Committed to sustainable value creation NN Group N.V. Annual Review 2020
The Annual Report aligns relevant information about our governance, strategy, performance and future prospects in a way that reflects the economic, environmental and social contexts in which we operate. It is prepared in accordance with Dutch law, relevant EU disclosure regulations and reporting standards.
Together with this report, NN Group publishes a Solvency and Financial Condition Report, a Total Tax Contribution Report, and a Carbon Footprint Report. Next to that, NN Investment Partners launches a Responsible Investing Report. All these reports are published on NN Group’s corporate website in the Investors/ Financial Report section.
Read more on our approach to reporting on pages 61-62 of the Annual Review.
Creating value for our stakeholders Adding value for customers ............................................ 24 Empowering our people to be their best ............ 29 Creating value for investors ........................................... 32 Creating a positive impact on society .................. 36 Contributing to the Sustainable Development Goals ............................................................... 41
You matter We believe that people want to live life to the fullest. We empower them to do just that – through all stages of their lives – by providing sound financial products and services, and by being a trusted advisor. We are steadfast in our commitment to help people care for what matters most to them.
#1 position in disability and accident top 3 life and pensions player in CEE
• Group income • Group pensions • Individual pensions • Japan: Corporate Life (COLI)
• Employee benefits • Fire insurance • Health insurance • Individual disability • Liability insurance • Motor insurance • Property and casualty • Transport insurance
• Mortgage origination and servicing for NN Group companies and third parties
About NN – CEO viewpoint impressed by, and grateful for, this resilience, and it meant that we could continue our business without interruption, with employee engagement going up and customer satisfaction remaining broadly stable. We have supported our customers with concrete and immediate solutions, and we have continued to support our partners in society. A highlight was also the completion of the acquisition of VIVAT Non-life, which makes us the leading player in the Dutch Non-life insurance market. Our overall financial and business performance remained strong, with a relatively limited negative impact of Covid-19 on our operating result. Furthermore, in 2020, we developed our company’s new strategy, taking onboard the input of many different stakeholder groups. In April, we updated the composition of our Management Board, welcoming two new members, Bernhard Kaufmann and Leon van Riet. All this enabled us to make a promising start with the implementation of our strategy.
What were the main drivers behind the company’s performance? In the Netherlands, our Life & Pensions business posted strong results on the back of the accelerated shift to higheryielding assets. We completed an attractive longevity transaction to transfer the full longevity risk associated with in total EUR 13.5 billion of pension liabilities in the
For NN, how do you look back on 2020? 2020 was a year we will not easily forget. Also at NN, colleagues have been working from home since mid-March. Even though it has been challenging, our people have quickly adapted to the new circumstances, and continued to care for each other, our customers, and our communities. We were
Netherlands, which creates optionality to further optimise our capital structure. NN Bank, the fifth largest retail bank in the Netherlands, continued to show growth, and originated new mortgages for a total amount of EUR 8.2 billion. In the Dutch Non-life business we saw an increase in disability and events-related claims, but the overall combined ratio held up well, at a level of 95.3%. NN IP managed to increase its total Assets under Management to EUR 300 billion, with a net inflow of thirdparty assets of EUR 13.6 billion. And, at Insurance Europe, we saw continued commercial momentum, helped by our strong tied agent force, and sales were up in the second half of the year. In Japan, we managed to recover our performance in the course of the year, from the impact of tax reforms in the beginning of 2020. All in all, a solid foundation for delivering on both our financial and non-financial targets.
What are your priorities for customers? We want to create long-term value for all our stakeholders through realising our purpose: we help people care for what matters most to them. It is our ambition to be an industry leader known for our customer engagement, our talented people, and our contribution to society. To achieve this, we need to evolve our current skills, and develop new capabilities in order to meet the changing customer demands and to stay competitive.
What are your priorities for employees? We offer our employees an environment in which they can be who they are, invest in their personal and professional growth, and develop a strong adaptability to change. In 2020, this need for flexibility already proved to be a reality, as working from home became the new normal, replacing daily commutes, moving meetings online, and offering flexible working hours. These changes turned out to have limited impact on productivity, and our colleagues indicate to be pleased with more optionality in managing their worklife balance. However, it has also become clear that the social interaction the office provides is missed, specifically when it comes to creativity, specific team projects, and people’s general well-being. We will therefore continue to invest in supporting our colleagues to stay physically and mentally fit.
This is reshaping many industries on a number of dimensions, accelerating digitisation, changing product offerings, prompting a new wave of innovation, and creating a new competitive landscape. In 2020, these factors provided both challenges and opportunities for NN Group. These have been taken on board when we defined our new strategy, which is primarily aimed at creating long-term value for all our stakeholders.
Impact Covid-19 on NN, including initiatives to support customers and employees of staff worked in offices, as some activities needed to be done at NN premises for legal or logistic reasons. Also, employees dealing with specific personal circumstances were allowed to work in the office under strict conditions.
In this process, we have changed the terms of many of our products to support customers in financial distress. For example, providing extra cover for restaurants that started delivery services and for the hospitality industry. Also, in the Netherlands, we have provided mortgage and consumer loan payment breaks to customers that experience financial difficulties. In Japan, we extended the moratorium period of premium payment for SMEs.
While the impact of Covid-19 on society as a whole is significant, the financial impact on NN Group for 2020 was relatively limited to EUR 53 million.
NN so far has shown to be relatively resilient to financial markets volatility, mainly due to our conservative investment strategy, close matching of assets and liabilities and a strong capital position. We continue to monitor the situation, and will take further measures when necessary. Monitoring includes: • Ensuring business continuity to allow customers be serviced uninterruptedly and employees to work safely from home
• Ensuring that outsourced activities can be performed according to defined services levels and that sales and support networks via brokers and tied agents remain healthy
It is generally expected that economic growth will return to pre-pandemic levels in the coming years; growth in Europe will be rising by around 4% in 2021 and in 2022. At the time of closing this Annual Report it is not possible to predict how recovery will precisely take place. Scientific progress, pharmaceutical advances (vaccines), and adjustments in the behaviour of citizens and companies should help keep the virus in check. Policies to support jobs and firms, in place since the beginning of the pandemic, will enable a faster, stronger rebound when restrictions are lifted, as more and more activities restart, limiting the aggregate income loss.
Continuing low interest rates In 2020, we saw a continuation of the low interest rate environment. While NN Group is relatively well positioned to face this environment, low interest rates affect the sector, and our company, through the balance sheet both on the assets and liabilities side, but also through the income channel. Therefore, we continue to look into possible solutions, such as an accelerated shift to defined contribution pension products in the Netherlands, and a shift towards protection products in general. Where possible, we also seek opportunities to create additional returns on our investments, and NN Bank seeks to lower its funding costs by rate reductions for savings and bank annuities and by optimising its wholesale funding.
(Geo)political developments Next to Covid-19, macroeconomic uncertainties were driven by different geopolitical developments and governmental instability. Among them, Brexit, economic conflicts between the US, EU and China, and rising nationalism in the EU and in the US. This contributed to increased volatility in financial markets, but the overall impact on NN has been limited.
Trends in labour markets To prevent the spread of Covid-19 and to ensure distancing of people, businesses and companies have been temporarily shut down and many employed people are confined to their homes. Labour markets have been strongly affected, for example by people losing their employment, cancellation of the hiring of new staff, or self-employed people with reduced working hours. This requires a lot of flexibility and adaptability from the workforce, and it is expected to have a lasting impact on the future way of working. For NN, this is an important area of focus in determining our human resources policies going forward (see page 29). Furthermore, changing customer behaviour and tech developments also require different skills from employees, such as IT and data analytics, as well as new ways of collaborating or managing teams. Therefore, at NN, we are investing in training and developing our colleagues, recruiting people with new skills, and strategically thinking about the well-being and needs of our workforce in the long term.
Other material topics External trends Topics related to Covid-19 9 NN Group N.V. 2020 Annual Review
NN conducts a regular review of its operating environment to identify topics that are considered to be material to our company. That is, those topics that potentially have the most impact – be it a risk or an opportunity – on our business and stakeholders, and where we could create the most value.
Through an open question in the survey, stakeholders responded that they missed employee-related topics and climate change risk on the shortlist. We will therefore continuously assess the developments in our operating environment, and strive to address these material topics in our decisions, strategic choices, and business activities.
The results presented in the matrix below show that the topics considered as most important (upper right) are Pandemic risk, Operating during lockdowns, Economic recession, Cost reduction & efficiency and Customer experience. Furthermore, we align with our stakeholders on topics, such as ESG integration, Data privacy & protection and Financial hardship.
The successful execution of our strategic objectives crucially depends on the strength of our risk management. We regularly identify key risks and determine our risk appetite, covering three main areas: strategic challenges, strong balance sheet, and sound business performance. Pages 57-60 elaborate on NN’s risk management.
Key risks Strategic challenges • Geopolitical and governmental instability • Regulatory environment • Ensure long-term business model • Talent management • Data capabilities • Good corporate citizenship
Sound business performance • Customer and product suitability • Operational and IT effectiveness • Cyber risk
Opportunities Strategic challenges (including Covid-19 related) • Leverage increased levels of innovation • Explore new ways of working • Invest in training and development of talent • Support communities in which we live and work • Comply with sustainable finance regulations • Integrate ESG factors in investments and underwriting
For more than 175 years, our company has merged, grown and changed, but the core of who we are has remained unchanged. At NN, we put our resources, expertise and networks to use for the well-being of our customers, the advancement of our communities, the preservation of our planet, and the promotion of a stable, inclusive and sustainable economy. Our purpose is to help people care for what matters most to them. We do so guided by our values care, clear, commit, and our brand promise You matter.
To maintain our strong position and remain relevant to all our stakeholders, we need to anticipate and continue developing sustainable solutions for our customers. We need to continuously increase our speed, adjust our business models and optimise our processes. To remain at the forefront, we need to make sure that we are able to outperform new and different kinds of competition, and enhance customer experience and engagement.
