The 2020 Annual Report consists of the 2020 Annual Review and the 2020 Financial Report. It provides an integrated review of the performance of NN Group.
How did you progress on your social and environmental agenda? With the aim to contribute to the wellbeing of people and planet, we support the transition to a sustainable economy by engaging with hundreds of investee companies, and voting for change at more than 3,000 shareholder meetings. Through these actions, we also give substance to our ambition to transition our proprietary investment portfolio to net-zero carbon emissions by 2050, in line with the Paris Agreement. Together with around 40 financial institutions, NN Investment Partners signed the Finance for Biodiversity Pledge calling on global leaders to act, and committing ourselves to protect and restore biodiversity through our finance activities and investments. We are pleased to have received external recognition for our ESG performance by being included in the Dow Jones Sustainability Indices, and by our improved CDP climate change disclosure A- rating. Our commitment to being a responsible taxpayer is demonstrated by our high ranking in the Dutch tax transparency benchmark, for the second year in a row.
We use this process as valuable input for the development of our strategy and our risk management, and it also helps us to identify focus areas for our reporting.
The outcomes of the list were discussed in NN Group’s Purpose Council, which advised adding the topic of ‘Increasing regulation’.
Customers and distribution We see our customers as the starting point of everything we do.
• Leverage and further build data and digital capabilities to improve our offering to customers
• Netherlands Non-life: expand data and underwriting capabilities, and leverage on additional scale of VIVAT Non-life
We can be proud of how we are showing resilience during the pandemic
What will be your focus for 2021? Leon: The focus will be on executing on the strategic priorities we launched in June 2020. This comes down to continuing with our simplification and cost-reduction plans, and improving our operational processes. We will continue to optimise risk returns by managing our longevity risk, and gradually grow our portfolio of higher-yielding, illiquid assets.
In Belgium, we initiated a programme focusing on strengthening our in-force book, and creating value through various actions including balance sheet optimisation. We are also investing in building future-proof IT systems, and in a product conversion programme to move from traditional savings to unit-linked in employee benefits.
In Japan, we improved our capabilities to support customers in the area of life and critical illness protection. Investing in our underwriting, claims management and pricing capability enabled us to provide an improved customer experience and valuable cover for our Japanese customers. Furthermore, and despite the impact Covid-19 and the tax reform had on the SMEs, we have managed to recover our performance, and the strong sales from the past are now bearing fruit, and result in higher than expected results.
Our purpose We help people care for what matters most to them
Through our distribution network we learn from our partners and colleagues for what kind of issues customers need solutions. For example, at NN Investment Partners (NN IP), we expand our global client servicing platform with a client portal so we can offer asset management clients the dual benefits of a digital and personal experience, and more customised solutions. Since we have more frequent and higher-quality interaction with them, we continue to learn more about their needs and can finetune our solutions accordingly.
• Japan Life: Continued focus on COLI protection and adapt product offering to new tax regime
• Insify – a fully digital insurance platform that lets small businesses arrange their own insurance anytime, anywhere.
Woonnu is a mortgage label launched by NN as part of our commitment to the Paris Climate Agreement. Woonnu incentivises sustainable living, for example by linking your interest rate to your home’s energy label. It also integrates sustainability and renovation advice into the mortgage application process.
NN Life has improved several processes for pension-participants, by making them digitally available. Pensioners can now make choices regarding their pension payments and partner pensions via a digital form at mijn.nn instead of filling in a paper response form.
In 2020, colleagues in the Netherlands launched the NN Pride Network to connect colleagues within the LGBTI+ community and raise awareness of LGBTI+ matters at NN. NN is a longstanding partner of Rotterdam Pride, and with Covid-19 impacting planned events, NN volunteers handed out inclusion flags in Rotterdam. The network’s digital year-end event for colleagues was its first international networking opportunity.
1 COLI: Corporate-owned life insurance market in Japan. 2 Operating Capital Generation (OCG): see Glossary (page 74) for definition.
