avatar ASR Nederland N.V. Finance, Insurance, And Real Estate
  • Location: UTRECHT 
  • Founded: 1971-04-11
  • Website:


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    annual report 2015

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    a.s.r. Archimedeslaan 10 P.O. Box 2072 3500 HB Utrecht www.asrnl.com

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    a.s.r. 3 2015 annual report 2015 annual report Contents Management report Financial report Chapter 1 - a.s.r. at a glance Chapter 5 - Financial Statements 1.1 Key figures 6 Consolidated financial statements 93 1.2 Profile 8 Company financial statements 224 1.3 Message from the CEO 10 1.4 Highlights of 2015 11 Chapter 6 - Other information 1.5 Strategy 16 6.1 Independent auditor’s report 232 1.6 Executive Board and Supervisory Board 24 6.2 Events after the balance sheet date 238 6.3 Other equity interests 238 6.4 Provisions of the Articles of Association regarding Chapter 2 - Report of the Executive Board profit appropriation 238 2.1 Themes in 2015 28 6.5 Profit appropriation 239 2.2 Financial Performance 32 2.3 Capital and liquidity management 68 2.4 Risk management 72 Sustainability Report Chapter 3 - Executive Board Responsibility Statement Chapter 7 - Sustainability 3.1 Executive Board Responsibility Statement 78 7.1 Sustainability strategy 242 7.2 Insurance 248 7.3 Employer 253 Chapter 4 - Report of the Supervisory Board 7.4 Investor 259 4.1 Financial statements and profit appropriation 80 7.5 Planet 263 4.2 Issues addressed by committees 82 7.6 Society 267 4.3 Management and supervision 84 7.7 Standards, covenants and memberships 270 4.4 Corporate governance 87 7.8 About this sustainability report 272 4.5 Remuneration policy 89 7.9 Assurance report of the independent auditor 274 4.6 Closing remark from the Supervisory Board 91 Appendix A – Glossary 277 Appendix B – List of Acronyms 281 Appendix C – Other customer information 282 Appendix D – Other employee information 283 Appendix E – Other environmental information 289 Appendix F – Other information 293 Contact details and publication 297

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    a.s.r. 4 2015 annual report This page has intentionally been left blank.

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    a.s.r. 5 2015 annual report a.s.r. at a glance Chapter 1 a.s.r. at a glance

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    a.s.r. 6 2015 annual report a.s.r. at a glance 1.1 Key figures Gross written premiums Breakdown of premium income (in € millions) (in %) Non-life 61 62 57 3,923* 4,092 3,787* 39 38 43 Life 2013 2014 2015 2013 2014 2015 * After restatement Operating expenses Profit for the year (in € millions) (in € millions) 575 529* 524* 601 423* 247* 2013 2014 2015 2013 2014 2015 * After restatement * After restatement DNB Solvency I (in %) 305 285 268 2013 2014 2015

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    a.s.r. 7 2015 annual report a.s.r. at a glance Combined ratio Operating return on equity (in %) (in %) 13.9 104.8*,** 94.8* 95.0 11.7* 8.9* 2013 2014 2015 2013 2014 2015 * After restatement * After restatement ** Including additional WGA-ER loss item Net Promoter Score (external) Carbon emission* (in %) (in ton CO2) 9,178.54 -41 -41 7,805.32 -33 7,000.36 2013 2014 2015 2013 2014 2015 * March 2016. The emission factors have been aligned to the most recent scientific insights. The carbon footprint for 2015 and the footprint for previous years have been redefined based on recent insights. Number of internal FTEs 3,789 3,513 3,650* 2013 2014 2015 * including 344 FTE M&A, excluding M&A 3,306

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    a.s.r. 8 2015 annual report a.s.r. at a glance 1.2 Profile ASR Nederland N.V. and its subsidiaries, hereinafter jointly a.s.r. is confident that it can prove its right to exist by acting referred to as a.s.r., is the Dutch insurance company for all based on customer interests and customer perception. This is types of insurance. Via the a.s.r., De Amersfoortse and Ditzo something that all employees work towards on a daily basis. brands and specialist labels such as Europeesche Verzekeringen And it is the employees that give the service of a.s.r. a face and Ardanta, a.s.r. plans to continue to focus its insurance and determine its quality. a.s.r.’s products and services need to business on P&C, occupational disability and health insurance follow in step. Customers can rest assured that their risks are (non-life) policies and pensions, individual life and funeral covered by an insurer that operates sober and avoids waste, expenses insurance (life) policies, as well as on the distribution listens to them and puts itself in their shoes. In order to position of insurance products. a.s.r. also offers specific banking and itself well in different customer segments of the Dutch insurance investment products and asset management services. Except for market, a.s.r. pursues a hybrid and multi-brand distribution operating a small Belgian funeral expenses insurance portfolio, strategy and offers products through 5,500 intermediaries. which is recognized as a business line of ASR Levensverzekering N.V., a.s.r. operates exclusively in the Dutch market. In its policies, a.s.r. takes account of the interests of its Having generated € 4,092 million in gross written premiums customers and employees, shareholder, and a broad group of (GWP) in 2015 and servicing approximately 1.52 million external stakeholders (business partners, regulators, politicians, customers (through its a.s.r., De Amersfoortse and Ditzo labels), regional governments, industry associations, trade unions, non- a.s.r. is the fourth largest insurance company in the Netherlands governmental organizations (NGOs) and local communities). measured by GWP. a.s.r. has its registered office in the Netherlands. Its head a.s.r. allows people to take out insurance for risks they are office is located at Archimedeslaan 10 in Utrecht. The offices unable or unwilling to bear alone, and to help customers at Pythagoraslaan in Utrecht and Stadsring in Amersfoort were grow their assets for later. Customers need to be able to rely closed in 2015. a.s.r. also has offices in Amsterdam (until April on a.s.r. meeting its financial obligations because a.s.r. enters 2016) and Enschede. a.s.r.’s subsidiaries are based in various into long-term liabilities such as pension contracts. That is why locations in the Netherlands. sustainable financial robustness is essential and one of the top priorities.

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    a.s.r. 9 2015 annual report a.s.r. at a glance 1.2.1 History Establishment of N.V. Maatschappij van Assurantie 1720 der Stad Rotterdam 1816 Establishment of Woudsend Verzekeringen Establishment of Let op Uw Einde 1847 1883 Establishment of De Utrecht (predecessor to AMEV) Establishment of Europeesche Verzekeringen 1920 1964 Establishment of De Amersfoortse Establishment of Ardanta 1965 1981 Falcon Life created from Mercator Life Merger between AMEV and VSB Group, followed 1990 by merger between AG Groep with AMEV/VSB Merger between ASR Group and Fortis AMEV, 2000 Fortis’s Dutch insurance operations Integration of insurance operations of Stad Rotterdam, 2005 AMEV, Woudsend Verzekeringen into Fortis ASR End of Fortis era: a.s.r. continues on as an independent 2008 company with the Dutch State as its sole shareholder Dutch government takes decision on sale of a.s.r. 2015 a.s.r. roots go back to 1720 with the foundation of Although ASR Nederland N.V. was acquired by the Dutch State N.V. Maatschappij van Assurantie, Discontering en Beleening as a result of the nationalization of Fortis group, it has never der Stad Rotterdam anno 1720, which – on 21 June 1720 – received any state aid. became the first listed insurance company in the Netherlands. The company in its present form was created in 2000 by the On 29 September 2011, the Dutch State transferred all of acquisition of ASR Verzekeringsgroep by the Fortis group. the shares to NLFI in exchange for depositary receipts for ASR Verzekeringsgroep was formed via acquisitions and these shares. NLFI is responsible for managing the shares mergers of, and partnerships with, a number of other and exercising all rights associated with these shares under companies, including insurers such as Woudsend Verzekeringen, Dutch law, including the voting rights. Since the date of Europeesche Verzekeringen, De Amersfoortse and Stad nationalization, the Dutch Minister of Finance has indicated that Rotterdam. The Fortis group saw the light in 1990 as a result of the investment was intended to be temporary and that a.s.r. was the merger of AG Group, Dutch insurer AMEV and Bank Group to be returned to the market. On 28 January 2016 the Lower VSB. In the autumn of 2008, following the financial difficulties House of Dutch Parliament agreed with the governments plan of Fortis group and to prevent further disruption of the Dutch to initiate the process of the sale of a.s.r. The Minister requested economy, the Dutch State acquired the Dutch entities of NLFI and a.s.r. to start preparing for an IPO, so that privatization Fortis group and forced Fortis to spin off Fortis Verzekeringen will become an option from the first half of 2016. Nederland N.V., which now operates as ASR Nederland N.V.

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    a.s.r. 10 2015 annual report a.s.r. at a glance 1.3 Message from the CEO 2015 was a good year for a.s.r., in which we posted solid results. In an insurance market where achieving organic growth in We were disciplined about implementing our strategy in 2015 combination with responsible returns proved challenging, as well, which helped us to streamline our business operations, winning customer trust is the only way to success. concentrating on key themes such as customer focus, efficiency, Our products and services were rated highly by our robustness and balance sheet optimization. customers in 2015 too. a.s.r. Non-life, for instance, saw a sharp increase in the number of Vernieuwde Voordeel Pakket policies Thanks to our strategic choices over the past few years, we sold. And De Amersfoortse’s Werknemers Pensioen was also have managed to steadily improve our Net Promoter Score, the welcomed by the market in 2015 too. benchmark for the degree to which customers recommend us to others. But we have also succeeded in improving and simplifying At the end of 2015, the renovation of the building at our products and in gaining more appreciation from advisors and Archimedeslaan in Utrecht was completed, which allowed us to consumer panels for our products and services. What is more, welcome the remaining De Amersfoortse colleagues who had our efforts have resulted in cost control; we first made cost cuts not moved to Utrecht before. Our colleagues at Europeesche by implementing smarter, more efficient procedures. After a few Verzekeringen will also join us soon. With a total of 3,300 work years of cost reductions, we now see our costs stabilizing. stations, nearly all employees have now been brought under the same roof and the conditions have been created to work in Our solvency ratio at year-end 2015 was once again robust. It has, accordance with the principles of The New World of Work. in fact, been the one of the most robust solvency ratios among This was motivated by the idea that this will allow us to provide Dutch insurance companies for years. In 2015, a.s.r. focused even better customer services. heavily on the implementation of the Solvency II regime, which took effect on 1 January 2016. a.s.r. is committed to not taking In 2015, a.s.r. also continued to prepare for a future as a private any irresponsible risks, based on a prudent investment policy and company. In January 2016, the Dutch Parliament approved the its preference for value over volume. The idea is that an insurance Cabinet plan to privatize a.s.r. through a potential IPO. The company should always be in a position to meet its financial Finance Minister has requested a.s.r. and its shareholder NLFI to obligations, both now and in the future. start preparing for an IPO, so that privatization will become an option from the first half of 2016. All our actions are motivated Our strategy led to a number of choices and decisions in 2015. by our strategy to be a socially relevant insurer that is robust, In the pension and funeral insurance markets, for instance, we customer-oriented, cost-efficient and knowledgeable. But bolstered our position by acquiring pension insurer De Eendragt a.s.r. also wants to be an agile insurer that adapts to a rapidly and funeral insurer AXENT. These acquisitions are complementary changing market. And for this, we need our employees to be in terms of risk and capital. We undertook these acquisitions in flexible as well. We put a lot of effort into internal mobility and the knowledge that the Dutch insurance market will continue to staff development, based on the idea that our customers will contract in 2015 and growth in this market could be achieved also benefit from the expertise, motivation and flexibility of our through strategic acquisitions provided that they are in line people. And this approach is paying dividends. We are seeing with our financial objectives. We are also seeing changes in the that customers are more satisfied with our service provision distribution landscape and the provision of service is gaining as they award us a better NPS traction. This has prompted us, based on our strategic pillars of score and intermediaries tend customer focus and expertise, to invest in our ties with advisors, to recommend a.s.r. more by acquiring Van Kampen Groep and Dutch ID. This is how we often. I am proud of the shore up our position in the intermediary channel, which is our expertise of our people and most important distribution channel. the enthusiasm, drive and commitment they display on We continued to tweak our core activities in 2015. As a result, a daily basis. we sold SOS International early in 2016. In addition, some of our real estate development business is now held for sale. Our Jos Baeten sharper focus on core activities has also led to the acquisition of Chief Executive Officer BNG Vermogensbeheer, an asset manager, in January 2016. This acquisition ties in with our ambition to leverage the knowledge we have accumulated for our clients as an asset manager for third parties as well. Moreover, we focused on optimizing our balance sheet in 2015. Measures taken for this purpose included the issue of a new hybrid loan and the reinsurance of some of our pension portfolio.

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    a.s.r. 11 2015 annual report a.s.r. at a glance 1.4 Highlights of 2015 1.4.1 Financial developments • The DNB Solvency I ratio continued to rise to 305% (year-end 2014: 285%). a.s.r. looks back on another good year. Earnings before tax • The double leverage ratio improved to 102% (year-end 2014: (EBT) rose to € 521 million in 2015 (up 25%). The Solvency II ratio 121%). (based on the standard formula) is robust (midpoint estimate of 185% after proposed dividends). At 95.0%, the combined ratio Non-life in the Non-life segment continued to be strong. Acquisitions further improved a.s.r.’s strategic market position in 2015. a.s.r. • The operating result rose from € 155 million in 2014 to intends to distribute € 170 million in dividend to its shareholder € 169 million in 2015 due to an increase in earnings from for 2015; this represents a 22% increase on 2014. both the occupational disability and health insurance businesses. In the P&C business, developments in earnings Earnings before tax up 25% to € 521 million (2014: were adversely affected by the summer storms in 2015. € 417 million); sharp rise in profit for the year to Despite this, the combined ratio in the Non-life segment € 601 million (2014: € 423 million) remained practically unchanged at 95.0%. • Earnings before tax, which are an indicator of the underlying • Profit for the year was up 10%, rising from € 153 million to financial performance, were up 25%, rising to € 521 million. € 169 million due to higher earnings before tax. The operating return on equity climbed from 11.7% to • At € 2,350 million, gross written premiums in the Non-life 13.9%. EBT increased in both the Non-life segment and the segment (P&C, occupational disability and health insurance) Life segment, as well as in the non-insurance business. were in line with 2014. • Profit for the year was up 42%, reaching € 601 million, due • Regular operating expenses were down 4% due to further to the higher EBT, a one-off increase in equity investment efficiency improvements. income and an increase in the value of the property portfolio. Life • Operating expenses amounted to € 575 million, representing a 10% rise on 2014 (€ 524 million). The • Earnings before tax increased from € 349 million to increase was mainly due to the expansion of activities in the € 434 million in 2015, mainly because incidental provisions distribution channel (acquisitions of Van Kampen Groep and formed in 2014 no longer adversely affected earnings in Dutch ID), the acquisitions of pension insurer De Eendragt 2015. and funeral insurer AXENT, and incidental expense items. • Profit for the year was up € 257 million from € 299 million in • At 95.0%, the combined ratio was in line with 2014 (94.8%). 2014 to € 556 million in 2015 due to an increase in earnings before tax, higher indirect investment income and incidental Premium income up 8% to € 4,092 million: stable in Non- items in 2014. life segment and rising in Life segment • Gross written premiums increased by 18% to € 1,828 million • In the Non-life segment, premium income was virtually due to the buy-out of a pension fund at year-end 2014 and stable at € 2,350 million (2014: € 2,359 million). strategic acquisitions in 2015. • In the Life segment, premium income rose to € 1,828 million • Regular operating expenses were up 15% in 2015, mainly (2014: € 1,543 million), due in particular to a buy-out of a due to an increase in the cost base as a result of the pension fund and the strategic acquisitions of De Eendragt strategic acquisitions and one-off costs due to strategic and and AXENT. regulatory projects. Robust solvency position; Solvency II ratio midpoint Investments estimate at 185% after dividend (31 December 2014: approx. 170%) a.s.r.’s investment policy aims to strike a balance between • At its midpoint estimate, the Solvency II ratio stood at 185% generating returns and preventing risks. Protecting the solvency at 31 December 2015 after distribution of the proposed position was an important factor in this context. Overall growth in dividend of € 170 million, based on the standard formula the fair value of the investment portfolio was 5.8% in 2015 (from (year-end 2014: approx. 170%). a.s.r. applies a bandwidth of € 34.7 billion to € 36.7 billion). Of this increase of € 2.0 billion, +10 percentage points and -10 percentage points to this € 1.0 billion was attributable to mortgages, € 0.4 billion to fixed- midpoint estimate, making allowance for both potential income securities and € 0.7 billion to equities. Property exposure positive and negative factors of which the final impact has was slightly lower compared to year-end 2014. yet to be determined, referring to the interpretation of the The acquisitions of AXENT and De Eendragt added € 3.5 billion delegated acts. to a.s.r.’s asset base. The AXENT and De Eendragt portfolios were integrated into a.s.r.’s investment policy over the course of

