NN Group reports 1Q16 results + andere nieuws

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Beleggingsadvies 26/05/2016 07:12
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 ratio1) 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.

tijd 09.00
De AEX vlak van huis op 446.91 -0,31 -0,07% NN Group EUR 31,01 +58ct vol. 65.000


Improved value proposition to clients in Bulgaria
Supporting the overarching strategic goals of NN Group, NN Bulgaria has recently implemented several changes that are set to support its long term sustainability. With profit growth in mind, in light of market challenges, NN Bulgaria has transformed its main distribution channel (tied agents) and primary value proposition to clients, as well as its support and service functions needed to make these changes happen.

Orange PRO

These changes can collectively be seen in a new programme called Orange PRO, which highlights the improved primary value proposition to clients in Bulgaria.

‘Rather than offering pensions or life insurance products, our main proposition has changed to include three types of services - advisory, transactional and product cycle - in five areas of financial planning: pension, investment, insurance, tax and estate planning.’ says Nikolay Stoykov, CEO of NN Bulgaria.

Financial advisory in five areas of financial planning is a proposition which is entirely new and unique for the Bulgarian market. It fits very well with the financial needs of the two main segments identified by the recent NN Bulgaria segmentation study (TNS, 2016). As financial advisor roles are a key feature of the new offering, the target is that by January 2017 at least 50% of NN Bulgaria agents are certified financial consultants under NN Bulgaria’s own internal training programme.


To achieve this goal, several projects within Orange PRO roll-out are running simultaneously:
Two six-month long licensing programs (for financial consultants and unit managers) which provide ‘license to sale’ and ‘license to manage’ to the representatives of the sales force
A new remuneration system and career development path for financial consultants, unit and agency managers which reflect the integrated sales targets (pension and life)
Integration of sales management and customer service processes in the current agent portal and sales support tool

As 2016 moves forward, changes that came about during the roll-out will be further integrated into every-day business processes.



Financial literacy

In relation to the new value proposition, main branding and communication activities are directed towards increasing financial literacy, matching the needs of customers and the company strategic targets.

Following the rebranding efforts and in response to ongoing pension reforms, in 2015 NN Bulgaria launched a new information portal called Pensiopedia – www.pensiopedia.bg (after the NN Romania initiative). The website provides useful information about the pension system in Bulgaria and the advantages of the three-pillar pension model in a customer-friendly and easy-to-understand way, with NN experts available to answer questions. In addition, the website is being used for customer data updates in case those online users who connect with NN appear to be customers.

The launch of Pensiopedia, along with other recent initiatives, have positioned NN Bulgaria as the leading provider of financial literacy in Bulgaria, a position which all are working to uphold.



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