Capital Markets Day
10 October 2018 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
Excel and expand Jos Baeten Chief Executive Officer Two exciting years since our IPO
Inaugural Cost variabilisation “textbook IPO” EUR Standard model RT1 issue Consolidation “Abroad is “Up to 12%”
for holidays” SII 194% index AEX holding cash Generali NL Cost of equity? “it’s 10%” Value over volume
Funeral insurance Largest private landowner NLFI COR Ambitious Bolt-on Financial flexibility targets Consistent target delivery Organic capital Conservative creation
assumptions
reinsurance
Mass lapse Mass
Craftsmanship
Shadow accounting Shadow methodology
5 Helping our customers is the reason we are in business
6 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 a.s.r. at a glance
Business mix (GWP) 3,800
36% EUR 4.0 employees (fte) #3 billion 2017 64% founded in leading market multi-brand “helping by doing” 1720; deeply positions and #3 and multi- rooted in Dutch channel overall Non-life society distribution; focus on Life +40 intermediaries net promotor score
value over helping volume customers 2008 2016 2017 to mitigate risks and nationalised; key strategic principle accumulate wealth no state aid received successful IPO privatisation completed
8 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 • Corporate social responsibility • Climate change
Economic & financial markets Political & regulatory
• Volatile financial markets • Withdrawing government • Low(er) interest rates for longer • From collective to individual arrangements • Reduced risk premiums • Higher capital requirements • Value chain integration • Rising retirement age
9 Strong and unique investment proposition still intact
Skilled and experienced management focused Strong solvency with high-quality capital on execution and delivery 8 1
Profitable LDI asset management platform Track record of attractive return on equity, with outstanding track record 7 2 capital generation and growing dividends
Proven cost reduction capabilities and Diversified and resilient Dutch insurer with continuing focus on operational efficiency 6 3 leadership in attractive market segments
Excellence in pricing, underwriting and 5 4 Differentiated distribution underpinned by highly claims management reputable brands
10 Our strategic principles drive performance
Value over volume
Excellence in pricing, Meeting customer Solid financial underwriting and Cost effectiveness needs framework claims management
11 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 14.4 14.6 14.7 > 160% Up to 12% Single medium-term target medium-term target 194% 14.7% ✓ ✓ ✓ ✓ A 2015 2016 2017 1H18 2015 2016 2017 1H18 2015 2016 2017 1H18
Combined ratio Operating expense reduction Financial leverage (%) (EUR million) (%) 97.1
95.6 < 97% EUR 50 million 25.1 25.2 25.3 25.4 <30% 95.1 medium-term target >50 medium-term target medium-term target 95.0 18 97.1% 23 25.4% 2015 2016 2017 1H18 2016 2017 2018 Total 2015 2016 2017 1H18
12 Generating attractive capital returns to shareholders
Ordinary dividend Dividend per share (EUR) • Ambition to offer a stable to growing dividend per share 1.63 1.27 • Pay-out ratio 45% - 55% of net operating result (after hybrid 1.13 1 expenses) 0.65 Interim • Interim dividend 40% of last year’s total ordinary dividend dividend
2015 2 2016 3 20173 1H183 Capital returned Capital return to shareholders (EUR million) • EUR 764 million of capital has been returned to shareholders since IPO (June 2016) 442 322 SBB 255 Interim • In total, 9 million shares were bought back 92 dividend 170 (EUR 255 million) to support the government’s exit 139 187 230
2015 2016 2017 1H18
1 In general, a.s.r. expects not to pay cash dividends if the Solvency II ratio (calculated in accordance with the standard formula) falls below 140% 2 Number of shares for 2015 restated to 150 million shares 3 Number of shares for 2016 is 147 million shares. Number of shares for 2017 is 141 million shares. Treasury shares are not eligible for dividend
13 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 offer a stable to growing entrepreneurship dividend per share
Organic capital creation Financial leverage Rating (EUR million) (%) (S&P) > € 430m < 35% Single A To be realised in 2021 At least
1 Targets are based on the assumption of normal market, environmental and economic conditions and no material regulatory changes and on stand-alone basis 2 In general, a.s.r. expects not to pay cash dividends if the Solvency II ratio (calculated in accordance with the standard formula) falls below 140%
14 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-life Life operating expenses (%, excluding Health) (bps)
GWP growth (organic) 3-5% 45-55 bps
Per annum On basic life provision
1 Targets are based on the assumption of normal market, environmental and economic conditions and no material regulatory changes and on stand-alone basis 2 Asset management and Distribution & services
15 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 investment portfolio 95% >44 +5% Impact by 2021 investments Per annum by 2021 € 1.2bn
1 Targets are based on the assumption of normal market, environmental and economic conditions and no material regulatory changes and on stand-alone basis
16 Our plan to deliver on the targets
Maintaining Managing Pursuing our financial the value from profitable growth discipline existing businesses in selective areas
17 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
18 Rational approach to capital deployment and return
Solvency ladder Are we in the on standard formula entrepreneurial Deploying capital in growth zone? Invest in organic growth
Inorganic Yes growth in domestic market >160%: entrepreneurial level
>140% cash dividend payment level
Invest in 120% risk appetite level market risk
100% SCR
19 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 Leidsche Pensions DB Funeral Bank Life Rijn Centrum
20 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
• underwriting leadership • Maintaining superior COR + Add volume / scale on existing platform • claims management • Optimising portfolio of Generali NL 66% • Finalising IT migration + Selective inorganic growth GWP • cost effectiveness EUR 2,579 million • Proprietary disability platform Disability • Focusing on sustainable Disability • Leader in broker channel employability + Focus on platform and • Sustained profitable COR • Unlocking prevention / vitality proposition extension 26% services potential Operating + Acquisitions and partnerships result Health EUR 188 million • Continue supporting Disability
