The world around us ............................................................... 6 Determining material topics ............................................. 9 Risks and opportunities ..................................................... 10
NN Group’s strategic priorities ....................................... 11 Our strategic commitments and targets .............. 14
Our values .................................................................................... 43 Our Code of Conduct and other policies ........... 46 Stakeholder engagement and international commitments ........................................................................... 48 Our response to the Task Force on Climate-related Financial Disclosures .................. 50
Governance and risk management How we are organised ....................................................... 55 Our Management Board ................................................... 56 Managing our risks................................................................. 57
Facts and figures Our approach to reporting .............................................. 61 Consolidated balance sheet ......................................... 63 Consolidated profit and loss account ................... 64 Key financial and non-financial indicators ........ 65 Assurance report of the independent auditor ............................................................ 70
Founded in 1845, NN Group is a financial services company, active in several European countries and Japan. For more than 175 years, our company has merged, grown and changed, but the core of who we are has remained the same. At NN we are committed to creating long-term value for all our stakeholders.
Asset Management2 1 On 11 February 2021, NN Group reached an agreement with KBC to sell its Bulgarian operations; the transaction is expected to close in the course of 2021. 2 Outside Europe and Japan, NN Investment Partners has offices in Montevideo, New York and Singapore.
A+ score by Principles for Responsible Investment 5th retail bank in the Netherlands market share in group pensions market share in disability and accident
EUR 8.2bn mortgage origination market share in individual life market share in property and casualty, #2 position >20% market share in Poland and Romania
1 Percentages based on total operating result excluding the segment Other (EUR -151m) for 2020.
• Alternative credit • Automated investing strategies • Multi-asset and fixed income solutions • Specialised equity • Specialised fixed income
Can you summarise 2020 in three words? People, future, world. The year 2020 was dominated by Covid-19, which continues to have a profound impact on millions of people and their livelihoods. Around the world, the virus has changed the way we live, work, travel, communicate, consume, and interact with each other. We all had to adapt to the new situation overnight, which has altered the experience of being an employee, a customer, or a citizen. This has also made us think about the future differently, as it accelerated the pace of change and clearly showed the fast and transformative impact of technology. It also emphasised the need to connect and care for others. In this sense, it was a year that brought new learnings, but also complex dilemmas of polarisation, economic security, health care, racial and gender inequality, and environmental protection. One of the most enduring insights will be how interconnected today’s world is. What happens anywhere, affects all of us everywhere, and often in a matter of hours.
The well-being and safety of our people, customers and society remains our priority, through this challenging period and thereafter
The power of technologies such as artificial intelligence and data analytics enable us to adjust our business models, improve customer experience, and become more efficient. A good example is HCS (Human Capital Services) in the Netherlands, that develops new services and platforms to support both employees and employers of SME companies in their mental and physical well-being and in increasing employee engagement and productivity. Also, to better serve a specific group of customers, we introduced a flexible, transparent and guaranteed protection product targeting the self-employed, which allows them to pay only for the coverage they need. We will continue to invest in these kinds of propositions.
Also, in 2020, across the globe, there has been a lot of attention to increased inequality, both social and economic. For NN these are important themes, and we shared our plans for a more inclusive workforce, customer experience, and community support in NN’s diversity and inclusion statement. We also again looked at the equal pay ratio in our company, and took next steps in supporting our LGBTI+ community.
And your priorities for shareholders? We are focused on maintaining a strong balance sheet and generating resilient and growing cash flows, by using our financial strength, scale and international footprint. We demonstrated that we can withstand the low interest rate environment, are well positioned to navigate market volatility, and have profitable growth opportunities in attractive markets. This underscores our commitment of growing operating capital generation over time, and thus delivering attractive and growing capital returns to our shareholders. The operating capital generation in 2020 was impacted by the exceptional market circumstances and low interest rates, as well as the suspension of bank dividends. On the other hand, our accelerated shift to higher-yielding assets provided some offset in the form of higher investment margins. All in all, we are well on track to deliver attractive and growing capital returns to our shareholders.
Furthermore, we support our communities through various initiatives. For example, in the Czech Republic, employees supported single parent families and people in senior care homes. In the Netherlands, colleagues were trained as home administration volunteers, and are now able to help family members and friends when they face difficult financial circumstances.
What are your plans for 2021? For 175 years, our values and purpose have underpinned what we do, and these will continue to shape our view of the culture we want to be known for, as we adapt NN to changing customer expectations in an evolving economic, political and digital landscape. There are many uncertainties in today’s world, but by keeping a sharp focus on executing on our strategic direction, and by maintaining discipline on the things within our control, we will continue to go the extra mile for our customers.
In our new strategic framework we set clear priorities and ambitions, showing we are committed to sustainable value creation. The well-being and safety of our people and customers will remain to be our priority, and we will continue to support them through this challenging period. Especially now, we believe the financial sector has an important role to play in society, and we look forward to creating long-term value for all those we work with and for – our people, customers, investors, business partners, and the communities we serve – in 2021 and beyond.
There are many different forces in society, from demographic, economic and political developments, to changing regulations. They all affect financial companies and the way we interact and do business. In addition, the Covid-19 pandemic continues to have a significant impact on people, society, businesses and the wider economy.
Economic developments and outlook The global pandemic has disrupted business activities worldwide. On the supply side, lockdowns, business closures, and social distancing cause challenges. On the demand side, layoffs and the loss of income reduce household consumption and general investments. In the Netherlands, the economy shrunk by a little over 4%, and in other markets such as Japan and Poland by around 3%.
Covid-19 In the beginning of 2020, we were not yet familiar with concepts like ‘lockdown’ or ‘social distancing’. Since then the spread of Covid-19 continues to impact all aspects of life. Health care systems are burdened, and many people are dealing with personal challenges or loss. Economies around the world have been significantly affected, and businesses and their customers had to adjust to changing circumstances.
These activities were coordinated by the central NN Corona Coordination Team (CCT), which was installed to monitor developments, to advise the Management Board, and to support a safe and smooth transformation process. The vast majority of our employees have worked from home since the start of the pandemic. Only a limited number
At the same time, the company focused on helping our customers, agents and business partners, and supporting the broader community. In several countries, such as the Czech Republic, we designed a digital sales and client signature process, enabling our sales force to remotely serve customers. Overall, sales processes have moved almost entirely online and we can serve our customers fully digitally.
NN also supports the communities in which we operate. For example, by helping our local charitable partner organisations, or by providing laptops to children that do not have the necessary equipment for remote education. In Romania, we donated funds for ventilators and breathing monitors, vital for treating critically ill patients affected by Covid-19, and in Spain, we offered free protection to healthcare professionals against Covid-19. A full list of initiatives can be found on our website.
In light of our strong financial position, we did not require any government support for paying salaries and other cost, and there was no delay in regulatory filings.
• Assessing volatility and liquidity in financial markets, and to apply stress testing and scenario analysis
Customer experience, new technologies and innovation Notwithstanding the severity of the Covid-19 situation, there are some outcomes that could have a long-term positive impact on the planet and societies. For example, a rejuvenated sense of community, or unprecedent levels of innovation. Due to lockdowns, many businesses have had to reinvent themselves and have undergone rapid digitalisation. Companies and individuals have quickly adapted to virtual tools to carry out activities that were previously face-to-face.
Technology, digitalisation, the shift to a platform economy and the use of data have a growing impact on our customers’ everyday lives and expectations. For NN, this has been a major factor in the development of our new strategy. As we want to offer tailored solutions and excellent experiences for customers, we need to leverage our data and digital capabilities. To achieve this, we want to radically simplify our technology and operations. This will make our processes more customer-friendly, agile and efficient, which is particularly helpful in our banking and Non-life businesses in the Netherlands, and in the markets where we offer protection products in Europe and Japan. This transformation goes hand in hand with great care around customer data and privacy and continued investment in cybersecurity.
Transition towards a sustainable economy Climate change has an increasing impact on the financial sector. Organisations are assessed on different aspects, such as financial performance, their market reputation, the quality of their products, and increasingly by their impact on society at large. Not only are citizens and businesses looking for products and services that suit their specific needs, they also expect companies to act responsibly and play their part. The pandemic has proven the viability of the environmental, social and governance (ESG) agenda for companies, investors and other stakeholders. It has specifically elevated the significance of social and environmental factors in the long term. NN has a track record of integrating ESG factors into its investment and underwriting processes. We also use our influence to support the transition to a sustainable economy and green recovery by engaging with governments and the companies in which we invest, and by offering clients sustainable finance solutions.
Regulatory developments Towards the end of 2020, the European supervisory body EIOPA issued an opinion to the European Commission (EC) on the Solvency II framework that the EC will use as input when it drafts a legislative proposal in 2021. This will then be discussed with the European Council and European Parliament in the coming years. The resulting legislation is currently expected to be implemented at the earliest in 2024. Based on the EIOPA Opinion and prevailing market conditions at the time of the publication, the net impact from the proposed changes to the riskfree curve extrapolation and risk margin calculation on NN Group’s Solvency II ratio at the expected implementation date is expected to be manageable.
Numerous other regulatory developments also have a large impact on the financial sector and our business model. Noteworthy are pension reforms in the Netherlands and a number of Eastern European countries, particularly Poland. We follow these developments closely and proactively analyse the impact on our business.
H ig h 1 Pandemic risk 2 Operating during lockdowns 3 Economic recession 4 Financial hardship 5 Government support 6 Data privacy and protection 7 ESG integration 8 New products and services 9 Adoption of new technology 10 IT transformation 11 Cost reduction and efficiency 12 Customer experience 13 Green recovery 14 Persistently low interest rates 15 Increasing regulations 16 Turbulence in financial markets
Methodologically, a long list of some 100 topics was compiled, based on an analysis of internal and external sources. From this list, a shortlist of 15 topics was created, using three main criteria: the impact of the topic on NN Group and/or our different stakeholders, the likelihood, and the impact within the key markets where NN is active. These criteria were applied with a timeframe in mind of the coming 12 months.
Compared with 2019, certain topics clearly linked to Covid-19 pandemic entered the shortlist, such as ‘Operating during lockdowns’ and ‘Financial hardship’.
Through an online survey, stakeholders (including customers, employees, investors, regulators, business partners and societal organisations) were asked to rank the shortlisted topics in order of their impact on their circumstances (y-axis), while NN Group’s senior management (Management Board and direct reports) ranked the topics in order of the impact on NN Group (x-axis).
The environment that we operate in, together with the material topics identified by our stakeholders, provide both risks and opportunities to our business model and strategic objectives.
