Position as at 31 December 2018 2017 Coupon date First possible redemption date
The Tier 1 and Tier 2 instruments have subordination provisions, rank junior to all other liabilities and senior to shareholder’s equity only. The conditions of the securities contain certain provisions for optional and required coupon payment deferral and mandatory coupon payment events.
The Tier 1 and Tier 2 instruments are classified as equity as there is no requirement to settle the obligation in cash or another financial asset or to exchange financial assets or financial liabilities under conditions that are potentially unfavourable for a.s.r.
The non-controlling interest relates to property development projects where non-controlling shareholders have committed to increase capital when required.
Net profit (loss) attributable to holders of ordinary shares for calculating the earnings per ordinary share 610 872
Diluted earnings per ordinary share from continuing operations (in euros) 4.27 5.90
Diluted earnings per ordinary share from discontinued operations (in euros) -0.24 0.02
For additional information related to net profit, please see chapter 7.2.2.
Financial statements 2018 | 7.5 Notes to the consolidated balance sheet 200 7.5.13 Subordinated liabilities
In 2015, a.s.r. issued € 500 million subordinated liabilities in the form of Tier 2 notes, first callable on 29 September 2025, and maturing on 29 September 2045. The coupon is fixed at 5.125% and paid annually on 29 September with a step up at the first call date.
Changes in the composition of the group 84 - 35 -
Changes in the composition of the group 324 - 42 -
Provision for claims (including IBNR) as at 31 December 4,674 4,276 378 363
Financial statements 2018 | 7.5 Notes to the consolidated balance sheet 202
The insurance liabilities are deemed to be adequate following the performance of the Liability Adequacy Test (LAT) taking into account the UFR of 4.05% applicable for 2018 (2017: 4.2%). The future UFR is subject to developments in the real interest rate and, based on the in 2017 published EIOPA UFR methodology, would result in a UFR of 3.6% in 2021. The UFR under Solvency II and therefore also for the LAT will decrease in 2019 from 4.05% to 3.9% with future decreases expected in the coming years. a.s.r. performed a sensitivity analysis on the impact of the development of the UFR as if the UFR would have been 3.6% at 31 December 2018 and concluded that it still has an adequate surplus of the insurance liabilities over the IFRS-LAT.
Financial statements 2018 | 7.5 Notes to the consolidated balance sheet 203 7.5.14.2 Claims development table, non-life The table below is a ten-year summary of movements in gross cumulative claims in connection with the Non-life portfolio for the period from 2009 to 2018.
Effect of fair value changes related to financial assets -354 417
The other changes in life insurance contracts (€ 287 million) mainly concern the reassessment of insurance contracts to insurance contracts on behalf of policyholders resulting from new product features provided in 2018 to clients.
7.5.15.1 Post-employment benefits pensions a.s.r. has a number of defined benefit and defined contribution post-employment benefit plans for its employees and former employees. The majority of employees are formally employed by ASR Nederland N.V. A limited amount of employees are employed by other group companies. The pension plans of other group companies are disclosed in a separate section in this paragraph.
The post-employment benefit plans for staff that is employed by ASR Nederland N.V. are insured by ASR Levensverzekering N.V.
The post-employment benefit plan for former Generali Netherlands N.V. employees is primarily based on the following conditions: • The accrual rate 1.875%; • A franchise of € 13,344; • Retirement age of 68 years; • Maximum pensionable salary capped at € 105,075; O p e ra tin g e n viro n m e n t
Financial statements 2018 | 7.5 Notes to the consolidated balance sheet 206
• A waiver of premium in the event of incapacity for work; • The personal contribution for the employee amounts to 4.7% of the pension basis.
The amount recognised as an expense for the defined contribution plans in 2018 amounts to € 2.9 million (2017: € 1.3 million). The increase is related to one of the group companies change in classification from defined benefit plan to a defined contribution plan.
The discount rate was 1.85% at 31 December 2018 (2017: 1.89%), resulting in a € 23.6 million increase in the defined benefit obligation (2017: € 94.2 million decrease). This includes the effect of the changed methodology on the pension obligation (see section assumptions).
Financial statements 2018 | 7.5 Notes to the consolidated balance sheet 208
Non qualifying plan assets The portfolio of global investments (non-qualifying assets) held by ASR Levensverzekering N.V. to cover the employee benefit expense can be broken down as follows: Breakdown of global investments held by ASR Levensverzekering N.V.
For the non-qualifying assets backing the post-employment benefit plans, a.s.r. has drawn up general guidelines for the asset mix based on criteria such as geographical location and ratings. To ensure the investment guidelines remain in line with the conditions of the post-employment benefit obligations, a.s.r. regularly performs Asset Liability Management (ALM) studies. Transactions in the non-qualifying assets are done within the guidelines. As the post-employment benefit plans are a liability on group level, the underlying insurance and market risks are in scope of a.s.r.’s risk policies. (see chapter 7.8). The overall interest-rate risk of the group is managed using interest-rate swaps and swaptions. ASR Levensverzekering N.V., manages the interest rate risk through an overlay interest hedging strategy using swaps and swaptions (see chapter 7.8.7) for the company as a whole. The swaps and swaptions are not specifically allocated to the a.s.r. post-employment benefit plans. Therefore the (un)realised gains and losses from swaps and swaptions as a whole are accounted for in liabilities arising from insurance contracts, in accordance with the shadow accounting policy, whereas the impact of changes in interest rates on the provisioning for Employee benefits based on IAS19 is part of actuarial gains and losses that are recognised in equity (see chapter 7.5.12.3).
As an employer, a.s.r. is expected to pay contributions for pension plans and other post-employment benefits in the coming financial year amounting to € 106 million (excluding the positive effect of the investment income) and € 0.2 million respectively.
Actuarial assumptions for future mortgage interest are no longer necessary (2017: 1.6%). In 2018, a.s.r.’s policy for grantable discounts on staff mortgages has changed. Discounts on staff mortgages have been fixated in amounts granted on the reference date December 2017.
In 2018, the discount rate methodology changed. a.s.r. developed an internal curve for high quality corporate bonds for determination of the discount rate. The discount rate is based on the return (zero coupon rate) of high-quality corporate bonds (AA rating) and the cash flow pattern of the pension obligation. All other methods used for determining the post-employment benefit defined obligation and assumptions are consistent with those applied in 2017.
Transfer to liabilities relating to assets held for sale -48 -
The decrease of savings and other deposits is due to the classification of a.s.r. bank to discontinued operations (see chapter 7.4.6).
An amount of € 88 million (2017: € 593 million) of the due to customers is expected to be settled more than twelve months after reporting date.
a.s.r. has bonds that have been transferred as a result of reverse repurchase agreements, but do not qualify for derecognition amounting to € 39 million (2017: € 64 million). The asset recognised for cash collateral paid on reverse repurchase agreements is presented under loans and receivables. The liability recognised for cash collateral received on repurchase agreements is presented under due to banks.
There is no difference between the carrying value of other liabilities and their fair value (see chapter 7.7.1.2).
The increase in total non-life (€ 427 million) and life (€ 103 million) gross insurance premiums is mostly related to the acquired activities of Generali Nederland.
Financial statements 2018 | 7.6 Notes to the consolidated income statement 214
A total amount of € 121 million (2017: € 112 million) has been eliminated and are therefore not included in the gross insurance premiums (and investment income and operating expenses). This relates to the a.s.r. post-employment benefit plans: € 106 million (2017: € 79 million), investment fees: € 14 million (2017: € 31 million) and Disability premiums: € 1 million (2017: € 2 million).
The proceeds from sales of property developments in 2018 and 2017 is mainly due to sale of parts of the Leidsche Rijn Centrumplan (LRC) in Utrecht to external parties.
Financial statements 2018 | 7.6 Notes to the consolidated income statement 217
The increase in net insurance claims and benefits non-life of € 271 million is mostly related to the acquisition of Generali Nederland (€ 201 million in 2018). The decrease in net insurance claims and benefits life of € 572 million is mostly related to a lower amount of claims paid and an increase in releases from technical provisions in Individual life.
Other operating expenses include travel and subsistence, telephone and personnel training expenses.