21 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 book consolidation variabilisation • Simplified and aligned processes 37% and products • Excel in product rationalisation and GWP migration of administrations + Finalise Funeral consolidation EUR 1,453 • Low cost operation with convincing million migration and consolidation track • Optimising investment returns record
• Optimisation of Solvency II capital Operating result EUR 633 million 87%
22 Asset management: Pursuit of selective (in)organic growth
Our foundation Our current focus Growth opportunity
Continue buy and build 2017 • Long experience with LDI • Leverage niche expertise in selected + approach higher margin propositions • Differentiation in quality and Own sustainability • Pensions DC supports fee-based rd + Capture pensions assets (DC) 3 parties 27% 73% account income a.s.r. • Excellent track record in Dutch Total AuM EUR 54 mortgages market • Exploring opportunities in real estate + Offer expertise in mortgages billion and LDI solutions • Dedicated real estate manager • Utilising expertise in ESG funds with core real estate funds and mortgage funds Expand real estate platform + 1% • Suite of capital light pension Operating solutions (APF, DC) result EUR 7 million
23 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 billion3 of technical provisions are serviced by mid-market players Non-life mid-market: cumulative EUR 4 Disability billion of GWP EUR 4 billion 12 insurers • Drivers of market consolidation are apparent: GWP • Regulatory developments: Solvency II and IFRS 17 • Lack of new production in Life Life (2017)1,2
Mid-market: cumulative EUR 13 billion 13 insurers GWP EUR 20 billion of technical provisions
1 Based on DNB data, which exclude foreign regulated entities operating in the Netherlands. Allianz Netherlands based on company publications 2 Top 5 consists of a.s.r., Achmea, NN, Aegon and Vivat 3 Solvency II value of the technical provisions including risk margin and after reinsurance. Source: SFRC reports
24 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
Quality balance sheet enabling pursuit of profitable growth Chris Figee Chief Financial Officer 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 shareholders
28 Strong historical performance driving earnings and dividend per share
Operating result Earnings per share1 (EUR million) (EUR) CAGR: +17% CAGR:+20%
729 622 3.53 537 2.46 2.88 382 1.87
2015 2016 2017 1H18 2015 2016 2017 1H18
IFRS result pre tax Dividend per share (EUR million) (EUR) CAGR: +18% CAGR:+20%
1,128 1.63 806 855 1.13 1.27 481 0.65
2015 2016 2017 1H18 2015 2016 2017 1H18
1 Based on net operating result (after hybrid expenses)
29 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
16 3 12 12
2015 2016 2017 1H18 2015 2016 2017 1H18
Non-life Distribution & Services
Robust and predictable service books Non-core businesses2 Operating result IFRS result (EUR million) (EUR million) 633 17 559 0 2 441 340
-91 2015 2016 2017 1H18 2015 2016 2017 1H18
1 Excluding a.s.r. Bank 2 Including a.s.r. Bank
30 Strong return on equity on growing stock of book equity
Operating result (EUR million) 537 622 729 382
CAGR:+10%
IFRS equity 4,432 4,493 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, 2 Annualised
31 Solvency II and capital management – stock
High
“Do we generate Insurance
enough?” Nirvana Solvency ‘stock’ (SII ratio) “Do we have enough?”
Low Solvency ‘flow’ (capital generation) High
32 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 3,338 3,374 6,826 6,935
Insurance 6,299 2,481 2,728 6,076 2,488 2,362 1,548 1,541 Hybrids 1,214 184 219 Operational 1,204 176 181
2,773 2,710 Market 2,368 2,533
Unrestricted 511 555 600 637 CDR Tier 1 -462 -586 5,279 5,393 -743 -770 LACDT 4,872 5,084 -1,708 -1,708 -1,817 -1,951 Diversification
2015 2016 2017 1H18 20154 2016 2017 1H18
1 In % of required capital excl. LACDT and diversification 2 After deduction of (proposed) dividend payments 3 Excluding a.s.r. Bank 4 Day one reporting
33 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%, in line with direct yield on investment portfolio
34 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 dividend Total impact expressed as % Impact on required capital Impact on EOF expressed as payment level of group solvency ratio expressed as % of group % of group solvency ratio solvency ratio
120% risk appetite level
100% SCR
35 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 strongly capitalised 200%
Range 180%
160% Group diversification benefit (2016 - 1H18, %-SCR points) 140%
120%
11% 11% 9% 100% a.s.r. a.s.r. a.s.r. Non-life1 Life 2 2016 2017 1H18
1 ASR Schadeverzekering N.V. 2 ASR Levensverzekering N.V.
36 Ample financial flexibility and choice for optimal instrument
• Balance sheet provides funding optionality Financial flexibility Financial leverage • Leverage only to be used for profitable, (EUR million, 1H18) (%) Max business-driven, deployment of capital 749 845 35 • Call 2019 pre-financed, unless favourable 1,541
market conditions and/or capital deployment 25.3 25.4 options present themselves, in which case 5,393
additional financing round may be executed 2017 1H18 EOF T1 Headroom T2 + T3 • Most constraining is financial leverage at max. Headroom 35% – headroom of circa EUR 900 million at 1H18 Interest coverage ratio Debt maturity profile (IFRS, multiple) (EUR million)
Potential call 16 pre-financed 12 Min 500 500 300 4 200
2017 1H18 2019 2024 2025 2027
37 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 1 Financial leverage
a.s.r. 105 a.s.r. 25
EU Life peers 164 EU Life peers average 28 average
Min Max Min Max
Source: a.s.r. company data, public disclosures, based on 2017 results EU Life insurance group consists of a.s.r., Aegon, Ageas, Axa, CNP, Generali, NN Note: 1 In % of required capital excl. LACDT and diversification; 2 High yielding assets consist of equity investments, real estate, and < BBB and unrated corporate bonds; a.s.r. real estate excludes rural portfolio
38 Solvency II and capital management – flow
High
“Do we generate Insurance
enough?” Nirvana Solvency ‘stock’ (SII ratio) “Do we have enough?”
