The Other segment comprises the banking business, ASR Vastgoed Ontwikkeling N.V. (property development), SOS International (emergency assistance) and the holding companies. The Banking business develops mortgages and savings-linked and unit-linked products that are administrated and managed by ASR Hypotheken B.V. and ASR Bank N.V. ASR Vastgoed Ontwikkeling N.V., which is one of the largest retail, residential and area developers in the Netherlands, focusing on developing combined-use residential and retail spaces in complex urban environments. On 1 January 2013, Ditzo was transferred from the Other segment to the Non-Life segment.
‘We have noticed that customers and other stakeholders appreciate the course we have taken.’
Financial robustness, good levels of solvency and retention of Standard & Poor’s A rating were key financial objectives in 2013. Preparing for the return to private ownership was also relevant in 2013, but that does not change a.s.r.’s course towards becoming a flat and transparent organization with clear products and a mindset to helping customers based on ‘first time right’. All financial developments at a.s.r. are described in Part II.
• Doodgaanendoorgaan.nl (online funeral insurance). The doodgaanendoorgaan.nl website offers practical advice on arrangements that need to be made for a funeral. Customers can also take out funeral insurance on the website.
• Customer-Oriented Insurance Quality Mark awarded to a.s.r. • Ditzo, De Amersfoortse and Europeesche Verzekeringen kept their Customer-Oriented Insurance
Efficiency • a.s.r. took first place for Facility Services in the Netherlands Facility Cost Index.
All a.s.r. employees share the responsibility for fulfilling customers’ wishes, and customer trust is an important part of this ambition. Trust goes further than the customer alone. It applies equally to successful cooperation with intermediaries by offering employees an inspiring and interesting working environment, and by giving the shareholder the prospect of attractive returns based on responsible risk.
Customers tell a.s.r. that they want transparent products, clear communication and personal service. a.s.r. has made meeting these needs its number one priority, and activities and targets are assessed against customer interests. New products are presented to customer panels and their feedback is incorporated into the product development process. Ultimately, this is reflected in the appreciation rating that customers give a.s.r. in terms of the Net Promoter Score (NPS).
Europeesche Verzekeringen specializes in travel and leisure insurance. Its product offering ranges from multi-trip travel insurance and classic car insurance to hobby and wedding insurance. Europeesche Verzekeringen sells insurance policies through the intermediary channel and through specialist partners to offer tailor-made policies to its customers, which not only include travel companies, health insurers and insurance agents, but also federations, clubs and associations, such as the Dutch Ski Federation.
It will become clear in 2014 how and when a.s.r. will return to the private market. a.s.r. is ready for it, as Minister of Finance Dijsselbloem announced in his letter to the Dutch House of Representatives in August 2013. Irrespective of what the privatization will look like, a.s.r. will continue to focus on its chosen strategy. This means that, over the coming years, a.s.r. will carry on adapting its organization so as to allow consumers and businesses to insure risks at the right price or to entrust their asset building to a.s.r.
In addition to capital management under Solvency II, which is the standard model for European insurers, a.s.r. has also developed its own methodology. This methodology quantifies the integral risk in terms of economic capital (ECAP). The methodology is different from the Solvency II standard model in that it uses self-developed techniques for calculating a limited number of risks. These techniques are a better fit for the specific risks that a.s.r. incurs, and provide a more complete understanding of these risks and the capital that is required to mitigate them. Besides the models mentioned above, this method also forms part of overall capital management. In addition to the Solvency II requirements, the self-developed ECAP method has been cascaded through the organization and integrated into the risk management structure. This system guarantees the transparency of the robust financial position that a.s.r. holds in terms of market value.
The LTGA assesses the so-called LTG package – a series of selected regulatory measures aimed at ensuring an appropriate supervisory treatment of long-term guarantee products, also under volatile market conditions. Six LTG measures are covered by this assessment, tested in different combinations through a series of 13 quantitative scenarios and tailored qualitative questions. The LTGA technical specifications were adapted by a.s.r. in 2013. The LTGA was carried out for several legal entities.
• ASR Levensverzekering N.V. participated in the Theoretic Solvency Criteria (TSC) assessment organized by DNB (known as Solvency 1,5) in 2013. The TSC is a criterion in addition to current legislation which aims to improve current supervision to become more risk based and forward looking. The outcome of the TSC could indicate whether DNB might be requested to issue a statement of no objection for a specific type of capital extraction.
the complaints procedure, including response times for complaint resolution, can be found at www.asr.nl.
