Archimedeslaan 10 P.O. Box 2072 3500 HB Utrecht The Netherlands www.asrnl.com
A Facts and figures 313 B About this report 315 C Glossary 319 D Abbreviations 321 E Materiality analysis and stakeholder dialogue 323 F GRI Content Index 327 G EU Directive: disclosure on non-financial information and diversity information 329
The financial statements for 2019 as included in this annual report are on the agenda for adoption at the Annual General Meeting of shareholders of 20 May 2020.
About the object The Oude Hoofdpoort in Rotterdam, the first offices of N.V. Maatschappij van Assurantie, Discontering en Beleening der Stad Rotterdam in 1720. In time-honoured fashion, this historic silver image was kept in the offices of the company’s Executive Board chairmen.
• Van Kampen Groep • Dutch ID • SuperGarant • Corins • ANAC • Loyalis Kennis & Consult • Poliservice
Leading market positions and overall in Dutch market based on gross written premiums (excl. Health)
1 The Transparency Benchmark takes place on a bi-annual basis. For that reason the 2017 result is presented.
At this point in time it is too early to make a realistic and credible assessment of the impact of the coronavirus on a.s.r.’s business and financial performance. The effect on our financial results will depend on a number of factors, including the extent and duration of the period of disruption and the impact on the global economy.
Our prime concern is the personal well-being of our customers and our employees, their partners and their families From the beginning of the crisis, this has been the starting point in all the measures we take. We have therefore decided, among other things, to completely close all of a.s.r.’s buildings. All our staff curently works from home so we are able to continue to provide our services to all of our customers. I am convinced that, with the commitment of all the staff at a.s.r., we will get through this crisis.
Sustainable a.s.r. wants to contribute to a more sustainable society and to add value for all its stakeholders – through sustainable products and services, in its investment policy, business operations and as a sustainable employer. Progress was made in all these areas in 2019. a.s.r. is at the top of the VBDO and Fair Insurance Guide benchmarks as one of the most sustainable investors among Dutch insurers. In 2019, it further improved the sustainability of its business operations by making its head office in Utrecht fully carbonneutral. This involved converting away from gas as a source of energy. Over the coming years, we will be taking further steps to make our operations more sustainable by halving the CO2 emissions of our business travel by 2025.
The high rating given to a.s.r. by its employees was reflected in the award of the ‘Best employer 2019-2020’ quality label. In this largest independent survey of Dutch employers, a.s.r. scored well above the average in the insurance sector, gaining the maximum three stars. There is however scope for further improvement in the sphere of diversity. Diversity ratios for the workforce as a whole are good, but they could be better at management level. This is now being addressed and will be expressly factored into our recruitment and appointment procedures.
Our core activity is insurance. Here, too, we want to concentrate chiefly on creating sustainable value. To this end, we have developed a number of products and services, such as the ‘Langer Mee AOV’, the ‘Verduurzamings hypotheek ’ and a.s.r. Vitality, a programme that helps customers to live healthier and more vital lives. In the Non-life segment, we are introducing more sustainable damage repairs, which can make a significant contribution to a more circular economy. Approximately 10% of our damage repairs are currently sustainable, which means that there is still considerable scope for growth. These sustainable options are based on our conviction that as an insurer, we have a duty to do more than simply bear risks and help people build capital for later. We want to increasingly be able to offer additional products and services with which to become even more relevant for our customers.
Financial self-reliance Our employees make a hugely valuable contribution to society by generously committing themselves to social
About a.s.r. | 1.2 Message from the CEO 13 activities aimed mainly at helping people to become more financially self-reliant. We believe in the importance of this commitment by our staff. This is therefore one of the non-financial goals we have linked to our strategy. The medium-term target is to achieve an annual increase of 5%, compared with 2018 (8,733), of the hours our employees spend in doing voluntary work. In 2019 this target was more than exceeded with an increase of over 40%, which indicates the impressive level of social engagement of our employees. We are immensely gratified by this.
Financial performance I am proud of the financial results we have achieved, and delighted that all the business lines have contributed to them. The execution of our strategy is running to plan. Our performance is in line with and has exceeded our targets. Our operating result rose by 14.5% to € 858 million against a slightly lower structural cost base. Turnover rose by 4.6% to € 4.7 billion, and at 93.5%, the combined ratio for Non-life and Disability shows that we understand our business. Pensions also reported a successful 2019, with an increase of over 50% of the gross written premiums (GWP) in the ‘WerknemersPensioen’ (WnP). a.s.r. has thus gained a strong position on the Defined Contribution (DC) market and this offsets the structural decrease in premiums from our Individual life portfolio. We are now administering Individual life on a single platform, after having transferred the final tranche of a total of over 800,000 policies in 2019. Our Mortgage fund, which we launched in 2017 for our institutional asset management customers, reached the € 5 billion milestone.
At 15%, the operating return on equity was well above target. The higher operating result means that we can pay our shareholders a higher dividend. We propose a cash dividend of € 1.90 per share for 2019, an increase of more than 9% compared with 2018.
In 2019, we reviewed and adjusted our capital policy, mainly to increase the scope for additional capital distribution. Our medium-term intention is to make an annual additional capital distribution of € 75 million in addition to the progressive regular dividend, provided our Solvency II ratio remains above 180% (based on the standard formula), given that we aim to maintain a robust balance sheet.
About a.s.r. | 1.3 Value creation model 14 1.3 Value creation model a.s.r. is committed to create long-term value for its stakeholders. This value may be economic, social or environmental.
The value creation model shows the flow of this value from the resources or ‘capitals’ a.s.r. consumes in its business to the economic, social or environmental value created (a.s.r.’s approach, output and impact) as a result of its activities. This model is based on the framework developed by the International Integrated Reporting Council (IIRC).
C o st e ff e ct iv e n e ss
So lid fi n an cial fram e w o rk
Funds • € 20.7 billion assets under management for third parties
Human and intellectual capital • 4,275 employees (headcounts) • € 6.4 million in training employees • Diversity and inclusivity • Health and vitality
a.s.r. contributes to the solution of societal issues with the long term perspective in mind.
As an institutional investor, one way in which a.s.r. takes ownership of social responsibility is through the use of ethical and sustainability criteria in its investment policy. All investments are screened on the basis of the Socially Responsible Investment policy, focusing on aspects such as social and environmental criteria. Countries and businesses that do not meet the criteria are excluded.
• Impact investing: € 927 million • Carbon footprint measured of investment and mortgages portfolio (for own account): 89%
About the object This strongbox, for keeping securities, among other things, dates from the 1700 – 1800 period. The inside of the lid shows the text ‘I served from 1720, I have gone through a great deal and I am grateful to have also come through the destruction of Rotterdam in 1940 in one piece’.
Operating environment | 2.1 The story of a.s.r. 18 2.1 The story of a.s.r.
The overarching strategy exists of ‘sustainable value creation’ and ‘value over volume’.
Ke y s tra teg ic pri nciple: Value over volum e Stra tegic principles
Value over volume In the insurance industry price competition is an effective instrument and volume growth can be relatively easily achieved by lowering premiums. However, this short-term growth may attract loss-generating business and is therefore unattractive to a.s.r. in the long term. At all times, growth will have to meet a.s.r.’s minimum return hurdles, whether this is organic growth or growth through acquisitions. Thus volume growth should always add value to a.s.r.
Strategic principles • Meeting customer needs a.s.r. serves its customers’ needs. As mentioned in chapter 2.2 SWOT analysis, there are important trends and developments affecting insurers, their business models and customer behaviour. a.s.r. must stay on top of these trends and developments and be flexible and agile to continue to meet its customers’ changing needs.
Cost-effectiveness is not about announcing large one-off cost reduction processes every couple of years, but something a.s.r. believes should be ever-present and embedded in day-to-day operations. Cost-effectiveness is part of the foundation of sustainable and profitable business models.
• Solid financial framework a.s.r. generates capital from its business activities and is a resilient and highly diversified insurer with solid solvency and profitable businesses. Its sound capital base allows a.s.r. to fulfill its longterm obligations and to absorb shocks while also taking advantage of opportunities to invest in organic growth as well as in selective acquisitions.
• Vitality and (sustainable) employability There is a growing attention for health and vitality, prompted partly by social trends and challenges such as a later retirement age and rising health care costs. In its products and services, a.s.r. focuses on the prevention of illness, absenteeism and disability, and on encouraging sustainable employability. It promotes the sustainable employability of its employees by investing in personal development, vitality and facilities that offer flexible working conditions.
• Climate change and energy transition Financial institutions increasingly need to factor in the risks associated with climate change, such as extreme weather, technological developments and the transition to a climate-neutral economy. a.s.r. assists the transition to a low carbon economy through its Socially Responsible Investments (SRI) and sustainable products and services.
These areas of growth can be developed in conjunction with partners and third parties. Not all products and services need to be a.s.r.-owned. It is a.s.r.’s goal to be relevant for its customers by offering third party services that are of high quality and add value in relation to those services that a.s.r. can offer itself.
Through its disability insurance business, a.s.r. has a strong connection with employers and employees and has a wide variety of services to offer that enhance sustainable employability. Several services can be seen as building blocks and are already part of a.s.r.’s business: disability and health insurance, insurance and service distribution companies, occupational health prevention and reintegration services and additional services such as a.s.r. Vitality.
This includes assistance in weighing up the pros and cons of buying and renting, mortgage advisory services, sustainable housing improvement advice or financial support to make houses more sustainable and reduce the burden on the climate of domestic housing. Housing insurance, burglary prevention services, maintenance support, sustainable damage repair services, can all improve customers’ home experience. The internet of things and development of domotics may enable a.s.r. to better serve its customers and is part of the evolution of this area of expertise.
• Self-employment and flexible labor markets Increasing flexibility of labor markets, the growth in the number of self-employed people and the rise of the gig economy where temporary contracts are the norm. These are trends a.s.r. need to respond to. Jobs become projects, freelancers replace employees and digital labor platforms speed up the process by matching supply and demand for specific labor competences with low transaction and processing costs.
Some trends lead to less demand for traditional insurance offered by insurers and more demand for additional services. These services relate for example to identifying and assessing risks, advice on how to deal with those risks, prevention services and claims handling services. These services can differentiate a.s.r. from other insurers. The use of data enables a.s.r. to better predict risks and provide better services to individual and corporate customers, while ensuring data privacy. Although some trends and developments can be viewed as threats to existing business models, a.s.r. identifies opportunities to benefit from those trends and developments and generate growth in an otherwise saturated and low growth insurance market.
Traditionally, insurance companies have customer contact mostly at moments that can have a negative connotation: payment dates and the handling of a claim when an event (accident) occurred. Client expectations are changing. Pure risk-bearing may no longer be sufficient and additional services may become more relevant to the customer. This provides a.s.r. with an opportunity to expand its offering and become more relevant to customers by increasing customer proximity and increasing the frequency of (positive) interaction with customers. By advising customers and enabling them to make better decisions, a.s.r. can positively impact customers’ decisions and behaviour. One example is the recent introduction of a.s.r. Vitality, through which a.s.r. aims to improve the health of its customers and employees.
The strategy described earlier is the driver of the value of a.s.r.’s business portfolio. On an ongoing basis, a.s.r. reviews its business portfolio for its contribution to value accretion, as well as its organic and inorganic growth outlook.
In 2019 a.s.r. strengthened its position in Non-life by acquiring Loyalis N.V. (Disability) and Veherex Schade N.V. (Disability). In doing so, a.s.r. continued its strategy of bolt-on acquisitions. The acquisition of Veherex was finalised on January 1st 2020. a.s.r. also increased its stake in HumanTouch Holding B.V. to 45%, to strengthen its position in the market for occupational health and safety services.
Within P&C, a.s.r. can continue to grow organically by gaining market share at the targeted COR and, where available, by adding books of business without materially increasing operational expenses, consequently benefiting from economies of scale. The distribution partners in the portfolio can facilitate this growth.
The sustainable employability opportunity for a.s.r. is to serve customers across all parts of the value chain. a.s.r. is consequently able to improve customer service levels throughout the service chain and create value in every single part of this value chain and in its underwriting performance. By focusing on sustainable employability and unlocking prevention services potential, a.s.r. adds value for its customers.
The foundation of its operations lies in multiple aspects, given that a.s.r. has gained extensive experience and expertise in: • Niche asset classes such as Dutch mortgages; • Unique proposition in real estate; • Environmental, Social and Governance (ESG)-driven asset management solutions; • Capital light pension solutions; Business domains in Non-life with growth potential
a.s.r.’s profitability in this segment has its origin in effective and simplified processes based on low and variable cost operations, in the excellent migration and conversion of books of business and in the optimisation of Solvency II capital and investment returns.
Growth opportunities within life insurance are: • a.s.r. continues to be a consolidator of funeral books; • a.s.r. continues to pursue individual life consolidation as seen in the recent acquisitions of Loyalis and VvAA Leven; • Benefits that may be achieved by leveraging a.s.r.’s operational efficiency in the segment.
• Technological developments, such as big data and machine learning, enables improved customer services and products
• Increased number of self-employed people, increased pension age and work-life balance changes lead to demand for sustainable employability
• Digitisation not yet fully embedded within the organisation as a whole, digital developments offer opportunities for a.s.r.
• Legacy systems due to developments in regulations and technology and past acquisitions
• Prolonged low interest rate environment and/ or financial markets turmoil due to macro developments
• Disadvantageous changes in regulations • Increasing life expectancy on certain life insurance service books • Further reduction of the solidarity principle and increased attention to individual solutions, possibly countered by mandatory solutions for ‘uninsurable’ groups
• Changing consumer behaviour, with declining and changing need for insurance products
• Disruption by new entrants and technologies • Development of the usage-based economy vs the ownership-based economy • Entrance of private equity parties into the consolidation of life insurance portfolios • Long-term financial obligations that provide certain interest rate sensitivity • Future legal proceedings regarding unit-linked file insurance policies • Potential financial impact of climate change
Operating environment | 2.3 Stakeholders and material topics 24 2.3 Stakeholders and material topics
More information about the integrated business strategy can be found in chapter 2.1 The story of a.s.r.
Material topic Strategic principle KPIs & targets Results Impact on stakeholders
Meeting customer needs Continuously focusing on improving levels of customer satisfaction in terms of quality and availability of services, comprehensible communication and customer focus.
No specific KPI’s or targets are formulated to monitor this performance. Compliance awareness on integrity related subjects through: • Gamification tooling • Training • Presentation • Ethical dilemma sessions and workshops
Solid risk management Risk management is an integral part of a.s.r.’s daily decision making and business operations. a.s.r. adopts an integral approach to managing risks, thereby ensuring that strategic objectives are met.
Developing and promoting sustainable products and services To offer sustainable products and services and encourage customers to positively and actively choose them.
• No specific KPI’s or targets are formulated to monitor this performance, since the exact impact (the nature and measurability) of products and services is still uncertain.
Contributing to sustainable employability Encouraging employees to develop themselves with the aim of maintaining and/or increasing their opportunities on the internal and external labor market and helping customers reduce the risk of (long-term) disability and encouraging sustainable employability.
• At least 30% of the Supervisory Board (SB), EB and senior management to be male or female
Reducing a.s.r’s operations footprint a.s.r.’s efforts to reduce its own environmental footprint.
• 50% reduction of CO2 emissions (by mobility) in 2025 (base year 2019)
Operating environment | 2.4 Strategic targets and results 27 2.4 Strategic targets and results 1 Targets are based on the assumption of normal market, environmental and economic conditions and no material regulatory changes and on a stand-alone basis.
2 OCC is the sustainable creation of capital from both the change in the Eligible Own Funds (EOF) and the change in the SCR on Solvency II basis. To express the change in SCR in EOF-equivalent terms, the change in SCR is multiplied by the average Solvency II ratio. The OCC consists of three elements: (1) Business Capital Generation, (2) Release of Capital and (3) Technical Movements. In this definition sustainable means: generated by the company on its own account, net of external and one-off effects. This results in a view on the Solvency II figures that is comparable with the definition of the operational result on IFRS basis.
a.s.r. has determined a set of ambitious group financial targets, positioning itself for profitable growth. It will continue to run the company with a strong capital position and a Solvency II ratio safely above 160% (standard formula). This enables a.s.r. to deploy capital for entrepreneurial purposes. The Solvency II ratio (after proposed dividend) decreased by 3% point to 194% (2018: 197%) and was well above the target of ‘safely above 160%’.
Given the strong performance in recent years and the confidence a.s.r. has in its business for the medium term, a.s.r. has a target for Operating Return On Equity (ROE) in the range of 12-14%. This target was outperformed in 2019 and the Operating ROE over 2019 was 15.1% (2018: 14.3%).
At the CMD the Organic capital creation (OCC) target of € 430 million for 2021 was introduced. This target is based on a.s.r.’s position as at that date. The OCC over 2019 full year equals € 370 million (2018: € 372 million) and reduced slightly in comparison to previous year. This was mainly caused by the decrease of the interest rates. For 2020 a new definition of the OCC was introduced. Based on the new definition the OCC increases to € 501 million. The main changes in this new definition are: • The market developments (e.g. spread movements) will be more reflected in the OCC; • The return on equities and real estate is more aligned with the long term expectations in our Strategic Asset Allocation (SAA) study; • Refinement of new business strain methodology leads to higher required capital strain; • The release of the market risk Solvency Capital Requirement (SCR) of the Life book is taken into account; • The unwind of Time Value of Financial Options and Guarantees (TVOG) is taken into account.
The maximum level of financial leverage has been set at 35% and is consistent with a.s.r.’s unchanged S&P A rating target. The financial leverage stood at 29.2% at year-end 2019 and the S&P rating was confirmed at A.
a.s.r. has a dividend policy with a pay-out ratio of 45–55% of the net operating result attributable to shareholders (i.e. net of hybrid costs) as well as an ambition to offer a progressive dividend per share. Management proposes a total dividend of € 267 million for the full year of 2019. This is a 9.2% increase compared to the cash dividend of 2018. The proposed annual dividend is in line with the dividend policy and based on a pay-out ratio of 45% of the net operating result distributable to shareholders (net of hybrid costs).
a.s.r. aspires to create sustainable value for its stakeholders and has set four non-financial targets as an integral part of its strategy.
a.s.r. has started to calculate its carbon footprint for investments for own account. Results are published on a quarterly basis on www.asrnl.com. The calculations follow the Platform Carbon Accounting Financials (PCAF) methodology, where a.s.r. contributes actively to the development of metrics for additional asset classes as for indirect investments. The objective is to regularly measure 95% of a.s.r.’s entire investment portfolio for its own account by 2021. At 31 December 2019, 89% of the total investment portfolio was measured.
Operating environment | 2.4 Strategic targets and results 28 energy (solar and wind), social enterprises or health improvements. In 2018, a.s.r. set the target of increasing impact investments for its own account at € 300 million per year to € 1.2 billion of impact investments in 2021. By the end of 2019, a.s.r.’s exposure to listed and non-listed impact investments and mortgages addressing specific environmental or societal needs stood at over € 927 million (2018: € 346 million).
Target 2021 1 In general, a.s.r. does not expect to pay cash dividends if the Solvency II ratio (calculated in accordance with the standard formula) falls below 140%.
2 a.s.r. as at the CMD and assuming rising forward rates. 3 As from 1 January 2020.
a.s.r.’s fee-generating businesses are growing in terms of absolute and relative contributions to operating results. a.s.r. aims to achieve more than € 40 million of operating result for the two segments of Distribution and Services and Asset Management, combined and expects to increase its operating results by 5% per annum thereafter. The operating result of the fee-based businesses amounted to € 48 million in 2019 (2018: € 43 million). This is an increase of 10.9% compared to 2018.