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    a.s.r. 12 2015 annual report a.s.r. at a glance 2015. The related increase in the investment portfolio was offset Strategic acquisitions to some extent by the fall in value of the bond portfolio as a result of accrued interest and spreads. In line with its defined strategy, a.s.r. acquired the following companies and portfolios in 2015: • The ASR Dutch Core Residential Fund and the ASR Dutch Prime Retail Fund welcomed external investors in 2015, De Eendragt allowing a.s.r. to further reduce its participations in the De Eendragt Pensioen N.V. (De Eendragt) of Amsterdam is a property funds. As a result, a.s.r.’s participation in the two pension insurer that saw the light in 2006 after the conversion funds has fallen to approximately 80% and 40% respectively. of Pensioenfonds De Eendragt into an insurance company. • The ASR Mixfonds, one of a.s.r.’s investment funds, came De Eendragt has about 22,000 policyholders and serves first in a survey conducted by the Lipper research institute 37 employers. After the integration of De Eendragt’s operations in 2015. The Lipper Awards are presented to the best- into a.s.r., the brand name De Eendragt will be phased out in performing investment funds in each category. 2016. The acquisition ties in with a.s.r.’s strategy to shore up its • The three funds operated by the a.s.r. real estate investment position in the pension market. business, rose significantly in the sustainability ranking of institutional property funds. The ASR Dutch Core Residential AXENT and NIVO Uitvaartverzekeringen Fund was even assigned the highest status, i.e. the Green AXENT Verzekeringen B.V. (AXENT) of Groningen is a Dutch Star, which was awarded to only 56% of the benchmarked insurance company with a portfolio of 2.2 million Funeral funds. The ASR Dutch Prime Retail Fund and the ASR expenses policies. a.s.r. acquired 100% of the shares in AXENT. Property Fund were promoted from Green Starter to Green AXENT’s portfolio and operations will be fully incorporated into Talker. Ardanta. At year-end 2015, a.s.r. reached agreement on the • The Fair Insurance Guide mentioned a.s.r. as a positive acquisition of the funeral insurance portfolio of NIVO. a.s.r. will exception in its report on life insurers investing in companies consolidate NIVO’s financial information with effect from 2016. that do military business with countries that are subject to NIVO of Mijdrecht was established in 1981 as a subsidiary of an arms embargo, are the locations of armed conflicts or are Uitvaartcentrum Zuid in Amsterdam, the largest private funeral known to restrict liberties. Out of the ten insurers covered in services provider in the Netherlands. NIVO has 286,000 policies the study, only a.s.r and one other insurance company were in portfolio, including both term life and burial insurance. shown conclusively not to have invested in such companies. NIVO’s entire portfolio will be transferred to Ardanta. Thanks • The Fair Insurance Guide awarded a.s.r. the highest score to this acquisition, a.s.r. has further bolstered its position in the for its sustainable investment policy in 2015. a.s.r. excelled Funeral expenses market. The acquisitions tie in with the a.s.r. in the areas of arms and bonuses in particular (score of 10), strategy. followed by labour rights, human rights, health care and industry (score of 9). Van Kampen Groep • In the annual survey of the Dutch Association of Investors Van Kampen Groep (VKG) keeps records for more than 3,000 for Sustainable Development (VBDO), a.s.r. achieved a top financial advisors in the Netherlands and works in partnership ranking for the fifth year in a row. with over 150 financial institutions. This intermediary services • In its annual Don’t Bank the Bomb report, PAX for Peace provider will continue to operate independently from its named a.s.r. a positive example in its research on how home base in Hoorn. By taking it over, a.s.r. has invested in a nuclear weapon products are financed. a.s.r. has explicitly business that plays a key role in a rapidly changing distribution excluded arms producers and traders from its investment landscape. With this acquisition, a.s.r. has strengthened its universe. strategic position in the distribution channel, particularly in the • The former post office at Neude in Utrecht was nominated area of service provision. by fellow investors for the Green Brick Award in 2015. The Green Brick Award for 2015 was all about transformations. Boval Groep and Felison Assuradeuren This listed building dating from 1924 will be transformed Dutch ID of Velserbroek is the holding company of the Boval into a multi-functional public meeting place, offering a Group and Felison Assuradeuren. Boval is an independent library, bars and restaurants, a food market and a public consultancy and financial services provider and Felison bicycle parking facility. The transformation and extension Assuradeuren provides services in the area of income protection will be carried out with the BREEAM building standard insurance. Boval has a large client base in the agricultural as leading. The project is carried out by a.s.r.’s real estate service supply, mechanical excavation and transport sectors. investment management and real estate development Both companies will continue to operate independently. businesses. The acquisition will allow Dutch ID to continue to grow as an intermediary and one of the country’s largest service providers. With this acquisition, a.s.r. has strengthened its strategic position in the distribution channel, particularly in the area of service provision.

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    a.s.r. 13 2015 annual report a.s.r. at a glance Balance sheet optimization New customers for health insurance business By leveraging its Ditzo and De Amersfoortse brands, a.s.r. a.s.r. has successfully launched and priced a € 500 million shored up its position in the health insurance market early in subordinated Tier 2 capital transaction. The transaction was 2016 by welcoming around 22,000 new customers. priced at 420 basis points over the ten-year swap rate and came with a fixed rated coupon of 5.125%. With this transaction, a.s.r. Initiative to create Het nederlandse pensioenfonds has broadened its profile among major European fixed-income a.s.r. has taken the initiative to create a general pension investors and raised its Solvency II qualifying capital. fund (Dutch acronym: APF) by the name of Het nederlandse a.s.r. and Legal & General Reinsurance have entered into a pensioenfonds. This is an independent pension fund with a strategic partnership for the reinsurance of some of a.s.r.’s single-minded focus on high-quality pension administration and pension portfolio. The reinsured sum involved is € 200 million. sustainable asset management. The great added value of the proposition is that the administration of pension schemes of Credit rating various parties can be combined in a pension collective in order to achieve economies of scale. Standard & Poor’s confirmed a.s.r.’s A rating for its core insurance companies and the BBB+ rating for the holding a.s.r. P&C awarded personal injury quality mark and company (ASR Nederland N.V.). All ratings have a stable a.s.r. and Ditzo received top rating in quality mark outlook. See for the S&P report: www.asrnl.com/investor- survey relations/ratings. 2015 was the second year in which a.s.r. P&C achieved the maximum score in the personal injury insurance certification audit by PIV, the Insurers’ Institute on Personal Injury Claims. 1.4.2 Non-financial developments a.s.r. achieved the best possible score on nearly all aspects. The personal injury quality mark is part of the general Customer- De Amersfoortse launched occupational disability policy 2.5 Oriented Quality Mark; it is the only type of insurance that is and flexible occupational disability insurance audited separately. The audit is based on the Code of Conduct Targeting self-employed persons, De Amersfoortse has for Personal Injury Claims Processing, which a.s.r. was one of the launched AOV 2.5, an occupational disability policy that will first insurers to endorse. pay benefits for two or five years. There are 800,000 self- employed persons in the Netherlands; three-quarters of them In addition, a.s.r. and Ditzo were awarded above-average have no occupational disability insurance. De Amersfoortse’s scores in the thematic review of personal injury/legal assistance new policy targets them in particular by paying benefits for two insurance by the body issuing the Customer-Oriented Insurance or five years, depending on the choice made when taking out Quality mark. a.s.r. ranked second for both personal injury and the policy. AOV 2.5 is designed to encourage self-employed legal assistance insurance. Ditzo actually tied for first place in persons suffering from an occupational disability to go back to the legal assistance category. work by providing job counselling and retraining or refresher courses. The target group are self-employed persons who AFM Customer Centricity Dashboard cannot afford or do not want to take out comprehensive a.s.r. achieved a score of 3.4 out of 5 for 2014/2015 on the occupational disability insurance to age 67, but do want Customer Centricity Dashboard of the Netherlands Authority some coverage. A flexible occupational disability policy was for the Financial Markets (AFM). Although this corresponds to introduced in 2015 as well. This flexible policy allows business the average score for the financial sector, it is 0.2 lower than last owners to change their coverage, including the insured sum, year when a.s.r. scored 3.6. policy excess, contract term, benefit payment threshold, age • AFM praised a.s.r. claims handling limit and indexation of benefits, at any given time. An AFM survey shows that a.s.r.’s claims handling is rated better than the market average on every aspect; the AFM De Amersfoortse combined occupational disability and looked at the claims handling procedures for house and health insurance in a single policy home contents insurance of six (large) insurance companies. De Amersfoortse has offered the Doorgaanverzekering health a.s.r. scored a 3.8 on a 5-point scale. The market average insurance policy since November 2015. This policy combines was 3.4. The AFM concluded that a.s.r. shows that it puts comprehensive occupational disability insurance for business itself in the customer’s shoes. owners with a free-choice health insurance policy, additional • Top ranking for a.s.r. Bank on AFM Dashboard coverage for the business owner’s family, such as childcare, a.s.r. Bank achieved the highest score in the AFM Self- domestic help, caregivers or cancer counselling, and the Assessment Dashboard for Contemporary Savings Policy support of a personal health insurance expert, who can answer pilot: it was awarded a 5 on a 5-point scale. The AFM questions and make arrangements for the policyholder. The Dashboard rates savings products offered by banks for Doorgaanverzekering policy is available to both existing and the criteria defined by the AFM. The score represented an new customers. improvement on 2014 (3.8) and was better than the average score achieved by all survey participants (4.5).

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    a.s.r. 14 2015 annual report a.s.r. at a glance Highest MoneyView rating awarded to a.s.r. legal customers about their unit-linked policies and help them make assistance insurance informed decisions. a.s.r. continued on this path in 2015 too, The a.s.r. legal assistance insurance policy was awarded focusing heavily on localizing and approaching customers. the highest possible rating in terms of ‘Pricing’ in a survey a.s.r. is committed to having customers make informed conducted by MoneyView. A total of 43 legal assistance decisions, so that they know whether or not their unit-linked insurance policies were subjected to review. policy still suits their current financial situation. In 2015, the main focus was on approaching and mobilizing non-accruing a.s.r. nominated in performance survey policyholders and customers with mortgage-linked policies. Adfiz, the sector association of independent financial advisors, In-depth customer research and customer panels are used nominated a.s.r. label De Amersfoortse twice in the categories first of all to align the method for approaching customers to ‘commercial income’ and ‘commercial pension’. The Adfiz their wishes. All targets for 2015 were achieved. The target performance survey shows which providers offer the quality the mobilization rate of 100% was reached for non-accruing customer deserves. policyholders. The target for mortgage-linked policies was 80%; at year-end 2015, we had managed to mobilize 86% of De Amersfoortse’s Doorgaan.nl campaign received our mortgage-linked policyholders. Based on a survey, AFM international SABRE Award qualified a.s.r.’s rebalancing recommendation as ‘good’ to De Amersfoortse Doorgaan.nl campaign won an international ‘very good’, which makes a.s.r. ‘best in class’ compared to other PR award. The judges of the SABRE Awards 2015 named the insurance companies. campaign the winner in the Product Media Relations category. Ditzo introduced claim submissions via WhatsApp Ditzo received gold SpinAward Ditzo customers have been able to file claims via WhatsApp Ditzo won the gold SpinAward for its #zorgmee campaign in the since September. Claim forms covering storm or fire damage Content category. The SpinAwards are bestowed upon creative can now also be filled in easily online. Ditzo customers will concepts that lift digital thinking to the next level. receive an answer via WhatsApp within half an hour, and policyholders and crash repair companies will usually have the Most customer-oriented insurance company compensation paid into their bank accounts the very same Ditzo won the Customer Centric DNA Award for the third time. week. The award is presented to businesses that customers rate as giving their best interests the highest priority. People Europeesche Verzekeringen named 2014’s Best Travel Engagement score 2015 Insurance Company The engagement score for 2015 was 53.5%, a 4% rise on 2014 In February 2015, Europeesche Verzekeringen was named (49.5%). The results of the Engagement Scan 2015 paint a 2014’s Best Travel Insurance Company in the Feather Awards, an more uniform picture than they did before. The differences annual initiative of TravMagazine, the professional journal of the between the business lines have diminished greatly and overall travel industry. The Feather Awards are presented based on a things have improved in terms of sustainable engagement. The survey conducted by GfK Retail & Technology Benelux of more employee participation rate was 80%. Of them, 53.5% felt ‘Fully than 6,000 travel agents in the Netherlands. It was the 15th time Engaged’ and 33.6% ‘Nearly Engaged’. Employees continue to that Europeesche Verzekeringen won the Feather Award for feel a strong commitment to TCF; the score of 8.6 was the same best travel insurance company. as last year. Life business introduced ‘website van je leven’ On the move a.s.r. uses the website van je leven (website of your life) to The labour market is a dynamic landscape: flexible employment educate customers about their financial situation and help them and use of new technologies make huge demands of the decide whether their financial concerns are justified or not. adaptability of organizations and their people. In order to stay a.s.r. has the ambition to increase its customers’ financial self- in touch, both organizations and employees need to invest in confidence. This keeps customers on their toes and helps them their development, motivation, engagement and vitality. It is make the right financial decisions. Research has shown that the crucial to be ‘on the move’. website contributes to the objectives that have been defined. The website is continuously being improved and streamlined a.s.r. launched its On the move programme in May 2015. to create the best possible fit for the needs and requirements A special Human Resources team has been formed to provide of our customers. With this in mind, a.s.r. will introduce a guidance to members of staff who wish to develop their talents revamped version of www.websitevanjeleven.nl early in 2016. and take ownership of their own future, whether it concerns promotions (talent development), transfers (sustainable mobility a.s.r. reaches mobilization targets through intensive within or outside a.s.r.) or redundancies. customer contacts a.s.r. has had an active strategy in place for mobilizing Women in management positions customers since 2010; in addition to offering compensation a.s.r. monitors the intake, progression and retention of women for excess charges, this strategy is also designed to educate in management positions. It proactively seeks to hire women in

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    a.s.r. 15 2015 annual report a.s.r. at a glance management positions. The ratios of women on the Executive FIRA Silver certification Board and the Supervisory Board of a.s.r. at year-end 2015 were FIRA is an institution that verifies the sustainability information 25% and 33%, respectively. The percentage of female senior of businesses and enables benchmarking based on reliable managers was 24.5%. data. The FIRA Platform is a digital register where suppliers can post their sustainability performance. After having verified this Herman Hintzen (60) joined Supervisory Board information, FIRA awards Gold, Silver and Bronze certificates. Herman Hintzen was appointed as a Supervisory Board member a.s.r. was awarded a Bronze certificate in 2014, which was on 1 January. Herman Hintzen was Chairman Insurance EMEA upgraded to a Silver certificate in 2015. at UBS Investment Bank in London since 2012, where he was concerned with financial institutions in Europe, and insurance companies in particular. He succeeds Margot Scheltema, who 1.4.3 Campaigns in 2015 resigned as a supervisory director of a.s.r. on 1 September 2015 to join the Supervisory Board of the Dutch Central Bank. a.s.r. launched a number of campaigns for the different brands and product lines in 2015 too. These campaigns always have Planet social relevance and are designed to showcase or assist organisations and initiatives that deserve support. For an Winner of Bouwpluim Award extensive list of all campaigns, see chapter 7.6.3. Below we have The renovation of the Archimedeslaan building was presented highlighted two special campaigns that ran in 2015. with the Dutch Bouwpluim Award 2015. This award is primarily concerned the partnership between the principal (a.s.r.) and De Andere Tour the contractor (Bouwcombinatie Archimedes). The Bouwpluim By putting on De Andere Tour (The Other Tour), the a.s.r. Award, which is presented once every two years, is an pension business demonstrated that you can be over 60 and initiative of various players in the construction industry. An very fit. The highlight of the campaign was that 42 over-60s independent panel of judges mainly assesses the openness and completed all 21 stages of the Tour de France in duos on constructiveness of the partnership between the principal and special a.s.r. tandems. De Andere Tour was a resounding the contractor. success. Not only did it increase a.s.r.’s brand awareness as a pension insurer by 140%, but it also contributed to raising our a.s.r. Real Estate Investment Management awarded profile as a company that ‘helps by taking action’. four BREEAM-NL stars for Centrum Waddinxveen a.s.r. Real Estate Investment Management was awarded a De Hartstocht BREEAM-NL four-star completion certificate for Centrum On 5 November, a blue velvet toy heart was sent on a trip Waddinxveen. This is the first retail development that was around the Netherlands to cover as many kilometres as possible awarded an ‘Excellent’ score in its completion certificate. and raise funds for research into cardiovascular disease in women. Ditzo donated € 10 for each kilometre clocked up by the blue heart and for each selfie with the heart shared on social media. After the campaign, a.s.r. donated € 307,650 to the Utrecht University Hospital.