In our engagement with shareholders, we sharpened our investor proposition, by further explaining our limited interest rate sensitivity, creating more transparency on our decision-making around capital returns, and setting a longer-term guidance of mid-single digit growth in operating capital generation, which underpins the opportunities we see in our markets.
Solid foundation Our company’s foundation is solid. We are focused on our customers and colleagues, we are financially disciplined, and we have the ability to invest in innovative business initiatives and customer solutions. We have a strong balance sheet, a diverse set of businesses, a leading position in the Dutch market, a unique in-house distribution network in European markets and proven bancassurance capabilities. We have a proven track record on delivering on our group targets and executing complex integrations. We have also demonstrated that we are disciplined when it comes to capital deployment and portfolio management.
Our contact with customers will not only involve selling our own products and services, but also those from other companies via our platforms.
Customers and distribution We see our customers as the starting point of everything we do
Products and services We develop and provide attractive products and services
People and organisation We empower our colleagues to be their best
Society We contribute to the well-being of people and the planet
We want to be an industry leader, known for our customer engagement, talented people, and contribution to society
• People, data and technology are crucial to offer the right solutions to our customers, and improve our process efficiency and underwriting capabilities, and remain price competitive
Strategic framework At NN, we help people care for what matters most to them. That is our purpose – the reason we exist as a company. Our purpose reflects the kind of company we aspire to be: one that delivers long-term value for our stakeholders. In this, we are guided by our values care, clear, commit, and by our brand promise You matter.
We engage with our customers to meet their real needs and to offer solutions that create long-term value. We use our digital capabilities and leverage our strong distribution footprint to further enhance our customer experience.
• Create customer experiences where digital, broker and tied agent channels reinforce each other
• Leverage local presence and partnerships • Drive customer interaction through
We nurture a culture aligned with our purpose, values and ambitions, which supports continuous learning, collaboration and diversity of thinking. We consider all colleagues to be talents, and invest in an inclusive and inspiring environment, so we are together best equipped to take our business into the future.
• Together shape the NN culture • Embrace diversity and inclusion • Invest in (future) skills and capabilities • Streamline our operating model to eliminate inefficiencies and remove barriers
We strive for our employee engagement to be at least 7.8
Financial strength We are financially strong and seek solid long-term returns for shareholders.
• Realise further efficiencies • Leverage scale benefits of Dutch life and pensions business • Reshape our existing insurance business in Belgium • Disciplined capital allocation • Attractive capital returns for shareholders
We are committed to ensuring resilient and growing long-term capital generation, with a target for operating capital generation (OCG) of EUR 1.5 billion
We are also committed to grow free cash flow (FCF) in a range around OCG over time
Society We contribute to the well-being of people and the planet.
• Build better and stronger communities • Reduce our direct CO2 emissions • Actively engage with our stakeholders • Contribute to the Sustainable
We aim to increase ESG-integration in our Assets under Management to 80%
We have pledged to contribute 1% of our (three-year average) operating result to our communities, including cash donations and hours of volunteering Target for 2023 Performance 20201 1% EUR 4.7m Performance 2019
Read more on pages 36-42 and 48-53 1 Hours of volunteering to be included as of 2021.
Another major milestone was composed of the transactions we did with reinsurance companies, to transfer the full longevity risk associated with EUR 13.5 billion of our pension liabilities. This significantly reduces our exposure to longevity risk, optimises our capital structure, and further strengthens our balance sheet.
Leon: While we have a lot of knowledge and talent, we remain self-critical about our execution speed and risk management controls. Comprehensive risk management processes can at times be a bit at odds with testing and piloting innovative ideas. Yet we want to remain agile, for example regarding the
As of 1 June 2020, the responsibilities for the Dutch businesses in the Management Board were divided into two portfolios. Tjeerd Bosklopper, already a member of the Management Board, is responsible for the Dutch activities in the area of Non-life, Banking & Technology.
How is the Life & Pensions business in the Netherlands showing progress? Leon: We have a strong focus on actively managing the in-force portfolio, which means optimising financial returns on our balance sheet and realising further efficiencies in line with the portfolio run-off. Throughout the year, we accelerated the shift to higher-yielding assets by making additional investments in mortgages, loans and real estate. We are working hard on simplifying our processes, while at the same time, focusing on investing in data, innovation and product development. Meanwhile, we keep working on gradually improving our customer satisfaction and have set ourselves a target to score above market average on Net Promoter Score (NPS) by 2023.
Consolidation in the individual life market further intensified, with new players emerging. Changing regulations present both challenges and opportunities. The Dutch Pension Agreement, announced in 2020, will lead to major changes for our pension business, including eventually phasing out Defined Benefit products, which will be quite a task.
How is our business in the Netherlands contributing to our society? Leon: As a financial services company, we add value to society with our specific expertise and the products and services we offer, so people and companies can protect themselves over the long term. Furthermore, we want to play our part in society by supporting and working with our partners. Our From Debt To Opportunities foundation focuses on projects aimed at improving the financial resilience of people with problematic debts. With our partner JINC we want to offer young people more perspectives on the labour market. This year we encouraged colleagues to reach out to those affected by the Covid-19 pandemic with an online training ‘Help with money matters’, facilitated by Nibud (National Institute for Family Finance Information). I am proud that close to 350 colleagues participated.
Tjeerd: Based on our solid foundation, we will focus a lot more on digitalisation and improving our data and AI capabilities. We will set next steps to increase customer interaction as we want to engage with them in their day-to-day lives. That way we can really help them and address societal needs at the same time.
1 OCG of EUR 0 million is due to the suspension of dividend payments in 2020 in accordance with the recommendations of the Dutch regulator.
Fabian, what made you most proud in 2020? That is an easy answer… I am proud of how quickly our International Insurance businesses adapted to the Covid-19 situation. To support our customers, we initiated digitally-enabled claims and sales processes, extended the cover for Covid-19 patients, and allowed for payment holidays and policy loans for existing products. We contributed to keeping our colleagues safe by enabling them to work from home, and we supported them in staying fit and healthy. This is also reflected in our employee engagement score which increased to 8.1 from 7.7 at the end of 2019. The commitment and passion of our employees has been impressive, and this really made a difference in responding effectively to the Covid-19 situation.
What were the main business highlights for International? The main highlight was our uninterrupted support for our customers. Covid-19 made us speed up our digital transformation and introduce new processes. We also saw that, despite many drawbacks, our resilient tied agent force throughout Europe made a major contribution to our overall results, even growing sales compared to 2019. Our tied agents have been able to swiftly adapt to our customers’ needs and to new remote sales and service process,
Can you give some examples of new products NN is offering? During 2020, we launched several protection and living benefit products. In Poland, we introduced a diabetes insurance as a supplement to life insurance contracts. This is a unique product offering a variety of coverages for healthy people, people with type 1 and 2 diabetes, and those with advanced diabetes. In Spain, we launched a flexible, transparent and guaranteed protection product targeted at the selfemployed, which allows customers to pay only for the coverage they need for their professional and personal lives. In the Czech Republic, we introduced a flexible risk product offering a variety of coverages and options, which brings together best practices following the integration of NN and Aegon.
What was the biggest challenge for your business in 2020? Like for many other companies; the Covid-19 situation. The absence of faceto -face contact with customers and between colleagues, the travel bans and the abrupt changes in how we work, were all challenging. However, our colleagues adjusted quickly and ensured we continued to meet customers’ needs remotely.
Furthermore, the low interest rates remained a challenge especially for pension and savings customers. We offer a broad and innovative portfolio which includes modern guarantee savings solutions and protection products, attracting new customers to NN and strengthening our offer for existing customers during this uncertain period.
What are the main opportunities for International going forward? We have a strong commitment of seeing customers as the starting point of everything we do. Our goal is to engage with our customers more frequently around the topics that matter to them. Over the past years, and especially in 2020, we have laid the foundations for how we aim to achieve this. We are convinced that a combination of digital and physical interactions between our strong tied agent network and customers will give us a unique opportunity to create new and special customer experiences. We also believe that through leads, process automation and data analytics, we can build long lasting relationships with customers. In support of this goal we will continue to extend our product range in living benefit and protection products. In addition, we are exploring investing into customer engagement platforms around themes like Carefree Retirement and Self-care, which we consider to be close to our core as NN and also to our customers’ hearts.
Satish, what are you most proud of from 2020? Our clients trust us to manage their assets, and I am really proud to see how we have been able to support them through a challenging year. With our strong digital capabilities we were able to keep connected with our clients and manage portfolios in highly volatile markets. Our ‘UpsideDown’ series enabled us to bring a variety of expert opinions and provided a platform for dialogue and discussion with our clients. And we were able to continue to provide advice and solutions to our clients, to help them navigate through market volatility and the economic and social impact of Covid-19.
And it has been more important than ever to continue to care for our people and for the societies we operate in. In 2020, we took additional steps to support our people, whose commitment and dedication are critical to our success. Vitality programmes, flexibility in work schedules, advice and training was offered to help them cope with long-term remote working in uncertain times. We also maintained collaboration with small- and medium-sized partners, for whom the impact can be greater in this situation.
Our focus on sustainable and impact equities as well as green bonds has proven to be effective. We have consistent performance in all of these capabilities and have seen an increasing demand from clients, as reflected in the inflows we saw in these capabilities. For instance, we recently reached EUR 3 billion Assets under Management in Green Bonds. In 2020, we added the NN (L) Corporate Green Bond fund and three impact equity funds. With our partner China AMC we also launched the China Equity ESG fund, which offers access to mainland China with an ESG overlay.
Finally, our upgraded and simplified fiduciary proposition is demonstrating its competitiveness through the various notable new clients who have placed their trust with NN IP.
Indeed, clients choose us not only for our products, but our people. How have you progressed as an organisation? Asset management is a people business, so it’s important to attract and retain top talent.
Engagement is a strong indicator of the commitment of our people. Our engagement score increased from 7.5 in 2019 to 7.8, and we remain focused on staying well connected.
