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7 Dec 2017 - 09:26 CET

David Knibbe about NN and Delta Lloyd: ‘We don’t want to be a new old company’

‘You need to integrate before you improve.’ Last Monday, Dutch online magazine ‘am:web’ published an interview with David Knibbe in which he clarifies this message.

David also explains what he thinks is necessary for a successful unification of Delta LIoyd and NN Group.  Please read the English version of the interview.

To successfully unify NN Group and Delta Lloyd in the Netherlands and Belgium, it is important that the initial focus is on integration and then on improving the merged company. ‘Intuitively, you want to do both at the same time, but then you lose momentum’, says David Knibbe, CEO of Nationale-Nederlanden. ‘That doesn’t mean standing still; we need to carry on innovating.’ To forge a single new culture, he learnt from businesses that had undergone the same process, such as Ahold and Delhaize, as well as ABN AMRO and Fortis. ‘We don’t want to be a new old company. We shouldn’t be too internally focused.’


Since Delta Lloyd and NN Group formally became a single company, there have been around 155 appointments at management level and in the layers immediately below, explains David Knibbe, who became CEO of Delta Lloyd at that time in addition to being CEO of Nationale-Nederlanden. ‘We deliberately acted quickly so that we could draw up integration plans straight away.’ Some of these plans were presented to shareholders and other stakeholders recently at the NN Group Capital Markets Day. One of NN Group’s announcements was that it wanted to save € 350 million by the end of 2020 and was aiming for average growth of between 5% and 7% in the operating result in the medium term.

Apart from the figures, how do you unify two businesses in practice?

Knibbe: ‘We made a start on day one by hosting 65 town hall meetings, during which we shared our plans with employees. Before that, there had been smaller sessions to get to know one another and to launch collaborative ventures. This is easier for corporate staff positions in the business units than it is for the operational side, where you are dealing with two kinds of customers: the NN and Delta Lloyd customers. In 2018, the Delta Lloyd brand will disappear and all new and existing products will be assigned the NN label, apart from, of course, brands that will continue to exist, such as Ohra and BeFrank. But operationally, for the time being, there will be two types of infrastructure.’

When will you have aligned the infrastructure?

‘There is not a specific timeframe for that. Furthermore, most insurers have several platforms in their own environment and these can continue to coexist. To benefit from the acquisition in that area, too, systems will disappear over the next three years. At non-life, we want to move from eight platforms to a single platform. In our life and pension business, we will get rid of eight to ten platforms.’

Perhaps trickier, but how do you forge a single business culture?

‘Yes, that is indeed a major challenge. In the sector, we have a tendency to look at the differences. Delta Lloyd is more commercial, more enterprising; NN is a professional organisation with lots of knowledge and expertise. We have a tendency to magnify these differences, whereas experts in cultural differences are telling us that viewed from a distance, the difference is not that great. Both companies have the same products and employees with more or less the same background and age range.

Our goal is to allow both strengths to return. At Nationale-Nederlanden we have seen how successful Delta Lloyd’s strength can be. We certainly want to retain this. In the pooling of resources, we see opportunities not only to expand the company, but also to become a more successful company. From the outset, we have said that we want the best managers. This has led to a mix of Delta Lloyd and NN managers in the business units. A new culture starts with mixing and that’s already happening automatically. ‘Delta Lloyd Young’ is also inviting NN young people to an event. Departments are taking all kinds of initiatives to get to know one another without us imposing it from above.’

Are you using your experiences of other large businesses that have recently merged?

‘I have visited various integration offices. For example, we went along to Aviva and Friends, two insurers that also merged in their own market. And ABN AMRO/Fortis Bank Nederland, which - although they are banks - have lots of areas of overlap, but we also visited Ahold and Delhaize. Delhaize is slightly smaller and is seen as being more enterprising, whereas Ahold is going forward as the large supermarket group with lots of knowledge. So, there are parallels to be drawn here.’

What did you learn from them?                  

‘Two things emerged from all of our visits. First of all, the partners had decided to communicate a great deal, but subsequently found that they could have done more. There is no such thing as too much communication. We have invested a lot of energy in this. When do you get it right? Perhaps when people say that they are not hearing anything new anymore.

The second thing that was said everywhere was: integrate then upgrade. You need to integrate before you improve. That is how you pick up the most speed. Intuitively, you want to make the two existing businesses better, but that is at the expense of the integration. For 2018, the emphasis will therefore be placed on integration: it’s good to listen to our employees, good to hear what customers are saying.