Strong balance sheet • Optimise risk/return profile of the investment portfolio • Seek additional returns on investments • Engage in longevity transactions
Sound business performance • Leverage data and digital capabilities • Improve efficiency and reduce operating costs • Attract new customers • Collaborate with partners (ecosystems, platforms) • Shift to defined contribution pension products • Provide protection products
NN Group maintains a balanced risk profile in accordance with the long-term nature of our business model
At NN, we want to create long-term value for all our stakeholders. The world around us changes rapidly, and so do we, focusing on adapting and evolving as a company. Our new strategy was launched in June 2020. It sets out what we want for NN, and how we will achieve our goals through our shared purpose, our ambition and our five strategic commitments.
Consulting with stakeholders In the run-up to the presentation of our new strategy in June 2020, we consulted many different stakeholder groups, ranging from shareholders to employees, consumers, societal organisations and regulatory authorities. We took their observations on board in developing the final strategic priorities. In the process, colleagues were involved in developing various parts of the plan, also making sure the direction was supported within the company.
The need for change The world in which we operate has changed in the past years. Technology, digitalisation, the shift to a platform economy and the use of data are all having a growing impact on our everyday lives. Customer expectations are evolving too. People expect a faster, transparent, more direct and more personalised experience, with tailored products and services offered by companies that act responsibly. Like other players in the sector, we are facing economic and political uncertainty, persistently low interest rates, pressure on our margins, and the impacts of climate change.
Delivered on financial targets Looking back, we delivered on all the Group medium-term financial targets set in 2017, which included EUR 400 million cost reductions by the end of 2020; annual earnings growth of 5-7%; and the generation of free cash available to shareholders in a range around net operating result. At the same time, we aim to keep improving the performance of our underlying businesses. NN Bank aims to originate high-quality mortgages and to broaden its retail offering. The Dutch insurance businesses are performing well, while NN IP is operating in a challenging environment. Our international insurance businesses have shown strong performance, notwithstanding the headwinds they faced from pension reforms in Europe and tax reforms in Japan.
Our approach For the distribution of our products and services to our customers, we have traditionally mainly interacted with customers via brokers, agents, banks, and emerging platforms. Our overall plan is to move more to the forefront: engaging with customers more frequently and more proactively, with solutions that meet their real needs. To help people care for what matters most to them at all times and at all stages of the customer life cycle. By using our data and customer analytics capabilities, and offering a combination of solutions that fit their needs. We will do so via our agent and distribution channels, and by being an active participant on platforms, for example around Carefree Retirement, helping customers shape their life after retirement.
We believe these changes will drive long-term value creation. Customer engagement, a leading brand and strong distribution create trust and relevance, which in turn attracts customers, improves retention, and increases margins and cross-sell opportunities. Investments in data and digital capabilities lead to efficiencies, smarter pricing and more effective underwriting.
Financial strength We are financially strong and seek solid long-term returns for shareholders
Key drivers for future value creation Our strategy is underpinned by a number of key beliefs: • The main driver for future value creation is more direct contact and a stronger relationship with our customers through innovative and tailored products and services that address real customer needs
• In our daily activities we seek to create long-term value for all our stakeholders
• For us, being a responsible corporate citizen means making well-balanced decisions, as we know that the choices we make today impact our world of tomorrow
Our ambition is the future we envision for our company; what we want to achieve in the coming years. We want to be an industry leader, known for our customer engagement, talented people and contribution to society. All parts of our business contribute to the delivery of our ambition.
Our strategic commitments Together, our purpose, ambition and strategic commitments reflect why we exist as a company, what we want to achieve, and how. This means a change in our focus and approach, with key initiatives for each of the strategic commitments.
Monitoring and measuring progress To monitor and measure progress, we set objectives for each of the strategic commitments, including financial and non-financial KPIs and targets (see pages 14 and 15). The targets are set for 2023 and reflect that we are a stakeholderdriven company.
We aim for all our (11) insurance business units to score an above market average Net Promoter Score (NPS)
People and organisation We empower our colleagues to be their best.
To grow staff diversity, for example by having at least 40% women in senior management positions
We excel in developing and providing attractive products and services, and operate with efficiency, agility and speed. To continue to do so, we will make use of digital and data capabilities.
• Insurance Europe: continue shift to protection products and invest in main banking partnerships
• Japan Life: continued focus on COLI protection and adapt product offering to new tax regime
We maintain a strong balance sheet and create solid financial returns for shareholders by using our financial strength, scale and international footprint, and by efficiently managing our customers’ assets and our own insurance portfolios.
We do business with the future in mind and contribute to a world where people can thrive for many generations to come.
• Pursue long-term value creation for all our stakeholders in our daily activities
• Support our customers with solutions that help them address societal challenges
• Accelerate the transition to a low-carbon economy through our investments
We will accelerate the transition to a low-carbon economy by targeting a net-zero carbon proprietary investment portfolio by 2050
Obviously 2020 was an extraordinary year, can you mention the highlights? Tjeerd: We can be proud of how we are showing resilience during the pandemic. In 2020, we took successful steps to enable our people to work from home, and it was amazing to see how quickly we all adjusted. We even welcomed and onboarded our new VIVAT colleagues digitally. This very much helped to ensure an uninterrupted service to our customers and partners. We offered customers payment breaks or broadened coverage. That way, for instance, restaurant owners could safely provide takeaway services to their clients. The financial impact on us was mixed, ranging from an increase in disability claims, and claims related to cancellation of events, to fewer traffic accidents and burglaries. Loan loss provisions were low due to ongoing low unemployment driven by strong government support.
In a particularly demanding year for everyone, what were the biggest challenges for your businesses? Tjeerd: We worked hard on our strategic commitment to improve the quality and frequency of our engagement with customers, and to become more visible in people’s day-today lives. One important way we are doing this is by making real advancements in our data and customer analytics capabilities. And at the same time, we also had to complete operational integrations. Balancing these two priorities has been challenging, although in the end both reinforce each other.
Keeping eyes on the horizon in the midst of the storm
We have a lot of knowledge and talent, we remain self-critical about our execution speed
Leon van Riet, previously CEO Netherlands Non-life, was appointed to the Management Board and is responsible for the Dutch Life & Pension activities.
What have been the main developments for Non-life in the Netherlands? Tjeerd: We were able to structurally improve our combined ratio, which is a solid accomplishment. A landmark for us was the acquisition of VIVAT Non-life, and we are now the leading player in the Dutch Non-life insurance market. This market faces strong competition, and it is important to work closely with our business partners. We have been looking for new ways of doing business, by partnering with newcomers such as Insify, who target new markets and audiences using digital capabilities and data. This is very much part of the future we have in mind, where we offer customer solutions specified to their needs.
What were the highlights for Bank? Tjeerd: In a competitive housing market in the Netherlands, we again achieved strong mortgage origination this year, a very important priority for us. And, we are broadening our business model, for example with the mortgages of the Woonnu initiative which rewards sustainable living, or by generating more fee business through external institutional investors.
NN Bank focuses on customer engagement, digitalisation and using data. The European payment rules (PSD2) came into force in 2019, and this allows customers to use services from other parties, such as insurers and fintechs, next to the services of their own bank. We acquired a stake in Invers, a company developing smart technology to analyse and deliver financial data. We developed the NOVA app together, which is a digital household book, linked to a customer’s payment account, and provides insights in their actual spending. Through our partnership Invers can grow faster and develop more applications, which fosters our customer engagement promise.
Tjeerd: We also find it important to contribute to the physical and mental health of our colleagues, our customers and the broader society. A specific initiative rolled out in 2020 (in cooperation with Klup) for people over 50 years in the Netherlands, aims to help them achieving a happy and meaningful social existence.
In Poland, the second and third phases of the pension reform took place, requiring companies with 20 to 250 staff to contribute to their employees’ long-term savings. Nationale-Nederlanden has signed approximately 5,100 agreements with companies of this size and was recognised as the country’s most preferred private pension provider in 2020.
The commitment and passion of our employees and agents made a big difference in supporting our customers and responding to the Covid-19 situation
How did our partnerships develop in 2020? Throughout the year, we strengthened and expanded our partnerships, and made our products more widely available. In the Czech Republic, we partnered with Air Bank to sell our pension products through their digital channel and branch network. NN Hungary partnered with Bank360, one of the largest loan aggregators in the country, to promote an income protection insurance. In Greece, sales deriving from our partnership with Piraeus Bank, mostly driven by upgrading our health and term life product propositions, proved very resilient. In our strategic cooperation with ING across six European markets, our strong and successful collaboration delivered a growth overall in the fee income for the bank and we continue to support their digital strategy by deploying modern products on flexible cloudbased platforms.
NN Romania and NN Hungary announced their plans to enter the general insurance market. In Romania, we launched a home insurance that contributes to Romanians’ financial security and going forward we will continue to invest in further diversifying our protection solutions. In Hungary, we announced plans to introduce home and travel insurance.
How is International contributing to society? We are proud to have an overarching community investment programme, NN Future Matters, which helps improve young people’s financial empowerment and economic opportunities. The NN Future Matters Scholarship gives students who live in challenging financial circumstances, and are first in their family to attend higher education, the opportunity to complete an international Master’s programme while living and studying abroad. Since its launch in 2014, the programme has helped 145 young people from different countries providing them with equal opportunities in education.
In 2020, we also focused on supporting our communities during Covid-19 through various initiatives. In Spain, we participated in an insurance industry initiative to offer free protection to healthcare professionals against Covid-19. In the Czech Republic, 150 employees took part in a challenge to support single parent families, lonely seniors and people in senior care homes. Activities such as organising Christmas dinners for over 3,000 senior citizens in 30 retirement homes, providing food and housing assistance to numerous singleparent families were amongst the highlights. In Romania and Slovakia, we donated hundreds of ventilators, breathing monitors and respirators, while in Greece and Turkey, we made donations to support the national health systems’ efforts against Covid-19.
We continued our journey to be one of the leaders in Responsible Investing: integrating ESG factors in over 74% of all assets we manage, increasing engagement with investee companies and votes at shareholder meetings. Covid-19 has only reconfirmed the importance of investing responsibly to work towards a more sustainable world.
What are the highlights of your product offering and performance? Through robust processes and a consistent, adaptive investing approach, we deliver strong risk-adjusted returns to our clients. We have enhanced our performance in specialised equities and fixed income capabilities throughout the year, with our High Dividend equities, Investment Grade and High Yield rising up the peer rankings. Our Patrimonial multi-asset range continued its strong performance and is now within top decile performance.
In the low interest rate environment, our private debt capabilities help clients attain higher yields. Mortgages, which we offer together with partners like NN Bank and Venn Hypotheken and the newly-launched Trade Finance fund, are some examples.
