NN Group reports 2Q17 results

Strong operating and commercial performance of the combined group; Solvency II ratio at 196%

  • Operating result ongoing business was up from EUR 321 million in 2Q16 to EUR 404 million, of which Delta Lloyd contributed EUR 49 million. The operating result excluding Delta Lloyd increased by EUR 33 million
  • Net result was down 28.2% from 2Q16 to EUR 240 million, of which Delta Lloyd contributed EUR 21 million. The net result excluding Delta Lloyd decreased by EUR 115 million, reflecting a provision related to ING Australia Holdings partly compensated by higher non-operating items
  • Strong commercial momentum: APE was up 43.1% from 2Q16 at constant currencies to EUR 400 million, of which Delta Lloyd contributed EUR 66 million. VNB for 6M17 was up 69.4% to EUR 170 million driven by Japan Life and Insurance Europe
  • Solvency II ratio of NN Group was 196% reflecting the acquisition of Delta Lloyd, positive market impacts, operating return and the deduction of the 2017 interim dividend
  • Holding company cash capital was EUR 1,731 million; including EUR 820 million dividends received from subsidiaries and EUR 500 million capital injection into Delta Lloyd Life
  • Interim dividend 2017 of EUR 0.62 per ordinary share or approximately EUR 209 million



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Statement of Lard Friese, CEO

‘Todaywe are reporting our first fully consolidated set of quarterly results for NNGroup and Delta Lloyd, and I am pleased with the strong overall performance ofthe combined group in the second quarter of 2017. We have seen a healthycontribution from Delta Lloyd, and almost all our segments reported improvedresults compared with a year earlier, most notably in Japan Life and InsuranceEurope. The results of our Netherlands Non-life business were impacted thisquarter by a EUR 40 million strengthening in the Property & Casualty insuranceliabilities. We continued to deliver cost efficiencies across our businesses,leading to a further reduction of our cost base. The Solvency II ratio was 196%,providing a solid foundation for the combined group going forward. Thecommercial momentum we saw earlier has been sustained, as both sales and thevalue of our new business increased significantly, and NN Investment Partnersagain attracted robust Third Party net inflows.

Wehave made steady progress in our first quarter together with Delta Lloyd, and astart has been made to integrate our businesses, with the aim of taking thecombined group into the next phase of our journey. Integrating twoorganisations and business cultures requires effort and focus. Throughout thisprocess, our employees remain committed to deliver an excellent customerservice, further innovate our businesses and to contribute to the societies inwhich we operate.

Weare excited to start this new chapter as a combined group, reporting a firststrong set of results. While we bring together the best of our businesses andcultures to integrate NN and Delta Lloyd in the Netherlands and Belgium, ourfocus remains on disciplined capital management, a strong balance sheet, and ondriving ahead with full energy to further improve the customer experienceacross our 18 markets.’

(download the full Press Release)


Quarterly Business Update

NN Group´s robust financialposition provides a solid foundation for executing the company’s strategy,which is to deliver an excellent customer experience based on transparentproducts and services and long-term relationships. NN Group aims to help peoplesecure their financial futures, and is committed to delivering products andservices that are easy to understand and meet customers’ lifetime needs.

Capturinggrowth

With the acquisition of DeltaLloyd, NN’s proposition in the Dutch pension market was further strengthened,especially in the area of Defined Contribution (DC) pensions. Delta Lloydbrings significant additional DC business to the existing NN portfolio, leadingto a combined #1 market position in DC. The first half of 2017 also showed asteady inflow of new contracts at AZL, NN Life’s pension administrator, for anumber of industry pension funds. These new contracts will significantlyincrease the total number of participants from almost 900,000 to 1,250,000 asfrom 1 January 2018.

Our general pension fund ‘DeNationale APF’ signed a contract with a new client, McCain. De Nationale APF isan independent entity which provides an attractive solution for pension fundsand employers to comply with increasingly complex pension regulations and tobenefit from economies of scale.

In the second quarter of 2017,the sale of protection products of Insurance Europe grew by 47.8% across theregion compared with the same quarter in 2016. Several of our business units inEurope developed health products. Forexample, our Spanish business expanded the ‘For You’ proposition to tiedagents. This product provides specific coverage for the diagnoses of breastcancer and offers specific services such as a second medical opinion, homecareand childcare services. A campaign raising awareness for cancer prevention,supported the marketing of the product.