What progress has NN IP made on its efficiency journey? During 2020, we further simplified our operating model and continued to invest in data and technology. We also continued to leverage on our strong investment platform, outsourcing or decommissioning noncore tools and systems. For instance, we completed the outsourcing of accounting of mandates and institutional clients, regulatory trade reporting and fund reporting. This helps our business to stay efficient and competitive. Going forward, we will continue to invest in the future, by looking for opportunities to strengthen our capabilities.
In addition, responsible investing is about actively engaging with companies to stimulate them to make a sustainable transition. We strongly believe in inclusion over exclusion and engage on themes such as governance, climate change and living wages.
Finally, we welcome the upcoming regulations in the space of sustainable finance. We are committed to making a difference for the future through our responsible investing practices and believe that regulation will define a common way of assessing sustainable products, which will help create a better, greener future overall.
Going forward, what are the main challenges asset managers are facing? Although trends suggest a growing need for asset management and related advisory services, asset managers face challenges including rising data and technology costs, increasing regulatory requirements and a downward pressure on fees.
What are your main growth opportunities? Asset management is a global and scalable business. We see strong growth potential in sustainable capabilities, emerging and private debt capabilities, and solutions, which we will support with consistent investments in technology, our robust processes and an adaptive investing approach. We believe we will grow by bringing the right products and solutions to our clients, combined with access to distribution.
How we create value We aim to create long-term value for our stakeholders. This simplified version of our business model shows how we use the resources (‘capitals’) in our organisation to create value as a result of our activities or outputs.
Pr od uc t d ev elo pment a nd pricing
Intellectual capital Availability of services • % growth of digital retail clients
Proper functioning of controls • Incidents of fraud, conflicts of interest and unethical behaviour 66
Natural capital Environmental impact from own operations • Carbon emissions 13 kilotonnes CO2 - 100% compensated by carbon credits
Adding value for customers Our customers are the starting point of everything we do. We help people care for what matters most to them by being there for them at each of the key moments in their personal and professional lives. We do this in good times and bad times, shouldering the risks they cannot bear alone.
As our customers enter middle age, their financial burdens and risks tend to multiply. They get married, have children, buy a house, get fired or divorced, start their own business or buy a holiday home. Unfortunately the chances of serious illness also grow. For each of these momentous events, we are there – with mortgages and retirement plans, investment advice, home or corporate liability insurance. Offering innovative products that reflect the changing world in which our customers live.
And finally, as people face retirement our commitment to creating long-term value becomes even more vital. We want to support them in having a happy and meaningful life. Whether it is a pension, help in finding ways to stay socially active, or an investment strategy with an eye on their grandchildren’s future.
Daily life • Health care insurance • Legal insurance Pension • Immediate (bank) annuities • Term deposits
Leaving home for the first time • Travel insurance Living on your own • Home insurance (furniture) • Personal loan
• Customer engagement (NPS): All insurance business units scoring above market average NPS by 2023 2020: 4 out of 11 business units
A platform can help us find new ways to sell or improve our traditional (insurance) products. Recent examples are: • Brickler – an algorithm-driven peer-topeer platform that directly connects house sellers and buyers, offering third-party services for each step in the selling process to reduce costs for both parties.
• Invers – NN has bought a stake in this ‘fintech enabler’ that develops smart technology to analyse and deliver financial data to Financials. As NN Bank becomes more top-of-mind and relevant to customers, the number of frequent-interaction, deep-engagement relationships it has with those customers will grow. Invers can provide datadriven insights that will help understand customers’ needs. This enables us to develop new propositions, such as the NOVA financial planning app that NN Bank created in collaboration with Invers.
• Powerly – supports people with tailored advice on making their homes energyefficient. For example, by installing solar panels or a heat pump.
• Cowboy – together with insuretech Qover, NN has set up a bike insurance product which is sold through various channels, both online and offline. Our insurance is now sold via several partners, like Cowboy, Decathlon, Angell Bike in the Netherlands, Belgium, Germany and France.
• Cyberwacht – offers an emergency hotline to help SMEs or freelancers who have been hacked minimise the impact.
• Kagyo Aid – a Japanese platform where SME owners’ children can interlink and assist each other in preparing for a successful business takeover from their parents.
• Klup – a social platform start-up for active people aged 50+ that NN has invested in. The platform aims to prepare for a carefree retirement, not just financially, but also by being socially engaged and staying (mentally) healthy.
Providing relevant new products A good example is Hello Mobility, a fleet management solution launched in 2019 in the Netherlands which was significantly scaled up in 2020. It provides personalised, data-driven tips on driving behaviour and accident avoidance for truck drivers, and an online dashboard for the business showing key fleet-wide metrics. This benefits both or the business (lower fuel bills and insurance premiums), society (fewer road accidents) and the planet (lower CO2 emissions).
In Turkey, we introduced Return of Premium, a long-term life protection product with a partial premium return to the insured person at maturity. And in Poland, NN and ING launched ‘two-wheeler insurance’ for e-bike, bicycle and scooter users in response to a real need for this coverage, as bike usage is rising.
Educating and powering customers To become a genuine thought leader, NN needs to find distinctive ways to address trends within society. We do this in four ways: • Participate in public debate. For example, our involvement in the high-level discussion around pensions that has been taking place in recent years in various countries where NN operates, including the Netherlands, Romania and Poland.
• Collaborate with research institutes to develop relevant, high-quality content. For example, recent research carried out with market research agency Kien Onderzoek into Dutch workers’ awareness and expectations regarding the new Pension Agreement.
Helping customers address societal challenges As part of this wider engagement with the communities in which NN operates, we strive to develop products and services that support our customers while also helping them address wider societal issues. A good example is our launching of Woonnu and Powerly (see previous page) in the Netherlands in 2020.
Supporting specific groups in society A core part of our strategy is that we want to contribute to an inclusive society. The following initiatives show how we have tried to achieve that in different countries in 2020.
In Spain, we launched Contigo Autónomo to help the self-employed, a group particularly hard hit by the Covid-19 pandemic, protect themselves from the negative impact of work incapacity due to illness or injury. This flexible insurance product offers a payment sufficient to support their family and business, plus relevant extra services such as physiotherapy, and legal and technological support.
In Japan, NN was the first life insurance company to initiate policy loans at zero interest to support clients during the Covid-19 pandemic.
In Greece, the maximum age-at-entry for hospitalisation products is almost without exception 65. NN Hellas offers NN Hospital for All, an innovative product offering hospitalisation and outpatient coverage to people aged between 16 to 80 and covering even those considered ‘non-insurable’ due to their medical history. In response to social distancing, we developed a digital service for our tied agents, so clients can be serviced remotely.
Every aspect of our products and services portfolio must also be supported by robust, futureproof technology and systems. So we are working hard to simplify our systems wherever necessary. In 2020, NN Belgium Life completed the migration to a target retail protection platform for brokers and decommissioned the legacy system making its operations more efficient. Similarly, various legacy issues were addressed within Non-life and we successfully carried out a number of other important platform migrations, including ATOS’s Virtual Desktop Infrastructure (VDI).
Enhancing digital capabilities to serve customers better To optimise the customer experience, we are continually enhancing our digital capabilities. We use leads, process automation and data analytics to ensure an ongoing interaction with customers, which gives us a clearer idea of the personalised solutions they require and build lasting relationships with them. As an example, we are introducing speech-to-text mining in our call centres to better understand customer needs in an automated way.
Also in 2020, international market research agency Living Group ranked NN IP in the top 10 asset managers for excellent digital experience. NN IP has found new ways to connect with clients and potential clients in a digital environment, for example through its social media channels, thought leadership digital events and Market Talk podcast series.
Data science capabilities Financial services today depend heavily on data science and artificial intelligence (AI) to make product offerings faster, more precise and more effective.
In 2020, we trained a first group of Business Translators, whose role will be to bridge the gap between the business and data science teams. This implies working with managers on strategic goals, and bringing business use cases to the data science teams. The aim is to address a large range of activities, from email automation and speech-to-text call analytics, to core activities such as pricing and underwriting.
Our brand Having a strong, well-known brand reassures our customers of the quality of our offering, and enhances our credibility with our industry and the marketplace as a whole. As we build brand credibility, we also build recognition, loyalty and competitiveness. Moreover, we believe customers engage with companies they like, know and trust, and a strong brand helps in this process.
How customers view our products and services Through customer feedback we learn about their preferences and views, helping us modify our services to meet their needs. We focus on several key metrics. All these key metrics are combined in what we refer to as the Global Brand Health Monitor (GBHM). The GBHM is used to track how our brand is perceived externally, and to gain insights into brand performance and development over time.
Net Promoter Score One of the key metrics in the GBHM is the internationally recognised Net Promoter Score (NPS) system, which measures how likely it is that our customers recommend our products and services to colleagues, friends, or family. There are different sorts of NPS. The relational NPS (NPS-r) is used to measure the strength of the relationship with customers, and to gain understanding of long-term customer satisfaction over time. We use the NPS-r to compare NN to market averages (see table). For the Netherlands, the NPS score refers to retail customers of Nationale Nederlanden brand in Life and Non-life insurance. Japan will be included in 2021, as comparable scores were not available in 2020.
In 2020, NPS scores have in general been under pressure, as can be seen from the decline in market averages (see table). This was likely partly due to the pandemic. For NN, unfortunately a significant decrease in scores occurred in Belgium, Bulgaria, Greece, Hungary, the Netherlands, and Spain. We are pleased that Turkey shows a significant increase. All in all, in 2020 four of our businesses scored above market average, similar to 2019. Our aim is for all business units to score above market average by 2023. To that end, we will also conduct additional research at local level to get a better understanding of what drives the NPS-r scores, to reflect on our service offerings and prioritise our improvement actions accordingly.
Market average 1 For the measurement of the number of business units scoring above market average, a margin of 5 points is used.