Employees related to administrative expenses and overheads are allocated to segment Holding and Other.
The decrease of € 96 million in other expenses is primarily related to a pension portfolio transfer with a negative interest surplus in previous year.
Financial statements 2018 | 7.6 Notes to the consolidated income statement 219 7.6.12 Income tax expense
The table below shows a reconciliation of the expected income tax expense with the actual income tax expense. The expected income tax expense is determined by applying the tax rate in the Netherlands to the profit before tax. In 2018, this rate was 25.0% (2017: 25.0%). The enacted tax rate for 2019 will be 25.0%.
Deferred taxes arising from changes in tax rates relates to the rate reduction of cooperation taxes in 2020 and 2021. The enacted rate for 2020 is 22.5% and for 2021 and thereafter is 20.5%.
Deferred taxes arising from changes in tax rates is included in the other effects.
The effective income tax rate is 23.3% (2017: 19.6%). The increase is due to a tax-exempt on capital gains in 2017, change in tax rate and the recalculation of the technical provisions of life insurance in 2017.
Financial statements 2018 | 7.7 Other notes 220 7.7 Other notes 7.7.1 Fair value of assets and liabilities
Reclassification between categories 2018 To level 1 To level 2 To level 3 Total
From: Level 1: Fair value based on quoted prices in an active market - 287 - 287
The movements of € 22 million from level 3 to level 1 relates to unlisted funds entirely consisting of listed investments.
Reclassification between categories 2017 To level 1 To level 2 To level 3 Total
From: Level 1: Fair value based on quoted prices in an active market - - 73 73
Level 3: Fair value based not based on observable market data 14 102 - 116
The adjustment of asset backed securities and various preference shares to level 3 is mainly the result of a reassessment of the nature of the valuation technique of the external sources, including the assessment of an active market.
Debt funds are adjusted from level 3 to level 2 based on a reassessment of the impact of the observable and non- observable market assumptions used in determining the fair values of the underlying instruments.
The following table shows the movement in financial assets measured at fair value including investment on behalf of policyholders and investment property that are categorised within level 3.
Changes in value of investments, realised/unrealised gains and losses: - Realised gains and losses (chapter 7.6.3) 3 8 - Recognised in Other comprehensive income -33 -2
Transfer between investments on behalf of policyholders and investment property - -
Changes in financial assets at fair value through profit or loss categorised within level 3
Changes in value of investments, - Fair value gains and losses (chapter 7.6.4) 129 127
Amounts due to customers and due to banks presented as level 1 primarily comprise savings and the liability recognised for the cash collateral received. The accrued interest included in other liabilities follows the classification of the underlying assets. Level 2 category financial assets relates primarily to savings-linked mortgage loans amounting to a fair value of € 3,884 million (2017 € 4,042 million).
The mortgage loan portfolio consists of high quality mortgages with a relatively fixed return, limited impairments and arrears (see chapter 7.5.7). The mortgage loan portfolio consists only of Dutch mortgages with a limited counterparty default risk in line with the strategic investment plan (see chapter 7.8.4).
Significant inputs to the Level 3 values are the net initial yield and market rental value. These inputs are verified with the following market observable data: • Market rent per square meter for renewals and their respective re-letting rates; • Reviewed rent per square meter; • Investment transaction of comparable objects; • The 10 year Dutch Government Bond Yield (%) rate as published by the Dutch Central Bank.
Net amounts of financial liabilities presented in the statements of financial position
7.7.3 Fair value of financial assets categorised into two groups based on business model and SPPI test results
In compliance with the deferral option IFRS 9 under IFRS 4, a.s.r. conducted a solely payments of principal and interest (SPPI) test on the financial assets.
In making this assessment, a.s.r. considers the following: • Variable interest rates; • Prepayment features; • Term extension features; • Contingent events; and • Terms that limit a.s.r.’s claim to cash flows from specified assets – e.g. non-resource asset arrangements
The tables in this note also comprise the financial assets of ASR Bank N.V., which are classified as assets held for sale in the consolidated balance sheet based on their underlying classification being primarily mortgages, bonds and cash and cash equivalents.
Financial assets with contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest: Asset-backed securities 74 74 -1
Total financial assets 57,318 55,587 -183 1 Other financial assets include the financial assets that fall into the business model held for trading and managed on a fair value basis or those financial assets with contractual terms that do not give rise on specified dates to cash flows that are solely payments of principal and interest.
2 The carrying value of the trade and other receivables is regarded as a good approximation of the fair value, as these assets have a short-term nature.
Financial assets with contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest: Corporate bonds 49 49
Total fair value of financial assets with contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest without low credit risk 644 708 a.s.r. has conducted the implementation of IFRS 9 for ASR Bank N.V. including the classification and measurement of the financial instruments. The 2018 financial statements of ASR Bank N.V. can be obtained from the company website, when available.
A related party is a person or entity that has significant influence over another entity, or has the ability to affect the financial and operating policies of the other party. Parties related to a.s.r. include associates, joint ventures, members of the Executive Board, members of the Supervisory Board, close family members of any person referred to above, entities controlled or significantly influenced by any person referred to above and any other affiliated entity.
The group regularly enters into transactions with related parties during the conduct of its business. These transactions mainly involve loans, deposits and commissions, and are conducted on terms equivalent to those that prevail in arm’s length transactions.
The remuneration of the a.s.r. Executive Board and Supervisory Board are described in chapter 7.7.5 (Remuneration of the a.s.r. Executive Board and Supervisory Board).
Following the IPO of a.s.r. in 2016, the Dutch State sold its remaining a.s.r. shares in a final transaction on 14 September 2017. This transaction was the completion of a period of state-ownership of a.s.r. that started in 2008. As of 2011, as state-owned financial company, a.s.r. was subject to a special law (Wet aansprakelijkheidsbeperking DNB en AFM en bonusverbod staatsgesteunde ondernemingen) which prohibited the pay of variable remuneration as well as the increase of fixed remuneration. With a.s.r.’s return to the market now fully completed, a.s.r. resumed the remuneration policy for the members of the executive board.
Once every three years, an independent consultant performs a market comparison (remuneration benchmark). The 2017 benchmark analysis highlights a considerable gap between a.s.r. and the relevant peer group. This has prompted the Supervisory Board to increase the salary of the members of the Executive Board. As this decision comes within the scope of the present remuneration policy, it was decided to act and implement the first step of the increase as of 1 January 2018. The increase will be effected in multiple steps over time, but no later than 1 January 2020. After full implementation the target salaries will still remain below the benchmark averages. The Supervisory Board continuously assesses and evaluates the remuneration policy for the Executive Board and will continue to do so in the coming period, with caution taking precedence over speed. This will include conducting extensive consultations with various stakeholders including shareholders, clients and staff. These consultations will take place in the course of 2018. The Supervisory Board will submit the remuneration policy for the Executive Board to the 2019 AGM for a shareholder vote.
Committee (€ 2,500 per annum), and as a member of the Supervisory Board of ASR Basis/Aanvullende Ziektekostenverzekeringen N.V.
(€ 4,000 per annum). During 2018 Annet Aris stepped down as a member of the Audit & Risk Committee (€ 10,000 per annum, amount 3 The amount received as a committee member of the Audit & Risk Committee (€ 10,000 per annum) and as a member of the Supervisory Board of ASR Bank N.V. (€ 4,000 per annum).
2 The increase in 2017 was due to the aforementioned one-off payment in December 2017, which was equal to a monthly salary granted by the
3 The commitment on pensions did not change in 2018. The increase in annual pension expenses is caused by a decrease in the interest rates.
Financial statements 2018 | 7.7 Other notes 235 7.7.6 Contingent liabilities and assets 7.7.6.1 General claims and disputes The group is a respondent in a number of claims, disputes and legal proceedings arising from the normal conduct of business.
