NN Group reports 1Q16 results
(Thomson Reuters ONE) -
Operating result stable; strong capital position
· Operating result ongoing business of EUR 305 million, stable on 1Q15,
as higher dividends at Netherlands Life and improved results at NN Bank were
offset by lower results at Netherlands Non-life, Insurance Europe and Asset
Management
· Net result of EUR 270 million, down from EUR 485 million in 1Q15,
which included a capital gain on an equity investment while 1Q16 reflects a
negative result for Japan Closed Block VA due to higher market volatility
· Cost savings in the Netherlands of EUR 11 million in 1Q16, bringing
the expense base down to EUR 792 million
· Strong capital position; Solvency II ratio at 241% at 1Q16 versus
239% at 4Q15
· Holding company cash capital increased to EUR 2.1 billion reflecting
dividends from subsidiaries of EUR 390 million partly offset by the EUR 250
million share buyback
· Share buyback programme up to EUR 500 million over 12 months
commencing 1 June 2016
Statement of Lard Friese, CEO
'We are pleased with our strong capital position, with a Solvency II ratio of
241% and robust free cash flow to the holding in the first quarter of 2016,
especially given the volatile market conditions in the first few months of the
year.
While the group operating result for the first quarter of 2016 was stable on the
same quarter in 2015, the operating performance of the individual segments
showed a mixed picture. Netherlands Life reported higher results supported by
continued strong investment performance, and the results of NN Bank improved on
the back of the continued growth of the mortgage portfolio and customer
deposits. Our international businesses continued to grow their fees and premium-
based revenues, which were offset by the impact of the low interest rate
environment and equity market depreciation. The non-life and asset management
businesses continue to have our full attention. The results of the non-life
business have been quite volatile and were impacted by an unfavourable claims
experience in the Individual disability portfolio in the first quarter. We
continue to implement our management actions aimed at improving underwriting
performance and efficiency. In response to the challenging environment, NN
Investment Partners is enhancing its strategic focus as announced at the end of
last year. The asset manager aims to attract third-party assets by focusing on
its areas of expertise, rationalising its product range and improving the
efficiency of its operations. In the first quarter of 2016, the asset manager
won several Lipper Group Awards recognising the success of its Multi-Asset
strategy and Emerging Markets Debt funds. Our cost reductions in the Netherlands
are on track to achieve the target expense base set out for 2018, and in the
first quarter we realised EUR 11 million in cost savings.
We are today announcing a programme to buy back shares up to EUR 500 million
over a period of twelve months. This demonstrates our disciplined capital
management as well as our commitment to returning excess capital to
shareholders. At the same time, we believe it is essential to maintain a robust
capital position and the financial flexibility to be able to pursue value
creating corporate opportunities.
On 14 April, ING sold its remaining 14.1% stake in NN Group. This transaction
marked the completion of our journey to become a stand-alone company. Going
forward, it remains essential that we capture the many opportunities of changing
consumer behaviour, retrenching governments and the use of new technology. We
will continue to invest in innovating our businesses, focused on improving our
service to customers and achieving our goals of increased efficiency and
agility.'
NN Group key figures
In EUR million 1Q16 1Q15 Change
-----------------------------------------------------------
Operating result ongoing business 305 304 0.1%
Net result 270 485 -44.2%
Net operating ROE 8.6% 8.7%
Solvency II ratio(1)) 241% n/a
Note: all footnotes are included on page 25
Quarterly Business Update
NN Group's strategy is to deliver an excellent customer experience based on
strong products and services and long-term relationships. In executing this
strategy we will focus on agility in order to navigate the ever-changing
insurance and asset management landscape, as well as the challenging market
dynamics.
Transparent products and services
NN Group is committed to delivering products and services that are easy to
understand and meet customers' lifetime needs. For example, Netherlands Life
launched a programme called 'Retirement in the mix' (Pensioen in de mix) aimed
at increasing pension awareness among employers and employees. Another new
service is Pension Assistance (Pensioen Hulp), an online tool open to customers
and non-customers alike, which provides relevant and personalised information to
help people prepare for their retirement in the ten years leading up to this
phase. A new product recently introduced by Nationale-Nederlanden is Active
Retirement (Actief Pensioen) whereby employees can purchase a pension with
immediate effect from their accrued pension capital. In the first quarter of
2016, Japan Life continued to increase its COLI protection sales, driven by
products launched in 2015, including a new term product and a new income
protection product for SME owners. NN Investment Partners successfully launched
a Green Bond fund, underlining our commitment to responsible investing.
Capturing growth
The fundamental need of people to protect themselves against life's
uncertainties will continue to drive growth in the insurance industry over the
long term. In Europe, we continue to expand our sales of new protection
products. By way of example, in Romania we have deployed an innovative product
development approach with ING Bank, which has resulted in a significant increase
in risk protection sales. Similarly, Turkey has introduced a new simple account
protection product for bancassurance customers that provides customers a
financial buffer in the case of an unexpected event. In addition, our Greek
business has launched a new direct online health proposition, which is seeing
early signs of success. In the Netherlands, NN Bank is one of the top 5 players
in the mortgage market in terms of new mortgage production, with its mortgage
portfolio growing to EUR 10.9 billion from EUR 10.5 billion at the end of 2015.
Customer deposits increased to EUR 8.6 billion at the end of the first quarter.
Also our asset manager continues to experience strong demand for its Dutch
Residential Mortgage Fund.