In addition to NPS-r, we also measure the transactional NPS (NPS-t) at a local level as a follow-up for actions or events in which customers have been in contact with us. The NPS-t is used to measure how satisfied customers are with recent interaction. Insights in NPS-t help us improve the customer journey, and we will intensify the measurement of this metric for specific events to measure customer satisfaction. While we frequently measure NPS-t, it is not included in the GBHM.
As a result most business units did not meet some of their brand targets. Overall, brand consideration has remained relatively stable for the majority of the business units. We are pleased that the score significantly improved in Romania, and slightly in Poland and Japan. The strong increase in Romania can be partly explained by the update of the competitors list that was used. Unfortunately, a significant decline occurred in Greece, the Netherlands and Turkey.
Supporting our people during the Covid-19 pandemic Due to the Covid-19 pandemic most of our people had to work from home. With little delay, our employees came together to find solutions for our customers, partners and communities during the lockdown. In this they were supported by the efforts of our IT colleagues who created a robust infrastructure to allow for remote working. We developed training courses to support remote working, and to help employees and managers look after their well-being and to stay connected. We launched the NN Vitality platform which offers advice, physio modules and fitness webinars, alongside various initiatives across our business units to support people struggling with the new situation.
Future way of working We expect to continue to work more from home in the future, as our remote working experience has demonstrated we have the digital tools and capabilities to work differently. This also seems to be a common preference amongst employees, and thus a strong driver to explore how we can facilitate hybrid ways of working.
In Spain and Poland, we are taking steps toward implementing hybrid working as the standard, with the office used for specific activities requiring intense collaboration. In Slovakia, alongside increased remote working, we will pilot a four-day work week, with employees using the fifth day for personal development.
Investing in skills and capabilities In 2020, following the launch of our company’s new strategy, we developed the i-LEAD profile to capture the behaviours suited to our ambitions and values. It is focused on having open and meaningful conversations (Courageous Conversations) between managers and their teams, and on emphasising the skills, attitudes and behaviours that really matter to us. These are translated into a set of tangible competencies that will be implemented as part of the appraisal cycle in 2021. Working with the i-LEAD profile and the NN competencies will guide employees in how to contribute to NN’s business objectives, and is expected to support personal and professional development and employee engagement.
We aim to offer a broad portfolio of training courses to help our people equip themselves for today and tomorrow. The Human Resources team works with our business units to define the overarching learning and development needs for the coming years. For example, in 2020 a data science & AI e-learning course was developed with our Customer & Commerce business unit in the Netherlands.
Our approach to diversity is about recognising the uniqueness of each person and appreciating the value we all bring. Together we create an environment in which people feel welcome and respected.
Diversity and inclusion At NN, we want to embrace everyone and together create an inclusive work environment in which people have equal opportunities and feel welcome, valued, respected, and free to bring their whole selves – regardless of gender, age, race, ethnicity, religion, disabilities, neurodiversity or sexual orientation. We will continue to take action in further enhancing diversity and inclusion (D&I) in our company.
D&I Statement In December 2020, we launched the NN Statement on Diversity & Inclusion to explain what we stand for, and to share our ambitions on a more inclusive work environment, customer experience and community support. We appointed a dedicated D&I specialist to drive our initiatives in this area, to contribute to positive change, and to support our D&I networks, such as NN Pride, NN Young Professionals and NN Neurodiversity.
D&I events To stimulate open and insightful dialogues around D&I topics, and to increase awareness, we launched the internal series Wo{men}talk, and continued to support TEDxAmsterdamWomen and their Talent Night initiative, offering a tailored mentor programme to the winner.
We conducted our second biennial equal pay statistical analysis in the Netherlands. When comparing similar compensation grades and job profiles, we found that gender does not influence pay: we offer equal pay for equal work. Going forward, we will measure this annually and across more countries, beginning with Poland, Belgium, Japan and Spain. We believe continuous attention for equal pay is key to driving D&I. It is therefore a recurring topic on the agenda of the Management Board and Supervisory Board.
Engagement The success of a company is closely related to the well-being of its employees. It is important to NN to have a workforce that feels engaged and supported. We invest in a safe and healthy working environment, with attention for personal and professional development. Twice a year, we monitor the sentiment within the company with our global employee survey. As of 2020, we use four questions to measure engagement. Our overall engagement score increased to 7.9 (2019: 7.4), with 82% of employees participating in the survey. We are pleased with this score, given the challenging working conditions created by the pandemic. Overall, there were strong scores in the areas of goal setting, autonomy and meaningful work. Though the score for peer relationships increased to 7.7 (2019: 7.4),
ADHD, autism, HSP and non-congenital brain injury are hard to recognise from the outside, yet can have an enormous impact on a person’s everyday working life. NN’s Neurodiversity Network aims to create a tolerant and accepting work environment, promote knowledge-sharing, and showcase the strength of differences, for example through events where employees talk about their own experiences.
CLA At the time of publication, discussions with the trade unions on a new collective labour agreement (CLA) for the Netherlands were ongoing. An agreement on a one-year CLA turned out to be unachievable, as parties were unable to align on topics such as a collective pay increase. At the time of publication of this report, we are in the process of investigating the possibilities for a long-term CLA that also includes the social plan and pension agreement.
• Accelerating management actions – Shift to higher-yielding assets – Balance sheet optimisation – Optimise Non-life business – Focus on efficiency
Resilient balance sheet We have always prioritised a strong balance sheet and this will not change. We combine a strong solvency position with a conservative asset exposure and low economic interest rate exposure. Our Solvency II ratio was 210% at the end of 2020 (versus 224% at year-end 2019). This reflects the inclusion of NN Bank in the Group Solvency II calculations as of the end of 2020 and the deduction of the proposed 2020 final dividend, partly offset by operating capital generation.
Our balance sheet creates opportunities for both further investments in higher-yielding assets and longevity transactions, as we did in May 2020. The solidity and stability of our balance sheet, even in volatile market conditions, along with the options this gives us, demonstrates NN’s robust and resilient profile.
The cash capital position at the holding company decreased to EUR 1,170 million from EUR 1,989 million at year-end 2019. This mainly reflects capital flows to shareholders, the acquisition of VIVAT Non-life, and the repayment of debt. It was partly compensated by remittances from subsidiaries.
Strong cash flow in the Netherlands In the Netherlands we have leading market positions, reinforced by the recent acquisitions of Delta Lloyd and VIVAT Non-life: • Our Dutch Life business has a strong track record of cash remittances, also during crises, and shown itself able to bringing expenses down.
• NN Bank originates a large volume of mortgages, the majority of which are transferred to the investment portfolios of the insurance companies or the third-party Dutch residential mortgage fund run by our asset manager. These are attractive assets from a risk-return perspective.
• Our asset manager, NN IP, manages the proprietary assets of the group’s insurance companies as well as third-party assets. It is a leader in responsible investing.
In addition we have set clear targets for expenses, for example to reduce the Non-life administrative expense ratio to under 10% (including EUR 40 million related to the VIVAT Non-life integration), and to reduce costs in the Life company in line with the run-off of the portfolio. NN Bank targets a cost/income ratio of below 55% and NN IP aims to maintain its cost/income ratio at a mid-60% level.
At the same time, we will allow for profitable growth, for example in the defined contribution (DC) business. Though this will increase expenses, it will also support overall OCG growth.
Profitable growth in attractive markets Our insurance operations in all countries outside the Netherlands, apart from Turkey, were started by NN as greenfields and built up into leading players in their local markets. Our European businesses are very much focused on protection.
From 2017 to 2019, we have seen strong growth of value of new business (VNB) in Europe, despite pension reforms in some countries. VNB declined somewhat in 2020, reflecting lower sales in Japan and Insurance Europe, which was due to Covid-19 restrictions.
Shareholder by country/region IHS Markit shareholder analysis at December 2020 (%)
Financial strength targets Our commitment to shareholders is supported by the following targets (set for 2023) for Group and the different businesses: Target
When proposing a dividend, NN Group considers, amongst other things, the capital position, the leverage and liquidity position, regulatory requirements and strategic considerations, as well as any expected developments in these areas.
Dividends are paid either in cash, after deduction of withholding tax if applicable, or in ordinary shares as elected by the shareholder. Dividends paid in the form of ordinary shares will be delivered from NN Group treasury shares or issued from the share premium reserve. We intend to neutralise the dilutive effect of the stock dividend through repurchase of ordinary shares.
On 2 September 2020, NN Group paid an interim dividend of EUR 2.26 per ordinary share, comprising EUR 1.40 per ordinary share, equal to the amount of the 2019 final dividend that was suspended in April 2020, plus EUR 0.86 per ordinary share, equal to the regular 2020 interim dividend calculated in accordance with the NN Group dividend policy.
Major shareholders According to the AFM register as at 8 March 2021, the following shareholders have an interest of 3% or more in NN Group on the notification date: • RRJ Capital II Ltd. 9.60% (23 May 2017) • Norges Bank 4.91% (30 September 2020) • BlackRock, Inc. 4.77% (21 August 2020)
Sustainability ratings We are rated on sustainability by specialist research agencies, such as Sustainalytics, MSCI and CDP. Furthermore, we are included in indices such as the Dow Jones Sustainability Indices. Read more on page 65. We proactively inform the market on our approach and performance by publishing and regularly updating an environmental, social and governance (ESG) presentation on our website and during one-on-one investor meetings.
In June 2020, NN announced its ambition to transition our proprietary investment portfolio to net-zero greenhouse gas emissions by 2050, to align with the Paris Agreement 1.5ºC target. This follows our earlier steps towards phasing out thermal coal-exposed investments, and the expansion of our carbon footprint and climate-related scenario analysis.
Supporting ESG integration Our RI Framework policy includes normsbased criteria reflecting our investment beliefs and values, relevant laws, and internationally-recognised norms and standards, such as the OECD Guidelines.
We apply an engagement-led divestment approach. This means restriction is proposed only when we feel engagement cannot change a company’s conduct or involvement in specific activities. The ESG Committee of NN IP assesses whether an issuer fails to meet our norms-based criteria, advised by the NN IP Controversy & Engagement Council. In 2020, this council met six times and discussed 171 cases.
