Issues affecting a.s.r. in 2014 a.s.r. focused heavily on treating customers fairly in 2014. In the Non-life segment, dedicated customer desks were set up through which customers contacting a.s.r. are served more swiftly and more effectively. The pricing of car insurance in the Vernieuwde Voordeel Pakket discount package was improved. SMEs were offered better prices on their fire and third-party liability policies, and discounts were granted on motor vehicles insurance for vans.
In addition, the pensions business signed a large number of contracts in 2014, for instance with GDF Suez E&P Nederland, the largest new customer in 2014. Natural gas extractor GDF Suez E&P Nederland signed a contract worth € 5.5 million in premiums per year.
18a.s.r. 2014 annual report a.s.r. at a glance 5. In April, an international delegation of mayors, city planners, architects and city councillors from 11 cities in Central and Eastern Europe visited a.s.r. to learn about a.s.r.’s sustainable bicycle policy. The visit was part of a training programme concerning mobility, sponsored by the European Union.
Since a.s.r. was one of the first insurance companies in 2011 to actively offer alternatives to customers in addition to what had been agreed with the lobby groups, we have now made contact with 90% of our unit-linked policyholders and made arrangements with them. This issue was foremost in the minds of the members of the Executive Board and the relevant senior managers in 2014 too. As a result, arrangements had also been made at year-end 2014 with more than 80% of customers holding so-called non-accruing policies. These achievements are in line with the targets for 2014, but it remains our goal to contact all customers. In 2015 too, our efforts will continue to be focused on finding solutions for the small group of customers that are proving very difficult to contact. At the same time, the Executive Board has concerns about the fact that, in the debate about unit-linked policies, the fee issue does not seldom get mixed up with the discussion on (expected) investment returns. Unit-linked policies are the subject of a broad public debate that does not only involve insurance companies and customers. That is why we value the dialogue with, and the constructive input of, all stakeholders, including politicians, regulators, lobby groups and the media. In 2014, a.s.r. met with politicians and journalists, for instance, and working visits were organized to share with stakeholders what efforts a.s.r. is undertaking in this respect.
Privatization and VIVAT/REAAL The potential consolidation of the insurance sector and a.s.r.’s possible role in it was a high-priority item for the Executive Board in 2014. The Executive Board discussed the option of a.s.r. being admitted to the bidding process for VIVAT/REAAL. The Dutch Minister of Finance decided in June 2014 to temporarily postpone a.s.r.’s privatization process to allow a.s.r. to take part in the bidding for VIVAT/REAAL. A potential bid was subject to the condition of external funding. The Executive Board discussed this issue in a large number of routine and additional meetings, which – in close consultation with NLFI – led to the selection of a number of reputable national and international investors to help fund a potential binding bid for VIVAT/REAAL. After having issued a non-binding bid, a.s.r. was admitted to the next stage of the process, which involved conducting a due diligence review and interviewing VIVAT/REAAL managers and experts. Based on the findings, the Executive Board decided in 2015 not to issue a final bid for VIVAT/REAAL because it would not tie in with a.s.r.’s predefined criteria.
With effect from 29 September 2011, the shareholder has been represented by Stichting Administratiekantoor Beheer Financiële Instellingen (NLFI), a trust office. a.s.r. was in frequent contact with NLFI in 2014, which was intensified by our admission to the bidding process for VIVAT/REAAL.
Unit-linked policies continued to be a priority in the life business in 2014. a.s.r. has reached nearly 90% of its unit-linked policyholders. In the last quarter of 2014, a.s.r. managed to catch up considerably and make contact with the specific group of customers who hold non-accruing of low-accruing unit-linked policies. At year-end 2014, more than 80% of these customers had been contacted.
41a.s.r. 2014 annual report Report of the Executive Board 2.2.4 Other segment
Investments on behalf of policyholders 8,300 8,049 Other assets 8,988 6,688 Total assets a.s.r. 50,894 42,436
The a.s.r. capital policy ensures prudent monitoring and control of solvency ratios in the organization, at both the group and division level. Capital management comprises all activities that focus on controlling, managing and monitoring any available and required solvency.
48a.s.r. 2014 annual report Report of the Executive Board 2.4 Risk management
• Risk management uses a set of metrics to monitor the capital of a.s.r. This monitoring also includes the impact of UFR. Limits and targets are in place for the capital metrics used. As a result of this process, solvency increased during 2014 and remains strong.