• All new building developments are fitted with LED lighting in public areas.
a.s.r.’s total electricity consumption in 2013 stood at 12,501,815 kWh. Compared to 2012 (15,876,618 kWh exclusive of consumption by Europeesche Verzekeringen) this represents a reduction of 21.3%. Total gas consumption in 2013 stood at 998,746 cubic metres. This is a reduction of 10.3% compared to 2012 (1,113,179 cubic metres).
As stated at point 4 above, a.s.r. has signed the GreenDeal manifesto on circular procurement. From 2014 onwards, all tenders will be subjected to a circular procurement test, as is already the case with SRI criteria. There will also be incentives for suppliers of a.s.r. to gain FIRA certification. FIRA is a digital register in which businesses (suppliers) can disclose their CSR performance to customers (i.e. buyers). FIRA acts as an independent verification body.
Treating customers fairly (TCF) The members of the Supervisory Board agree with the Executive Board that a.s.r.’s reason for being lies in treating customer fairly and offering customers perceived value. With this in mind, TCF is an explicit theme in the discussion of issues in Supervisory Board meetings. TCF was a central issue, for instance, in discussing after-sales services for unit-linked policyholders, but it also played a prominent role in the debate on topics such as dividend, the new pension proposition and future consolidation options. In order to be able to monitor developments in TCF and customer experience, both internal reports and reports by external regulators were routinely addressed. This helped to keep the members of the Supervisory Board up-to-date on issues such as the outcome of quality mark surveys and Net Promoter scores. The members of the Supervisory Board are pleased with the steps that have been taken to prioritize TCF and they have a positive opinion of progress monitoring based on dashboards.
Risk Management, Integrity and Audit The Supervisory Board discussed the reports of Risk Management, Integrity and Audit on a quarterly basis. Reports issued by, and findings of, the external regulators were also reviewed extensively. To the satisfaction of the members of the Supervisory Board, the number of problems reported by the departments decreased in the year under review; existing issues were resolved and there were a limited number of new problems. The Supervisory Board will persist in stressing the importance of constant management focus and discipline to continue the policy of resolving issues as they occur.
Jos studied law at Erasmus University Rotterdam and started his career in 1980 when he joined Stad Rotterdam Verzekeringen, one of a.s.r’s major predecessors; he was appointed CEO of Stad Rotterdam in 1999. He then joined the Board of Directors of Fortis ASR Verzekeringsgroep N.V., becoming Chairman of the Board of De Amersfoortse Verzekeringen in June 2003. In 2005, he was appointed Chairman of the Board of Directors of Fortis ASR Verzekeringsgroep. He has served as the Chairman of the Executive Board and CEO of a.s.r. since January 2009.
Annet Aris had a 17-year career at McKinsey as a management consultant, nine years of which she served as a partner. She serves as a supervisory director at several Dutch and foreign enterprises and institutions, including at Finnish-based Sanoma Group and German-based Kabel Deutschland AG, Jungheinrich AG, Tomorrow Focus AG and Hansa Heemann AG. Annet is an adjunct professor of strategy at INSEAD international business school (Fontainebleau, France).
Appointment and reappointment of executive and supervisory directors There were no changes in the composition of the Supervisory Board and the Executive Board in 2013. With a view to the decision to change the governance structure of the supervised subsidiaries, new supervisory directors have been appointed to the different subsidiaries. With effect from 1 January 2014, the four supervisory directors of ASR Nederland N.V. were appointed as members of the Supervisory Board of ASR Levensverzekering N.V., ASR Schadeverzekering N.V.,
Other equity instruments 15 515 515 equity attributable to holders of equity instruments 3,033 2,676
As of 1 January 2013, the amendments to IAS 19 Employee benefits have become effective. The most significant change in the amended standard is the immediate recognition in equity of ‘actuarial gains and losses’ which were previously reported using the ‘corridor method’. Due to the retrospective treatment the comparative figures for 2012 have been restated accordingly (see chapter 2.2).