We strongly believe in inclusion over exclusion and engaging with issuers on themes such as governance, climate change and living wage
We value diversity of thought and take pride in our diverse organisation: gender diversity, close to 50 nationalities, different educational backgrounds, and a variety of complementary skills.
How does NN IP contribute to wider society? Responsible Investing is core to our identity. Our goal is to integrate ESG factors into 80% of our Assets under Management by 2023. We are making steady progress, with ESG integration of over 74% in 2020 compared with 68% in 2019. We believe that ESG integration improves risk-adjusted returns in the mid to long term.
Financial capital Including debt, equity, revenue and assets invested by clients
• Total energy used 33,000 MWh (of which 72% of the electricity used was renewable)
• Business partners and suppliers • Other key stakeholders, i.e. regulators
Our value creation model is based on the framework developed by the International Integrated Reporting Council (IIRC). It is built around ‘capitals’ – stocks of value that may be either increased or decreased through a company’s business activities or outputs. In the way we do business, we see customers as the starting point of everything we do. We develop and appropriately price financial products and services which meet the needs of our customers through each phase of their lives. We aim to be where our customers want us to be, and distribute our products and services through many channels, including intermediaries, brokers, tied agents, banks and financial advisors, as well as directly online. We receive fees, premiums and deposits from customers for the products and services provided. We invest this money prudently and responsibly. The returns earned on these investments are used to pay out pensions, claims, other benefits and interest. The remaining capital is deployed for investments in growth initiatives, managing debt and delivering capital returns to our shareholders.
Financial capital Disciplined capital deployment • Total dividend and interest payments to investors EUR 783m
Human capital Wages and benefits • Total wages, benefits and pension contributions EUR 1.6bn
Inclusive and inspiring working environment • % women in senior management positions 33%
• Net Promoter Score 4 out of 11 Business Units scoring above market average
Environmental impact from investments • Carbon footprint relating to proprietary investment portfolio 72 tCO2e/EURm invested
Social and Relationship capital Returns to customers • Total claims and benefits paid
Customers To our customers, we offer peace of mind; our products help protect them, their families, their health and their property. We also safeguard their personal data, provide mortgages and a stable source of income in retirement. Our aim is to offer quick, effective customer service and access to new, innovative financial products.
Employees To employees, we provide wages and other benefits. We also contribute to their pensions. In addition, we offer skills training and opportunities for career development. We provide an inspiring and inclusive place to work. Our aim is to build an engaged workforce and nurture a culture aligned with our purpose, values and ambition.
Investors To our investors, we are committed to deliver resilient and growing long-term capital generation. To do so, we maintain a strong balance sheet and create solid financial returns by using our financial strength, scale and international footprint, and by efficiently managing our customers’ assets and our own insurance portfolios.
Society We contribute to the well-being of people and the planet. We take a long-term and a responsible approach to investments, working to minimise their impact on the environment. We also support the economy through taxes and payments to intermediaries and other business partners. Through donations and volunteering, we are actively involved in local communities.
Being there for customers means providing solutions that create long-term value, and developing products and services that meet their real needs through each phase of their lives.
For young adults leaving home for the first time to study or travel, we offer relevant liability and travel insurance. For young professionals renting a first home, or starting out on their careers, increasingly often as freelancers with all the uncertainties that can bring, we offer income and legal protection insurance, consumer loans, and savings and investment solutions.
In the Netherlands we are investing in User Research and User Experience capabilities to ensure that our digital solutions work in practice.
Improving the customer experience To ensure we are there where our customers want us to be, we try to offer them the choice to interact with NN through digital channels, brokers and/or our tied agent network in Europe. By smart use of data & AI insights, we also try to ensure customers can access products and services in the ways that suit them best.
We are regularly entering new partnerships and strengthening existing ones. For example, the acquisition of VIVAT Non-life includes the Volksbank Non-life distribution agreement. This creates a valuable additional bancassurance distribution channel in the Netherlands, where we now have distribution arrangements with almost all large banks. NN Belgium Life partnered with one of the most prominent brokers in Belgium, Wilink, strengthening our distribution in the retail and self-employed broker segments. While in the Czech Republic, we have partnered with Air Bank to sell and service our pension products through their digital channels and branch network.
Starting a career • Term life insurance • P&C insurance First home • Savings solutions • Mortgage
We are in the process of further refining key performance indicators in this area, for the different NN business units. Below KPIs have been set in qualitative terms.
• Netherlands Non-life: Expand data and underwriting capabilities, and leverage on additional scale of VIVAT Non-life
• Insurance Europe: Continue shift to protection products and invest in main banking partnerships
Developing new customer engagement platforms In the digital age, value for customers can be added by improving access to services. That is why we are always looking at developing new customer engagement platforms. These can be platforms developed in-house, platforms that we set-up together with partners or we join a platform owned by a partner.
• Kokotomo – this platform was launched in Japan and is specifically tailored for the partners of SME owners whose spouses have passed away. The platform helps them connect with each other during their grieving period and also provides support in the takeover and running of the family business.
Moreover, we are developing and piloting retail engagement platforms that centre on key themes such as Carefree Retirement and Self-care: • Zorggenoot – a network of local experts who help find, arrange and finance informal elderly homecare. A pilot is currently running in partnership with Dutch health insurer CZ.
• Kwiek – a platform that helps people aged 65+ finding a job, thereby also seeking solutions for social problems around retirement such as loneliness.
• Self-care – colleagues in Poland and Turkey are working on building a customer engagement platform focused on selfcare services. This will empower people to look after their family’s health by providing access to digital health services, making seeing a doctor easier and quicker, and building healthy habits.
• Provide trend analyses and insights, for example through our Dutch Pension TV YouTube channel.
• Help customers cope with today and tomorrow’s societal issues (see Klup, Kwiek and Zorggenoot). Or through the ‘Pension Help’ service of NN Life & Pensions for customers approaching pension age.
Improving our systems and digital capabilities We want to offer customers solutions that will meet their needs today and in the future. We are therefore streamlining our portfolio. Phasing out old products and legacy systems, and focusing on products and services that are truly relevant to customers. Thereafter we will continuously finetune these solutions to reflect the evolving needs of customers and society. So, for example, when the Delta Lloyd mortgage portfolio was migrated to NN systems some 25 mortgage products were combined into one new NN product.
For some years now, NN’s Advanced Analytics Competence Centre has been building data science capabilities and we are now onboarding more data scientists closer to the business. We have also developed an extensive data and AI literacy programme. We have trained more than 700 employees through our e-learning programme. The course focused on how to use data science to address key areas like improving the customer experience and lowering costs.
Brand consideration At least twice a year, we measure key brand indicators, such as brand consideration and brand preference. Brand consideration is measured to monitor the preferences of customers. Due to the pandemic many marketing communication plans had to be adjusted and activities were postponed. In some countries only around half of the originally allocated budgets were spent.
We see it as our responsibility as a large employer to help reduce the impact of Covid-19. Across our countries, the majority of employees have continued working from home, with the exception of those involved in critical processes and in necessary cases. In Japan, employees work in the office one day a week.
We nurture a culture aligned with our purpose, values and ambitions, which supports continuous learning, collaboration, and diversity of thinking. We consider all colleagues to be talents, and invest in an inclusive and inspiring environment so we are best equipped to take our business into the future.
NN culture At NN, we believe everyone brings a set of unique talents and perspectives to the table. We want to create an inspiring environment for our employees by fostering an NN culture that supports an open mindset, an independent quest for knowledge, and shared learning agility directed towards making a difference.
Employee value proposition We operate in a tight labour market, particularly for specific skills in areas such as tech, finance, risk and investment. To position NN as an employer of choice, we launched our new employee value proposition (EVP) and a careers site for the Netherlands and Belgium, which will also be rolled out to other countries. The EVP is based on three pillars: NN’s promise to employees; what our people value most; and what sets us apart from competitors.
Attracting and retaining the right talent more effectively will help us fulfil our ambition to be an industry leader known for our talented people. We will measure the effectiveness of our employee branding through employee rankings (e.g. the Brandchart Imago Research 2021), and by analysing the results of all activities.
• 40% women in senior management positions by 2023 2020: 33%
The NN Innovation Method, launched in 2019, is both a mindset and a way of working. By using a single framework we want to make all levels of innovation accessible to everyone at NN. The framework provides tools and support for colleagues working on both new propositions and innovations to existing projects, and helps colleagues enhance their customer engagement skills. The method values an agile, entrepreneurial mindset. By validating ideas with real customers, project teams can stop projects early or pivot to a better approach before product launch.
In 2020, we trained over 250 colleagues across 16 business units in using the Innovation Method. A further 20 colleagues were trained to support local projects as certified innovation coaches.
Learning & development In 2020, NN invested EUR 12.9 million in training and development (2019: EUR 18.9 million). The decrease in 2020 is largely due to the impact of the pandemic. Many external courses were cancelled or moved online, or employees chose alternatives. The internal training opportunities we created to support employees with remote working were often low or no-cost, yet valuable, such as peer-to-peer coaching.
In addition, we further developed our leadership development portfolio. This includes a programme for first-time managers, and a training to support Courageous Conversations. We also launched a fast-track programme in 2020 for senior managers with high potential and we strengthened the NN traineeship programme to tailor to the specific needs of our businesses.
To help managers support their team members in finding a healthy and efficient way of working from home, we designed several toolkits. And, as we recognise the importance of different forms of learning and network building in leadership development, we use peer-to-peer coaching to bring our managers together to learn from each other, and to share issues and best practices.
Gender diversity and equal pay In support of our D&I agenda, we published a target on gender diversity. The male/ female ratio across the company is well-balanced, but less so within senior management positions. At the end of 2020, 33% of senior management were women (2019: 36%). This shows there is still work to be done to reach our target of 40% by 2023, and we therefore focus our efforts on topics such as succession planning, talent review and leadership development.
D&I networks we recognise it is difficult to stay connected while working remotely. While still relatively low, the scores for efficient processes (6.6, 2019: 6.0) and workload (7.4, 2019: 7.2) also showed improvement.
Top employer In 2020, the Top Employer Institute again named NN a Top Employer in all our markets outside of the Netherlands, as well as Top Employer Europe. The Top Employers Institute recognises employers who provide excellent employee conditions, nurture and develop talent at all levels of the organisation, and strive to continuously optimise employment practices.
Employee representation Our works councils facilitate employee consultation in most NN countries in Europe. In 2020, a new Central Works Council and a new European Works Council were installed. NN’s new strategic direction, and the measures taken to respond to the Covid-19 pandemic, were topics high on the agendas of the European, Central and local Works Councils.