Low Solvency ‘flow’ (capital generation) High
39 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 GNL incl. GNL generation1 movements operational dividend dividend developments
1 Previously labelled ‘Operational capital generation’ or ‘OCG’ and as from now renamed to ‘Business Capital Generation’ or ‘BCG’
40 Three perspectives on flow over multiple periods
1 1 Business capital generation 2 Organic capital creation 3 Total EOF accretion (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 excludes impact from share buybacks, RT1 issuance and dividend
41 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 ‘Business Capital Generation’
• As of today, this is relocated to the bucket ‘Release of Capital’ 322 310 • Netting of risk margin effects ‘Release of 288 capital’ 264
• release of risk margin from decreasing 170 149 139 book of business, and 2H 131 • addition of risk margin from new 130 118 business
• OCC remains unchanged 153 161 1H 133 149
2016 2017 1H18 2016 2017 1H18
42 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) 377 348 • Growth of fee income 67 Other OCC 26 • Inclusion of Generali NL • Lower UFR unwind 179 322 310 49 Business Capital Generation 130
2016 2017 1H18 Target 2021
• Based on existing Long Term Investment Margin assumptions
43 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 AM (excl. Bank) improved to • Increase in fee based operating result at Distribution & Services: EUR 10 million (1H18) from EUR 3 million to EUR 16 million in 2015 - 2017 • Optimised investment platforms (Real Estate, ESG & Mortgage) to attract new investors and recurring fee income
Robust and predictable Non-core service books businesses
• Optimising investment portfolio • Successful sale of largest part of Real Estate Development • Added EUR 7 billion in AuM from acquisitions • Containment of Leidsche Rijn Centrum exposure • Excess return in OCC increased to EUR 298 million in 2017 • Bank moved into non-core • Realising synergies of recent acquisitions (Funeral, Generali NL)
44 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. • Operating ROE 12% • Operating ROE 11% (1H18: >20%) • IFRS ROE 14% • IFRS ROE 9%
Robust and predictable Non-core service books businesses
• IFRS equity EUR 4,111 million • IFRS equity EUR 115 million • SII Eligible Own Funds 3 EUR 5,101 million • SII Eligible Own Funds n.a. • Operating ROE 13% • Operating ROE n.a. • IFRS ROE 18% • IFRS ROE n.m.
1 Combination of Non-life and Distribution & Services 3 ASR Levensverzekering N.V. 2 ASR Schadeverzekering N.V., ASR Basis Ziektekostenverzekeringen N.V, 4 Bank & Asset Management excluding Bank ASR Aanvullende Ziektekostenverzekeringen N.V.
45 Converting 2017 earnings and capital generation into dividends
Net IFRS earnings Business capital generation EUR 906 million Dividend pay-out ratio EUR 310 million
45 - 55 % 74 % - Incidentals - Capital gains
Dividend
Net operating result EUR 230 million Organic capital creation (after hybrid expenses) EUR 511 million EUR 377 million 61 %
46 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 322 348 310 377 130 179
Business OCC Business OCC Business OCC capital capital capital generation generation generation
1 Net operating result net of hybrid costs
47 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 One executive board – • Capital and cash is kept at cash at both for the group and for OpCo level B Cover next 12 months of hybrid expenses HoldCo the main OpCos • Cash held at holding is for operational purposes and + flexibility Operating entities all well- “No capitalised – delivering • Excluding group credit financial At year-end add paid prior year dividend strong RoE facility of EUR 350 million C rationale” as proxy for next year to have Short term interest excess = rates/reward for money market holdings are cash at currently low and below HoldCo cost of funding Year-end holding cash
A + B 2017: EUR 155 million
48 Holding cash policy in practice
Upstreams per HY Upstreams in relation to Operating result and OCC (EUR million) (EUR million)
203 190 191 185 2016 2017 1H18 Life 100
Upstreams 377 508 246
1 87 % of net op. result 71% 82% 76% 62 52 Non-life 44 % OCC2 108% 135% 137%
SII ratio a.s.r. Life3 182% 186% 190%
4 Other SII ratio a.s.r. Non-life 180% 185% 169% 17
1H16 2H16 1H17 2H17 1H18 Holding cash 353 463 229
1 Excluding Holding / eliminations 3 ASR Schadeverzekering N.V. 2 Based on OCC of a.s.r. Group 4 ASR Levensverzekering N.V.
49 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 zone? • RoC after diversification • Newly introduced DC propositions at Life • Increase in third-party AuM Invest in market risk • RoC after diversification to exceed 10% • Allocation of additional circa 6%-points of by some margin Solvency II ratio to market risk in 2017 >160%: entrepreneurial level • Market risk capped at 50% of • Room to add real estate and credit risk in 2H18 total undiversified risk (circa 5%-points of Solvency II ratio)
>140% cash dividend payment level Inorganic growth in domestic market Multiple acquisitions in • Return on Unrestricted Tier 1 fungible 1. Underwriting businesses capital ≥ 12%. 2. Distribution businesses • Reasonable payback period 120% a.s.r.’s risk appetite 3. Niche asset managers • Meet or exceed SBB accretion
100% SCR
50 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 of time… most efficient to them
• and the excess is not driven by uneconomic developments…
51 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 (% points of SII ratio) (EUR million) 442
255 92 Rerisking Generali NL 170 230 2017: -6%pts -9%pts 187 2H18: -5%pts 2016 2017 1H18
52 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
Business domains in Non-life with growth potential Michel Verwoest Chief Operating Officer 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 businesses (scale) and skills • Health • 94 -96% combined ratio target (excl. Health) • Growing premium income (3-5%) profitably (excl. Health) • Operating result 2017: • Operating result 2017: EUR 172 million EUR 16 million
P&C Disability Health Total ASR Schadeverzekering N.V. Basic Health Supplementary Health 1,004 1,083 1,145 757 765 616 593 669 2,433 2,579 808 730 2,350 GWP 545 364 1,717 (EUR million) 2015 2016 2017 1H18 2015 2016 2017 1H18 2015 2016 2017 1H18 2015 2016 2017 1H18
100.0 89.6 88.2 90.9 91.2 95.5 99.1 99.2 98.4 95.0 95.6 95.1 97.1 98.5 98.5 Combined Ratio 95.5 (%) 2015 2016 2017 1H18 2015 2016 2017 1H18 2015 2016 2017 1H18 2015 2016 2017 1H18
1,478 1,497 190 1,673 Eligible Own Funds 1,648 1,389 176 1,579 (EUR million) 170
2016 2017 1H18 2016 2017 1H18 2016 2017 1H18
56 P&C Leveraging excellent underwriting capabilities 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 Strong position in P&C, especially in intermediary distribution
Observations on distribution and market participants Top 5 P&C market Dutch P&C market 2 • P&C market is competitive. Limited presence of foreign insurers (2017) distribution channels • Low margins and limited organic growth possibilities drive consolidation 5% Achmea • market share of a.s.r. is 15% (including Generali NL) 6% 47% Other NN • Intermediary distribution stable at ~50% in past years (portfolio) 27% 15% a.s.r.3 Authorised 26% • a.s.r. has a diversified and profitable portfolio agents Univé 27% Advisors • a.s.r. is a leading player in the advisory channel 21% Vivat • > 33% market share1 of new retail production in the advisory channel 2017