As of 1 January 2013, the amendments to IAS 19 Employee benefits have become effective. Due to the retrospective treatment the comparative figures for 2012 have been restated accordingly (see chapter 2.2).
whereby unrealized actuarial gains and losses remained outside the profit for the year and total equity. As of 1 January 2012, all actuarial gains and losses are recognized directly in ‘Other comprehensive income’ (component of total equity). Also there is a revision in the computation
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.
Commission fees directly or indirectly related to the acquisition of new or renewal insurance contracts are capitalized to the extent that these acquisition costs (‘deferred acquisition costs’ or ‘DAC’) are covered by the estimated future surcharges of the underlying contracts.
Derivatives are primarily used by a.s.r. for hedging interest-rate and exchange rate risks, for hedging future transactions and the exposure to market risks.
Other assets include accrued investment and interest income, property developments, tax assets and accrued assets.
The total of best estimate and risk margin for Non-life segment as a whole, is compared to the technical provision recorded in the balance sheet. If there is a deficiency, the non-life insurance liabilities are increased to adequate levels through a charge to the income statement.
110a.s.r. 2013 annual report 2013 consolidated financial statements ASR Nederland N.V.
An asset is impaired when its carrying amount exceeds its recoverable amount. Impairment losses are recognized in the income statement as soon as they are identified. For details, see the relevant items of chapter 2 as mentioned earlier.
116a.s.r. 2013 annual report 2013 consolidated financial statements ASR Nederland N.V.
The sensitivities of regulatory solvency ratio to market risks are as follows: Scenario 31 December 2013 31 December 2013 31 December 2012 31 December 2012
The sensitivity of the solvency ratio excluding UFR to a 1% decrease in interest-rates changed from -32% to -17%. This is mainly due to the improvement of the extrapolation method of the discounting curve excluding UFR.
The foreign currency position is monitored on a quarterly basis. The total net exposure in foreign currency is € 359 million (2012: € 541 million). The table shows the currencies with largest net exposure.
127a.s.r. 2013 annual report 2013 consolidated financial statements ASR Nederland N.V.
The change in market values of bonds issued by financial institutions reflects both a gradual reduction in our exposure to senior and subordinate securities in line with our strategic investment plan and a substantial positive spread performance in these subsectors. Part of the available proceeds was reinvested in government bonds and non-financial credits. Higher interest-rates and the higher interest-rate sensitivity of the covered bond portfolio were the factors mainly responsible for the decline in the market value of this sector.
Collateralized debt obligation (CDO) Collateralized debt obligations are securities backed by a pool of bonds, loans or other assets. CDO’s do not specialize in one type of debt, but are often non-mortgage loans or bonds. CDO’s are unique in that they represent different types of debt and credit risk. In the case of CDO’s, these different types of debt are often referred to as ‘tranches’ or ‘slices’. Each slice has a different maturity and risk associated with it. The CDO portfolio of a.s.r. currently consists mainly of senior tranches in collateralized loan obligations (CLO’s), which are CDO’s backed by a portfolio of European bank loans. Also, the portfolio contains various CDO’s with several types of collateral, such as loans to smaller financial institutions and ABS.
types: individual life (including funeral insurance) and group life. Due to a.s.r.’s diversified life insurance portfolio, the longevity risk is limited. The longevity risk in parts of the a.s.r. insurance portfolio is mostly offset by the opposite risk (mortality risk) in other parts of the life portfolio (funeral, term insurance).
rates. Additional liabilities are arranged in case of unfavourable trends following the issue date (e.g. increased life expectancy).
Subordinated debt 15 30 - -45 - Liabilities arising from insurance contracts 4,126 23,263 - -1,949 25,440 Liabilities arising from insurance contracts on behalf of
Fire and other property damage 347 350 -206 -107 -38 5 5.6 Non-life ratios
Ditzo has been integrated in the Non-Life segment since 2013. The expense ratio for 2012 on a comparable basis was 9.8% and the commission ratio 16.2%.
The percentages of vacant properties are as follows: 9.2 Fair value – Property (including land and buildings for own use) The breakdown of the Investment property and land and buildings for own use in accordance with the fair value hierarchy, as explained in chapter 2.8, is as follows: F ai r va lu e b as e d o n q u o te d p ri ce s in a n ac ti ve m ar ke t
Post-tax profit and loss from discontinued operations - - - - Other comprehensive income 44 2 -1 45
The table below gives a detailed overview of the types of financial assets held: Company
Changes in investment at fair value through profit and loss: Company
Derivatives held for hedging - 1 - 1 Total positive fair value 1 2,200 - 2,201
171a.s.r. 2013 annual report 2013 consolidated financial statements ASR Nederland N.V.