Background Since the end of 2006, individual unit-linked life insurance products (beleggingsverzekeringen) have received negative attention in the Dutch media, from the Dutch Parliament, the AFM, consumers and consumer protection organisations. Elements of unit-linked policies are being challenged or may be challenged on multiple legal grounds. The criticism and scrutiny on unit-linked life insurance products led to the introduction of compensation schemes by Dutch insurance companies that have offered unit-linked products. In 2008, a.s.r. reached an outline agreement with two main consumer protection organisations to offer compensation to unit-linked policyholders in case the cost charge and/or risk premium charge exceeds a defined maximum. A full agreement on implementation of the compensation scheme was reached in 2012. The total recognised cumulative financial costs relating to the compensation scheme for Individual life in a.s.r.’s income statement until 2018 was € 1,030 million. This includes, amongst other things, compensation paid, amortisation of surrender penalties and costs relating to improved product offerings. The remaining provision in the balance sheet as at 31 December 2018 amounted to € 42.3 million and is solely available to cover potential additional compensation (schrijnende gevallen) and costs relating to the compensation scheme. On the basis of this agreement, a.s.r. offered consumers additional measures such as alternative products and less costly investment funds. In addition to the compensation scheme, a.s.r. has implemented additional measures (flankerend beleid), including the ten best in class principles as formulated by the Dutch Minister of Finance. On 17 July 2015, the Dutch Ministry of Finance published an Order in Council (Algemene Maatregel van Bestuur), pursuant to which insurance companies can be sanctioned if they do not meet the compulsory targets set for approaching policyholders of unit-linked life insurances and prompting them to review their existing policies.
The agreement with the two consumer protection organisations and additional measures are not binding for policyholders. Consequently, neither the implementation of the compensation schemes nor the additional measures offered by a.s.r. prevent individual policyholders from initiating legal proceedings against the a.s.r. and making claims for damages.
Financial statements 2018 | 7.7 Other notes 236 policies. These organisations argue, amongst other things, that consumers did not receive sufficient compensation based on the compensation scheme.
a.s.r. is currently subject to two collective actions. In June 2016, Woekerpolis.nl initiated a collective action, requesting the district court Midden-Nederland to declare that a.s.r. has sold products in the market which are defective in various respects (e.g. on transparency regarding cost charges and other product characteristics, and included risks for which the insurer failed to warn, such as considerable stock depreciations, the inability to realise the projected final policy value, unrealistic capital projections due to difference in geometric versus arithmetic returns and on general terms and conditions regarding costs that Woekerpolis.nl considers unfair). Also, in March 2017, the Consumentenbond started a collective action against a.s.r. The collective procedure of Consumentenbond is currently pending at the district court Midden-Nederland. In a decision of 6 February 2019 the district court Midden-Nederland rejected all claims of Woekerpolis.nl and concluded that the products sold by a.s.r. cannot be considered as defective. Only with regard to the claim on administrative costs that are calculated under specific circumstances in a specific Spaarplan product, the district court decided this to be unlawful as no defence was put forward.
Other commitments, primarily facility management and ICT related, have been entered into for an amount of € 36 million (2017: € 44 million).
ASR Utrecht Real Estate Investments Netherlands B.V. 100,00 100,00 Amsterdam Life
Anac, All-Finance Nederland Advies-Combinatie B.V.³ 100,00 100,00 Eindhoven Distribution & Services
Van Kampen Groep Holding B.V.³ 100,00 100,00 Hoorn Distribution & Services
Brand New Day Premiepensioeninstelling N.V.3,4 50,00 50,00 Amsterdam Holding & Other
For notes to equity interests in associates and joint ventures, see chapter 7.5.4. The list of equity interests which are required under Sections 379 and 414, Book 2 of the Dutch Civil Code has been filed with the Trade Register of the Chamber of Commerce in Utrecht.
The Executive Board will propose to the Annual General Meeting of Shareholders to distribute € 245 million in dividend (including the interim dividend of € 92 million) on ordinary shares for 2018.
Financial statements 2018 | 7.8 Risk management 239 7.8 Risk management
a.s.r. is exposed to a number of risks, such as strategic risks, market risks, counterparty default risks, liquidity risks, underwriting risks. The RMF monitors the risk profile of a.s.r. and its legal entities in order to ensure that it stays within the risk appetite.
As of 1 January 2016, the Solvency II regime is in place. a.s.r. measures its risks based on the standard model as prescribed by the Solvency II regime and therefore the risk management framework and this chapter are fully aligned with Solvency II. The Solvency Capital Requirement (SCR) is determined as the change in own funds caused by a predetermined shock which is calibrated to a 1-in-200-year event. The basis for these calculations are the Solvency II technical provisions which are calculated as the sum of a best estimate and a risk margin.
7.8.1 Risk management system including the Own Risk and Solvency Assessment Risk Management System
It is of great importance to a.s.r. that risks within all business lines are timely and adequately controlled. In order to do so, a.s.r. has implemented a Risk Management framework based on internationally recognised and accepted standards (such as COSO ERM and ISO 31000:2018 risk management principles and guidelines). Using this framework, material risks that a.s.r. is, or can be, exposed to, are identified, measured, managed, monitored and evaluated. The framework is both applicable to a.s.r. group and the underlying (legal) business entities.
7.8.1.1 Risk Management Framework The figure below is the risk management framework as applied by a.s.r. The framework is based on the Enterprise Risk Management (ERM) model by COSO1.
Risk Management framework The Risk Management (RM) framework consists of risk strategy (including risk appetite), risk governance, systems and data, risk policies and procedures, risk culture, and risk management process. The RM framework contributes to achieving the strategic objectives as set out by a.s.r.
Risk policies and procedures: Risk policies and procedures at least ¹: • Define the risk categories and the methods to measure the risks; • Outline how each relevant category, risk area and any potential aggregation of risk is managed; • Describe the connection with the overall solvency needs assessment as identified in the Own Risk & Solvency
Within a.s.r. risk culture is an important element that emphasises the human side of risk management. The Executive Board has a distinguished role in expressing the appropriate norms and values (tone at the top). a.s.r. employs several measures to increase the risk awareness and, in doing so, the risk culture (see chapter 7.8.1.1.5 Risk culture).
Risk appetite is defined as the level and type of risk a.s.r. is willing to bear in order to meet its strategic, tactical and operational objectives. The risk appetite is formulated to give direction to the management of the (strategic) risks. The risk appetite contains a number of qualitative and quantitative risk appetite statements and is defined for both financial (FR) and non-financial risks (NFR). The statements highlight the risk preferences and limits of the organisation and are viewed as key elements for the realisation of our strategy. The statements and limits are defined at both group level and at legal entity level and are determined by the Executive Board and approved by the Supervisory Board. The statements are evaluated regularly to maintain alignment with the strategy.
Risk appetite statement ASR Nederland N.V. 2018 1 ASR Nederland N.V. places long-term value creation at the forefront of its (strategic) operations. ASR
Nederland N.V. is a socially responsible organisation which ensures that all stakeholders’ interests are met in a balanced and sustainable way.
9 ASR Nederland N.V. has a minimum interest coverage ratio of between 4 and 8.
11 ASR Nederland N.V. generates a robust and high-quality operational ROE, i.e. pursues an overall
Risk strategy aims to ensure that management decisions lead to a risk profile that remains within the risk limits. The risk strategy entails all processes to identifying, assessing and managing risks and opportunities. The SRA (Strategic Risk Analysis) is a method for identifying, assessing and managing strategic risks. Through a combined top-down and bottom-up SRA (Strategic Risk Analysis) approach, the most important strategic risks are identified. For each of the strategic risks an estimation of the likelihood and impact is made to prioritise the risks. The main strategic risks are translated into ‘risk priorities’ (including emerging risks) at group level and are monitored throughout the year in the a.s.r. Risk Committee. Output from the strategic risk analysis, combined with the risk appetite statements, provides insight into the risk profile of a.s.r. and underlying legal entities. The risk profile is monitored in the relevant risk committees.
• Challenges the 1st line and supports the 1st line to achieve their business objectives in accordance with the risk appetite
As second line of defence, Compliance encourages the organisation to comply with relevant rules and regulations, ethical standards and the internal standards derived from them (‘rules’) by providing advice and devising policy. Compliance supports the first line in the identification of compliance risks and assesses the effectiveness of risk management on which Compliance reports to the relevant risk committees. In doing so, Compliance uses a compliance risk and monitoring framework. In line with risk management, Compliance also creates further awareness in order to promote a culture of integrity. Compliance coordinates contacts with regulators in order to maintain an effective relationship and keeps oversight of the current topics.
