Acceleration & Innovation on track

Transcription

1 Acceleration & Innovation on track Interim Results 2014 Willem van Duin Chairman of the Executive Board Huub Arendse Chief Financial Officer 14 August 2014

2 Contents General overview Group results Acceleration & Innovation Financial overview Results per segment Capital position and solvency Investments Q&A 2

3 Acceleration & Innovation change programme on track Operational result increases to 142 million Write-down of goodwill ( 143 million) and reorganisation expenses ( 45 million) lead to 58 million net loss Acceleration & Innovation on track: Various innovations launched for our customers Distribution organisation simplified for improved service Operating expenses fall by 3% Careful workforce reduction on schedule Improved financial position: current solvency ratio of 217% (IGD) 3

4 Financial developments: Operational result increases to 142 million Operational result Net result Gross written premiums 17,611 17, Operating expenses Solvency I ratio (IGD) ,423 1,473 Equity (in %) 202 9,684 9,702 Operational result increases to 142 million on the back of strong performance from insurance business and 3% reduction in operating expenses Total combined goodwill write-down for Syntrus Achmea and Oranta of 143 million and 45 million in reorganisation expenses result in net loss of 58 million Health insurance premiums for 2014 fell by 100 per policy, while the departure of several pension clients with separate accounts has resulted in a fall in revenue Financial position improves further, with a solvency ratio of 217%

5 Performance of Dutch insurance business improved Non-Life Dutch insurance business Non-Life Health Pension & Life Basic 118 Basic 62 * Modified cost allocation method provides a clearer view of operational performance of individual segments, but does significantly affect segment results. Higher earnings from income protection and stable earnings from property & casualty cancelled out by higher cost allocations and nonrecurring investment income in 2013 Health Effective healthcare procurement and lowerthan-projected healthcare expenses offset higher cost allocations and lower GWP Returned approximately half a billion euro to customers in 2014 by reducing premiums by 100 per policy Result from Basic Health 113 million Pension & Life Higher earnings due to reduction of risk (volatility) and interest-rate trends 5

6 Write-down of goodwill and reorganisation expenses result in loss Result Operational result Goodwill write-down Reorganisation expenses Mergers & acquisitions Result before tax Goodwill write-down Syntrus Achmea million write-down of goodwill; results lower than projected due to lower real estate management fees and the departure of a major client in pension management Goodwill write-down Oranta 65 million write-down of goodwill; lower growth and profit expectations on account of the persistently weak market and the uncertain economic outlook Reorganisation expenses associated with Acceleration & Innovation programme 45 million reorganisation provision to cover various expenses, including the impact on human resources of the integration of several different distribution divisions, a workforce reduction in staff departments and services, and the sale and closure of several health centers 6

7 Acceleration & Innovation: accelerated change in terms of customer focus Background Acceleration in customer focus and cost savings Innovation of processes and online services These changes are in response to customers fastchanging needs Customer-driven Ambitions with Acceleration & Innovation Providing new solutions to our customers Medewerkers Maintaining current high level of customer satisfaction Maintaining long-term financial health Employees Responsible returns Competitive costs Objectives by the end of million cost reduction Reduction of approximately 4,000 jobs 7

8 Customer-driven: responding to customers fast-changing needs Implemented innovative solutions for our customers Integration of direct and intermediary distribution divisions Established customer councils to ensure customers have a say in business operations Achmea increased its AFM Customer Centricity score to 3.3 on a scale of 5 8 Medewerk ers

9 Responsible returns: performance and portfolio management Measures in income protection insurance to increase profitability on a long-term basis Medewerk ers Strategic management of customer portfolio to ensure more stable interest income from pension business Streamlining of portfolio through the closure of health centers and sale of Myler Building up a direct position in Dutch residential mortgages, including through Syntrus Achmea (Tellius) 9

10 Competitive costs: cost reduction on schedule Operating expenses reduced by 50 million: on track for the objective of further reducing our operating expenses by 450 million by the end of 2016 Medewerk ers Progress with careful workforce reduction; good results in anticipated 30% downsizing of staffs and services Integration of Agis and TakeCareNow! brand with Zilveren Kruis Achmea Reducing complexity continues to be a high priority, including through faster migration to IT target systems 10

11 Employees: investing in long-term employability More focus on competencies customer-driven and results-oriented when setting development and evaluation targets with employees Working on preventive employee mobility: Improving internal mobility/promotions Restricting the hiring and recruitment of external staff Agreed sustainable redundancy plan with unions Continued appreciation for Achmea as an employer: we ranked first among insurers and pension funds in a survey conducted by current-affairs weekly Intermediair 11 Medewerk ers

12 Contents General overview Group results Acceleration & Innovation Financial overview Results per segment Capital position and solvency Investments Q&A 12

13 Non-Life: stable performance in a consistently competitive market Gross written premiums P&C Result before tax Income Protection 2,036 2, ,514 Combined ratio (%) Property & Casualty Expense ratio 13 Claims ratio Combined ratio (%) Income Protection Expense ratio Claims ratio Growth in a shrinking market due to high appreciation from customers for Centraal Beheer Achmea, Interpolis and FBTO Higher insurance results despite increased personal injury loss and a number of storm damage claims 77 1,540 Property & Casualty insurance 22.9 PBT lower on higer cost allocation and lower investment returns due to nonrecurring investment income in 2013 Modified cost allocation method provides a clearer view of operational performance Income Protection insurance Previous measures have resulted in a lasting increase in the profitability of income protection insurance Lower absenteeism rates helped reduce claims; as a consequence, this also reduces customers demand for sickness and accident insurance

