VIVAT WAY OF WORKINGSRLEV NV Annual Report 2020 Thuiswerkregelingen ANNUAL REPORT SRLEV NV 2020 - SRLEV NV 1 TABLE OF CONTENT 1 OVERVIEW 3 1.1 Key Figures 3 1.2 Message from the Executive Board of SRLEV NV 4 2 ORGANISATION 5 2.1 About SRLEV 5 2.2 Our Brands 6 2.3 Our Business Lines 7 2.4 Our People 8 3 STRATEGY AND DEVELOPMENTS 9 3.1 Trends and Developments 9 3.2 Strategy SRLEV 9 3.3 Business Line Strategy 11 3.4 Sustainability 12 3.5 Business Performance 28 3.6 Financial Results 32 3.7 Risk and Capital Management 34 4 CORPORATE GOVERNANCE 39 4.1 Shareholder 39 4.2 The Executive Board 39 4.3 Governing Rules 40 4.4 The Supervisory Board 40 4.5 Report of the Supervisory Board 42 4.6 Remuneration 44 FINANCIAL STATEMENTS 49 5 CONSOLIDATED FINANCIAL STATEMENTS 50 6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 57 7 MANAGING RISKS 142 8 COMPANY FINANCIAL STATEMENTS 182 9 NOTES TO THE COMPANY FINANCIAL STATEMENTS 189 OTHER INFORMATION 201 1 Provisions in Articles of Association Governing the Appropriation of Profit or Loss 201 ADDITIONAL INFORMATION 213 1 Principles Underlying/Non-underlying Result 213 ANNUAL REPORT SRLEV NV 2020 - TABLE OF CONTENT 2 1 OVERVIEW 1.1 KEY FIGURES In € millions 2020 2019 2018 2017 2016 Ratios Regulatory Solvency II 163%1 163% 188% 158% 149% Profit or loss Gross premium income 1,762 1,848 2,102 2,245 1,834 Investment income 1,096 1,240 1,495 1,416 2,761 Investment income/expense for account of policyholders 692 2,067 -387 429 902 Total income (including other income components) 5,224 6,727 3,201 4,164 5,289 Total expenses 5,359 6,333 3,454 4,256 4,953 Result before taxation -135 394 -253 -92 336 Tax expense / benefit -107 64 21 -37 84 Net Result IFRS from continued operations -28 330 -274 -55 252 Statement of financial position Total assets 64,021 58,064 52,432 53,498 55,005 Investments 41,176 38,837 36,022 35,927 35,897 Investments for account of policyholders 13,788 13,520 11,989 13,138 14,251 Loans and advances due from banks 589 712 1,562 1,799 960 Total equity 3,684 3,410 3,128 3,217 3,035 Insurance liabilities 51,341 48,868 45,037 45,509 46,274 Amounts due to banks 4,651 2,715 1,340 1,627 1,330 1 Regulatory Solvency II ratio 2020 is not final until filed with the regulator. SRLEV and SRLEV NV In this annual report, we use the name ‘SRLEV NV’ when referring to the company financial statements of SRLEV NV. For the consolidated financial statements of the insurance business as a whole, we use the name ‘SRLEV’. The SRLEV Report of the Executive Board, as referred to in section 2:391 of the Dutch Civil Code includes the following chapters: Key Figures (chapter 1.1), Message from the Executive Board (chapter 1.2), Organisation (chapter 2), Strategy and Developments (chapter 3) and Corporate Governance (chapter 4), excluding Report of the Supervisory Board (chapter 4.5). ANNUAL REPORT SRLEV NV 2020 - OVERVIEW 3 1.2 MESSAGE FROM THE EXECUTIVE BOARD OF SRLEV NV Dear stakeholders, 2020 was an eventful year for our company. We welcomed our new shareholder Athora Ltd., executed the sale and we have started implementing a new strategy. Amidst the change of ownership, turbulent economic and COVID-19 environment, we were able to provide an uninterrupted and high-quality service to our customers whilst delivering solid financial results coupled with a stable solvency position. On the 2nd of April 2020 it was announced that Athora completed its acquisition of VIVAT by acquiring 100% of the shares in VIVAT from Anbang. With the combined capabilities of VIVAT and Athora, we will be best placed to fulfil our customers’ needs and to build further upon our strong market position in pensions. SRLEV improved its Net Underlying Result by further reducing the operating costs and improving the technical result. The impact of COVID-19 on the results has been limited. The solvency position remained stable at 163%. Focus on capital and a strong balance sheet will remain a key priority for the company. Commercially, it was another successful year for our pension business. Gross premiums remained high at € 1.1 billion, with an all-time high production of € 300 million of immediate annuities, and our PPI doubled its assets under management to above € 1 billion. The retention rate remained high at 84%. The declining individual life market led to lower gross premiums of € 669 million, but the sale of direct annuities —identified as a strategic focus product within our new strategy— increased in the final quarter of the year to € 60 million. We are making strong progress in implementing the new strategy and are simplifying the operating model and organisational structure, within a single Pension Business, a dedicated Life Service Business and fewer smaller support functions. In addition, we are initiating and accelerating