• Leading market positions in Central and Eastern Europe and in the COLI market in Japan1
Dividend policy Progressive dividend per share, annual share buyback of at least EUR 250m and additional excess capital to be returned to shareholders unless used for value-creating opportunities
Financial targets Operating capital Generation (OCG)2: EUR 1.5bn in 2023 Free cash flow (FCF): Over time, in a range around OCG
We expect mid-single digit annual growth of operating capital generation over time, allowing us to deliver attractive and growing capital returns to shareholders Delfin Rueda Chief Financial Officer
Our conservative asset mix is heavily geared to high-quality government bonds, and we have a low sensitivity to interest rates.
• The Non-life business recovery is on track to achieve our combined ratio target, while also focusing on the integration of VIVAT Non-life and further upgrading of data capabilities.
These businesses are already delivering strong cash flows in the Netherlands, but are all also taking additional steps to increase cash generation.
We are continually focused on improving efficiency. Since 2013, we have reduced our cost base by over EUR 650 million, of which the business units in scope of the cost reduction target (related to the Delta Lloyd acquisition) reduced administrative expenses by a total of EUR 404 million since 2016.
For NN Group, the international businesses provide an attractive way to invest capital in organic growth. These European and Japanese businesses generate virtually all VNB growth.
In Japan, we have a leadership position in the sizeable Corporate Life (COLI) market. In the first half of 2020, tax regulations led to a decline in sales in Japan, but sales recovered in the second half (see page 18).
NN Group OCG of EUR 1.5 billion Free cash flow in a range around OCG over time
Progress on targets OCG for NN Group decreased to EUR 993 million from EUR 1,349 million in 2019. This reflects the negative impact of lower interest rates, the suspension of dividend payments from NN Bank (in accordance with the recommendations of the Dutch regulator), and unfavourable developments in Non-life’s disability and accident portfolio. This was partly offset by a higher investment return mainly in Netherlands Life reflecting the shift to higher-yielding assets.
Capital return policy NN Group announced an update of its dividend policy on 13 February 2020. It intends to pay a progressive ordinary dividend per share and execute a recurring annual share buyback of at least EUR 250 million. Additional excess capital is to be returned to shareholders unless it can be used for value-creating opportunities.
A progressive dividend means a growing dividend per share. We will decide on the amount of the dividend each year depending on the circumstances at the time, but the long-term growth pattern of annual dividends is ultimately linked to the growth of capital generation. We expect mid-single digit annual growth of OCG over time.
At the AGM on 20 May 2021, a final dividend for 2020 will be proposed of EUR 1.47 per ordinary share. The proposed 2020 final dividend plus the regular 2020 interim dividend of EUR 0.86 per ordinary share gives a pro forma total dividend for 2020 of EUR 2.33 per ordinary share. This represents a pro forma increase of 7.9% on 2019 dividend per share (DPS).
Share buyback On 13 February 2020, NN Group announced a share buyback programme for an amount up to EUR 250 million over a period of 12 months, commencing 2 March 2020. This share buyback was temporarily suspended on 6 April 2020 and resumed on 6 August 2020.
On 18 February 2021, NN Group announced that it will execute an open market share buyback programme for an amount of EUR 250 million. The programme will be executed within 12 months and commenced on 1 March 2021. The share buyback will be deducted in full from Solvency II Own Funds in the first half of 2021 and is estimated to reduce NN Group’s Solvency II ratio by around 3%-points.
Creating value – Investors continued 1 Pro-forma 2019 full-year dividend per share of EUR 2.16, comprising the 2019 interim dividend of EUR 0.76 plus the suspended final dividend of EUR 1.40.
2 Pro forma 2020 full-year dividend per share of EUR 2.33, comprising the 2020 interim dividend of EUR 0.86 plus the proposed 2020 final dividend of EUR 1.47.
Other information The authorised share capital of NN Group N.V. consists of ordinary shares and preference shares. Currently, only ordinary shares are issued, while a call option to acquire preference shares has been granted to the NN Group Continuity Foundation (Stichting Continuïteit NN Group). Read more on page 30 of the Financial Report.
• UBS Group AG 3.12% (9 February 2021) • Bank of America Corporation 3.04%
(2 March 2021) Please refer to the AFM register of Substantial holdings and gross short positions for more details on the nature and characteristics of these interests.
Credit ratings On 14 December 2020, Standard & Poor’s published a report confirming NN Group’s ‘A’ financial strength rating and a ‘BBB+’ credit rating with a stable outlook. On 16 October 2020, Fitch confirmed NN Group’s ‘A+’ financial strength rating and ‘A’ credit rating with a stable outlook.
Responsible investment NN Group’s Responsible Investment (RI) Framework policy sets out our vision and approach in this area: we integrate ESG factors into our investment processes and active ownership practices. We prefer inclusion backed by engagement to exclusion, but also uphold restrictions. Our asset manager, NN Investment Partners (NN IP) also offers clients a range of ESG-integrated, sustainable and impact investment strategies.
Guided by the Institutional Investors Group on Climate Change (IIGCC)’s ‘Net-zero investment framework’, NN’s strategy has two dimensions: decarbonisation of our investment portfolio in line with a netzero trajectory by 2050, and increasing investment in climate solutions. We prefer approaches and methods most likely to deliver impact in the real economy.
We established an NN Paris Alignment Council to oversee the process of aligning the proprietary investment portfolio to the Paris climate goals, and define related action plans and targets. We developed a Paris Alignment Strategy for sovereign bonds which we plan to implement in 2021. Countries are scored on their climate performance using current and forwardlooking indicators. Using a best-in-class approach, we aim to increase allocation towards higher-climate-performing issuance and/or green bonds. We are also exploring ways to engage more with sovereign issuers on climate change.
We strive to contribute to the well-being of people and the planet. We do business with the future in mind and contribute to a world where people can thrive for generations to come. We do this by investing our assets responsibly, being a fair taxpayer, managing our direct environmental footprint, and through our activities in the communities where we live and work.
Work is ongoing to develop asset-class specific strategies for private real estate, corporate bonds and listed equity, with deliverables expected in 2021.
NN IP has a stringent definition of ESG integration: for each investment analysis, the integration of ESG factors needs to be consistently demonstrated and documented. At year-end 2020, ESG criteria were consistently integrated for 74% of total assets, amounting to EUR 223 billion (compared to 68% in 2019). This includes those assets managed under the sustainable and impact strategies. NN IP is committed to a target of 80% ESGintegrated AuM by 2023.
Influencing companies to take responsibility Voting is one of the most powerful tools of active ownership, and we vote at shareholder meetings on behalf of our own and our clients’ assets. To ensure proper governance, we have separate voting committees in place, and publish our voting record on a dedicated website.
• ESG-integrated Assets under Management (AuM): 80% by 2023 2020 (year-end): 74%
• Accelerate the transition to a lowcarbon economy by targeting a netzero carbon proprietary investment portfolio by 2050 2020: Installed Paris Alignment Council, chaired by NN Group’s Chief Investment Officer 2020: Developed asset-class specific Paris Alignment strategy for sovereign bonds
• Continue to increase our AuM in sustainable and impact strategies 2020 (year-end): EUR 29.3bn AuM (+29% compared to year-end 2019)
Deforestation in the Amazon NN recognises the importance of taking action against deforestation. Due to the complexity of the supply chain, we prefer to use our influence to improve standards. Involvement with all parties in the supply chain – from producers to retailers – is our preference. Collective action against deforestation is part of our engagement activities as we believe it strengthens our position and increases our impact. In the case of soy, NN IP is a member of the FAIRR Initiative and participates in the PRICeres Investor Initiative for Sustainable Forests, working with industry, producers and governments to tackle soy-related deforestation.
During 2020, NN IP voted at 3,053 AGMs on 35,015 agenda items. Voting activities were focused on three main issues: board elections, the alignment of executive remuneration with company strategy, and sustainability shareholder resolutions.
A recently published report ‘Voting matters 2020’ by ShareAction shows how 60 of the world’s largest asset managers voted on 102 shareholder resolutions on climate change, climate-related lobbying, and social issues, during the period of September 2019 to August 2020. NN IP has been named the sixth-best performer, having supported 95% of resolutions or more.
Through engagement, we aim to raise awareness of ESG issues and encourage issuers to improve their policies and practices. In addition to controversy engagements, NN IP performs thematic engagements on corporate governance, natural resources & climate change, and decent work. Because of the active investment strategies of NN IP, our equity and fixed income analysts and portfolio managers are in frequent dialogue with investee companies. Our RI specialists also enter into dialogue with corporate and sovereign issuers, and whenever ESG issues are a topic of discussion during company meetings we log the updates in a dedicated database.
During 2020, NN IP also continued our participation in collective investor engagements, such as Climate Action 100+ and the CDP Non-Disclosure and Science Based Target campaigns, encouraging companies to disclose information on climate risks and set long-term targets on reducing their greenhouse gas emissions.
As the chart shows, in total we had 1,269 ESG dialogues with issuers in 2020, double the number of dialogues compared to 2019. In addition to the two examples mentioned in the boxes in this chapter, please find more on how we engage with companies and sectors in NN IP’s Responsible Investing Report 2020 on our website.
Encouraging governments In addition to the company engagement, NN Investment Partners signed an open letter to Brazilian Embassies expressing concern about increasing deforestation in Brazil. This has led to a dialogue with members of the Brazilian Congress about the conservation of the country’s tropical forests. We will continue our engagement with the Brazilian authorities through the Investors Policy Dialogue on Deforestation in Brazil.
Furthermore, NN IP joined a group of 26 financial institutions from around the globe launching the Finance for Biodiversity Pledge. They called on global leaders and committed themselves to protect and restore biodiversity through their finance activities and investments in the run-up to the Conference of the Parties (COP 15) to the Convention on Biological Diversity in 2021.
NN Group was signatory to a statement initiated by the Dutch Sustainable Growth Coalition asking the Dutch government to place sustainability as the cornerstone in the Covid-19 recovery. It was signed by a broad coalition of businesses in the Netherlands and noted that the Covid-19 pandemic has occurred during society’s transition to a more sustainability-driven and inclusive economy. In the recovery, the coalition does not want to lose sight of this challenge, the risks associated with climate change or the loss of biodiversity.
Besides taxes that NN Group pays as a taxpayer, which represent a cost for our company, we are also responsible for collecting taxes on behalf of our clients, employees, and service providers, and passing them on to tax authorities. To give insight into our tax contribution, since 2019 we have published a Total Tax Contribution (TTC) Report, which reflects taxes paid in the countries where we operate.