Compared to € 633 million in 2017 Non-life (P&C and Disability)
The United Nations launched the Sustainable Development Goals (SDGs) in 2015. a.s.r. has identified five sustainable development goals in connection with its integrated business strategy, to which it has most to contribute as a sustainable insurer, investor, employer and socially engaged business partner. SDGs 1, 3, 7, 8 and 13 are closely connected to the three pillars of a.s.r.’s sustainable value creation strategy. The table below shows how a.s.r. contributes to the SDGs and their underlying targets, and how it tracks progress.
Target • Impact investments including investments contributing to health improvements (for own account) by 2021.
Contribution • a.s.r. offers insurance to cover (the costs of) health care, available at one price (per label) for anyone who is eligible for this type of insurance under Dutch law.
• In november 2019 a.s.r. introduced a.s.r. Vitality to stimulate its customers and employees to get moving and live healthier lives in a positive way.
Contribution • a.s.r. foundation supports the financial education of children and young people (reading and teaching) and households with (a risk of) problematic debts.
Target • Number of employees employable via the Participation Desk: 70 in 2026
Contribution • a.s.r. complies with the 10 principles of the Ethical
Manifesto to ensure that customers are financially self-sufficient and are able to gain access to insurance services in case payment arrears and problems arise.
• a.s.r. is committed to fostering an inclusive culture in which difference is recognised, valued and used to the fullest. The principles of a.s.r.’s policy on diversity include ‘Participation of people with limited labor market potential’ and ‘Equal development opportunities for all employees’.
Ensure healthy lives and promote well-being for all at all ages.
Economic growth must be inclusive to provide sustainable jobs and promote equality.
Targets • Carbon footprint: 95% of investment and mortgages portfolio (for own account) measured in 2021.
• 50% reduction of CO2 emissions by mobility of its head office in 2025.
• a.s.r. develops climate maps, improves risk and claims assessments and helps intermediaries and customers with information to prevent claims from climate risks.
About the object In the 19th century, insurance companies primarily relied on word-of-mouth advertising by messengers and agents. The first advertising expressions appeared at the end of the 19th century in the form of posters and calendars. The images were often overloaded with symbolic images from ancient history and Christianity. Around 1900, symbolic images with protective angels were most commonly used. Public spirits were often confronted with gloomy messages, but we also see some more cheerful expressions with flowers.
Customers need to be able to rely on a.s.r. being able to meeting its fi nancial liabilities, now and in the future. a.s.r. strives to continuously improve its processes in order to provide its customers with an even better service and to be able to develop sustainable products and services with long-term value. a.s.r. offers solutions that align with the needs of its customers. Furthermore, a.s.r. supports clients and insurance brokers by actively sharing relevant content and practical guidance for damage prevention. See chapter 3.2 Our role as a sustainable insurer.
Having a competent, agile, diverse and vital workforce is key for a.s.r. in achieving its business targets. That is why a.s.r. is committed to attracting, retaining and inspiring the most suitable employees, offering them extensive scope for training and development, and facilitating a sound work/life balance. See chapter 3.3 Our role as a sustainable employer.
a.s.r. foundation initiates projects on fi nancial awareness and self-reliance. By teaching and supporting people in reading and arithmetics, a.s.r. supports them being able to handle money and organising their fi nancial administration. In addition a.s.r.’s sponsorship and donation policy is in line with this. See chapter 3.6 Our role in society.
Sustainable value creation | 3.2 Our role as a sustainable insurer 35 3.2 Our role as a sustainable insurer a.s.r. helps customers in sharing risks and accumulating assets for later. a.s.r. serves its over 1.5 million customers both directly via the online channel and mainly indirectly via a network of about 5,000 intermediaries. These intermediaries are independent financial advisers who advise their clients in the field of insurance and pensions. Their specific knowledge of the local market and customers is especially valuable for a.s.r. and its customers. New products and solutions are developed in close cooperation to ensure that these products are competitive and meet the changing needs of customers.
In a changing world, there is a growing need for sustainable and socially responsible products and services which increase positive and reduce negative impacts. Developing and marketing these products is part of a.s.r.’s business strategy. In addition to the sustainable products a.s.r. has introduced a.s.r. Vitality in 2019. In case of damage repair a.s.r. stimulates customers to make use of sustainable repair services.
Sustainable repair a.s.r. considers it important to have damage repaired with a view to the environment. That is why a.s.r. works together with repair companies that share this view. These companies have been tested for their sustainable business operations and have the Sustainable Repairs certificate. These can be construction companies, cleaning companies, glaziers, companies that repair electronics, or companies that help repair interiors (e.g. the floor or the sofa).
In case of damage, there is the choice to have this repaired by a sustainable repair company with a Sustainable Repairs quality mark. Of course the damage will be repaired as quickly as possible. But such a company also helps the environment and society in the longer term by meeting strict requirements.
External recognition a.s.r. is proud to receive acknowledgement for its socially responsible products and services.
Flood insurance a.s.r. is the first insurer in the Netherlands to offer flood cover for buildings and contents, part of its response to climate change.
Doorgaan-insurance is a single policy offering both occupational disability/loss of earnings insurance and group medical cover. It includes extended cover, psychological support and advice from the personal Doorgaan experts.
‘WelThuis Starters hypotheek’ The ‘WelThuis Starters hypotheek’ is designed for fi rst-time buyers and offers reduction in montly costs, fl exibility and certainty. The longer term ensures a lower monthly amount, which means that the mortgage can be managed fi nancially.
MoneyView, a leading Dutch research agency in the financial services industry, awarded a.s.r. the following in several categories: • 5 star MoneyView award for the Welthuis hypotheek for product rating and price; • 5 star MoneyView award for third party liability insurance for product rating and terms and conditions; • 5 star MoneyView award for the short-term travel insurance of Europeesche Verzekeringen for product rating and conditions.
experience a.s.r.’s service. a.s.r. wants its customers to feel that it is continually improving its service and strives for an increase of its NPS. In 2019, the NPS customer contact moment for customers increased by two points during the year, from 42 (2018) to 44 (2019). a.s.r. measures the NPS in all business lines. The NPS per business line is presented in chapter 4.1 Group and segment performance and Annex A Facts and figures.
Complaints management a.s.r. assumes handling complaints is a subject that requires specific knowledge and expertise. Therefore, complaint handlers keep their profession up to date through permanent education. This means points must be earned periodically with training or courses. For example, by following the course Dealing with Aggression and Emotion. Customers reward a.s.r.’s complaint handlers with a score of 8 (on a scale of 10).
The figures on the next page show the number of complaints settled and the percentage of complaints handled which have been fully settled, partly settled or not fully settled and unclear to the complainant. Most complaints relate to adjustments of the insurance and to claims. Most complaints arise from movements of a diverse nature (53%) and the payment of claims (22%).
One of the questions is whether the complaint has been settled in the customer’s opinion
In 2019 Stichting Toetsing Verzekeraars conducted a survey by order of the AFM on Complaints and Feedback Management. a.s.r. scored 4.5 out of 5. In the benchmark comparison with the five largest insurers, a.s.r. stood out favourably with the highest average score.
a.s.r. strives to reduce the number of customer cancellations caused by payment arrears and problems. It also strives to reduce situations in which customers are confronted with cost-increasing measures. In all cases, a.s.r. strives to avoid non-payment.
a.s.r.’s customers can find information on www.asr.nl about the options available if they are unable to meet their payment obligations. This information was visited over 6,000 times during 2019.
Health continued to improve customer solutions. For example, Health strives to ensure that customers are no longer charged unnecessary collection costs and no longer need to be registered with the Central Administration Office (CAK). The actions that Health has carried out: • Call actions have led to 60% more payments; • Customers who are registered with the CAK and have a small outstanding debt will be approached for a payment arrangement so that they can be deregistered as a defaulter. Since the start in March 2019, Health has been able to deregister 60 customers with the CAK; • Health is investigating the possibilities of a tailored customer approach, including the use of data from payment profiles.
• Process improvement in various customer teams were realised to ensure more equal and appropriate treatment of customers when agreeing on a payment arrangement.
a.s.r. acts in line with its purpose by supporting her mortgagees. Especially when they are at risk of falling behind on installments due to (personal) financial circumstances is an active part of a.s.r.’s social responsibility. An important a.s.r. principle, is to focus on enabling mortgagees to continue living in their house. In order to accomplish that, a number of measures are proactively offered when relevant, such as jobcoaching, budgetcoaching, home visits and interest installment-breaks.
a.s.r. focuses on prevention of payment arrears, and as a result mortgagees that are not yet behind on installments but are reasonably expected to be at risk of falling behind, qualify for pre-emptive support.
Sustainable value creation | 3.3 Our role as a sustainable employer 39 3.3 Our role as a sustainable employer
Employees are an important factor in successfully executing a.s.r.’s strategy and creating long-term value. As described in chapter 2.1 The story of a.s.r., customers and wider society benefit from the service, expertise, positive attitude and social commitment of its employees.
The a.s.r. culture Everyone at a.s.r. abides by the organisation’s core values, which set out the basic approach and are used as a behavioural compass. These core values are: • ‘I’m helpful’. Employees are approachable, listen attentively, then help with solutions using their expertise, experience and commitment; • ‘I think ahead’. Employees empathise and think ahead to proactively help customers, intermediaries and colleagues; • ‘I act decisively’. Employees keep a close eye on content and process, and come up with solutions. They coordinate, are persistent and stand by their commitments.
74% of staff completed the survey (2018: 70%). The high scores of 2018 were maintained with improved scores in several dimensions. The strategic direction and vision are well recognised by the employees. The scores also show that the employees are highly motivated to innovate and to pay heed to the wishes expressed by the market. At corporate level customer focus stabilised in 2019. a.s.r. strives to improve its customer focus. Results are analysed by means of in-depth qualitative group sessions with employees and management in which action points for the customer theme are determined jointly and implemented in 2020. A follow-up on the attention points including customer focus will be conducted by the individual business lines.
Relative score employee engagement in Denison scan compared to the benchmark 3.3.1 HR policy a.s.r. needs competent, agile, diverse and vital employees with an entrepreneurial and versatile attitude in order to realise ‘the strategy of a.s.r.’. Employees who can and dare to take control of their day-to-day work, including their own careers, but also employees who can handle change, within a.s.r. as well as in the market in which it operates. That is why a.s.r.’s HR policy focuses on personal leadership and personal agility, on supporting employees in their professional development and on enhancing their vitality and employability.
Agility The environment in which a.s.r. operates, is continuously changing. Consider, for example, the changing competitive conditions and developments such as robotisation, digitisation and artificial intelligence (AI). That is why agility is one of the most important themes in a.s.r.’s development programmes and why the employee review plotting is also based on the agility of employees. During the annual employee review, the performance and potential of all a.s.r. employees is discussed. The results of the employee review are discussed individually with each employee and are used for strategic employee planning, succession planning, mobility and recruitment, as well as the targeted implementation of the development programmes.
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Development and sustainable employability Every year, a.s.r. employees can make use of an extensive range of training programmes and courses to keep up with their professional knowledge and to improve their skills.
Employees took part in one of the development programmes 534 719 819
Employees were given guidance in the context of redundancy 157 154 182
Strategic personnel planning In order to ensure that the workforce is sufficiently equipped to adapt to the organisation’s course and developments in a rapidly changing world, HR is moving from an operations-driven to a strategy-driven personnel planning. During 2019, the HR organisation was adapted to this: a team has been set up within the department that is dedicated to finding the best solution for a total workforce management issue. Multidisciplinary HR teams (advice, vitality, recruitment, development) ensure an optimal service provision to the business units.
Data analyses are crucial for strategic personnel planning. That is why, since 2018, HR has been drawing up an extensive monthly dashboard with all the relevant HR key indicators, target figures and associated analyses. Since 2019, this dashboard has also been included in the Performance Management Reporting of the business lines and large staff departments. In addition, each business line receives a customised dashboard on a monthly basis. The next step is predictive analyses based on the collected data.
Flexibility in employment conditions and in the working relationship Because the standard employee does not exist and employees have different needs at different stages of their lives, a.s.r. offers flexible working conditions through its CLA. Examples of this are time- and place-independent
Vitality a.s.r. invests in the vitality of its employees, including through its a.s.r. Vitality programme which is offered free of charge to all a.s.r. employees. Other means used by a.s.r. to promote vitality include periodic medical examinations, help with setting up workstations, internal sports facilities, vitality workshops, vitality software, a healthy offer in the company restaurants, and fresh fruit supplied free of charge.
Absenteeism The absenteeism rate for 2019 was 3.97% (2018: 3.83%). This slight increase can be explained by an increase in long-term absenteeism. a.s.r. has taken action on various points to reduce the rate of absenteeism. The sickness absence regulations have been amended, whereby the emphasis is placed on what the employee can do himself to prevent sickness. ‘In Motion with a.s.r.’ is an umbrella initiative aimed at being and staying healthy at work. There is extensive attention for vitality and absenteeism, a.s.r. will continue to work on reducing the absenteeism rate.
The short absence (and therefore also the reporting frequency) has decreased compared to 2018. a.s.r. will maintain its efforts aimed at improving the health and vitality of its employees in 2020. In 2019, 54% of all employees have not been absent due to illness during the year (2018: 56%).
1 Excluding maternity leave. 2 Nil absenteeism is the percentage of employees who have not reported sick during the reporting period.
Diversity and inclusivity a.s.r. is committed to achieving an inclusive culture in which differences are recognised, valued and used to the full. a.s.r. believes in the positive effect of a diverse workforce on its success and innovation – be it through differences in gender, ethnicity, age, religious beliefs, education, sexual orientation, disability or nationality.
Number of employees through the Participation Desk 70 35 29 31
In 2019 a.s.r. has reached the first performance level on the Performance Ladder for Social Business (PSO). This measurement instrument and quality mark from TNO reflects the degree of social entrepreneurship achieved. Organisations are placed higher on the ladder (there are four performance levels) the more people they employ with a vulnerable employment status and through working with other PSO-certified organisations. In concrete terms, this means that a.s.r. structurally makes its own contribution to the employment of employees who have a distance to the labor market, but that it also takes this into account when purchasing and tendering from suppliers.
Pension scheme The a.s.r. pension scheme expired at the end of 2017 but was ‘frozen’ with the introduction of ‘De Andere Cao’. Negotiations with the trade unions on the pension scheme started in 2018 and were continued in 2019. The aim is to introduce a new pension scheme on 1 January 2021.
Remuneration Every three years, an independent consultant is hired to perform a market comparison based remuneration benchmark. The a.s.r. remuneration policy starts from the principle that the average level of total remuneration should be the median of the peer group. The relevant peer group for a.s.r. employees (excluding the EB of ASR Nederland N.V. and a.s.r. asset management) is the general market. The relevant peer group for a.s.r. asset management is the asset management market. In line with the remuneration policy, the remuneration of a.s.r. employees consists solely of a fixed payment. The peer group of the EB is described in chapter 5.3 Remuneration report.
Business targets are set annually by the EB. These are based on a.s.r.’s business strategy including financial as well as non-financial targets. All targets are cascaded to management to focus all contributions on achieving the defined business goals. The progress of the targets is discussed in the regular meetings between management and employees. a.s.r. does not use variable remunerations, there are no financial bonuses linked to the targets.
In 2019, a.s.r. had one type of variable remuneration: the ‘Boter-bij-de-vis’ (incidental bonus), a variable remuneration scheme with a small remuneration linked to specific, additional performances. This reward cannot be agreed in advance but is awarded after delivering an extra ordinairy, specific performance. In 2019, 153 employees received a Boter-bij-de-vis reward.
a.s.r. also has a few other special forms of variable remuneration, such as retention allowances, a welcome bonus and a buy-out, which occur only occasionally and are awarded in line with legislation and regulations. The same applies to severance pay. In 2019, 2 employees received such a special form of remuneration.
The number of shares purchased during the reporting period were 100,546, for an amount of € 2,7 million (2018: not applicable, no ESPP in force).
Please find more detailed information about employees in Annex A Facts and figures.
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a.s.r. also assesses businesses on their level of compliance with international conventions such as the Organisation for economic Co-operation and Development (OECD) guidelines, the UN Guiding Principles and United Nations Global Compact (UNGC).
100% compliance with own SRI policy a.s.r. safeguarded the full compliance of its SRI policy using a three-step process: internal teams implementation (investment departments), compliance process (Risk) and an independent external assurance (by Forum Ethibel). In 2019 a.s.r. took the necessary steps to align its recently acquired investment portfolio from Loyalis and make it fully compliant with a.s.r.’s SRI policy.
For sovereign bonds, a.s.r. applies a best-in-class selection of countries based on their SDG performance, in line with the SDG country ranking published by the SDG Index: the weighted average score of the a.s.r. sovereign portfolio is ranked in the first quartile (best-in-class) of the SDG Index.
a.s.r. defines three types of engagement: I. Engagement for the purpose of influencing: this type of engagement is used to move companies towards better sustainable practices. In 2019, the issues addressed included the following: • Global Compact breaches through a.s.r.’s partnership with Robeco: the updated list of companies under engagement and their status can be found on www.asrnl.com; • Living wages through the Platform Living Wage Financials (PLFW) which is a collaborative partnership between 13 financial institutions to engage listed companies in the garment, agri-food and retail sector to address living wage issues in their supply chain. In 2019, a.s.r. actively contributed to the engagement of 8 of the companies and finalised the development of the methodology for the agri-food and retail sectors; • Fur and exotic leather through collaborative engagement: the use of real fur and exotic leather is attracting growing criticism and major luxury brands have declared their intention to step out of the fur business. Together with two peer investors, a.s.r. has successfully closed the engagement with 5 luxury brands on taking steps towards phasing out fur in 2019.
Voting policy A shareholders’ right to vote is essential for a proper functioning of a corporate governance system. a.s.r. exercises this right whenever relevant. a.s.r.’s voting policy (www.asrnl.com) has been developed in accordance with the Dutch Corporate Governance Code and its own SRI policy. This policy is applicable to all internally managed listed equities. In 2019 a.s.r. developed further specifications with its proxy voting provider to flag ESG related issues. In 2019, a.s.r. voted at nearly 97%
Externally managed assets The external providers’ SRI policy is a key criterion in the selection of external managers. a.s.r. seeks to appoint managers who apply a SRI policy that is as close as possible to its own and, as a minimum condition, a.s.r. requires exclusion of controversial weapons as per the Sustainable Investing Code of the Dutch Insurance Association and the best possible effort to be a signatory to the UN PRI and UN Global Compact principles. a.s.r. also engages with its external managers to enhance their SRI policy, implementation and transparency. In 2019, a.s.r. actively engaged with new and existing managers, such as BlackRock, to develop ESG products. A new ESG tracker fund for High Yield was launched to the market with a.s.r. as seed investor. a.s.r. receives frequent sustainability reporting from its external managers and, where possible, requests impact metrics in addition to the SDG reporting.
Insurers Benchmark by the Dutch Association of Investors for Sustainable Development (VBDO); • VBDO: a.s.r. was cited as having the best practice in the report ‘Dutch institutional investors and climate change’; • a.s.r. was recognised in 3 different ways by UN PRI: - UNPRI qualified a.s.r. as the 2019 Group Leader. The title was awarded for the first time this year to the top 10% members of UN PRI for their efforts in selecting external asset managers for listed and private equity; - The PLWF, in which a.s.r. is a partner, won the UN PRI prize for best initiative in the field of SRI and active shareholding; - a.s.r.’s sustainable investing strategy was awarded the highest score by UN PRI assessment, scoring the same or better than the sector average in all areas, with the highest possible score A+ given for its strategy and governance and the ESG management of its equity investment.
