2017 Annual Report ASR Nederland N.V. Archimedeslaan 10 P.O. Box 2072 3500 HB Utrecht www.asrnl.com 2017 Annual Report ASR Nederland N.V. Archimedeslaan 10 P.O. Box 2072 3500 HB Utrecht www.asrnl.com Annual Report | 2017 4 2017 Annual Report 1 Introduction 1.1 At a glance 6 1.2 Key figures 8 1.3 Message from the Chairman 10 2 About a.s.r. 2.1 Our strategy 12 2.2 Value creation model 17 2.3 Key trends 22 2.4 Our stakeholders and material issues 29 2.5 Our people 33 3 Business performance 3.1 Group performance 38 3.2 Segment performance 49 3.3 Risk management and Compliance 78 3.4 Statements Executive Board 86 3.5 Assurance report of the independent auditor 87 4 Governance 4.1 Corporate governance 90 4.2 Our investors 98 4.3 Supervisory Board report 102 4.4 Remuneration report 110 4.5 Employee participation 114 Annual Report | 2017 5 Introduction 5 Financial statements 2017 5.1 Introduction 121 5.2 Consolidated financial statements 123 5.3 Accounting policies 130 5.4 Group structure and segment information 153 5.5 Notes to the consolidated balance sheet 164 5.6 Notes to the consolidated income statement 191 About a.s.r. 5.7 Other notes 198 5.8 Risk management 216 5.9 Capital management 250 5.10 Company financial statements 254 Business performance 6 Other information 6.1 Independent auditor’s report 261 6.2 Provisions of the Articles of Association regarding profit appropriation 271 7 Report of Stichting Continuïteit ASR Nederland 273 Governance Annexes A Notes to the reader 275 B Glossary 277 C Abbreviations 283 D Stakeholder engagement 285 Financial statements 2017 E Additional employee information 286 F GRI Content Index 287 G EU Directive: disclosure of non-financial information and diversity information 293 Other Introduction Introduction | 1.1 At a glance 6 1.1 At a glance ASR Nederland N.V., hereinafter ‘a.s.r.’, is the Dutch insurance company for all types of insurance. a.s.r. offers a broad range of financial products in the areas of non-life, life and income protection insurance. a.s.r. also offers investment and (bank) savings products. a.s.r. is also active as an investor and offers asset management services to institutional clients. Furthermore a.s.r. is a full-service provider for intermediaries. a.s.r. operates exclusively in the Dutch market, except for a small Belgian funeral insurance portfolio, which is recognised as a business line of ASR Levensverzekering N.V. Structure ASR Nederland N.V. Non-life Life Banking and Asset Distribution and Holding and Other Management Services • P&C • Pensions • a.s.r. bank • VKG • Disability • Individual life • a.s.r. mortgages • Dutch ID • Health • Funeral • a.s.r. asset • SuperGarant management • Corins • a.s.r. real estate • PoliService investment management Our brands Multi-brand and multi-channel distribution; focus on intermediary. Introduction | 1.1 At a glance 7 Introduction Founded in Head office of a.s.r. Utrecht, The Netherlands Other locations: Ardanta in Enschede and a number of distribution units at various 1720 locations in the Netherlands. About a.s.r. Number of employees a.s.r. is the (Internal FTEs) third largest Business performance insurance company in the Netherlands 3,493 measured by GWP (excluding health insurance). Highlights of 2017 Governance Privatisation completed Financial statements 2017 Announcement of proposed acquisition of Generali Nederland a.s.r. first insurer issuing Euro dominated Restricted Tier 1 Contingent Convertible capital instrument Other Development of new Collective Labour Agreement (CLA) De Andere Cao Effective date: 1 January 2018 Introduction | 1.2 Key figures 8 1.2 Key figures Financial key figures Operating result IFRS net result Operating ROE € 729m € 906m 15.6% +17.2% +37.5% up to 12% target (2016: € 622m) (2016: € 659m) (2016: 14.6%) Solvency II Organic capital creation Combined ratio 196% € 377m 95.1% +7% pts 11% on SCR Target <97% (2016: 189%) (2016: € 348m) (2016: 95.6%) Introduction | 1.2 Key figures 9 Introduction Non-financial key figures Net Promoter Score Sustainable Asset Management About a.s.r. +40 +56 100% Business performance for customers for intermediaries of the assets under management by Group Asset (2017: Q4) (2017: Q4) Management are compliant with a.s.r. SRI policy. Diversity Governance 25% 25% 27% 40% 60% 75% 75% 73% Supervisory Board Executive Board Senior Management Other employees Financial statements 2017 Female Male Other Introduction | 1.3 Message from the Chairman 10 1.3 Message from the Chairman ‘Pride in looking back over a good year, but our focus remains on the future’ 2017 was in many respects an excellent year for a.s.r. We achieved full privatisation, posted an operating result of € 729 million and can take pride in a strong solvency ratio of 196%. Our customers and intermediaries awarded us a higher Net Promoter Score (NPS), and we welcomed Generali Nederland, among others, to the group. ‘Pride in what we achieved in 2017 is certainly appropriate, but we are also resolutely looking forward.’ The Executive Board is pleased with the results obtained by a.s.r. Discipline in executing our strategy led us to exceed all our medium-term financial targets in 2017. Our operating result rose by 17.2% to € 729 million, with all business segments contributing to the increase. At 15.6%, operating return on equity was well above our target of ‘up to 12%’. In non-life insurance, our expertise was reflected in an increase in Gross Written Premiums (GWP) of nearly 6%, while at the same time we managed to reduce our cost base by € 3 million. The Combined Ratio was 95.1%, which was well below the target of ‘less than 97%’. Our Solvency II ratio, based on the standard formula and taking into account the dividend proposal, was robust at 196% and exceeded our target of ‘safely above 160%’. The sharp rise in the operating result allows us to pay out a higher dividend. Based on the results for 2017, we are proposing a dividend of € 229.7 million. This is a cash dividend of € 1.63 per share, an increase of more than 28% compared to last year. As of this year, we also start paying out interim dividends, which will be set at 40% of the total dividend of the previous year (€ 0.65). We strive for a stable growing dividend per share in the long-term. a.s.r. is ambitious to grow, both organically and through acquisitions. In 2017, we finalised the integration of the insurance portfolio of funeral services company NIVO, the integration and migration of De Eendracht Pensioenen, announced the acquisition of Generali Nederland and completed the acquisition of First Investments. We have already taken initial steps to integrate the various businesses in anticipation of closing Generali Nederland into a.s.r., and on 1 June 2018 our new colleagues are planned to relocate to Utrecht. Improving our service and focusing on customers is a top priority which we are working on each day. The Net Promoter Score from customers and intermediaries is a reliable yardstick in this regard. We are therefore delighted that the NPS from customers went up in 2017 from +36 to +40 and from intermediaries from +50 to +56. Their appreciation was also reflected in growth in our sales figures, with an increase of more than 32% in the number of Vernieuwde Voordeel Pakketten (non-life insurance packages) sold and a 48% increase in premiums for the WerknemersPensioen (employee pension). a.s.r.’s brand awareness also rose in 2017, and we are increasingly being recognised as a socially responsible insurer. This shows that profitable growth and serving the public benefit can go hand in hand. In 2017, we achieved a number of visible results in this area, such as the creation of a Health Impact Bond for the successful occupational reintegration of cancer patients, the creation of a new credit ESG fund in which external investors can participate and the announcement of our intention to provide, in conjunction with Triodos Bank, € 600 million in financing to sustainable projects over the next four years. a.s.r. is also increasingly being recognised and acknowledged in the market as a prominent exponent of sustainability. In 2017, this was confirmed by various studies (VBDO, Eerlijke Verzekeringswijzer and the annual sustainability report of the United Nations Principles for Responsible Investments (UN PRI)). We will continue to focus on operating in a smarter, more efficient and more cost-effective way. To this end, in 2017 we further simplified our organisation by merging a number of staff departments. To speed up the digital transformation and better anticipate evolving customer needs, we also established the Innovation & Digital team to meet growing customer demand for online communication. Using artificial intelligence and robotics, this team is further automating (simple) processes to give our employees more scope to focus on complex customer queries and work that adds greater value. The Innovation & Digital team is also exploring evaluating new (insurtech) initiatives and testing and building initiatives of its own. Introduction | 1.3 Message from the Chairman 11 Introduction In September 2017, NLFI sold the remaining interest in a.s.r. on behalf of the Dutch State. In the fifteen months since the initial public offering (IPO) in June 2016, a.s.r. has made a full return to the stock market. Looking back on the process from nationalisation to full privatisation, we are proud of the way this was achieved. The total proceeds from the sale was € 3.80 billion against an initial investment of € 3.65 billion.