NN Group reports 1H20 results

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Overig advies 06/08/2020 07:15
Robust capital position.
NN Group Solvency II ratio of 221% versus 224% at the end of 2019; the Solvency II ratio before deduction of the interim dividend and EUR 183 million of share buybacks in the first half of 2020 was 231%

Cash capital position at the holding decreased to EUR 1,315 million from EUR 1,989 million at the end of 2019, reflecting cash outflows of EUR 1,132 million including the consideration paid for the acquisition of VIVAT Non-life, the redemption of EUR 300 million senior debt and the repurchase of own shares, partly offset by remittances from subsidiaries to the holding

2020 interim dividend of EUR 2.26 per ordinary share or approximately EUR 705 million, which comprises the amount of the suspended final dividend plus the regular interim dividend amount

Resumption of share buybacks for the remaining amount of EUR 67 million of the original EUR 250 million programme

Strong results in current economic environment

Operating capital generation decreased to EUR 543 million from EUR 697 million in the first half of 2019, reflecting lower interest rates and the impact of COVID-19 restrictions

Operating result increased to EUR 926 million from EUR 914 million in the first half of 2019, which benefited from EUR 67 million of private equity dividends, while the current half-year includes EUR 16 million of private equity dividends and non-recurring benefits

Limited negative impact of COVID-19 of around EUR 30 million in the first half of 2020

Net result of EUR 587 million, down from EUR 1,118 million in first half of 2019, which benefited from positive revaluations

Further cost reductions of EUR 21 million in the first half of 2020; total cost reductions achieved to date of EUR 381 million versus the full-year 2016 administrative expense base

The value of new business was EUR 122 million, down from EUR 236 million in the first half of 2019, reflecting lower sales in Japan and Insurance Europe

Statement of David Knibbe, CEO

‘Despite the current turbulent economic environment, we present a solid set of results for NN Group today. We were able to respond quickly to the COVID-19 pandemic by ensuring continuity of our business and adapting to the changing needs of our customers, employees and other stakeholders. Our Solvency II ratio remains strong at 221% and our balance sheet is resilient, with a strong cash capital position of EUR 1,315 million at the end of June 2020.

The decision to suspend the 2019 final dividend and share buyback programme in April followed the recommendations of the European and Dutch regulators in response to the COVID-19 crisis and the uncertainty about how that would develop. However, it was always our intention to make those distributions to shareholders when the time was right and therefore we now announce that we are resuming the share buyback programme and will pay an interim dividend of EUR 2.26 per ordinary share, comprising the combined amount of the suspended final dividend and the regular interim dividend.

Our focus is now on operating capital generation (OCG) and our commitment to grow OCG to mid-single digit over time. The OCG in the first half of 2020 was EUR 543 million, reflecting the impact of low interest rates and
COVID-19. We are reporting an operating result for the first half-year of EUR 926 million, an increase of 1.3% compared with the same period last year. The impact of the pandemic on our operating result was limited at around EUR 30 million, while sales and value of new business were impacted by COVID-19 restrictions and the tax regulation change in Japan. In Netherlands Life we accelerated the shift to higher-yielding assets and we took various expense initiatives at Insurance Europe to maintain efficiency. And in Japan we successfully kept surrender rates down, for example by offering policy loans.

In the first six months of the year almost 15 thousand new mortgages for a total amount of EUR 4.4 billion were originated at NN Bank, compared with 12.5 thousand mortgages and EUR 3.7 billion in the first half of 2019. Total Assets under Management at NN IP increased to EUR 285 billion, compared with EUR 276 billion at the end of 2019. Our asset manager attracted net Third-Party assets of EUR 3.5 billion in the first half-year, mainly in Fixed Income and multi-asset strategies as well as in its Dutch residential mortgage fund. The pandemic understandably put some pressure on our customer engagement scores (NPS), while our employee scores improved significantly. Employees indicate they value the measures taken by the company to safeguard their well-being and facilitate working from home.

We reduced administrative expenses by a further EUR 21 million in the first half of the year, bringing our total expense reduction to EUR 381 million at the end of the first half of 2020. After completing the acquisition of VIVAT Non-life on 1 April, we have started the process of integrating the business, for example by redirecting new business to NN platforms and cooperating closely with our intermediaries on migrations. Overall Netherlands Non-life performed well with a combined ratio of 94.9% for the first half of 2020. We are taking measures to improve the performance of the Netherlands Non-life business, especially at Disability & Accident.

During our Capital Markets Day in June, we presented our strategy as well as new targets for the Group and the individual business segments. It is our aim to create value for the benefit of all stakeholders. Our broader responsibility to society is reflected in our non-financial targets that, for instance, help to accelerate the transition to a low-carbon economy by transitioning our proprietary investments to net-zero carbon emissions by 2050. This commitment to align with the Paris Agreement follows earlier steps, such as the phase-out strategy of thermal coal-exposed proprietary investments by 2030, the carbon footprint analysis, and the climate-related scenario analysis. At the end of June 2020, the percentage of our total Assets under Management where environmental, social and governance (ESG) factors are integrated in the investment process, was 71 percent.

With our priority to maintain a strong balance sheet, and the strategic actions we are taking to achieve resilient and growing long-term capital generation, we are well-positioned to navigate through volatile markets, drive profitable growth and deliver attractive capital returns going forward.’

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https://www.nn-group.com/financial-article/nn-group-reports-1h20-results.htm

tijd 09.12
NN Groep EUR 34,05 +1,03 vol. 226.000



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