NN Group reports on the progress of the share buyback programmes on its corporate website on a weekly basis.
• Reach at least 100,000 young people through NN Future Matters (20142020 ); and help 11,625 households out of poverty and debt (2016-2020) 2020: 15,834 young people reached through NN Future Matters (totalling 154,192 and exceeding our 2020 target) 2020: 2,603 households reached (totalling 11,949)
We encouraged our employees to reach out to those affected by the pandemic. In the Netherlands, 348 employees participated in the online training ‘Help with money matters’ facilitated by Nibud (National Institute for Family Finance Information): our employees were trained as home administration volunteers and can now guide a family member, friend or acquaintance financially affected by the Covid-19 pandemic to the appropriate support service.
Secondary focus We support SDG 7 (Affordable and clean energy) with our ambition to accelerate the transition to a low-carbon economy through our investments. With our community investments we strive to build better and stronger communities and therewith contribute to SDG 1 (No poverty). Our impact on SDG 5 (Gender equality) is related to our continuous efforts to enhance diversity and inclusion in our company.
Our employee engagement survey asks colleagues how their managers perform on living our values. Even with everyone working from home, the response to the statement ‘I feel encouraged by my manager to meet our high standard of integrity’ increased to 8.3 (2019: 8.0) and ‘My manager consistently acts as a role model when it comes to living our NN values’ scored 8.1 (2018: 7.9). Scores are consistent with the general high appreciation of management in the employee engagement survey. This is in line with the benchmark and most likely influenced by the Covid-19 situation.
while Hungary and the Netherlands show a significant decrease on all three values. The GBHM-scores were under pressure in many of our markets, because marketing communication plans had to be adjusted and activities were postponed due to the Covid-19 pandemic. Together with the local business units, we will look into ways to restore the results in 2021. We will continue to invest in a strong and relevant brand.
E-learning In 2019, we launched the online learning platform ‘Conduct Matters’, to raise awareness of the NN Code of Conduct. It is accessible for all employees in all local languages.
• Many of our product development and strategy updates are based on three-to-five year time frames
Transition risk could also arise from a change in the composition of the underwriting portfolio, impacting the liability side of our balance sheet. This change will be affected by our objectives to diminish the carbon footprint, explore initiatives to keep the climate-related underwriting risks insurable, and develop sustainable products and services.
Active dialogue with investees – Our asset manager engages with investee companies on climate-related matters. ‘Natural Resources and Climate Change’ is one of NN IP’s thematic engagement themes and focuses on deforestation, plastics, and the transition to low-carbon business models for the utilities, and oil & gas sectors. These engagements are often conducted in collaboration with other investors, such as through the PRI or the Climate Action 100+. NN also annually takes part in the CDP Non-Disclosure Campaign, encouraging companies to disclose information on climate change, water and deforestation risks. In 2020, we also supported a new CDP Science Based Target Campaign to encourage companies to set long-term targets on reducing their GHG emissions. Next to engagement with companies, NN IP supported the investor letter from the IIGCC to EU leaders on a sustainable recovery from Covid-19. For more details on NN IP’s stewardship activities please see NN IP’s RI Report.
In 2020, NN committed to transition our proprietary portfolio to net-zero GHG emissions by 2050. We are developing asset-class specific strategies (see page 36 on Responsible Investment). In 2021, we will define intermediate objectives and milestones in relation to this commitment.
Strong balance sheet: This facilitates sound financial business performance – we want to avoid having to raise equity capital after a moderate stress event or being a forced-seller of assets when markets are distressed.
Operational and IT effectiveness: risk of material failures in processes or IT systems leading to higher expenses, operational losses, disruption of operations or reputational damage.
References relate to the notes starting with Note 1 ‘Accounting policies’ of the Financial Report. These form an integral part of the Consolidated annual accounts.
– sustainable paper as % of total paper 59% 64% 78%
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