NN Hellas in Greece introduceda new health insurance programme, ‘NN Orange Health’. This is specificallydesigned to meet the needs of young families, as it covers up to six insuredpeople in the same policy. NN Orange Health provides access to more than 40private hospitals in Greece at an affordable price. It includes coverage abroad,medical expenses in the event of an accident, surgical allowance, and urgenttransportation within Greece.

The NN Accident Insurancepackages of NN Hungary have proven to be successful, with more than 10,000policies sold to date, since its launch in the second quarter of 2016. Offeredonline, the packages provide specific coverage in the event of an accident,including coverage for daily hospital costs and loss of income, plus a ridercovering the costs of physiotherapy, assistance service and help at home. Thedemand for this product shows that customers are becoming more conscious aboutpreparing for the loss of income due to an accident. In addition to this, newriders were added to Motiva, NN Hungary’s easy-to-understand pension insuranceproduct.

NN Investment Partners sawpositive net flows for Third Party assets for the fourth consecutive quarteramounting to EUR 3.1 billion in the second quarter. And our banking businesses- NN Bank and Delta Lloyd Bank - grew their combined mortgage portfolio by EUR0.5 billion to EUR 17.4 billion in the second quarter of 2017. During that sameperiod, their customer savings grew by EUR 0.2 billion to EUR 13.7 billion.

Multi-accessdistribution

NN Group serves its customersthrough multiple channels, comprising tied agents, bancassurance partners, brokersand direct channels.

Following the acquisition ofDelta Lloyd, the distribution capabilities of NN Group have been expanded withthe inclusion of its direct channel OHRA and bank distribution channel ABN AMROInsurance in the Netherlands. ABN AMRO Insurance provides ABN AMRO customerswith life and non-life insurance product and service solutions in the Retailand SME segments. With over a million customers serviced through call centres,internet and branches, ABN AMRO Insurance is an attractive bancassuranceplatform in the Netherlands. In Belgium, the distribution scope has beenbroadened with the brokers and direct channels of Delta Lloyd Life Belgium.

In the second quarter of 2017,our businesses in Europe added new banks to the bancassurance platform, throughwhich life and non-life products are offered. NN Bulgaria added three newbanks, and in the Czech Republic the cooperation with Moneta Money Bank isshowing positive results with a significant increase in sales of life insurancepolicies and pensions. Nationale-Nederlanden in Poland started offering healthinsurance packages to customers through its strategic partnership with ING BankŚląski, using their online banking channel.

NN Hayat ve Emeklilik launcheda new partnership with Abank, a player in the Turkish and international market.This partnership enables customers to have access to NN Hayat ve Emeklilik’sproduct portfolio through Abank’s 53 branches across Turkey, over the next 5years.

Bancassurance COLI sales forJapan Life increased by 26.4% at constant currencies, compared with the secondquarter of 2016, despite increasing competition. Higher sales were driven bythe higher bank activation and the expansion of the bank distribution network to68 partners as of end of June 2017, compared with 57 partners a year earlier.Furthermore, Sumitomo Life started offering NN Life Japan’s COLI products fromthe beginning of April 2017, contributing over 10% of Japan Life’s total salesthis quarter.

Effectiveand efficient operations

NN Group is committed tomaking its processes as efficient and effective as possible. The businesses inthe Netherlands are working on the integration process with Delta Lloyd, but atthe same time continue to implement efficiency initiatives. For example, NNLife is separating its pension business into Pension Services and Pensions NewBusiness to further improve the customer experience for both segments.

Furthermore, NN Life hassuccessfully migrated around 140,000 policies to a new platform. This systemcreates a flexible cost structure and enables our customers and tied agents tosee their product details online.