The ratios of women on the Executive Board and the Supervisory Board of a.s.r. at year-end 2014 were 25% and 50%, respectively. These ratios are the same as in 2013 and are still well above the national average.
a.s.r. fraud prevention policy a.s.r. does not tolerate any unfair or fraudulent practices and pursues an active fraud prevention policy, basing itself on internal procedures as well as on regulations stipulated by the Dutch Association of
The a.s.r. SRI policy has been integrated into the investment practice by way of: 3.1.3.1 Exclusion criteria for countries and companies 3.1.3.2 ESG integration for best-in-class investments 3.1.3.3 Engagement 3.1.3.4 Impact investments 3.1.3.5 Voting 3.1.3.6 National and international covenants 3.1.3.1 Exclusion criteria for countries and companies a.s.r. pursues a strict exclusion policy based on controversial activities that is applied to the entire internally managed portfolio, both for countries and companies. Among other players, this policy covers producers of controversial or offensive weapons, nuclear energy, gambling and tobacco. a.s.r. also requires businesses to comply with international conventions on human rights and labour rights, and applies criteria relating to gender equality, freedom of union, exclusion of child labour, indigenous people’s rights, etc.
3.1.3.4 Impact investments In the investment process, a.s.r. devotes special attention to impact investing. Impact investments are investments in companies, organizations and/or funds with the intention to generate a beneficial impact on society and the environment at an acceptable financial return. Through these investments, a.s.r. makes a sustainable contribution to society, for instance by processing or recycling waste, using renewable energy (solar and wind), reducing its environmental impact or energy consumption, and that – just as a.s.r. does – make a contribution to the circular economy. Examples of these investments include the Robeco Clean Tech Fund, the Glenmont Clean Energy Fund or the Life Science Partners funds. A total of € 35 million has now been invested in non-listed impact investments, representing nearly 2% of the total equity portfolio.
Further initiatives were taken in 2014, including the creation of a platform for financial support for Dutch start-ups that match our impact investing criteria (www.doorgaan.nl).
To demonstrate that a.s.r. is in control of the processes, Financial Markets and Rural Real Estate (a division of a.s.r. real estate investment management) are ISAE 3402-certified. An independent auditor performed an audit of the processes of these departments and issued an ISAE 3402 type II assurance certificate. This quality mark is a key indicator that a.s.r. has full and adequate insight into investment processes, including their execution and controls. The Financial Markets department has been awarded ISAE 3402 type II certification every year since 2010. The ASR Dutch Prime Retail Fund (DPRF) has been awarded the ISAE 3000 Type II assurance certificate.
• a.s.r. vastgoed vermogensbeheer supports two charities: Stichting Ambachtsheerlijkheid Cromstrijen, a foundation whose goal is to conserve the local cultural heritage dating back to 1492, including unique and sizeable historical archives and a map collection, and Stichting Kasteel Bleijenbeek, which foundation seeks to consolidate, restore, improve and keep open to the public the ruins of Bleijenbeek Castle, part of the Bleijenbeek estate in Afferden (owned by a.s.r.). The latter foundation aims to protect and manage the natural and scenic value and the cultural and social heritage of the estate in the broadest sense of the words for future generations to enjoy.
Existing residential portfolio and sustainability The existing residential portfolio is managed and maintained on the basis of sustainable and socially responsible principles. a.s.r. vastgoed vermogensbeheer has teamed up with partners in the chain to maintain the residential portfolio. These partners are advisers, leading national property managers and three building contractors. The building contractors have been selected, in part, for their vision of sustainability and their sustainability performance. They are NEN-EN-ISO 14001-certified.
All building waste and building materials are collected separately and recycled; FSC-certified wood is used only. In addition, a.s.r. vastgoed vermogensbeheer educates tenants about do-it-yourself energyconserving solutions and encourages tenants to try them. Together with these tenants a.s.r. vastgoed vermogensbeheer explores options for applying building-wide energy-efficient improvements.
1 The lower levels of energy and natural gas consumption were also due to the closure of some parts of the building for renovation works.
The a.s.r. foundation’s activities can be broken down into three main groups: Social team-building This involves departments raising money for charity. The focus lies on organizations that truly need a helping hand. The management of a department regularly combines a social team-building activity with a policy presentation.
Global Reporting Initiative Guidelines The Annual Report of ASR Nederland N.V. has been compiled using the Guidelines of the Global Reporting Initiative (GRI). a.s.r. believes that the GRI G3.1 Guidelines provide an effective framework for its sustainability reporting. The G3.1 Guidelines can be broken down into various levels. Based on a self-assessment, a.s.r. has submitted its Annual Report to the GRI for verification at B level. Appendix 2 of this report contains a GRI-index. This Index shows where the reader can find GRI disclosures in the Annual Report. Additional information is provided that has not been included in the Annual Report itself. The information contained in the CSR chapter and the GRI-index has not been audited.