• The peace organisation PAX included a.s.r. in its Hall of Fame for the 5th time in recognition of its policy against nuclear weapons; • In a new practice study by the Fair Insurance Guide on investments by insurers in the pharmaceutical industry, a.s.r. was identified as one of the top 3 insurers taking into account affordable medicines and whether the pharmaceutical companies pay taxes in a fair manner. Later in 2019, a.s.r. was ranked as one of two insurers with a very low exposure to shale gas companies.
As a real estate investment manager focusing on long-term value creation, a.s.r. prioritises the need to make real estate more environmentally sustainable. a.s.r. believes in maintaining long-term relationships with its stakeholders, with whom it wants to reduce its carbon footprint. However, ESG goes further than simply pursuing the sustainable management of real estate. a.s.r. strives to contribute to both the environment and society by
Sustainable value creation | 3.4 Our role as a sustainable investor 47 investing in neighbourhoods, among other things. The funds and business lines are continuously striving to make the properties in their portfolios more sustainable. Their focus is both on sustainable acquisitions and on making standing investments more environmentally sustainable with a keen eye on the energy efficiency of the buildings, and the use of sustainable materials and methods and greenery. a.s.r. continuously investigates and implements new developments and applications, such as solar parks, transforming vacant spaces and/or buildings, energyneutral dwellings, charging points for electric cars and green rooftops.
(% of the holdings in the portfolio that were declared asbestos-safe)
Green Building Certificate In addition to the portfolio’s energy label certification, the a.s.r. real estate funds aim to further improve the sustainability of their portfolios by focusing on acquiring Green Building Certificates (GBC) including BREEAM-NL, Dutch Green Building Council (DGBC) Woonmerk and Well for their buildings and complexes. This certification means that the properties, their surroundings and the development process as a whole are assessed on a broad range of environmentally sustainability criteria.
The ASR Dutch Core Residential Fund’s (DCRF) objective for the period up to 2019 was to obtain these certifications for at least 20% of its portfolio. In 2019, 23% of ASR DCRF’s portfolio was certified.
The goal for the ASR Dutch Mobility Office Fund (DMOF) portfolio was to increase the BREEAM-NL certification grade from 6.5% in 2018 to at least 30% by the end of 2019. Following the award of BREEAM-NL certification for the Eempolis office building in Amersfoort in 2019, 31% of the portfolio is now certified.
Target: 1 Green Building Certifi cation shopping centre 4 certificates BREEAM-NL In-Use Good certification and 1 Breeam-NL in-Use Very Good certification
Sustainable investing – GRESB benchmark By participating annually in Global Real Estate Sustainability Benchmark (GRESB) Assesment, an independent benchmark that assesses the sustainability of real estate investment funds around the world, a.s.r. improves its transparency and awareness of sustainability. In 2019, all three funds participating in GRESB improved their scores.
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In line with its mission and Corporate Social Responsibility (CSR) policy, a.s.r. strives to be a socially responsible taxpayer.
a.s.r.’s tax policy contributes to the ambition to be a financially reliable and stable organisation to ensure that a.s.r.’s short-term as well as its long-term commitments towards customers and stakeholders can be met, thus creating long-term value. In addition, the outcome of its tax policy is that a.s.r., as a member of society, contributes its fair share to enable and maintain the very society of which it is part.
Tax strategy a.s.r. aims to be a socially responsible taxpayer based on professionally executed tax compliance. a.s.r. does not apply any tax-aggressive positions. In optimising its tax planning, business considerations are always leading.
Tax is a topic in the stakeholders’ dialogue (see Annex E Materiality analysis and stakeholder dialogue).
In view of the tax strategy, a.s.r. has the following objectives: • a.s.r. only supports transactions or products with a welldocumented business objective; • The starting point is that a.s.r. acts in accordance with the spirit and letter of the tax legislation and regulations in the countries in which a.s.r. operates. a.s.r. does not use any structures aimed at tax avoidance. a.s.r. will not allocate profits to jurisdictions with low tax rates or make use of tax havens and does not use tax structures intended for tax avoidance; • a.s.r. has no products that facilitate customers in avoiding or evading taxes; • a.s.r. optimises its tax position, thus limiting the tax burden. This takes place within the given framework of a.s.r.’s wish to make a sustainable contribution to society as a whole; • a.s.r. takes care of the timely payment of tax debts; • a.s.r. presents relevant (tax) positions adopted or to be adopted as soon as possible to the tax authorities and provides the tax authorities with an active insight into all relevant facts, circumstances, positions, and its view of the associated legal consequences; • a.s.r. actively manages its tax risks. In view of its open and transparent relationship with the tax authorities, a.s.r. proactively coordinates the tax consequences of various transactions in advance with the tax authorities.
Group Tax has a central role in the tax function of a.s.r. and therefore has an important role in embedding the tax strategy in the day-to-day operations of the organisation. Group Tax is responsible for the establishment, maintenance and testing of the Tax Control Framework that is part of the Management In Control process.
Group Tax is the ‘single point of contact’ with the tax authorities and has periodically and ad hoc consultation with the tax authorities. External tax advisors will only be consulted after involvement and/or approval by Group Tax.
In the case of important agreements such as product development, acquisitions, internal reorganisations, Group Tax is consulted. This ‘sign off’ is used to safeguard the compliance of the tax strategy. In addition, tax issues are regularly discussed with the CFO.
3 The corporate income tax rate for 2020 is 25%. The 2021 rate is 21.7%. The rate reduction was taken into account when valuing the amount of the deferred (net) tax claim at year-end 2019.
authorities at an early stage ensures that the tax position in the financial statements contains fewer uncertainties, which contributes to the confidence that stakeholders can derive from a.s.r.’s tax position. Because a.s.r. operates almost exclusively in the Netherlands, there are no international tax rulings.
Domestic and foreign taxes levied at source, offset against Dutch corporate
Direct investments For the investments (equities and corporate bonds) in companies, a.s.r. makes use of ESG research from the research firm Vigeo Eiris. The assessment of companies also includes tax criteria, in particular on the basis of (inter) national guidelines. In this way, a.s.r. avoids possible ESG risks in its investment portfolio in relation to for example tax havens and offshore financial centres. More information on this can be found on a.s.r.’s website: www.asrnl.com.
In line with its status as a signatory of the UNGC, a.s.r. works to ensure that human rights are respected. Moreover, a.s.r. endorses the United Nations Guiding Principles on Business and Human Rights (UN GPs), setting out the global standards for preventing and addressing the risk of adverse human rights impact linked to business activities, as well as other more detailed standards, such as the OECD Guidelines for Multinational Enterprises or the Equator Principles for the financial sector. As such, a.s.r. strives to integrate human rights risk management and due diligence into existing business processes across relevant operations.
The largest link with challenging human rights situations is considered to be found in asset management activities. In addition, causing or contributing to human rights violations may occur in a.s.r.’s own operations, through business partners or in the supply chain.
Own operations a.s.r. strives for an inclusive workforce with equal opportunities and treatment. A culture in which people from a variety of backgrounds can thrive and are feeling comfortable in expressing their identity and opinions. But also where people with an occupational impairment have the opportunity to a fully-fledged job.
The a.s.r. code of conduct describes the desired attitude and behaviour that is expected from each other, including respectful cooperation and working together on an equal basis. In this code of conduct is also stated that a.s.r. respects and subscribes to the fundamental human rights as laid down internationally in the Universal Declaration of Human Rights. In most cases, if there is an area of concern including discrimination, an employee’s supervisor or the HR department is in the best position to address this. In case of violations or suspected violations, employees but also third parties, including former employees, clients and other contracting parties, can report alleged malpractice anonymously, freely and without feeling threatened under the whistleblower scheme.
A potential risk relates to complaints regarding breaches of customer privacy or loss of customer data. a.s.r. complies with the General Data Protection Regulation (GDPR) regulation which came into force in 2018. More information about a.s.r. privacy policies and measures, can be found in chapter 3.5.4 Privacy and in a.s.r.’s privacy statement (www.asrnl.com).
Supply chain a.s.r. does not do business with employees and business partners, including suppliers and customers involved in crime, including money laundering, fraud or the financing of terrorism and other socially undesirable acts. a.s.r. has a Customer Due Diligence (CDD) policy that requires screening before a contract is signed. The contract
a.s.r. strives to remain as inclusive as possible in its acceptance policies, providing access to essential financial products and services also to vulnerable groups of people in society. On the other hand, societal expectations and a.s.r.’s sustainability policies are increasingly playing a role in determining which clients and companies a.s.r. decides to do business with. For instance, a.s.r.’s pension department has started a pilot programme tailored ethical guidance in their acquisition and acceptance policies. Besides formally implemented measures like the CDD policy and exclusion lists based on international sanctions, this ethical guidance moves the decision-making process beyond the question ‘can we accept a certain client?’ to the more ethical consideration ‘do we want to accept a certain client?’ This tailored guidance helps to ethically reflect on the types of clients a.s.r. deems socially acceptable for its business and stakeholders, now and in the future.
Through these general and tailored ethical initiatives and policies, a.s.r. attempts to develop company-specific guidelines to help reflect on how it deals with dilemmas in the different contexts of its various business activities, enabling a.s.r. to gauge its ethical culture and consider to what degree daily decisions express its core values and contribute to society in valuable ways. By creating opportunities for dialogue about dilemmas, a.s.r. strives to be better equipped to deal with changing societal norms and circumstances as an organisation and to stimulate the growth of ethical awareness among its employees.
However, these ambitions may also lead to several practical daily dilemmas. As an intermediary insurer, a.s.r. distributes the majority of its products and services through independent advisors and intermediaries, who are accustomed to cooperating with trusted partners in the non-life supply chain. This means that primary processes involve many stakeholders and interests. Consider, for example,
Sustainable value creation | 3.5 Our role as a trusted company 53 customers, distribution partners, insurers, inspection agencies, expertise agencies and repair companies, to name but a few. While local damage repair - making use of trusted (existing) networks - may sometimes be quicker and more easily accessible for customers (due to familiarity) and may also benefit the local economy, it does not mean that damage will always be repaired in the most sustainable way.
In the coming years, non-life department aims to be a trusted and reliable sustainable service-provider for its consumers, companies, business partners and employees. These ambitions require an efficient supply chain, involving a wide range of stakeholders that work closely together to visibly improve the customer experience and reduce costs across all business processes. It enables a.s.r. and independent advisors to better inform customers about the relevance of preventive measures and help them to choose sustainable repair options wherever possible within the repair network.
In addition to the information provided by customers, a.s.r. may receive data from third parties, such as employers or other parties, for example, Statistics Netherlands (CBS), the Credit Registration Office (BKR), the Employee Insurance Agency (UWV), working conditions services or market research firms. a.s.r. records from which sources it has received data.
Personal data are necessary for the performance of a.s.r.’s services. Using personal data helps a.s.r. to improve its products, perform marketing activities, reduce risks and even trace fraud or cases of abuse. In this context, a.s.r. complies with the Insurers and Crime Protocol and the Financial Institutions Incident Warning System Protocol. Both protocols have been established by the Dutch Association of Insurers.
All data are handled with due care and adequate technical and organisational measures have been taken to safeguard sufficient protection levels. a.s.r. has put in place technical and organisational measures to protect data against loss or unlawful processing. Examples include measures for using a.s.r.’s websites and IT systems safely and for avoiding abuse, but also for protecting physical spaces where data are stored. a.s.r. has an information security policy in place and arranges training programmes for its staff in the area of personal data protection. Only authorised staff can view and process data.
Data leaks may concern access to, deleting of, amendment of or posting personal data without intention of the organisation. a.s.r. is required in accordance with the GDPR to report data leaks that in potential carry serious consequences for those involved, directly to the Dutch Data Protection Authority (DDPA). These notifications are carried out by Compliance. Although the reported data leaks in potential carry serious consequences for those involved, there have been no reports of any damages related to misuse or abuse of leaked data in 2019. Most data leaks are the consequence of human error. a.s.r. took appropriate measures to mitigate risks related to the reported and non-reported data leaks. It is currently the expectation of the company that none of the leaked data will have a serious impact for those involved.In 2019 no fines have been imposed for the reported data leaks to the DDPA. a.s.r. has procedures in place to ensure adequate processing in case of a data leak.
Notifications of data leaks at the Dutch Data Protection Authority 19 58 38
Compliance reports quarterly on the number of data leaks and type to responsible management, the EB, the a.s.r. Business Executive Committee (BEC) and the A&RC of the SB. When necessary, a.s.r. has taken
Data are only provided to third parties if it is permitted by law and if it is necessary for a.s.r.’s business operations. Sometimes, a.s.r. is required by law to pass on specific personal data to the authorities e.g. disclosures concerning life insurance policies to the tax authorities. To ensure a sound acceptance and risk policy and to prevent fraud, a.s.r. records data in the Central Information System of the CIS foundation in The Hague. The CIS foundation supports insurers in their acceptance and claims processes. With the information concerning the CIS foundation, a.s.r. is permitted, under strict conditions, to exchange information via the CIS foundation. More information on this can be found on the website of the CIS foundation.
a.s.r. produces profiles of its customers on the basis of the data collected with the purpose of analysing these data and thus obtaining insight into (future) actions and preferences. When doing so, a.s.r. complies with legislation and regulations. This means, among other things, that a.s.r. asks permission in advance if this is required by law.
Integrity and ethical conduct are prerequisites for a.s.r.’s reputation as a trustworthy insurer. In addition to the use of clear frameworks, sound and controlled business operations are above all driven by sound, intrinsically embedded core values and ethical behaviour.
The a.s.r. code of conduct sets out the required attitude and behaviour of a.s.r.’s employees. The aim of the code is to protect a.s.r.’s reputation through the integrity and professional conduct of all its employees. For more information about the a.s.r. code of conduct, see www.asrnl.com.
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a.s.r. has a fraud policy at group and divisional level. This policy provides for identifying and detecting fraud during the processes of acceptance and claims handling. a.s.r. investigates signals of unethical behaviour, including corruption and fraud, from employees, intermediaries and suppliers. Should integrity be compromised, including through corruption and/or fraud, a.s.r. will take appropriate measures, with due regard for the applicable laws, regulations and sector-based protocols. The risk of corruption has been discussed in more detail in various policies, including in relation to anti-corruption policy and an incentive policy. a.s.r. operates a policy of zero-tolerance, and uses the definition formulated by the Dutch National Bank (DNB): ‘The risk of corruption is the risk of financial companies in the Netherlands being involved in bribery and/or conflicts of interest which impair the integrity of, and trust in, that company or in the financial markets’.
a.s.r. has a central Compliance department which monitors the sound and controlled business operations, including reputational risks, of a.s.r. The framework for monitoring and review is based on the rules, regulations and standards of a.s.r. itself, including the a.s.r. code of conduct. In 2019, the Compliance department monitored compliance with the CDD regulation, the Insurance Distribution Directive (IDD) regulation, the outsourcing policy (in cooperation with the Group Risk Management (GRM) department)
and the quality of information provided to clients. The Compliance department played a central role in a.s.r.’s CDD optimisation project. In order to guarantee sound and controlled business operations, a.s.r. has taken a number of control measures to prevent, recognise and defy unethical behavior, including combatting corruption.
In 2019, a.s.r.’s management continued to actively seek dialogue with its investor base and potential investors. A total of 385 investors were seen in 232 meetings. In addition to holding conference calls and in-house meetings with investors, management took part in 26 international roadshows and attended broker-organised investor conferences. The main topics, in addition to financial and operational business progress, were consolidations in the Dutch market, and the upcoming Solvency II framework, capital management and OCC, the impact of the low interest rate i.e., investment returns. For more information about a.s.r.’s policy on fair disclosure and bilateral dialogue see www.asrnl.com.
For the 2019 financial year, a.s.r. proposes to pay a total dividend of € 1.90 per share, which is paid as an interim dividend of € 0.70 per share and a final dividend of € 1.20 per share. The total dividend represents an increase of 9% compared to last year (2018: € 1.74 per share). The dividend increase reflects a.s.r.’s continued strong operational and financial performance throughout 2019. Following the approval of the Annual General Meeting (AGM) on 20 May 2020, the final dividend will be payable with effect from 27 May 2020. The a.s.r. shares will trade ex-dividend on 22 May 2020.
In 2018, a.s.r. introduced an interim dividend, set at 40% of the total dividend for the prior year. The interim dividend falls within the dividend policy and is conditional on adequate results and solvency. a.s.r. holds cash at the holding to cover operating holding costs and hybrid expenses for the next 12 months, and cash to pay the final and interim dividend.
Since the Initial Public Offering (IPO) on 10 June 2016, a total cash amount of € 1,184 million has been returned to shareholders (including the proposed final dividend over 2019). This amount includes € 255 million of share buy-backs in 2017 during the sell down process by NL financial investments (NLFI). On 31 December 2019 there were 140,748,799 million shares outstanding (31 December 2018: 141,000,000 shares).
1% of the shares are held by retail shareholders in the Netherlands.
Shares and share price performance a.s.r.’s shares are listed on Euronext Amsterdam (symbol: ASRNL, ISIN: NL0011872643). Since 19 March 2018, a.s.r. has been included in the AEX index (Amsterdam Exchange Index).
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Average daily volume shares 422,419 474,054 602,768 a.s.r. is included in the following indexes: • AEX since 19 March 2018; • FTSE4Good Index Series, confirmed on 10 July 2018; • Ethibel Sustainability Index (ESI) Excellence Europe since 21 September 2018; • a.s.r. is also included in several MSCI indices.
a.s.r. has ratings from S&P. In 2019, it had several conference calls with the rating agency and a meeting at the a.s.r. offices to discuss developments both in a.s.r. and on the Dutch insurance market. This resulted in a comprehensive S&P analysis report on a.s.r. on 18 July 2019, which confirmed the ratings and outlook. The single A rating of the insurance entities has applied since 29 September 2008, and the stable outlook since 23 August 2012.
Affairs (BVPA), which is a minimum standard obligatory for contacts with representatives from politics, the private sector and society. Via the BVPA, Public Affairs of a.s.r. is a signatory to the EU Transparency Code of Conduct. Public Affairs of a.s.r. monitors developments in the area of legislation and regulations while providing appropriate answers in its political contacts.
Sustainable value creation | 3.5 Our role as a trusted company 58
The pursuit of climate neutral operations is part of the a.s.r. strategy. a.s.r. is actively getting to grips with waste management, mobility, energy usage and carbon emissions in order to minimise its impact on the environment. a.s.r. puts a special focus on its carbon footprint, which is of two types: • Indirect footprint as a result of investment activities (see chapter 3.4 Our role as a sustainable investor); • Direct footprint due to its own operations, as explained below.
Approximately 90% of all 4,275 a.s.r. staff work from the Utrecht head office. a.s.r. has a total of 101,000 square metres of office space in use, of which the head office represents a major share of 91%. This makes the head office and its employees the most material part of a.s.r.’s direct footprint. a.s.r. uses the Greenhouse Gas Protocol’s scope classification, which defines three different scopes.
Category of carbon emmissions in % tonnes of CO2 in % tonnes of CO2 in % tonnes of CO2
Business travel as a result of lease car fleet 26.5 2,078 27.0 2,172 29.1 2,248
With regard to the definition of the business traffic component in scope 1, a.s.r. has opted for the ‘operational control’ approach. In this approach, a.s.r. assumes that it has an impact on the efficiency of the lease fleet. The emissions of the a.s.r. lease fleet is included in scope 1.