a.s.r. market shares a.s.r. P&C portfolio (2017 GWP, %)5 (2017 GWP, %) #3 #36 #3 #5 #33 1% Retail Motor 12.9% 13.6% 24% 12.1% 28% 10.3% 10.1% SME Fire 2% 46% Co-insurance Transport
Other4 71% 28% Total Motor Fire Transport Other
1 Source IG&H , 2 Source IG&H and DNB, 3 Including Generali NL, 4 Other includes liability and legal assistance 5 Excluding credit and bail insurance – excluding Allianz, 6 Market position in motor, excluding Allianz
59 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 / Commissions • Limited volatility in large claims ratio due to risk appetite and reinsurance programme Calamities • Volatility in COR mainly driven by calamities Large claims (>EUR 50,000)
Average 62% Mass claims ( 60 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 handling Portfolio detection • Expense discipline Distribution management Segmentation • Single SME market underwriting Ratios Claims & Return Craftsmanship management Competitive position Ratio & Return Competitive • Data mining • Tracking COR performance of position • NPS score intermediaries • Scalable IT platform (SaaS) • Selection and optimisation of distribution partners’ portfolios Product • Competitive pricing management • Cost optimisation 61 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 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 63 62 64 64 63 62 58 61 60 58 60 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Claims ratio Moving average claims ratio (4 quarters) Average claims ratio Average claims ratio since 1Q15 is 62% 1 Excluding Ditzo, Europeesche and Generali NL 63 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 • Quinity Insurance Solution - administration / claims handling (EUR million) platform Lower operating expenses while • SaaS platform with proven technology investing in innovation and growing the business • Improving digital services to clients and intermediaries Operating 11.3% 10.3% 9.7% expense ratio • Connecting with new business partners and ecosystems % of NEP • Using / enhancing portfolio data 107 110 107 3 9 • Product portfolio rationalised with simplified operations 7 • Lower running costs post completing Run 104 101 100 Change Finalisation end of 2020 - decommissioning current legacy systems 2015 2016 2017 64 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 packages sold per day • Selective growth in SME market - capturing ‘fall-out’ • Benefit from economic recovery / hardening of the market 2015 2016 2017 1H18 • Further increased share of advisory channel No. of VVP packages sold per day Average premium per VVP package • Selective growth in co-insurance channel Market leading position High retention of clients in advisory channel (circa 10 years on average) Able to grow premiums at stable cost base Top-line growth despite termination of non profitable volume of EUR 77 million (value over volume) 65 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 Generali NL portfolio), co-insurance portfolio provider of specialty insurance solutions • Full service provider for insured • Optimisation digitalisation and data P&C clients, insurers and financial analysis advisors, fully supported by IT • Distribution via online portals to tooling. Distribution power to 2,900 increase number of policies advisors • Authorised agent focussed on car- • Increase number of dealers (top 50) insurance and provision of services • Improve web-based tooling to car dealers (e.g. claims handling • Price differentiation / technical support) 66 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 Deny customer • Sanction lists I II III IV • Company intel • Fish data set IV Red flag To special issues 67 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 15% Motor 16% Authorised agents • authorised agent portfolio to be integrated at end of 2018 Fire 3% Commercial • direct Generali NL portfolio migrated to Ditzo portfolio before end of 2019. Other 23% 16% Direct • Use of robotics for commercial migration of provincial broker portfolio - 62% completed before year end 2019 65% Advisors • New business exclusively with a.s.r. P&C products • Generali NL Non-life workforce decreased from 127 to 78 FTEs on October 1st, 2018, management functions reduced Non-life results Generali NL 1H181 Strategic value co-insurance • In 2016, we acquired Corins to enter the co-insurance market (> EUR 1 billion GWP) EUR 176 million 101.4% GWP COR • Through the acquisition of Generali NL, a.s.r. has grown in the co-assurance channel. The goal is to selectively grow to a more dominant market position (value over volume) We will continue to pursue opportunities for inorganic growth comparable to Generali NL 1 Generali NL Non-life consists of P&C and Disability 68 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 Disability Disability platform servicing the growing demand for sustainable employability 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 positioned for further growth both organically and inorganically 71 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 channel 6.6% 5.9% 4.4% • Macro trends (e.g. flexibilisation, increasing retirement age) drive 3.1% sustainable employability • Increasing focus on preventive measures and productivity a.s.r 2 NN Achmea Goudse Aegon Loyalis Vivat enhancing services • Future growth of the market is driven by: a.s.r. Disability portfolio • Economic recovery, growing self-employed workforce (EUR million, %) • Withdrawing of the government 19% Individual / Self-employed 37% GWP Sickness leave 16% 2017: EUR 765 Group disability million Other 28% 1 Source: DNB, 2017 excluding Allianz as is is no longer reported as a separate entity in the Dutch market. 2 Including Generali/‘Europeesche’ accident and health. 72 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 profiles • Reducing/preventing absenteeism • Self-employed – ‘De Amersfoortse disability triangle’ Self- employed • Group –specialised teams / third-party specialists Claims handler Vocational experts Health & safety Reintegration Continuously monitoring services services Competitive position (partnerships) of our combined ratio Group disability • Extensive customer data from over • Constant monitoring of claims 30 years of experience ratios per risk category • Excellent service to our customers • Monitoring of claims development • Multi-disciplinary approach to per distribution channel Employer/employee claims handling • Disciplined cost management 73 Strong claims track record Disability quarterly claims ratio (%) 75% 79 78 77 67 69 71 73 70 71 72 64 65 69 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% Seasonality is primarily due to periods of flu leading to increases in short-term sickness leave 74 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 classes • UWV (government) then offered relatively • Ex-post actions proved insufficient • Strong focus on products with value for low prices • Actions