11.6 Fair value hierarchy – Investments on behalf of policyholders The breakdown of the fair value of the Investments on behalf of policyholders in accordance with the level hierarchy, as explained in chapter 2.8, is as follows: Fair value based on quoted prices in an active market
Investments on behalf of policyholders at fair value - through profit and loss
Changes in provision for claims 1,923 1,967 96 101 Changes in shadow accounting through equity -102 75 - - Other - -1 - -
ToTAl lIfe InSuRAnce conTRAcTS AT yeAR-end 19,688 21,314 a.s.r. acquired 70,000 funeral policies, with a technical provision of € 33 million, from the Facultatieve insurance portfolio on 1 May 2013.
180a.s.r. 2013 annual report 2013 consolidated financial statements ASR Nederland N.V.
Insurance claims and benefits recovered from reinsurers 14 -1 neT InSuRAnce clAImS And benefITS, lIfe -3,185 -3,741 29 Operating expenses Operating expenses can be broken down as follows: Salaries and wages -239 -250 Social security contributions -30 -32 Employee benefit charges -37 -40 Employee discounts -8 -9 Other short-term employee benefits 6 -3 Total cost of own staff -308 -334
Changes in impairments of investments available for sale can be broken down as follows: Collateralized debt obligations 18 5 Reversal of impairments on bonds as a result of disposal 35 11
Total 1 From 1 April 2012 the amount as a committee member also includes remuneration for services as supervisory director of ASR Bank N.V. amounting to 4,000 euro’s per annum per supervisory director.
198a.s.r. 2013 annual report 2013 consolidated financial statements ASR Nederland N.V.
Other equity instruments 8 515 515 equity attributable to holders of equity instruments 3,033 2,676
1. Compliance and transparent accountability 1.1 Compliance with the Code a.s.r. applies all the principles of the Dutch Insurance Code. Compliance with the principles is carefully monitored and, where possible, improved, taking account of the constantly changing needs of stakeholders. Any comparable legal and regulatory requirements that go beyond the principles set down in the Code, are complied with.
217a.s.r. 2013 annual report Other information 3.1.6 Taking account of the risk appetite approved by the Supervisory Board, the Executive Board shall carefully balance the insurer’s commercial interests and the risks to be taken.
3.2 Duties and procedures 3.2.1 In its actions, the insurer’s Executive Board shall carefully balance all interests of the insurer’s stakeholders, such as customers, shareholders and employees, taking account of the insurer’s continuity, the social environment in which it operates and the applicable laws and codes of conduct.
219a.s.r. 2013 annual report Other information be based on a.s.r.’s core values. The recruitment and selection process and the induction programme for new staff also pay special attention to this topic. For information about the core values, see www.asr.nl/EN/about-asr.
4.4 The Executive Board shall ensure that the risk management function is set up in such a way that the Board is informed, in a timely manner, of material risks to the insurer, so that these can be managed. Decisions material to the risk profile, capital allocation or liquidity requirement shall be taken by the Executive Board.
5 Audit 5.1 The Executive Board shall ensure that the management of risks connected with the insurer’s business is systematically monitored.
The Audit Department has periodic consultations with DNB to discuss the risk assessment, findings and audit plan. The Audit Department’s risk assessment consists of macro and micro plans, and is performed in close consultation with the independent external auditor. The department also takes the initiative to organize a ‘tripartite consultation’ with DNB and the independent external auditor at least once a year. In 2013, one tripartite consultation was held.
The targets to be achieved in terms of financial results and customer appreciation are adopted annually by the Executive Board and the Supervisory Board. These targets are discussed with, and explained to, the Works Council before they are adopted.
2.9 Significant changes during the reporting period regarding size, structure, or ownership.
Part V (Report of the Supervisory Board), Section 5.1.4 (Corporate governance).
2.10 Awards received in the reporting period. Part I (a.s.r. at a glance), Section 1.3 (Highlights of 2013).
3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.
Shareholder There were six formal meetings with NLFI, a.s.r.’s shareholder, in 2013. Where needed, contacts were maintained between meetings as well.