The decrease in CO2-emissions from business traffic is due mainly to changes within the lease car park. Both the increase in the number of electric cars and the improved
Outlook a.s.r. aims to replace all fossil-powered lease cars with electric cars by 2025 at the latest.
Results 2019 The scope 2 emission remained nil because all electricity consumed was carbon neutral. The vast majority of this electricity is generated with Danish windmills. As in previous years, a proportion of the electricity was self-generated by solar cells.
Results 2019 Emissions fell by 89 tonnes of CO2-equivalent. 97% of the head office’s footprint consisted of emissions caused by mobility. a.s.r. has drawn up an ambitious mobility plan to reduce CO2-emissions by 50% in the period 2017-2025.
Outlook Plans are being made to make commuting more sustainable by introducing an environmental zone. In the future, only low-emission cars will be allowed on a.s.r.’s parking lot.
Because a.s.r. wants to remain climate neutral, all remaining emissions are offset.
Energy usage In 2019, the head office used 61 kWh (scope 1 and scope 2) of energy per m² (gross floor area). If a.s.r. wants to meet the Paris targets for its head office, it must reduce its purchased energy consumption to 50 kWh m² gross floor area by the year 2050 at the latest.
a.s.r. foundation a.s.r. foundation encourages employees to contribute to society, in a team or at home. On annual base, a.s.r. provides hours and financial resources for this. a.s.r. foundation initiates projects with the help of the voluntary efforts of colleagues with regard to two themes: • Financial self-reliance: providing help to prevent people from getting into debt or to get people out of debt again with the help of voluntary commitments of employees; • Helping by doing: inspiring, motivating and mobilising a.s.r. employees to voluntarily engage in community activities in a broad sense.
Financial self-reliance In the Netherlands, one in five households has high-risk or problematic debts. The debt burden is on average € 40,000 spread across fourteen different creditors. The chance of someone ending up with a hard to resolve debt burden is a combination of factors. However, it does appear that having a disorganised administration, a lack of proper financial upbringing and low literacy increase the risk of debt1. a.s.r. foundation provides support: • In promoting financial education of children and young people (reading and teaching). To prevent children and young people from getting into financial difficulties, a.s.r. supports in becoming financially mature and independent.
Helping by doing a.s.r. considers it important to play a broad social role in the community. This fits in well with the desire of many employees to be actively involved in the community in a meaningful way. Annually, a.s.r. makes time and finances available for this purpose.
• In a team context – Social Team Activity (STA) More and more departments within a.s.r. extend their help as a team in a social organisation. This creates a combination of team building and ‘helping by doing’. The STA activities were divided into two categories: ‘Rolling up your sleeves (active day-jobs or a day out) and Fresh Looks (helping with a strategic issue). Over 90 departments have joined a STA during the year.
• At home – Encouragement Plan An individual Encouragement Plan has been put in place to encourage volunteering in colleagues’ private environment. The financial contribution of up to € 500 per plan by a.s.r. foundation is an extra backing. If an idea is only about receiving a financial contribution, the proposal will be rejected. Colleagues can apply for an Encouragement Plan once per calendar year.
New in 2019 In October 2018 a.s.r. issued non-financial targets including one on the contribution to society: from 2019 onwards, a.s.r. supports colleagues to volunteer 5% more hours per year by participating in activities of a.s.r. foundation.
The following do not qualify for sponsoring or donations: • Organisations or projects that serve only individual interests; • Organisations or projects that discriminate on the basis of race, faith, sexuality, religion, gender, handicap or age; • Organisations or projects affiliated to politics, legislation, lobbies and/or business that are directly or indirectly operated for the benefit of a government official or a person closely related to a government official; • Organisations or projects, the supporters, participants or organisers of which promote or display offensive behaviour.
About the object Various historical objects from the history of a.s.r., including the chairman’s hammer dating from 1848 and a number of richly decorated objects that were previously used by messengers.
Profit/(loss) for the year attributable to holders of equity instruments 972 669 45.2%
Basic earnings per share on IFRS basis (€) 6.47 4.33 49.6%
Solvency II ratio (standard formula, post proposed dividend)2 194% 197% -3%-p
Total equity attributable to holders of equity instruments (IFRS-based) 6,093 5,479 11.2%
1 The comparative figures have been restated for an adjustment in the definition of the operating result. The depreciation of the VOBA and intangible fixed assets of business combinations are from now on incidental. As a result, the operating result for 2018 increased by € 7 million from € 742 million to € 749 million.
2 After proposed dividend, exclusive of a.s.r. bank, a.s.r. asset management and a.s.r. real estate.
The incidental operating expenses increased € 23 million to € 59 million (2018: € 36 million). This increase is driven by preparation costs for the a.s.r. Vitality programme and Merger and Acquisitions (M&A) related costs.
FTEs The number of internal FTEs, including redundant employees still under contract, increased by 6.1% to 3,906 FTE (2018: 3,683 FTE). This increase is caused by the addition of the acquired companies. Excluding these acquisitions, the number of internal FTEs decreased. The completed integration of Generali Nederland into a.s.r. platforms led to a reduction in internal IT-related employees.
of which € 29 million in the scond half of 2019 due to a reassessment). Several other items, including the own pension scheme, regulatory costs for the implementation of IFRS 17/9 legislation, integration costs and the harmonisation of a technical provision in the Non-life segment, led to incidental charges.
Operating return on equity Operating return on equity improved 0.8%-point to 15.1% (2018: 14.3%) and is well above the medium-term target range of 12-14%. IFRS return on equity increased 5.4%-point to 19.1% (2018: 13.7%) and was also driven by a higher contribution from (indirect) incidental items.
The OCC amounted to € 370 million and remained fairly stable compared to last year (2018: € 372 million). Good performance of the business segments was offset by an increase in the ‘UFR drag’ due to lower interest rates.
Disability improved due to profitable growth, especially within sickness leave, where price increases led to an improvement in the COR. P&C underwriting result improved due to a relatively low level of large claims and a lower impact from calamities, particularly compared to the € 30 million impact from the January storm in 2018, and profitable growth. Disability also absorbed the impact of a correction in the actuarial interest rate in the claims reserve (VPU) for recent years in the second half of 2019 and P&C absorbed the impact of lower discount rate on further bodily injury claims.
Combined ratio The COR of P&C and Disability showed a strong improvement of 2.2%-points to 93.5% (2018: 95.7%) driven by both product lines.
Products a.s.r.’s broad P&C insurance product range offering can be divided into the following categories: • Motor
Strategy and achievements a.s.r. endeavours to leverage its existing strengths and achieve a COR of less than 98%. The P&C business is expected to grow in line with Gross Domestic Product (GDP) development. a.s.r. has been able to add organic and inorganic growth onto its platform with a marginal expense impact. a.s.r. aims to strengthen its current role of risk bearer and expand into a broad service provider of more relevant services. In addition, a.s.r. aims to make its services more sustainable in view of its social responsibility.
Business performance | 4.1 Group and segment performance 68 will automatically be granted an extension of their current precipitation cover. This applies to the residential premises, home contents, leisure home, commercial buildings, movable property and inventory items insurance. With the extension of this precipitation cover, the customer is insured against loss caused by water that has unexpectedly entered the building as a result of flooding caused by the failure of a non-primary water-control structure.
Outlook 2020 P&C will implement its SME products on the new non-life platform. Ditzo will convert the remaining Europeesche Verzekeringen portfolio, improving its service to customers and reducing its operating costs. In the new non-life platform, an online log-in portal will be available for retail customers. In addition, a.s.r. aims to strengthen its current role of risk bearer and expand into a broad service provider of more relevant services. A cyber proposition for the SME market is expected to be launched. The estimated growth of the GWP is 3-5% in 2020.
In the beginning of 2019, the Ditzo and Europeesche Verzekeringen organisations were merged into one single organisation, supporting two different market propositions. By the end of 2019, all Europeesche Verzekeringen products were implemented in the Ditzo platform. The conversion of the Europeesche Verzekeringen portfolio into this new platform will take place in the beginning of 2020. Subsequently, the Europeesche Verzekeringen IT environment will be decommissioned, which will result in further cost reductions and a simplification of the IT environment.
Under the brands of ‘De Amersfoortse’ and ‘Loyalis’, a.s.r. offers a broad range of disability insurance products as well as services of in-house experts and external parties in the context of prevention and reintegration for large businesses, SMEs (employers and employees) and self-employed persons.
Products The disability insurance product range offering can be divided into the following categories: • Disability of self-employed persons: - Products for self-employed persons to protect against loss of income in the event of sickness or disability; - Products for employees to protect the payment of fixed expenses in the event of sickness or disability and to cover loss of income above the wage limit (WIA - Work and Income Act) supplementary insurance, in the event of disability.
Market The disability market is divided into several productlines. • Disability self-employed (with 36% the largest) for the entrepreneur who has no social security concerning loss of income caused by sickness or occupational disability and is able to insure disability risk up to retirement age; • Sickness leave (33%) which protects the employer for its responsibility for continued payment of salary to the employee in case of sickness leave up to 2 years. As an extension thereof the third division; • Group Disability (25%), provides the employee, who may appeal to the WIA in covering possible significant loss of income. WIA is a public act covering all employees in the Netherlands and is administered by UWV.
Strategy and achievements Through its brands De Amersfoortse and Loyalis, a.s.r. has a strong position in the disability insurance market. a.s.r. is well positioned to capture profitable growth opportunities. On 1 January of 2020, a.s.r. acquired the insurer Veherex. With this acquisition, a.s.r.’s market share will increase. a.s.r. has a significant position in the intermediary distribution channel. Important elements for sustainable value creation are enhanced offering on pricing and underwriting, and deployment of dedicated multidisciplinary teams. With an NPS score of 46 in 2019 (45 in 2018) Disability slightly improved its customer satisfaction.
Target: 50 a.s.r. continues to provide high-quality products and services that focus on sustainable employability, for one, by encouraging its participations to cooperate. Recently introduced products and services include: • The ‘Doorgaan’ policy, an integrated disability and health insurance, is expanded with a ‘natura’ policy; • The ‘Langer Mee AOV’ an affordable product with preventive care up to the retirement age; • a.s.r. Vitality; a health programme - based on behavioural science – that encourages customers to get moving and live healthier lives in a positive way; • The ‘MKB Verzuim ontzorgverzekering’ (SME sickness leave insurance to make life easier) with an ‘ontzorgmanager’ (a manager to make life easier), who is the contact during reintegration in case of sickness leave and who has knowledge of all relevant legislation and regulations.
Please find a more detailed description of these products in chapter 3.2 Our role as a sustainable insurer.
As part of a.s.r.’s strategy to meet customer needs and improve cost effectiveness, Disability has developed and implemented several digital initiatives such as: • Assisting intermediary channels with e-based underwriting systems and online channels to provide online product offerings; • Making progress in the number of connections linking the payroll system and the insurance administration, as a result of which personnel transactions are processed directly in the administration; • Linking health services administration and the insurance administration, as a result of which sickness leave transactions are processed directly in the administration.
Outlook for 2020 a.s.r. is not expecting any major changes in the country’s social systems. Recently, Disability developed a long-term vision focusing on sustainable employability as a growth area. Within that area, a.s.r. intends to become the thought leader/director by forward and backward integration of partners into the chain.
Market The health insurance market is a highly regulated market. All Dutch residents are obliged to have basic health insurance coverage. Basic coverage has limited variations across all insurers, since it is a statutory requirement. Although supplementary insurance coverage is not obligated, 84%¹ of the market chose a form of supplementary health insurance in 2019. Health insurance contracts are taken out for a year at the time. At 6-7%, the percentage of customers that switch between health insurance providers per calendar year has been relatively stable over the past four years. In 2019, the percentage of customers that switched was 7%.
It is mandatory for insurers to accept all persons who are statutory obliged to have basic health insurance coverage. This is made possible by a government-run system of risk spreading, which provides compensation to insurers related to the costs in their customer base. Government and the health insurance industry are constantly seeking to improve the system of risk-based cost compensation.
Given that it considers the health of its customers as one of its main priorities, a.s.r. ended the outsourcing of healthcare procurement in 2017 and started to bring the contracting of healthcare providers in-house in 2018. This continued in 2019. With the switch to in-house healthcare procurement, a.s.r. aims to strengthen its relationship with healthcare providers for the benefit of its customers, while at the same time facilitating smooth declaration processes in order to benefit both customers and healthcare providers.
a.s.r. will also look into possibilities for further improving the unique proposition of Doorgaan (combination of health care insurance, disability insurance and services aimed at sustainable employability).
Gross written premiums The GWP amounted to € 1,619 million (2018: € 1,566 million). Recurring premiums (€ +41 million) as well as single premiums (€ +12 million) increased. This year, the WnP product continued to be successful and the AuM further increased to € 1.3 billion (2018: € 0.7 billion) primarily due to the growth of the portfolio and higher stock markets. The number of active participants is now over 80,000 (2018: 55,000). The additional contribution from Loyalis (€ 59 million) and WnP portfolio growth exceeded the decrease of the existing DB/DC Pension portfolio and recurring premiums in Individual life. The level of surrenders of nominal policies at Individual life was stable at 0.79% (2018: 0.83%). Excluding the single premium in the figures of the previous year related to the acquisition of PC Uitvaart (as from October 2018), GWP from Funeral increased this year (€ +2 million).
Life operating expenses expressed in bps of the basic life provision improved to 53 bps (2018: 56 bps), in line with the target of 45-55 bps for 2019-2021. Operating expenses in relation to the premiums (measured in APE) improved, which is reflected in a slightly improved cost-premium ratio (APE) of 10.9% (2018: 11.1%).
Historically, a.s.r. also offered DB products but due to market changes DB products are no longer offered.
Market As a provider of various insurance pension products, a.s.r. plays an important role in the Dutch pensions market, both under the brand of a.s.r. and in a joint venture with Brand New Day for an IORP. Driven by the low interest environment and the current pension debate in the Netherlands, there has been a steady shift in the pensions market towards capital-light products. This trend is expected to continue in the years to come. With its DC and IORP proposition, a.s.r. believes it is well positioned to increase its market share through high-level service, cost effectiveness and execution capabilities.
The renewal of DB contracts is considered if customers intend to shift to DC in the near future and meet strict financial criteria. The strategy for the existing DB book is to maintain its value, reduce capital requirements, enhance cost coverage and minimise risks. The DB book will become a service book as more employers opt for other pension solutions.
Cost control and cost variability are essential for value creation and value retention. Various plans were implemented in 2019 to further simplify the organisation and processes. The migration of the Generali Nederland and Loyalis books and their integration into the existing a.s.r. platform is on track (completion scheduled for 2020).
Individual life a.s.r. is one of the largest providers of individual life insurance products in the Netherlands, measured in GWP.
a.s.r. plays an important part in consolidating the Dutch (life) insurance market. In 2018, Generali Nederland was acquired, in 2019 Loyalis, and in 2020 the life book of VvAA.
Products Ardanta’s primary objective is to insure funeral expenses, for which it offers capital and in-kind insurance products.
Ardanta is committed to increasing digital process support. In 2019, the ‘100% digital in 2023 programme’ was launched. The digital transformation means fundamental changes in customer interaction and customer experience, value propositions and business models, as well as operational processes. Also in 2019, the first business processes were robotised. All of these actions aim to increase customer satisfaction with Ardanta.
With an NPS score of 40 in 2019 (41 in 2018), the funeral business slightly decreased its customer satisfaction.
Ardanta’s CSR initiatives focus on ‘address enrichment’ in order to contact customers again with whom Ardanta has lost contact over the years. In addition, the ‘Old Case Team’ project tries to trace relatives of deceased customers in order to make payments they are entitled to.
Business performance | 4.1 Group and segment performance 76 4.1.4 Asset Management1 1 Bank and Asset Management segment was renamed to Asset Management segment as Bank was sold during the year. The Asset Management segment involves all activities related to asset management including investment property management, and the discontinued banking activities. As of October 2018, all activities of ASR Bank N.V. were classified as discontinued, and most of these activities were sold during the year.
The Asset Management segment relates to all banking activities and activities related to asset management, including investment property management. The related entities include ASR Vermogensbeheer N.V., ASR Real Estate B.V., ASR Hypotheken B.V., ASR Bank N.V. and ASR Financieringen B.V.
These increases were partly offset by an outflow in mandates (€ -1.5 billion) of some local governments as a result of specific regulation (‘schatkistbankieren’). The increase of inflow at a.s.r. real estate by € 0.3 billion to € 1.9 billion primarily relates to new participants in the various funds.
a.s.r. completed the sale of its banking activities to Dutch insurer Achmea. These activities consist of a saving portfolio (volume of around € 1.7 billion with approximately 125,000 customers) and the transfer of the mortgage portfolio (volume of € 1.5 billion). The financial result from a.s.r.’s banking activities is not included in a.s.r.’s operating result. The profit for the year from discontinued operations and including the realisation of the transfer of all assets and liabilities amounted to € 1 million (2018: € -37 million). In the beginning of 2020 the final step for phasing out the banking activities was taken with the partnership agreement with Van Lanschot Kempen for investment accounts in the portfolio of a.s.r. bank. Once these investment accounts are transferred, the banking licence will be terminated.
Operating result The operating result of the Asset Management segment increased by € 8 million to € 24 million (2018: € 16 million). Both a.s.r. asset management (€ 4 million) and a.s.r. real estate (€ 4 million) contributed to this increase.
The operating result of a.s.r. asset management increased by € 4 million to € 12 million due to the growth of external AuM, mainly as a result of inflow in the ASR Hypotheekfonds (mortgage fund) and the ESG funds. The operating result of a.s.r. real estate also increased by € 4 million to € 14 million, mainly due to growth in AuM (€ 0.3 billion) reflecting higher inflows and revaluations.
ASR Vermogensbeheer N.V. has conducted all of a.s.r.’s asset management activities – with the exception of direct real estate – and is active in the market as a.s.r., the Dutch asset manager.
Strategy and achievements a.s.r.’s investments aim at long-term value creation. In its investment activities, Asset Management considers the fact that the present generation has inherited the earth, hoping to pass it on to the next generation. Sustainable investment is of crucial importance. Asset Management applies the same strict criteria when investing on behalf of its customers as it does when investing for itself.
Asset Management invests in fixed-income securities such as government bonds (rates) and corporate bonds (credits), including overlay/LDI, European and US equities, real estate and mortgages. Asset Management believes that selective, risk-controlled deviations from the index can generate higher returns. This approach to investment is referred to as Index Plus investing. Selective deviations from the index can be based on quality criteria and sustainability aspects, for example.
Asset Management continuously looks for possibilities to further streamline its processes. This is done, for example, by computerising repetitive tasks. Another innovation example is the integration of ESG factors into the entire investment process, which has given Asset Management a leading position in ESG investing. In 2019, Asset Management made significant progress in measuring the carbon footprint of its investment portfolio. By the end of 2019, the carbon footprint of 92% of the portfolio was calculated, well ahead of the target of 80%.
DPRF, DCRF, DMOF and Dutch Science Park Fund (DSPF). These substantial retail, residential, office and science park funds are open to institutional investors who are looking for stable capital growth, enabling them to participate in these funds or outsource their national and international real estate investment management to a.s.r. The rural estate portfolio that Real Estate manages on behalf of a.s.r. is the largest of its kind in the Netherlands.
