operating ROE. IFRS ROE grew to 17.2% • Dividends paid to shareholder grew further 22% to € 170 million • S
Slide 29: Contact details
Contact details Investor Relations [email protected] Michel Hülters T +31 (0)6 15 49 95 69 Barth Scholten T +31 (0)6 30 44 15 71 29
Slide 30: Appendix
Appendix A. Financial ratio’s B. Combined ratio’s per Product Line C. Operating result per segment D. Calculation of the combined ratio E. Calculation of the operating RoE F. Accounting and presentation changes in 2015 30
Slide 31: A. Financial ratios
A. Financial ratios Net result (€m) Operating result (€m) ROE Operating ROE 601 521 17.2% 423 13.9% 417 11.7% 11.0% 2014 2015 2014 2015 2014 2015 2014 2015 DNB solvency I Solvency II ** (st. model) Total equity Financial leverage 305% c.170% c.185% €4,259m 285% €3,709m * 23.9% * 25.1% 2014 2015 2014
Slide 32: B. Combined ratio per product line
B. Combined ratio per product line Dec. 2015 Dec. 2014 Segment Non-Life Claims ratio 71.1% 70.0% Expense ratio 8.9% 9.4% Commission ratio 15.0% 15.4% Combined ratio 95.0% 94.8% Disability Claims ratio 69.6% 71.0% Expense ratio 8.7% 8.3% Commission ratio 11.3% 12.0% Combined ratio 89.6% 91.3% Health
Slide 33: C. Operating result per segment
C. Operating result per segment Operating result: profit before tax adjusted for (i) investment income of an incidental nature (including realized capital gains, impairment losses and realized and unrealized changes in value) and (ii) incidental items not relating to ordinary activities as a result
Slide 34: D. Calculation of the combined ratio
D. Calculation of the combined ratio (€ million) 2015 2014 Net insurance premiums Non-life 2,235 2,225 Net insurance claims and benefits - 1,666 - 1,659 Compensation capital gains (Disability) 18 39 Interest accrual on provisions (Disability) 62 62 Prudence margin (Health) -3 - Total corrections 77
Slide 35: E. Calculation of Operating Return on Equity
E. Calculation of Operating Return on Equity € in millions Dec. 2014 Dec. 2015 Operating result (before tax) 417 521 Minus: Interest on hybrid instruments1 43 45 Operating result after hybrid costs (before tax) 374 476 Tax effect (25% tax rate) 94 119 Operating results after hybrids costs (net of ta
Slide 36: F. Accounting and presentation changes in 2015
F. Accounting and presentation changes in 2015 Accounting changes with retrospective effect as from 1 January 2014 • ‘Investment property’ and ‘property for own use’ are valued at fair value instead of at amortized cost • Deferred acquisition costs (DAC) are directly charged to the income statement
a.s.r. (ASR Nederland N.V.) — FY2015 Earnings Presentation on 6ix