• Contribute 1% of our operating result (three-year average) to our communities, including cash donations and hours of volunteering by 2023 2020: EUR 4.7 million in charitable donations 2020: 7,991 volunteering hours
• Reduce direct CO2 emissions (tonnes) by 3% per FTE per year 2020: 43% decrease in CO2 emissions per FTE
We are in talks with six investee companies about deforestationrelated risks within their supply chains. As part of these efforts, we supported an investor statement on Amazon deforestation and forest fires, asking companies to step up their efforts and demonstrate a clear willingness to eliminate deforestation within their operations and supply chains. NN IP has also signed the Statement of Support for the Cerrado Manifesto, reflecting our commitment to halt deforestation and our intention to work with industry, producers, governments and residents to protect Brazil’s valuable, biodiverse Cerrado region. The main challenge of the manifesto is to find mechanisms to end deforestation in an area where regulation does not encourage this protection: about 85% of the conversion of Cerrado’s native vegetation into soy is legal under Brazilian law.
In addition to our own engagement efforts, we use the services of Sustainalytics Stewardship Services. They carry out engagements with companies on our behalf, primarily focused on compliance with internationally-recognised conventions and guidelines.
Responsible tax strategy We believe that a responsible approach to tax is an essential part of good citizenship. We manage our tax position in line with our business operations, and our position reflects our corporate strategy and takes into account relevant international guidelines, such as the OECD Guidelines for Multinational Enterprises. Being a responsible taxpayer also means that our tax planning takes long-term considerations into account and carefully weighs all stakeholder interests. We have a set of tax principles to which we adhere and that we communicate publicly on our website through our Tax Strategy and Principles, and the NN Group Tax Charter.
Our 2020 TTC Report is available on our website and provides insight on the taxes being borne and collected on a countryby -country basis for the book-year 2020. In addition, we explain developments impacting the tax position of NN Group.
Financial tax disclosures The financial disclosures on corporate income taxes paid by NN Group can be found in the 2020 Financial Report. The same information is included in the 2020 TTC Report, but this report provides more detailed explanations to help understand the disclosures. In addition, the TTC Report provides information on other taxes collected and paid by NN Group as part of its operations.
Child labour in agriculture Global inequalities continue to widen, and the Covid-19 pandemic has the potential to further exacerbate this as the number of people in extreme poverty is increasing. This has a direct bearing on child labour, particularly in agriculture where we focus our engagement efforts on the cocoa sector in Ivory Coast and Ghana.
NN IP encourages companies to more closely monitor their supply chains for the existence of child labour, to put in place remedy systems and to foster children’s rights with relation to education, health and safety. The need for a living income is also addressed.
Making a positive impact through our investments During 2020, NN IP expanded its sustainable and impact strategies offering with the launch of a new corporate green bond fund. Our green bond strategy (funds and mandates) has seen rapid growth, reaching EUR 3.5 billion at year-end 2020. Total AuM of our sustainable and impact investing products grew 29% to EUR 29.3 billion at year-end 2020.
Our carbon footprint analysis of proprietary assets measures the carbon footprint of 80% of our total assets. We published more details in the ‘2020 Carbon footprint of our proprietary assets’ report. This year’s publication also includes insights from our TCFD-aligned scenario analysis and is published on our website.
Sustainable sourcing With an annual spend of around EUR 1 billion, our procurement activities support our business strategy. A substantial part of this investment goes towards professional services, IT, real estate and facility management, where we implement sustainable and circular solutions. Our relationship with suppliers is based on our NN values, and we aim to work together in a mutually beneficial way. We have a supplier qualification process and governance in place for managing social, environmental and financial aspects of the procurement process. In the last quarter of 2020, NN launched a supplier qualification platform which, amongst others, gives insights into suppliers’ sustainability performance.
Contributions to our communities At NN, we put our resources, expertise, and networks to use for the advancement of our communities. We promote a society in which everyone can participate and thrive for many generations to come.
To increase our impact, in several countries NN joined forces with other companies from our sector. The Dutch Association of Insurers, of which NN is a member, donated money to ZWiC, a foundation that financially supports healthcare workers who were hospitalised in intensive care, incapacitated or passed away due to Covid-19. In Spain, NN financially supported the UNESPA initiative to create collective life insurance for hospital staff and clinicians during the pandemic.
We involve both international and local partners to ensure the programme is globally consistent while remaining relevant to local needs and issues. We have seen how certain young people growing up in already challenging circumstances have been most hit by the changes resulting from the pandemic: less access to technology; in several countries, minimal digital literacy; and sometimes no family support with home schooling. Together with our international partner Junior Achievement Europe, we continued our joint programmes as much as possible. In 2020, 7,865 students in ten countries took part in the Social Innovation Relay. This flagship programme is a global competition for secondary school students to develop an innovative business concept that addresses a real societal need. This year, most programmes were successfully run digitally.
In Spain, we are an Aldeas Infantiles Future Builder, helping teenagers aged 16-19 in risk of social exclusion with their social skills, personal development, academic qualifications and employability. The programme aims to promote social and labour inclusion.
The NN Future Matters scholarship programme, a collaboration between NN and EP-Nuffic, gives first-generation higher education students the opportunity to complete a Master’s degree in the Netherlands. Students are matched with an NN mentor, who supports them during the year. In 2020, we welcomed 35 students from eight countries.
In addition to financial support, 72 employees volunteered 2,514 hours of their time and expertise to projects that further the foundation’s goals.
Our key impact areas As a responsible insurer, investor and employer we make a particular contribution to the achievement of the following four Sustainable Development Goals (SDGs): SDG 3 (Good health and well-being), SDG 8 (Decent work and economic growth), SDG 12 (Sustainable consumption and production) and SDG 13 (Climate action). Our company can contribute to these goals through both our core business activities and our value chain.
In 2015, the United Nations launched the 2030 agenda for sustainable development. At its heart are the 17 Sustainable Development Goals (SDGs). The goals address the world’s largest societal challenges such as ending poverty, improving health and education, reducing inequality and preserving our oceans and forest.
SDG 3 Good health and well-being Ensure healthy lives and promote well-being for all at all ages
Growth aspirations for renewable energy investments (and other climate solutions) for NN’s own asset portfolio
Integrated ESG factors in investment process for 74% of our total AuM at year-end 2020
Introduction and scaling of products and services with environmental impact like a greener housing market, sustainable living and promotion of climate-neutral transport
Accelerate the transition to a low carbon economy by targeting a netzero carbon proprietary investment portfolio by 2050
Installed Paris Alignment Council, chaired by NN Group’s Chief Investment Officer
Set a science-based target to commit to reduce absolute scope 1 and 2 CO2 emissions of our direct environmental footprint
CO2 emissions per FTE decreased by 43% to 0.9 CO2 emissions per FTE
Contribute 1% of our operating result (three-year average) to our communities, including cash donations and hours of volunteering by 2023
EUR 4.7 million donations to charitable organisations 2,603 households reached by From Debt to Opportunities Foundation 7,991 employee volunteering hours in NN Future Matters focus areas
SDG 5 Gender equality Achieve gender equality and empower all women and girls
Inclusion in the Bloomberg Gender-Equality Index, partnership with TedxAmsterdamWomen 40% women in senior management positions by 2023 33% women in senior management positions
SDG 8 Decent work and economic growth Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
Living our Values programme The Living our Values programme was launched in 2014 to encourage and support employees in applying the values in their daily work.
Updated statement of Living our Values We first launched the NN statement of Living our Values, in preparation of our future as a stand-alone company. It states, for both internal and external stakeholders, what NN stands for and reflects our commitment to long-term value creation.
We published the updated statement in June 2020, as part of our strategic framework.
In the Netherlands, Values week was fully digital. From their homes nearly 750 colleagues joined workshops, dialogues and presentations on business and societal topics. Afterwards, 81% of the participants in the Netherlands felt the Values week provided a good opportunity to reflect on our values (2019: 71%), 68% felt it stimulated discussion (2019: 60%) and 99% would encourage colleagues to join the next edition (2019: 95%). The NN Innovation Method (see page 29) was used to see how we could find ways to increase colleagues’ participation in Values week. The outcome was to develop a digital team energiser, to be launched in 2021.
Clear ‘In our team we are easy to approach and communicate proactively and honestly’
We also ask employees how connected they feel to our values, and in 2020 this score rose to 8.2 (2019: 7.9). As nearly all colleagues were working from home, we conducted an additional special survey in August, for employees in the Netherlands. The survey aimed to gain insights into perceptions that may have changed due to working remotely. We were pleased with the response that 80% of our people felt equally connected to the values before we started working from home; 9% felt less connected, 6% more so, and 5% neutral. We will continue to monitor perceptions in 2021.
Consumer perceptions We measure the perception of our values amongst our customers and the general public through the Global Brand Health Monitor (GBHM).
For the general public, most markets show stable scores in comparison to 2019. Particularly Belgium shows a high growth, engagement around our purpose and strategy, and to further stimulate an open dialogue on how we help people care for what matters most to them. In 2020, to feel connected and engaged turned out to be even more important than before. Initiatives to achieve this included our ‘Let’s connect’ theme for our internal International Leadership Meeting, focused on 250 senior managers, and a ‘Let’s connect’ session for colleagues in the Netherlands with Tjeerd Bosklopper and Leon van Riet, members of the Management Board.
‘We help people care for what matters most to them’ is our company’s purpose. It expresses the ‘why’ behind our actions, and it reflects the kind of company we aspire to be; one that delivers long-term value for our stakeholders. Along with our values and our brand, our purpose is at the heart of our culture.
Matters – all local languages), Silent voice Activation/Whistleblowing Procedure (Your Voice Matters) and Privacy – all key topics in the Code of Conduct.
This two-way assessment forms the basis for a constructive dialogue with NN senior management on how we manage the risk culture within the company and where we can improve. The resulting 360-degree loop delivers content to underpin the ‘Employee Conduct & Business Culture’ statement within our risk management framework. The process is led by Group Risk, in close cooperation with Group Legal and Group Compliance within business units.