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    a.s.r. 16 2015 annual report a.s.r. at a glance 1.5 Strategy 1.5.1 Mission 1.5.2 Strategy Mission a.s.r.’s strategy is based on four pillars: fulfilling customer a.s.r.’s overall mission is to offer transparent insurance solutions needs, pricing discipline and underwriting excellence, cost as a trusted partner to its customers while creating sustainable effectiveness and maintaining a solid financial framework. and stable value for its stakeholders. a.s.r. translates this mission a.s.r. strives to execute these four strategic pillars within all into the prioritization of simple and transparent products, clear of its segments. communication and fair treatment of customers. a.s.r. believes that an ingrained belief in service and employee skill will Fulfilling customer needs promote connections between a.s.r.’s employees, independent a.s.r. aims to offer customers simple, transparent products that advisors and clients, and will ensure alignment of interests with fulfil their needs. Propositions are tested in real-life consumer a.s.r.’s success and with society as a whole. As part of its mission, panels and in advisor panels. As part of this process, a.s.r. a.s.r. has identified the following key roles that intends to play: closely monitors whether there are any changes in customer • An insurer for customers needs with the goal of continuously meeting those needs. In a.s.r. is deeply integrated in Dutch society and is committed the product approval and review process, the board of directors to understanding customer needs. It aims to offer its discusses cross-functional proposals for the adequacy of new customers peace of mind by offering risk management and existing products. Furthermore, a.s.r. continuously strives and wealth accumulation products designed to secure to improve its services to customers and the intermediaries that customers’ financial stability and to protect customers from advise them. The development of customer and intermediary risks they do not want or are not able to bear themselves. satisfaction is closely monitored through measuring closed loop a.s.r. considers customers’ trust essential to its business feedback, named Net Promoter Score (‘NPS’). This provides and values the strength of independent third-party a.s.r. with insights into the development of customer and advice reflected in its strong position in the intermediary intermediary satisfaction. Reports on customer satisfaction and channel. In order to strengthen customer trust, a.s.r. customer services are discussed by the Executive Board. intends to continue its focus on product transparency, clear communication with customers and excellent client service. The employees of a.s.r. strive to help customers where possible, communicating with them in clear and simple language. • A financial institution a.s.r. believes that the intermediary channel has proven to be a.s.r. aims to be a financially reliable and stable institution resilient and allows customers to receive appropriate advice with a strong solvency position to fulfil its long-term and to select the most suitable product. a.s.r. focuses on retail obligations and commitments to all its stakeholders. a.s.r. customers, self-employed individuals and SMEs. a.s.r. strives to believes that a solid financial position will enable it to meet shape its products and multi-brand distribution strategy to meet both its short and long-term obligations to customers and customer requirements and preferences. Furthermore, through shareholders. In a.s.r.’s opinion, its ‘value over volume’ further decentralisation of distribution, product marketing and philosophy will help to capture long-term value creation. IT, a.s.r. aims to further simplify its organizational structure in order to allow a.s.r. to respond quickly to changes in market • A people-focused employer trends and customer behaviour. The result of decentralisation is a.s.r. aims to employ highly skilled employees (in terms of that business directors are responsible for end-to-end business expertise and experience), and to attract and retain talented lines, allowing a.s.r. to easily and swiftly respond to changing individuals. a.s.r. strives to offer its employees a stimulating market trends. and inspiring work environment as well as enabling them to develop, broaden and grow their skills. As a people-focused Excellence in pricing, underwriting and claims employer a.s.r. aims to offer a highly adaptable and flexible handling structure, and to demonstrate execution drive. a.s.r. intends to maintain a disciplined pricing strategy focusing on further deepening its knowledge of customer behaviour and • A valuable member of society continuing to enhance and further develop its experience and a.s.r. feels responsible to society at large, to its customers in skills in respect of pricing and underwriting. a.s.r. believes that general and to vulnerable groups in particular. a.s.r.’s strives these are key drivers for sustainable value creation. to reflect its view on social responsibility in its HR policy (e.g. by employing (partly) disabled young people), its investment a.s.r. aims to continue to leverage benefits from its in-house policy, its working environment (The New World of Work) expertise in all of the core insurance processes such as pricing, and its environmental policy. underwriting, claims management and asset management.

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    a.s.r. 17 2015 annual report a.s.r. at a glance Historically, underwriting and claims management skills have whose inclusion in a.s.r. have a low impact on a.s.r.’s regulatory resulted in a strong combined ratio. In an effort to achieve a required capital) include the acquisitions of service providers, competitive claims ratio, a.s.r. intends to further invest in senior such as VKG and Boval, as well as the acquisition of BNG insurance specialists and to build and expand their underwriting Vermogensbeheer. skills and expertise. Cost effectiveness Within the Life segment, a.s.r. intends to continue its value a.s.r. aims to continuously focus on effectively managing its over volume philosophy to price its products such that the costs. a.s.r. aims to further decrease its operating expenses in pricing exceeds the cost of equity of the individual business the coming years. Furthermore, a.s.r. intends to strive to focus line and that a.s.r.’s targets are achieved. a.s.r. plans to continue on increasing the variable proportion of its cost base (relative to pursue its pricing strategy through a disciplined approach. to fixed), with the goal that if the demand for certain services Based on this approach, representatives from all relevant parties decreases, the cost base will be flexible. a.s.r. plans to invest within a.s.r. participate in the pricing committee relating to in activities when such expenditures contribute to foreseeable pension contracts (e.g. the pension business, actuarial, Group improvements in respect of increased revenues or to enhance Risk Management and Asset Management) and certain material the customer experience. contracts are subject to approval by the Board. a.s.r. will seek to implement its disciplined cost approach In addition, a.s.r. believes it operates in capital-light businesses throughout the organization, including its newly acquired with significant growth potential. businesses. Through further decentralization of distribution, product marketing and IT, a.s.r. aims to further simplify the (i) Selected Pension products organizational structure and to reduce costs. To this end, a.s.r. a.s.r. currently is the main provider of services to the General plans to simplify and rationalize its existing product portfolio, Pension Fund (APF) which it founded in 2016. In addition, particularly for Life and Pensions. In all business lines a.s.r. a.s.r. has completed acquisitions (which met internal hurdle seeks to minimize the number of administrative (back-office) rates) which a.s.r. believes resulted in a capital effective systems (e.g. pension, individual life and P&C). a.s.r. also strives cost coverage of its DB portfolio and a.s.r. believes these to simplify the organizational structure while creating an agile acquisitions also provide a platform for a.s.r. to increase its organization with limited management layers. sale of DC products and to support future APF sales efforts. In addition, a.s.r. is focused on increasing the percentage of (ii) Distribution and Services variable costs as compared to fixed costs within its overall cost a.s.r. has recently acquired VKG and Boval, which serve as a base. In order to achieve this goal, a.s.r. plans to outsource base to maintain its strong relationship with the intermediary activities which third parties can perform more efficiently and distribution channel. In recent years there has been growth effectively, due to specific knowledge or because cost-or-scale of market share of mandated brokers and the emergence of benefits. Examples of excisting outsourced activities are SaaS service providers. a.s.r. believes that with these acquisitions in Individual life, Pensions and Health, ITO for Individual life it is well positioned to capitalise on this trend. Furthermore, and BPO applied for part of the portfolio for Individual life a.s.r. believes these acquisitions offer forward integration in and Pensions. However, a.s.r. believes that certain activities, the insurance value chain and therefore better insights into such as pricing, underwriting, asset management and claims client needs, enabling a.s.r. to adjust its product portfolio management (including for instance medical advisors and and/or distribution mix and therefore better align with personal injury claims), should be performed by a.s.r. given that customer needs. these are essential to the insurance operations. (iii) Asset Management Cash generative business model While a.s.r.’s asset management activities have historically a.s.r.’s objective is to maintain its operation on a solid financial been exclusively to service the assets of the insurance framework backed by a sound investment policy and investment segments, a.s.r. aims to enhance its asset management mix to deliver robust, high-quality earnings underpinned by capabilities and grow third party (fiduciary) assets strong capital generation. a.s.r. believes that the achievement of management services (including the APF), leveraging the these objectives will enable the payment of attractive and stable track record of a.s.r.’s real estate asset management activities dividends to shareholders. Consideration of risk appetite is key in managing assets for third parties. These are all areas to executive and senior management decisions. a.s.r. intends which are capital-light and which a.s.r. believes have growth to maintain its capacity to pay dividend over the coming years potential. through strong capital generation, while maintaining a solid solvency position and retaining an adequate level of cash at a.s.r. Furthermore, a.s.r. may continue to pursue select non- transformational acquisitions. Under a.s.r.’s current acquisition a.s.r. applies a conservative risk profile and has set internal policy, acquisition targets must meet internal hurdle rates (such minimum levels designed to absorb losses and to support as ROE targets) and are assessed based on other factors such as financial robustness while optimizing its capital position within the potential for sufficient scale, scope and/or strategic benefit. the parameters set by the regulator. Recent capital-light acquisitions (acquisitions of companies

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    a.s.r. 18 2015 annual report a.s.r. at a glance Further detail about the strategy of the individual business lines De Amersfoortse and Ditzo labels) both through 5,500 is presented in chapter 2. intermediaries. The majority of a.s.r.’s insurance products are distributed via the intermediary channel. In addition, a.s.r. has successfully introduced its online challenger brand, Ditzo. 1.5.3 Brand and distribution policy a.s.r. deploys a multi-brand model which is designed to address In order to position itself advantageously in different customer different market segments and comprises three core brands: segments of the Dutch insurance market, a.s.r. uses a hybrid a.s.r., De Amersfoortse and Ditzo, as well as two niche brands: and multi-brand distribution strategy and offers its products Europeesche Verzekeringen and Ardanta. to approximately 1.52 million households (through its a.s.r., Brand Type Products Distribution Coverage Platform a.s.r. Generalist Individual life, Advisors and Nation-wide asr.nl Pensions, specialists P&C and Banking De Amersfoortse Specialist Income protection, Advisors Nation-wide amersfoortse.nl Pensions and Health Ditzo Specialist P&C and Health Online Nation-wide ditzo.nl Europeesche Verzekeringen Specialist Travel and Leisure Multi-channel Nation-wide europeesche.nl Ardanta Specialist Funeral Multi-channel Nation-wide ardanta.nl

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    a.s.r. 19 2015 annual report a.s.r. at a glance a.s.r.’s current brands and distribution policy includes the following: a.s.r. Under the a.s.r. brand, a.s.r. offers products for P&C (all customer segments), pensions (DB products for the commercial market), individual life (term life and annuity) and banking products (mortgages, savings and investments for retail clients). The a.s.r. branded products are distributed via the intermediary channel (e.g. P&C, mortgages and DB pension products) as well as online (e.g. term life, savings and individual annuity). In addition, mandated brokers, aggregators and service providers can sell a.s.r.’s products under their own brand names. The a.s.r. brand targets retail and commercial (primarily SME) customer segments. De Amersfoortse Under De Amersfoortse brand, a.s.r. offers disability, health and DC pension insurance, mainly focused on the commercial market. De Amersfoortse products and services are sold exclusively through intermediaries. Ditzo Ditzo is a.s.r.’s online brand, focusing on health and P&C products for retail clients. Since its introduction, Ditzo has established a client base of over 70,000 P&C and 180,000 health insurance customers in 2015. Ditzo-branded products are sold online via its own websites and aggregator websites. Europeesche Verzekeringen Under the Europeesche Verzekeringen brand, a.s.r. specializes in travel and leisure insurance. Europeesche Verzekeringen insurance policies are sold through the intermediary channel, including through specialist partners, such as tour operators and sports federations and the direct channel. The Europeesche Verzekeringen brand primarily targets retail customers. Ardanta Ardanta is a.s.r.’s funeral insurance brand. Most of Ardanta’s funeral insurance policies historically sold via the intermediary channel. Currently, Ardanta utilises a multi-channel distribution strategy by offering its products through intermediaries, direct salesforce and online. The Ardanta brand targets retail customers. With the acquisitions of AXENT and NIVO, a.s.r. has two additional funeral brands; and VKG and Boval were recently acquired and are a.s.r.’s service providers. They are full service providers and mandated brokers to a number of Dutch insurance companies. As full service providers, VKG and Boval give connected intermediaries access to a wide array of insurance products.

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    a.s.r. 20 2015 annual report a.s.r. at a glance 1.5.4 SWOT analysis • Strong solvency position supported by high-quality • Presence in Dutch insurance market only, capital which is shrinking and highly competitive • Track record of attractive return on equity and capital • Impact of shrinking life book on long-term cost and cash generation effectiveness • Diversified, resilient Dutch insurer with leadership in attractive market segments • Differentiated distribution, underpinned by highly reputable brands • Excellence in pricing, underwriting and claims handling • Proven cost-reduction capability and continuous focus on operational efficiency • Profitable LDI Asset Management platform with strong track record We s a th • Skilled, experienced management focused g kn en es on execution and delivery Str ses Op po rt ts un a itie re s Th • Sustainable business enhancement via fiduciary asset management in combination with capital light life products (e.g. APF Pensions DC products) • Further development of segment Distribution • Continued lack of trust in financial sector by the society and Services via VKG and/or Boval (Dutch ID) • Prolonged low interest rate environment and/or • Increasing demand for sustainable, transparent financial markets turmoil and simple products • New changing legislation governing insurance products • Increase in multi-channel approach taken by or unit-linked policies customers • Fierce competition in Dutch market 1.5.5 Materiality matrix Based on the stakeholder model, a.s.r. keeps in close contact This survey asked the stakeholders to list the themes that they with all its stakeholders throughout the year. For more believe are most material to a.s.r. These material themes were information about the stakeholders and the stakeholder then presented to higher management to determine the impact dialogue, see page 246 of this annual report. for a.s.r. (for details, see Appendix F, Materiality). a.s.r. has a keen eye for developments in society and keeps A social development is considered material if it is relevant its finger on the social pulse in order to execute its strategy to the stakeholders and could have a major impact on the well and gear its products and services to the changing needs development of a.s.r. The greater the impact of the theme and requirements of its customers and other stakeholders, on both society and a.s.r.’s business operations, results and particularly with respect to changes in the long term to which strategy, the greater the materiality of the development. To a.s.r. wishes to align its product and service development. A stay relevant as an organization and execute the strategy, this materiality matrix has been prepared for this purpose. The development will also have to be reflected in our business matrix has come about following the stakeholder dialogue practices and management. and a survey that was put together based on the strategy.

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    a.s.r. 21 2015 annual report a.s.r. at a glance 1 Customer satisfaction and service Relevance for stakeholders 2 Transparent product and service 2 descriptions 3 Transparent products 4 Customer privacy 5 Rules and regulations 6 Anti-corruption and fraud 15 6 7 Compliance 1 8 Employer-employee relationship 3 9 Sustainable supply chain 4 10 Regulators 17 11 Cybersecurity 19 12 Customer health and safety 13 Employee health and safety 14 Supplier human rights assessment 5 15 Child labour 16 16 Non-discrimination 11 17 Forced or compulsory labour 7 14 18 Human rights review of operations 19 Energy 10 20 Environmental impact of products and services 18 8 12 9 20 13 Impact on a.s.r. A description of the six most important material themes is given 5. Rules and regulations below. Compliance with rules and regulations forms the heart of our sound and ethical business practices. Any violation can, 1. Customer satisfaction and service in fact, result in major financial losses and reputational harm. a.s.r. focuses on customer satisfaction and service using the a.s.r. not only wants to comply with the letter of the law, Customer-Oriented Insurance Quality Mark, Net Promoter but it also seeks to act in the spirit of all relevant rules and Score (NPS), 1-in-service, AFM Customer Centricity regulations, including regulations governing the provision of Dashboard, customer surveys and complaints management. financial services. a.s.r. updates its policies regularly where appropriate. 2. Transparent product and service descriptions We are constantly making sure that prospective and 6. Anti-corruption and fraud existing customers can access and understand the product The Security department promotes and monitors the pursuit information we provide. a.s.r. is taking various steps to make of ethical business practices and focuses in particular on the information more accessible and easy-to-read. We do this zero tolerance policy with respect to fraud and unethical by rewriting our style guides and offering training courses in conduct of employees, advisors and contracting parties. language level B1/customer-friendly information. For details on the material themes described above, see 3. Transparent products chapter 7, Sustainability. Appendix F describes the delineation a.s.r. is always working to improve its processes to help of all identified materialities and correlates them to the related customers by continuously focusing on making products stakeholder interests. accessible and easy-to-understand. a.s.r. does this by performing internal reviews (PARP and test of cost effectiveness, usefulness, security and intelligibility) and 1.5.6 Value creation in 2015 external reviews (consumers, employers and a selection of customers) of its products. a.s.r.’s mission is to help customers and focus on their interests. It allows them to insure risks they cannot or will not bear 4. Customer privacy themselves and by helping them reach their financial goals. a.s.r. has policies and procedures in place in relation to Customers can rest assured that their risk cover and the funds privacy regulations. The privacy statement provides an they entrust to a.s.r. are in the safe hands of an insurer that understanding of the different categories of data a.s.r. avoids waste, listens to them and puts itself in their shoes. processes, the reasons for processing this data and the rights of the customer.

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    a.s.r. 22 2015 annual report a.s.r. at a glance a.s.r. opts for value over volume; it manages costs by avoiding The figure below ties in with the reporting framework of the waste and permanently works on improving its efficiency. Clarity Integrated Reporting Council and consists of three elements: and simplicity combined with efficient business processes and input, our business model and output. a robust financial position are essential in this context. a.s.r. focuses on standardizing processes and products, increasing The themes mentioned are addressed in greater detail in the level of Straight Through Processing and, where useful, different sections of the annual report. outsourcing services to specialist partners. INPUT Business model OUTPUT Manufacturing Customer satisfaction (NPS) Manufacturing Sustainable products (e.g. VVP, Life Occupational Disability 2.5) Non-life Customers and Intermediary distribution Banking and Asset Management products: Introduction of new products Distribution and Services Retail | Commercial Claimhandling Customer services Intellectual Non-life | Occupational Intellectual Knowledge and training (Talent disability | Health | Highly educated workforce Development Programme) Individual life | Pension | Knowledge-sharing with internal and Traineeship Funural | Banking| external stakeholders Innovation Craftmanship Asset Management Human Human Van Kampen A vital and sustainably flexible On the move Groep | Boval | Het workforce Vitality More emancipation and labour Diversity Assuradeurenhuys participation of women and people Pay-and-benefits package with an occupational impairment Remuneration policy (including young disabled people) Mission and Vision Social Social Financial literacy and education a.s.r. Foundation Helping by taking action Stakeholder dialogue Governance Meeting and connecting Engagement Natural Core activities 2% carbon reduction per year 30% energy efficiency improvement Natural (MYA3 2005-2020) Carbon footprint Corporate profile Circular projects, including the gym MYA3 covenant Sustainable business practices Circular economy (recycling, renovation, heat and cold storage, bicycle plan, lease cars) Opportunities Sustainable procurement and threats Financial Solid financial performance Financial Strategy Robust solvency ratio Risk appetite Combined ratio Non-life Solid and sustainable Investment policy Operating profit Value over volume Return on equity Performance Cost control Dividend pay-out ratio Focus on core activities a.s.r. SRI Policy Capital Fair Insurance Guide Dutch Association of Investors for Sustainable Development (VBDO) External environment

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    a.s.r. 23 2015 annual report a.s.r. at a glance Manufacturing a.s.r. offers continuity and security through responsible products that are relevant to customers and meet their wishes and requirements. a.s.r. achieves this by continuously developing new products, simplifying its existing product offering and making information accessible and easy-to-understand. Intellectual Employees are encouraged to achieve their full potential. a.s.r. uses its knowledge and innovative drive to develop new and improved products and processes. The wishes and requirements of customers, which are identified in customer surveys, are leading. Human a.s.r. facilitates the development of its employees by offering them education and training. a.s.r. seeks to hire talented new people. Social a.s.r. contributes to society by investing in a variety of sustainable public initiatives, such as the drive for financial literacy, and by engaging in regular dialogue with its stakeholders, but also by paying tax and by sourcing products and services. Natural a.s.r. seeks to minimize its impact on the environment, which is why it is efficient about its waste and its consumption of water, energy and other natural resources. Financial a.s.r. has a strong capital and solvency position. The capital that is required for its business operations is raised based on a responsible investment policy.