The members of the Supervisory Board are satisfied with the execution of the risk policy. Solvency levels remain good and comfortably adequate thanks to the organization’s prompt and adequate response to external developments based on the chosen risk appetite and the associated riskmitigating measures. In the middle of the reporting period, the Supervisory Board followed up the Audit & Risk Committee’s recommendation when it adopted the funding plan, which resulted in further optimization of the capital position of ASR Nederland N.V.
The effectiveness of the audit, compliance and risk management functions within ASR Nederland N.V. was a specific focus area for the Audit & Risk Committee. The Committee covered the audit plans for 2015 of both the internal audit and the independent external auditor, and approved them. The Committee also debated and approved the annual plan of the Integrity department and the risk management plan for 2015. Every quarter, the Committee addressed the audit, compliance and risk reports, as well as the audit reports of the independent external auditor.
Selection, Appointment & Remuneration Committee The Selection, Appointment & Remuneration Committee (SAR) was in session seven times in 2014.
C.H. (Cor) van den Bos (1952) Chair of the Audit & Risk Committee
First appointed on: 15 December 2008 Current term of office: 15 June 2011 to 15 June 2015
90a.s.r. 2014 annual report Report of the Supervisory Board all meetings of the Audit & Risk Committee. The chair of the Audit & Risk Committee consulted with the independent external auditor once outside the presence of the other regular participants in Audit & Risk Committee meetings; one of the topics discussed was the auditor’s independence.
Appointment and reappointment of executive and supervisory directors There were no changes in the composition of the Supervisory Board in 2014. Kick van der Pol and Annet Aris were reappointed for a term of four years in June 2014 and December 2014 respectively. Chris Figee was appointed CFO on 1 May 2014. He replaced Roel Wijmenga, who left a.s.r. after having served five years in the role of CFO.
Meetings of the Supervisory Board and committees The Supervisory Board met with the Executive Board sixteen times during the reporting period. Six meetings were scheduled as routine meetings and ten were ad-hoc meetings to discuss specific issues related to a.s.r.’s future privatization. The Supervisory Board also held periodic operations review meetings.
The fixed pay awarded to employees comprises their fixed gross monthly pay, plus 8% holiday allowance and an end-of-year bonus. The level of the fixed pay is determined by the weight of an employee’s position and the related remuneration group. Any increases in fixed pay are linked to the appraisal of how employees perform their duties in general and their compliance with the a.s.r. values (personal, accountable and authentic). Fixed pay is adjusted for structural wage developments in accordance with the CBA for back-office positions in the insurance industry. The objectives pursued as part of how employees perform their duties are extrapolated from a.s.r.’s strategic targets. a.s.r.’s strategy centres around helping by taking action. This is reflected in KPIs relating to such issues as a customer dashboard, the Keurmerk Klantgericht Verzekeren (Customer-Oriented Insurance Quality Mark) and the Net Promoter Score. These KPIs form the basis of inspiring individual targets.
The supervisory directors have a positive opinion of how a.s.r. has implemented the planned cost cuts and how it has simplified its organizational structure and processes. Thanks to this firm foundation, a.s.r. will be able to adapt further to the rapidly changing requirements of customers and the insurance market, and to do so responsibly and sustainably.
Especially now that organizational changes have been implemented, many colleagues have been let go and a.s.r. is en route towards an autonomous and healthy future. The Supervisory Board greatly appreciates the commitment and energy that employees continued to display in 2014. This was emphatically reflected in the professionalism with which the process leading up to a potential bid for VIVAT/REAAL was structured and implemented by the Executive Board and senior management. The Supervisory Board would like to express its great appreciation for the drive and commitment it saw in this process, while business as usual continued for everyone too.
Cash and cash equivalents 6.12 3,135 1,521 Total assets 50,969 42,445
Due to customers 6.20 1,949 1,366 Due to banks 6.21 3,277 677
Income tax (expense) / gain 6.33 -94 -84 Profit for the year 379 276
Total items that may be reclassified subsequently to profit and loss 156 80
Total other comprehensive income for the year, after tax -371 197
• IFRIC 21 Levies: IFRIC 21 is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy.
