Robust capital position and improved operating result
- Operating result ongoing business of EUR 274 million, up 16.6% from 3Q13, supported by the expense reduction programme in the Netherlands and lower debt funding costs. Year-to-date operating result ongoing business up 20.6%
- Net result improved to EUR 354 million versus a net loss of EUR 652 million in 3Q13, which included a loss on the divestment of ING Life Korea. Year-to-date net result 18.4% lower, reflecting a one-off charge in 1Q14 for making the closed defined benefit pension plan in the Netherlands financially independent
- Robust capital position maintained; IGD ratio up at 283% and holding company cash capital stable at EUR 1.2 billion
- Year-to-date cost reductions of EUR 108 million achieved in the Netherlands
- New sales up 17.2%, at constant currencies, supported by Japan Life and pension renewals in Netherlands Life
- Assets under management at Investment Management increased to EUR 180 billion driven by strong market performance
Statement of Lard Friese, CEO
“NN Group delivered a set of strong results demonstrating progress towards our medium term objectives. As part of the listing process resulting in the IPO of NN Group on 2 July, we presented our strategic financial objectives in June this year with a focus on capital generation and earnings improvement.
Our capital position remains strong, mainly supported by capital generation from operating entities, a pre-IPO capital injection and favourable markets. At the same time, we continue to reduce expenses. With the successful implementation of the transformation programme in the Netherlands we are on track to meet our EUR 200 million expense reduction target by 2016, with realised cost reductions of EUR 108 million this year so far.
The core of our strategy is to deliver an excellent customer experience. Our continued strong new sales growth in all regions underscores the dedication of our employees to keep our customers at the heart of everything we do. This is demonstrated by the increased sales in Japan Life, Insurance Europe, NN Bank and the pension business in the Netherlands.
Although we are still at the beginning of our journey as an independent company we are pleased with the strong performance and the progress we have made so far on delivering on our strategic objectives.”
Strategy and business highlights
NN Group’s strategy is to deliver an excellent customer experience, based on great service and long-term relationships. We aim to achieve this by offering transparent products and services that serve customers’ lifetime needs. We do this by making our multi-access distribution network available to customers wherever required, and by maintaining effective operations that deliver an excellent customer service. The strategic financial objectives are to generate capital and improve earnings. The year-to-date results demonstrate the initial progress made in delivering these. Improved operating results are supported by significantly reduced expenses. The strong commercial performance is demonstrated by sales growth across the group.
In the Netherlands Life segment, expenses are in part driven by the positive impact of the transformation programme in the Netherlands. The investment margin increased due to higher dividends on private equity, the shift to higher-yielding assets and higher invested volumes. New sales (APE) continued to grow driven by pension contract renewals. The capital position of NN Life remains strong with a Solvency I ratio of 252%. The strong position in the pension market has recently been recognized by Dutch business magazine Management Team. Their annual survey among managers ranks Nationale-Nederlanden first in pensions and second in insurance.
The successful reduction of expenses related to the transformation programme in the Netherlands also contributed to an increased operating result in the Netherlands Non-life segment. The operating result for Property & Casualty (P&C) suffered from a negative claims development, while in Disability & Accident (D&A) the results improved due to management actions to restore profitability and a favourable claims development.
Insurance Europe is moving its business mix towards protection products as well as repositioning its retirement services towards solutions that provide customers with downside protection in the low interest rate environment. The operations continue to increase retention and new business through an improved customer experience. The year-to-date sales increased 10.8% (excluding currency effects) supported by higher life sales in most countries. At the same time, the year-to-date expenses decreased.
Japan Life has increased its agency productivity and diversified its distribution channels by substantially expanding its bancassurance channel (recruiting 10 new bank distribution partners this year). Together with the more positive sentiment created by the steady economic recovery in Japan this resulted in substantially higher new sales with a year-to-date increase of 21.2%, excluding currency effects.
