It also means that we have an open and honest relationship with our intermediaries, key distribution partners, in which we act together in a fast changing world. Trust is also the basis for the relationship with our shareholder. In these unpredictable market conditions, we have opted for certainty, confident that this is the best way to serve the shareholder’s long-term interests.
In retrospect we can say that in recent decades, the financial sector could have chosen for a better balance between customer interests and creating value for shareholders. The period was characterized by a focus on profit and shareholder value. This almost became an even greater priority than serving the interests of the customer. As a consequence, customers lost confidence. We learned a hard lesson. That is why ASR is truly taking a fresh approach. The customer is our main motivation, a fact that we are more aware of today than ever before. For this reason we are putting our house in order. For example, by taking the lead in the search for the best possible solution for the compensation of unit-linked policy holders. Our employees are doing their personal best to find such a solution, working alongside intermediaries.
In addition, customers are comfortable with taking out policies themselves in an easy-to-navigate process and they appreciate us being available at any time to answer questions. Our advertising campaign, both online and offline, has to be unique to make us stand out from the competition. It is not just new customers, but existing ones as well, who need to get to know our new health insurance policy in a convenient and clear manner.
Financial Markets ASR’s asset management activities are governed by the policy on Socially Responsible Investment (SRI). This stresses affirmative action on best practices and best products based on environmental, social and governance (ESG) criteria. The policy applies to all investments in countries (government bonds) and in businesses (equities and corporate bonds). This means, for instance, that ASR invests more in businesses that score well on ESG criteria within their sector of industry. ASR also invests in businesses that make a sustainable contribution to society, for instance by processing or recycling their waste, reducing their environmental impact, lowering their energy consumption or using clean energy. ASR observes strict exclusion criteria for producers of controversial weapons, nuclear energy, pesticides, alcohol and tobacco, and for the gambling industry, sex industry, and businesses engaged in animal experimentation. Businesses that breach international conventions, for example on the equal treatment of men and women, child labour or trade union freedom, can also be excluded.
ASR signed the United Nations Principles for Responsible Investment (UNPRI) on 14 October 2011. UNPRI was launched in 2006 by the Secretary-General of the United Nations and is the global standard for best practices, its aim being to provide a stimulus for socially responsible investment. The Principles were developed to help investors take account
Its CSR policy was nominated for a CSR award in 2011. This award is presented by the City of Utrecht to a business that
Composition of the workforce in FTE: 31/12/2010: 2,763 men – 1,570 women 31/12/2011: 2,832 men – 1,432 women
Karin Bergstein’s areas of responsibility within the Executive Board are Non-life, Occupational Disability, Pensions, Individuallife and Banking. She is also in charge of the IT and Information & Project Management support departments.
In addition, the compensation payments to unit-linked policyholders negatively influenced the profit for the year by € 94 million after tax in 2011. This is € 66 million more than in 2010. Risk-mitigating measures to keep the solvency position at a strong level are partly the cause of direct investment returns decreasing by € 13 million, compared to 2010. Lower costs and improvements in the combined ratio for Non-life fuelled a € 38 million increase in operational results compared to 2010.
The Life segment comprises all of ASR’s operations that involve asset-building, asset reduction and asset protection via consumer and business insurance. All operations are consolidated into ASR Levensverzekering N.V. ASR’s portfolio is made up of products for asset-building and asset protection for retail customers, such as life insurance, funeral insurance, savings-linked policies, unit-linked policies, annuities, pension insurance and asset reduction products such as immediate annuities. The ASR label offers pension solutions for corporate customers, including average-pay schemes, defined contribution plans and defined benefit plans, as well as dependants’ benefits shortfall insurance. To distribute these, ASR works in close cooperation with advisors, specialist pension experts and consultants. Ardanta offers funeral insurance to retail customers in the Netherlands, Germany and Belgium. The majority of these policies are distributed via the intermediary channel.
Operating expenses Operating expenses fell by 7% to € 262 million compared to 2010. Expenses in the Life segment were down in particular thanks to the completion of the integration of Falcon into ASR and the outsourcing of processes to India. The cost-premium ratio improved in 2011 from 13.6% to 12.8% on the back of lower operating expenses in Individuallife, which was compensated by the effect of lower premiums in the Life segment.
Customer interests Customer interests take priority in ASR’s actions. In the Life segment, many efforts were undertaken to put customers’ interests first. To this end, new asset-building products were introduced that are in keeping with public opinion on transparency, information provision and a low fee structure.