Audit & Risk Committee The Audit & Risk Committee was established by the Supervisory Board to gain support in the following matters: • Assessment of the risk appetite proposal based on the financial and non-financial risk reports, among other documents; • Assessment of the annual report, including the financial statements of ASR Nederland N.V.; • The relationship with the independent external auditor, including the assessment of the qualities and independence of the independent external auditor and the proposal by the Supervisory Board to the AGM to appoint the independent external auditor; • The performance of the audit function, compliance function, the actuarial function and the risk management function; • Compliance with rules and regulations; and • The financial position.
Product Approval & Review Process Board The Product Approval & Review Process Board (PARP Board) is responsible for the final decision-making process around the introduction of new products and adjustments in existing products. The managing Director of the business line Health is appointed as chairman. The committee evaluates if potential risks in newly developed products are sufficiently addressed. New products need to be developed in such a way that they are cost efficient, reliable, useful and secure. New products also need to have a strategic fit with a.s.r.’s mission to be a solid and trustful insurer. In addition, the risks of existing products are evaluated, as requested by the product approval and review process as a result of product reviews.
a.s.r. has a Data Governance and Quality policy in place to support the availability of correct management information. This policy is evaluated on an annual basis and revised at least every three years to keep the standards in line with the latest developments on information management. The quality of the information is reviewed based on the following aspects, based on Solvency II: O p e ra tin g e n viro n m e n t
• Completeness (including documentation of accuracy of results); • Adequacy; • Reliability; • Timeliness.
When user defined models (e.g. spreadsheets) are used for supporting the RM Framework, the ‘a.s.r. Standard for End user computing’- in addition of the general security policy - defines and describes best practices in order to guard the reliability and confidentiality of these tools and models. a.s.r. recognises the importance of sound data quality and information management systems. End 2018 a.s.r. finished the project to further enhance the measurement and reporting on data quality for the purposes of financial reporting. The management of IT and data risks of the implemented tools, models and systems (including data) is part of the Operational IT risk management.
7.8.1.1.4 Risk policies and procedures a.s.r. has established guidelines, including policies that cover all main risk categories (market, counterparty default, liquidity, underwriting, strategic and operational). These policies address the accountabilities and responsibilities regarding management of the different risk types. Furthermore, the methodology for risk measurement is included in the policies. The content of the policies is aligned to create a consistent and complete set. The risk policy landscape is maintained by Group Risk Management and Compliance. These departments also monitor the proper implementation of the policies in the business. New risk policies or updates of existing risk policies are approved by the risk committees as mentioned previously.
Monitoring and reporting The risk identification process is not a continuous exercise. Therefore, risk monitoring and reporting are required to capture changes in environments and conditions. This also means that risk management strategies could, or perhaps should, be adapted in accordance with risk appetite tolerance levels and limits.
Market risk The risk of changes in values caused by market prices or volatility of market prices differing from their expected values. The following types of market risk are distinguished: • Interest rate risk • Equity risk • Property risk • Spread risk • Currency risk • Concentration risk/market concentration risk
Strategic risk Strategic risk is the risk of a.s.r. or its business lines failing to achieve the objectives due to incorrect decision-making, incorrect implementation and/or an inadequate response to changes in the environment. Such changes may arise in the following areas: • Climate • Demographics • Competitive conditions • Technology • Macroeconomic conditions • Laws and regulations and ethical standards • Stakeholders • Group structure (for product lines only)
Financial statements 2018 | 7.8 Risk management 249 7.8.2 Insurance risk
The solvency buffer is held by a.s.r. to cover the risk that claims may exceed the available insurance provisions and to ensure its solidity. The solvency position of a.s.r. is determined and continuously monitored in order to assess if a.s.r. meets the regulatory requirements.
The insurance risk increased as a result of the lowering of the mass lapse cover, refinement of the calculation of the Health risk, the uniformation of the Generali Nederland assumptions and the portfolio development at Non-life.
Solvency II sensitivities a.s.r. has assessed the impact of various sensitivities on the solvency ratio. The sensitivities as at 31 December 2017 and 2018, expressed as impact on the group solvency ratio (in percentage points) are as follows: Solvency II sensitivities - insurance risks
Type of risk (%-points) 31 December 2018 31 December 2017 31 December 2018 31 December 2017 31 December 2018 31 December 2017
Expense risk Measured as the impact of a 10% decrease in expense levels. Mortality risk Measured as the impact of a 5% decrease in all mortality rates. A mitigating effect will occur between mortality and longevity rates.
7.8.2.1 Life Insurance risk The life portfolio can be divided into funeral, individual life and group pension. The insurance contracts are sold primarily to retail and wholesale clients through intermediaries.
Longevity risk Longevity risk is associated with (re)insurance obligations where payments are made until the death of the policyholder and where a decrease in mortality rates results in higher technical provisions. The required capital is calculated as the change in own funds of a permanent decrease of mortality rates by 20%. The decrease in mortality rates is applied to portfolio’s where payments are contingent on longevity risk.
Disability-morbidity risk Morbidity or disability risk is associated with all types of insurance compensating or reimbursing losses (e.g. loss of income, adverse changes in the best estimate of the liabilities) caused by changes in the morbidity or disability rates. The scenario analysis consists of a 35% increase in disability rates for the first year, 25% for subsequent years, combined with a decrease in revalidation rates of 20%.
The required capital for a mass lapse event is reduced by the proceeds that are to be expected from a reinsurance arrangement (Mass Lapse Cover). This arrangement covers the risks of a mass lapse event of parts of the portfolio to the extent that the mass lapse is more than 20% and less than 40%. Especially in the case of funeral policies the netting of positive and negative risks within model points can be considerable for policies that can be surrendered (completely ending the policy, with payment of surrender value) in the case of the mass lapse. In most cases, the shock scenario for determining the SCR for mass lapse for funeral policies consists of an immediate shock of 40% with respect to the continuation of premium payment (mass ‘pup’-scenario). This is mostly in line with policy conditions. The mass pup treatment in the funeral portfolio for mass lapse risk reduces the netting of positive and negative risks to a level that is not material.
Employee benefits ASR Nederland N.V. has insured the post-employment benefit plans for a.s.r.’s employees with ASR Levensverzekering N.V., an insurance company within the group. Though the liability of this plan is classified as employee benefits on the balance sheet and determined according to IFRS principles, the required capitals for the life insurance risks are fully taken into account and based on Solvency II principles. The risk margin at a.s.r. group level equals the sum of risk margins of all underlying OTSO’s. No correction is made for the elimination of post-employment benefit plans for a.s.r.’s employees with ASR Levensverzekering N.V.
Other information Within a.s.r. life the longevity risk is dominant and arises from group pension business and individual annuities. The longevity risk is partly offset by mortality risk that arises from the funeral portfolio and individual policies with mortality risk. The other main risks a.s.r. life is exposed to are expense risk and lapse risk, though lapse risk is reduced due to the aforementioned Mass Lapse reinsurance arrangement. Below table summarises the required capital for abovementioned life insurance risks based on the standard model.
7.8.2.1.1 Managing life insurance risk Life insurance risk is mitigated by pricing, underwriting policies and reinsurance.
Mass lapse cover The required capital (SCR) for a mass lapse event is reduced by the proceeds that are to be expected from a reinsurance arrangement (Mass Lapse Cover) with RGA, Munich Re and some other reinsurers. This arrangement covers the risks of a mass lapse event of parts of the portfolio to the extent that the mass lapse is more than 20% and less than 40%. The mass lapse cover will be gradually terminated in 2 years starting from Q4 2018.
Financial statements 2018 | 7.8 Risk management 253 7.8.2.2 Health Insurance risk and non-life insurance risk 7.8.2.2.1 Health insurance risk The Health insurance portfolio of a.s.r. is diverse. The portfolio can be divided into two main product types: • SLT Health portfolio (Similar to Life Techniques) Income Protection, which can be divided into - Individual Disability (Zelfstandigen) - Group Disability (WIA)
• NSLT Health risk - This risk is applicable to the NSLT Health portfolio. The calculation is factor-based. The risk is calculated similarly to the Non-life insurance risk.