Changes in the principles for financial reporting The following changes in the EU-endorsed IFRS standards and IFRIC interpretations are effective from 1 January 2015. These changes have no material effect on the total equity attributable to shareholders or profit for the year of a.s.r.: • Defined Benefit Plans: Employee Contributions (Amendments to IAS 19). • Annual Improvements to IFRSs 2010–2012 Cycle: The Annual Improvements is a collection of nonurgent amendments to IFRSs, in response to issues addressed during the 2010–2012 cycle.
E. Investment property Investment property is property held to earn rent or for capital appreciation or both. In some cases, a.s.r. is the owner-occupier of some investment properties. If owner-occupied properties cannot be sold separately, they are treated as investment property only if a.s.r. holds an insignificant portion for use in the supply of services or for administrative purposes. Property held for own uses (owneroccupied ) is recognized within property plant and equipment.
116a.s.r. 2014 annual report 2014 consolidated financial statements ASR Nederland N.V.
Changes in the expected actuarial assumptions and differences with the actual actuarial outcomes are recognized in the actuarial gains and losses included in other comprehensive income (component of total equity).
P. Transaction date and settlement date All purchases and sales of financial instruments, which have to be settled in accordance with standard market conventions, are recognized at the transaction date, which is the date on which a.s.r. becomes party to the contractual stipulations of the instrument. Any purchases and sales other than those requiring delivery within the time frame established by regulations or market conventions are accounted for as forward transactions until the time of settlement. For details on these transactions, see accounting policy I ‘Derivatives and hedge accounting’.
Q. Securities lending a.s.r. participates in securities lending transactions, whereby collateral is received in the form of securities or cash. Cash received as collateral is recognized on the balance sheet and a corresponding liability is recognized as liabilities arising from securities lending in ‘Due to banks’. Securities lent remain on the balance sheet. Securities received as collateral are not recognized in the balance sheet.
JJ. Impairments 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 6.2 as mentioned earlier.
Risk appetite The risk appetite sets boundaries for risks a.s.r. is willing to take in order to realize a.s.r.’s strategic objectives. The risk appetite is a tool for optimizing risk and return. The risk appetite reflects the risk management strategy of a.s.r. and influences the way the organization is managed. Risk appetite is defined at both group level and at legal entity level (OTSO -‘Onder Toezicht Staande Onderneming’) for financial and non-financial risks. The risk appetite is determined by the Executive Board and approved by the Supervisory Board.
The sensitivities of regulatory solvency ratio to market risks are as follows (in %-p): Type of risk 31 December 2014 31 December 2013
6.3.5.1 Mortgages Mortgages are granted for the account and risk of third parties and for a.s.r.’s own account. The a.s.r. portfolio consists only of Dutch mortgages with a limited credit risk. In line with the strategic investment plan, the mortgage portfolio increased by € 756 million in 2014. The majority of new mortgages in 2014 were guaranteed by the Dutch national mortgage guarantee fund (NHG).
Although a lapse does not lead to a direct loss in the statement of income, due to the surrender value requirement underlying the provision, a lapse might lead to a loss of future profits. The effects of lapse risk are monitored in the current Solvency II-based risk frameworks, as are other life risks.
These are schemes under which staff is awarded pension benefits upon retirement. Pension risk exist for these plans and consists mainly of interest-rate risk, longevity risk and inflation risk.
• a.s.r. participated in the stress test 2014. The stress test is an assessment of the European Supervisor (EIOPA) to test the resilience of insurance companies regarding market risks under a combination of historical and hypothetical scenarios.
The solvency ratio including UFR (Solvency I) as reported to the regulator increased from 268% to 285%. The decrease of the interest-rates in relation to application of the UFR had a significant positive impact on the solvency ratio including UFR. This movement is in line with the sensitivities as presented in paragraph 6.3.4.
The group intends to distribute a stable dividend to the shareholders each year, subject to capital management objectives and restrictions, including the fungibility of capital from the registered insurance companies. Dividends are based on a pay-out of 40%-45% of profit attributable to equity holders after distribution to holders of other equity instruments.
159a.s.r. 2014 annual report 2014 consolidated financial statements ASR Nederland N.V.
Insurance claims and benefits recovered from reinsurers 92 8 - - 100 Net insurance claims and benefits -1,659 -3,621 - 166 -5,114
171a.s.r. 2014 annual report 2014 consolidated financial statements ASR Nederland N.V.