Multi-access distribution
NN Group strives to be available to serve our customers through multiple
channels. We have a diverse mix of distribution channels comprising tied agents,
bancassurance partners, brokers and direct channels, which we are looking to
constantly strengthen. Within Japan Life, for example, we continue to enhance
and diversify our distribution through bank networks where we have experienced
sales growth of 33% in the first quarter of 2016. In Greece, new sales via our
bancassurance partner, Piraeus Bank grew by 63% year on year. In Poland, we
recently announced the acquisition of Notus Financial Advisors, a leading
financial broker in the market. The acquisition of Notus will further strengthen
and diversify the distribution network of Nationale-Nederlanden Poland with over
350 of Notus' own agents in Poland's largest cities as well as nationwide
coverage through franchises giving access to 600 financial advisors.
Effective and efficient operations
We aim to make processes as efficient and effective as possible, in order to
deliver value for money for our customers. In the Netherlands we continue to
reduce expenses, for example by work towards IT-cloud solutions, offshoring and
application rationalisation.
The digital transformation of our business improves customers experience as well
as our efficiency. Last year, in Spain we implemented a paperless sales process
for tied agents. This increased customer experience, measured by our Net
Promoter Score, and reduced new business processing costs. On the back of this
success in Spain, we have recently launched digital solutions in Poland and the
Czech Republic and will be launching similar platforms in other European
countries in the coming months.
Innovation
We continue to invest in innovation and in the first quarter of the year,
Netherlands Non-life introduced the SmartHome pilot in the 'Smartest House of
the Netherlands' in Eindhoven. The pilot, initiated by Sparklab (NN Non-life's
innovation lab), is intended to explore the effect that home sensors have on
residents' overall feeling of safety.
NN Group Profile
NN Group is an international insurance and asset management company, active in
more than 18 countries, with a strong presence in a number of European countries
and Japan. With around 11,500 employees the group offers retirement services,
insurance, investments and banking to more than 15 million customers. NN Group
includes Nationale-Nederlanden, NN and NN Investment Partners. NN Group is
listed on Euronext Amsterdam (NN).
Investor conference call and webcast
Lard Friese and Delfin Rueda will host an analyst and investor conference call
to discuss the 1Q16 results at 10.00 am CET on Thursday 26 May 2016. Members of
the investment community can join the conference call at +31 20 531 5865 (NL),
+44 203 365 3210 (UK), +1 866 349 6093 (US) or follow the webcast on www.nn-
group.com.
Press call
Lard Friese and Delfin Rueda will host a press call to discuss the 1Q16 results,
which will be held at 12.00 pm CET on Thursday 26 May 2016. Journalists can join
the press call at +31 (0)20 531 5863.
Financial calendar
· Annual General Meeting: 2 June 2016 · Publication 3Q16 results: 17
· Publication 2Q16 results: 18 August November 2016
2016 · Publication 4Q16 results: 16
February 2017
Contact information
---------------------------------- ----------------------------------
Press enquiries Investor enquiries
Saskia Kranendonk Investor Relations
+31 62 568 3835 +31 88 663 5464
saskia.kranendonk(at)nn-group.com investor.relations(at)nn-group.com
---------------------------------- ----------------------------------
Additional information on www.nn-group.com
· NN Group 1Q16 Financial Supplement, NN Group 1Q16 Analyst Presentation
and NN Group 1Q16 Interim Accounts
· Photos of NN Group executives, buildings and events are available for
download at Flickr
Important legal information
NN Group's Consolidated Annual Accounts are prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
("IFRS-EU") and with Part 9 of Book 2 on the Dutch Civil Code.
In preparing the financial information in this document, the same accounting
principles are applied as in the 2015 NN Group Consolidated Annual Accounts.
All figures in this document are unaudited. Small differences are possible in
the tables due to rounding. Certain of the statements contained herein are not
historical facts, including, without limitation, certain statements made of
future expectations and other forward-looking statements that are based on
management's current views and assumptions and involve known and unknown risks
and uncertainties that could cause actual results, performance or events to
differ materially from those expressed or implied in such statements. Actual
results, performance or events may differ materially from those in such
statements due to, without limitation: (1) changes in general economic
conditions, in particular economic conditions in NN Group's core markets, (2)
changes in performance of financial markets, including developing markets, (3)
consequences of a potential (partial) break-up of the euro, (4) changes in the
availability of, and costs associated with, sources of liquidity as well as
conditions in the credit markets generally, (5) the frequency and severity of
insured loss events, (6) changes affecting mortality and morbidity levels and
trends, (7) changes affecting persistency levels, (8) changes affecting interest
rate levels, (9) changes affecting currency exchange rates, (10) changes in
investor, customer and policyholder behaviour, (11) changes in general
competitive factors, (12) changes in laws and regulations, (13) changes in the
policies of governments and/or regulatory authorities, (14) conclusions with
regard to accounting assumptions and methodologies, (15) changes in ownership
that could affect the future availability to us of net operating loss, net
capital and built-in loss carry forwards, (16) changes in credit and financial
strength ratings, (17) NN Group's ability to achieve projected operational
synergies and (18) the other risks and uncertainties detailed in the Risk
Factors section contained in recent public disclosures made by NN Group.
Any forward-looking statements made by or on behalf of NN Group speak only as of
the date they are made, and, NN Group assumes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new information
or for any other reason.
This document does not constitute an offer to sell, or a solicitation of an
offer to buy, any securities.
NN Group Press Release 1Q2016:
http://hugin.info/160538/R/2015677/747407.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: NN Group NV via GlobeNewswire
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