SLT Health Risk Longevity risk Longevity risk is associated with (re)insurance obligations where payments are made until the death of the policyholder and where a decrease in mortality rates results in higher technical provisions. The required capital is calculated as the change in own funds of a permanent 20% decrease in mortality rates. The decrease in mortality rates is applied to portfolios where payments are contingent on longevity risk.
NSLT Health Risk Premium and reserve risk The premium risk is the risk that the premium is not adequate for the underwritten risk. The premium risk is calculated over the maximum of the expected earned premium of the next year, and the earned premium of the current year.
Health catastrophe risk Medical Expense A health catastrophe for NSLT Health portfolio is an unexpected future event with a duration of one year. The risk is determined ultimo year. The amount of catastrophe risk is apparent from the number of insured and parameters for mass accident scenario and pandemic scenario that have been approved by Dutch Central Bank in consultation with Health Insurers Netherlands. Accident concentration is not applicable for NSLT Health. The catastrophe risk has a projection of one year (T) following from the contract boundary of one year in accordance with the Dutch Health Insurance Act. After year T the risk is ‘zero’. Catastrophe risk for AV equals zero because these contracts have a maximum compensation for claims.
Mass accident scenario In this scenario, an accident takes place during a major public event. The risk is that 10% of the attendees are killed, 1.5% are permanently disabled, 5% are disabled for 10 years, 13.5% are disabled for 12 months and 30% need medical attention.
Premium- and reserve risk The premium risk is the risk that the premium is not adequate for the underwritten risk. The premium risk is calculated over the maximum of the expected written premium for the next year, and the written premium for the current year. The Premium and reserve risk is derived at the level of a legal entity based on the Standard Model. For the calculation of the Premium and reserve risk, several input data and parameters are necessary, as described in the Standard Model. The geographical spread, when a (re)insurer underwrites products in different countries, is not relevant for a.s.r. non-life as there is no material exposure outside the Netherlands.
Non-life Catastrophe Risk Module Catastrophe risk is defined as the risk of loss or adverse change in the value of insurance liabilities, resulting from significant uncertainty of pricing and provisioning assumptions related to extreme or exceptional events. The Non-life SCR Catastrophic Risk Module used consists of natural catastrophe risk (Windstorm and Hail), man-made catastrophe risk (Fire, Motor and Liability) and other Non-life catastrophe risk. The Non-life Catastrophe Risk Module is derived at the level of a legal entity based on the Standard Model.
• Effect of continuous fixed costs is not taken into account.
For the non-life portfolio, the provision at year-end 2018 can be broken down as follows under Solvency II: Non-life portfolio - technical provisions per segment
Technical provision 1,306 885 7.8.2.2.3 Managing health and non-life insurance risk Health and Non-life insurance risk is managed by monitoring claims frequency, the size of claims, inflation, handling time, benefit and claims handling costs, and biometrical risks (disability, recovery, illness, death). Concentration risk also qualifies as an insurance risk.
By determining the retention, the impact on the statement of financial position is taken into account as well. The difference in the retention of disability depends on the structure of the contract (basic coverage or indexed).
A summary of sensitivities to market risks for the regulatory solvency, total equity and profit for the year is presented in the tables below. The first table summarises the required capital for market risks based on the standard model: Market risk - required capital
The main market risks of a.s.r. are spread, property and equity risk. This is in line with the risk budgets based on the strategic asset allocation study. Market risk decreased mainly driven by an adjustment of the interest rate hedge within current hedging policy bandwidth and lower equity risk due to fallen stock prices.
The value of investment funds at year-end 2018 was € 3,650 million (2017 € 3,250 million). a.s.r. applies the look-through approach for investment funds to assess the market risk.
Solvency II sensitivities The sensitivities of the solvency ratio as at 31 December 2018, expressed as the impact on the group solvency ratio (in percentage points) are as presented in the table below. The total impact is split between the impact on the solvency ratio related to movement in the available capital and the required capital.
4.2%/4.05%) Measured as the impact of a parallel 1% upward and downward movement of the interest rates. For the liabilities, the extrapolation to the UFR (4.05% for 2018 and 4.2% for 2017) after the last liquid point of 20 years remained unchanged.
At the same time, it is assumed that the Volatility Adjustment will increase by 20bps (2017 was 21 bps) based on reference portfolio.
The Solvency II sensitivities stayed almost the same in the past year, except for the interest rate sensitivity and credit spread sensitivity. The decrease of the interest rate sensitivity from +11 to +7 in the upward scenario (and from -10 to -5 in the downward scenario) is mainly caused by a change in the interest rate hedge policy. The increase of the credit spread sensitivity from +14 to +21 is caused due to the fact that the interest rate up becomes dominant in this scenario. This led to a bigger diversification in the market risk module and therefore to a bigger impact of the SCR on the ratio.
The sensitivities of total equity to equities decreased in 2018 in line with the decreased exposure to equities. The
Financial statements 2018 | 7.8 Risk management 259 sensitivity of profit in the equity down scenario is due to the impact of the put options and impairments of shares. The sensitivity of profit in the equity up scenario is due to the impact of the put options.
7.8.3.1 Interest rate risk Interest rate risk is the risk that the value of assets, liabilities or financial instruments will change due to fluctuations in interest rates. Many insurance products are exposed to interest rate risk; the value of the products is closely related to the applicable interest rate curve. The interest rate risk of insurance products depends on the term to maturity, interest rate guarantees and profit-sharing features. Life insurance contracts are particularly sensitive to interest rate risk. The required capital for interest rate risk is determined by calculating the impact on the available capital due to changes in the yield curve. Both assets and liabilities are taken into account. The interest rate risk is the maximum loss of (i) an upward shock or (ii) a downward shock of the yield curve according to the prescribed methodology. a.s.r. applies a look- through approach for investment funds to assess the interest rate risk.
SCR interest rate risk 238 428 a.s.r. has assessed various scenarios to determine the sensitivity to interest rate risk. The impact on the solvency ratio is calculated by determining the difference in the change in available and required capital.
Interest rate risk is managed by aligning fixed-income investments to the profile of the liabilities. Among other instruments, swaptions and interest rate swaps are used for hedging the specific interest rate risk arising from interest rate guarantees and profit sharing features in life insurance products.
An interest rate risk policy is in place for the Group as well as for the registered insurance companies. All interest rate- sensitive balance sheet items are in scope, including the employee benefit obligations of the Group. In principle, the
Financial statements 2018 | 7.8 Risk management 260 sensitivity of the solvency ratio to interest rates is minimised. In addition, the exposure to interest rate risk or various term buckets is subject to maximum amounts.
7.8.3.2 Equity risk The equity risk depends on the total exposure to equities. In order to maintain a good understanding of the actual equity risk, a.s.r. applies the look-through approach for investment funds to assess the equity risk. The required capital for equity risk is determined by calculating the impact on the available capital due to an immediate drop in share prices. Both assets and liabilities are taken into account. Stocks listed in regulated markets in countries in the EEA or OECD are shocked by 39% together with the symmetric adjustment of the equity capital charge (type I). Stocks in countries that are not members of the EEA or OECD, unlisted equities, alternative investments, or investment funds in which the look-through principle is not possible, are shocked by 49% together with the symmetric adjustment of the equity capital charge (type II).
a.s.r. applies the transitional measure for equity risk for shares in portfolio at 31 December 2015. The SCR equity shock was 22% at 31 December 2015 and linear increasing in 7 years to (i) 39% + equity dampener for type I shares and (ii) 49% + equity dampener for type II shares. This resulted in a reduction of the average risk charge of equity risk of about 4.4% per 31 December 2018.
The 2018 the equity risk decreased mainly due to a smaller equity portfolio as a result of the drop of share prices. Besides the smaller equity portfolio also the average risk charge on balance decreased as a result of the downward effect of the equity dampener.
The table below shows the exposure of the equity portfolio to sectors. The total value is including the equities in externally managed funds.