taken in Q4 2017 customers and for a.s.r. • a.s.r. deliberately did not follow this pricing • Strong price increase • Strong position in classes 1-3 level – value over volume principle (10 - 20% on average) (>70% of portfolio) • Discontinuation of loss-making • Classes 4-5 (‘blue collar’) selectively contracts targeted 1 BeZaVa is part of the Dutch WGA/WIA-act 75 ‘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 • Smarter insured: sharp pricing and always someone who employees provides help and support in getting and staying fit ✓ • Early detection of (the risk of) disability and the use of interventions • Health insurance and Disability insurance at the same company • Results in improved underwriting results • Dedicated Doorgaan expert available to minimise absenteeism • Early preventive care (during health coverage period) Successful cross-selling • Reduced chance of long-lasting disability • 41% of our Amersfoortse Health portfolio ✓ • 15% of Disability portfolio (expected to double) • Enhanced coverage, leading to peace of mind and focus on work: • additional cover for childcare Improved retention despite premium pricing • support for home and/or informal care • Doorgaan customers vs only Disability customers: ✓ 3.6% vs 5.9% • Taking good care of our customers benefits both parties • Doorgaan vs only Health customers: 7.7% vs 14.9% 76 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 Prevention & added Services Enhancing productivity & 1 Not applicable for Health reducing absenteeism 77 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 positioned for further growth both organically and inorganically 78 Appendix 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 disability (employers and their employees): sickness leave (short term, 2 years), disability insurance in addition to Dutch social legislation 1. Market for disability of the self-employed • No social security in case of disability caused by sickness or an accident • In case of disability, claims depend on the amounts and insured periods, the degree of disability and excess periods (>14 days) • Return to work programmes and skilled claims handling processes are key for insurers in managing COR and profitability 2. Market for group disability Sickness leave Disability insurance • Employees are responsible for salary payments (max. two years) • After two years of sickness, employees may appeal to the WIA • Employers can insure this risk on the private market • Insurers have developed several products to cover this risk • Employers usually offer these products to employees as fringe benefits • Disability insurers can differentiate themselves in their support for reintegration • In addition, employers may choose to either bear the risk themselves or transfer the risk to an insurer (WGA ERD – self-insurer) • After two years of sick leave, employers are no longer responsible for salary payments and employees can be laid off 80 Life – robust and predictable service books Karin Bergstein Chief Operating Officer 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 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 service books through rationalisation of products & systems • Operating result 2017: EUR 633 million • Low cost operation with clear customer focus to create optimal customer value • Continue to manage unit-linked file Individual life Pensions Funeral Total 632 1,257 1,279 1,243 572 515 500 531 556 175 172 GWP (recurring premiums) 358 125 292 87 737 (EUR million) 2015 2016 2017 1H18 2015 2016 2017 1H18 2015 2016 2017 1H18 2015 2016 2017 1H18 16.6 19.3 21.6 40.1 41.9 16.1 17.5 18.7 4.7 4.8 38.2 38.6 Technical reserves 4.7 15.2 15.4 4.0 (EUR billion) 2015 2016 2017 1H18 2015 2016 2017 1H18 2015 2016 2017 1H18 2015 2016 2017 1H18 84 Strong increase in operating result, driven by investment margin Operating result Investment margin (in EUR million) (in EUR million) 633 510 334 440 559 290 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) 119 123 107 Technical result 59 95 99 50 38 Cost result 48 24 24 12 2015 2016 2017 1H18 2015 2016 2017 1H18 85 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 through processing (STP) to reduce handling cost • If STP is not an option, the use of robotics is an alternative to reduce processing times for customers while reducing handling costs 86 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 policies since 2010 No. of policies 2015 2016 2017 2018 PC 15,000 Generali NL Funeral 358,000 NIVO 286,000 Axent 2,200,000 Integrated 87 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 been made Operational Financial Product features rationalisation Funds rationalisation (in no. of product features) (in no. of funds) 1,800 270 Product features funds 12 core products 34 core funds 88 Track record in IT migration in Individual life to SaaS platform No. of • New target IT platform (SaaS) has variable costs and ensures that 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 decisions enable a.s.r. to NGL 70,000 migrate multiple books per annum DAV 51,000 • Planning focusses on migrating the remaining books. NKV book Falcon 102,000 migration planned to be finalised at the end of October 2018 NIP 195,000 ABC 15,000 NKV 73,000 Generali NL 116,000 HLS 200,000 (optional) Achieved 89 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 ahead of Funeral expectations EUR 16 million • Migration of Generali NL Individual life prioritised over existing service books • IT systems can be shut down once the migration of the portfolio Individual life Three portfolios is realised. Hence, financial impact of IT migration is expected to EUR 36 million be back loaded DC portfolio Pensions DB portfolio EUR 44 million Non- contributory Technical migration 90 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 EUR 267 million EUR 24.5 million Funeral August 2015 2.2 million EUR 1.5 billion EUR 54.7 million Pensions July 2015 22,500 EUR 1.7 billion EUR 44 million 91 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 migration of systems and FTEs • Operating expenses for 2018 are expected to increase due to 36,000 the inclusion of Generali NL (EUR 22 million). Over time, cost 200 synergies are expected to be reflected in operating expenses 33,000 • Operating expense target of 45 – 55 bps of basic provision 30,000 150 27,000 24,000 100 2015 2016 2017 1H18 Ratio OpEx / basic provision 63bps 62bps 57bps Basic provision OPEX 1 Basic provision is technical provision minus shadow accounting reserve and realised gains reserve 92 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 stable in the next 10 years Individual while the Funeral book is expected to show a moderate increase 26 Life • Duration of books 22 Funeral • Individual life: ~9 years 18 • Pensions: ~18 years 14 • Funeral: ~36 years 10 Pensions 6 2 2017 2019 2021 2023 2025 2027 1 Assumptions: no new production, fixed VA, fixed UFR, use of forward curve 93 M&A strategy: opportunities for bolt-on acquisitions 1,2 • Despite a high level of concentration in the Dutch Life insurance Life (2017) market, opportunities for bolt-on acquisitions exist in midsized market segment EUR 13 billion 3 