Strategy and achievements Real Estate’s strategy is to create long-term value for investors. To this end, agreements are made to generate returns at acceptable risk levels. In the longer term, it is important for Real Estate to make a substantial contribution to the (economic) objectives of tenants and leaseholders. Real Estate also has a strong focus on quality, believing that quality retains its value. It therefore invests continuously in maintenance, good-quality materials, sustainability of buildings and sustainable land use. Sustainability is an integral part of Real Estate’s investment and management practice.
Real Estate launched the DSPF in 2019. This fund has similar characteristics to the other three unlisted real estate funds under management by Real Estate (retail, residential and office) and is open to institutional investors. The fund invests in commercially exploitable real estate at Dutch science parks and has developed and signed a unique partnership-model with TU Delft. By investing in science parks, DSPF actively stimulates to create unique areas of growth in which links are made between education, research, business activities and supporting facilities, such as retail and housing concepts.
Real Estate has started several projects from the Digital Business Programme. One project, for example, is a tenant portal where tenants are given access to their rental contracts. A large number of business intelligence dashboards have also been operationalised. In addition, a start has been made with predictive analysis and combining climate risk data with Real Estate’s asset portfolio information.
In 2019, Real Estate made significant progress in measuring the carbon footprint of its investment portfolio. By the end of 2019, the carbon footprint of 78% of the portfolio was calculated.
Outlook for 2020 The positive and low interest economic climate is favourable for both occupants and investors in real estate markets. Real Estate predicts positive market dynamics, increasing rents and decreasing vacancy levels on average. Positive market dynamics in the retail sector are harder to find due to the increasing impact of online shopping. Prime high street units and dominant district shopping centres are most resilient to the ongoing headwinds and might profit from vulnerable streets and/or assets being redeveloped. The availability of supply will determine the level of decrease in investment volumes. Geographical differences will nonetheless remain substantial. Real Estate will therefore continue to focus on key regions, towns and locations. However, acquiring and building high-quality products will continue to be a challenge in view of current investor demand and low supply levels on good locations.
Mortgages provides mortgage loan services such as acceptance, arrears management and recovery, and reporting for mortgages recognised on a.s.r.’s balance sheet. It also provides these services for a.s.r. mortgage fund management activities.
Products Mortgages is active in the residential mortgage market. Mortgage loans are issued by Life, which is a component of ASR Levensverzekering N.V. Part of the mortgages were subsequently acquired by ASR’s Hypotheekfonds. Mortgages are distributed via the intermediary channel only. a.s.r.’s residential mortgage portfolio includes annuity mortgages, linear mortgages and interest-only mortgages.
Since 2018, Mortgages has offered the ‘Welthuis Startershypotheek’ (Starters mortgage). Starters have a hard time on the housing market due to high house prices. With the Starters mortgage, they can opt for a longer term, to a maximum of 40 years, thus reducing their monthly costs.
In 2019, Mortgages introduced the ‘Verduurzamingshypotheek ’ (Sustainability mortgage). This allows customers to borrow extra money for energy-saving measures in, at and around their home. As Mortgages aims to contribute to reducing CO2-emissions of the housing stock, this loan has an extra low interest rate.
Strategy The strategy with regard to mortgage loan services is to have lean and reliable processes and to achieve economies of scale by servicing growing mortgage loan portfolios. The growth of loan assets under administration was partly a consequence of the organic growth of the mortgage loan portfolio in Life, but chiefly of the introduction of the ASR Hypotheekfonds. a.s.r. considers mortgage loans to be an attractive asset category in which to invest insurance premiums, and offers institutional clients the opportunity to invest in mortgages through the ASR Hypotheekfonds. Mortgages aspires to be a front-runner in supporting mortgage customers in the energy transition of their homes.
Outlook for 2020 A further growth of the mortgage business is expected for 2020. The mortgage market appears to be consolidating to some extent, but demand for mortgages to finance investments continues to increase. A further growth will result in improved cost efficiencies.
The Distribution and Services segment includes the activities related to distribution of insurance contracts and includes the financial intermediary business of PoliService B.V., Van Kampen Groep Holding B.V. (and Van Kampen Geld B.V.), Dutch ID B.V.,
Operating expenses The operating expenses increased by € 9 million to € 60 million (2018: € 51 million) primarily as a result of the addition of the acquired activities of Loyalis Kennis & Consult (as of May 2019), ZZP Nederland by SuperGarant (as of July 2018), ArGon Groep by SuperGarant (as of August 2019) and Melching Groep by Van Kampen Groep (VKG) (as of July 2019).
ArGon Groep supports organisations in the transition to, or the optimisation of, own management in vitality, prevention, absenteeism and reintegration policies. Melching Groep is a mandated broker and service provider in the insurance business and acts as a link between insurance companies and intermediaries.
The overall trend is for larger distribution businesses to gain market share on the strength of both organic and inorganic growth; the top 50 companies in the distribution field increase their power within the overall distribution landscape. Hybrid distribution models of insurance products also remain in place and, last year, the independent intermediary channel gained some market share in one or two subsidiary markets.
Strategy and achievements a.s.r. continued its growth path in the distribution business in 2019. On 1 July 2019, VKG acquired Melching Groep, a full-service provider for intermediaries. In 2019, SuperGarant acquired ArGon Groep, a service provider certified under the working conditions rules, to further improve its services to customers. Dutch ID acquired an IT company (Humannet) to further optimise the IT applications of its product offerings. Following the acquisition of Loyalis in 2019, the distribution and services activities of Loyalis (Loyalis Kennis & Consult) were added to the distribution and services segment.
a.s.r. also believes the acquisitions provide learning and innovation opportunities as they facilitate the development and testing of new product ideas with direct input from the distribution and customer sides. The integrated chain approach enables a.s.r. to accelerate the implementation and marketing of innovations and new products.
Van Kampen Groep VKG is a full service provider and a mandated broker to a number of Dutch insurance companies, including a.s.r.’s P&C insurance business. As at 31 December 2019, VKG acted as service provider and mandated broker to 25 financial institutions, and distributed products from 118 insurers, banks and other credit institutions. VKG provides access to the insurance exchange and mortgages.
Based on these associations, VKG offers administration and consulting services to intermediaries for their commercial and back-office operations. As at 31 December 2019, VKG had agreements with approximately 3,000 intermediaries in the Netherlands, 500 of whom had fully outsourced their administrative processes to VKG. The acquisition of Melching Groep is expected to further strengthen the position of VKG as a full service provider.
Dutch ID Dutch ID is an intermediary, service provider and mandated broker to a.s.r.’s disability and P&C insurance businesses, as well as to other insurance companies operating in the Dutch non-life insurance market.
Corins Corins is a successful and reputed high-quality underwriting agency in the Dutch Non-life co-insurance market. The company services over 50 brokers and will continue to represent the multiple insurers it currently does business with. The inclusion of Corins in a.s.r. in 2016 has contributed to a.s.r.’s expansion in the Dutch commercial P&C insurance market. a.s.r. participates in the pool of Corins, which enables a.s.r. to grow in the Dutch co-insurance market within the terms of its own risk appetite.
SuperGarant SuperGarant operates as an intermediary and underwriting agent. As a service provider, SuperGarant constitutes a unique advisory centre offering integrated disability propositions consisting of prevention, reintegration and disability insurance products aimed at the retail sector. The acquisition of ArGon Groep, a service provider, is expected to further strengthen the services offered. SuperGarant also sells P&C products to its customers. SuperGarant works in close collaboration with SME trade associations and has a direct line of contact with franchise and purchasing organisations.
Business performance | 4.1 Group and segment performance 82 also offers solutions such as online workspaces, call centre activities and servicing of websites. For several years now, ANAC has been rewarded by its customers as the best small service provider in the Netherlands (awarded by Bureau DFO; Best Small Service Provider P&C 2016, 2018 & 2019).
Loyalis Kennis & Consult Loyalis Kennis & Consult supports its customers – mainly corporates – with advice and assistance about sustainable employment. It provides advice on absenteeism policies, mobility and vitality. It also offers customised coaching to employees by using, among other things, an income scan and a future scan for people of over 55 years of age and by paying extra attention to a good work-life balance. It also provides social security training and answers questions about disability, dismissals and reintegration.
Outlook for 2020 For the year to come, it is important to note that the market anticipates decreasing commission levels for distribution companies, as was experienced in 2019. a.s.r. continues to aim at organic growth of its Distribution and Services segment, and unlocking the earnings potential of last year’s acquisitions. In terms of development of the results for this segment, the growth plans which are being pursued may compensate for the downward pressure on commission levels.
Business performance | 4.1 Group and segment performance 83 4.1.6 Holding and Other (including eliminations)
Operating result The operating result decreased by € 4 million to € -112 million (2018: € -108 million). This was mainly the result of an increase in the interest expenses (€ -12 million) on the newly issued € 500 million Tier 2 subordinated loan in April 2019. The proceeds were primarily used to fund the acquisition of Loyalis. This decrease was partly offset by an expansion of the interest in HumanTouch Holding B.V., a service provider in the field of reintegration, at the beginning of this year.
Risk management is an integral part of a.s.r.’s day-to-day business operations. a.s.r. applies an integrated approach to managing risks, ensuring that strategic objectives are met. Value is created by striking the right balance between risk, return and capital whilst ensuring that obligations to stakeholders are met.
Management of financial risks a.s.r. strives for an optimum trade-off between capital, risk and return. Steering on capital, risk and return is done by decision-making throughout the entire product cycle from PARP to the payment of benefits and claims. At a more strategic level, decision-making takes place through balance sheet management. A robust solvency position takes precedence over profit, premium income and direct investment income. Risk tolerance levels and limits are disclosed in the financial risk appetite statements (RAS) and are monitored by the Financial Risk Committee (FRC). The FRC evaluates FR positions against the RAS on a monthly basis. Where appropriate, a.s.r. takes additional mitigating measures.
At this point in time it is too early to make a realistic and credible assessment of what the impact of the coronavirus will be on a.s.r.’s business and financial performance. The effect on the financial results will depend on a number of factors, including the extent and duration of the period of disruption and the impact on the global economy and financial markets. As published in this report, a.s.r. is financially healthy and its capital position is solid. In the recent weeks, a.s.r.’s Solvency II ratio proved resilient to absorb these extraordinary developments in the financial markets. Based on the closing market position as of 19 March 2020, which is the most recent analysis available at the time of publication of this annual report, a.s.r. estimates its Solvency II ratio, on the standard formula, to be substantially higher than year-end 2019. The ratio reflects observed market movements as at 19 March 2020, but does not yet allow for any change in insurance claims or changes in experience or assumptions that may arise from the corona crisis. The estimate includes the positive impact from the significantly higher volatility adjustment which increased with over 40 bps since year-end 2019, as well as the flattening of the interest rate curve. It also includes the negative impact of the further reduction of the UFR and the € 75 million share buyback that is currently being executed. Because of the current high volatility in the financial markets, the estimated Solvency II ratio may vary substantially from day to day. a.s.r.’s liquidity position of € 1.6 billion at year-end 2019 has also proven resilient. a.s.r. continues to closely monitor the impact of the corona outbreak on the operating performance of our various business lines. a.s.r. furthermore continues to monitor the potential IFRS impact relating to the valuation of financial
Business performance | 4.2 Risk management 85 instruments and valuation of technical provisions which are sensitive to developments in the (long-term) interest rates.
a.s.r.’s prime concern is the personal well-being of its customers and its employees, their partners and their families. As a leading Dutch insurer, a.s.r. is committed to help its customers through this challenging period and to do everything in its power to help overcome the corona crisis in the Netherlands. To protect its employees all a.s.r. employees are working from home which most employees are already very familiar with, given the ‘independent time and place working’ policy of a.s.r.
Management of non-financial risks NFR appetite statements are in place to manage the risk profile within the limits determined by the EB and approved by the SB. The Non-Financial Risk Committee (NFRC) monitors and discusses on a quarterly basis whether NFR are adequately managed. Should the risk profile exceed the risk appetite, the NFRC will decide on the steps to be taken. The risk profile and internal control performance of each business is discussed with senior management in the business risk committees and the NFRC each quarter.
• At a.s.r. asset management, Brexit will mainly impact flexibility with regard to the current portfolios in derivatives positions and new derivative transactions to be concluded in the future. Within a.s.r. asset management, a working group has been set up that is in contact with all relevant counterparties and contract adjustments are implemented.
During 2019, a.s.r. took various actions to further enhance the measurement and reporting of data quality for financial reporting purposes and to mitigate end-user computing risks. Adherence to the ‘a.s.r. Standard for End-User Computing’ is accommodated by the explicit integration of relevant controls into the risk and control frameworks of the business lines.
a.s.r. will continue to look for opportunities to improve the management of its NFR in 2020, for example by focusing on the use of application controls and data analytics. New developments such as AI and robotics and their effects on risk management will also be further explored.
In 2019, all business units applied the Governance and Risk Compliance (GRC) tool ‘Cerrix’. The functionality and performance of this tool were improved in 2019. a.s.r. will continue to seek opportunities to improve the management of its operational risks in 2020, including the use of data analysis.
In addition to these risk priorities, a.s.r. also identified several emerging risks. Emerging risks are defined by a.s.r. as new or existing risks with a potentially significant impact, the level of which is hard to define.
Emerging risks: • Climate change; • Energy transition; • Longevity risk.
Pressure on result and renewal of the cashgenerating business model This risk priority concerns the risk of the cash-generating business model coming under pressure due to developments in the insurance market, since a highly competitive insurance market may lead to margin and volume decreases.
The risk of contraction in the portfolio relates to this risk priority. Since the portfolio is contracting rapidly, the risk exists that the process of lowering costs may not be fast enough. a.s.r. continually monitors and assesses its product portfolio and distribution channels for relevant alterations in order to meet changing customer needs and to achieve planned cost reductions as premiums fall. For example, it actively monitors the market to examine potential acquisitions or mergers.
Low interest rate environment and pressure on investment returns, exacerbated by geopolitical tensions Since interest rates are historically low, it remains a challenge to generate sufficient returns on investments and reinvest on attractive terms. The pressure to generate investment returns (search for yield) creates a considerable tension between risk and return.
Increased focus on, and attention for, emerging cyber security risks is a daily requirement for a.s.r. and its supply chain. Investing in detection and prevention skills and techniques and learning from incidents in the financial industry strengthens cyber resilience. Since the battle against malicious intentions is ongoing, cyber security efforts continued to dominate risk reports in 2019. a.s.r. is aware of the trust invested in it by its customers, and makes conscious choices in the risk exposure it is willing to tolerate. A dedicated cybersecurity team, regular testing, continuous awareness programmes and scrutinised vulnerability programmes ensure that a.s.r. is fully aware of its risks and takes measures where appropriate. All measures are continuously monitored and updated where necessary. a.s.r.’s suppliers are periodically reviewed and assessed for their cyber resilience. Partnerships with financial institutions and public agents, such as the Dutch National Cyber Security Centre (NCSC) and i-CERT (a cybersecurity partnership between insurance companies), are crucial in mounting an effective defence against cybercrime. a.s.r. is actively involved in these partnerships.
Although the financial consequences of these developments could be substantial, a.s.r.’s exposure cannot be reliably estimated or quantified at this point. If one or more of these legal proceedings succeed, there is a risk that a ruling, though only legally binding for the parties involved in the proceedings, could be applied to, or be relevant for, other unit-linked life insurance policies sold by a.s.r. Consequently, the consequences of any current and/or future legal proceedings brought upon a.s.r. could be substantial for a.s.r.’s life insurance business and may have a materially adverse effect on a.s.r.’s financial position, business, reputation, revenues, operating results, solvency, financial condition and/or prospects.
In March 2017, the Consumentenbond also initiated a collective action against a.s.r. based on similar grounds to that initiated by Woekerpolis.nl. In a decision of 11 March 2020, the district court of Midden Nederland rejected the Consumentenbond claims.
Woekerpolis.nl issued a notice of appeal on 16 April 2019. In December 2019, claim organisation ‘Wakkerpolis’ initiated a collective action against a.s.r. Although the claim from ‘Wakkerpolis’ is largely based on similar grounds as the other two collective actions, it primarily concentrates on the lack of transparency of cost charges.
In November 2018, a.s.r. set up an internal centralised CDD optimisation project in order to optimise compliance with the CDD-rules. A fit-gap analysis was conducted and policy guidelines were formulated. These actions have been largely implemented in 2019, with some further actions due in Q1 2020. In May 2017, the International Accounting Standards Board (IASB) published IFRS 17, the new IFRS standard for insurance contracts which will replace the existing IFRS 4 standard. IFRS 17 is expected to be effective from 1 January 2022, subject to endorsement by the EU, based on the Exposure Draft IFRS 17 published in June 2019. The revised IFRS 17 is expected to be published in mid-2020. European Financial Reporting Advisory Group (EFRAG) is currently preparing the endorsement of IFRS 17 for use in the EU following the IASB publication. a.s.r. is now in the process of preparation and implementation, while acknowledging that the amendments are still pending (including the implementation date).
IFRS 17 is designed to facilitate comparability between insurers and to increase transparency in relation to risks, contingencies, losses and embedded options in insurance contracts. IFRS 9 Financial Instruments was published in July 2014 and has had a major impact on the processing of financial instruments (investments). In order to maintain cohesion between the two standards a.s.r. applies the option in IFRS 4 which allows for the deferral of the implementation of IFRS 9 until the implementation of IFRS 17. Since 2017, a.s.r. has an internal programme in place to prepare for the implementation of IFRS 17 and IFRS 9 throughout the Group. The IFRS 17 and IFRS 9 programme will have a major impact on the Group’s primary financial processing and reporting and could have
Please see for more information about climate risk and energy transition, chapter 4.4 a.s.r.’s approach to addressing climate change.
Compliance risks 2019 Developments in rules and the management of high compliance risks and action plans provide the basis for the annual compliance plans and the compliance monitoring activities. a.s.r. continuously monitors changing legislation and regulations and assesses their impact and corresponding actions to be taken.
In 2019 a.s.r. paid specific attention to the main compliance risks described below. • Customer Due Diligence risk (including Anti Money
Laundering) CDD remains relevant for a.s.r. in order to guarantee sound and controlled business operations. The Compliance department played a central role in a.s.r.’s CDD optimisation project and continued monitoring compliance with CDD regulation. To mitigate risks of non-compliance related to CDD, a.s.r. decided to further centralise CDD screening and tooling. A central CDD-desk consisting of Compliance, Investigations and Legal, has been implemented to ensure a consistent screening approach within a.s.r. The CDD-desk also functions as a expertise center.
• Outsourcing risk Outsourcing risk is relevant for a.s.r. in view of regulatory and legislative developments. In 2019 a.s.r. took steps to further control risks corresponding with outsourced activities and monitored compliance with the a.s.r. outsourcing policy. In 2019 Compliance and (GRM) continued its monitoring on the effectiveness of the outsourcing policy. This has contributed to (1) an improved awareness of risks related to outsourcing and (2) improvements in control measures taken by business management to further mitigate risks. Recommendations were discussed with (business) management and include a further improvement of the regular monitoring of the outsourced services.
To guarantee furthermore sound and controlled business operations, a.s.r. has taken a number of control measures to prevent, identify and combat unethical behaviour, including corruption. In 2020 a.s.r. will implement tooling to further improve monitoring and awareness throughout the business, see chapter 3.4.5 Integrity.