Composition equity portfolio 7.8.3.3 Property risk The property risk depends on the total exposure to real estate. In order to maintain a good understanding of the actual property risk, a.s.r. applies the look-through approach for investment funds to assess the property risk. The required capital for property risk is determined by calculating the impact on the available capital due to an immediate drop in property prices by 25%. Both assets and liabilities are taken into account.
Currency risk has decreased 37.5 million. This is mainly caused by a decrease in foreign stocks and bonds in externally managed funds.
Specification currencies with largest exposure Foreign stocks and bonds in externally managed funds have substantially decreased in the following currencies: USD, AUD, ZAR, GBP. The AUD liabilities have substantially increased, which results in a negative AUD net exposure as per 31 december 2018. This is against the hedge policy of a.s.r. and therefore this is resolved as per january 2019 by increasing the asset exposure of a.s.r.
Scenario (%-point) 31 December 2018 31 December 2017 31 December 2018 31 December 2017 31 December 2018 31 December 2017
The total exposure of assets in scope of spread risk is €25,236 million (2017: €23,431 million). The increase of the portfolio is mainly due to the acquisition of Generali Nederland. The portfolio decomposition is similar to 2017, except: • The amount of core government bonds decreased and the amount of non-core government bonds decreased; • The amount of AAA decreased and the amount of AA increased.
Composition fixed income portfolio by rating 7.8.3.6 Market risk concentrations Concentrations of market risk constitute an additional risk to an insurer. Concentration risk is the concentration of exposures to the same counterparty. Other possible concentrations (region, country, etc.) are not in scope. The capital requirement for concentration risk is determined in three steps: 1. Determine the exposure above threshold. The threshold depends on the credit quality of the counterparty; 2. Calculation of the capital requirement for each counterparty, based on a specified factor depending on the credit quality; 3. Aggregation of individual capital requirements for the various counterparties.
Financial statements 2018 | 7.8 Risk management 265 7.8.4 Counterparty default risk
Counterparty default risk reflects possible losses due to unexpected default or deterioration in the credit standing of counterparties and debtors. Counterparty default risk affects several types of assets: • Mortgages; • Savings-linked mortgage loans; • Derivatives; • Reinsurance; • Receivables; • Cash and deposits.
The default percentage (i.e. the percentage of mortgages which is in arrears for over three months) has decreased from 0,21% in December 2017 to 0,10% in December 2018. This drop is a consequence of the improved economic circumstances and of the organisation of preventive management, whereby the flow of short-term arrears to longer delays could be reduced.
7.8.4.2 Savings-linked mortgage loans The counterparty default risk of the savings-linked mortgage loans (‘Spaarlossen’) depends on the counterparty. For 45% of the portfolio, the counterparties are Special Purpose Vehicles. The risk is limited due to the robust quality of the mortgages in the Special Purpose Vehicles in combination with the tranching. a.s.r. has a cession-retrocession agreement with the counterparty for 50% of the portfolio, for which the risk is limited. Effectively, a.s.r. receives the underlying mortgage loans as collateral, mitigating the counterparty default risk of the savings-linked mortgage loans. 2017 has been restated.
a.s.r. recognises different levels of liquidity management. Short-term liquidity, or daily cash management, covers the day-to-day cash requirements under normal business conditions and targets funding liquidity risk. Long-term liquiditymanagement considers business conditions in which market liquidity risk materialises. Stress liquidity management looks at the ability to respond to a potential crisis situation as a result of a market event and an a.s.r.-specific event. Unexpected cash outflows could occur as result of lapses in the insurance portfolio, savings withdrawals or cash variation margin payments related to the ISDA/CSA agreements of derivatives. a.s.r. monitors its liquidity risk scenarios via different risk reporting and monitoring processes including daily cash management reports, cash flow forecasts and stress scenario liquidity reports.
In managing the liquidity risk from financial liabilities, a.s.r. holds liquid assets comprising cash and cash equivalents and investment grade securities for which there is an active and liquid market. These assets can be readily sold to meet liquidity requirements. As at 31 December 2018, a.s.r. had cash (€ 2,525 million), short-term deposits (€ 1,469 million), liquid government bonds (€ 11,929 million) and other bonds and shares. Furthermore a.s.r. has access to multiple committed cash facilities in order to meet its liquidity needs in times of stress.
The following table shows the contractual cash flows of liabilities (excluding insurance contracts on behalf of policyholders) broken down in four categories. For liabilities arising from insurance contracts, expected lapses and mortality risk are taken into account. Profit-sharing cash flow of insurance contracts is not taken into account, nor are equities, property and swaptions.
• Expected cash flows based on assumptions made at year end 2018.
The change in derivatives can be explained by the large amount of transactions in the past year and the fact that only a small part of the total derivatives portfolio is in scope here.
The SCR for operational risk amounts to € 212 million at the end of 2018 (2017: € 184 million) and is determined with the standard formula under Solvency II. The operational risk is based on the basic solvency capital requirement, the volumes of premiums and technical provisions, and the amount of expenses. Operational risk increased mainly due to the acquisition of Generali Netherlands.
Through a combined top-down and bottom-up SRA (Strategic Risk Analysis) approach, the most important strategic risks are identified. After the analysis a list of risk priorities is established and risk management actions are assigned. The progress of these actions is monitored in the a.s.r. Risk Committee.
Financial statements 2018 | 7.8 Risk management 269 7.8.7.1 Strategic risk management Strategic risk management aims to identify and manage the most significant risks that may impact a.s.r.’s strategic objectives. Subsequently, the aim is to identify and analyse the risk profile as a whole, including risk interdependencies. The ORSA process is designed to identify, measure, manage and evaluate those risks that are of strategic importance to a.s.r.: Identifying Through the ORSA process, identification of risks is structurally organised through the combined top-down and bottom-up SRA approach. The SRA outcomes are jointly translated into risk scenarios and ‘risk priorities’, in which the most significant risks for a.s.r. are represented.
Evaluating Insights regarding likelihood and impact are evaluated against solvency targets. Based on this evaluation, conclusions are formulated regarding the adequacy of solvency objectives at group and individual legal entity level.
Identifying With the operational targets as a starting point, each business entity performs risk assessments to identify events that could influence these targets. In each business entity the business risk manager facilitates the periodic identification of the key operational risks. All business processes are taken into account to identify the risks. All identified risks are prioritised and recorded in a risk-control framework.
The risk policies prescribe specific risk analyses to be performed to identify and analyse the risks. For important IT systems, SPRINT (Simplified Process for Risk Identification) analyses have to be performed and for large outsourcing projects a specific risk analysis is required.
Measuring All risks in the risk-control frameworks are assessed on likelihood of defaults and impact. Where applicable, the variables are quantified, but often judgments of subject matter experts are required. Based on the estimation of the variables, each risk is labelled with a specific level of concern (1 to 4). Risks with a level of concern 3 or 4 are considered ‘key’.
1 For example, the SAA-study, analyses in the context of reinsurance renewals, ad hoc sensitivity analyses and/or stress tests.
ICT Through IT risk management, a.s.r. devotes attention to the efficiency, effectiveness and integrity of ICT, including End User Computing applications. The logical access control for key applications used in the financial reporting process remains a high priority in order to enhance the integrity of applications of data. The logical access control procedures also prevent fraud by improving segregation of duties and by conducting regular checks of actual access levels within the applications. Proper understanding of information, security and cyber risks is essential, reason for which continuous actions are carried out to create awareness among employees and business lines.
Each business line has their own crisis team led by the director of the management team. The continuity of activities and the recovery systems supporting critical activities are regularly tested and crisis teams are trained annually. The objective of the training is to give the teams insights into how they function during emergencies and to help them perform their duties more effectively during such situations. The training also sets out to clarify the roles, duties and responsibilities of the crisis teams. One important training scenario used is a scenario that includes cyber threats.