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    a.s.r. 24 2015 annual report a.s.r. at a glance 1.6 Executive Board and Supervisory Board 1 3 4 2 1 Jos Baeten 2 Karin Bergstein 3 Chris Figee 4 Michel Verwoest Composition of the Executive Board and the Supervisory Board . 1.6.1 Members of the Executive Board J.P.M. (Jos) Baeten (CEO) Additional positions Jos Baeten (1958) has the Dutch nationality and is the Chairman Currently, Jos Baeten is a member of the Executive Board of the of the Executive Board and Chief Executive Officer (CEO). Dutch Association of Insurers (Verbond van Verzekeraars) and His areas of responsibility are Human Resources, Corporate Chairman of the Supervisory Board of Stichting Rotterdamse Communications, Strategy, Marketing, Business Support, Schouwburg. In addition, he is also member of the General Corporate Social Responsibility, Audit, Integrity and Legal. Administrative Board of VNO-NCW. Jos Baeten studied law at Erasmus University Rotterdam and H.C. (Chris) Figee (CFO) started his career in 1980 when he joined Stad Rotterdam Chris Figee (1972) has the Dutch nationality and serves as CFO. Verzekeringen N.V., one of a.s.r.’s main predecessors. He joined His areas of responsibility are Group Accounting, Reporting & the Executive Board of Stad Rotterdam Verzekeringen N.V. in Control, Business Finance & Risk, Group Asset Management/ 1997 and was appointed CEO of this company in 1999. He then Financial Markets, Group Balance Sheet Management and joined the Management Board of Fortis ASR Verzekeringsgroep Group Risk Management. N.V., becoming Chairman of the Board of De Amersfoortse Verzekeringen N.V. in June 2003. In 2005, Jos Baeten was Chris Figee earned a degree (with honours) in Financial appointed Chairman of the Board of Directors of Fortis ASR Economics from the University of Groningen and is an EFFAS Verzekeringsgroep N.V. Certified Investment Analyst. He also studied Risk Management at Stanford University. Chris Figee started his career at Aegon, Jos Baeten was appointed as CEO of a.s.r. on 26 January 2009. where he held various positions, including that of Senior Portfolio Manager. In 1999 he moved to McKinsey, where he rose to the role of partner in 2006. After ten years at McKinsey,

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    a.s.r. 25 2015 annual report a.s.r. at a glance he joined Achmea as Director of Group Strategy & Performance M.H. (Michel) Verwoest Management in 2009. He also served as a member of the Michel Verwoest (1968) has the Dutch nationality. His areas of Achmea Group Committee. Chris Figee’s last position at responsibility are the product lines Pensions, Occupational Achmea was Director of Group Finance. Disability Insurance and Health Insurance. He is also responsible for Real Estate Development, Real Estate Asset Management Chris Figee was appointed as a member of the Executive Board and Information Technology & Change. on 1 May 2014. Michel Verwoest studied marketing at TiasNimbas Business Additional positions School in Tilburg and business administration at IBO Business Chris Figee does not hold any additional positions at this time. School, and held several executive positions at ING Group between 1997 and 2012. At ING, he served as CEO of RVS K.T.V. (Karin) Bergstein Insurance and was in charge of the Individual Life business. Karin Bergstein (1967) has the Dutch nationality. Her areas His last position in the insurance business of ING Group was a of responsibility are the product lines Property & Casualty, managing board member of Nationale Nederlanden. Individual life, Banking, Funeral, Europeesche Verzekeringen, Van Kampen Groep and Customer Service. Michel Verwoest was appointed to the Executive Board of a.s.r. on 1 December 2012. Karin Bergstein studied medical biology at Utrecht University (Master in 1991) and in 1998 earned an MBA from Nyenrode Additional positions University and the University of Rochester in the United States. Michel Verwoest does not hold any additional positions at this She started her career at ING Bank in 1991, where she held time. various positions until 2010. Her last position was that of Director of Products & Processes, which gained her a seat on a.s.r.’s registered address, i.e. Archimedeslaan 10, 3584 BA the Executive Board of ING Bank Nederland. Prior to that she Utrecht, the Netherlands serves as the business address for all served as CEO of ING Car Lease International from 2003 until the members of the Executive Board. 2009. Karin Bergstein was appointed as a member of the Executive Board of a.s.r. on 1 September 2011. Additional positions Karin Bergstein is a member of the Supervisory Board of Stichting Sanquin Bloedvoorziening and of the Supervisory Board of Utrecht University. She also serves as a member of the Supervisory Board of Human Total Care.

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    a.s.r. 26 2015 annual report a.s.r. at a glance 1 2 3 4 1 Cor van den Bos 2 Kick van der Pol 3 Annet Aris 4 Herman Hintzen 1.6.2 Members of the Supervisory Board C. (Kick) van der Pol C.H. (Cor) van den Bos Chairman of the Supervisory Board Chair of the Audit & Risk Committee Member of the Selection & Appointment Committee and the Remuneration Committee Cor van den Bos (1952) has the Dutch nationality and served on the Executive Board of SNS REAAL N.V. until August 2008, in Kick van der Pol (1949) has the Dutch nationality and serves as which position, he was responsible for all insurance operations. Chairman of the Board of Directors of Ortec Finance and as Cor van den Bos is the Chairman of the Supervisory Board Chairman of the Board of the Federation of Dutch Pension. He of CED, a claims-processing manager, and of Noordwijkse is also a member of the Bank Council of DNB, a member of Woningstichting, a housing corporation. He is also Vice- the Board of the Confederation of Netherlands Industry and Chairman and a Non-Executive Member of the Board at the Employers (VNO-NCW) and Chairman of the Executive Boards investment firm Kardan N.V. of VPRO and OVAL. In the past, Kick van der Pol served as the Vice-Chairman of the Executive Board of Eureko/Achmea and as First appointed on: 15 December 2008 Chairman of the Executive Board of Interpolis. Current term of office: 15 June 2015 – 15 June 2019 First appointed on: 15 December 2008 H.C. (Herman) Hintzen Current term of office: 15 June 2014 – 15 June 2018 Member of the Audit & Risk Committee A.P. (Annet) Aris Herman Hintzen (1955) has the Dutch nationality. Until Chair of the Selection & Appointment Committee and the January 2016 he worked as Chairman Insurance EMEA at UBS Remuneration Committee Investment Bank. He currently serves as Chairman of the Board Member of the Audit & Risk Committee of Amlin International SE and a member of the Investment Committee of Concertgebouw Fonds. In the past, Herman Annet Aris (1958) has the Dutch nationality and had a 17-year Hintzen also acted as an advisor to the Executive Board at APG career at McKinsey as a management consultant, including nine Asset Management and served as Managing Director at Morgan years of which she served as a partner. She holds supervisory Stanley, Credit Suisse and JP Morgan. directorships at several Dutch and foreign enterprises and institutions, including ASML N.V. in the Netherlands, First appointed on: 1 January 2016 ProSiebenSat1 AG and Jungheinrich AG in Germany and Current term of office: 1 January 2016 – 1 January 2020 Thomas Cook PLC in London. Annet Aris is an associate professor of digital strategy at INSEAD international business a.s.r.’s registered address, i.e. Archimedeslaan 10, 3584 BA school (Fontainebleau, France). Utrecht, the Netherlands serves as the business address for all the members of the Supervisory Board. First appointed on: 7 December 2010 Current term of office: 7 December 2014 – 7 December 2018

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    a.s.r. 27 2015 annual report Report of the Executive Board Chapter 2 Report of the Executive Board

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    a.s.r. 28 2015 annual report Report of the Executive Board 2.1 Themes in 2015 The financial statements for 2015, which the Executive Board at least twice weekly in 2015 for consultation. The key themes has submitted to the Supervisory Board, covers the period from that were addressed in the meetings of the Executive Board in 1 January 2015 to 31 December 2015. The Executive Board met 2015 are listed below. Routine topics Additional themes Customers HR and talent development Market, strategy, business Mergers, acquisitions and divestments Employees and development Unit-linked policies Complaint reports Privatization Contacts with Works Council Solvency II Solvency Renovation of Archimedeslaan office Developments in premium income/cost ratio Risk management and risk appetite Financial performance (quarterly, interim and annual results) Reinsurance policy Contacts with, and reports to, regulators Contacts with shareholder Investment plan Dividend proposal, including policy CSR and sustainability Multi-year budget Compliance, audit and risk reports Governance ICT-projects In addition to recurring topics, the Executive Board also Market, strategy, business discussed a number of specific themes in its routine meetings The Executive Board reviews the business with the different in 2015, as well as scheduling extra meetings. More details on business lines every quarter. These reviews are designed to some of the themes listed above are provided below. have in-depth discussions about market developments and developments in results (both financial and non-financial), Customers such as budgets, premium income, costs and interest rate We exist by the grace of our customers. This is top of mind developments. Based on its strategy, a.s.r. decided in 2015 for us in everything we do. That is why we place great focus to create a general pension fund (Dutch acronym: APF) as on customer-related issues, also in our internal meetings and well as establishing a fiduciary asset management business. sessions, and in our internal communications. Various reports, The strategic acquisitions that were made were discussed including the TCF Dashboard, complaint reports and the NPS, and approved. In 2015, a.s.r. also shored up its position in the are used to gain an understanding of developments in, and funeral market by acquiring AXENT and submitting a bid for our performance on, TCF on a highly regular basis. A lot of the NIVO portfolio. a.s.r. strengthened its share of the pension attention is also being paid to knowledge dissemination by market thanks to the acquisition of De Eendragt. a.s.r. acquired sharing and discussing best practices. At the same time, we two companies in 2015 to bolster its distribution coverage in continuously review our products and processes in order to the P&C and income protection market. The transaction with align them to the interests and needs of our customers. Van Kampen Groep was completed in early January; in the autumn, the operations of Dutch ID, whose main subsidiaries The Executive Board also regularly addresses issues related to are Boval and Felison Assuradeuren, were incorporated into the the network of advisors that a.s.r. frequently likes to work with. Distribution and Services segment. It is crucial that we provide appropriate and timely services to them and actively request their feedback if we want to improve HR and talent development the processes underlying the services to them on a continual a.s.r.’s employees are the driving force of the organization. basis. They help customers through unexpected events and difficult times, and work to improve products and processes every Treating customers fairly continues to be a priority for the day. By responding to customers quickly and giving them the Executive Board and further improvements are being explored right answers, putting themselves in the customer’s shoes and all the time. offering them products and solutions that they actually need,

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    a.s.r. 29 2015 annual report Report of the Executive Board our people make an important contribution to turning a.s.r. into The Executive Board sets great store by robustness because the socially relevant insurer that we want to be. it clearly tells our customers that a.s.r. will be able to fulfil its obligations at any time, even in the more distant future. One of the topics the Executive Board discussed in 2015 was To a.s.r., this is reflected in a robust solvency ratio, measured employee engagement based on the engagement score. based on Solvency I and Solvency II requirements alike. Given that the Solvency II regime was to take effect on A key objective of a.s.r.’s HR policy is to strike the right balance 1 January 2016, this regime became increasingly important to between trust in the intrinsic motivation of all a.s.r. employees a.s.r. in 2015. Solvency II is governed by a standard formula, on the one hand and to agree on clear targets and assess rather than the self-developed internal model. The Executive employee performance on the other. The Executive Board firmly Board believes that this should enhance transparency and believes that we can only be a sustainable and socially relevant consistent interpretation. At year-end 2015, the midpoint insurance company if we onboard the right and motivated estimate for a.s.r.’s Solvency II ratio was 185%. a.s.r. uses a people, and do not place financial incentives above all else. bandwidth of +10 percentage points and -10% percentage points for the midpoint estimate. The Executive Board had the a.s.r. pay-and-benefits structure benchmarked in 2015. In this context, Hay Group reviewed Works Council the salary structure. The outcome was described in a memo, The Executive Board attaches great value to providing which was discussed in an Executive Board meeting. The information to the Works Council and hearing their opinion. survey showed that a.s.r.’s pay-end-benefits package is just at The working relationship that has developed between the the median of the relevant benchmark group. The outcome a.s.r. executive and the Works Council is characterized by a was discussed and led to the conclusion that – despite the great deal of openness. The Works Council is informed of fact that a.s.r. no longer offers variable pay – overall, the pay- many issues at an early stage, allowing it to use its influence and-benefits package formed only a limited impediment to on the decision-making process in an effective manner. The attracting and retaining qualified people in 2015. Executive Board is highly appreciative of the constructive and open discussions, and for the time and energy that the Works A paper elaborating on the ‘On the move’ programme was Council spends on issues that are impactful for a.s.r. Key themes used to discuss a.s.r.’s policy on sustainable employability. that were discussed with the Works Council in 2015 were Management development issues were also addressed a.s.r.’s privatization and potential IPO, various acquisitions and extensively during this discussion. Both initiatives encourage disposals, and a jointly to be conducted survey of employee and help employees to develop themselves and to invest in preferences for different fringe benefits. The outcome of this their professionalism and career perspectives, so as to improve survey will form the basis for the dialogue with the Works their sustainable employability. Council on the simplification and modernization of the pay- and-benefits package. In 2015, the executive also discussed The Executive Board also places special focus on the with the Works Council the outcome of the annual employee development and succession of senior management. One of engagement survey and the ‘On the move’ programme, which the ways of doing so is the annual senior management survey, was introduced in mid-2015. in which context the individual members of senior management are first discussed within the Executive Board and then jointly Governance, shareholder and supervision with the Supervisory Board. The discussions focus on personal The managing and supervisory bodies of the supervised growth, combined with mobility within a.s.r. As part of this entities ASR Levensverzekering N.V., ASR Schadeverzekering policy, one managing director took on new roles in 2015, two N.V., N.V. Amersfoortse Algemene Verzekering Maatschappij, left a.s.r. and one was recruited externally. Europeesche Verzekering Maatschappij N.V., ASR Basis Ziektekostenverzekeringen N.V., ASR Aanvullende Solvency II Ziektekostenverzekeringen N.V. and ASR Bank N.V. met at least The a.s.r. risk appetite, which is based on Solvency II, ECAP and four times in 2015. The managing and supervisory bodies of a prudent approach to risk management, has been transposed the supervised entities De Eendragt Pensioen N.V. and AXENT into requirements for solvency, liquidity and returns; solvency NabestaandenZorg N.V. met at least two times The standing takes priority over profit and profit takes priority over premium agenda items included the financial (quarterly) results and the income. For this reason, a.s.r. performs an in-depth Own Risk audit, compliance and risk reports. Other topics of discussion and Solvency Assessment (ORSA) every year, in which context were entity-specific issues, including the impact of the changing various scenarios are defined and extrapolated. markets for various entities. The risk appetite was an important criterion for the Executive The managing and supervisory directors of ASR Board in making both tactical and strategic decisions in Levensverzekering N.V., ASR Schadeverzekering N.V., 2015 too. Solvency levels remained acceptable and more N.V. Amersfoortse Algemene Verzekering Maatschappij, than adequate in 2015 thanks to the organization’s prompt Europeesche Verzekering Maatschappij N.V., De Eendragt and adequate response to external developments based on Pensioen N.V. and AXENT NabestaandenZorg N.V. are the same the chosen risk appetite and the associated risk-mitigating as those of ASR Nederland N.V. This is not the case where the measures. a.s.r.’s risk appetite was redefined in 2015 with a view other three entities are concerned. to the introduction of the Solvency II regime.