After that comes improvement. How much change can a business cope with at the same time? The agendas are full: legislation is changing, the sector is digitising. This comes on top of that. You don’t want to do too much too soon. ABN AMRO took this approach from the very start of the integration with Fortis Bank Nederland. We are going to have a close look at this.’

Did the other parties strongly advise you against anything?

‘That a merger of equals is very difficult. If you want to decide everything together, it takes longer. That’s why we appointed the CEOs from day one. We wanted to get away from thinking along Delta Lloyd and NN lines as quickly as possible. The management teams are dealing with the joint life or banking operations. This is how you avoid the status quo.’

What is your big fear in this acquisition process?

‘You don’t want to become a new old business. If you are fully integrated after three years, but haven’t innovated, something has gone wrong. We need to look outside, not just focus internally. That’s one of the things I’m most alert to.’

That seems to contradict the advice to integrate first then improve.

‘No, it doesn’t, because you can also innovate outside the company, for example, in a start-up environment such as Sparklab (NN’s innovation lab, ed.). When new products become successful, we bring them into the company and identify where they can best be applied: at Nationale-Nederlanden or with one of the labels. What I mean to say is that you definitely need to be in tune with what is happening outside. This is why we constantly measure customer satisfaction and have held sessions with more than 500 intermediaries about what opportunities they see and what they are worried about. As a follow-up, we recently kicked off dialogue sessions at am:dag. I also visit intermediaries.’

What message do you have for intermediaries?

‘That they are very important to us. We want to include them in our business plans. That’s why we want to know what their concerns are, but also where they see opportunities to work together.’

The concerns are about the erosion of supply, aren’t they?

‘Yes, that is certainly one of the concerns, but there are still plenty of insurers in the Netherlands, certainly if you compare them with the banking landscape. Whether that is a problem, is something you can agree or disagree with. I ask myself what the intermediary needs. Is that to always be able to choose between at least five insurers for all customers? Or to look together at where there are opportunities?’

What opportunities can you offer intermediaries?

‘We have an awful lot of customer data and by merging, the database has grown even larger and we are able to perform better data analyses. We can share the outcomes with intermediaries, tell them what their customers are likely to need. They may require a particular product, but they may also need a service. When intermediaries give us feedback, we can enrich our data again. The better we are at analysing data, the more we can help intermediaries with advice for their customers.’

That’s externally, but what’s the atmosphere like in the business now? Has the Capital Markets Day created more transparency and therefore more certainty and calm among employees?

‘We hold what we call ‘Hello You’ meetings during which we ask employees how much confidence they have in the new combined business and whether they are ready or willing to embrace the change and whether they feel they are capable. We have taken three measurements and we are seeing an upward trend. The green group, which is positive, is growing, while the much smaller red group is shrinking. But there is still a large group of grey in between. They are not sure yet. That’s because we have announced that jobs will go, but not how many. This means that some people are uncertain whether they will have a job and where that job will be.’

When will employees be given that certainty?

‘The pace of integration differs for each business unit. (Asset management and banking are taking the lead; life and non-life businesses are following at a slower pace, ed.). We need to request advice for each entity and consult stakeholders. Most people know when the advice is being requested for their department.’

Have you been inspired in this approach by your experiences at one of the integration offices you visited?

‘No, I don’t believe so. It was our own idea to tackle it this way. NN Group and Delta Lloyd have lots of experience with this kind of process. Before the integration, NN and Delta Lloyd had announced that they wanted to reduce costs and both companies have undergone reorganisations in the past.’

I can imagine that having transparency quickly can also ensure greater calm in the organisation.

‘We would prefer to have clarity as soon as possible and we are working very hard to achieve this. I haven’t heard anybody say that the pace of integration is too slow. We have already made lots of choices, at management level, at a job level, and at the level of technical systems. And what I’ve seen from other integrations is that employees are more focussed on their own job than on looking at the business as a whole.’

Nobody thinks the pace is too slow. Could it be too fast? Or can’t the integration and reorganisation be completed quickly enough?

‘You want to do it carefully. There are limits for how fast you can go and this is partly to do with rules. You need to consult stakeholders, sit down with the Works Council, you want to include parties in your decision making. We are trying to get things done as quickly as possible within the limits.’

When can you call the integration a success?

‘If we succeed in building a company in which our customers and other stakeholders recognise and acknowledge the strength of Delta Lloyd and Nationale-Nederlanden. Then I’d be very proud.’

And when is that?

‘Officially, the process will take three years, that’s what we have agreed. I hope that customers will quickly experience the strength of both businesses.’