Following the legal merger with ASR Levensverzekering N.V. in 2010, Ardanta has operated as a separate label in the Life segment since 1 January 2011. Because of this integration, more than three million policies in the ASR portfolio were transferred to Ardanta in 2011, which has now become the second largest funeral insurer in the Netherlands. Ardanta’s specific knowledge and expertise fuelled a reduction in costs for the group as a whole.
With regard to occupational disability insurance policyholders, there is a growing focus on taking a pro-active approach to prevention and reintegration. ASR is the only insurer in the Netherlands with its own employment expert service. Thanks to the combination of an in-house employment expert service and reintegration coaches, occupational disability can be avoided or reduced in duration. Self-employed persons were offered a health check. Where medically indicated, they were also offered follow-up screening and, where appropriate, an intervention. In addition, 95% of all of De Amersfoortse’s correspondence, including brochures and contract terms and conditions, is now written in easy-to-understand language (B1). This compares with only 80% in 2010.
As of 2011, De Amersfoortse was the only label under which ASR offered occupational disability insurance contracts. Among other things, this has led to employees being transferred to the Amersfoort office from various other locations. Moreover, the occupational disability insurance business introduced a stringent policy of cost control for its operations in 2011. These measures caused the operational costs of the Non-life segment to decrease by 3% in 2011 compared to 2010, to € 251 million.
The funding position and the scope of the available financing programmes were more than sufficient at year-end 2011 to protect the cash position in the time to come. Virtually all financing facilities are available. As a consequence ASR does not, for the time being, see any immediate cause to secure more financing facilities.
The modified Dutch Insurance Code, adopted on 22 June 2011 by the General Meeting of members of the Dutch Association of Insurers, is in line with ASR’s mission and core values and has been signed by ASR.
• Staff terms The staff terms are in accordance with the policy that applies to all ASR-employees.
Supervisory Board Kick van der Pol Ph.D. Annet Aris MSc Cor van den Bos MSc Margot Scheltema MSc
Acquisition of non-controlling interest - - - - -25 -25 - -25 - -47 -72
Net increase/decrease in amounts due from and to customers -605 155
The following changes in the EU-endorsed IFRS standards and IFRIC interpretations have been effective since 1 January 2011. Unless stated otherwise, these changes have no material effect on the financial statements of ASR.
Associates Associates are those entities over which ASR has significant influence, but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. The consolidated financial statements include ASR’s share of profit of associates from the date that ASR acquires significant influence until the date that significant influence ceases.
Upon recognition, investments in associates are initially accounted for at cost price, including any goodwill paid. Subsequent measurement is based on the equity method of accounting. Where an associate’s accounting policies are different from ASR’s, carrying amounts have been changed to ensure that they are consistent with the policies used by ASR. For details, see chapter 2.18.
2.13 Statement of cash flows The statement of cash flows classifies cash flows by operating activities, investing activities and financing activities. Cash flows denominated in foreign currencies are converted at the exchange rates applicable on the transaction date.
Should VOBA’s carrying amount exceed the difference between the carrying amount of the liabilities arising from insurance contracts and the liabilities identified as part of the liability adequacy test, VOBA is impaired to a level where the values are equal. This is charged to the income statement as an impairment loss.
Repair and maintenance costs are charged to the income statement in the period in which they are incurred. Expenses incurred after the acquisition of an asset are capitalized if it is probable that the future economic benefits will flow to ASR and the cost of the asset can be measured reliably.
Retail, Offices and residential property are valued using all three methods, whereas for parking and rural properties the Income method is primarily used.
2. Fair value on the basis of (significant) observable market inputs
assets or liabilities; • quoted prices for identical or similar assets or liabilities in inactive market; • input variables other than quoted prices observable for the asset or liability. These include interest rates and yield curves observable at customary intervals, volatility, early redemptions spreads, loss ratio, credit risks and default percentage.
Discretionary interest on other equity instruments Discretionary interest on other equity instruments are adjusted against equity upon payment.
The related adjustment to the insurance liability is recognized in other comprehensive income if, and only if, the unrealized gains or losses are recognized in other comprehensive income. Unrealized gains and losses on assets at fair value through profit and loss are recognized in the income statement with a corresponding adjustment for shadow accounting in the income statement.
DNB LAT For the DNB solvency ASR uses the DNB LAT. As a consequence the IFRS LAT is applied also on the ECB AAA curve. The IFRS LAT differs from the DNB LAT as follows: • No surrender value floor is applied to the IFRS LAT • No prudential filters are applied to the IFRS LAT
This chapter describes the risks of ASR incurs and the way these risks are managed.
Major risks of business units were identified. The impact on strategy achievement is measured qualitatively and controls for mitigating these risks were determined.
Greece, Spain and France and in financial institutions also reduced the counterparty default risk.