We are pleased that this effort was recognised by external stakeholders, with NN the top-scoring company in the annual Tax Transparency Benchmark published by the Dutch Association of Investors for Sustainable Development (VBDO) in both 2019 and 2020. This benchmark provides a comparative study of Dutch listed companies’ fiscal transparency.
NN Group’s total tax contribution in 2020 amounted to EUR 2,392 million, and consisted of the corporate income taxes paid by NN Group and the total of other taxes collected and paid by NN Group as part of its operations (including Value Added Tax, Insurance Premium Tax, payroll taxes, and withholding tax on dividends paid by NN Group). Of this total tax contribution, we paid 78% to the tax authorities in the Netherlands, and 22% to local tax authorities on behalf of our international businesses.
Five of the seven companies with which NN IP engages have made progress. Most companies now have Child Labour Monitoring and Remediation Systems covering more than 50% of their supply chain in Ivory Coast and Ghana, and some have started rolling them out in other cocoa-growing communities in West Africa, Indonesia and Brazil. Furthermore, several companies have announced their support to new programmes to keep primary-aged children in school. For more information, refer to NN IP’s Responsible Investment Report.
For NN Group’s own assets, too, we look for investments that have a positive impact on society while meeting our investment criteria. For instance, we invest in green bonds, and finance renewable energy and resource efficiency-related infrastructure debt projects. In total, these investments amounted to EUR 1.3 billion at year-end.
We use the GRESB Real Estate assessment as the primary measure of our progress. In 2020, the GRESB (value-weighted) score for NN’s portfolio of funds, joint ventures and directly-owned buildings scored 83 out of 100 (industry average: 70). While for the second consecutive year our directlymanaged real estate portfolio received a 5-star rating, GRESB’s highest rating and recognition as an industry leader.
Managing our direct environmental footprint We manage our environmental performance through efficient use of natural resources, and identifying and implementing green alternatives. We compensate the remainder of our CO2 emission by purchasing voluntary carbon credits and have been carbon neutral since 2007. Our 2020 target is to reduce our CO2 emissions from direct operations by 3% per FTE per year. In 2020, our CO2 emissions decreased by 43% per FTE per year and 72% of our electricity use came from renewable sources. These statistics do not take into account the increased use of energy by employees working from home, and it is not really possible to separate the Covid-19 effect from other initiatives. Going forward, we aim to set a science-based target to commit to reducing our absolute scope 1 and 2 CO2 emissions.
Covid-19 has caused distress globally. In addition to its immediate impact on our health, it makes even clearer that the well-being of millions of people and of our planet are fragile. During this extraordinary year, alongside the community investments that are part of our long-standing NN Future Matters programme, we supported efforts to address immediate Covid-19-induced health and economic needs.
In the Czech Republic, NN employees helped distribute care packages to senior citizens in seven care homes, sent personally-made digital postcards to 256 isolated senior citizens and delivered 14,300 orange tulips to elderly care homes across the country. NN also ran a campaign whereby employees can help distribute cash donations made available by NN for organisations providing food, housing and recreational activities for the elderly.
Where needed, NN provided additional support to existing partners. NN Spain provided an additional donation to our long-standing partner Aldeas Infantiles to give over 100 families in Madrid access to basic food and healthcare products and services, and additional resources to their entrepreneurship programme for single mothers in the Canary Islands.
Throughout the year, NN Netherlands initiated various activities for our partner LINDA foundation, which helps families in financial difficulties – a group that grew rapidly after the first outbreak. At the start of the pandemic, NN arranged laptops for families in poverty so their children could follow classes online. In the summer, colleagues packed bags with toys and supplies to make the long summer holidays a bit more fun. Around Christmas we initiated a big internal fundraising campaign to ensure as many families as possible could enjoy the festive season. We also launched a campaigning video on the issue of poverty. In total, NN donated EUR 1.7 million to initiatives responding directly to the impact of Covid-19 in the countries where we operate. Read more on our website.
NN colleagues in the Netherlands gave guest talks on digital skills at high schools via our community investment partner, JINC. The goal is to improve schoolchildren’s digitals skills while also making them aware of the job opportunities in the IT sector.
In Greece, NN continues to support My Career, a digital career orientation programme that helps young people make informed career study choices and links opportunities in the employment market with their personal interests. Because the tool is available online, young people in urban and rural areas could be reached. From the programme’s launch in 2019 until the end of 2020, 1,696 students from 330 Greek schools had been helped.
Through the From Debt to Opportunities Foundation, NN Group supports households who face problematic debt. Together with local not-for-profit partners, the Foundation helps people to acquire financial skills to escape poverty and achieve sustainable financial security.
While the extent to which Covid-19 affected job security, income losses and household debt is yet unclear, the Foundation funded the accelerated digitalisation of the majority of its partners – in addition to the regular financial aid provided. In this way, 2,603 households could still be supported in 2020. In addition, 69 employees volunteered their time and expertise. During its five-year programme, a total of 11,949 households were reached, aided by a total of 1,538 NN volunteers.
In Poland, we continued our support to the University of Success, a programme helping 18-year-old girls leaving orphanages who want a career in the IT or digital media sectors. For its contribution to this initiative, NN Poland was awarded the prestigious ‘Benefactor of the Year Award’ in the area of Entrepreneurship.
Overall in 2020, we supported 15,834 young people and made EUR 2.5 million in charitable donations to NN Future Mattersrelated target areas. Since the start of our programme in 2014, we have reached 154,192 young people, exceeding our 2020 target to positively impact the futures of 100,000 young people. Read more on our website.
Going forward One of the strategic commitments in NN Group’s new strategy is our contribution to society. As part of this, we will be significantly upscaling our contribution to our communities by pledging to invest 1% of our operating result (three-year average) in cash donations and hours of volunteering by 2023. To reach this ambitious target we will build on our current strong foundation, grow existing and start new partnerships, while increasing our donations and hours of volunteering to make a lasting impact. In 2021, we will report in line with the B4SI Framework, a robust measurement standard in which we will include the hours volunteered in the total contributions to our communities using a standard calculation method, and we will adjust our charitable donations policy to meet the B4SI standards.
To measure the impact of its efforts and to contribute to a better understanding of what works in the field of poverty reduction in the Netherlands, the Foundation collaborates with the Amsterdam University of Applied Sciences in an extensive five-year research. Amongst other insights, interim results show that after participation, both the average household debt as well as the number of creditors is significantly reduced over the long term. In addition, one in ten respondents remains fully debt-free. Final research results will be published in 2021.
At NN, we strongly believe the public and private sector should work together to help achieve these goals. We are highlighting the SDGs where we can have the biggest impact through our business activities, investments and community programmes.
These SDGs seamlessly integrate with the themes of our own strategic agenda: healthy and safe living, a sustainable planet and an inclusive economy. The table below shows NN Group’s contributions to the SDGs in 2020 and our future ambitions.
Contribute to the physical and mental health of our colleagues, our customers and the broader society
Contributed to keeping our colleagues safe by enabling them to work from home, and staying fit and healthy (reflected in the score of 7.8 on mental and physical wellbeing during the pandemic in regular employee survey)
Continue to support our customers with solutions that help them address societal challenges related to healthy and safe living
Introduction and scaling of products and services with social added value that address issues, such as loneliness, diabetes, access to healthcare and burn-outs
SDG 7 Affordable and clean energy Ensure access to affordable, reliable, sustainable and modern energy for all
Amount of investments of own assets in direct renewable infrastructure projects and green bonds used for renewable energy: EUR 1.0 billion at year-end 2020
SDG 12 Sustainable consumption and production Ensure sustainable consumption and production patterns
Total AuM of our sustainable and impact strategies grew 29% to EUR 29.3 billion at year-end 2020
Support our customers with solutions that help them address societal challenges related to climate change
SDG 13 Climate action Take urgent action to combat climate change and its impacts
Amount of securities covered by the coal phase-out strategy for the proprietary portfolio: EUR 1.6 billion
SDG 1 No poverty Improving access to sustainable livelihoods, entrepreneurial opportunities and productive resources
Together increase diversity, inclusion and equality in our teams; engage everyone, and encourage them to be who they are, share their voices and drive change
Continue to help improve people’s financial well-being, with a particular focus on 10 to 25-yearolds and disadvantaged groups 15,834 young people reached through NN Future Matters 35 scholarships provided to students from eight countries
Empower people to be their best, and respect each other and the world we live in
Act with integrity and do business with the future in mind
Our values guide, inspire and unite us. They are the foundation of our culture, and are at the basis of our strategic framework. Our values guide us in our everyday work – not only in what we do, but also in how we do it.
After six years, and with the development of our company’s new strategy, we felt a review was due to ensure our values remain relevant in a changing world. We aligned the statement with our new purpose, and rephrased and updated the text. We also removed some principles that are now covered in more detail in the Code of Conduct, while considering applicable regulatory requirements (e.g. the Oath for Financial Institutions in the Netherlands). The essence of each value remains unchanged.
Cultural fit The NN Living our Values programme aims to increase awareness around our values and enables colleagues to fully integrate them into their everyday behaviour. We take steps to ensure that all employees remain conscious of the values throughout their NN careers, and that they are reflected in our HR policies and processes.
The values are therefore the starting point for hiring new employees, and part of the reward process. The new i-LEAD profile (see page 30), which is based on the new strategic framework, captures all key NN behaviours. The newly-designed Key Talent Management process for senior management incorporates ‘cultural fit’ (i.e. acting in accordance with the NN values).
Values week Our annual NN Values week, organised across 12 countries, provides an opportunity to engage colleagues in how we live our values. Values week 2020 was about connecting, an apt theme given the need to work from home during the pandemic.
Tone at the top Our Management Board and senior leaders are important role models when it comes to living our values. To open Values week, David Knibbe, CEO NN Group, and Dailah Nihot, Chief Organisation and Corporate Relations, participated in a live discussion viewed by over 1,000 colleagues globally. They spoke about what our values mean to them and the importance of the Living our Values programme. Our values state that we listen with genuine interest, empathy and an open mind, and during the week Management Board members joined a number of small, informal sessions with colleagues to discuss the challenges and opportunities encountered when working remotely.
Monitoring progress We monitor the effectiveness of the Living our Values programme in our annual employee engagement survey. The Management Board and the Living our Values Project group use the outcomes to evaluate where we need to focus attention. The 2020 results saw a significant improvement on 2019.
For customers, the 2020 year-end results show that the values remain strongly embedded in the NN brand, with at least 50% of customers recognising each of the values in most markets. However, in 2020, Belgium, Japan and the Netherlands fell below 50% which is a significant decrease compared to 2019.