Reporting misconduct When misconduct occurs, NN carefully reviews and assesses whether an investigation or other action is needed. Breaches of the NN Code of Conduct are not taken lightly, and can include appropriate measures.
Since then, we have rolled out several new interactive e-learning courses. These aim to raise risk awareness around confidential and price-sensitive information (Confidential Matters), Market Abuse/Insider trading (Trading Matters – all NN insiders), Bribery & Corruption/Conflicts of Interest (Conflicting
In one of the two cases listed below Corporate Security & Investigations carried out further investigations. Concerns, reported in 2020, have been recorded and reported periodically (numerically) via the Chief Compliance Officer to the Management Board and Supervisory Board.
Other incidents and concerns In 2020, Corporate Security & Investigations was involved in 66 cases (2019: 95). In six cases, disciplinary measures (warning, reprimand, termination of employment, or instant dismissal) were taken. Employees are informed in writing of any disciplinary measures.
PARP process and golden rules The demand for transparent, simple products from the financial services industry continues to grow. Customers expect value for money, transparency, and products and services that evolve with developments. Any new or modified product or service must first undergo a careful Product Approval and Review
Data is vital to us in order to be able to serving today’s customer effectively. Using (big) data to analyse customer propositions helps us strengthen our interactions with customers, forge more intuitive partnerships, and create superior, tailor-made solutions.
In 2020, we developed our own AI ethics framework (the ‘NN AI Guidelines’) aligned with our values. These guidelines facilitate the development and use of trustworthy AI, and set even stricter requirements than legislations prescribe. During 2021, we will develop an NN AI Policy that further entrenches these principles. NN also contributed to the Dutch Association of Insurers’ Ethical Framework (‘Ethisch Kader’).
We are very aware that we need to strike a proper balance between individual choices, privacy and social responsibility. Besides the focus on the data we manage and protect, we also provide our customers with services around data and cybersecurity, as the consequences of inadequate cybersecurity can be far-reaching for both individuals and companies.
One of the steps taken in 2020 is the completion of the Best in Data (BID) programme in the Netherlands. Our FEC processes have been thoroughly analysed, screened and improved; our data quality monitoring and control have been improved; our data standards have been set and improved; transparency and completeness controls have been set; and, employees have completed awareness courses to ensure their familiarity with the latest legislation.
Unit-linked products in the Netherlands In the Netherlands, unit-linked products have received negative public attention since the end of 2006. We have taken this criticism to heart, as our aim is to support our customers as best we can. The Dutch insurance subsidiaries of NN Group reached out to all individual customers who purchased unitlinked products in the past (‘activeren’).
Our dialogue with stakeholders takes many forms: day-to-day interaction and regular feedback sessions with customers on our products and services; works council meetings and continued dialogue with our employees; roadshows for analysts and investors; regular contact with regulatory bodies, government agencies and other organisations (including non-governmental organisations (NGOs), trade unions and industry associations); and roundtables with policymakers, academics and peers.
National and international commitments As a company based in the Netherlands, we adhere to Dutch law and the Dutch Corporate Governance Code. We observe the laws and regulations of all markets in which we operate. We also adhere to relevant international standards and guidelines, including the UN Global Compact and the OECD Guidelines for Multinational Enterprises.
Commitment of the financial sector to the Dutch Climate Agreement In July 2019, NN signed the commitment of the financial sector to the Dutch Climate Agreement and thereby commits to contribute to the financing of energy transition, to disclose the carbon footprint of our relevant investments and publish an action plan in 2022.
For the third year in a row, NN has disclosed the carbon footprint of our proprietary assets, currently covering 80% of our total portfolio. It is composed of the general account assets of the insurance activities, and the assets of NN Bank and NN Group. You will find a summary update on page 66 and more detail can be found in a separate publication ‘2020 Carbon footprint of proprietary assets‘ report on our website. We continuously enhance our approach to address climate change into our strategy, policies and activities. We encourage the energy transition, for example through our active ownership activities, and make sustainable and impact investments.
In June 2020, NN announced its ambition to transition its proprietary investment portfolio to net-zero greenhouse gas emissions by 2050. This builds on existing climate initiatives, such as phasing out thermal coal-exposed investments from our investment portfolio by 2030 and NN IP’s active dialogues with investee companies on climate-related matters.
The covenant’s signatories (all Dutch insurers, the government and six NGOs) pool their knowledge and experience, identify ESG risks, and initiate steps to mitigate those risks. Insurers are expected to have due diligence processes in place to address ESG risks and, where necessary, to develop, adjust and improve their policies. Publication of policies and restricted lists are required, as are disclosures on voting and engagement activities with investee companies.
During the year under review, we participated in many of the activities organised by the parties of the covenant. In a knowledge sharing session, NN IP provided insight into how we aim to integrate ‘access to remedy’ in the investment process. Furthermore, we co-signed an engagement letter to two pharmaceutical companies on the topics of access to medicines and transparency. Read more on how we integrate ESG in our investment process on pages 36-38 and in NN IP’s Responsible Investing Report 2020. For an overview of fixed-income bonds held on the NN Group balance sheet by type of issuer, refer to page 152 of the Financial Report (Note 51).
Early 2020, we conducted a review of our human rights policies and processes. The findings enable us to further strengthen our approach to human rights risks and opportunities across the organisation. We are currently working on the approach and results of human rights due diligence for our own operations, more specifically our procurement activities.
Customer experience related to any change in products, services and processes
Products and services, performance, strategy, partnering, integration and conversion acquired business
Create value through consistent and transparent voting behaviour, improved disclosures, improved decision-making including on ESG issues
Investment in oil & gas companies (arctic drilling), natural resources and human rights, deforestation, benchmarking methods
The Executive Board’s responsibilities include the formulation of the company’s strategy in line with its view on long-term value creation. This includes the non-financial aspects relevant to NN and its stakeholders, such as environmental, social and governance (ESG) matters. The Supervisory Board supervises the strategy pursued by the Executive Board, while the Management Board is responsible for the company’s day-to-day management and overall strategic direction. This includes the setting and achievement of the company’s objectives, and the ESG aspects that are relevant to the company. These responsibilities are laid out in the respective charters of these Boards as published on our corporate website.
In 2020, as part of our Supervisory Board’s Permanent Education programme, a session was organised on climate change risks & opportunities disclosures and dialogue. Furthermore, the Management Board discussed and confirmed NN’s approach to climate change risks and opportunities. It also sponsored selected activities carried out by NN’s teams to engage in industry initiatives, leading to publications such as ‘Insuring the climate transition’ from the UN convened TCFD Insurer Pilot.
At NN IP, the executive team provides strategic direction and oversees the implementation of the RI Framework policy in the investment processes, as well as the execution of NN IP’s climate change policy. This latter policy determines the climate change governance within NN IP and describes how it addresses climaterelated risks and opportunities. The scope of the policy covers the investment beliefs, integration of climate change in the investment process, active ownership, restrictions, transparency, and advocacy.
To ensure proper support and implementation of these policies, the executive team receives input from NN IP’s ESG Committee. The committee is chaired by the Chief Investment Officer (CIO) of NN IP and comprises representatives of the Responsible Investment team and senior representatives from NN IP’s various business segments, as well as the CIO of NN Group and representatives of Corporate Citizenship. To support the investment teams in the integration of ESG within the investment process, and to further drive the development of responsible investing and engagement, NN IP has a dedicated Responsible Investment team, which reports to the CIO of NN IP.
In 2020, a Paris Alignment Council was set up to develop and oversee the approach of aligning the proprietary investment portfolio to the Paris goals. The ‘net-zero’ ambition is a new commitment that NN has made to actively support the global transition to a low-carbon economy, and was communicated externally at the NN Capital Markets Day in June 2020. The Council, chaired by the CIO of NN Group, will provide direction on the implementation of the approach and monitor progress on plans and targets.
Our response to the Financial Stability Board’s Task Force on Climate-related Financial Disclosures
NN distinguishes (a) transition risks and (b) physical risks from climate change. Transition risk could arise from the adjustment process towards a lowcarbon economy. This may adversely affect individual businesses, sectors and/ or the broader economy, impacting our investment portfolios and thus the asset side of our balance sheet. Overall, NN anticipates that the global pricing of financial assets will increasingly be influenced by factors such as public policy, technological developments, changing consumer preferences, or evolving interpretations of legal frameworks. Such trends and changes are likely to materialise over the medium term. Insurers may be exposed to these risks through their investment portfolio. However, our investments are also exposed to specific short-term risks, such as sudden possible adjustments to market sentiment around climate risks, impacting segments and investments in our portfolio. Having a welldiversified and global portfolio focused on a broad range of investments could lessen the impact of transition risk. NN uses a system of risk limits and tolerances to manage financial risks overall, per asset category or type of financial risk.
Finally, prolonged and multiple periods of heatwaves or other consequences of rising temperatures may result in increased mortality and morbidity, thereby impacting our life and income insurance liabilities. Long-term threats are difficult to predict, but currently we expect this to have less impact on our life and income insurance liabilities than other risks, such as changes in demographics. Furthermore, we note that from an overall risk perspective, NN has a larger exposure to longevity risk, which partly offsets mortality risk.
Phasing out coal in our portfolio – In 2019, we adopted a policy to phase out thermal coal-exposed investments by 2030 in our proprietary portfolio. This decision affects around EUR 1.6 billion of investments in the mining and utility sectors, mostly held in corporate bonds. While most of these holdings will mature before 2030, we have some longer-dated exposures. These will be closely monitored; if by 2030 the companies have not reduced their coal-related business to 5% or lower they will be sold. To create consistency in our business, we aligned our policy for insurance underwriting with the investment side. We believe this policy sends a strong signal for an urgent phase-out of coal in order to achieve the Paris targets, and additionally supports us in mitigating the climate-related transition risks in our portfolio.