C lim at e w o rk in g g ro u p
GRM combines physical and transition risks identified in the annual SRA with bottom-up risk mitigation efforts pursued by the various business units and
To understand the potential physical and transition impacts of climate change on its business, a.s.r. has developed a top-down and bottom-up management approach. a.s.r. is focusing on delivering quantitative scenario-driven insights into the resilience of the most material parts of the business, while continuously improving a qualitative assessment of the remainder, with a view to leveraging lessons across various segments in order to be able to provide group-wide insights and strategic policy responses.
Concentration Pathways (RCP) 2.6 of the Intergovernmental Panel on Climate Change (IPCC)) with an orderly transition towards a low carbon economy. To achieve the ambitious reduction in carbon emissions, significant investments are made in low-carbon technologies and replacing fossil fuels with clean energy sources. Globally, the transition has a positive impact on GDP growth in the short and medium term of 7%.
• 1.5°C temperature rise (approximately RCP 2.6 of the IPCC) with a disorderly transition towards a low-carbon economy. The difference with the orderly transition is that during the energy transformation additional shocks to the economy due to stranded assets are added.
• 4.0°C+ temperature rise assumes no action is taken to limit global warming, resulting in no additional economic growth. The impact of physical and transition impacts slowly enter the global economy, reducing asset returns.
During the reporting period, a.s.r. carried out a detailed analysis on its AuM for its own account (€ 70,599 million AuM) to test the resilience of the investment strategy and policy.
Risks arise due to e.g. extreme weather events, increasing sea levels, fl oods and disruptions in the food chain - and can have implications for the geographical location of companies as well as concentration risks for investments, including real estate and insurance companies.
Higher temperatures can moreover lead to subsidence, which in turn can have a negative impact on mortgage portfolios - while changing (seasonal) precipitation and hail patterns can increase claims on P&C insurance policies, and increase damage and costs of a.s.r.’s real estate portfolio.
Moreover, a transition to energy-effi cient housing could negatively impact valuations of high energy label housing in the Netherlands (E, F and G).
As of 2019, in addition to these economic environments, a.s.r. now validates its investment strategy and SAA by analysing the impact on various metrics in its RAS of the expected impact of climate change, based on the chosen
Business performance | 4.4 a.s.r.’s approach to addressing climate change 92 scenarios. a.s.r. has used climate scenarios developed by Ortec Finance and has incorporated the impact of the different climate pathways on assets in the annual SAA study.
In the SAA, the a.s.r. balance sheet in its entirety is projected forward for 20 years. Each scenario set consists of 2,000 scenarios and these have been fed into a stochastic financial model which in turn translates the impacts of these climate-adjusted GDP shocks on a range of more than 600 financial and economic variables. Following this approach, a.s.r. has been able to quantify climate risk-aware economic outlooks per pathway, applied to the neutral economic scenario.
• a.s.r.’s SRI policy reduces exposure to sectors with high transition risks and increases exposure to sectors with high transition opportunities1. This is indirectly observed in the SAA climate scenarios.
C h an g e in r e tu rn o n r e q u ir e d c ap it al (%
Climate unaware 1 In July 2019, a.s.r. ranked first in an annual study conducted by the VBDO on responsible investing policies, and in November 2019 a.s.r. also ranked first in a biennial study among 80 large Dutch insurers and pension funds on how institutional investors include the risks and opportunities of climate change in their investments.
• As global warming increases, returns on the asset portfolio decrease due to an increase of the impact of the materialising physical risks.
a.s.r. aims to use the same climate scenarios to further support quantitative assessments within other a.s.r. business lines going forward, most notably Real Estate. Within the asset management business, a.s.r. has now embedded this assessment of its resilience in the yearly cycle and intends to build on this work to develop emission reduction pathways for its investment portfolios.
Physical and transition risk within the P&C business Due to more extreme weather, both the frequency and intensity of damage will increase and become more volatile. This could lead to a further increase in claims. Non-life insurance policies are reviewed annually in terms of coverage, conditions and price. This gives a.s.r. the chance to regularly reassess climate risks and opportunities. Furthermore, the purchase of reinsurance limits the financial loss due to physical risks. Reinsurance contracts are reviewed annually based on the latest insights. Transition risks are low, based on a qualitative assessment, and will be continually monitored within the P&C business.
Business performance | 4.4 a.s.r.’s approach to addressing climate change 93 4.4.3 Climate risk management
Climate-specific risks incorporated in the SRA process are: • Physical risks associated with climate-induced extreme weather events; • Transition risks associated with the energy transition; • Reputational risks associated with consumer sentiment towards financial institutions; • Regulation and litigation risks as announced under the
Climate risk in asset management Asset Management is organised through a range of oversight lines in order to minimise climate-related risks. The first line of defense are the portfolio managers. Each client mandate is managed according to the guidelines and restrictions of the SRI policy, which sets out the minimal standards. Customers are only able to opt for additional SRI restrictions.
Business performance | 4.4 a.s.r.’s approach to addressing climate change 94
Climate risk in real estate Each business line within a.s.r. is responsible for designing and implementing its own climate risk mitigation and control processes. Within Real Estate, this includes developing a detailed understanding of climate risks through plotting all its assets in GIS (Geographic Information System) and enriching this with climate impact data sourced from the Dutch Climate Impact Atlas curated by the Royal Dutch Meteorological Institute (KNMI). This work has generated a climate risk scoring mechanism down to asset level, which in turn has allowed us to identify the highest risk assets in the portfolio.
Proven resilience of a.s.r. to climate risk Proven resilience of a.s.r. to climate risk
% compliance to SRI policy for all assets managed by a.s.r.
Carbon footprint (%) for all asset classes1 Carbon footprint: 95% of investment and mortgages portfolio (for own account) measured in 2021
As required by Section 5:25c paragraph 2(c) of the Dutch Financial Supervision Act, the EB declares that, to the best of its knowledge: I. The financial statements provide a true and fair view of the assets, liabilities, financial positions and earnings of a.s.r. and the enterprises included in the consolidation taken as a whole; II. The management report provides a fair view of the position at the balance sheet date and developments during the year under review and the enterprises included in the consolidation taken as a whole, together with a description of the principal risks confronting a.s.r.
IV. The report states those material risks and uncertainties that are relevant to the expectation of the company’s continuity for the period of twelve months after the preparation of the report (see chapter 2.1 The story of a.s.r., 2.2 SWOT analysis and 6 Financial statements).
Business performance | 4.6 Assurance report of the independent auditor 97 4.6 Assurance report of the independent auditor
Our conclusion We have reviewed the sustainability information in the accompanying annual report for the year 2019 of ASR Nederland N.V. at Utrecht. A review is aimed at obtaining a limited level of assurance.
Reporting criteria The sustainability information needs to be read and understood together with the reporting criteria. ASR Nederland N.V. is solely responsible for selecting and applying these reporting criteria, taking into account applicable law and regulations related to reporting.
The reporting criteria used for the preparation of the sustainability information are the Sustainability Reporting Standards (option: Core) of the Global Reporting Initiative (GRI) and the applied supplemental reporting criteria as disclosed in Annex B About this report and Annex C Glossary of the annual report.
The references to external sources or websites in the sustainability information are not part of the sustainability information as reviewed by us. We therefore do not provide assurance on this information.
Business performance | 4.6 Assurance report of the independent auditor 98 executive board regarding the scope of the sustainability information and the reporting policy are summarised in Annex B About this report and Annex C Glossary of the annual report.
The EB is also responsible for such internal control as the executive board determines is necessary to enable the preparation of the sustainability information that is free from material misstatement, whether due to fraud or errors.
Procedures performed to obtain a limited level of assurance are aimed to determine the plausibility of information and vary in nature and timing from, and are less in extent, than for a reasonable assurance engagement. The level of assurance obtained in a review is therefore substantially less than the assurance obtained in an audit.
We apply the ‘Nadere voorschriften kwaliteitssystemen’ (NVKS, Regulations for Quality management systems) and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and other applicable legal and regulatory requirements.
Our review included amongst others: • Performing an analysis of the external environment and obtaining an understanding of relevant social 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 sustainability information. This includes the evaluation of the results of the stakeholders’ dialogue and the reasonableness of estimates made by the EB; • Obtaining an understanding of the reporting processes for the sustainability information, including obtaining a general understanding of internal control relevant to our review; • Identifying areas of the sustainability information with a higher risk of misleading or unbalanced information or material misstatements, whether due to fraud or errors. Designing and performing further assurance procedures aimed at determining the plausibility of the sustainability information responsive to this risk analysis. These further review procedures consisted amongst others of: - Interviewing management and relevant staff at corporate level responsible for the sustainability 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 sustainability information; - Obtaining assurance information that the sustainability 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.
We communicate with the SB regarding, among other matters, the planned scope and timing of the review and significant findings that we identify during our review.
Business performance | 4.6 Assurance report of the independent auditor 99
Legal structure ASR Nederland N.V. is the Group’s holding company. The supervised entities (OTSOs) within the Group are ASR Levensverzekering N.V., ASR Schadeverzekering N.V., ASR Basis Ziektekostenverzekeringen N.V., ASR Aanvullende Ziektekostenverzekeringen N.V. and ASR Bank N.V. On 1 May 2019, ASR Nederland N.V. completed the acquisition of Loyalis N.V. Loyalis N.V. was legally merged into ASR Nederland N.V. on 1 August 2019.
A personal union exists between ASR Nederland N.V., ASR Levensverzekering N.V. and ASR Schadeverzekering N.V. through cross-membership of the EB and the SB. ASR Basis Ziektekostenverzekeringen N.V., ASR Aanvullende Ziektekostenverzekeringen N.V. and ASR Bank N.V. have their own EBs. The SBs of these entities consist of a combination of members of the EB and members of the SB of ASR Nederland N.V.
General Meeting of Shareholders and consultation with Shareholders At least one AGM is held per annum, no later than 30 June. The main purpose of the AGM is to decide on matters as specified in a.s.r.’s articles of association and under Dutch law, such as the adoption of the financial statements. The articles of association also outline the procedures for convening and holding general meetings and the decisionmaking process. The draft minutes of the AGM must be published on the corporate website (www.asrnl.com) no later than three months following the AGM. Shareholders are given three months to respond to the draft minutes. The minutes of the AGM are subsequently adopted and signed by the Chairman and Company Secretary.
The AGM in 2019 was held on Wednesday 22 May. A total of 71.1% of the total issued share capital with voting rights was present in person or represented by proxy or voting instructions. The agenda of the AGM included the proposal to adopt the annual financial statements, the approval of the proposed dividend payments for the financial year 2018, the proposal to grant a discharge to each (former) member of the EB and SB from liability in respect of the exercise of their duties in the financial year 2018, the proposal to adjust the remuneration policy for the members of the EB as of 1 January 2020 and the proposal to determine the remuneration of the members of the SB as of 1 July 2019, the proposal to appoint KPMG as external auditor for the financial years 2020 up to and including 2024, the proposal to reappoint Kick van der Pol as Chairman and member of the SB, and the proposals to extend the autorisation of the EB to issue ordinary shares and/or to grant rights to subscribe for ordinary shares, to restrict or exclude the statutory pre-emptive right and to acquire the company’s own shares. All agenda items were approved by the AGM. The next AGM will be held on Wednesday 20 May 2020.
An Extraordinary General Meeting (EGM) was held on 30 October 2019. The agenda of the EGM included the proposals to appoint Gisella van Vollenhoven and Gerard van Olphen as new members of the SB. A total of 71.5% of the total issued share capital entitled to vote was present in person or represented by proxy or voting instructions. These proposals were approved by the EGM.
Contacts with shareholders are currently conducted entirely in line with the Policy on fair disclosure and on the basis of bilateral dialogue with shareholders. The Policy on fair disclosure and the bilateral dialogue with shareholders is published on www.asrnl.com. The Group’s Disclosure Committee supervises compliance with laws and regulations in relation to the disclosure of price sensitive information.
Anti-takeover measures Stichting Continuïteit ASR Nederland (the ‘Foundation’) was established on 26 May 2016 under Dutch law in connection with a.s.r.’s listing on Euronext Amsterdam. The Foundation has an independent board consisting of three members. The role of the Foundation is to promote and protect the interests of a.s.r., its business and stakeholders, and to work against possible influences that could threaten the continuity, independence, strategy and/or identity of a.s.r. or its associated business to the extent that they could conflict with the aforementioned interests. If the interests of a.s.r., its business, stakeholders or continuity were to be undermined, the Foundation would be entitled - provided certain conditions under the call option agreement were to be met - to exercise a call option right on preference shares such that the number of preference shares acquired under the call option would never exceed the total number of shares forming the issued capital of a.s.r. at the time the call option was exercised, minus the number of preference shares already held by the Foundation (if any) at the time and minus one. See chapter 8 Report of Stichting Continuïteit ASR Nederland for more information.
The EB is collectively responsible for the day-to-day conduct of business at a.s.r. and for its strategy, structure and performance. In carrying out its duties, the EB is guided by a.s.r.’s interests, which include the interests of the businesses connected with it, which in turn include the interests of customers, shareholders, employees and society at large. The EB is accountable to the SB and the AGM with regard to the performance of its duties.
Certain resolutions made by the EB require the approval of the SB and/or the AGM. These resolutions are outlined in the a.s.r. articles of association and the Rules of Procedure of the EB. Both can be viewed at www.asrnl.com.
Composition of the Executive Board The articles of association specify that the EB must consist of a minimum of two members, including at least a CEO and CFO. Only candidates found to meet the ‘fit and proper test’ under the Dutch Financial Supervision Act are eligible for appointment. In accordance with Article 17.1 of the articles of association of ASR Nederland N.V., the SB appoints the members of the EB and may suspend or dismiss any EB member at any time. The SB also notifies the AGM of proposed (re)appointments. At the beginning of 2019, a.s.r. was in a period of transition following the previous announcement of a change in its management structure. Following the introduction of its new management structure, the EB now consists of three members: the CEO, CFO and a member. The existing Chief Operating Officer (COO) position has been withdrawn and Karin Bergstein and Michel Verwoest resigned as COOs of the EB with effect from 1 February 2019. The selection procedure for a new EB member began in November 2018. Between 1 February and 1 December 2019, the EB temporarily consisted of two members under the chairmanship of Jos Baeten. In anticipation of the appointment of the new member, the portfolio was temporarily divided between the CEO and CFO. On 29 May 2019, the SB announced the nomination of Ingrid de Swart as member of the EB. At the 2019 EGM, the SB discussed the proposed appointment of Ingrid de Swart as a member of the EB. The SB subsequently appointed Ingrid de Swart for a four-year term with effect from 1 December 2019. On 1 October 2019, a.s.r. confirmed the resignation of Chris Figee as CFO and EB member. As of 1 February 2020, Chris Figee stepped down. The selection procedure for a suitable successor for the CFO position has begun immediately after the announcement. On 20 December 2019, a.s.r. announced the nomination of Annemiek van Melick as candidate as CFO and EB member. Annemiek van Melick was appointed by the SB after the EGM on 12 February 2020.
Business Executive Committee On 1 February 2019, a BEC was established. Through the creation of the BEC, a.s.r. increased direct involvement of the senior managers of the product lines in further strengthening a.s.r.’s innovative power. It also enables a.s.r. to act decisively with respect to potential inorganic opportunities. The BEC consists of the members of the EB, the Chief Risk Officer (CRO) and senior managers representing specific business areas. The following business areas are represented in the BEC: Service Books (Individual life & Funeral), Pensions, Disability, Health, P&C, Asset Management, Mortgages and Innovation & Digitisation. Through the creation of the BEC, a.s.r. increased direct involvement of the senior managers of the product lines in further strengthening a.s.r.’s innovative power. It also enables a.s.r. to act decisively with respect to potential inorganic opportunities.
The BEC supports the EB, and is co-responsible for the implementation and realisation of the business strategy. Only the members of the EB have voting rights in the meeting of the BEC. The BEC will ensure the direct involvement, knowledge and skills of a.s.r.’s senior management responsible for specific business areas in the decision-making process at board level. With part of the industry in motion, it is vital that a.s.r. is able to respond quickly to opportunities that arise and efficiently anticipate constantly changing customer needs.
The SB will continue to maintain contact with the members of the EB as its primary role. As is already common practice, relevant senior managers will join SB meetings depending on what is on the agenda. The SB supervises the functioning of the BEC as a whole and the relationship between the EB and the BEC. The performance of the senior managers is also discussed between the EB and SB in the context of the review of senior management and succession planning.
Sustainability governance a.s.r. seeks to be a leader in sustainable business practices in the financial sector and takes account of sustainability wherever possible. It does so from five roles: ‘Sustainable insurer’, ‘Sustainable investor’, ‘Sustainable employer’, ‘A trusted company’ and ‘Role in society’.
A sustainability Work Force, with delegates from the business as well as staff departments, operates under the Task Force. It reports quarterly on the set sustainability KPIs to the Task Force, which evaluates the results achieved or takes action where necessary. Each focus has a sustainability Work Force for substantive discussions and to work out (subsidiary) activities.
From 2020 on the BEC will take over the responsibilities of the CSR Task Force.
Diversity a.s.r. is committed to an inclusive culture. In 2017, the SB adopted a formal diversity policy. a.s.r. uses the following definition for diversity: a balanced composition of the workforce, based on age, gender, cultural or social origin, competences, views and working styles. In December 2019, the EB consisted of one woman and two men. Per February 2020 the EB consists of two women and one man and therefore the current composition of the EB meets the gender target of having at least 30% women and 30% men amongst the members of the EB. a.s.r. will continue to strive for an adequate and balanced composition of the EB in future appointments by taking into account its diversity policy and all relevant selection criteria such as executive experience, experience in finance and experience in the political and social environment.
Permanent education and evaluation The 2019 self-evaluation session of the EB was conducted and discussed on the basis of a questionnaire. The general impression that emerged from this self-evaluation was positive. The main topic in this evaluation was the transition to a new composition of the EB and time will be invested in getting to know each other better in this new composition. In the context of the change of the CFO, attention is paid to knowledge transfer. Strategic themes that played a role in the past year will also play in the coming year: e.g. shrinkage of the life book and cost development. In addition other accents will also be laid, including a more customer-oriented organisation.
The performance of the members of the EB was also assessed by the SB as part of the scope of the annual assessment process. In this context, interviews are held twice a year with the individual members of the EB (by two SB members each time) in which the results of the aforementioned self-evaluation was included.
In 2019, specific sessions were also organised jointly with the SB and the senior management for the benefit of further education. The first session was a follow-up on the explanation of IFRS 17, the new accounting standard for insurance contracts, led by FRPM. The new regulations will impact future external reporting on insurance contracts. The implementation of IFRS 17 within a.s.r. is a major project. The second session focused on investment management. This knowledge session was led by a.s.r. asset management and took place at the end of the year. During this session, the SB, EB and senior management were given an update on strategic investment management, AI and robotisation in investment management, economic development and the strategic vision for 2020.
Jos Baeten is responsible for Group Risk Management, Human Resources, Legal & Integrity, Corporate Communications and Audit.
Jos Baeten studied law at Erasmus University Rotterdam and began his career in 1980 when he joined Stad Rotterdam Verzekeringen N.V., one of a.s.r.’s main predecessors. He attended the Advanced Management Programme at Wharton University in Pennsylvania in 2002. In 2005, he was appointed Chairman of the Board of Directors of Fortis ASR Verzekeringsgroep N.V.