Investment Management aims to grow its third party business by following a tailored approach for each client segment. In its retail business and in its home markets, Investment Management plans to protect and further expand its leading positions and continues to develop a more distinct range of equity products. Assets under management increased to EUR 180 billion this quarter driven by favourable market performance. After a successful tender process, Investment Management has been appointed as one of the four parties to conduct the Asset-Backed Securities Purchase Programme of the European Central Bank. This mandate is a recognition of the expertise of Investment Management in Asset-Backed Securities trading.
NN Bank’s mortgage portfolio increased to EUR 7.4 billion from EUR 6.2 billion at the beginning of this year in line with its strategy. This increase is the result of new production and the transfer of ING Bank mortgages, partly offset by the sale of mortgages to NN Life. NN Bank continues to build its product offering in the Netherlands with the introduction of a consumer lending product in February of this year and a credit card in October. As part of our corporate citizenship programme that focuses on improving people’s financial well-being, NN Bank donates 10 eurocent for each credit card transaction to the Linda Foundation, a charity that helps (single-parent) families in financial distress. Consumer savings continued to grow by offering competitive rates and attractive products, leading to total customer deposits of EUR 6.6 billion at the end of the third quarter.
(download the full press release)
NN Group Profile
NN Group is an insurance and investment management company with a strong, predominantly European presence in more than 18 countries. With around 12,000 employees the group offers retirement services, insurance, investments and banking to more than 15 million customers. NN Group includes Nationale-Nederlanden, ING Insurance Europe, ING Investment Management and ING Life Japan, and is listed on Euronext Amsterdam (ticker: NN).
Media conference call
Lard Friese and Delfin Rueda will host a media conference call to discuss the 3Q14 results at 9.30am CET on Wednesday 5 November 2014. Journalists can join the conference call at + 31 20 531 5863.
Investor conference call and webcast
Lard Friese and Delfin Rueda will host an analyst and investor conference call to discuss the 3Q14 results on 5 November 2014 at 10:30am CET. Members of the investment community can join the conference call at +31 20 531 5865 (NL), +44 203 365 3210 (UK) or +1 866 349 6093 (US) and via live audio webcast at www.nn-group.com.
Publication 4Q2014 results: Wednesday, 11 February 2015 (provisional)
Publication 1Q2015 results: Thursday, 7 May 2015 (provisional)
Annual General Meeting: Thursday, 28 May 2015
The following documents are available on www.nn-group.com:
Important legal information
Annual Accounts are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union (“IFRS-EU”).
the financial information in this document, the same accounting principles are
applied as in the NN Group N.V. condensed consolidated interim financial
information for the period ended 30 June 2014. All figures in this document are
unaudited. Small differences are possible in the tables due to rounding.
Certain of the
statements contained herein are not historical facts, including, without
limitation, certain statements made of future expectations and other
forward-looking statements that are based on management’s current views and
assumptions and involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially from those
expressed or implied in such statements. Actual results, performance or events
may differ materially from those in such statements due to, without limitation:
(1) changes in general economic conditions, in particular economic conditions
in NN Group’s core markets, (2) changes in performance of financial markets,
including developing markets, (3) consequences of a potential (partial) break-up
of the euro, (4) the implementation of the EC Restructuring Plan, (5) changes
in the availability of, and costs associated with, sources of liquidity as well
as conditions in the credit markets generally, (6) the frequency and severity
of insured loss events, (7) changes affecting mortality and morbidity levels
and trends, (8) changes affecting persistency levels, (9) changes affecting
interest rate levels, (10) changes affecting currency exchange rates, (11)
changes in investor, customer and policyholder behaviour, (12) changes in
general competitive factors, (13) changes in laws and regulations, (14) changes
in the policies of governments and/or regulatory authorities, (15) conclusions
with regard to accounting assumptions and methodologies, (16) changes in
ownership that could affect the future availability to us of net operating
loss, net capital and built-in loss carry forwards, (17) changes in credit and
financial strength ratings, (18) NN Group’s ability to achieve projected
operational synergies and (19) the other risks and uncertainties detailed in
the Risk Factors section contained in the most recent annual report of ING
forward-looking statements made by or on behalf of NN Group speak only as of
the date they are made, and, NN Group assumes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information or for any other reason. This document does not constitute an offer
to sell, or a solicitation of an offer to buy, any securities.