Delta Lloyd requests court ruling on DNB measures
(Thomson Reuters ONE) -
* De Nederlandsche Bank (DNB) has fined Delta Lloyd Levensverzekering NV.
* DNB has asked Delta Lloyd to "dismiss" its CFO by 1 January 2016 at the
latest.
* Delta Lloyd believes these measures are based on incorrect assumptions and
considers them disproportionate.
* A review by Delta Lloyd's Supervisory Board confirmed that the actions of
Delta Lloyd were in line with its risk policy and that no regulation was
violated.
Background
On 2 July 2012, DNB introduced a fixed interest rate to be used when calculating
insurance liabilities with terms exceeding 20 years[1]. In the week before this
interest rate was introduced, Delta Lloyd decided to reduce its interest rate
risk hedges. DNB performed an investigation of whether Delta Lloyd's decision-
making process at that time was in accordance with the requirements of so-called
'sound operational management'[2].
As soon as the DNB investigation began, Delta Lloyd's Supervisory Board
instituted its own review of the same facts and circumstances. For this the
Supervisory Board engaged external legal and accountancy expertise.
Delta Lloyd Supervisory Board chairman Jean Frijns: "For Delta Lloyd it is
regrettable that we have to inform you of a difference of opinion with DNB. We
cannot reconcile DNB's view with the facts as established by us. We have no
doubt that Delta Lloyd acted at all times in the interests of all stakeholders.
That is why we have chosen to take these legal steps, because it is the only way
to obtain an independent ruling on this difference of opinion. We will continue
to work towards a constructive regulatory relationship with DNB and the
enhancement of mutual trust. We do this with the fullest confidence in the
company, its executives and employees."
DNB measures
On the basis of its investigation of Delta Lloyd Levensverzekering NV, DNB has
imposed a fine of ? 1.2 million, increased by an amount of ? 21.6 million
representing the financial gain which it claims Delta Lloyd Leven achieved,
making a total of ? 22.8 million.
On the basis of the facts that were investigated, DNB also reassessed the
'suitability'(2) of Delta Lloyd's CFO, Emiel Roozen, and concluded that Delta
Lloyd should dismiss him by 1 January 2016 at the latest. DNB has concluded that
Emiel Roozen's 'integrity'(2) is beyond dispute.
Outcome of DNB investigation
DNB is of the opinion that the decision-making concerning the reduction by Delta
Lloyd of its interest rate risk hedges was conducted without due care. DNB found
that Delta Lloyd should not have reduced its hedges at that time and that this
was inconsistent with its risk policy. DNB claims that Delta Lloyd acted in
order to gain an advantage from confidential information. DNB places its
conclusions in the context of its critical view of Delta Lloyd's risk
management.
Outcome of Delta Lloyd's Supervisory Board review
The Supervisory Board interprets the facts and circumstances differently from
DNB and has reached different conclusions:
1. Delta Lloyd's actions were not in contravention of the law or regulations.
* Delta Lloyd has a different opinion than DNB regarding the confidential
nature of the information.
2. Delta Lloyd's actions were consistent with its risk policy.
* Delta Lloyd's solvency was such that, on the basis of its risk policy,
hedges of downward equity and interest rate risks could be reduced.
* Delta Lloyd's purpose was not financial gain, but to reduce the hedge on
interest rate risks.
3. The actions of Delta Lloyd were focused on the interests of its
stakeholders, and were in accordance with the applicable risk management
policy.
Delta Lloyd measures
As a result of its own review, Delta Lloyd further concluded there was a
possibility for improvement in the area of risk awareness, compliance and
internal governance. In line with best practice at financial corporations, the
risk management function will be strengthened at all levels, including the
Executive Board. In relation to that, it is the intention of the Supervisory
Board to soon nominate a Chief Risk Officer (CRO). The Supervisory Board
considers the measures taken as a result of its review adequate and appropriate.
Therefore the Supervisory Board considers DNB's far-reaching measures, including
the dismissal of the CFO, unjustified and disproportionate.
Legal proceedings and the impact of the measures
DNB and Delta Lloyd's Supervisory Board have reached other conclusions based on
their investigations. The consequences for Delta Lloyd are drastic and in the
view of the Supervisory Board too far-reaching. For this reason, Delta Lloyd has
decided to submit DNB's measures to the court and request it to rule on the
interpretation of the facts and circumstances and the associated conclusions,
including the "dismissal" of the CFO, as well as (the calculation of the total
amount of) the fine.
The Supervisory Board has expressed its full confidence in Emiel Roozen, who was
reappointed as CFO with DNB's approval on 22 May 2014 and therefore will remain
in office pending the legal proceedings.
Conference call for media, analysts and investors
On 22 December 2014 at 9:00 a.m. (CET) Jean Frijns, Chairman of Delta Lloyd's
Supervisory Board, will host a conference call (in English) for media, analysts
and investors to provide further details about this press release.
The dial-in number for this conference call is 31 (0)20 531 5841, code 348890#.
Notes on legal terms used in the Dutch Financial Supervision Act (wet op het
financieel toezicht - wft)
The term 'suitability' in the light of the Wft:
The suitability requirement for persons in key position, as applicable in June
2012, was included in section 3:8 (1) Wft, chapter 2 of the Decree on Conduct of
Business Supervision of Financial Undertakings (Besluit Gedragstoezicht
financiële ondernemingen) (professional competence of employees) and the 2012
Policy Rule on Suitability (Beleidsregel geschiktheid).
* The integrity and suitability of the people involved in the day-to-day
management of financial undertakings are screened before they can be
appointed.
* The suitability screening involves above all assessment of the knowledge and
skills of the person concerned. The regulator assesses such factors as
training, work experience and certain competences. The suitability screening
also takes account of the composition and functioning of the board as a
whole.
* The suitability screening is an ongoing requirement. Suitability may have to
be reassessed if the regulator considers that there are reasonable grounds
for doing so.
The term 'integrity' in the light of the Wft:
The integrity of people in key positions is screened by reference to section
3:9 Wft, chapter 3 of the Decree on Conduct of Business Supervision of Financial
Undertakings (Besluit Gedragstoezicht financiële ondernemingen) and chapter 2 of
the Decree on Prudential Rules under the Wft (Besluit prudentiële regels Wft).
* The aim of the integrity screening is to ensure that the integrity of people
in key positions is beyond doubt. This is done by requesting information
from government bodies and organisations for which the person concerned has
worked.
The term 'sound operational management' in this context:
Article 1.2 (C) of the 2012 Policy Rule on Suitability (Beleidsregel
geschiktheid) defines the term 'sound and ethical operational management' as
follows.
* Sound and ethical operational management requires an adequate accounting and
internal control system, measures to safeguard suitability and professional
competence within an undertaking, the careful treatment of customers, risk
management, compliance and outsourcing.
--------------------------------------------------------------------------------
[1] This involves the introduction of the Ultimate Forward Rate (UFR) for Dutch
insurers. The UFR is a method of extrapolating the yield curve for maturities of
20 to 60 years, which is used in calculating solvency.
[2] As defined in the Dutch Financial Supervision Act; see notes on legal terms
at the end of this press release.
Full press release:
http://hugin.info/142905/R/1882552/664183.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Delta Lloyd via GlobeNewswire
[HUG#1882552]
Unternehmensinformation / Kurzprofil:
Datum: 22.12.2014 - 07:35 Uhr
Sprache: Deutsch
News-ID 361007
Anzahl Zeichen: 9700
contact information:
Town:
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Kategorie:
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