Investigation The role of the investigation department is to execute ASR’s zero tolerance policy on fraud. ASR rejects any unfair practices or fraud. Investigation is responsible for fraud prevention, fraud investigation and repression: • Fraud prevention: measures are taken to prevent unfair practices or fraud within ASR. Fraud prevention measures include customer due diligence checks to ensure that ASR only does business with reliable individuals or firms.
Non-Financial Risk Committee The Non-Financial Risk Committee (NFRC) has a mandate from the Executive Board to decide on non-financial risk policies. The NFRC manages and controls non-financial risks. The NFRC determines non-financial risk limits at group level and monitors that the risk profile stays within the agreed risk limits. If the risk profile exceeds the limits, the NFRC takes mitigating actions. The NFRC reports to the ASR Risk Committee. The members include the ASR’s COO (Chairman), key representatives managing the non-financial risks and an FRC liaison.
ASR has underwriting policies for life insurance. It describes the types of risks and the extent of risk ASR is willing to accept. As far as individual life insurance is concerned, policyholders can be subjected to medical screening.
• Illness: illness cover includes continued salary payments for the first two years of the individual’s incapacity for work.
Non-life insurance risk Non-life insurance risk is primarily comprised of risks resulting from third-party liability, disability and general third-party liability. Provisions are formed to cover the scale and the long- term character of the claims (especially those involving disability).
The table below shows a reconciliation between regulatory solvency required and buffer capital required: 3.9 Hedge accounting ASR has entered into a limited number of cash flow hedges to hedge some of its interest rate risk. These hedging transactions hedge risk on separate contracts. Under IFRS, derivatives are measured at fair value in the balance sheet and any changes in the fair value are recognized through profit and loss. In the event that changes in fair value of hedged risks are not recognized through profit and loss, an accounting mismatch occurs, making the results more volatile. In these cases, hedge accounting is applied to mitigate the accounting mismatch and volatility.
The ASR segment reports show the financial performance of each segment. The purpose of these reports is to allocate all items in the balance sheet and income statement to the segments that hold full management responsibility for them.
Change in provision for unearned premiums - 74 - - 74 fair value gains and losses -8 - -1 - -9 result on investments on behalf of policyholders -370 - - -2 -372
In 2011, goodwill decreased by € 13 million as a result of impairments related to negative developments in the ASR Vastgoed Ontwikkeling. Furthermore the goodwill recognised following the Paerel Leven N.V. acquisition of € 4 million has been fully impaired as this goodwill was deemed not recoverable. For the purposes of impairment testing, goodwill is allocated to the cash-generating units of the relevant operating segment. The goodwill as at 31 December 2011 relates to B.V. Nederlandse Hulpverleningsorganisatie-SOS International in segment Other.
o n o b se r va b le m a r k et D
UnUtilized tax losses 2011 2010 total unutilized tax losses as at 826 880 deferred tax assets calculated for unutilized tax losses as at 207 220
ASR expects to fully utilize these tax losses, which can be utilized up to 2017.
as a % of liabilities as at 31 December -1.3% -0.7% 0.2% -1.8% 3.7% 3.5% -2.9% -2.3% 1.1% -21.5%
Amounts owed to customers can be broken down as follows: All carrying amounts reflect the fair value as at the balance sheet date.
Acquisition costs can be broken down as follows: 33 Impairment of assets
On 14 November 2011, ASR Levenverzekering N.V. acquired 100% of the shares of Paerel Leven N.V. for an amount of 1 Euro. ASR has started integrating the activities in the Life segment and it is expected a Legal merger to occur between ASR Levenverzekering N.V. and Paerel Leven N.V. in 2012. Hereby, guaranteeing continuity to the Paerel policyholders. The activities of Paerel Leven N.V. have been included in the Life segment. The figures of Paerel Leven N.V. are consolidated with effect from 14 November 2011. The acquisition of Paerel Leven N.V. realised a limited loss for ASR’s profit for the year for the period 14 November 2011 to 31 December 2011.
Acquired liabilities liabilities arising from insurance contracts 201 202 liabilities arising from insurance contracts on behalf of policyholders 8 8 other liabilities 2 2
Unless stated otherwise, all amounts presented in these financial statements are in millions of euros.
5 Deferred tax assets The deferred tax assets relate primarily to the unutilized tax losses of € 207 million (2010: € 220 million) and employee benefits of € 68 million (2010: € 52 million). ASR expects to fully utilize these tax losses, which can be utilized up to 2017.
ASR Nederland N.V. Archimedeslaan 10 P.O. Box 2072 3500 HB Utrecht www.asrnederland.nl