digitalisation initiatives and we will consider outsourcing a number of —non-strategic— activities in the coming years. This enables us to position ourselves as the only fully dedicated large pension provider in the Netherlands using the well-known Zwitserleven brand. Our new strategy will benefit all our existing and future customers. Also at the core of our strategy is investment management. Because of this importance, the Supervisory Board has decided to search for a Chief Capital & Investment Officer to strengthen the Executive Board, subject to regulatory and works council approval. Combining our knowledge of the Dutch market and leveraging on certain investment capabilities of Athora, we expect to enhance capital generation in the future and be able to offer the best value for money propositions to our customers by long term sustainable investments. To effectively execute our new strategic asset allocation, the full management of the own account investments will be transferred to Athora Netherlands from ACTIAM. SRLEV will safeguard and further enhance its social responsible investing credentials, and continues to embed sustainable insurance and corporate social responsibility practices in the organisation. The change of ownership of the Non-Life business went smoothly. This would not have been achieved without the hard work of our employees, the joined process with the works council and the constructive cooperation with our business partners. SRLEV has full confidence that it is well positioned for the future in becoming the number 1 pension provider in the Netherlands. Amstelveen, the Netherlands, 24 March 2021 On behalf of the Executive Board of SRLEV NV, Tom Kliphuis, Chief Executive Officer ANNUAL REPORT SRLEV NV 2020 - OVERVIEW 4 2 ORGANISATION 2.1 ABOUT SRLEV SRLEV is a Dutch insurance company that offers a variety of insurances. Through its main brand Zwitserleven, SRLEV provides pensions and life insurance products. Under the brand Reaal, SRLEV offers service for life insurance products sold in the past. SRLEV primarily operates in the Netherlands. Legal Entity SRLEV NV is a public limited company with a two-tier board structure consisting of an Executive Board (EB) and a Supervisory Board (SB). SRLEV NV is a full subsidiary of Athora Netherlands NV. The members of the Executive Board of Athora Netherlands NV are also the members of the Executive Board of SRLEV NV. Certain topics are managed and controlled from a consolidated perspective. To the extent applicable, information in this board report is therefore presented on Athora Netherlands level. The figure below shows the total structure of Athora Netherlands NV and the position of SRLEV NV in this structure. SRLEV NV within the structure of Athora Netherlands NV, business lines and brands 2.1.1 Composition of the Executive Board The Executive Board is responsible for the strategy and management of the company. The Executive Board per 31 December 2020 consisted of the following members: • R.H. (Tom) Kliphuis – Chief Executive Officer • Y. (Yinhua) Cao – Chief Financial Officer1 • A.P. (Annemarie) Mijer – Chief Risk Officer • A. (Angelo) Sacca – Chief Strategy & Commercial Officer • S.A. (Stefan) Spohr – Chief Operating Officer More information on the Executive Board is stated in Chapter 4: Corporate Governance. 1 Yinhua Cao will step down as Chief Financial Officer and member of the Executive Board of SRLEV NV, effective on 1 May 2021. ANNUAL REPORT SRLEV NV 2020 - ORGANISATION 5 2.1.2 Composition of the Supervisory Board The Supervisory Board is responsible for overseeing the Executive Board’s conduct and general business management. It has an important role in the company’s governance, by approving or dismissing significant business-related decisions. As of 31 December 2020 the Supervisory Board consisted of the following members: • M. W. (Maarten) Dijkshoorn • M. A. E. (Michele) Bareggi • F. G. H. (Floris) Deckers • J. M. A (Hanny) Kemna • P.P.J.L.M.G. (Pierre) Lefèvre More information on the Supervisory Board is stated in Chapter 4: Corporate Governance. 2.1.3 Shareholder SRLEV NV is a wholly owned subsidiary of Athora Netherlands NV. The sole shareholder of Athora Netherlands NV is Athora Netherlands Holding Ltd. Athora Netherlands Holding Ltd. is a full subsidiary of Athora Holding Ltd. 2.2 OUR BRANDS Zwitserleven Zwitserleven has become one of the leading pension insurers in the Netherlands. Zwitserleven offers wealth accumulation products ‘for later’. Zwitserleven has been awarded repeatedly for having the most sustainable investment policy in the Netherlands. Reaal Reaal is known for Life insurance products. Reaal improves the financial resilience of customers by helping them make well-considered choices about their financial situation.