(around 17 million customers) • Business partners and suppliers • Other key stakeholders
Owners and employees of small- and mediumsized enterprises (SMEs), where the company is both the policyholder and the beneficiary of the policy
NN Group operating result ongoing business before tax (excluding the segment Japan Closed Block VA)3
Early in the year, the legal mergers of Delta Lloyd Asset Management and NN Investment Partners (NN IP), as well as those of Delta Lloyd and NN Belgium were completed. In December 2018, we were pleased to obtain the Dutch Central Bank’s approval to expand our Partial Internal Model to include the Delta Lloyd Life and Non-life entities in the Netherlands. Subsequently, we merged those entities into NN Life and Non-life on 1 January 2019. These accomplishments are testament to the commitment and dedication of the teams involved.
In 2018, we further strengthened our Responsible Investment Framework policy, including the decision to exclude tobacco producers, and companies involved in oil sands. Also, we held more than 500 dialogues with companies on their environmental, social and governance (ESG) performance, to encourage them to further improve their plans or conduct.
We also celebrated our first year as a name sponsor of the NN North Sea Jazz festival in Rotterdam, and the NN Running Team celebrated almost 150 podium finishes, with the new marathon world record by Eliud Kipchoge as the highlight of the running year.
How will you continue to create long-term value? Our company has a history dating back to 1845. Since then, our company has changed, grown and merged, but the core of who we are has remained the same. We want to help people secure their financial futures, guided by three values that connect and inspire us: care, clear, commit.
Driving forces in our external environment We take into account the many developments impacting our operating environment, which often affect the entire financial services sector. Understanding this environment helps us manage the risks and opportunities we face, so that we can better meet the expectations of our stakeholders.
Control framework and top risks NN operates a disciplined and rational framework for risk-taking. This Risk control framework is based on a cycle of risk strategy, risk assessment, risk control, and risk monitoring, embedded in a sound risk culture.
Our performance NN is delivering on its strategy and priorities. In 2018, we made good progress on the integration of the Delta Lloyd and NN businesses, further innovating our customer experience and strengthening our presence in the markets where we operate.
Finally, we use our resources, expertise and reach to help society achieve long-term prosperity. We invest our assets and those entrusted to us in a responsible way by integrating environmental, social and governance (ESG) factors into our investment processes and active ownership practices. We support local communities through donations and employee volunteering.
Our innovation lab, SparkLab, focuses on customer behaviour, exploring new trends and developments in the Non-life market. It runs experiments that can be scaled-up if successful. Examples include Bundelz, our prepaid car insurance for infrequent drivers, and Perfect Day, a cybersecurity service for small- and medium-sized enterprises (SMEs).
The environment in which we operate was characterised by persistent low interest rates, increased competition, and political and economic uncertainty in some markets. We use scenario planning techniques to ensure that we have properly evaluated a range of outcomes in our business plans, so that we continue to be well positioned to navigate the environment.
In Hungary, preparations took place throughout 2018 to launch a fully agile organisation as of February 2019. The agile way of working will also be used to create an appealing work environment and as a differentiator in our employer branding, so we can continue to attract young talent.
In Belgium, we further digitalised underwriting processes, for example, by simplifying medical acceptance processes for customers.
To equip ourselves for the future, we must concentrate on our core activities to become a less complex, more adaptable organisation. The legal merger and integration of DLAM is one example. Another is the announcement in November of our intention to consolidate our Luxembourg management company, NN Investment Partners Luxembourg S.A. with NN Investment Partners B.V., the Dutch licensed entity, to simplify our organisation, align roles and responsibilities across locations, and harmonise processes and procedures. The consolidation is subject to regulatory approvals.
Satish Bapat, CEO NN Investment Partners, and Dailah Nihot, Chief Organisation & Corporate Relations, discuss driving change as an investor.
To raise awareness of pensions in the Netherlands, we supported the National Institute for Family Finance Information (Nibud) in creating an online tool where people can check whether they risk having an inadequate pension to support themselves when they retire. The resulting Geldplan Pensioen is available on the Nibud website and distributed via municipalities in the Netherlands. By year-end 2018, 5,538 people had used the tool. NN also introduced a new online application for pension contributors close to pensionable age. This lets users assess their risk appetite by completing a risk profile questionnaire, calculate how much pension they are likely to receive based on product choices and request an offer for a suitable definedcontribution pension product.