Innovation

NN’s innovation lab, Sparklab, in Hungary is developingseveral health initiatives, including a mobile application connected to a smartdevice to help those living with diabetes. The aim of the project is to usetechnology to help people to take care of their health and make it easier tofollow their health status and results. Sparklab in the Netherlands launched‘Bundelz’, the first prepaid car insurance. It allows customers to buy a1,000-kilometre bundle of car insurance, instead of paying a monthly premium.This user based service is ideal for drivers who only drive occasionally, orshort distances. The Dutch Cyber Collective, an NN initiative supporting SMEsto reduce cybercrime, launched the ‘Cyberwacht’, an emergency service forhacked companies. The Cyberwacht limits damage, investigates causes and removesmalicious software.

We offer our agents and employees digital tools tosimplify and improve the experience of our customers. For example, we aredeploying new digital illustration tools for our agents to help customersselect the right products and services. Paperless application processes,including electronic underwriting and biometric signatures, enable ourcustomers to access our products and services effortlessly.

Movir, which offers individual disability insurance toself-employed workers in the Netherlands, joined forces with Totem Open Health,an innovative start-up in the mobile health sector, aimed at detecting andaddressing people’s high stress levels. Based on data from ECG sensors usingTotem, a person’s stress level can be monitored, which, if needed, prompts theuser to seek timely help in order to prevent potential burnout.

Otherevents

As part of our commitment to society, NN Group endorsedthe final recommendations of the Financial Stability Board (FSB) Task Force onClimate-related Financial Disclosures. A consistent disclosure framework helpsus as an investor and insurer, to more effectively measure the financialimplications of climate change. To demonstrate that climate change warrantsspecific attention, NN Group has published the carbon footprint of a large partof its proprietary assets, and joined the Institutional Investors Group onClimate Change (IIGCC). These steps help us to engage with investee companiesto encourage them to reduce greenhouse gas emissions and support the ParisAgreement.

OHRA, Delta Lloyd’s direct distribution channel forhealthcare and non-life protection products won a SAN Accent Award for itshealth insurance campaign in the Netherlands.

(download the full Press release)


Investor conference call and webcast

Lard Friese and Delfin Rueda will host an analyst andinvestor conference call to discuss the 2Q17 results at 10.00 am CET onThursday 17 August 2017. Members of the investment community can join theconference call at +31 20 531 5865 (NL), +44 203 365 3210 (UK), +1 866 349 6093(US) or follow the webcast on www.nn-group.com.

Press call

Lard Friese and Delfin Rueda will host a press call to discuss the 2Q17 results, which will be held at 12.00 pm CET on Thursday 17 August 2017. Journalists can join the press call at +31 (0)20 531 5863.

Financial calendar          

  • Publication 3Q17 results: 16 November 2017
  • Capital Markets Day: 30 November 2017
  • Publication 4Q17 results: 15 February 2018

Additional information

  • Photos of NN Group executives, buildings and events are available for download at Flickr
  • NN Group is an international insurance and asset management company, active in 18 countries, with a strong presence in a number of European countries and Japan. With all our employees the Group offers retirement services, pensions, insurance, investments and banking to approximately 17 million customers. NN Group’s main brands are Nationale-Nederlanden, NN, Delta Lloyd, NN Investment Partners, ABN AMRO Insurance, Movir, AZL, BeFrank and OHRA. NN Group is listed on Euronext Amsterdam (NN).
  • 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 of the Dutch Civil Code.

    In preparing 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 2017.

    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 or European Union countries leaving the European Union , (4) changes in the availability of, and costs associated with, sources of liquidity as well as conditions in the credit markets generally, (5) the frequency and severity of insured loss events, (6) changes affecting mortality and morbidity levels and trends, (7) changes affecting persistency levels, (8) changes affecting interest rate levels, (9) changes affecting currency exchange rates, (10) changes in investor, customer and policyholder behaviour, (11) changes in general competitive factors, (12) changes in laws and regulations and the interpretation and application thereof, (13) changes in the policies and actions of governments and/or regulatory authorities, (14) conclusions with regard to accounting assumptions and methodologies, (15) changes in ownership that could affect the future availability to NN Group of net operating loss, net capital and built-in loss carry forwards, (16) changes in credit and financial strength ratings, (17) NN Group’s ability to achieve projected operational synergies, (18) catastrophes and terrorist-related events, (19) adverse developments in legal and other proceedings and (20) the other risks and uncertainties contained in recent public disclosures made by NN Group.

    Any 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.

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