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    a.s.r. 30 2015 annual report Report of the Executive Board With effect from 29 September 2011, the shareholder has The works progressed as planned and came in within budget. been represented by Stichting Administratiekantoor Beheer We received very few complaints about inconveniences Financiële Instellingen (NLFI), a trust office. a.s.r. was in frequent experienced by users and neighbours. The employees contact with NLFI in 2015, which was greatly intensified by the working in the renovated building are very proud of their work preparations for a.s.r.’s potential privatization. environment. The renovated building, which has already been showered with several awards, has been assigned energy a.s.r. attaches great value to a good relationship with the efficiency rating A and received the BREEAM Excellent label. regulators. It is in frequent contact with both the Netherlands Authority for the Financial Markets (AFM) and the Dutch Central No bid for VIVAT Bank (DNB). Outside of our routine contacts, a.s.r. spoke with Various players, including DNB, feel that consolidation in the DNB in 2015 about its reasons for not issuing a bid for VIVAT, Dutch insurance market is a must and an inevitable fact of life. about the preparations for the potential privatization and about Given its robust capital position and efficient operations, a.s.r. unit-linked policies. a.s.r. was also in frequent contact about is perfectly positioned to consider potential consolidation unit-linked policies with AFM. opportunities provided that they fall in line with its risk appetite and meet other requirements in the areas of capital, risk and Finally, the Executive Board believes that there should be return. After a thorough due diligence, the Executive Board a keen sense of awareness throughout the organization decided early in 2015 not to submit a binding offer for VIVAT. of compliance with rules and regulations as well as codes Together with a consortium of investors, which had been formed governing a.s.r. That is why it has been decided to have all for the purpose of funding a potential bid, a.s.r. looked at all the a.s.r. employees take the professional oath, so that everyone ins and outs of a bid. Based on the findings, it was decided not has a thorough understanding of the importance of the related to submit a final bid for VIVAT. principles. The deadline for all employees having taken the oath is 1 April 2016. At year-end 2015, 70% of all employees had Privatization taken the oath. From the time that a.s.r. was nationalized in 2008, all our people have worked hard to build a financially solid and socially CSR and sustainability relevant insurance company that would be ready to return to We are keenly aware of a.s.r.’s role in society and the sustainable the private sector at some point in time. The commercial drive, and ethical choices that come with it. The organization is capital position and profitability of the different business lines committed to forging sustainable relationships with our of a.s.r. and of a.s.r. as a whole are developing well and a.s.r. was customers and advisors (the intermediary channel) every day. one of the best-positioned insurers in the Dutch market in 2015. To achieve this, we are continuously working to improve our a.s.r. is well on its way to becoming the ‘other insurer’ that treats services and offer sustainable insurance products. Our key customers fairly and helps by taking action. driver is to be a socially relevant insurance company. This also encompasses our investment policy and our insurance and The accomplishments over the past few years show that a.s.r. is banking products, as well as the procedures for selecting social on track for a successful privatization. In November 2015, Dutch projects to participate in. Finance Minister Dijsselbloem submitted his plan to the Dutch Parliament in which he announced his intention to sell a.s.r. and Environment issues came to the fore in various discussions to ask a.s.r. and its shareholder NLFI to start preparing for an about sustainability in 2015. The environment was a key factor IPO in the first half of 2016. The Dutch Parliament agreed to in every decision we took in relation to the renovation of the the Minister’s plans at 28 January 2016. A potential IPO will not building at Archimedeslaan. This was reflected in the building affect the service provision to our customers. We will continue being awarded the BREEAM Excellent label. It has also been on the path we have chosen by demonstrating every day that decided to take measures to further reduce the carbon we are committed to building an insurance company that emissions caused by our lease car fleet. helps people and continuously works to develop sustainable relationships with its customers. Renovation of head office In 2009, we made the choice to move our people to a single Developments in premium income/cost ratio building, which should help to reduce costs (from 15 locations In 2015, the Executive Board went on to make costs more to one) and create a shared culture for our organization. a.s.r. flexible and manage them, while constantly working to improve is committed to sustainability, which was one of the reasons service quality. New pension and health insurance propositions, for not leaving behind a vacant property, but renovating it and for instance, are administrated using SaaS solutions at low preparing it for the new world of work, which is characterized and flexible costs. But with respect to existing portfolios too, by customer focus. The renovation was undertaken while choices have been made to reduce costs and make them more business went on as usual in the building; colleagues from other flexible, while improving our service provision at the same time, locations were moved gradually to Utrecht. e.g. by outsourcing the pension business’s back office and transferring life policies to a SaaS solution. The second stage of the building works was completed early in 2015. The third and final stage was completed in December In the Executive Board’s opinion, costs should be viewed in 2015. relation to premium income and earnings. Acquisitions, for

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    a.s.r. 31 2015 annual report Report of the Executive Board instance, may come with acceptable cost increases – and insurance company that it aspires to be, and for the results increases in premium income – and costs incurred for raising that were achieved in 2015 in particular. The Executive Board our level of professionalism that can be ‘recouped’ can also also wants to express its appreciation to the Supervisory Board tie in with the envisaged cost development. One example and the shareholder for their constructive input. The sessions is that we decided to insource a claims inspection service in and discussions about such issues as a.s.r.’s planned potential 2015. The insurance market is fiercely competitive. To stay privatization were intensive and of great added value to our relevant, a.s.r. not only needs to be able to offer its customers business. But most of all we owe a debt of gratitude to our attractive prices, but also provide attractive service levels. After customers who have chosen our products and services. It is only all, insurance is all about creating a safety net for unforeseen by their grace that we exist. circumstances. For this reason, the Executive Board considers it of great importance that a.s.r.’s product and service offering Utrecht, the Netherlands, 4 April 2016 remains of high quality in the future. The Executive Board Closing remark from the Executive Board Jos Baeten The Executive Board is grateful to all employees for their Karin Bergstein unrelenting commitment to helping customers every single Chris Figee day and to making a.s.r. the valued and socially relevant Michel Verwoest

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    a.s.r. 32 2015 annual report Report of the Executive Board 2.2 Financial Performance 2.2.1 a.s.r. • The operating result was up € 104 million, rising from • Equity attributable to holders of equity instruments € 417 million in 2014 to € 521 million in 2015. (IFRS-based equity) was up € 550 million, rising from • A sound performance by the Non-life segment, partly € 3,709 million at year-end 2014 to € 4,259 million at year- due to the robust combined ratio of 95.0%. end 2015. • Strong improvement of results in the Life segment, • Gross written premiums increased to € 4,092 million (up 8%), where incidental expense items still had an adverse mainly due to a buy-out of a pension fund and strategic effect on earnings in 2014. acquisitions in 2015. • A slight increase in operating result from other • Operating expenses came to € 575 million (2014: segments. € 524 million). This increase was primarily due to a rise in • Profit for the year rose from € 423 million in 2014 to regular expenses as a result of the strategic acquisitions. € 601 million in 2015, mainly due to the higher operating Operating expenses were also affected by a number of result, an increase in one-off investment income from incidental expense items. equities and an increase in the value of the property • In 2015 a.s.r. focused on core activities, illustrated by: portfolio. • Increase of scale in the Life segment (acquisitions of • The Solvency II ratio 1 continued to rise, standing at De Eendragt and AXENT). a midpoint estimate of 185% at year-end 2015 after • Bolstering of our strategic position in the intermediary distribution of the proposed dividends (year-end 2014: distribution channel (acquisitions of Van Kampen Groep approx. 170%) 2. and Dutch ID). • The DNB solvency ratio 3 (Solvency I) rose further to 305% at • Classification of the real estate development operations year-end 2015 (year-end 2014: 285%). and emergency assistance services as ‘non-core’, which resulted in the sale of SOS International on 26 January 2016. 1 The Solvency II figures are based on the standard formula, the application of which will be further developed in some respects. 2 The estimate at year-end 2014 was based on the methodology in force at the time. 3 This is the last press release in which the Solvency I ratio is mentioned. Under EIOPA regulations, the Solvency I regime has been superseded by the Solvency II regime with effect from 1 January 2016.

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    a.s.r. 33 2015 annual report Report of the Executive Board Key figures, a.s.r. (in € millions) 2015 2014 (restated) Gross written premiums 4,092 3,787 - Non-life 2,350 2,359 - Life 1,828 1,543 - Eliminations -86 -115 Operating expenses -575 -524 - Non-life -207 -215 - Life -205 -178 - Banking and Asset Management -48 -46 - Distribution and Services -22 -6 - Holding and Other -112 -96 - Real Estate Development -6 -7 - Eliminations 25 24 Operating expenses associated with ordinary activities -538 -485 Provision for restructuring expenses -30 -28 Operating result 521 417 - Non-life 169 155 - Life 434 349 - Banking and Asset Management 12 7 - Distribution and Services 3 2 - Holding and Other -93 -102 - Real Estate Development - - - Eliminations -4 6 Incidental items (not included in operating result) 258 117 - Investment income 371 216 - Underwriting incidentals - -93 - Other incidentals -113 -6 Profit/(loss) before tax 780 534 - Non-life 217 199 - Life 709 373 - Banking and Asset Management 10 6 - Distribution and Services 4 1 - Holding and Other -67 -40 - Real Estate Development -93 -12 - Eliminations - 7 Income tax expense -150 -108 Profit/(loss) for the period from continuing operations 630 426 Profit/(loss) for the period from discontinued operations -26 -5 Non-controlling interest -3 2 Profit/(loss) for the period attributable to holders of equity instruments 601 423

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    a.s.r. 34 2015 annual report Report of the Executive Board 2015 2014 (restated) New business, Life (APE) 92 140 New business, Non-life 208 201 Combined ratio, Non-life 95.0% 94.8% Return on equity 17.2% 11.0% Operating return on equity 13.9% 11.7% Equity and solvency (in € millions) 2015 2014 (restated) Total assets 53,338 51,654 Total equity (IFRS) 4,259 3,709 Solvency I ratio 305% 285% Solvency II ratio (standard formula) – after dividend midpoint estimate c. 185% c. 170% Headcount in FTEs (internal) 3,650 3,513 Macro developments in the Netherlands Financial sector The Dutch financial sector is large (measured by GWP) Demography compared to other EU countries. During the 2008 financial crisis, At the end of 2015, the Netherlands had 17 million inhabitants. key banks and insurers were nationalised or received state aid, While the population has been growing at a 0.5% compounded but the process of re-privatisation has started. As a result of annual growth rate (‘CAGR’) over the past twenty-five years, the financial crisis there is increasing attention on transparency, the population is also aging (18% 65+ in 2015 as compared customer care, simpler products and moderate remuneration to 13% in 1990). Consistent with other Western European in the financial sector by regulators, politicians and the general countries, stabilisation of the population is expected around public. As of 1 January 2016, Solvency II regulations came 2035, while the aging phenomenon will continue. Demographic into force after many years of preparation. The Solvency II developments vary by region, with some regions expecting regime comprises requirements for insurance companies. population shrinkage within the next twenty years. The introduction of the new regime is meant to harmonize the European insurance market, increase the protection Economy of policyholders and improve risk awareness in both the The Dutch economy is recovering from the economic downturn governance and management of insurance companies. Solvency triggered by the financial crisis which commenced in 2008. II sets more sophisticated solvency requirements and will form After a fall in housing prices between 2008 and 2012, the an integral part of the risk management of insurance companies. Dutch economy began to stabilise in 2013 and returned to growth later that year. Despite the impact of economic Insurance industry in the Netherlands imbalances across the Eurozone, many main economic drivers, including consumption, corporate investments, government In 2014, the Dutch insurance market was the fifth largest spending and exports have contributed to the stable economic in Europe, following behind the United Kingdom, France, performance of the Netherlands in recent periods (GDP growth Germany and Italy. The Netherlands ranked the third highest in 2010-2014 +1.3% CAGR). the EU in 2014 in terms of insurance density and had the highest GWP per capita in the EU (€ 4,500). The Dutch insurance market In the second quarter of 2014, the Dutch economy had is a mature market, with a GWP as a percentage of GDP of recovered such that it was almost the same size as before the 11.0%. In 2014, Dutch insurance companies paid out € 71 billion financial crisis of 2008. GDP was € 663 billion (the thirteenth in claims to their customers, and received € 74 billion in largest GDP per capita globally) with a growth of 1.9% for the premiums. The CAGR of the Dutch insurance market (including year ended 31 December 2014. In the second quarter of 2015 health) in terms of GWP amounted to -1.0% between 2010 and GDP growth in the Netherlands was 1.8%, up compared to the 2014, which excludes reinsurance premiums written. second quarter of 2014. On 31 August 2015 unemployment was 6.8%. S&P expects the Dutch economy to grow 1.7% on The Dutch insurance industry can be divided into two an annual basis through 2017 (2014: 0.9% growth). Today, the categories of insurance products: (a) life insurance, which Netherlands has an AAA rating with all three rating agencies: comprises group life, individual life and funeral insurance, and Moody, Fitch, S&P. (b) non-life insurance which comprises P&C, disability insurance and health insurance. a.s.r. was the fourth largest composite

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    a.s.r. 35 2015 annual report Report of the Executive Board life and non-life (excluding monoline health insurers) insurance Profit for the year was up € 178 million, rising from € 423 million provider in the Netherlands measured by GWP in 2014. to € 601 million, due in particular to the higher operating The Dutch insurance market is mature, with a few leading result, a one-off increase in of equity investment income and insurers in all segments. an increase in the value of the property portfolio. Conversely, the decision to sell or discontinue parts of the real estate Distribution development business caused additional loss provisions to be The distribution channels for life and non-life insurance formed in 2015. include (a) intermediaries (advisors, mandated brokers and actuarial consulting firms), (b) the distribution networks of Incidental items not included in the operating result mainly banks (‘Bancassurance’), (c) direct sales, (d) collective insurance related to the increase in investment income, which was driven partners, such as sports federations and travel agents) and (e) mainly by higher realized capital gains and the revaluation of other channels such as post offices and retailers. the property portfolio. In the first half of 2015, a.s.r. scaled back its equity exposure on relatively high price levels in order to stay In all markets except health insurance, intermediaries account for within the set risk bandwidths. Other incidentals relate to: most of the commercial business line volumes and a significant (i) Recognized provisions for losses suffered by the real estate portion of the retail line volumes. The typical (‘traditional’) development business; intermediary is a small business with a physical office and limited (ii) Consulting fees for acquisitions, restructuring expenses and or no online presence. Fifty-two percent of intermediaries are shareholder-related expenses. freelancers of which most have annual revenues below € 150,000. Some of the larger intermediaries also operate as mandated The Solvency II ratio stood at midpoint estimate 185% as per brokers and have branded insurance products. 31 December 2015 after distribution of the proposed dividend of € 170 million, based on the standard formula (year-end 2014: Distribution channels in the Dutch market are in a state of approx. 170% based on the methodologies in force at the time). transition. The number of small intermediaries (fewer than 20 a.s.r. applies a bandwidth of +10%-points and -10%-points employees) has been decreasing (around -3.6% annually since around this midpoint estimate reflecting both potential positive 2011) while number of intermediaries with over 20 employees and negative factors of which the final impact still needs to be has remained steady. Drivers and trends currently shaping the determined, referring to the interpretation of the delegated acts. market are: • The decrease in the number of intermediaries, primarily The Solvency II ratio increased by gains from business driven by the ban on commissions for complex products in performance, traditional measure in equity risk and issuance 2013 and the increasing requirements in respect of expertise hybrid capital. This positive effect was partly offset by changes for advising on financial products; to non-economic assumptions and an increase in the capital • In addition, these developments have led to an increase in requirement due, for instance, to the acquisitions of specialisation of the remaining (larger) intermediaries; and De Eendragt and AXENT, and a prudent margin on the • Both insurance companies and intermediaries have been potentially assumed tax factor under Solvency II (loss-absorbing building up their online distribution capabilities. Still, few capacity of deferred tax). intermediaries are present online (in 2013: 28%, of which The DNB solvency ratio strengthened further at year-end 2015 only 60% generated revenue online). to 305% (2014: 285%). Financial performance in 2015 Return on equity (ROE) based on profit for the year rose to 17.2% (2014: 11.0%). The operating result was up € 104 million, rising from Operating return on equity climbed to 13.9% (2014: 11.7%). € 417 million to € 521 million. The operating result from the Both the Life and Non-life segments posted a higher operating insurance business showed a € 99 million rise to € 603 million, result. due to an increase in both the Life and Non-life segments. In the Non-life segment operating result increased by Gross written premiums increased by € 305 million on 2014, € 14 million, from € 155 million to € 169 million. The rising to € 4,092 million (up 8%). In the Non-life segment, improvement was due in particular to the occupational disability gross written premiums were stable at € 2,350 million and health insurance businesses. In the P&C business, the (2014: € 2,359 million). P&C saw a € 14 million (or 1%) rise in combined ratio also remained well below 100%, despite the gross written premiums. The increase in the Life segment was damage caused by summer storms. mainly attributable to gains from the buy-out of a pension fund In the Life segment, the operating result increased by € 85 million, and strategic acquisitions. rising from € 349 million in 2014 to € 434 million in 2015. In 2014, the operating result was adversely affected by a number of New business in the Non-life segment rose to € 208 million, provisions. Adjusted for this effect, the figure was stable. € 7 million higher than in 2014. This increase occurred mainly in the health insurance business (€ 6 million), due to growth in the The increase in the operating result from the non-insurance Ditzo portfolio. P&C and occupational disability were virtually business was due mainly to lower interest accrual on the stable. In the Life segment, new business fell from € 140 million pension provision in the Holding segment and a higher in 2014 to € 92 million in 2015. The difference was mainly operating result from the banking operations. attributable to the signing of a large pension contract in 2014,