Let’s connect programme As a follow-up to the 2019 Values review, we introduced a communication and culture programme around the theme ‘Let’s connect’. This programme was developed for our leadership when we launched our new strategy in June. It aims to enhance
In December 2019, a committee was set up to advise and support the Management Board in developing a new purpose statement. A year later, this committee was formalised as the group-wide Purpose Council, with the objective to oversee how we are upholding our purpose and progressing on our nonfinancial targets.
Chaired by the Chief Organisation and Corporate Relations, and sponsored by the Group CEO, the Council consists of several Management Board members, heads of relevant staff functions and business/country representatives. It performs an advisory, consultative and preparatory role, and supports the Management Board in steering, measuring and reporting on non-financial issues relevant to the strategy, and related to customers, employees and society.
Risk Culture Check-in In January 2019, Group Risk and Group Compliance introduced the Risk Culture Check-in, whereby all business units perform a self-assessment on how they perceive the risk culture within their unit. They also assess head office control functions on their risk culture and cooperation. In 2020, the second Risk Culture Check-in was executed.
Platform on Product Insights In December, ‘Product Talks’, a digital learning platform was launched by Group Legal, Group Compliance and Group Risk, for colleagues involved in product development or review in all business units.
The online platform brings together relevant legal, compliance, risk and behavioural science perspectives in micro-learning courses. These aim to expand and deepen knowledge and skills relevant to developing and reviewing NN products and services in line with our Product Policy. The content is relevant for both first-line functions (such as product development, sales and marketing) and second-line functions, and accessible to all interested NN employees.
Whistleblower Policy The NN Group Whistleblower Policy enables every employee to report, if they wish anonymously, a concern outside normal reporting channels. NN Group guarantees
NN Code of Conduct Based on the NN statement of Living our Values, the NN Code of Conduct offers clear guidance in a single, easy-to-understand document for the behaviours we expect from NN employees: how we interact with colleagues, customers, and other stakeholders; how we deal with information and data; how we deal with conflicts of interest, fraud, corruption, and financial economic crime; how we use equipment and the internet; and how we report and deal with breaches.
Employees are required to formally acknowledge annually that they understand the content of the NN Code of Conduct, and can and will apply the underlying policies and standards. This has been mandatory for all business units for several years. The Code of Conduct has a supplement for management: The Manager Annex.
In 2020, we achieved an acknowledgement score of 100% for internal NN staff and managers (excluding staff on long-term leave or sick leave).
While the Covid-19 pandemic affects the world in many ways, our NN Code of Conduct continues to be a clear guide for how we want to behave towards our customers, colleagues and other stakeholders
Safeguarding value creation – Our Code of Conduct and other policies
Other policies NN, has policies, processes, systems and practices in place to ensure that we always do business in line with our values. That means being there for our customers by developing products and services designed with their best interests at heart, and managing our processes and their personal data in line with best practice in terms of transparency, safety and security. In doing so, we demand standards from all our business units and employees that meet and often exceed legal requirements.
Process (PARP) to ensure it is transparent and meets customers’ needs. Integral to PARP are our Customer Golden Rules: • Offer fair value to customers • Explain the risks, returns and costs of our products and services • Regularly assess products, services and distribution practices • Only work with professional and licensed distributors
Data privacy As digitalisation continues rapidly, we are conscious that to safeguard the privacy of our customers, it is more important than ever that we secure their personal data and then handle it responsibly. We do this by complying with all data protection legislative requirements, of which the EU General Data Protection Regulation (GDPR) is the most important one.
Our data & artificial intelligence (AI) analyses are focused on product/market optimalisation, process efficiency, and fraud and claim analytics. An example of process efficiency is the email classification project that uses AI to automatically classify emails received in generic mailboxes and routes them to the department that can best deal with them. This increases speed in answering and reduces handling costs.
Financial economic crime NN cautiously guards against money laundering, funding of terrorism, tax evasion and other forms of financial economic crime (FEC). Both because they are illegal and unethical, and because they can harm confidence in NN as a financial services provider. Digitalisation and dependency on digital systems has significantly increased the potential impact of FEC, and NN takes pro-active preventative measures to avoid FEC occurring. We do not tolerate any deviation from relevant FEC laws or regulations.
The Dutch insurance subsidiaries of NN Group continue to periodically reach out to groups of selected customers to encourage them to carefully assess their unit-linked products in order to enable them to address their personal situation and offer customers the option to switch to another product or make changes to their policy free of charge. Customers are also entitled to free advice. As at 31 December 2020, the portfolios of Dutch insurance subsidiaries of NN Group comprised less than 375,000 active unit-linked policies. In a limited number of cases (less than 1,250), Dutch insurance subsidiaries of NN Group have settled disputes with individual customers. These are tailormade solutions. A limited number of individual customers and several consumer protection organisations have initiated legal proceedings against Dutch insurance subsidiaries of NN Group. Read more on pages 125-127 of the Financial Report Note 44.
Safeguarding value creation – Our Code of Conduct and other policies continued
NN Group engages in ongoing dialogue with stakeholders on a variety of topics, ranging from products, services and business performance to our role in society. By endorsing national and international initiatives, we underline our ambitions and join forces with other organisations to increase leverage.
Stakeholder engagement Stakeholder engagement is a vital part of our efforts to earn their trust and support, and of our duty as a responsible and engaged company. NN Group identifies stakeholders based on their potential to influence or be affected by our business. Important stakeholder groups include customers, employees, investors, business partners and society, including regulators and societal organisations. We seek feedback from these groups on key topics that matter to them. This helps us align our business interests with the needs and expectations of relevant stakeholder groups, and is a source of information for strategy development and decision-making.
In 2020, NN participated in the research publication ‘Stakeholder inclusion as an accelerator for the Sustainable Development Goals’. This collaborative effort with UN Global Compact Netherlands, academics, NGOs and around 70 Dutch corporates, provided insight into the different stages of stakeholder engagement.
To underline our ambitions, NN Group and/ or our respective businesses have endorsed various national and international initiatives, and we are a member of various relevant international organisations. For an overview, please visit our website.
Furthermore, as a mortgage provider we want to contribute to the reduction of greenhouse gas emission in the houses we finance. NN Bank offers financing options to make homes more sustainable. Through prevention and advice tools such as Powerly, we encourage and support customers to improve the energy efficiency of homes. Read more in the sections on Responsible investment on pages 36-38, Our response to the Task Force on Climaterelated Financial Disclosures (TCFD) on pages 50-53, and NN IP’s Responsible Investing Report 2020.
International Corporate Social Responsibility (ICSR) sector covenant The ICSR covenant for the Dutch insurance sector aims to ensure that insurers identify and mitigate any potential negative environmental, social and governance (ESG) impacts through their investments.
Customers (retail) Customer interviews, panels and surveys, both online and offline
Stimulate good cooperation, increase financial advisor and broker satisfaction, leading to customer satisfaction
Financial and operational developments, corporate governance, natural resources and climate change, decent work, (non-)financial disclosures
Economic and financial market developments, risk assessments, (pension) regulation, ICSR sector covenant, sustainable finance
Exchange vision and insights, engagement with investee companies, participation in working group on biodiversity
At NN Group, we have reported on climate change since the financial year 2017 incorporating the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). This response is structured along the four TCFD pillars: governance, strategy, risk management, and metrics and targets.
Governance The NN Group Executive Board ensures that the company has adequate internal risk management and control systems in place so that it is aware of any material risks run by our company, and that these risks can be managed properly. Each year, the Executive Board defines the company’s risk appetite, related limits and tolerances. This is ratified by the Supervisory Board. Risk management processes are covered as part of the NN Group Financial Report (Note 51).
Within the Management Board, the Chief Organisation & Corporate Relations (COCR) has Corporate Citizenship, which includes sustainability, in her portfolio. The COCR is the sponsor for any sustainability, climate or responsible investment related topics that are discussed in the Management Board. The Chief Risk Officer (CRO), also part of the Management Board, is entrusted with the day-to-day responsibility for NN Group’s risk management function. The CRO is tasked to ensure both the Management Board and the Supervisory Board are at all times informed of, and understand the material risks to which NN is exposed including climate-related risks.
He is the sponsor of the NN Group annual risk & solvency assessment, in which we evaluate outcomes of scenario analyses including climate change.
In addition to this, each of our other Management Board members promote and integrate sustainability into their respective businesses or functions where relevant. To advise the Management Board on the implementation of the overall sustainability direction, the company employs a dedicated Corporate Citizenship team. This team works closely together with the different businesses and functions to steer and advise on the embedding of ESG aspects, as part of the implementation of the overall strategy.
ESG-related governance within our investment activities NN’s Responsible Investment (RI) Framework policy describes our approach to integrate ESG factors, including climate change, in our investment process. The Management Board decides on adjustments to the RI Framework policy and the related restricted list, taking into account the recommendation of the ESG Committee of NN Investment Partners (NN IP). In 2020, RI-related items were discussed in the Management Board four times.
Climate Change Dialogue To support TCFD implementation, NN has a Climate Change Dialogue: a multi-disciplinary working group, advising the Management Board on climate risks and opportunities. In 2020, the Dialogue convened to discuss the climate scenario analysis work, explore new developments and identify further actions. It also reviewed the functioning of the dialogue group, and identified a need to bring further alignment into the climate-related risk and opportunity analyses performed throughout the Group.
Strategy Climate change presents risks and opportunities, and it is expected that these will increase over the mid to long term. NN Group therefore considers climate change to be an emerging development with potential for
Safeguarding value creation – TCFD continued considerable risk to our long-term business model and strategy. As such, we evaluate climate change-related risks as part of our strategy resilience, stress tests and scenario analyses (refer also to the section on Risk management on page 54 of this chapter).
• Our investment strategies backing the life and income insurance liabilities need to consider the impacts of climate change over a period well beyond the next five years
Physical risks relate to long-term changes in climate and increases in natural catastrophes. These risks are particularly relevant to our non-life insurance business. Although predominantly in the Netherlands, we also offer a range of non-life products in Belgium, Spain and Poland. An increased frequency and severity of weather events, such as windstorms or hail, can lead to higher expenditures (claims and operational costs), thus affecting the margins of our P&C insurance products. However, because P&C is mostly a one-year renewal business, we have the ability to adjust our risk models and define premiums (or introduce excess) to reflect predicted possible losses. Moreover, external reinsurance will, under certain conditions, partially mitigate potential impacts.
Besides having consequences on the liability side, physical risks could also impact our investment portfolio. A severe windstorm or flooding might damage buildings within our European real estate portfolio, which could result in asset impairments or indirectly affect our clients’ ability to pay their mortgages.