Capitalising on opportunities – Our strategy seeks to leverage opportunities for financing a low-carbon, climateresilient future, such as by offering our asset management clients sustainable and impact strategies, by providing insurance products to protect against physical climate impacts and to support low carbon business models. In 2020, NN IP further expanded its green bonds range of funds by adding a corporate variant. Our banking business launched Woonnu, a new mortgage loan platform that offers consumer mortgage loans that rewards steps taken to reduce the owner’s carbon footprint, for instance by improving the energy efficiency of their property. We also adapt existing features in our insurance offerings; we provide cover for solar panels on residential insurance policies without charging an additional premium. Finally, we support customers through risk prevention and advice tools: Powerly provides Dutch homeowners with tailored
Joining forces to develop best practices – We also collaborate with peers to develop industry best practices. In 2020, we joined the Platform Carbon Accounting Financials (PCAF), and we participated in the IIGCC Paris Aligned Investment Initiative (PAII), to help develop the ‘Net zero investment framework’ which investors can use to develop strategies to align their portfolios to the Paris goals. We also collaborated with 21 other insurance companies to develop risk management approaches, forward-looking scenario-based tools and methodologies. The pilot group published a paper titled ‘Insuring the climate transition’ in January 2021.
Risk management NN Group’s risk policy framework ensures that all risks (including climate-related risks) are managed consistently and that NN operates within the set risk tolerances.
Next to analysing individual investmentlevel risks, we carry out analyses at a portfolio level to assess potential climate risks and opportunities, and to support the implementation of a broader climate strategy. For example, we measure the carbon intensity of our proprietary investments, which provides us information on our highest carbon risk exposure and is useful for, amongst others, engagement purposes. We consider engagement to be an important tool, also for managing climate risks. This means we enter into a dialogue with investee companies on the risks of climate change, and the need to transition to a low-carbon economy.
Although we prefer to support behavioural change through an engagement approach, we may decide to exclude a company when it is not willing to engage in a dialogue, or when we believe not enough progress is being made. We have environmentally focused exclusion criteria on oil sands and thermal coal mining. For NN ’s proprietary investment portfolio, we additionally implement the earlier mentioned coal phase-out policy,
Finally, external reinsurance will, under certain conditions, partially mitigate potential impacts. We have a group-wide catastrophe reinsurance programme in place to protect against the severity and frequency of large natural catastrophes. Reinsurance covers are placed with a broad and diversified panel of strongly capitalised external reinsurers, and reduce the losses to NN Group from both large events and multiple smaller ones. Both the applicability of the external vendor models, as well as the reinsurance structure and cover, are reviewed annually for renewal.
To mitigate potential climate-related transition risks and provide a strong signal to companies, the insurance business applies exclusionary criteria for thermal coal mining companies. We will not provide (non-life) insurance services to companies that derive more than 30% of their revenues from thermal coal mining or use at least 30% thermal coal for power generation. These thresholds will phase down to 5% by 2030, to align our policy with the investment side.
The transition towards a low-carbon economy also causes legal challenges. We monitor climate-related litigation. Most cases are against governments, but complaints against business are on the rise. This can have consequences for NN, in case we insure these companies. However, because the relative size of NN’s general liability insurance portfolio to corporate clients, we consider risks in this area to be low at this moment in time.
The 2020 Group ORSA includes climate change scenarios, further building on the previously mentioned assessments on our own general account investment portfolio to better understand the impact on our business. Topics covered are: • A qualitative assessment focusing on transition risks associated with policies for government bonds. It is built on our assumption that countries that have a well-developed long-term strategy towards achieving GHG emissions reductions consistent with the Paris Agreement, are more likely to face lower transition risk.
• A quantitative assessment to assess preparedness of corporates to deal with climate change. Investments in certain industries might lose value when companies cannot adapt to a low-carbon business model.
• A quantitative assessment focusing on the effects on homeowners that are confronted with unintended adverse effects of government energy transition policies, that include a severe but plausible economic downturn with uncertainty about future property values and reduced sales of existing homes.
General conclusions from these assessments are: • Impact of climate change contains high levels of uncertainty and as such, caution is warranted in drawing conclusions based on scenario outcomes. Furthermore, climate-related scenarios are potentially not representing the full impact of climate change, as it is virtually impossible to provide an all-inclusive scenario.
• Scenario analyses performed so far show climate change is more imminent to our underwriting business in NN Non-life compared to our Life and Pensions businesses.
• Qualitative scenarios, as well as other data supported analysis, can help to gain a further understanding of potential exposures in our portfolios. For instance, for the mortgage portfolio, geographical data offers visualisation of concentration of physical risks. Based on current insights, and assuming the Dutch government will further execute its infrastructure improvement programme, our exposures until 2050 are limited. We will continue to incorporate new data and assumptions in our regular monitoring.
We will continue exploring potential events and more accurate parameters to quantify the impact of climate risks, as well as build further capabilities to make more detailed assessments per type of investment. This includes a specific focus on deepening our understanding of climate-related risks, focusing on our non-life insurance portfolio, amongst others by using the insights gained from the earlier mentioned UN convened TCFD Insurer Pilot.
Metrics and targets Own operations At NN Group, we are committed to reducing the environmental impact of our own operations. Our operations have been carbon neutral since 2015, by reducing our emissions year-on-year and by offsetting any remaining emissions. We have set quantitative targets to reduce our GHG emissions and consumption of scarce resources. In 2021, we expect to set a new target, which will be science based. Read more on page 39.
• Amount of green bonds and infrastructure investments in the areas of energy and resource efficiency held in the proprietary portfolio: EUR 1.3 billion (2020).
• Amount of securities covered by the coal phase-out strategy for the proprietary portfolio: EUR 1.6 billion.
The Executive Board is entrusted with the management, the strategy and the operations of NN Group under supervision of the Supervisory Board.
NN Group N.V. (NN Group) is a public limited company (naamloze vennootschap) incorporated under the laws of the Netherlands.
Read more about our Management Board on pages 23–42 of the Financial Report.
The Management Board is entrusted with the day-to-day management and overall strategic direction of NN Group.
David Knibbe Chief Executive Officer and chair of the Executive Board and Management Board
Strong risk management is important for the successful execution of our business plan, and for achieving our strategic commitments. In these times, increased levels of uncertainty require us to remain alert, monitor the developments in our operating environment, and act where necessary.
On a regular basis, we identify the key risks related to our strategy. We use a variety of inputs, such as the material topics identified by our stakeholders, macroeconomic reports, risks identified by the management boards of our business units and by the CRO Forum (a group of professional risk managers from the insurance industry).
In 2020, we paid specific attention to risks related to our new strategy and to the Covid-19 pandemic. For each set of risks, we define our risk appetite: how much risk we are willing to take. This covers three main areas: Strategic challenges, Strong balance sheet, and Sound business performance.
Below we provide more information on our key risks and how we manage them. Where relevant, we discuss how the Covid-19 pandemic impacts the risks. Note 51 on Risk management in our Annual Accounts includes further details on NN’s overall approach to risk management and our financial and non-financial risk exposures.
Strategic challenges: We manage our businesses on a risk-return basis, in order to meet strategic objectives and the interests of our stakeholders.
We focus on being a customer-centric, data-driven company by evolving current skills, while further developing capabilities and our entrepreneurial mindset to meet changing customer demands, and stay competitive and relevant in the future.
Climate change is an emerging risk to NN Group, given that we are predominantly a life insurer, and consists of physical and transition risks. Physical risks may impact our investment portfolio, or customer properties. Also there is risk related to transition to lower carbon economies which may adversely affect individual businesses, sectors and the broader economy, thereby having an impact on our investment portfolio. NN performs climate scenario analyses to create more insight into specific drivers of climate-related risks and opportunities. Read more in Our response to the Task Force on Climate-related Financial Disclosures (pages 50-53) and our Carbon Footprint report.
Talent management: risk of not being able to attract, retain and pay world class talent in competition with players within and outside our industry.
We monitor employee engagement through regular surveys and benchmarks. Read more in Empowering our people to be their best (pages 29-31).
To achieve our strategic commitments, we continue to develop an agile, digital mindset within the company, as well as investing in excellent data capabilities (e.g. Artificial Intelligence, use of big data). These require different (technology-related) skills and ways of working, strengthening pricing and underwriting teams, implementing a data strategy within Non-life, and rolling-out an extensive training programme in all our businesses.
Good corporate citizenship: risk that NN Group does not adequately balance stakeholder interests, or deviates from society’s evolving norms and values, in areas such as responsible investments, environmental protection, equality, inclusion, taxes and remuneration, leading to reputational damage.
Read more in Creating a positive impact on society (pages 36-40) and Our response to the Task Force on Climate-related Financial Disclosures (pages 50-53).
Asset & Liability Management (ALM) and investments: risk of reduced available capital due to financial market turmoil or missed investment opportunities.
Market risk is taken in pursuit of returns for the benefit of customers and shareholders. As part of the new strategy, we started the process of shifting to higher-yielding assets, partly replacing low-yielding sovereign bonds, and financed by the sale and redemption of sovereign bonds. The Covid-19 pandemic has created volatility and uncertainty in financial markets. At selected moments, NN however used opportunities to additionally invest in higher-yielding assets.
Customer and product suitability: risk that products do not appropriately cover customers’ interests over the full product lifetime.
Product suitability is essential to our relationship with customers and creating longer-term value for our stakeholders. NN’s Product Policy covers product requirements, including specific requirements on customer suitability. Our NN Code of Conduct states what we expect from our employees and business partners in terms of behaviour. Also Product Approval and Review Processes and product risk committees are in place to oversee product design, customer suitability, sound underwriting and claims management, and adequate pricing of existing and new products.
NN wants to become a more agile organisation, with the ability to respond faster to relevant developments, and by encouraging an entrepreneurial mindset. At the same time, risks must be managed well. We therefore use a risk control framework which ensures risks are understood and managed through effective controls, and that robust processes are in place that demonstrate the effectiveness of controls, and compliance with policies, standards and governance. Read more in the Financial Report, Note 51 on Risk Management.