Traditional top 5: 86% of the market • Within Life circa EUR 20 billion of technical provisions is on the GWP books of mid-market players • Of which circa EUR 5 billion at monoline Funeral insurers 13 Mid-market: cumulative insurers EUR 20 billion provisions A few small insurers Cumulative EUR 0.1 billion 1 Based on DNB data, which exclude foreign regulated entities operating in the Netherlands 2 Top 5 consists of a.s.r., Achmea, NN, Aegon and Vivat 3 Solvency II value of the technical provisions including risk margin and after reinsurance. Source: SFCR reports 94 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 Innovation based on customer-centric approach Philippe Wits Chief Innovation Officer 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 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 We serve our customers personally, timely and fluently Volume: Value: Volume: Plethora of conversations 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 APIs 1:1 1:1 1:1 1:1 1:100,000 1:1 1:1 1:100,000 1:10,000 1:1 Data analytics 1:1 1:1 1:1 1:1 1:100 1:1 1:1 1:1 Single sign-on 1:1,000 1:1 1:1 1:1,000 1:100 1:1 1:1 1:1,000 1:1 1:1 Voice-assisted services Digital factory 1:1 1:1 1:1 1:1 1:1 1:1 1:1 1:1.000.000.000.000 1:1,000 1:1000 1:1 1:1 Speech analytics 1:1,000,000 1:1 1:1 Robotics 1:1 1:1 1:1 1:1 1:1 1:1 1:1 1:100,000 1:1 1:1 Digital communities 1:100 1:1 1:1 IAAS 1:10,000 1:1 1:1 1:1 1:1 1:1 1:1 1:100,000 1:1 1:1 1:1 1:1 1:10,000 Parallel and exponential scalability Sequential and human scalability Sequential and IT scalability 100 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 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 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 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 products, e.g. in the field of DNA • Partnerships with suppliers of • Paid consultations prevention tools and wearables • Financial investments • Risk estimations and control • Risk estimations Competences • Expansion of data and dynamic risk • Expansion of health-related pricing competences a.s.r. helps customers to reduce risks, a.s.r. helps customers with financial, Connection to mission whereas before only financial implications psychological and/or physical vitality were insured 104 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 & plan • Gain traction • Gain market share • Improve the bottom line • Business idea and feasibility • Traffic • Revenue growth • Revenue growth Selection criteria • Business model and margins • Revenue-paying customers • Client retention ratio • Return on capital (e.g.) • Market size • Customer growth • Customer acquisition costs • Operating margins 105 Leveraging and co-creating with VC funds to find the best opportunities 106 Prototyping and building start-ups to drive the future value of a.s.r. 107 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 Leverage capabilities for growth of third party investment services Jack Julicher CEO a.s.r. asset management 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 SRI proposition and a strong position in LDI and mortgages Capturing assets in changing pension landscape 111 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.s.r. Acquisition of BNG mutual funds mix funds Vermogensbeheer Asset manager for 2010 2014 2017 the a.s.r. OpCos Launch of a.s.r. AIFMD licence Acquisition of First investment funds obtained Investments (LDI) 112 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 Return on 7.3 7.1 7.5 6.8 5.0 4.6 4.2 LTM (bps) Capital 3.4 4.4 4.1 3.1 3.1 1.8 1.8 1.7 1.4 Equity 330 10% 0.8 0.6 0.3 0.1 -0.8 -1.3 -1.8 -2.0 Real estate 300 15% 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 Mortgages 110 41% +0.2% -0.7% +0.2% +0.1% +0.5% +0.3% +0.5% -0.1% +0.4% 0.0% 0.0% +0.5% +0.8% +0.4% Corporate 70 11% Eurozone large cap Dutch real estate1 DPRF DCRF DMOF credits (%) (%) Sovereign 14.5 14.4 50 n.a. 21.3 21.3 12.7 12.7 non-core 19.6 18.1 7.2 9.3 9.2 6.1 6.2 6.4 2.8 5.0 4.0 4.3 3.7 Sovereign core -20 n.a. 2015 2016 2017 -13.6 -14.1 2011 2012 2013 2014 2015 2016 2017 +0.5% -1.5% 0.0% +1.0% -0.2% +0.6% +0.1% 1 No representative benchmark available 113 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 49.4 15.7 • Harvesting illiquidity premiums 12.7 14.5 12.4 • Return on capital for market risk in line with overall RoE target 2.6 • Current market view leads to moderate re-risking 2.2 2.6 3.7 2.7 3.3 3.5 2.9 11.1 10.5 Third-party growth due to initiation of funds 10.8 10.3 7.2 8.2 6.5 7.8 13.0 12.4 12.4 10.9 Building third-party asset manager, 2.1 3.3 3.6 4.1 leveraging on key competences and scale 2015 2016 2017 1H18 Cash & deposits Sovereign Mortgages Credits Real Estate Equity Third-parties 114 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, EUR 1.5 billion 3rd party) • LDI & Rates • Retail • Integrated balance sheet management • Residential housing • ESG Index-plus fund range • Offices • Dutch mortgages • Rural • Investment partners Attracting third-party AuM 115 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 activities for e.g. policy holders 7 5 • Margins on third-party AuM improved to 3.5bp due to economies of scale • Net inflow of EUR 1.3 billion AuM in 1H18 3 • Operating result shows steady increase 4 Outlook 1 • Target operating result > EUR 20 million • 5% growth thereafter 5 4 3 2016 2017 1H18 Real estate Asset management 116 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 ✓ ✓ ✓ Policyholders ✓ ✓ EUR 1.2 EUR 3.7 EUR 8.2 EUR 1.0 EUR 1.5 AuM billion billion billion billion billion Offering expertise to various customer groups via state-of-the-art platforms 117 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 95% of • Independent audit • Gambling and • Opportunity the portfolio by 2021 tobacco • Quality of • EUR 1.2 billion worth • Violation of management of impact investing international conventions ESG Index-plus Euro-credits Scope 1 Benchmark Scope 2 Benchmark Carbon footprint 300 Scope 1 Portfolio 250 Scope 2 Portfolio 200 150 invested mln 100 50 EUR EUR CO2 equivalent CO2 equivalent ton per 0 Sep 2017 Dec 2017 Mar 2018 Jun 2018 118 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 portfolio optimisation • Reporting Tailor-made LDI mandate and investment guidelines Insurance APF Small and medium-sized pension funds Regulatory regime Solvency II nFTK nFTK Investment universe All available instruments Cash bonds/swaps Cash bonds / swaps Management style Low turnover Liability management Buy & maintain Derivatives Yes, flexible Yes, stable Yes, stable Format Balance sheet Mandates & funds Mandates & funds 119 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 profile of 10 years and longer • Diversified client base with > 30 pension funds and insurance companies • Attractive returns and diversification effects and beneficial to ALM ASR Mortgage Fund subfund NHG ASR Mortgage Fund subfund non-NHG • 100% of mortgages backed by guarantees (NHG1) • Mortgage receivables without NHG • Low risk profile • Higher return profile • Interest-only mortgage receivables < 25% • Interest-only mortgage loans < 50% • Credit score AAA • Credit score AA 1 Nationale Hypotheek Garantie (National Mortgage Guarantee Scheme) 120 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 607 481 • Introducing new product in 2018 273 • Further shift towards DC expected to go forward AuM 74 (EUR million) 20151 20162 20173 1H184 Capturing AuM in capital light pension market 50 • a.s.r.’s new pension business is shifting from DB to DC 36 25 (new premiums: from 30% DC in 2014 to >90% DC in 2017) 18 16 20 • a.s.r. shows faster shift towards DC than market Participants 3 7 (x 1,000) (new premiums: from 65% DC in 2014 to 80% DC in 2017) 2015 2016 2017 1H18 Active participants Inactive particpants Progress in 2017/2018 • Historical strong focus on SME clients, improved proposition for corporates Gross written • Optimised lifecycles including ESG integration premiums 63 105 156 118 (EUR million) • Flexibility for various risk profiles • New customer-orientated portal • New product for post-retirement annuities 121 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 proposition and a strong position in LDI and mortgages Capturing assets in changing pension landscape 122 a.s.r. real estate Dick Gort CEO a.s.r. real estate 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 skills acknowledged by large international investor base investing in our funds Reliable and increasing stream of fee income from growing third-party investor base 125 Real estate platform based on 125 years of experience and expertise 126 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 33.8 32.5 32.2 32.9 30.0 30.8 31.3 31.3 31.0 • Long term leasehold contracts 27.9 29.0 24.3 25.7 • Stable investment return, augmented by capital appreciation 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Direct return in relation to CBS inflation1 Direct return (Rural) Inflation 3.0% 2.8% 2.8% 2.7% 2.7% 2.6% 2.6% 15 years 2.5% 2.5% 2.5% 2.4% 2.4% 2.2% 2.2% 2.2% average 2.5% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1 Source: CBS, CPI adjusted for product related taxes and subsidies 127 Core investment portfolios in which 3rd 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, divided over > 10 assets 13 investors, third-party investors 47% 12 investors, third-party investors 29% 8 investors, third-party investors 64% Focus on: • Experience: high-street retail in top 20 cities • Well-located and well-performing areas • Focus on high-mobility locations (circa 2/3) • Product types medium-priced rental • Convenience: district shopping centres and dwellings (EUR 710 - EUR 1,250) supermarkets (circa 1/3) • Exceptional quality: >95% high-street • >85% located in 12 focus regions • All assets located in G4 and other large assets in top 20, cities in vicinity of IC train stations Vacancy • ~2% • ~2% • ~5% level: 1 This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, please refer to www.asrrealestate.nl for the prospectus. 128 A reputable international client base, in addition to a.s.r. 129 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 1,421 1,344 1,358 1,256 1,207 • Growth in AuM driven not only by revaluations but also by new 1,145 1,162 investments 981 820 • Total returns exceed targets 293 279 309 316 • Development of new investment (fund) initiatives to secure future 229 261 268 business growth Core Residential Prime Retail Mobility Office ASR PF Rural Core asset funds and portfolio Total return 2015 2016 2017 1H18 (%) 14.5 14.4 12.7 12.7 third- 29% parties 47% 64% 7.2 100% 100% 6.9 6.1 5.7 a.s.r. 71% 3.9 53% 2.8 36% Core Residential Prime Retail Mobility Office ASR PF Rural Core Residential Prime Retail Mobility Office 130 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 3,966 3,987 1,531 3,756 3,848 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 2014 2015 2016 2017 1H18 Growth in fee income (EUR million) CAGR: third-parties 6% 35 a.s.r. 33 31 29 28 11 24 25 11 6 7 10 0 4 24 21 22 22 22 21 23 1H11 2011 2012 2013 2014 2015 2016 2017 1H18 131 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 skills acknowledged by large international investor base investing in our funds Reliable and increasing stream of fee income from growing third-party investor base 132 Life disclosures Patrick Klijnsmit Director Group Accounting, Reporting & Control 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 Life basic provision expanded by acquisitions Development of service book (IFRS) (EUR billion) Basic provision increased from EUR 28.0 billion to EUR 35.2 billion (+ EUR 7.2 billion). Acquired provision bases • 2015-2016: total EUR 3.5 billion 45 • 2018 - Generali NL: EUR 3.5 billion 40 EUR 2.8 billion Shadow accounting reserve EUR 3.1 billion 35 Capital gains reserve • Capital gains reserve (EUR 3.1 billion) virtually unchanged since 2015 despite releases 30 Funeral Basic • Shadow accounting reserve (EUR 2.8 billion) driven by fair value changes of nominal 25 provision matched book; shift to capital gains reserve when realised Pensions EUR 24.6 billion 340 20 • Operating result for large part driven 12 15 Individual by investment margin • Substantial margin between 10 38 Investment margin investment contribution and required Unit linked Technical result provision interest on basic nominal provision 5 Unit linked EUR 10.6 290 Result on costs billion 0 2014 2015 2016 2017 1H18 Unit linked Individual Pensions Funeral Capital gains reserve Shadow acc reserve 1H18 136 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 2016 2017 1H18 2015 rate environment Direct investment • Strong solvency providing room for market risk; search for yield income1 1,003 981 1,000 529 (e.g. expansion in mortgages) Realised gains reserve release 160 269 322 155 • Additional AuM from acquired businesses + • Historical profitability locked-in through capital gains reserve, Total investment contribution 1,163 1,250 1,322 684 providing stability in earnings of matched books for the coming years Required interest2 829 810 812 394 • Annual release capital gains reserve estimated at EUR 300 - million until IFRS17 Investment margin 334 440 510 290 Technical result supported by acquisitions, but under pressure due to run-off in Individual Life book Result on costs 48 24 24 12 Future operating result can be modelled by: Technical result 59 95 99 38 + • Basic provision excluding Unit linked for investment margin Operating result 441 559 633 340 • Basic provision including Unit linked for other sources of income • Investment margin likely to be broadly stable at 2.3% Incidentals 275 83 298 100 • Expected pressure on technical result due to shift from active to + inactive policies, decrease in cost coverage and lower mortality IFRS result 716 642 931 440 result in Individual Life as the book is shrinking On medium-term, Life earnings expected to be broadly in line with 2017 1 This line item differs from ‘’investment income’’ in the Annual Report due to (i) interest expenses on derivates and (ii) saving mortgages (offset through technical provisions) 2 Including other components such as profit sharing with a shift from technical result to investment margin 137 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 Historical data will be made available on our website 138 Implementing IFRS 17 