Our response The management of climate-related risks and opportunities is part of our overall business strategy. Measures we take include: Using insights from scenario analyses in risk and investment process – In 2019/20, NN Group performed climate change scenario analyses to get more insight into specific drivers of climate-related risks and opportunities that may impact investment performance. The analyses are focused on the largest asset categories on our balance sheet: government bonds, residential mortgages, and non-financial corporate exposure. Where possible, we considered a relevant short-, medium-, and long-term scenario, aligned with the TCFD recommendations. We described these analyses in our 2019 Annual Review, and published additional details in the ‘2020 Carbon footprint of our proprietary assets’ report. We use the insights as further input for formulating our investment strategy, and further integration of climate change aspects in our risk management practices.
Safeguarding value creation – TCFD continued advice to improve the energy-efficiency of homes and offers connections with partners able to implement the measures.
Processes within investments NN has a policy framework in place to ensure our assets are invested responsibly. The policy includes a requirement to systematically incorporate ESG factors into the investment process. The consideration of ESG factors, alongside traditional financial data, helps us to make better informed decisions and optimise the risk-return profile of investment portfolios. At NN IP, assessing the materiality of ESG factors, including climate change, is an integral part of the investment process, where the analysts identify material risks and opportunities within the investment case. The processes are constantly enhanced. In 2020, NN IP developed its own proprietary ESG indicator for corporates and sovereigns. By the end of 2020, ESG criteria were consistently integrated for 74% of NN IP’s AuM.
Processes within insurance underwriting Within our P&C insurance business, we manage physical climate risks in several ways. NN helps customers take precautionary measures, with the aim of preventing and minimising claims caused by windstorms, fire or other events. We monitor our claims experience and reprice or adjust policy conditions where necessary. NN’s P&C portfolio is predominantly annually renewable, allowing repricing over the short term. We apply such measures cautiously, as longerterm affordability for our clients remains an important consideration for us when making strategic choices.
We let insights from catastrophe models guide our risk management process in terms of pricing/underwriting. For this, we use external vendor models (based on meteorological modelling, reflecting observed storms and patterns) to estimate the impact and damage that would be caused by large natural catastrophes, such as windstorms. NN uses a multi-year forward-looking approach.
Catastrophe models are also part of the risk management process in terms of solvency and capital management. Portfolio diversification and tracking concentration risks are other key risk mitigating steps. NN’s wide product range offers a broad variety of non-life insurance protection cover options against damage and loss from a wide range of causes. In addition to our P&C products, our portfolio includes income products, such as disability and accident insurance, which are less sensitive to windstorm or climate change.
Solvency and resilience testing We explicitly consider large catastrophic losses in economic capital modelling in order to ensure NN Group is resilient to such extreme scenarios. The Solvency II supervisory framework requires that insurers hold sufficient capital to cover the losses of a 1-in-200-year event, over a one-year time period. In addition, insurers also consider risks beyond this one-year time period as part of their Own Risk and Solvency Assessment (ORSA), and hold a level of capital that is in line with their defined risk appetite. NN Group, and each of its regulated (re)insurance subsidiaries, prepares an ORSA at least once a year. The ORSA includes the outcomes of stress tests and/or scenario analyses that are aligned with the identified key risks.
• A quantitative assessment using geographical data to assess physical (concentration) risks for properties in NN’s mortgage book in the Netherlands, looking at flooding events (including surface water flood caused by heavy rainfall, river flood and coastal flood).
Our Non-life and Banking businesses have analysed the following scenarios: • A quantitative assessment of a series of windstorms, and the potential impact on the solvency position of Non-life.
• A quantitative assessment of a disorderly transitional scenario ensuing from rapid global action and policies to limit warming to below 2°C compared to preindustrial levels, but having impact on our assets (equity, mortgages, real estate) materialising over the medium-term business planning period, in line with a (2019) PRA scenario.
• For our corporate bond portfolio, we consider the potential impact moderate and manageable. Over the past years we have been refining our RI strategy, and will continue to do so in the years to come. This will help to position our portfolio composition more towards companies that are likely to be best positioned on a path to decarbonising and/or offer climate solutions, while keeping a diversified portfolio.
Investments We measure the carbon footprint associated with our proprietary investments. New for 2020, is the inclusion of our real estate investment portfolio. This brought the total assessed amount to EUR 175 billion, representing 80% of our total asset portfolio, composed of the general account assets of the insurance entities, and the assets of NN Bank and NN Group. For more detail see table on page 66 and the separate publication, called ‘Carbon footprint of our proprietary assets’ report.
Other metrics and targets: • NN IP’s AuM in sustainable and impact strategies: EUR 29.3 billion (2020).
• GRESB score, as an indicator of the sustainability performance of the proprietary real estate portfolio: 83 out of 100. The assessment covers EUR 8 billion or 97% of NN’s real estate portfolio.
• Number of company dialogues on ESG factors conducted by NN IP analysts and ESG specialists: 1,269.
• Shareholder proposals where NN IP voted ‘for’: 100% out of 22 proposals requesting companies to set up GHG emission reduction targets in line with the Paris goals; 100% out of 11 proposals filed by Climate Action 100+; and 100% out of three proposals related to deforestation.
Our governance structure ensures we act with the interests of our group and all our stakeholders in mind, and that we comply with relevant regulations. Strong risk management is essential for the successful execution of our business plans and for achieving our strategic commitments.
Read more in the Corporate governance chapter on pages 23-32 of the Financial Report.
Read more in the Report of the Supervisory Board on pages 10-22 and in the Corporate governance chapter on pages 23-32 of the Financial Report.
Dutch Corporate Governance Code NN Group is subject to the Dutch Corporate Governance Code (the Code). The application of the Code by NN Group during the financial year 2020 is described in the publication Application of the Dutch Corporate Governance Code by NN Group, dated 10 March 2021, which is available on the website of NN Group. This publication is to be read in conjunction with the Corporate governance chapter on pages 23-32 of the Financial Report.
Geopolitical and governmental instability: risk of disintegration of existing economic and political systems and structures, driven by shifting power balances or nationalism, leading to protectionist behaviour, reduced economic prospects or geopolitical instability.
(Geo)political developments can have severe impact on both the economic as well as the regulatory environment in which we operate. We manage this risk by ensuring a strong solvency and liquidity position, and by holding investments with a high allocation to bonds of highly-rated European countries with relatively strong economies and whose sovereigns are considered a safe haven in times of crisis, and with a low exposure to the financial sector. We closely follow developments in international markets, and managing our asset exposures using a system of concentration limits on amongst others sovereign and country exposures, which are subject to regular review and monitoring.
Regulatory environment: risk of adverse changes to regulations or increased supervisory scrutiny that can have a profound impact on our business, products, regulatory solvency position and/ or performance (e.g. IFRS 9 and 17, taxes, Solvency II regulation, crisis measures, sustainability related legislation).
Political and regulatory developments may significantly impact our businesses, for example through revised solvency regulations, tax reforms or business regulations. Major developments in this area are the ongoing Solvency II review, implementation of IFRS 9 and 17, new pension regulations in the Netherlands, and new regulations around sustainability. ESG considerations have been part of NN’s way of doing business for a long time, and are at the heart of NN’s updated strategy. We follow the development of regulations closely, regularly assessing their potential impact on our business. We actively manage our relationships with regulators and supervisors to ensure NN can make an effective contribution to legislative processes and any concerns are consistently raised in relevant forums.
Long-term business model: risk of not adapting our business model in time to the changing world around us (e.g. changing customer behaviour or demographics, lowinterest environment, new entrants/ partnerships/markets, technical disruption, impact of climate change).
To manage this risk we need to stay relevant as a company to customers, now and in the longer run, by timely adapting to new developments, managing our operations efficiently using new technologies, or by creating economies of scale.
Sustained low interest rate levels impact our current balance sheet and new sales. Products that offer options and guarantees based on available returns in the market are less attractive to customers given low interest rates and the associated low yields. We adjust our product offerings, investment strategy and asset & liability management for this.
NN proactively invests in personal and professional development throughout the careers of our people. We help them build valuable networks, explore career paths, offer long- and short-term internal assignments, and job rotation schemes. We have also introduced agile working methods to give individuals and teams more flexibility in performing and prioritising their activities. We composed a new leadership profile, called i-LEAD, based on which our management is trained to coach and manage our people.
Data capabilities: risk of not having best-in-class big data capabilities for pricing, underwriting and distribution, in light of value chain disintermediation and growing attention for data privacy.
Long-term value creation for all stakeholders is at the core of our new strategy. Society’s norms and values are evolving rapidly and not always codified in formal legislation. By responding adequately to increased stakeholder expectations we have the opportunity to improve our business, to create long-term value, and to strengthen our brand and reputation towards customers, investors and employees, and the broader society. This is why we integrate ESG criteria into our decision-making by formulating clear policies and monitoring adherence, for example through our our Responsible Investment Framework Policy, Remuneration Framework and Tax Risk Management Policy.
Market risks are managed within clearly-defined and monitored limits and tolerances, and with the option to reduce downside risk through hedging programmes. In addition, our strategic asset allocation aims to optimise capital generation within the boundaries of adequate diversification, acceptable risk levels and cash flow matching mismatch limits.
Longevity risk: risk of higher technical provisions or required capital if life expectancy increases faster than expected.
NN Group’s pension and guarantee product portfolios are exposed to longevity risk, especially in the Netherlands. In May 2020, NN Life successfully completed three re-insurance transactions to transfer longevity risk. NN will actively explore further opportunities to manage longevity risk. We also actively manage our exposure by continuing to move from defined benefit (DB) to defined contribution (DC) products, and repricing and renewing old DB products into new DC products. Read more in Financial Report Note 51 on Risk Management.
Sound business performance: To achieve sound operational performance, we conduct business applying the NN values and by treating customers fairly. We aim to avoid human or process errors in our operations and to limit the impact of any such errors when they do occur.
The current Covid-19 environment impacts many of our customers, which may lead to increased risks, such as difficulties in paying premiums or mortgages. NN is helping customers and business partners through specific actions, such as via providing temporary payment breaks for premiums, mortgages or consumer loans. Read more on NN’s Covid-19 related initiatives to support customers and employees (page 7).
Technological developments are reshaping our business model and impacting our operations. Increasing data volumes, mobilising data access, and making IT more agile and flexible have helped drive the adoption of cloud services. Working from home, as well as increased use of digital channels by clients and agents, increases our dependency on IT and proper business continuity measures. At the same time, the Covid-19 pandemic has led to an acceleration of digitalisation trends and the use of (new) technologies.