Cyber risk: risk of cybersecurity attacks, leading to misuse or loss of information (including personal data breaches), discontinuity of operations, or financial or reputational loss.
The Chief Information Officer and Information & Infrastructure Security functions ensure business continuity management, cyber-risk management and business information security via standardised, internationally-accepted frameworks, norms and technical guidelines that form the basis for managing IT and cyber risks within NN Group. For managing dependencies with external third parties, NN has an outsourcing policy and framework in place.
NN Group also publishes a Solvency and Financial Condition Report, a Total Tax Contribution Report, and a Carbon Footprint Report. NN Investment Partners publishes a Responsible Investing Report. These reports provide additional information on specific topics and are published on the same date on NN Group’s website in the Investors/ Financial reports section.
Scope of the data in the Annual Review The scope of the reported data is the range of entities over which NN Group has management control. This applies to all material items as depicted in the materiality matrix, unless otherwise stated.
Performance data All financial data in this review is taken directly from NN Group’s Financial Report.
Review and approval Information in the Annual Report is based on extensive reporting from our businesses and functions in the countries where we are active. All information is reviewed by NN Group’s Disclosure Committee and has been approved by our Executive Board and Supervisory Board before publication.
Relevant topics Relevant topics were selected for the 2020 Annual Review, through a materiality assessment using internal and external research, and other sources. This assessment included a survey amongst internal and external stakeholders, see page 9.
Reporting guidelines We aim to strengthen our integrated way of reporting every year. The Annual Review contains various elements from the International Integrated Reporting Council (IIRC) framework, such as our value creation model and a materiality matrix. This review strives to present relevant information about our strategy, governance, performance and future prospects in ways that are relevant to the economic, environmental and social contexts in which we operate.
The information and data in the Annual Review is prepared in accordance with the Standards (Core) from the Global Reporting Initiative (GRI). The GRI Index table shows against which indicators NN Group reports, and where to find the respective information in this Annual Review, the Financial Report and/or the NN Group website. This year also the 207 Tax Standard is included. The index table is published on NN Group’s corporate website in the Investors/Financial Report section, where you can also find the Progress reports for the UN Principles for Sustainable Insurance and the UN Global Compact.
External assurance The annual accounts of NN Group N.V., including the consolidated annual accounts and the parent company annual accounts, are audited by KPMG. For more information, refer to the Independent auditor’s report on pages 187-203 of the Financial Report.
Furthermore, KPMG provided limited assurance on the non-financial information in the Annual Review. The scope of KPMG’s assurance engagement is described in its assurance report. We provided evidence to our external auditor in support of the statements we make in this report. For more information, refer to the Assurance report of the independent auditor on pages 70-72 of this review.
NN Group’s Total Tax Contribution Report was provided limited assurance by KPMG. For more information, refer to the Assurance report of the independent auditor on pages 26-29 of the Total Tax Contribution Report.
Going forward Going forward, we will continue to tailor our reporting to serve different stakeholder groups. We will aim for further integration of financial and non-financial information to provide stakeholders with a complete picture of how we create long-term value for our company and our stakeholders.
– designated as at fair value through profit or loss 1,336 1,184
Consolidated profit and loss account (in EUR million) For the year ended 31 December notes 2020 2019
Net result (in EUR million) For the year ended 31 December 2020 2019
Earnings per ordinary share For the year ended 31 December and amounts in euros 2020 2019
NN Group share price (last trading day of the year, in EUR) 35.53 33.82 34.80 1 Includes NN Bank. 2 Pro-forma 2020 full-year dividend per share of EUR 2.33, comprising the 2020 interim dividend of EUR 0.86 plus the proposed 2020 final dividend of EUR 1.47. 3 Pro-forma 2019 full-year dividend per share of EUR 2.16, comprising the 2019 interim dividend of EUR 0.76 plus the suspended final dividend of EUR 1.40.
Donations to charitable organisations (x EUR 1,000)7 4,704 3,200 2,700 4 Percentage for 2019 is based on the average brand consideration score from 2017 to 2019.
5 Employee engagement score and the percentage of participation consists of internal and external employees (2019 and 2018 data are adjusted to this scope). 6 In 2020, the target group for this indicator was adjusted to Management Board and Management Board minus one managerial position (instead of the composition of our Senior Leaders Group). 7 Includes cash donations to charitable causes, corporate foundations and partnerships.
9 The Transparency Benchmark takes place on a bi-annual basis. The relative score of 50% represents a 78th position out of 240 companies.
Weighted Average Carbon Intensity (tCO2e/EURm of revenue) – Fixed income and listed equity 106 106 107
1 Different number in FTE reflects changes due to the CLA in the Netherlands; Delta Lloyd used to count for 38 hours per week as FTE (instead of 36 hours per week as FTE). This also has an impact on the (lower) number of part-time employees.
CO2 emissions from energy consumed on NN sites 5 7 8
– renewable electricity as % of total electricity 72% 72% 66%
Our conclusion We have reviewed the Non-Financial Information in the Annual Review for the year ended 31 December 2020 (hereafter: the Non-Financial Information) of NN Group N.V. (hereafter: NN Group) based in Amsterdam and headquartered in The Hague. A review is aimed at obtaining a limited level of assurance.
Based on our procedures performed, nothing has come to our attention that causes us to believe that the information relating to material non-financial topics (for selection of topics, see page 9) is not prepared, in all material respects, in accordance with the reporting criteria as described in the section ‘Reporting criteria’ of our report.
Basis for our opinion We have performed our review on the Non-Financial Information in accordance with Dutch law, including Dutch Standard 3810N: ‘Assurance-opdrachten inzake maatschappelijke verslagen’ (Assurance engagements relating to sustainability reports).
The reporting criteria used for the preparation of the Non-Financial Information are the Sustainability Reporting Standards of the Global Reporting Initiative (GRI) and the applied internal reporting criteria as disclosed on page 62 of the Report.
The Non-Financial Information includes prospective information such as ambitions, strategy, plans, expectations and estimates, and risk assessments. Inherently the actual future results are uncertain. We do not provide any assurance on the assumptions and achievability of prospective information in the NonFinancial Information.
Responsibilities of the Executive Board and the Supervisory Board for the Non-Financial Information The Executive Board of NN Group is responsible for the preparation of the Non-Financial Information in accordance with the GRI Standards and the applied supplemental reporting criteria as disclosed on page 62 of the Report, including the identification of stakeholders and the definition of material matters (see page 9). The choices made by the Executive Board regarding the scope of the Non-Financial Information and the reporting policy are summarised in ‘Our approach to reporting’ of the Report. The Executive Board is also responsible for such internal control as it determines is necessary to enable the preparation of the Non-Financial Information that is free from material misstatement, whether due to fraud or error.
Our responsibilities for the review of the Non-Financial Information Our objective is to plan and perform the review in a manner that allows us to obtain sufficient and appropriate assurance evidence for our conclusion.
Procedures performed to obtain a limited level of assurance are aimed to determining the plausibility of information and vary in nature and timing from, and are less in extent, than for an audit engagement. The level of assurance obtained in review engagements with a limited level of assurance is therefore substantially less than the assurance obtained in audit engagements.
The measures taken to limit the outbreak of the COVID-19 virus have impacted the manner in which we have planned and conducted our assurance procedures. We have also considered the implications for the non-financial reporting process, assessed the internal controls embedded therein particularly focusing on the material topics for the 2020 reporting, and the implications for management oversight. We performed our assurance procedures completely remotely. This had practical implications for the way in which we 71 NN Group N.V. 2020 Annual Review
© 2021 KPMG Accountants N.V., a Dutch limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
updated our understanding of process activities and controls, but we were able to make use of technology for observation, inspection and test of detail against authentic source documents.
— Evaluating the consistency of the Non-Financial Information with the information in the report which is not included in the scope of our review; — Evaluating the presentation, structure and content of the Non-Financial Information; — To consider whether the Non-Financial Information as a whole, including the disclosures, reflects the purpose of the reporting criteria used.
A subset of non-financial performance indicators concerning sustainable, ethical and corporate governance issues, such as managing the company’s carbon footprint and having systems in place to ensure accountability.
An ethical statement introduced in early 2013 for employees in the Dutch financial sector, along with the introduction of a social charter and update of the Banking Code. It applies to employees of banks and other financial enterprises, including insurance companies, investment firms and financial service providers. By taking the oath, employees declare that they are bound by a code of conduct to the ethical and careful practice of their profession.
An industry-driven organisation committed to assessing the sustainability performance of real assets globally, including real estate portfolios. On behalf of close to 60 institutional investors, GRESB Real Estate has assessed almost 1,000 property companies and funds globally.
An international independent standards organisation that helps businesses, governments and other organisations understand and communicate their impact on issues such as climate change, human rights and corruption.
An organisation that is neither part of a government nor a conventional for-profit business. Usually set up by citizens, NGOs may be funded by governments, foundations, businesses or private individuals.
NN Future Matters The global community investment programme for NN Group. It aims to empower people in the markets where we operate to improve their financial well-being, and support them in growing their economic opportunities.
The assessment of a product in relation to its customer suitability, financial and non-financial risks, and profitability. NN Group conducts a PARP when it introduces a new product, changes the characteristics of an existing product, or reviews a product. This is to ensure the product is acceptable to our company, our customers and society in general.
UN Global Compact A UN initiative to encourage businesses worldwide to adopt sustainable and socially responsible policies, and report on their implementation. It is a principle-based framework for business containing ten principles in the areas of human rights, labour, environment and anti-corruption.
For further information on NN Group’s sustainability strategy, policies and performance, please visit sustainability.htm or contact us via sustainability@nn-group.com
Solvency and Financial Condition Report (SFCR) and the GRI Index Table –
(13) changes in laws and regulations and the interpretation and application thereof, (14) changes in the policies and actions of governments and/or regulatory authorities, (15) conclusions with regard to accounting assumptions and methodologies, (16) changes in ownership that could affect the future availability to NN Group of net operating loss, net capital and built-in loss carry forwards,