Recovery Planning a.s.r.’s Recovery Plan helps to be prepared and have the capacity to act in various forms of extreme financial stress. The Recovery Plan describes and quantifies the measures that can be applied to live through a crisis situation. These measures are tested in the scenario analysis, in which the effects of each recovery measure on a.s.r.’s financial position (solvency and liquidity) are quantified. The required preparations for implementing the measures, their implementation time and effectiveness, potential obstacles and operational effects are also assessed. The main purpose of the Recovery Plan is to increase the chances of successful early intervention in the event of a financial crisis situation and to further guarantee that the interest of policyholders and other stakeholders are protected.
Financial statements 2018 | 7.9 Capital management 271 7.9 Capital management
The solvency ratio stood at 197% as at 31 December 2018 after distribution of the proposed dividend and is based on the standard formula as a result of € 6,924 eligible own funds and € 3,523 million SCR.
Management Overall capital management is administered at group level. a.s.r. currently plans to consider investing capital above the Solvency II ratio (calculated based on the standard formula) of 160% (management threshold level) with the objective of creating value for its shareholders. If and when a.s.r. operates at a level considerably above the management threshold level and it believes that it cannot invest this capital in value-creating opportunities for a prolonged period of time, it may decide to return (part of this) capital to shareholders. If a.s.r. chooses to return capital, it plans to do so in a form that is efficient for shareholders at that time. a.s.r. actively manages its in-force business, which is expected to result in free capital generation over time. Additionally, business improvement and balance sheet restructuring should improve the capital generation capacity while advancing the risk profile of the company. The legal entities are individually capitalised and excess capital over management’s targets for the legal entities is intended to be up-streamed to the holding company as far as is needed for amongst others covering external dividend, coupon payments on hybrids/senior financing instruments and holding costs and in so far the local regulations and the internal risk appetite statement allow.
Objectives The group is committed to maintain a strong capital position in order to be a robust and sustainable insurer for its policyholders and other stakeholders. The objective is to maintain a solvency ratio well above the minimum levels as defined in the risk appetite statements and above the relevant management threshold levels. Sensitivities are periodically performed for principal risks and annual stress tests are performed to test a.s.r.’s robustness to withstand moderate to severe scenarios. An additional objective is to achieve a combination of a capital position and a risk profile that is at least in line with a ‘single A’ rating by Standard & Poor’s.
In accordance with a.s.r.’s dividend policy, the liquidity of the underlying entities is not taken into account for the liquidity position of the group. However, the capital is recognised in the capital position of the group, since a.s.r. has the ability to realise the capital of this OTSO, for example by selling the entity. Specifically regarding ASR Basis Ziektekostenverzekeringen N.V. in 2018, no dividend or capital withdrawals have taken place.
The table below shows how the eligible own funds of a.s.r. relate to the different capital targets.
The required capital stood at € 3,523 million per 31 December 2018 (2017: € 3,479 million). The required capital (before diversification) consists for 2018 € 2,584 million out of market risk and the insurance risk amounted to € 2,724 million as per 31 December 2018.
a.s.r. (including financial institutions) complied during 2018 with the applicable externally imposed capital requirement. The table below presents the solvency ratio at group level as at the date indicated.
The Solvency II ratio stood at 197% (excluding financial institutions) as at 31 December 2018 (2017: 196%). The Solvency II ratio including financial institutions stood at 195% as at 31 December 2018 (2017: 195%).
The group has formulated its dividend policy in line with its current strategy. a.s.r. group intends to pay an annual dividend that creates sustainable long-term value for its shareholders. a.s.r. group aims to operate at a solvency ratio, calculated according to the standard formula, above a management threshold level. This management threshold level is currently defined as above 160% of the Solvency Capital Requirement (‘SCR’). In general, it expects to not pay cash dividends if the group level solvency ratio (calculated according to the standard formula) falls below 140%. a.s.r. group currently intends to consider investing capital above the solvency ratio (calculated according to the standard formula) of 160% with the objective of creating value for its shareholders. If and when a.s.r. group operates at a certain level safely above the 160% (not driven by non-economic developments), and a.s.r. group assesses that it cannot invest this capital in value creating opportunities for a prolonged period of time, a.s.r. group may decide to return (part of this) capital to shareholders. If a.s.r. group elects to return capital, it intends to do so in the form that is efficient for shareholders at that time. a.s.r. intends to pay € 245 million dividends over full year 2018 (including interim dividend). As from 2018, a.s.r. pays an interim dividend.
The numbers following the line items refer to the relevant chapters in the notes to the company financial statements.
7.10.3 Notes to the company financial statements 7.10.3.1 Accounting policies The company financial statements are prepared in accordance with Title 9, Book 2 of the Dutch Civil Code. The consolidated financial statements of a.s.r. for 2018 have been prepared in accordance with IFRS – including the International Accounting Standards (IAS) and Interpretations – as accepted within the European Union and with part 9 of the book of the Dutch Civil Code. In accordance with Section 362(8), Book 2 of the Dutch Civil Code, the ASR Nederland N.V. Executive Board has decided to apply the same accounting policies to the company financial statements as applied to the consolidated financial statements. This has been the practice since 2005.
New standards, interpretations of existing standards or amendments to standards, not yet effective in 2018 IFRS 16 Leases IFRS 16 is effective for annual periods beginning on or after 1 January 2019. IFRS 16 replaces IAS 17, the existing standard on leases. Under the new lease standard the current operating lease accounting (where a.s.r. is the lessee) will change, introducing a right-of-use asset and lease liability.
a.s.r. will implement IFRS 16 by applying the modified retrospective method, meaning that the 2018 comparative figures in the 2019 financial statements will not be restated to show the impact of IFRS 16. The standard will result in an increase in balance total of approximately € 220 million and is not expected to have a significant impact on equity or result of the company financial statements of a.s.r.
Financial statements 2018 | 7.10 Company financial statements 277 7.10.3.3 Subsidiaries On 5 February 2018, the closing for the transaction of Generali Nederland took place. As a result, a.s.r. fully included the results and the balance sheet positions in the a.s.r. financial statements from that date. As of 8 May 2018 the legal merger of ASR Utrecht N.V. (formerly named Generali Nederland N.V.) with ASR Nederland N.V. was effective. Since ASR Nederland N.V. already owned 100% of the shares of Generali Nederland, this merger has no financial impact on the company financial statements of ASR Nederland N.V.
The loans to group companies consist primarily of deposits with group companies of € 61 million (2017: € 70 million) with an average interest rate of 1.8% (2017: 1.8%) repayable within one year, no loans with a maturity term within 3 years (2017: nil) and loans of € 22 million (2017: € 18 million) with a maturity term longer than 3 years and an average interest rate of 3.7% (2017: 4.0%). Interest income on loans to group companies amount to nil (2017: € 1 million).
Change in reserves required by law - - 430 -429 - - - -
Change in reserves required by law - - - -258 258 - - - -
Discretionary interest on other equity instruments - - - - -45 - -45 - -45
Tax relating to interest on other equity instruments - - - - 11 - 11 - 11
Share capital For a breakdown of the share capital, see chapter 7.5.12.1.
Other equity instruments The other equity instruments relate to four (2017: four) different hybrid Tier 1 and Tier 2 instruments classified as equity (see chapter 7.5.12.5). Of the four different equity instruments that were issued, two instruments (issue date 2009) are guaranteed by ASR Levensverzekering N.V. The third instrument (issue date 2014), which features a perpetual non call 10 year restricted Tier 2 capital instrument, does not contain guarantees from operating entities. In 2017, a.s.r. issues the first continental European Solvency II-compliant and Euro denominated Restricted Tier 1 issue. The issue features a perpetual non-call 10 year restricted Tier 1 contingent convertible capital instrument (see chapter 7.5.12.5) and does not contain guarantees from operating entities.
a.s.r.’s Distributable Items is an amount equal to (with respect to and as at any Interest Payment Date, without doublecounting ): (i) The retained earnings and the distributable reserves of a.s.r., calculated on an unconsolidated basis, as at the last calendar day of the then most recently ended financial year of a.s.r.; plus (ii) The profit for the period (if any) of a.s.r., calculated on an unconsolidated basis, for the period from a.s.r.’s then latest financial year end to (but excluding) such Interest Payment Date; less (iii) The loss for the period (if any) of a.s.r., calculated on an unconsolidated basis, for the period from a.s.r.’s then latest financial year end to (but excluding) such Interest Payment Date, each as defined under national law, or in the articles of association of a.s.r.