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    a.s.r. 36 2015 annual report Report of the Executive Board which was classified as gross written premiums in 2015. Other • Boosted scale in Distribution and Services segment (VKG, causes for the decline in new business included the structural Dutch ID); fall in demand for individual life insurance products and a.s.r.’s • Strengthened third party asset management skills in run-up preference for value over volume. to APF as business model; a.s.r. bolstered its position in the pension and funeral insurance • Divested business where a.s.r. is not the best owner (SOS businesses (Life segment) in May 2015 by acquiring De International). Eendragt and AXENT. These two acquisitions have diversified a.s.r.’s risk profile and added € 3.5 billion to its assets invested. Tax strategy Operating expenses for 2015 amounted to € 575 million ASR Nederland N.V. is a Dutch company. Both the parent (2014: € 524 million). The increase was due in particular to a.s.r.’s company and its associates have their registered offices in the incorporation of De Eendragt, AXENT, Van Kampen Groep and Netherlands. a.s.r.’s business focuses virtually exclusively on Dutch ID and the associated acquisition costs. the Dutch market. Its income tax liability is concentrated nearly entirely in the Netherlands. The number of internal FTEs rose by 136 (or 4%) from 3,513 in 2014 to 3,650 in the reporting period, due to the strategic The relationship between a.s.r. and the Dutch Tax & Customs acquisitions in 2015 (an increase of 344). Disregarding the Administration is governed by a so-called Horizontal effect of the strategic acquisitions, the headcount fell by 208 to Supervision Covenant, which is based on transparency, 3,306. This was the result of previous restructuring operations understanding and trust. a.s.r. periodically sits down with designed to reduce costs on a sustainable basis and increase the tax authorities. a.s.r. submits relevant standpoints (on tax cost flexibility. In line with this, about 90 people (80 FTEs) in the matters) to the tax authorities as soon as possible and actively a.s.r. pension business transferred to Infosys in the reporting offers them insight into all relevant facts and circumstances, its period as part of an outsourcing drive. standpoints and its view of the related legal effects. 2015 objectives and achievements a.s.r.’s strategy is an extension of its corporate strategy, one of the pillars of which is that a.s.r. is committed to corporate Objective: further improve and differentiate on financial social responsibility. With this in mind, a.s.r. wants to be a performance socially responsible taxpayer. This is reflected in the level of • Very strong financial result; a.s.r. delivered € 521 million professionalism of the tax compliance function. a.s.r. does not operating profit and 13.9% Operating ROE. IFRS ROE grew push its limits when it comes to tax planning and arm’s length to 17.2%; principles are always leading. • Dividends paid to shareholder grew further 22% to € 170 million; a.s.r. has a tax department, which plays a central role in all • Strongly enhanced financial disclosure with new things tax-related. The tax department occupies an objective segmentation and additional details on Solvency II. and independent position within a.s.r. and assesses the quality of internal tax opinions. The tax opinions a.s.r. offers to (retail) Objective: strengthen competitive position customers do not contain any information that might encourage • Continuation of organic reduction of internal work force them to commit tax violations. (internal FTEs excluding acquisitions reduced by 208 FTE); • Significant new business initiatives, e.g. reinsurance on a.s.r. is developing an in-house Tax Control Framework. This pension buy out contracts, further decentralization and framework is designed specifically to manage tax issues empowerment of a.s.r. business lines, achieved top line affecting a.s.r.’s business practices and will encompass all growth in P&C whilst writing 98% COR business. policies, procedures and controls. The purpose of this internal system of managing tax risks is to file correct and complete Objective: optimize balance structure and enhance capital returns for all types of taxes and to do so within the set management deadlines. Being in control of tax risks also guarantees that tax • Solvency II standard formula very strong at midpoint debts are paid on time. estimate 185% after proposed dividend; • Balance sheet further optimized: a.s.r.’s effective tax rate can be derived from the table breaking • Issued € 500 million Tier 2 hybrid capital instrument; down the income tax expense (see chapter 5.32 of the financial • Financial leverage at 25.1%; Operating interest cover at statements for 2015). At 25%, the nominal tax rate was the same 9.8x; in 2015 as in 2014. This percentage corresponds to the Dutch • Double leverage reduced to 102%. income tax rate. a.s.r.’s effective tax rate for 2015 was 19.23% (2014: 20.22%). In addition to exempt profit constituents and Objective: strengthen business portfolio of the Group non-deductible costs, the difference between the nominal and • Added additional scale in life & pensions segment whilst effective tax rates was affected by prior-year adjustments as maintaining longevity / mortality balance (AXENT, NIVO, well. These tax adjustments weighed down the nominal tax rate De Eendragt); by 4.6% (2014: 1.4%)

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    a.s.r. 37 2015 annual report Report of the Executive Board Insurance business

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    a.s.r. 38 2015 annual report Report of the Executive Board 2.2.2 Non-life segment • The operating result rose from € 155 million in 2014 to • Profit for the year was up 10%, rising from € 153 million to € 169 million in 2015 thanks to an increase in earnings € 169 million due to the higher operating result. from both the occupational disability and health insurance • At € 2,350 million, gross written premiums in the Non-life businesses. In the P&C business, developments in earnings segment (P&C, occupational disability and health insurance) were affected by the summer storms in 2015. Despite were in line with 2014. this, the combined ratio in the Non-life segment remains • Regular operating expenses were down 4%, due to further practically unchanged at 95.0%. efficiency improvements. Key figures, Non-life (in € millions) 2015 2014 (restated) Gross written premiums 2,350 2,359 Operating expenses -207 -215 Provision for restructuring expenses -15 -14 Operating result 169 155 Incidental items (not included in operating result) 48 44 - Investment income 63 58 - Underwriting incidentals - - - Other incidentals -15 -14 Profit/(loss) before tax 217 199 Profit/(loss) for the period attributable to holders of equity instruments 169 153 New business, Non-life 208 201 Combined ratio, Non-life 2015 2014 (restated) Commission ratio 15.0% 15.5% Expense ratio 8.9% 9.3% Claims ratio 71.1% 70.0% Combined ratio, Non-life 95.0% 94.8% Combined ratio - P&C (a.s.r. Non-life, Ditzo and Europeesche Verzekeringen) 98.5% 95.0% - Occupational disability insurance 89.6% 91.3% - Health insurance 95.5% 98.9% Profile Non-life insurance market The Non-life segment consists of non-life insurance entities and their subsidiaries. These non-life insurance entities offer The Dutch non-life insurance market (including health insurance) non-life insurance contracts, including policies insuring risks was the fourth largest non-life insurance market in Europe in related to motor vehicles, fire, travel and leisure, liability, legal 2014 measured by GWP, behind Germany, the United Kingdom assistance, occupational disability and medical expenses. The and France. General insurance density (including health most significant entities of the Non-life segment are ASR Basis insurance) in the Netherlands measured by GWP per capita Ziektekostenverzekeringen N.V., ASR Schadeverzekering N.V. was $ 4,393 (€ 3,631 at the exchange rate of € 1 = $ 1.2098 as at and N.V. Amersfoortse Algemene Verzekering Maatschappij. 31 December 2014) in 2014.

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    a.s.r. 39 2015 annual report Report of the Executive Board The Dutch non-life insurance market (excluding health Trends insurance) measured by GWP amounted to € 14.3 billion in • Changing customer behaviour and commoditisation of 2014, representing 19.5% of the total Dutch insurance industry. retail P&C With a 12.1% market share in 2014, a.s.r. was the second largest In respect of financial products which are less complex insurer in the non-life insurance market (excluding health (commoditised), easily comparable and not linked to other insurance). The Dutch health insurance market amounted to financial products (such as mortgages), retail customers € 41.5 billion, representing 56.6% of the total Dutch insurance increasingly tend to gather information online. After industry in 2014. orientation, customers tend to use the intermediary or direct channel for the product purchase. The Dutch non-life insurance market is a mature and highly • Economic growth and premiums in commercial P&C competitive market, with 74 insurance groups active in the non- Economic growth increases insured sums in the commercial life market excluding health in 2014, and nine insurance groups market. However the current soft market is expected to active in the health insurance market in 2014. hamper premium income increase. • Growth of market share of mandated brokers and P&C emergence of service providers Mandated brokers and service providers increased revenues This segment consists of (a) motor (including bodywork and (a combination of fees and commissions) from € 2.1 billion motor vehicle liability), (b) fire (including property damage, in 2011 to € 2.3 billion in 2014. Service providers accounted natural forces and engineering, (c) transport (goods in transit) for approximately 20% of the total retail P&C insurance and (d) other (liability, miscellaneous financial loss and legal portfolio in 2014 (40% via advisors and 40% via mandated expenses). brokers). The growing market share of mandated brokers and service providers stems from their ability to compete Market on price and to combine products that they offer in a cost P&C accounts for 14.7% of the Dutch insurance market. efficient way. Between 2010 and 2014, the Dutch P&C market declined with • Technological disruption -3.2% CAGR, primarily as a result of the economic downturn Technological innovation is impacting non-life insurers. (lower insured sums), increased transparency and increased Big data and online servicing can help to make processes pressure on premiums. more efficient (e.g. business rules for underwriting, fraud detection and claim handling), offer more tailored products, The outlook for 2016 and 2017 is fairly stable with limited growth adapt pricing and offer better service to customers. In the expected in the mid-term, in line with GDP development. long-term, technologies such as the automated car can have Growth potential is somewhat hampered by the (already) high a disruptive impact on the insurance market by reducing or penetration for most product groups and limited room for changing risk and thus the need for insurance, while other premium increases due to fierce competition in the market. developments, such as the need for cyber security, can lead to the formation of new P&C markets. The P&C insurance market is competitive, with the top six insurers having a combined market share of approximately Disability 60% and few foreign market participants. In recent years new, specialised market participants and brands have entered the Disability insurance consists of three products: (i) disability retail P&C segment, often as subsidiaries of larger insurers. self-employed, which is mostly for self-employed professionals, (ii) sickness leave, which covers the cost of the first two years of Distribution disability for employees, and (iii) Group disability, which covers In the Dutch P&C insurance market, most products are the privatised part of formerly public insurance coverage. distributed via advisors, mandated brokers and through direct distribution. The distribution channel mix varies for retail and Market commercial market segments. In terms of new production, the The overall disability market measured by GWP is 4.8% of total direct channel has become increasingly important in the retail insurance market. market segment (47% direct in 2014, 30% via advisors, 16% The combined ratio of the disability insurance market was via Bancassurance and 6% via other), in particular for the sale calculated in accordance with DNB methodology was 121.6% of less complex products. In terms of portfolio size, the direct in 2012, 107.2% in 2013 and 105.6% in 2014. The peak in 2012 channel is not growing (but remains stable at around 20% of was mainly due to the Group disability WGA-ER product, portfolio), mainly as a result of the high churn rate in the direct which resulted in market-wide losses for disability insurance channel. In the commercial market segment (in particular companies. The market has been declining in recent years due SME which represents the majority of the P&C volume), to the economic downturn along with the 2013 commission ban. intermediaries remain dominant, as the commercial market generally requires more complex and customised products. The disability market is mature and concentrated, with the top three market participants controlling 61% of the market in 2014.

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    a.s.r. 40 2015 annual report Report of the Executive Board a.s.r. has a leading position in the disability market with the Health brand De Amersfoortse. The six largest market participants all provide the full product range (disability self-employed, sickness Health is a highly regulated market. The Dutch healthcare leave and Group disability WIA/WGA). system distinguishes two types of insurance: basic and supplementary coverage. All Dutch residents are required to Distribution have basic health insurance coverage, although coverage is In the disability insurance market most products are distributed free for minors. Basic coverage is the same across insurers as through intermediaries. For the product categories sickness leave coverage is government driven. Consumers are free to decide and Group disability, there is a requirement for customers to obtain whether they purchase supplementary coverage. Supplementary advice, given the relatively complex products offered. In relation to coverage, which has higher margins than basic insurance, is self-employed disability there is an option for sophisticated clients often offered in packages and varies by insurer. Insurers are to buy disability products via an execution-only structure directly required to accept all Dutch residents for basic coverage. from an insurer, without any advisory service. A government-run system of risk equalisation enables the acceptance obligation and provides insurers with compensation Trends for excessive costs resulting from their customer base. • Political influence on disability insurance market The political landscape in the Netherlands has had an Market impact on the disability products offered and the related In 2014, 13.4 million adults in the Netherlands paid for basic volume in terms of GWP. In general, a more liberal coverage. In the same year, 84% of adult Dutch residents paid government tends to allow for a higher level of participation for supplementary coverage. The CAGR in terms of GWP of the by the private sector in the disability market. The health insurance market in the Netherlands was 1.3% between foundations for the current disability insurance market came 2010 and 2014. In 2015 new legislation transferred an estimated into effect as a result of changes in social legislation starting € 3.5 billion of healthcare costs from the public system to the in 1987. There is market potential for further deregulation in private insurance system. regard to disability products. The average combined ratio of Dutch health insurers calculated • Legislation (BeZaVa) for Group disability in accordance with DNB methodology amounted to 97.1% in Currently, there are ongoing political discussions in 2012, 96.9% in 2013 and 98.1% in 2014. relation to legislation for Group disability to extend employers’ liability for temporary employees (‘BeZaVa’), The Dutch health insurance market is a concentrated market, which is expected to represent a potential market size of with nine insurance groups active in the market in 2014. The top € 528 million in 2016. It is expected that this legislation will four health insurance companies held a combined market share become effective as of 1 January 2017. of approximately 90% measured by GWP in 2014. • Dominant intermediary channel Historically, distribution of insurance products in the The Dutch health insurance market is dominated by mono-line disability insurance market has primarily been through insurers with origins in the Dutch public healthcare segment. intermediaries. This was mainly driven by the requirement The number of customers who switched per calendar year has for customers to obtain advice prior to the purchase of a been stable in the last three years at approximately 7%. complex disability insurance product. • Disability of self-employed Distribution The number of self-employed professionals has been Consumers have two options to take out health insurance: increasing by approximately 4% per annum during the individually or through a collectively agreed scheme. Products past 13 years in the Netherlands. To improve accessibility are sold via, for the most part, healthcare collectives with and insurability of self-employed, the disability market employers, customer groups and unions, which together developed more flexible products to tailor the mix of excess represent approximately 6.5 million insured (65% of the and insurance coverage. collective health insurance market). Health insurance products • Economy for employers making arrangements for their employees are The disability insurance market is highly dependent on distributed through intermediaries and the direct channel. economic developments and changes in legislation. Health insurance products in the retail segment are primarily Although the market for disability has been declining in distributed through the direct channel (including aggregators). the period 2012–2014, it is expected that the disability During the last four years, the distribution mix has remained market will follow the economic recovery in 2015. Growth fairly stable with the direct channel accounting for >80% of in clients and premiums is expected to accelerate as volume, with advisors’ share of distribution in a high single- a result of economic recovery and fewer bankruptcies, digit range and banks’ share in the low single-digit range. corresponding with higher employment levels and higher Aggregators account for the vast majority of direct individual wages. Traditionally, the disability market has followed sales. economic developments with a lag time of one or two years. Therefore, it is expected that the disability market will show Trends marginal growth, independently of the effect of the BeZaVa • Strong political influence on the health insurance market legislation. The core principle of the Dutch healthcare system is to

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    a.s.r. 41 2015 annual report Report of the Executive Board provide good access for all residents, however at the same This decline compared to the previous reporting period was time healthcare expenses are growing due to the ageing largely due to a high single premium of € 21 million in 2014. In population, technological advancements and increasing the health insurance business, premiums were up € 25 million, costs of medicine. The Dutch government is continuously due in part to the higher inflow of new policyholders through reorganising and optimising the healthcare system, with new Ditzo. legislation aimed at improving quality and reducing costs. Key initiatives of the Dutch government include: Regular operating expenses fell by € 8 million to € 207 million in • Cost control, quality improvement and a volume shift 2015, driven by greater operational efficiency. towards insurers. Technology companies, healthcare providers and insurers alike are pushing for innovation and the use of the internet in the health sector, which Business segments is expected to contribute to higher quality and lower cost. In 2015 new legislation transferred an estimated General € 3.5 billion of healthcare costs from the public system to The Non-life segment comprises the following three product the private (insurance) system; lines: • Increased risk for health insurers due to changes in the • P&C insurance, including motor vehicle, fire, transport, government-run system of risk equalisation; and liability and other insurance policies, as well as travel and • Mandatory excess (‘own risk’) for insured rises slightly leisure insurance products; every year. • Disability insurance, including disability self-employed, • Increasingly informed customers sickness leave and group disability, as well as occupational Consumers are price sensitive due to price transparency and disability insurance products related to the Dutch Work and enforced standardisation of health insurance (basispakket). Income Act; and Consumers seek a balance between freedom of choice • Health insurance, including basic health insurance and in healthcare provider selection and lower premiums if supplementary health insurance. limitations apply. • Health insurers seeking differentiation P&C insurance Differentiation occurs across various factors: e.g. healthcare commissioning, new propositions, additional services General and marketing. From 2010 to 2015 the number of basic a.s.r. was the third largest provider of P&C insurance products in health insurance labels has risen from 52 to 70, while the 2014 in the Netherlands measured by GWP with a market share number of insurance groups owning these labels (nine) has of 9.3%. a.s.r. offers a broad range of P&C insurance products not changed. In addition, health insurers are increasingly under the brands a.s.r., Europeesche Verzekeringen and Ditzo. investing in infrastructure and in technology. P&C had a combined ratio of 95.0% and 98.5% in 2014 and 2015, respectively. In 2015, the combined ratio for the brand a.s.r. Financial performance Non-life amounted to 97.8% (2014: 93.7%; 2013: 98.5), for Europeesche Verzekeringen 100% (2014: 97.6%; 2013: 100.8%) and for Ditzo The combined ratio remained at a good level (94.8% for 2014 116.6% (2014: 121.8%). a.s.r.’s P&C claims ratio increased from and 95.0% for 2015); as a result, the operating result in the Non- 59.9% at 31 December 2013 to 60.6% at 31 December 2015, life segment rose from € 155 million in 2014 to € 169 million while it outperformed the market average in each of the in 2015. In the occupational disability business, the combined periods. ratio improved due to active claims management in both the individual and Group occupational disability businesses. Based on rules set by the Dutch Association of Insurers Earnings from the health insurance business improved as (Verbond van Verzekeraars) in a code of conduct (Gedragscode a result of equalization effects and lower costs. In the P&C geïnformeerde verlenging en contractstermijnen particuliere business, operating result was affected by the summer storms schade- en inkomensverzekeringen), Dutch property and of 2015. casualty policies can be entered into for a maximum term of twelve months. In the case of automatic extension for a period The increase in profit for the year was mainly attributable to the of one year, policyholders have the right to terminate upon 30- higher operating result and higher investment income (due to day notice. realized capital gains in particular). Products Gross written premiums were almost stable at € 2,350 million a.s.r. believes that P&C insurance products in the Dutch market (2014: € 2,359 million). In the P&C, premium income was up are fairly standardised. a.s.r.’s broad P&C insurance product from € 991 million in 2014 to € 1,005 million in 2015. This offering can be divided into the following categories of policies: rise was mainly attributable to an increase in premiums in • Motor the underwriting agency channel (up € 50 million), which a.s.r.’s motor policies for retail and commercial clients was partially offset by a fall in the captive channel (down provide third-party liability coverage for motor vehicles and € 34 million). In a contracting market, gross written premiums commercial fleets, including property damage and bodily in the occupational disability business dropped by € 48 million. injury, as well as coverage for theft, fire and collision damage.