Annemiek van Melick studied Dutch Law at the University of Utrecht and Financial Management at Nyenrode Business University. Annemiek van Melick previously worked at De Volksbank, where she was a member of de EB and CFO from 2014 to September 2019. Prior to that, she worked from 2012 to 2014 as Chief Financial & Risk Offi cer at SNS Retail Bank, a business unit of SNS REAAL and as Director Corporate Strategy and M&A at SNS REAAL from 2008 to 2012. Annemiek van Melick started her career in 2001 at Goldman Sachs in London within the investment banking division focused on capital market transactions and later on joined Lehman Brothers’s M&A team in Amsterdam, where she worked until 2008.
Additional positions Annemiek van Melick is a member of the SB of Royal Swinkels Family Brewers.
Chairman of the Executive Board and Chief Executive Offi cer (CEO)
Chris Figee has a degree in Financial Economics from the University of Groningen and is an EFFAS certifi ed investment analyst. He also studied Risk management at Stanford University. Chris Figee began his career at Aegon N.V., where he held various positions. In 1999, he moved to McKinsey, where he became partner in 2006. After ten years at McKinsey, he joined Achmea as Director of Group Strategy & Performance Management in 2009. Chris Figee’s last position at Achmea was as Director of Group Finance.
Additional positions Chris Figee is a member of the SB of Stichting Nederland Comité UNICEF.
As of 1 December 2019, Ingrid de Swart is responsible for IT&C, Innovation & Digitisation, Services and Distribution.
Composition of the Supervisory Board In line with a.s.r.’s articles of association, the SB should consist of at least three members. There were a few changes to the composition of the SB in 2019. According to the rotation schedule, the third term of office of the Chairman of the SB expired at the close of the 2019 AGM. With a view to preserving continuity in the SB, Kick van der Pol was nominated by the SB for a special extension of his term for (a maximum of) two years. The AGM reappointed Kick van der Pol as member and Chairman of the SB. Annet Aris resigned as a member of the SB at the end of the 2019 AGM. Due to the resignation of Annet Aris and the forthcoming changes in the composition of the SB (resignation of Cor van den Bos) in accordance with the retirement schedule, the SB nominated two candidates as new members in order to ensure continuity within the SB and its committees. At the EGM on 30 October 2019, the proposed candidates, Gisella van Vollenhoven and Gerard van Olphen, were appointed as new members of the SB. The SB now consists of six members: Kick van der Pol (Chairman), Cor van den Bos, Herman Hintzen, Sonja
Diversity The SB has drawn up a projected profile for its size and composition, taking into account the nature of a.s.r.’s business, its activities and the desired expertise and background of its members. The SB profile can be viewed on the a.s.r. website: www.asrnl.com. In 2017, the SB adopted a formal diversity policy. One of the objectives of the policy is to achieve a SB consisting of at least 30% women and at least 30% men. In 2019, the composition of the SB met this gender ratio, with 33% women and 67% men.
The composition of the SB is such that each member has the skills to assess the main aspects of overall policy and the SB as a whole matches the desired profile due to a combination of experience, expertise and independence of the individual members. The diversity of its members ensures the complementary profile of the SB. a.s.r. will continue to strive for an adequate and balanced composition of the SB in any future appointments by taking into account the diversity policy and all relevant selection criteria such as executive experience, experience in finance and experience in the political and social environment.
Name Date of initial appointment Date of reappointment End of current term of appointment1
Independence and conflicts of interest In line with the Dutch Corporate Governance Code, SB members are appointed by the AGM for a four-year term. They can be reappointed for a single additional four-year term and subsequently reappointed for a period of two years, which appointment may be extended by two years at most. Reappointments following an eight-year period must be justified in the SB report. SB members retire no later than by the AGM immediately following the end of their term of appointment.
All the SB members passed the ‘fit and proper test’ required under the Dutch Financial Supervision Act. In 2019, there were no reports of potential conflicts of interest relating to members of the SB. The SB was also able to carry out its tasks independently pursuant to principles 2.1.7 to 2.1.9 of the Dutch Corporate Governance Code.
E n d o f cu rr e n t te rm o f ap p o in tm e n t
G e n e ra l b u si n e ss m an ag e m e n t st ra te g y
( lif e n o n -l if e as se t m an ag e m e n t
ig it al & in n o va ti o n
Cor van den Bos 12-2008 06-2019 11 1952 M • • • • • •
Gerard van Olphen 11-2019 05-2023 1962 M • • • • • • • •
This will be guaranteed, among other things, through continuing education and a possible external working visit in this context. The search for a new chairman (with relevant board experience and knowledge of the insurance sector) is also a point for attention. In addition, the SB will devote specific attention in the coming year to the onboarding of the new members of the EB and the relationship with the BEC. In the coming year there will also be attention for further digitisation in the interest of the customer and the development of costs.
The individual members were given updates and presentations on various topics in view of their supervisory directorships at several Dutch and foreign enterprises and institutions.
Vice-Chairman of the Supervisory Board and chairman of the Audit & Risk Committee
of SNS REAAL N.V., where he was responsible for all insurance operations, M&A and integration. Cor van den Bos is Vice-Chairman and a
From 2013 to 2015, he was Chairman of the EB of SNS Reaal (then known as
March 2016. He is also a member of the SB of the Dutch Heart Foundation and a member of the SB of Netspar.
Gisella van Vollenhoven is also a member of the SB of Waarborgfonds
Vollenhoven has worked at the DNB, where she was Division Director
Dutch Corporate Governance Code Since being listed on Euronext Amsterdam, a.s.r. has been required to abide by the Dutch Corporate Governance Code. a.s.r. has complied with all the principles and best practices of the Dutch Corporate Governance Code, with the exception of those that do not apply to it. In the Corporate Governance section of its website, a.s.r. also publishes a detailed ‘comply or explain’ list which indicates which principles and best practices do not apply to it.
Professional oath On 1 January 2013, the Dutch financial sector introduced a mandatory oath for EB and SB members of financial institutions licensed in the Netherlands. With regard to insurance companies, in addition to the EB and SB members, individuals holding a management position immediately below the EB who are responsible for staff who may have a significant influence on the risk profile of the insurance company, are also required to take the oath, as are certain other employees. This includes individuals who may (independently) significantly influence the risk profile of the undertaking as well as those who are or may be involved in the provision of financial services.
For banks based in the Netherlands, such as ASR Bank N.V., all individuals working under the responsibility of the bank are required to take a similar bankers’ oath with effect from 2015. Those who have taken the bankers’ oath are subject to disciplinary rules.
Decision concerning disclosure of nonfinancial information and Decision concerning disclosure of diversity policy a.s.r. also wants to be transparent concerning the non-financial information in its Management Report. Since the 2017 reporting year, the relevant legal requirements have been tightened for large companies of public interest. Such organisations, which include a.s.r., are now expected to clarify how they deal with environmental, social and personnel issues, respect for human rights and the fight against corruption and bribery in their business operations and value chain. Large listed companies must also provide insight into their policy on diversity in relation to the EB and SB. Annex G EU Directive disclosure on non-financial information and diversity information states where the information requirements specified by the new legislation can be found in the annual report.
Highlights 2019 began with the implementation of the announced change of the management structure. Previously, several meetings were held with the SB, the EB and DNB, to discuss the design of the new management structure in order to successfully implement the strategy and achieve the goals a.s.r. has set for the future. This has resulted in a change of the composition and size of the EB, which now consists of three members, and the establishment of the BEC as from 1 February 2019. The introduction of the BEC guarantees more direct involvement of the senior managers of the product lines in further strengthening a.s.r.’s innovative power. It also enables a.s.r. to act decisively with regard to potential inorganic opportunities. As a result, the COO positions disappeared and Karin Bergstein and Michel Verwoest therefore stepped down from the EB as of 1 February 2019. The SB wishes to express its appreciation to them both for their contributions and key role in a.s.r.’s recent transition. The search for a new member of the EB resulted in the announcement of the nomination of Ingrid de Swart. After her introduction during the EGM in October 2019, the SB appointed Ingrid de Swart for a period which ends at the close of the 2023 AGM.
Lastly, on 1 October 2019 a.s.r. confirmed the resignation of Chris Figee as member of the EB and CFO as from 1 February 2020. The search for a suitable successor began immediately after the announcement. On 20 December 2019 the SB announced its proposal to appoint Annemiek van Melick as the intended successor of Chris Figee. The proposed appointment was discussed at the EGM on 12 February 2020. After the close of the EGM, the SB appointed Annemiek van Melick for a period which ends at the close of the 2023 AGM. The SB wishes to express its appreciation to Chris Figee for his key role in a.s.r.’s transition from a state-owned organisation to a listed company with an excellent reputation on the capital markets, since which a number of successful acquisitions have been made. a.s.r. now has a strong financial position, has become more agile, has improved its cost control and is well-placed to continue the execution of its current strategy.
Later on, a.s.r. announced the acquisitions of VvAA Levensverzekeringen N.V. and Veherex. With this acquisition, VvAA guarantees sustained access to life insurance products for its more than 120,000 members.
With the acquisition of Veherex, a.s.r. expands and strengthens its market position in the area of occupational disability insurance, whilst reinforcing its leading position in the provision of integrated sustainable employability solutions for employers. The SB has every confidence in the successful outcome of these acquisitions and supported the EB with the disciplined execution of the portfolio strategy during 2019.
Strategy based on long-term value creation Each year, the EB presents various matters to the SB for approval, such as the (quarterly) figures, multi-year budget, the investment plan and the risk appetite. These matters were all discussed and approved by the SB in 2019. Throughout the year, the EB discussed a.s.r.’s strategy in detail with the SB and obtained the support of the SB for its value creation model. For a.s.r. as a multiline insurer, this involves the portfolio strategy (as described in chapter 2.1.3 Portfolio and execution of strategy) and the strategy for small and medium-sized acquisitions. Acquisition opportunities and possible divestments were discussed in the context of the execution of the strategy. The SB supported the EB with bolt-on acquisitions, which was also implemented in 2019 as mentioned above.
In 2019, SB discussions included the following topics: • Strategy, including a.s.r.’s long-term value creation in various business areas, such as Pensions, Disability and Health in combination with the introduction of a.s.r. Vitality, Distribution and Services, Real Estate Development and specific developments such as sustainable employability and self-employed individuals; • Several M&A files, including the evaluation of previous acquisitions such as Generali Nederland; • Corporate governance, composition of the SB and EB
Financial performance The SB discussed the financial performance each quarter, covering standing issues such as developments in the COR, long-term cost development and premium developments. The SB was satisfied with a.s.r.’s financial performance in 2019.
In general, a.s.r. has a well-functioning internal control system, consisting of the ‘three lines of defence’ model, which supports a.s.r. in achieving its objectives. The various reports that are prepared can be described as informative and of good quality providing management with the appropriate information.
In the year 2019 a.s.r. further invested in strengthening internal control. EY, however note, that due to the multiplicity and coincidence of internal and external developments, there is pressure on the workforce within the organisation. This is reflected, among other things, by the degree of external hiring, but also by delays in the closing of in- and external audit findings.
The key findings with a high priority can be summarised as follows: • Improve the Risk Control Framework for pensions, by including a control on periodic monitoring of timely and complete data delivery of disability information from third parties (such as the UWV); • Ensure controls are executed timely in the acceptance of business within the P&C business; • Improve the monitoring controls on tied agents ‘Volmachten’, including setting more detailed standards and documentation requirements for conducting the audits at ‘Volmachten’; • Ensure that the process for monitoring and periodically reviewing transactions through high privilege accounts (HPAs) and non-personal accounts (NPAs) for Business Applications is consistently applied across all entities.
Coronavirus In February and March 2020, the SB has discussed the a.s.r. developments related to the coronavirus and the impact on the business, as well as the operational aspects, and will continue to monitor how a.s.r. is addressing the rapidly changing environment.
The SB has great appreciation for the approach taken by the Works Council to developments impacting a.s.r., such as the acquisition of Loyalis, the evaluation of the remuneration policy for the EB and SB, the selection and appointment of the new members of the EB and the introduction of the employee share purchase plan. Taking into account the interests of both a.s.r. as a whole and its employees, the Works Council makes thorough preparations when addressing the wide range of issues it is presented with, discusses them in a constructive dialogue with the EB, and issues balanced, well-considered opinions and recommendations.
Contacts with external regulators and auditors The SB periodically consulted with DNB and AFM. The independent external auditor, EY, attended the SB meetings at which the annual and interim financial results were discussed. During these meetings, the auditor elaborated on the audit reports and answered specific questions.
The three committees are: • The Audit & Risk Committee (A&RC); • The Remuneration Committee (RC); • The Selection & Appointment Committee (S&AC).
Audit & Risk Committee • Cor van den Bos (Chairman) • Sonja Barendregt • Herman Hintzen
Specific topics discussed in the committee included (i) cyber risks and IT security, with a focus on outsourced activities, (ii) fraud issues (both from external clients - e.g. inappropriate claims behaviour - or from employees) and measures taken, (iii) decreasing interest rates and impact on solvency through the balance sheet plan 2019 and quarterly projection updates and (iv) following the completion of the acquisition of Loyalis in early 2019, the integration plan and status report in view of the integration of Loyalis. Special attention was given to KPMG’s transition plan, after their appointment at the AGM in May 2019 as the external auditor for the financial years 2020 to 2024.
The a.s.r. risk appetite is based on a prudent approach to risk management and translates the risk appetite into qualitative business guidelines for NFR matters and into requirements for solvency, liquidity and returns for the FR matters; solvency takes priority over profit and profit takes priority over premium income. Moreover, a.s.r.’s updated capital and dividend policy was discussed, after which the SB approved the updated policy.
The RC advises the SB on matters including the remuneration policy for the EB and SB and the terms and conditions of employment of the EB, and reviews the remuneration of senior management. The profiles of senior management have been adapted towards a more competence-based model, which improves the differentiation between the different roles.
The RC met six times in 2019. Its meetings were also attended by the CEO (except when issues relating to the EB were discussed) and the Director of Human Resources, who also acts as Secretary in association with the Company Secretary. The committee solicits support and advice from departments such as GRM, Compliance, Audit and Human Resources. Where needed, the committee is consulted by the expertise of independent legal and pay & benefit experts.
At the EGM in 2019, Gisella van Vollenhoven and Gerard van Olphen were appointed as members of the SB. A selection process for the appointments of these new members began in 2019 with the help of an external agency and were prepared by the committee. Gisella van Vollenhoven was appointed with an enhanced right of recommendation from the Works Council.
Furthermore, the committee discussed the annual appraisals of senior management. The change to a more competence-based model for the profiles of senior managers was also a subject of discussion and was prepared by the committee. A nine-box grid was used to evaluate senior managers and to discuss their individual development and possible successors. The committee was also informed of the results of the Denison scan, a tool used to measure the success of the organisation.
The proposed remuneration policy for the EB per 1 January 2020 was adopted by the shareholders at the 2019 AGM with 84% of the votes cast. Due to the fact that this new remuneration policy is applicable per 1 January 2020, in this (2019) report first the former policy is mentioned, which relates to the payments that were made in 2019. This is followed by the new policy. At the 2020 AGM there will not be a vote on the remuneration policy. The remuneration report (execution of the policy in 2019) will be put up for an advisory vote in line with current legislation.
Shareholder Rights Directive II (EU 2017/828) With the current remuneration policy (per 2020) for the members of the EB as well as the SB a.s.r. is of the opinion that it is compliant with the requirements of the Shareholders Rights Directive II (as implemented in Dutch law) as far as it is applicable to a.s.r.
Both the remuneration policy of the EB and the SB has been adopted by more than 75% of the votes cast (84% and 99% respectively). In addition, the Works Council was kept fully informed and involved during the evaluation process. The Works Council was timely given the opportunity to determine a formal position with regard
The current remuneration policy does not include any procedural conditions under which a deviation from the remuneration policy is possible, the SB is aware of this. The format (in concept) for the remuneration report of the European Commission has been broadly followed and the tables are filled in as far as applicable to a.s.r. (no variable remuneration scheme and no remuneration in shares). Finally, this report will be submitted to the AGM 2020 for advisory vote.
A. Remuneration Policy in force until 31 December 2019 The a.s.r. Group remuneration policy applies to all a.s.r. employees, including the EB. a.s.r.’s remuneration policy is controlled and sustainable and aims to improve and maintain the integrity and robustness of a.s.r. It supports the strategy, objectives, values, culture and long-term interests of a.s.r. and all its stakeholders. It enables a.s.r. to retain employees and attract the right people. An organisation-wide variable remuneration is not a part of the remuneration policy. The remuneration of the EB consists of a fixed remuneration. This comprises a fixed monthly amount, including holiday allowance. Pay is indexed in accordance with the a.s.r. CLA. The remuneration policy is based on the principle that the average level of total remuneration is just below the median of the benchmark group that is relevant to the company. Every three years, an independent consultant makes a market comparison (remuneration benchmark). The relevant peer group for the EB is a mix of Dutch financial institutions and medium-sized listed Dutch businesses outside the financial sector. The Remuneration Committee periodically checks whether that the choice of peer group is still adequate or if it should be revised.
The performance of each EB member is reviewed annually, based on a set of financial and non-financial targets determined by the SB. The targets for 2019 can be summarised as follows: • Financial: realisation of the multi-year budget within the established risk appetite; • Customer: creating a recognisable positioning of a.s.r.
The following conditions apply to severance pay for policymakers (including members of the EB). • The maximum severance pay is 100% of the fixed annual remuneration; • Severance pay is not awarded in the event of failure on the part of the company; • Severance pay that can be classified as variable is not awarded to a.s.r.’s policymakers or to banks and insurers that are part of the Group.
Neither fixed nor variable severance pay may be awarded in the following cases: • If an employment relationship is terminated early at the employee’s own initiative, except where this is due to serious culpable conduct or neglect on the part of the company; • In the event of serious culpable conduct or gross negligence on the part of the employee in the performance of his or her role.
Remuneration in 2019 The SB realises that substantially salary increases were granted to members of the EB in 2018 and 2019, as previously announced at the beginning of 2018. The reason for this was that the salaries had hardly been adjusted for years due to the restrictions resulting from the shareholding of the Dutch State. As a result, salaries were far below the benchmark. In that context, the SB has decided to adjust the salaries in relation to this benchmark and due to their responsibilities. With the new remuneration policy as of 2020, salary increases will be in line with the methodology included in this policy and therefore will be more moderate and in line with the payments made to all employees and the company results. This is further explained hereinafter.
Pay ratio a.s.r. is transparent about the remuneration of the EB. Not only in terms of actual amounts, but in accordance with Dutch law and the Dutch Corporate Governance Code also in comparison with the median of the remuneration of all staff.
Total remuneration 2019 of the Executive Board The remuneration of the current and former members of the EB is in accordance with the 2019 remuneration policy.
There are no loans, advances or guarantees provided by a.s.r. or any undertaking belonging to the same group of a.s.r. on behalf of a member of the EB.
Executive Board member Base salary Fees Fringe benefits2 One-year variable Multi-year variable Extra ordinary items Pension expense3 Total remuneration
2 Variations arise as a result of the fiscal treatment of lease vehicles depending on the price and private use of the car, personal allowance and social security.
4 The proportion of fixed and variable remuneration is not relevant since the members of the EB do not receive any variable remuneration. The low proportion of fixed and variable remuneration of Ingrid de Swart, Karin Bergstein and Michel Verwoest in 2019 is caused by the amount of extraordinary items (severance payments and signing bonus) received by them during the financial year.
5 Ingrid de Swart was appointed to the EB on 1 December 2019. The remuneration figures for 2019 reflect a partial year as a member of the EB. The fee relates to a signing bonus received.