We take an integrated approach to reporting, and our Annual Report consists of two parts: this Annual Review and the Financial Report. It is prepared in accordance with Dutch law, relevant EU disclosure regulations and reporting standards.
Structure In the Annual Review, we aim to provide a concise, accurate and balanced account of NN Group’s financial and non-financial performance over the past year. It is structured around seven sections: About NN, Our operating environment, Our strategy, Creating value for our stakeholders, Safeguarding value creation, Governance and risk management, and Facts and figures. It is prepared in adherence to relevant nonfinancial disclosure regulations, such as the EU Non-Financial Reporting Directive.
In-depth information regarding our financial performance, can be found in the Financial Report. It is prepared in accordance with the International Financial Reporting Standards (IFRS), endorsed by the European Union.
Reporting profile This is NN Group’s seventh Annual Report since our separation from ING Group and becoming a publicly-listed company on 2 July 2014. It is published on 11 March 2021. We report annually, on a calendar year basis (1 January – 31 December).
The scope for community investment and environmental data is all businesses with more than 100 FTE (representing 99% of our total organisation).
For non-financial information and data on customer engagement we use NPS reporting and the Global Brand Health Monitor. The Human Resources (HR) data is directly sourced from our HR data analytics department. Data on responsible investment come from Aladdin and our proprietary system for logging engagements with issuers. For data related to community investment and our direct environmental footprint, NN Group uses an online system, Credit360. Our internal validation process, including the application of Credit360’s validation rules ensures to limit any inaccuracies in the reported data.
Reference is made to Note 31 ‘Earnings per ordinary share’ for the disclosure on the Earnings per ordinary share.
Assets under Management (end of period, in EUR billion) 300 276 246
– insurance business units scoring above market average 4/11 4/11 8/12
Dow Jones Sustainability Index (out of 100) 84 (Included) 78 (Included) 77 (Included)
8 Sustainalytics changed its research method (2018 scores: position NN Group out of number of insurance companies) and since 2019 provides ESG Risk Ratings scoring companies on their ESG risks from negligible (0-10), low (10-20), medium (20-30), high (30-40) to severe risk (40-100).
Shareholder resolutions on which we voted by topic 683 706 596
Private real estate – portfolio average (vs. benchmark average) 83 (70) 85 (77) 80 (66)
1 NN calculates the GRESB scores on a value-weighted basis, and compares these to the relevant benchmark average. Scores are on a scale of 1 to 100. The real estate portfolios are part of NN Group’s proprietary assets. Due to fundamental changes to the 2020 GRESB Assessment structure, the 2020 scores cannot be compared with previous years.
Corporate fixed income 259 284 318 2 The decline in the Carbon Footprint (tCO2e/EURm invested) metric for Fixed Income and Equity in 2019 compared to 2018 was mainly attributed to methodology change; we started using a company’s enterprise value as a denominator to attribute emissions to both equity and debt positions.
Scope of our carbon footprint disclosure In 2020, we measured the carbon footprint of our private real estate portfolio for the first time. This brought the assessed AuM up to EUR 175 billion. This represents 80% of our total asset portfolio which comprises general account assets of the insurance entities, and the assets of NN Bank and NN Group. The main asset types that were not in scope of this carbon footprint analysis included cash, derivatives and private equity. The fixed income holdings that we assessed included government bonds and corporate fixed income securities. The corporate fixed income portfolio comprised mainly corporate bonds, but also asset-backed securities and loans (although the data availability on these two asset categories was limited).
This is the first year that we disclose the carbon footprint of our real estate investment portfolio. Our measurement includes the scope 1 and 2 emissions of NN’s direct investments in real estate properties and our indirect investments via non-listed real estate funds. It should be noted that this carbon footprint result might not yet provide the complete picture of carbon footprint of our real estate portfolio as data quality as well as coverage is expected to improve further in the future. More information on the methodology and results can be found in a separate report, called ‘Analysis of carbon footprint of proprietary assets’, published on the NN Group website.
Total spending on training and development (in EUR million) 12.9 18.9 21.5
2 In 2020, the target group for this indicator was adjusted to Management Board and Management Board minus one managerial position (instead of the composition of our Senior Leaders Group). 3 For 2020 and 2019 the scope is global. For previous years, the scope was Netherlands only; this counts for 60% of the total organisation. 4 Employee engagement score and the percentage of participation consists of internal and external employees (2019 and 2018 data are adjusted to this scope). 5 Human capital ROI is calculated as: (operating result ongoing business + employee expenses)/employee expenses.
Total employee wages and benefits (in EUR million) 1,608 1,545 1,500
Ratio of CEO compensation to the average employee compensation1 30:1 26:1 30:1 1 The calculation method was adjusted to already comply with the new prescribed method of the Dutch Monitoring Commission Corporate Governance as published on 14 December 2020. Compared with previous years, the pay ratio calculation includes components of variable remuneration under IFRS-EU and social security costs. For more information, refer to the Remuneration report on page 42 of the Financial Report.
Total donations to charitable organisations (x EUR 1,000)2 4,700 3,200 2,700
Total hours of volunteering work (in Future Matters focus areas) 7,991 12,481 13,236
Total number of young people reached through NN Future Matters programme3 15,834 25,421 38,536
Total number of households reached through the From Debt to Opportunities programme 2,603 2,983 2,468 2 Includes cash donations to charitable causes, corporate foundations and partnerships 3 Numbers reached include partnership with JA and EP-Nuffic, the Future Matters anniversary donations and main Dutch programmes (excluding the From Debt to Opportunities programme).
1 Certain emissions figures for 2019 and 2018 have been restated due to revised emission factors. 2 Increase in total waste for 2019 due to refurbishment of the NN Group headquarters in The Hague.
The Non-Financial Information comprises a representation of the performance of NN Group on its nonfinancial KPIs, and the thereto related, business operations, events and achievements during the year. NN Group is the parent company of a group of entities. The Report incorporates the consolidated information of this group of entities to the extent as specified in ‘Our approach to reporting' in the Report.
Reporting criteria The Non-Financial Information needs to be read and understood together with the reporting criteria. NN Group is solely responsible for selecting and applying these reporting criteria, taking into account applicable law and regulations related to reporting.
Our review engagement included, among others, the following procedures: — Performing an analysis of the external environment and obtaining an understanding of relevant societal themes and issues, and the characteristics of the company; — Evaluating the appropriateness of the reporting criteria used, their consistent application and related disclosures in the Non-Financial Information. This includes the evaluation of the results of the stakeholders’ dialogue and the reasonableness of estimates made by management; — Obtaining an understanding of the reporting processes for the Non-Financial Information, including obtaining a general understanding of internal control relevant to our review; — Identifying areas of the Non-Financial Information with a higher risk of misleading or unbalanced information or material misstatements, whether due to fraud or error. Designing and performing further assurance procedures aimed at determining the plausibility of the Non-Financial Information responsive to this risk analysis. These procedures included among others: — Interviewing management and relevant staff at corporate level responsible for the non-financial strategy, policy and results; — Interviewing relevant staff responsible for providing the information for, carrying out internal control procedures on, and consolidating the data in the Non-Financial Information; — Obtaining assurance information that the Non-Financial Information reconciles with underlying records of the company; — Reviewing, on a limited test basis, relevant internal and external documentation; — Performing an analytical review of the data and trends in the information submitted for consolidation at corporate level.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the review and significant findings that we identify during our review.
EOIPA European Insurance and Occupational Pensions Authority. EIOPA focuses on providing a sound regulatory framework for and consistent supervision of insurance and occupational pensions sectors in Europe, and is an independent advisory body to the European Commission, the European Parliament and the Council of the European Union.
Engagement survey A questionnaire measuring how a company’s brand and values are experienced by its employees, how its leaders live up to the standards the company sets, and how the company fulfils its employee value proposition as an organisation.
Materiality matrix Presents the trends and topics that are considered to have a potential impact on a company, and/or on its stakeholders. Likelihood, location and a specific timeframe are taken into account.
NN CCT NN Corona Coordination Team, consisting of representatives from relevant staff functions (Legal, Compliance, Risk, Communications, IT, HR) and businesses, with the aim to monitor Covid-19 developments, advice the Management Board and to support a safe and smooth transition process.
A policy set in place by NN Group to help businesses manage their compliance risks effectively and to set out the responsibilities on compliance risk management for the business and the compliance function.
OECD The Organisation for Economic Co-operation and Development, an international organisation, established after World War II, with the aim to shape policies that foster prosperity, equality, opportunity and well-being for all.
The movement in the solvency surplus (Own Funds before eligibility over SCR at 100%) in the period due to operating items, including the impact of new business, expected investment returns in excess of the unwind of liabilities, release of the risk margin, operating variances, Non-life underwriting result, contribution of non-Solvency II entities and holding expenses and debt costs and the change in the SCR. It excludes economic variances, economic assumption changes and non-operating expenses.
The NN Group N.V. 2020 Report of the management board (Bestuursverslag), as referred to in section 2:391 of the Dutch Civil Code. It includes the Annual Review and the following chapters in the Financial Report: Financial Developments, the Report of the Supervisory Board, Corporate Governance, the Remuneration Report, and the Dutch Financial Supervision Act and Dutch Corporate Governance Code statements.
Contact us NN Group N.V. Schenkkade 65 2595 AS The Hague The Netherlands P.O. Box 90504, 2509 LM The Hague The Netherlands www.nn-group.com
Disclaimer NN Group’s 2020 Annual Report consists of two documents: the 2020 Annual
Review and the 2020 Financial Report. More information – for example the
is available on the corporate website in the Investors/Financial Report section.
Certain of the statements in this 2020 Annual Report are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation: (1) changes in general economic conditions, in particular economic conditions in NN Group’s core markets, (2) the effects of the Covid-19 pandemic and related response measures, including lockdowns and travel restrictions, on economic conditions in countries in which NN Group operates, on NN Group’s business and operations and on NN Group’s employees, customers and counterparties, (3) changes in performance of financial markets, including developing markets, (4) consequences of a potential (partial) break-up of the euro or European Union countries leaving the European Union, (5) changes in the availability of, and costs associated with, sources of liquidity as well as conditions in the credit markets generally, (6) the frequency and severity of insured loss events, (7) changes affecting mortality and morbidity levels and trends,
(17) changes in credit and financial strength ratings, (18) NN Group’s ability to achieve projected operational synergies, (19) catastrophes and terrorist-related events, (20) adverse developments in legal and other proceedings and (21) the other risks and uncertainties detailed in the Risk management section and/or contained in recent public disclosures made by NN Group and/or related to
Any forward-looking statements made by or on behalf of NN Group in this
Annual Report speak only as of the date they are made, and, NN Group assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.