14 Health: strong results from management of healthcare expenses and good procurement Gross written premiums Result before tax Basic Supplementary 12,806 13,249 1,379 1,386 11, , Basic 118 Basic Basic health insurance The reduction in basic health insurance premiums by 100 per policy and a decrease in the number of policyholders have resulted in lower revenue, partially offset by a larger contribution from the Health Insurance Fund Effective healthcare procurement and lower-than-projected expenses for medical aids and mobility (among other expenses) offset higher cost allocations and lower written premiums Earnings from basic insurance fell by 4% to 113 million Combined ratio (%) Basic health Expense ratio 14 Combined ratio (%) Supplementary health Claims ratio Expense ratio Claims ratio Supplementary health insurance Written premiums from supplementary health insurance decreased due to the lower number of policyholders and because a portion of policyholders opted to reduce their supplementary cover

15 Pension & Life: higher earnings due to risk reduction and interest-rate trends Gross written premiums Pension Result before tax The cancellation of several separate accounts and the departure of the Achmea pension fund resulted in lower revenue; this decline was partially offset by a number of single-premium insurance policies received Life 1,608 1, , Value of new business* Pension insurance VNB margin* (in %) Proactive reduction of volatility and interest-rate trends had a positive effect on our earnings Extensions and migrations to systems with lower costs result in an increase in the value of new business (VNB) Life insurance Competition from bank savings products remains competitive; rate reductions and portfolio decline resulted in lower revenue * Mortgage activities not included (part of banking activities) 15 We further reduced the implementation costs of our closed-book portfolio which consists of products which are no longer sold in the market but which are still featured on our books as a premium-paying policy for current customers

16 Other activities International activities Result strongly influenced by 65 million goodwill write-down on Oranta; operational result stable at 3 million Revenue fell by 12% to 580 million due to negative exchange-rate effects, difficult market conditions in Russia and Greece, in particular, and a nonrecurring high premium in Turkey in 2013 Syntrus Achmea 78 million goodwill write-down on Syntrus Achmea Assets under management increase further by more than 9 billion, to 79.3 billion Banking activities An increase in interest income was cancelled out by lower fair-value income and higher operating expenses Achmea Bank s savings portfolio further increased to 4.5 billion, with nearly 40% of the portfolio fixed for a period of more than one year In May, Achmea Bank s three legal entities merged into a single entity: Achmea Bank N.V. 16

17 Financial position improves further; high solvency ratio Equity Equity Equity Solvency 9, ,702 Our equity remained virtually equal: the revaluation reserves increased as a result of lower interest rates and higher stock-market indexes; however, net loss, dividend and coupon payments cancelled out this increase Solvency Solvency increased as a result of an improvement in the LAT and lower Group (FCD) 220% 203% capital requirements for the Pension & Life business and higher revaluation reserves in the Non-Life business Group (IGD) 217% 202% The positive result from health insurance has been added to the reserves and causes a higher solvency ratio Non-Life NL 268% 237% Health NL 195% 185% Pension & Life NL 264% 226% A strong solvency is important to enable us to meet our commitments towards policyholders, even if healthcare expenses are higher than projected. We anticipate the transfer of approx. 1 billion costs from the Exceptional Medical Expenses Act (AWBZ) Adjusted for the UFR method, the IGD solvency ratio increased to 197% (year-end 2013: 192%) 17

18 Investments: right balance between risks and returns Total investment portfolio ( 48.0 billion) Direct property portfolio ( 1.1 billion) Property 3% Deposits 4% We invest the premiums paid by our customers as responsibly and efficiently as possible and aim to achieve optimal returns without losing sight of any of the associated risks Fixed-income 83% Fixed-income by type ( 39.7 billion) bonds 1% Corporate Fixed-income funds 1% Government bonds 47% Fixed-income by rating ( 39.7 billion) <BBB 2% BBB 10% Not rated 6% AAA 46% Asset-backed Loans and mortgages 7% Government related or guaranteed 8% * Annualised 18 More than 90% of fixed-income portfolio invested in investment-grade securities Substantial stake in direct mortgages to be built up in H Running yield 2,66%* A 13% Covered Bonds 9% Size of investment portfolio at company s own risk and expense increases further to EUR 48 billion AA 23%

19 Acceleration & Innovation change programme on track Operational result increases to 142 million Write-down of goodwill ( 143 million) and reorganisation expenses ( 45 million) lead to 58 million net loss Acceleration & Innovation on track: Various innovations launched for our customers Distribution organisation simplified for improved service Operating expenses fall by 3% Careful workforce reduction on schedule Improved financial position: current solvency ratio of 217% (IGD) 19

20 Contents General overview Group results Acceleration & Innovation Financial overview Results per segment Capital position and solvency Investments Q&A 20

21 Acceleration & Innovation on track Interim Results 2014

22 For more information, please contact: Stefan Kloet Bastiaan Postma Media Relations Investor Relations