6 Michel Verwoest left the EB and a.s.r. on 1 February 2019. Karin Bergstein left the EB on 1 February 2019 and left a.s.r. on 1 August 2019, observing the applicable cancellation period of 6 months. The remuneration figures for 2019 reflect the part of the year Michel Verwoest and Karin Bergstein were employed by a.s.r., except for the amounts under extraordinary items. These amounts concern severance payments which are based on their annualised fixed remuneration on their contract termination dates.
Executive Board member Base salary Fees Fringe benefits1 One-year variable Multi-year variable Extra ordinary items Pension expense2 Total remuneration
Fixed portion of the total remuneration3 1 Variations arise as a result of the fiscal treatment of lease vehicles depending on the price and private use of the car, personal allowance and social security.
3 The proportion of fixed and variable remuneration is not relevant since the members of the EB do not receive any variable remuneration. The low proportion of fixed and variable remuneration of Ingrid de Swart, Karin Bergstein and Michel Verwoest in 2019 is caused by the amount of extraordinary items (severance payments and signing bonus) received by them during the financial year.
Pensions The calculation of annual pension expenses is based on the total pension rights granted during a term of service at a.s.r. Pension costs include: • Pensions based on a maximum pensionable salary cap
(€ 107,593, fiscal maximum); • Compensation for the maximum pensionable salary cap
(to be used for pensions at the employee’s discretion); • Pension benefits related to historically awarded pension rights; • VPL (early retirement and life cycle; ‘VUT, Prepensioen en Levensloop’).
All components of the remuneration of the EB are included in the base used for calculating the pension benefits. The members of the EB have the same pension scheme (Defined Benefit) as the employees of a.s.r.
A comparative chart is included above over the remuneration and company performance over the last five reported financial years. The company performance is expressed in operating result per share. Also the median remuneration of the employees (not being an EB member) is shown, also used for the pay ratio as mentioned before. Finally the average remuneration of the EB (CEO and CFO) is presented. As also mentioned before is visible in this comparative chart that substantially salary increases were granted to the members of the EB in 2018 and 2019. The reason for this was that the salaries had hardly been adjusted for years due to the restrictions resulting from the shareholding of the Dutch State. As a result, salaries were far below the benchmark. In that context, the SB has decided to adjust the salaries in 2018 and 2019 in relation to this benchmark and due to their responsibilities. With the new remuneration policy as of 2020, salary increases will be in line with the methodology included in this policy and therefore will be more moderate and in line with the payments made to all employees and also the company results.
a.s.r.’s starting point is that society experiences it as a useful insurer that deals responsibly with the funds entrusted to it and the environment in which it operates. With this in mind, the following four perspectives have been used to formulate the proposal as a basis for the remuneration policy: 1. The organisational perspective: in line with how a.s.r.
Item 2. The internal perspective All a.s.r. employees have a salary based on job weighting based on a classification in salary scales that they progress through in stages. The remuneration of the EB members is also fixed on the basis of a classification into salary scales. This creates a link with the salary scales for the other employees. The positions of members of the EB and 1 A range of 0.25 - 4 applies to market capitalisation. A range of 0.4 - 2.5 applies to turnover and employees.
In principle, the EB members progress through the salary scales in the same way as the employees. For the employees, this concerns an annual increase of 3% (provided that there is room for this in the scale). For the EB members, the SB has the option of adjusting this growth path slightly, upwardly or downwardly (increase of 0% to 6%). The a.s.r. CLA applies to the members of the EB in relation to pay indexation.
Item 3. The external perspective a.s.r. offers its employees a market-compliant salary. Market compliance of the salary is assessed on the basis of a reference group. The reference group of the EB consists of Dutch organisations only, many of which have a social nature, to be distinguished according to comparable Dutch listed companies and Dutch financial institutions, including insurance companies. The non-financial institutions must meet at least two of the three criteria set with respect to the similar size of the companies for inclusion in the reference group. These criteria concern the organisation’s turnover, market capitalisation, and the number of staff1. a.s.r. finds itself around the middle of this reference group. In addition, all remuneration data of the organisations in the reference group must be published individually. The median is established using a conversion factor of 0.5 of ‘at target’ variable to fixed salary for the companies in the reference group that have a variable remuneration component.
Governance | 5.3 Remuneration report 123 in exceptional circumstances (a growth of 0% to 6%, provided there is room in the salary scale). In doing so, the SB will take into account the performance of a.s.r. and the principles laid down in the remuneration policy. The SB will account for this in the annual remuneration report.
Periodical test The Remuneration Committee tests the principles of the remuneration policy (at least) once every four years against the four perspectives. The remuneration policy will be put to the vote (at least) once every four years at the General Meeting of Shareholders. The market comparison (remuneration benchmark) is carried out once every two years by an external consultancy firm.
Salary level Individual salary level Salary level based on salary scale (70% to 100%)
The average level of the total remuneration lies just below the median.
The maximum for the salary scale lies just below the median.
The a.s.r. CLA applies to the members of the EB in relation to pay indexation.
The SB assesses each year whether, in addition to the increase in accordance with the CLA salaries index, there are grounds for a salary increase for the members of the EB within the salary scale.
All remuneration data of the organisations in the reference group must be published individually.
The median is fixed with a conversion factor of 0.5 from variable to fixed salary for the companies in the peer group with a variable remuneration component.
In the event of material changes, the policy is presented to the
Remuneration in 2020 On the basis of the benchmark used for the 2019 AGM proposal and the mitigation principle, the salary of the CEO is currently at a level between € 682,000 and € 975,000. A salary scale of € 530,000 to € 756,000 applies for the CFO. For the other member of the EB, a scale of € 505,000 to € 722,000 applies. The maximum for the salary scale of the CEO is currently set at about 10% below the median for the reference group. The maximum for the salary scale of the CFO and the other member of the EB is currently set at about 5% below the median for the reference group. The benchmark is set every two years. The positioning, the scale maximum and the resulting bandwidth of the scale are then assessed and may be adjusted in relation to the resulting median.
Below the most recent reference group which consists of 20 companies.
Those employees who have not reached the end of their salary scale yet get a yearly guaranteed increase of 3% until they reach the maximum of their salary scale. The EB members who have not reached the maximum of their salary scale can get a yearly increase between 0% and 6% (not guaranteed) until they reach the maximum of their scale. Per 1 January 2020 the SB decided to increase the salary of the CEO with 3%. This increase is in line with the increase all employees receive.
As of 2020, the members of the EB commit themselves into a shareholding of 75% for the CEO and 50% for the other members, of the most recent gross salary. The share interest will be achieved within a maximum period of seven years. The shares must be held for a minimum of five years (blocking period). This percentage may be considered low in relation to other companies, but it must be taken into account that the members of the EB purchase these shares from their own financial resources. The shares do not form part of a variable remuneration or a remuneration in shares. The SB has made agreements with the members of the EB that the intended target (a shareholding of 75% for the CEO and 50% for the other members of the EB, of the most recent gross salary) will be achieved by 2026 at the latest.
At year-end 2019, the CEO and (now former) CFO hold the following number of shares: • Jos Baeten 2,324 (15% of the most recent gross salary); • Chris Figee 775 (9% of the most recent gross salary); • Ingrid de Swart holds no shares at year-end 2019, because she was appointed per 1 December 2019.
The remuneration policy for SB members, including fees, expense allowances and other benefits, was adopted by the AGM. The remuneration paid to the members of the SB does not depend on the financial performance of a.s.r. and none of the SB members own a.s.r. shares.
Until July 2019 the members of the SB were entitled to: • A base fee for members or chair of the SB; • A committee fee for members on each of the SB’s
As of July 2019 the members of the SB are entitled to, as adopted by the 2019 AGM: • A base fee for members or chair of the SB; • A committee fee for members or chair of each of the
The fees for the members of the SB have remained unchanged since 2009. The Dutch Corporate Governance Code states that the remuneration of the members of the SB should reflect the time spent and the responsibility of the function. In recent years, the responsibilities of the SB have increased due to changes in governance, legislation and regulation. A benchmark study was conducted as part of the periodical evaluation. The reference group is the same as the one used for the remuneration of the members of the EB. The benchmark showed that the remuneration was far below the median of the benchmark. Based on this it was proposed to adjust the remuneration of the SB, as the remuneration was not in line with the time spent and the increased responsibility of the position. The proposed remuneration policy for the SB per 1 July 2019 was adopted by the shareholders with 99%.
SB members who also serve on the SB of ASR Bank N.V. receive € 4,000 per annum and those on the SB of ASR Basis/Aanvullende Ziektekostenverzekeringen N.V. also receive € 4,000 per annum. Annual fees are not paid to members of the EB who are also members of the SB of one of the Group entities, such as ASR Bank N.V.
Remuneration of the Supervisory Board members in 2019 The remuneration of the current and former members of the SB in accordance with the remuneration policy. There are no loans, advances or guarantees provided by a.s.r. or any undertaking belonging to the same group of a.s.r. on behalf of a member of the SB.
1 Remuneration as a SB member of a.s.r. 2 Remuneration as a committee chairperson or member of a.s.r., SB member of ASR Bank N.V. or SB member of ASR Basis/Aanvullende
Committee (€ 3,750), and as a member of the SB of ASR Basis/Aanvullende Ziektekostenverzekeringen N.V. (€ 4,000). 4 The fees relate to the amounts received as a committee member of the Audit & Risk Committee (€ 12,500) and as a member of the SB of 5 The fees relate to the amounts received as a committee member of the Audit & Risk Committee (€ 10,000) and the Selection and Appointment
Consultation with both the EB and SB takes place in an atmosphere of transparency and openness. The topics dealt with by the Works Council are highly diverse including among others: • The consultations with the trade unions included the
CLA negotiations and the extension of the pension scheme. The Works Council brought the opinions of the employees into the discussions; • The acquisition of Loyalis, Veherex and VvAA Leven. The Works Council was actively involved in the various acquisitions in the past year. Among other things through contacts with the participation of the parties to be taken over and by attending staff meetings organised in the context of the takeovers.
The Works Council has been involved in the introduction of the newly appointed supervisory directors in the SB, Gisella van Vollenhoven and Gerard van Olphen and has issued positive advice in both cases.
The Works Council has been involved in the introduction of the newly appointed executive directors, Ingrid de Swart and Annemiek van Melick and has issued positive advice in both cases.
A delegation from the Works Council attended the AGM in May 2019 and the EGM in October 2019.
An overview of the formal consultations of the Works Council with the CEO and the SB is shown below. In addition to these formal consultations, the works council also had a number of informal contacts with the CEO and members of the SB.
Regular Works Council meetings with a member of the EB Chairman of EB, secretary of the EB, HR Director, and Works Council
Regular Works Council meetings with a member of the EB and members of the SB
Chairman of EB, member(s) of the SB, secretary of the EB, HR Director, and Works Council
About the object The stained glass window illustrates the partnership between De Utrecht and Holland in 1958 with the Grote Kerk of Dordrecht on the left and the golden disc, the company logo. On the right are the Dom Tower of Utrecht and the tree planter, the logo of De Utrecht.
6 Financial statements 6.1.1 General information 132 6.1.2 Statement of compliance 133 6.2 Consolidated financial statements 134 6.2.1 Consolidated balance sheet 134 6.2.2 Consolidated income statement 135 6.2.3 Consolidated statement of comprehensive income 137 6.2.4 Consolidated statement of changes in equity 138 6.2.5 Consolidated statement of cash flows 139 6.3 Accounting policies 141 6.3.1 Changes in comparative figures 141 6.3.2 Changes in EU endorsed published
Own Risk and Solvency Assessment Risk Management System 234 6.8.2 Insurance risk 244 6.8.3 Market risk 253 6.8.4 Counterpart default risk 261 6.8.5 Liquidity risk 264 6.8.6 Operational risk 265 6.8.7 Strategic and operational risk management 265 6.9 Capital management 268 6.9.1 Capital management objectives 269 6.9.2 Solvency ratio and a.s.r. ratings 270 6.9.3 Dividend and capital actions 271 6.10 Operating result 273 6.11 Company financial statements 275 6.11.1 Company balance sheet 275 6.11.2 Company income statement 276 6.11.3 Notes to the company financial statements 276
a.s.r. is a public limited company under Dutch law having its registered office located at Archimedeslaan 10, 3584 BA in Utrecht, the Netherlands. a.s.r. has chosen the Netherlands as ‘country of origin’ (land van herkomst) for the issued share capital and corporate bonds which are listed on Euronext Amsterdam and the Irish Stock Exchange (Ticker: ASRNL).
The consolidated financial statements of a.s.r. have been prepared in accordance with the IFRS – including the International Accounting Standards (IAS) and Interpretations – as adopted by the EU, and with the financial reporting requirements included in Title 9, Book 2 of the Dutch Civil Code, where applicable.
Financial statements 2019 | 6.2 Consolidated financial statements 134 6.2 Consolidated financial statements 6.2.1 Consolidated balance sheet
Consolidated income statement for the year ended 31 December 1 Comparative figures for 2018 have been restated. For details see chapter 6.3.1.
Attributable to: Non-controlling interests - 2 - Shareholders of the parent 912 610 - Holders of other equity instruments 60 59
Earnings per share 1 Comparative figures for 2018 have been restated. For details see chapter 6.3.1.
Basic earnings per ordinary share from discontinued operations 6.5.12 0.01 -0.26
Diluted earnings per ordinary share from continuing operations 6.5.12 5.94 4.27
Financial statements 2019 | 6.2 Consolidated financial statements 137 6.2.3 Consolidated statement of comprehensive income
Unrealised change in value of available for sale assets 1,671 -429
Total items that may be reclassified subsequently to profit or loss 346 -289
Total comprehensive income attributable to holders of equity instruments 941 426
(in € millions) S h ar e c ap it al
N o n -c o n tr o lli n g in te re st
Issue of other equity instruments - - - - - - - - - -
Redemptions of other equity instruments - - - - - - - - - -
Redemptions of other equity instruments - - - - - - - -209 - -209
Unrealised gains and losses include shadow accounting adjustments (see accounting policy I, chapter 6.3.4). For more detailed information on the unrealised gains and losses, see chapter 6.5.12.2.
In 2019, treasury shares acquired / sold are for the purpose of the a.s.r. employee share purchase plan. See chapter 6.5.12.4.
The table below represents the cash flows from continuing and discontinued operations combined. Cash flows related to discontinued operations are included in chapter 6.4.6. if applicable.
Net (increase) / decrease in investments on behalf of policyholders -1,208 573
Net (increase) / decrease in trade and other receivables -31 76
Net (increase) / decrease in assets and liabilities relating to held for sale - 186
Cash flows from financing activities: Issue of subordinated debts 492 -
Further details on cash flows from operating activities: Interest received 1,406 1,247
Further details on lease payments: Total cash outflows for leases -6 -
IAS 12 amendment The IAS 12 amendment clarifies that the income tax consequences of dividends on financial instruments classified as equity should be recognised according to where the past transactions or events that generated distributable profits were recognised. These requirements apply to all income tax consequences of dividends.
Changes in presentation The current presentation differs from last year’s presentation in some aspects. Where applicable, in accordance with IFRS, comparative figures have been included in the new presentation format to ensure comparability. This mainly concerns interest income and interest expense relating to negative interest paid on derivative assets and positive interest received on derivative liabilities of a total of € 109 million. These changes in presentation have no impact on net result nor equity.
IFRS 16 Leases Under this standard a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for a consideration. The main items a.s.r. leases, under operating lease agreements, are vehicles and buildings. For contracts that contain a lease component and one or more additional lease or non-lease components a.s.r. applies the practical expedient not to separate non-lease components from lease components.
Incremental borrowing rate applied at the date of initial application: For vehicles leased a.s.r. uses the borrowing rate supplied by the lease company, which is 0.9%. The weighted incremental borrowing rate of a.s.r. as a lessee applied to the leased other property and equipment is 2.9%.
a.s.r. deems its previous and current consolidated financial statements to be in line with the amended definition of material, including clarifications. As a result, the amendment will have no material effect on the presented quantitative and qualitative information.
Programme In 2017, a.s.r. started a combined IFRS 17 and IFRS 9 programme to implement IFRS 17 and IFRS 9 Financial Instruments and has performed a high-level impact assessment. In 2018 and 2019, the programme has focused on the following activities: • Updating Technical Implementation Documents taking into account available information and interpretation (i.e. IASB
Board papers, IASB Transition Resource Group papers, and amendments to IFRS 17); • The identified workstreams have continued to implement IFRS 17 in the operations during the period till the effective date of IFRS 17; • Gained a better understanding of the impact through performing an impact assessment based on various scenarios; • Evaluating and analysing the potential use of the disaggregation accounting policy choice for the insurance finance income or expense or OCI-option in combination with hedge accounting; • Developing and implementation of CSM engines for its pension, life, funeral and disability business; • Implementation of the IT architecture including implementation of the general ledger, accounting hub and reporting infrastructure; • Defining the level of aggregation of contracts and decisions regarding the use of different accounting models; • Preparation of the IFRS 17 accounting manual; • Preparation of a dummy IFRS 17 and IFRS 9 consolidated financial statements; • Preparation of a transition plan for IFRS 17 also taking into account the recent Generali and Loyalis acquisitions; • Preparation of transition plan for IFRS 9 including if and how to implement hedge accounting due to the strong interaction between the insurance liabilities and the underlying assets; • Provided feedback and input for the EU endorsement process, IASB IFRS 17 exposure draft and IASB IFRS 17
Amendments, where possible; • Further training of staff participating in the programme; • Preparation for an end-to-end systems test, including a financial impact assessment (i.e. information and transactions from source systems, via risk engines, accounting hub, general ledger to financial statements) in 2020.
IFRS 9 replaces most of the current IAS 39 ‘Financial Instruments: Recognition and Measurement’, and includes requirements for classification and measurement of financial assets and liabilities, impairment of financial assets and hedge accounting.
Impairment The recognition and measurement of impairment under IFRS 9 is intended to be more forward-looking than under IAS 39. The new impairment requirements will apply to all financial assets measured at amortised cost and at fair value through other comprehensive income with the exception of equity instruments. Initially, a provision is required for expected credit losses resulting from default events that are expected within the next twelve months. In the event of a significant increase in credit risk, a provision is required for expected credit losses resulting from all possible default events over the expected life of the financial asset.
Programme IFRS 9 a.s.r. is currently performing the following activities: • a.s.r. has performed business model evaluation and solely payment of principle and interest (SPPI) testing related to the financial assets and liabilities held by the insurance activities, as part of the overall IFRS 17 and IFRS 9 programme; • Is evaluating the classification and measurement of the financial instruments in relation to IFRS 17 and asset liability management; • Preparation of the IFRS 9 accounting manual; • Implementation of the IT architecture for updating the investment management systems for IFRS 9; • Preparation for the end-to-end systems test, including a financial impact assessment in 2020.
The implementation of IFRS 9, in combination with IFRS 17, for the insurance activities may have a significant impact on shareholders’ equity, net result and/or other comprehensive income and on the consolidated financial statements of a.s.r.
A. Estimates and assumptions The preparation of the financial statements requires a.s.r. to make estimates, assumptions and judgements in applying accounting policies that have an effect on the reported amounts in the financial statements. These relate primarily to the following: • The fair value and impairments of unlisted financial instruments (see accounting policy B and E); • The estimated useful life, residual value and fair value of property and equipment, investment property, and intangible assets (see accounting policy C, D and T); • The measurement of liabilities arising from insurance contracts (see accounting policy I); • Actuarial assumptions used for measuring employee benefit obligations (see chapter 6.5.15); • When forming provisions, the required estimate of existing obligations arising from past events; • The recoverable amount of impaired assets (see accounting policy B, E and G).