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    a.s.r. 42 2015 annual report Report of the Executive Board • Fire and high average retention of customers (retail: 16.4 years a.s.r.’s fire policies for retail and commercial clients provide with a retention rate of 86% in 2015, SME: 11.2 years with a coverage for a variety of property risks including fire, storm retention rate of 87% in 2015). In 2015, the retail segment had and burglary. Private coverage is provided on both a single- a total GWP of € 258 million and 572,432 customers, while the risk and multi-risk basis, with multi-risk policies providing SME segment had a total GWP of € 218 million and 19,414 coverage either for loss or damage to dwellings and customers, in each case excluding customers served via the damage to personal goods. mandated broker channel. This excludes GWP for mandated • Travel and Leisure brokers, which accounted for € 344 million of GWP in 2015. a.s.r. offers travel insurance policies for retail clients and is a market leader in the travel and leisure market in the Travel and leisure insurance is sold under the brands Netherlands. Europeesche Verzekeringen and a.s.r. via the same channels as • Other a.s.r.-branded P&C products, Europeesche Verzekeringen is also a.s.r. also offers other Non-life insurance products such as sold by travel agents. In 2015, travel and leisure had a total GWP transport (only Non-life in transit), liability, agricultural and of € 85 million and a retentionrate of 80%. The retention ratio, construction motorised vehicles, construction all risk and calculated as the number of customers in the current period assistance. who were also customers in the prior period divided by the total number of customers in the prior period, for travel & leisure only a.s.r. was the second largest insurance provider with a market relates to € 34 million of GWP, as that the remainder of travel & share of 9.2% in motor, the fourth largest provider with a market leisure business has a duration of less than one year. share of 8.8% in fire, the fifth largest provider with a market share of 3.9% in transportation and the third largest provider Individual clients seeking direct online purchase and online with a market share of 9.4% in other P&C insurance (including services are best served via Ditzo. Ditzo had 70,390 P&C liability, travel and leisure) in the Netherlands in 2014 measured customers in 2015 with total GWP of € 23 million and a retention by GWP. rate of 72%. The following chart shows a.s.r.’s P&C product mix by GWP in Disability insurance 2015 (€ 1,005 million) General a.s.r. has been a market leader in respect of disability insurance since 2007, and in 2014 its market share in the Netherlands 21% Motor measured by GWP was 21.9%, with more than 99,000 retail Fire and self-employed clients and approximately 78,000 SME and Travel commercial clients. The total Dutch disability insurance market 42% 9% Other measured by GWP amounted to € 3.5 billion GWP in 2014. a.s.r.’s Disability segment maintained a combined ratio of 91.3% and 89.6% in 2014 and 2015, respectively. a.s.r. has reduced its 28% disability claims ratio from 94.2% (excluding WGA-ER: 72.7%) at 31 December 2013 to 69.6% at 31 December 2015. a.s.r.’s retention ratio of 94.5% for Disability is above the market average of 94.1%. By brand, a.s.r. accounted for € 821 million of GWP, Europeesche Verzekeringen for € 161 million and Ditzo for The foundations for the current disability insurance market € 23 million in 2015. came into effect as a result of changes in social legislation starting in 1987. a.s.r. was one of the first to respond offering Distribution disability insurance solutions under the De Amersfoortse brand, a.s.r. utilises multiple distribution channels for its P&C insurance and today a.s.r. offers a broad range of disability products for products and the choice of a particular channel depends SMEs, self-employed and individual customers. primarily on the preference of customers. SME clients and families often seek advisory support and are served by advisors Based on rules set by the Dutch Association of Insurers and/or mandated brokers. In the Dutch market, aggregators are (Verbond van Verzekeraars) in a code of conduct, (Gedragscode frequently used for orientation and act as mandated brokers. geïnformeerde verlenging en contractstermijnen zakelijke schade- en inkomensverzekeringen) Dutch disability policies can a.s.r. has a strong position in the intermediary channel (in be entered into for an initial term of up to three years and are 2014, a.s.r. was the market leader with a 24% market share in thereafter automatically extended every year for a period of one retail P&C and had the third largest market share of 16% in year, with a termination right by policyholders upon 30-day notice. commercial P&C measured by GWP). The a.s.r. brand is a.s.r.’s P&C brand for intermediaries, and a.s.r.-branded products are Products also sold under brand names of mandated brokers (including a.s.r.’s disability business line comprises two primary categories: aggregators) with a high average duration of client relationships Self-employed (including self-employed and retail customers)

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    a.s.r. 43 2015 annual report Report of the Executive Board and group disability. For both product categories, in addition Distribution to insurance products, a.s.r. offers the services of in-house a.s.r.’s clients in the disability business line range from medical advisors, re-integration managers, vocational experts multi-national corporations to individual clients. a.s.r.’s main and external parties offering reintegration, health and safety distribution channel for disability insurance products is the services (arbodiensten), combined with skilled claim handlers, intermediary channel, including via mandated brokers for group for all policyholders, to assist with their reintegration. In Group disability products. a.s.r. is a market leader in the intermediary disability, a.s.r. also has a joint venture with NN Group called channel in disability insurance in the Netherlands with a market ‘Keerpunt’ (a workplace reintegration services provider), in share of 42% for self-employed and 32% for group disability addition to its own in-house specialists. products in 2014 measured by GWP. On average, duration • Self-employed of client relationships within Disability is high, with average a.s.r. provides disability coverage to self-employed customer durations of 7 years, 10.6 years and 8.8 years for individuals for loss of income caused by disability. In case group disability, self-employed and sickness leave, respectively. of disability, customers are provided with a payment until Due to tightening regulatory requirements in the Dutch recovery, death or in case of permanent disability up to insurance market, there is a general trend toward consolidation late age or the retirement age. a.s.r. offers self-employed in the intermediary market, which is particularly visible in group disability products for all professions. Individual employees disability. Smaller brokers remain an important distribution can insure themselves for disability protection for e.g. channel for self-employed disability products, where smaller mortgage payment protection and supplementary wage local intermediaries traditionally have strong positions. protection (wia excedent) in addition to that provided under The share of sales by mandated brokers has been increasing social legislation, i.e. income protection against disability and reached 12% of the total disability portfolio in 2015. for employees whose disability risk is not insured by their employers. The average customer duration was 10.6 years. Health Insurance • Group disability (sickness leave and long-term disability) a.s.r. provides employers with two categories of products: General (i) sickness leave disability products, which cover the first two a.s.r. was the eighth largest provider of health insurance products years of employers’ mandatory salary payments in the case of in 2014 in the highly competitive Dutch market measured by disability of employees (SME market), and GWP with a market share of 1.5%. a.s.r. offers health insurance (ii) long-term group disability products which offer coverage products under the brands Ditzo and De Amersfoortse. Health up until retirement age depending on the coverage (SME had a combined ratio of 98.9% and 95.5% in 2014 and 2015, market and corporate market). As the BeZaVa act (wet respectively. Health had limited capital requirements within beperking ziekteverzuim en arbeidsongeschiktheid bij a.s.r.’s structure, and circa 3% of a.s.r.’s total Solvency II was vangnetters), comes into force as of 1 January 2017 for attributable to Health as at 31 December 2015. the part of WGA liability for temporary employees. A new additional market segment for group disability products will a.s.r. had a customer base of approximately 316,000 customers be created. With respect to Group disability the average in 2015 who have taken basic health insurance and/or customer duration for sickness leave was 7.0 years, while the supplementary health insurance, of which approximately average customer duration for sickness leave was 8.8 year. 180,000 were served by Ditzo, 125,000 by De Amersfoortse and 11,000 via mandated brokers. Products 13% Self-employed a.s.r.’s health business line comprises two primary categories: Sickness leave basic health insurance and supplementary health insurance. 17% Group disability • Basic health insurance 41% Other 1 a.s.r. offers basic health insurance coverage, the terms of which are mandated by law. For the year ended 31 December 2015, 88% of a.s.r.’s health portfolio measured 29% by GWP (excluding governmental premium) was comprised of basic health insurance policies. • Supplementary health insurance a.s.r. offers a range of health insurance products covering 1 a.s.r. also offers products related to sickness leave and group risks and expenses not covered by the Dutch basic disability via mandated brokers. Due to the importance of this health insurance scheme, including physiotherapy, distribution channel, a.s.r. presents these sales as a part of a restorative dental care, glasses, maternity care, medical separate product category (‘Other’). The average customer duration assistance abroad and orthodontia. Services offered under was 1.1 years. supplementary health insurance packages vary depending on targeted customer groups. For the year ended 31 December 2015, 12% of a.s.r.’s health portfolio measured by GWP was comprised of supplementary health insurance policies.

  • Page 44

    a.s.r. 44 2015 annual report Report of the Executive Board In the fourth quarter of 2015, a.s.r. launched a new proposition a.s.r.’s main non-life product groups are: P&C, disability and called ‘Doorgaanverzekering’ proposition, which combines health insurance products the products offered by the Disability segment with the health insurance products described above, which is offerted to both P&C self-employed and a.s.r. customers via the De Amersfoortse brand. In respect of P&C insurance a.s.r. endeavours to leverage its The following chart shows the a.s.r.’s health product mix by existing strengths and to achieve a combined ratio < 98% on GWP in 2015 (€ 616 million): the average over the course of the business cycle. Leverage on existing strength and distinctive profitability a.s.r. aims to continue developing its expertise in differentiated 12% Basic insurance pricing, underwriting and claim handling, which a.s.r. believes Supplementary insurance are key drivers for sustainable value creation. a.s.r. believes it can achieve this through, for example, hiring additional senior insurance specialists and further analysis of data. The further analysis of data can improve a.s.r.’s business rules by making them more comprehensive, to apply them to its clients and to 88% strictly monitor the performance of the different channels, while aiming for a more diversified P&C portfolio. Investing in SaaS solutions By brand, in 2015 Ditzo accounted for € 173 million of GWP a.s.r. plans to implement a SaaS solution for the P&C business. (of which € 150 million were attributable to basic insurance and a.s.r. believes that this SaaS solution will improve the robustness € 23 million to supplementary insurance) and De Amersfoortse of its P&C systems and reduce the P&C business’ fixed cost for € 156 million (of which € 111 million was attributable to basic base while decreasing costs overall. An additional benefit a.s.r. insurance and € 45 million to supplementary insurance), while expects from a SaaS solution is an improvement in connectivity mandated brokers accounted for €14 million (of which with intermediaries through the creation of service concepts € 10 million was attributable to basic insurance and € 4 million such as client portals. to supplementary insurance). These GWP’s are exclusive of the governmental contribution for risk equalisation of € 273 million Profitable and selective growth in market share in 2015. a.s.r. intends to selectively grow in the intermediary channel through more active intermediaries, acquiring a greater Distribution percentage of the business of the market’s largest 650 advisors The distribution mix of Health consists of the direct distribution and by pursuing a retention strategy based on good customer channel under the Ditzo brand, focused on individual clients, service. Furthermore, a.s.r. aims to increase its market share in while distribution under the De Amersfoortse brand is done the SME liability and transport markets. a.s.r. intends to bring through the use of intermediaries and is mainly focused on self- proven innovative products and services to the wider market, employed and SME customers. but only after testing these products and services by leveraging the distribution power and innovation skills of VKG and the Strategy learning and innovation skills of Ditzo. In the Non-life segment, a.s.r. aims to leverage its claims a.s.r. considers the intermediary channel to be resilient. management skills and to maintain operational efficiency Customers who choose the intermediary channel tend to and total expense discipline in order to continue to deliver a be more loyal, which results in high retention rates for these combined ratio in line with its targets. a.s.r. seeks to develop portfolios. a.s.r. believes that these long term relationships put products based on customer data, underwriting experience and it in an advantageous position relative to competitors with less claims management excellence. The entire process is managed commitment to this distribution channel. The relative share of on a business line basis, in which end-to-end empowered the intermediary channel versus direct channel within the P&C business directors are in charge of executing strategy for market has remained stable over the last five years (excluding each product group. There is no separate chain or channel disability and health, based on GWP). The primary focus of a.s.r. management at a.s.r. level for all non-life products. in distributing P&C products is therefore on the intermediary channel. a.s.r. strives to leverage its deep understanding of the Dutch non-life markets to apply risk based pricing to achieve Commercial insurance profitable growth in line with GDP growth. a.s.r. aims to a.s.r. intends to establish its position in the commercial strengthen its presence in Non-life markets by improving mid-sized P&C insurance market as a.s.r. believes this will offer connectivity with the intermediary channel, forward integration an opportunity for profitable growth. Commercial insurance with service providers and by actively promoting its products products historically have not been a priority of a.s.r. through its own direct business, Ditzo. a.s.r. aims to focus on selective and controlled growth in this

  • Page 45

    a.s.r. 45 2015 annual report Report of the Executive Board sub-segment of the P&C market, in particular through sales of and health insurance proposition whose benefits for the commercial insurance products to mid-sized corporates, while customer include lower premiums and additional services. continuing to apply underwriting discipline and the a.s.r.’s ‘value a.s.r. plans to develop several variants including basic over volume’ strategy even in this sub-segment. The first steps coverage, full coverage and services that complement the that a.s.r. plans to take are the development of underwriting and existing disability or health insurance product. a.s.r. expects claims management skills specific to this market. Additionally, that this product will enable increased cross-selling between a.s.r. may pursue acquisitions in this sub-segment in order to disability and health sub-segments. a.s.r. believes that the acquire underwriting and claims management skills and to grow integrated process will result in customer appreciation and, market share. in turn, increased retention rates. Disability Hybrid distribution to improve and secure distribution channels a.s.r. intends to assist the intermediary channel with e-based a.s.r. is the number one insurer in terms of GWP in the Dutch underwriting systems and online channels to provide online disability insurance market and, with its strong product offerings. In addition, a.s.r. aims to support the De Amersfoortse brand, a.s.r. believes that it is well-positioned mandated brokers in exploring the local SME market, including to capture profitable growth opportunities in this market. the introduction of new propositions. Furthermore, with the Furthermore, a.s.r. holds a leading position in the advisory acquisition of Boval/Felison, a.s.r. believes it has strengthened distribution channel. Disability insurance is expected to grow its position in the mandated brokers segment. in line with general macro-economic trends. In addition to maintaining its focus on market leadership and achieving a.s.r. believes that this approach should contribute to attractive combined ratios, a.s.r. intends to pursue growth maintaining its market leading position in disability insurance. opportunities especially within the SME and self-employed Legislative changes that further privatise care linked to customer segments, leveraging on its strength in the reintegration could result in additional growth of the disability intermediary channel. insurance market. An example in this respect is the currently proposed BeZaVa act. If the proposed BeZaVa act is adopted, Maintain market leadership with focus on the combined ratio temporary employees are expected to largely become Through its disability product line a.s.r. aims to achieve the managed by the private sector and the disability market is targeted combined ratio. In respect of disability insurance, expected to shift from public to private. a.s.r. believes that it is a.s.r. plans to capitalise on its unique integrated approach of well positioned to take advantage if this change occurs. utilising a dedicated multi-disciplinary team of professionals and by maintaining focus on the enhancement and further Health development of pricing and underwriting, which a.s.r. believes are key drivers for sustainable value creation. a.s.r. believes The strategy of a.s.r. for Health is to continue to be an agile that it can achieve this through (i) optimisation of pricing and niche player with profitable underwriting, benefiting from focusing on cost efficiency, expanding skills and expertise alliances (e.g. collaboration with other insurance companies in respect of claims management and reintegration (both in respect of the purchase of medical care and Delphi R&D in supported by in-house medical advisors and specialists in the respect of back office IT processes), with a focus on cross-selling field); and (ii) data analysis. Furthermore, a.s.r. intends to pursue and retention of customers. Health has a strong record with and enhance its strict performance management framework of a combined ratio below 99% since 2013. a.s.r.’s strategies for mandated brokers, for example through an increase in audits. offering health insurance products include the following: To improve competitiveness, the disability business line plans • Self-funding to finish the implementation of a system for Group disability, an a.s.r. intends to fund the growth of its health business IT platform resulting in better service (e-based underwriting), exclusively through organically generated Solvency II capital better underwriting and lower costs (self-fill data systems). without any capital injection from a.s.r. • Maintain brand appreciation Product development for new business opportunities Health insurance is a product with a high degree of a.s.r. intends to continue providing optimal services and customer interaction. a.s.r. believes that the customer’s high quality products to its customers. This is expected perception of Ditzo Health and De Amersfoortse as to be achieved by reducing the complexity of products measured by NPS of '9' leads to increased appreciation and by keeping product offerings up-to-date through the of a.s.r.’s overall brands. Therefore, a.s.r. intends to take introduction and development of new propositions to seize advantage of the high degree of customer contact to offer market opportunities. Recently planned or introduced product the highest levels of customer service so as to maintain and, developments include: where possible, improve the brand appreciation of both its • The development of a new product to cover the 12-year risk direct Health brands as well as its other, associated brands. of disability including reintegration services complementary • Support Ditzo and De Amersfoortse brands to facilitate to social legislation (BeZaVa); cross-selling • Improving access for and insurability of the self-employed; a.s.r. is focused on the growth of Ditzo Health and • The introduction of ‘Doorgaanverzekering‘ under the De Amersfoortse customers to create cross-selling De Amersfoortse brand. This is an integrated disability opportunities to its P&C and disability businesses,

  • Page 46

    a.s.r. 46 2015 annual report Report of the Executive Board particularly as the cost of acquisition for new health business is lower than the independent cost of acquiring new P&C customers. The sale of health insurance products via De Amersfoortse and Ditzo increases brand recognition and thereby improves retention rates. In 2015 23% of new Ditzo P&C customers also had a Ditzo Health product. Since the introduction of Ditzo Health in 2011, the number of insured individuals reached approximately 180,000 as at 31 December 2015 increasing opportunities for cross- selling. Furthermore, a.s.r. recently introduced the new product ‘Doorgaanverzekering’, which combines health and disability products, with a resulting cross-selling level of approximately 32% by Health. These cross-selling initiatives are also important for a.s.r. because retention rates of customers who purchase multiple products with a.s.r. are significantly higher compared to customers who only have one of a.s.r.’s products (the lapse rate for customers to whom a.s.r. cross-sold an Amersfoortse disability or health product decreased from 8.1% to 6.7% and from 8.7% to 4.5% respectively in 2015).