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 speed, many reporting choices yet to be made Some unclarity surrounding EU-endorsement process – postponement possible 140 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 Shareholders’ • Other assumptions applied Available equity • Risk adjustment vs risk margin Own • Expected future profits in own funds (Solvency II) or in liabilities (IFRS 17 CSM) Funds Shareholders’ Contractual service equity margin Expected change in insurance liabilities 2015 (EUR billion) Risk margin Risk 38.2 38.8 adjustment 2.7 3.2 8.6 30.2 2.1 Best Probability weighted Technical estimate discounted expected provision liability present value of cash flows IFRS 4 liabilities Shadow Realised gains Own pension IFRS 4 tariff Connection to IFRS 17* accounting scheme basis IFRS 17* IFRS 4 Solvency II IFRS 17 Note: The relative size of the diagramme is purely for illustration purposes 141 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 variability a contractual link to underlying items (such as assets) • Usually long-term insurance, • Usually Non-life insurance, • Individual unit-linked contracts Types of protection business short term contract • Group unit-linked contracts • Annuities • Short-term Life and certain • Long-term general insurance group contracts contracts Mandatory? Optional 142 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 constructed historical data exist When ‘impractical’ and hindsight is not OR required Fair value approach: When … no historical information is available or when chosen (if full retrospective is not Previous periods Future periods possible) • On transition, an entity should apply IFRS 17 retrospectively unless it is impracticable to do so • The choice between the modified approach and the fair value approach on transition will impact the CSM on transition, and as a result the release of profit (through CSM) after transition 143 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 future cash flows of the insurance contract Matching IFRS 17 and IFRS 9 Liabilities • Start from the liability side and Assets Equities, decide on the OCI option or not Portfolio 1 derivatives, Discount rate (and then present through P&L) FVTPL changes to P&L debt Portfolio 2 instruments Portfolio 3 • Apply Business Model test FVOCI with no recycling Equities … • Apply SPPI test Discount rate … FVOCI with Debt recycling changes to OCI … • Will result in the classification of instruments financial instruments in IFRS 9, … with the goal of matching assets Amortised Debt cost instruments Portfolio x and liabilities 144 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 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, many reporting choices yet to be made Some unclarity surrounding EU-endorsement process – postponement possible 146 IR contact Michel Hülters Barth Scholten Vincent Uriot Email: [email protected] Tel: +31 30 257 8600 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') apply to this document of ASR Nederland N.V. and all supervisory authorities; (18) changes in ownership that could affect the future availability of net ASR Nederland N.V.’s legal vehicles and businesses ('ASR Nederland'). Please read this operating loss, net capital or built-in loss; (19) changes in conclusions with regard to accounting Disclaimer carefully. assumptions or methodologies; (20) adverse developments in legal and other proceedings and/or investigations or sanctions taken by supervisory authorities; (21) risks related to mergers, acquisitions, or divestments (22) other financial risks such as currency movements, interest rate Some of the statements in this document are not (historical) facts, but are ‘forward-looking fluctuations, liquidity, or credit risks and (23) the other risks and uncertainties detailed in the Risk statements’ ('Statements'). The Statements are based on our beliefs, assumptions and Factors section contained in recent public disclosures made by ASR Nederland. expectations of future performance, taking into account information that was available to ASR Nederland at the moment of drafting of the document. The Statements may be identified by words such as ‘expect’, ‘should’, ‘could’, ‘shall’ and similar expressions. The Statements may The foregoing list of factors and developments is not exhaustive. Any Statements made by or on change as a result of possible events or factors. behalf of ASR Nederland only refer to the date of drafting of the document, except as required by applicable law. ASR Nederland disclaims any obligation to update or revise and publish any expectations, based on new information or otherwise. Neither ASR Nederland nor any of its ASR Nederland warns that the Statements could entail certain risks and uncertainties, so that directors, officers, employees give any statement, warranty or prediction on the anticipated the actual results, business, financial condition, results of operations, liquidity, investments, results as included in the document. The Statements in this document represent, in each case, share price and prospects of ASR Nederland may differ materially from the Statements. only one of multiple possible scenarios and should not be viewed as the most likely or standard scenario. The actual results of ASR Nederland may differ from the Statements because of: (1) changes in general economic conditions; (2) changes in the conditions in the markets in which ASR All figures in this document are unaudited. Small differences may be included in the tables as a Nederland is engaged; (3) changes in the performance of financial markets in general; (4) consequence of rounding. changes in the sales of insurance and/or other financial products; (5) the behaviour of customers, suppliers, investors, shareholders or competitors; (6) changes in the relationships with principal intermediaries or partnerships or termination of relationships with principal ASR Nederland has taken all reasonable care in the reliability and accurateness of this intermediaries or partnerships; (7) the unavailability and/or unaffordability of reinsurance; (8) document. Nevertheless, information contained in this document may be incomplete or deteriorations in the financial soundness of customers, suppliers or financial institutions, incorrect. ASR Nederland does not accept liability for any damages resulting from this document countries/states and/or other counterparties; (9) technological developments; (10) changes in in case the information in this document is incorrect or incomplete. the implementation or execution of ICT systems or outsourcing; (11) changes in the availability of, or costs associated with, sources of liquidity; (12) consequences of a potential (partial) This document does not constitute an offer to sell, or a solicitation of an offer to buy, any termination of the European currency: the euro or the European Union; (13) changes in the securities. frequency or severity of insured loss events; (14) catastrophes or terrorist-related events; (15) changes affecting mortality or morbidity levels or trends or changes in longevity; (16) changes in 149 Capital Markets Day 10 October 2018