Building our brand NN’s campaigns focus on understanding people’s deeper motivations in life. Branding activities let us interact more frequently and connect emotionally with our audience. We want campaigns to inspire people to take care of what matters to them most. In 2018, our digital campaigns reached millions of people across Europe and Japan.
Supporting customers in arrears We want to be a positive force in the lives of customers. That means being there not only when things go well, but also in difficult times. NN Bank uses an early-warning system for mortgage customers at risk of being in arrears. Depending on a customer’s personal situation, NN can provide a budget or job coach or restructure the mortgage contract. In 2018, we helped 353 customers this way.
The integration of Delta Lloyd in the Netherlands and Belgium continued to be a priority in 2018. Internationally, our focus was on further strengthening our ‘You matter’ culture and building a strong brand in all our markets. Our ambition is to be recognised as an employer of choice, so we can attract and retain the talent we need to grow the company.
• Proposing a total 2018 dividend of EUR 1.90 per share6 1 The stated percentages are the interests reported by the relevant shareholder to the AFM on the indicated dates. It is possible that the stated interests differ from the current interests of the relevant shareholder.
Dividend policy NN Group intends to pay an ordinary dividend in line with its medium-term financial performance and envisages an ordinary dividend pay-out ratio of 40-50% of the net operating result from ongoing business. NN Group intends to pay interim dividends calculated at approximately 40% of the prior year’s full-year dividend. Barring unforeseen circumstances, NN Group intends to declare an interim dividend with the disclosure of the second quarter results and to propose a final dividend at the Annual General Meeting (AGM) of shareholders. When proposing a dividend, NN Group takes into account, amongst other things, the capital position, leverage and liquidity position, regulatory requirements, and strategic considerations, as well as the expected developments in these areas.
During 2019, NN IP will expand its engagement efforts to several regional banks in Asia to improve financing arrangements and make sure that sustainability agreements are being upheld. We have developed a scorecard and use tools such as the online platform, Sustainable Palm Oil Transparency Toolkit (SPOTT) and general ESG research to monitor and engage with these companies in order to drive improvement by all parties in the supply chain.
The income tax paid is reflected in the consolidated statement of cash flows in the Financial Report and amounted to EUR 55 million in 2018 (2017: EUR 124 million). The lower income tax paid in relation to the income tax charge reflects differences between accounting and tax rules (including the change in tax rates mentioned earlier) and tax losses and tax credit carry-forwards. We provide further details of both the tax charge and the tax paid per country in the Financial Report.
In Romania, the Hai la gradinita! (Go to kindergarten!) project aims to get children in the poorest communities into preschool. With support from early education agency, OvidiuRo, we give children access to kindergarten and age-appropriate education materials.
1 Includes cash donations to charitable causes, corporate foundations and partnerships.
Our values enable us to build and maintain trust of our stakeholders. Our Code of Conduct supports us in achieving this ambition by giving colleagues more detailed guidelines for specific behaviour. Janet Stuijt, General Counsel & Head of Compliance 55 NN Group N.V. 2018 Annual Review
Read more in the Report of the Supervisory Board on pages 10-20 and in the Corporate governance chapter on pages 21-31 of the Financial Report.
Stakeholder groups, engagement, topics discussed and outcome Stakeholder group Engagement Topics discussed Outcome
Financial and operational developments, corporate governance, climate change, human rights, (non) financial disclosures
NN Group, and each of its regulated (re)insurance subsidiaries, prepares an ORSA at least once a year. In 2018, we leveraged a stress test conducted by DNB on our non-life entities, and included our internal reinsurance unit NN Re to explore the impact at NN Group level. The modelled scenarios included one or several windstorms in Europe, in combination with defaults of some major reinsurers, and one scenario focused only on extreme weather events in the Netherlands. The scenarios gave insight into how reinsurance contracts function and validated our decision to buy reinsurance cover for an accumulation of events. Furthermore, while the scenarios showed negative impacts for NN Non-life, they would be manageable on the balance sheet of NN Group.
Human capital indicators continued 73 NN Group N.V. 2018 Annual Review
Total hours of volunteering work (in Future Matters focus areas) 13,236 14,099 5,685
The SDGs, also known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity.
Contact us NN Group N.V. Schenkkade 65 2595 AS Den Haag The Netherlands P.O. Box 90504, 2509 LM Den Haag The Netherlands www.nn-group.com