  • Page 47

    a.s.r. 47 2015 annual report Report of the Executive Board 2.2.3 Life segment • The operating result increased from € 349 million to • Gross written premiums increased by 18% to € 1,828 million € 434 million in 2015, mainly because incidental provisions due to the buy-out of a pension fund at year-end 2014 and formed in 2014 no longer adversely affected earnings in strategic acquisitions in 2015. 2015. • Regular operating expenses were up 15% in 2015, mainly • Profit for the year was up € 257 million from € 299 million due to an increase in the cost base as a result of the in 2014 to € 556 million in 2015 due to an increase in the strategic acquisitions. operating result, higher indirect investment income and incidental items in 2014. Key figures, Life (in € millions) 2015 2014 (restated) Regular premiums written 1,256 1,308 Single premiums 572 235 Gross insurance premiums 1,828 1,543 Operating expenses -205 -178 Provision for restructuring expenses -11 -12 Operating result 434 349 Incidental items (not included in operating result) 276 24 - Investment income 287 122 - Underwriting incidentals - -93 - Other incidentals -11 -5 Profit/(loss) before tax 709 373 Profit/(loss) for the period attributable to holders of equity instruments 556 299 Cost/premium ratio (APE) 12.3% 10.7% New business (APE) 92 140 Profile the Netherlands amounted to € 17,5 billion in 2014, and the The Life segment comprises all life insurance entities and life insurance market represented 23.9% of the total Dutch their subsidiaries. These entities offer insurance policies that insurance market. Total assets of life insurers amounted to involve asset-building, asset reduction, asset protection, € 436 billion at 31 December 2014. The CAGR in terms of term life insurance and Funeral expenses for consumers and GWP of the life insurance market in the Netherlands was -5.1% business owners. These operations are being conducted by between 2010 and 2014. With an 8.8% markt share in 2014, a.s.r. ASR Levensverzekering N.V. (‘a.s.r. Leven’) and, since 2015, also was the sixth largest insurer in the life insurance market. by De Eendragt and AXENT, which a.s.r. intends to merge with a.s.r. Leven in the course of 2016-2017. Group life Life insurance market Group life is mainly pensions. The Dutch pension system consists of four pillars: (a) a mandatory state pension scheme The Dutch life insurance market can be split into three product (‘Pillar 1’), (b) employer-based pension schemes (‘Pillar 2’), categories: (i) Group life, (ii) Individual life and (iii) Funeral. (c) voluntary pension facilities with fiscal benefits (‘Pillar 3’) and (d) voluntary pension facilities without fiscal benefits (‘Pillar 4’). The Dutch life insurance market was the 13th largest life Insurance companies only offer products from Pillars II, III and IV. insurance market in Europe in 2014 measured by GWP, accounting for 2.2% of the European life insurance market. Life Group life insurance products are policies pursuant to which insurance density in the Netherlands measured by GWP per employers offer pension products and certain other insurance capita was $ 1,296 (€ 1,071 converted at the exchange rate of benefits to their employees. The Dutch group life market can be € 1 = $ 1.2098 as at 31 December 2014) in 2014. The split in (a) traditional and (b) unit-linked. Netherlands has the 14th highest life GWP per capita in Europe, excluding premiums paid into non-commercial pension Market funds/schemes. The GWP of the life insurance market in Pillar 2 consists of employer-based pension schemes. In 2014,

  • Page 48

    a.s.r. 48 2015 annual report Report of the Executive Board Dutch insurance companies had a 20% market share of the they will enable insurers to serve companies who now Dutch pension market, generating € 8.7 billion measured by have a company pension scheme (total € 301 billion GWP and representing approximately € 200 billion of AuM. AuM). Insurance companies can generate fees by Industry-wide pension funds and company pension funds offering services to newly formed APF foundations, such held 78.5% market share in 2014, accounting for € 33.7 billion as administrative and asset management services. measured by GWP in 2014 and representing € 1,133 billion of • Tightening regulation: Tightening regulation drives AuM. IORP’s accounted for the remaining 1.5% market share. smaller pension funds either into consolidation or into GWP in the group life market has grown by 3.9% per year insurance. between 2010 and 2014, mainly due to the transfer of assets • Market from smaller and liquidated pension funds to commercial • Shift from defined benefit pension schemes towards insurance companies. These assets are incorporated in GWP as defined contribution pension schemes: Traditional Dutch single premiums, which have shown a strong increase between group pension schemes are defined benefit pensions 2012 and 2014. Recurring unit-linked premiums have decreased offering investment guarantees to employees. As a due to changes in regulation and the success of IORPs. In 2014, result of low interest rates, longevity risk and capital the IORP GWP had grown to € 380 million, from € 112 million requirements under IFRS accounting rules, demand in 2013 and a level of € 11 million in 2012 and representing for defined benefit pension schemes is under pressure approximately € 500 million of AuM in 2014. and defined contribution pensions are becoming an increasingly attractive alternative. Companies are The combined market share measured by GWP of the top six looking for more affordable defined contribution providers of group life insurance was approximately 99% in alternatives which result in less volatile financial results 2014. With respect to pensions, the large insurers differ from for the employer. After the introduction of IORPs in each other in their product focus, specialising in DB, DC, IORP 2011, IORPs have taken a significant portion of defined and/or APF. contribution premiums. IORP GWP levels grew from € 11 million in 2012 to € 380 million in 2014. As part of Distribution the shift of the market from existing products to new Group life products are mainly distributed through the products such as DC (including IORP) and APF, insurers intermediary channel, in particular by a limited number face a shift of active participants to inactive participants of intermediaries. The pension intermediary market is in their existing books. These existing books will need consolidating, coming from 2,700 pension intermediary firms to be managed on costs, as the rights of the inactive in 2012 to 1,076 firms in 2014. Actuarial intermediary firms, participants and related assets will last for many years. auditors and branded specialists (e.g. Willis Towers Watson, • Pension funds liquidating and moving to insured Aon, Mercer) are the main channels for corporate clients while solutions: Increasing regulation of pension funds, small insurance advisory business are mainly used is SME intended to ensure that pension funds comply with market. minimum coverage ratios, has resulted in stricter requirements on funding and governance. As a result Trends small- and medium-sized pension funds are rapidly • Economy consolidating or are being liquidated. • Increased capital requirements have been put in place and there is a limited ability to absorb market risk due Individual life to low interest rates and longevity risk. This has led to a market shift from the more capital-intensive DB products The individual life market consists of term life and annuities with to capital-light DC and APF products. no other products actively offered. The market is dominated by • Legislation large market participants with small market participants active • Pension reform in the Netherlands, with further future but in declining numbers (from 45 small market participants in reforms expected: The Netherlands, like many other 2010 to 36 in 2014). Many insurers have decided to close new mature markets, is facing the economic consequences business for most or all individual life products, focusing on of an ageing population. To handle this issue, the Dutch customer services and retaining AuM. There is a possibility that government gradually extended the retirement age the Dutch individual life insurance industry will consolidate. for occupational pensions from 65 to 67 in 2014, and linked it to life expectancy thereafter. In addition, fiscal Life insurance policies can be split into traditional life support for the accumulation of pension benefits has insurance policies, where the insurance company bears been reduced. One of the consequences is an expected the investment risk, and unit-linked insurance policies increase in demand for individual pension schemes in (beleggingsverzekeringen), where the policyholder bears the Pillars III and IV, as employer-paid pensions are likely to investment risk. Life insurance policies can also be distinguished decrease in the future. by type of premium payment (recurring or single premiums), and • Introduction of APF: APF was introduced on 1 January on the basis of insurance payments by the insurance company 2016 with licensing of APF vehicles expected in the (capital sum or annuity, depending on product). Commissions second quarter of 2016. While APFs are independent, have been banned for life insurance products since 2013.

  • Page 49

    a.s.r. 49 2015 annual report Report of the Executive Board Market • Customers Individual life accounts for 11.9% of the insurance market, with • Want more and direct service from insurers, including € 8.7 billion GWP and 75% recurring premiums. The latter can information on existing or new products or advice. be almost fully (98%) attributed to existing contracts in 2014. • Good service is an important condition for customers to The CAGR of the individual life market is -11.2% for the period remain with their insurers and is therefore an important 2010-2014. driver for retention rates. New production has decreased from € 822 million APE in Funeral 2010 to € 325 million APE in 2014 (CAGR -20%). While natural and unnatural lapses are larger than new production, GWP Funeral insurance is a type of individual life insurance which is decreased over time. paid out upon death, either in cash or in kind, to cover related The combined market share measured by GWP of the top six funeral expenses, such as a cemetery plot and headstone, providers of individual life insurance was approximately 78% casket, funeral procession and other miscellaneous costs. in 2014. Market Distribution Approximately 70% of the adult Dutch population has funeral In the Netherlands, individual life insurance products are sold insurance and average premium levels vary from € 5 to € 15 per through intermediaries (including advisors), Bancassurance, month. Of this 70%, approximately 50% are considered to be direct and other channels. The intermediary channel is the underinsured as a result of non-indexing. New business levels main distribution channel for individual life products and are low, mainly as a result of lower appetite for this product accounted for approximately 55% of life insurance GWP in with younger generations, the intermediary commission ban 2014. The number of intermediaries declined as a result of the (incentive for sale removed) and cost for advice is high in introduction of a prohibition on commissions for intermediaries. comparison to monthly premium level. Funeral insurance is The direct channel for term life (26% in 2014) is growing. characterised by low premium levels, predictable cash flows and relatively stable portfolios. Trends Trends in the individual life market centre around three topics: The Dutch funeral market is a mature market, with over 90% of market, legislation/economy and the customer. the open book market controlled by five market participants. • Market Only two large generalist Dutch insurance companies are • The ongoing decline of the traditional and unit-linked currently offering funeral insurance, though more used to do markets is expected as a result of multiple factors. The so. The funeral insurance market comprises insurers who offer market is returning to simple risk products. The demand funeral insurance with in-kind benefits, supporting their funeral for term life is expected to grow due to a foreseen services business. recovery of the housing market. • Due to new entrants in term life, competition from New entrants are not expected in the short-term and further incumbents and increasing price transparency are consolidation is expected, as market participants seek expected. economies of scale. Intermediaries are selling portfolios rights • The individual life market is mainly seen as a closed (advice will be the responsibility of insurers going forward), and book market. Many of the Dutch insurers consider their the amount of smaller specialist market participants is expected individual life books as closed books and are looking to decrease (26 market participants with GWP below € 7 million, for ways to manage individual life portfolios in a cost of which 19 have GWP below € 1 million). efficient way; most continue to manage their own portfolios, but especially the smaller market participants Distribution may experience scale issues. The uses of BPO and ITO Historically, nearly all funeral policies were sold through to reduce costs and make costs more flexible are being intermediaries. In recent years direct sales have seen a strong analysed by several insurers. Further consolidation is increase. In addition to obtaining new customers, insurers also expected. generate new business through fulfilling their ‘duty of care’ to • Legislation and economy their in-force underinsured customer base (e.g. increase insured • Increasing capital requirements and low interest rates sum). pose a challenge for making required returns on the existing portfolio. Trends • Low interest rates on savings have a positive effect on There are three key trends in the Dutch funeral market: lapse rates and retention rates as customers profit from consolidation, a shift to the direct channel and a decrease in relatively good returns on both nominal and unit-linked customer demand. policies. In addition, customers are less price-sensitive at • Decrease in and change of customer demand expiration of insurance products and generally choose Overall new production levels are expected to decline, as the ease of dealing with the insurer over price. many customers are not willing to pay for advice on funeral insurance and as new generations show limited interest for

  • Page 50

    a.s.r. 50 2015 annual report Report of the Executive Board the product. Economic recovery and higher wages could Profit for the year was up € 257 million from € 299 million in 2014 slightly soften the overall downward pressure on demand. to € 556 million in 2015 due to higher indirect investment income Retention of existing customers by increasing the customer and incidental items, including an impairment of € 93 million satisfaction becomes therefore more and more important. (before tax) on value of business acquired (VOBA), in 2014. • Shift to direct channel As customers have low willingness to pay for intermediary Gross written premiums were up from € 1,543 million in 2014 advice, insurers are starting to promote their direct offering to € 1,828 million in 2015. In the pension business, premium to compensate for the loss of intermediary volume. income rose by € 346 million from € 626 million in 2014 to • Consolidation € 972 million in 2015. This was mainly attributable to higher Another trend in the funeral market is the consolidation of single premiums because of the buy-out of a pension fund, the portfolios to create more value on existing and new business sharp increase in Werknemers Pensioen and the acquisition by reducing the costs per policy. This is possible as some of De Eendragt. Regular premiums written were down in the large insurers have moved funeral to closed book and hence pension business, due in part to a lower cap on tax-facilitated are looking for solutions for their portfolios. Furthermore, pension accrual. The customer base of the IORP, in which there are a number of insurers with sub-optimal scale a.s.r. has teamed up with Brand New Day, rose to over 1,500 (approximately 19 Dutch funeral insurers, who have less than employers (year-end 2014: 1,000 employers). € 1 million GWP). New business (APE) in 2015 was lower than in 2014, one of the reasons being a pension buy-out that was recognized within Financial performance Life new business in 2014. The operating result for 2015 came to € 434 million, up from Premium income from the funeral insurance business was up € 349 million for 2014. One of the reasons for the increase was € 20 million (i.e. 18%) due mainly to the acquisition of AXENT. an incidental technical provision formed in 2014. In addition, an The share of policies taken out online is still gaining ground. incidental provision formed in 2014 was released in the pension Of total new business, 45% of policies are now taken out online business in 2015. 2015 saw a higher release of realized capital (2014: 39%). gains and lower write-downs on swaptions. This increase was partially offset by a fall in underwriting gains in the pension In the Life segment the technical provisions increased by business due to lower pricing of portfolios after conversion € 2.4 billion, climbing to € 26.1 billion. to new contract terms and to the fact that benefits and reservations for mortalities were higher than in 2014. Life – Movements in technical provision (own account) 2015 2014 (in € millions) At 1 January 23,655 19,653 Premiums 1,172 818 Insurance claims and benefits -1,357 -1,330 Net inflow -185 -512 Net interest income (including shadow accounting) -258 4,942 Change in group composition (strategic acquisitions) 3,168 - Other -320 -428 At 31 December 26,060 23,655 The increase in insurance liabilities was mainly due to the Operating expenses rose by € 27 million from € 178 million in acquisitions of De Eendragt and AXENT (€ 3.2 billion). In 2014 to € 205 million in 2015, due in part to a higher cost base addition, gross written premiums increased as a result of the as a result of strategic acquisitions. buy-out at year-end 2014 of a large pension contract, while insurance claims and benefits were virtually stable compared Since new production volumes in the life market are under with last year. pressure, a.s.r. is still pursuing its strategy of cost flexibility and structural cost reductions to allow costs to keep pace Developments in interest rates and the related recognition with the size of the portfolio. In the individual life business, for of developments in the value of fixed-income investments in instance, the first migration of what will soon be an obsolete the technical provision through shadow accounting, affect the product system to a new platform was completed. The pension changes in net interest income. In 2014, the effect was major, as business has taken a first step towards outsourcing its business a result of decreasing interest rates and the resulting increase in processes: in this context, 80 FTEs were transferred from a.s.r. to the value of fixed-income investments and derivatives. outsourcing partner Infosys on 1 April 2015.

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