Investment property can be broken down as follows: Cost model 1,698 1,617 Fair value model 66 100
Transferred from other assets -2 -1 Transferred from property, plant and equipment 17 Cost price as at 31 December 2,199 2,095
In 2014, loans to associates and joint ventures amounted to € 5 million (2013: € 17 million). These loans are classified as loans and receivable.
Due from policyholders 293 325 Due from intermediaries 160 174 Reinsurance receivables 76 84 Due from Health Insurance Fund 60 24 Other receivables 190 253 Total trade and other receivables 779 860
The table below shows the composition of other assets: Deferred investment and interest income 483 516 Property developments 100 137 Prepaid costs and other non-financial assets 94 6
The Dutch State has been the sole shareholder of ASR Nederland N.V. since 3 October 2008. On 29 September 2011, the Dutch State transferred all shares in ASR Nederland N.V. to NL Financial Investments (NLFI) in exchange for depositary receipts for the shares. There were no changes in share capital during the financial year.
ASR Levensverzekering N.V., an insurance company and a group entity, is the insurer of the postemployment benefit plan. As this company holds the separated investments that are meant to cover the employee benefit obligation, they do not qualify as plan assets in accordance with IAS 19 and are therefore included in financial assets.
Changes in 2014 a.s.r. has harmonized the (inflation) indexation in its post-employment benefit plan for both employees and former employees in 2014. This has resulted in the foundation of a separate account to fund future inflation indexation based on the consumer price index, maximized to 3%, by investing € 285 million in a dedicated separate account administrated by ASR Levensverzekering N.V. The sole purpose of the separate account is to provide indexation when the proceeds of the existing investments backing the pension plan are insufficient to meet the indexation. Furthermore, the following changes will also take place, 1 January 2015, for employees primarily in order to comply with pension and tax legislation: • the accrual rate for old age pensions was changed to 1.875% (2013: 1.9%); • retirement age changed to 67 years (2013: 65 years or 62 years); • maximum pensionable salary capped at € 100,000; • minimum franchise has changed. As a result of the above mentioned amendments a past service cost is accounted for in 2014 amounting to € 78 million which has been recognized in the Other income in 2014 (see chapter 6.26).
Experience adjustments to qualifying investments, gain (loss) - - - As % of qualifying investments as at 31 December - - - Experienced adjustments to defined benefit obligation, loss (gain) 13 14 3 3 As a % of liabilities as at 31 December 0.4% 0.6% 10.3% 21.5%
Net liability as at 1 January 6 10 Total expenses 1 -3
All carrying amounts reflect the fair value as at the balance sheet date (see chapter 6.6.2).
The table below breaks down interest income per category: Interest income from receivables due from credit institutions 133 132 Interest income from investments 532 575 Interest income from amounts due from customers 248 223 Interest income from trade receivables and derivatives 253 309 Other interest income 19 5
208a.s.r. 2014 annual report 2014 consolidated financial statements ASR Nederland N.V.
Unless stated otherwise, all amounts presented in these financial statements are in millions of euro.
6.40.3.11 Borrowings In 2014, the borrowings from group companies was settled in accordance with the normal terms of the borrowing. The average interest-rate was 3.8%.
Governance Principles In accordance with the Governance Principles for Insurance Companies, which are also referred to as the Dutch Insurance Code (‘the Code’), insurers are required to account for their compliance with each principle of the Code separately. The compliance reports are to be included in consolidated/company annual reports and published on the group/company website. a.s.r.’s compliance report is given below. This report has also been posted on the website (www.asrnl.com).
The chair of the Supervisory Board is responsible for the effectiveness of the Supervisory Board and its committees. The Supervisory Board’s regulations stipulate that members are to follow a programme of continuing education (CE) and satisfy the CE requirements.
3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance.
FS6 Percentage of the portfolio for business lines by specific region, size (e.g. micro/ SME/large) and by sector.
EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.
HR8 Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations.
HR9 Total number of incidents of violations involving rights of indigenous people and actions taken.
PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.
Continuous contact; where needed, follow-up sessions are scheduled after every meeting
Customers Investor account Improve the readability and retrievability of the information provision to customers
House sparrow Over the past 20 years, the number of breeding pairs of the house sparrow (Passer Domesticus) has dropped significantly (by over 50%). In the Netherlands, the house sparrow is on the Red List of threatened species. House sparrows preferably make their nests in buildings. a.s.r. contributes to conserving the species by fitting 40 nest boxes to the facade of its headquarters. The nest boxes will have been fitted by the end of 2015.
ASR Nederland N.V., which is based in the Netherlands only, does not have any foreign operations.