Distributable items 2,936 3,090 7.10.3.10 Employee benefits Employee benefits can be broken down as follows (see chapter 7.5.15): Employee benefits
Provisions primarily relate to provisions for staff restructuring and retained disability risk. The timing of the outflow of resources related to these provisions is uncertain because of the unpredictability of the outcome and time required for the settlement of disputes.
An amount of € 13 million of the provisions is expected to fall due within one year (2017: € 11 million).
Financial statements 2018 | 7.10 Company financial statements 280 7.10.3.12 Subordinated liabilities Subordinated liabilities can be broken down as follows (see chapter 7.5.13 for further details).
There is no significant difference between the carrying amount of € 39 million (2017: nil) debt to group companies and the fair value of these liabilities.
7.10.3.18 Auditor’s fees With reference to Section 2:382a(1) and (2) of the Dutch Civil Code, the following fees for the financial years have been charged by EY Accountants LLP to the Company, its subsidiaries and other consolidated entities. • Fees for audit engagements: these include fees paid for the audit of the consolidated and company financial statements, quarterly reports and other reports.
In the above mentioned years no fees were paid for tax-related advisory services to EY Accountants LLP and no fees were paid to other EY networks, other than EY Accountants LLP.
A statement of joint and several liability under section 403, Book 2 of the Dutch Civil Code has been issued by ASR Nederland N.V. for the companies identified in chapter 7.7.8 List of principal group companies and associates.
Investment obligations and guarantees ASR Nederland N.V. has issued guarantees to third parties for a total amount of nil (2017: € 120 million) for real estate development projects.
Lease commitments For the table with the breakdown of the commitments for non-cancellable operating leases, see chapter 7.7.6.
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8.1 Report on the audit of the financial statements 2018 included in the annual report
Report on the audit of the financial statements 2018 included in the annual report
Our opinion We have audited the financial statements for the year ended 31 December 2018 of ASR Nederland N.V., based in Utrecht, the Netherlands.
In our opinion: • The accompanying consolidated financial statements give a true and fair view of the financial position of ASR Nederland N.V. as at 31 December 2018, and of its result and its cash flows for 2018 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code; • The accompanying company financial statements give a true and fair view of the financial position of ASR Nederland N.V. as at 31 December 2018, and of its result for 2018 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
The consolidated financial statements comprise: • The consolidated balance sheet as at 31 December 2018; • The following statements for 2018: the consolidated income statement, the consolidated statements of comprehensive income, changes in equity and cash flows; and
The company financial statements comprise: • The company balance sheet as at 31 December 2018; • The company income statement for 2018; and • The notes comprising a summary of the accounting policies and other explanatory information.
Explanation Operating Result is based on the profit before tax adjusted for investment related income for own account of an incidental nature and incidentals. Using Operating Result helps to maintain an appropriate materiality level giving more consideration to the users’ view of the scale of the financial position and operations rather than volatile circumstances. For ASR Nederland
Change compared to last year No change in the materiality compared to last year.
We agreed with the supervisory board that misstatements in excess of € 1.8 million, which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit ASR Nederland N.V. is at the head of a group of entities, including the principal subsidiaries as set out in note 7.7.8 of the annual accounts. The financial information of this group is included in the consolidated financial statements of ASR Nederland N.V.
Assets Equity Operational resultWe provided detailed instructions to each component team including areas of audit emphasis. We also executed oversight procedures and engaged in regular communication to confirm that the audit progress and findings for each of the in-scope locations were discussed between the group audit team and the component teams.
Our key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements. We have communicated the key audit matters to the supervisory board. The key audit matters are not a comprehensive reflection of all matters discussed.
Compared to our independent auditor’s report 2017, we made the following change to our key audit matters: • We added a new key audit matter related to the reclassification of ASR Bank N.V. as held for sale and discontinued operation, since this has a significant impact on the classification and measurement of component ASR Bank N.V. in the consolidated financial statements of ASR Nederland N.V.
Risk ASR Nederland N.V. has insurance contract liabilities of € 43.5 billion representing 81% of its total liabilities.
Shadow accounting is complex, requires judgment regarding results that apply for shadow accounting and has a significant impact on the liabilities arising from insurance contracts. The company has comprehensive procedures and internal controls in place to determine the shadow accounting.
Key observations Based on our audit procedures performed, we consider the methods used for the valuation of the insurance contract liabilities appropriate.
We determined that the company applied shadow accounting (including the accounting for realised results) in accordance with their accounting policy and consistent with previous years.
The company has comprehensive procedures and internal controls in place to determine the valuation of the non-listed investments and related disclosures.
Furthermore, we assessed and tested the design and operating effectiveness of the controls over related disclosures including the disclosures in note 7.7.1.
Key observations Based on our audit procedures performed, we consider that the Solvency II information disclosed in the capital management section of the annual accounts (note 7.9), sufficiently reflects the valuation and riskbased capital requirements of the Solvency II regulatory framework and the capital management disclosure requirements of EU-IFRS.
Risk In the second half of 2018 ASR Nederland N.V. finalised its Purchase Price Allocation (PPA) regarding its acquisition of Generali Nederland N.V. as per 5 February 2018, in accordance with IFRS 3 Business
Combinations. The final consideration for the Generali Nederland N.V. acquisition was € 153 million.
We have assessed the expertise of the third-party expert. Furthermore, we deployed a specialist team to audit the PPA. Our team included valuation specialists who have extensive experience in the valuation of investments and insurance liabilities.
Our procedures focused primarily on the risks relating to the valuation model, assumptions and judgments associated with the estimation of the fair value measurements. These included amongst others: • Gaining an understanding through enquiry and review of the valuation methodology adopted by
Key observations Based on or audit procedures performed, we determined that management applied a reasonable approach in determining the PPA of Generali Nederland N.V. ‘s assets acquired and liabilities assumed, and resulting amount of goodwill recognised.
Other information | 8.1 Report on the audit of the financial statements 2018 included in the annual report 289
Classification ASR Bank N.V. as held for sale and discontinued operation
As result of the classification held for sale, the component ASR Bank N.V. is presented in the balance sheet on single line items as assets respectively liabilities related to assets held for sale. Furthermore, due to the classification of discontinued operation, the result of the component ASR Bank N.V. is presented in the consolidated income statement in a single amount as profit or loss from discontinued operations.
Additionally, IFRS 5 requires an entity to measure a non current asset (or disposal group) classified as held for sale at the lower of its carrying amount and fair value less costs to sell. As a consequence, an impairment is taken by a.s.r. since the fair value less cost to sell of ASR Bank N.V. is determined to be lower than the carrying amount. Refer to Note 7.4.6. Discontinued operations and assets held for sale and related liabilities.
Since IFRS 5 requirements are complex, and the fair value determination of ASR Bank N.V involves judgment, we identified this as a key audit matter.
In addition, we consider the impairment on ASR Bank N.V. within a reasonable range.
Nederland N.V. have been added in 2018 to the IT infrastructure of ASR Nederland N.V.
Other information | 8.1 Report on the audit of the financial statements 2018 included in the annual report 290
Key observations Based on the combination of the tests of controls and IT substantive procedures performed, we obtained sufficient appropriate audit evidence for the purposes of our audit.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements.
Engagement Following the appointment by the annual general meeting of shareholders on 16 April 2015, we were engaged by the supervisory board on 31 March 2016 as auditor of ASR Nederland N.V. as of the audit for the year 2016 and have operated as statutory auditor since that date.
The supervisory board is responsible for overseeing the company’s financial reporting process.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or specific items.
Articles 35, 36 and 37 of the Articles of Association: Distributions – General Article 35 35.1 A distribution can only be made to the extent that the Company’s equity exceeds the Non-Distributable Equity.
35.8 A distribution shall be payable no later than thirty days after the date on which such distribution was declared, unless the Executive Board sets a different date. If it concerns a distribution in cash, such distribution shall be payable in such currency as determined by the Executive Board.
Distributions – Reserves Article 36 36.1 All reserves maintained by the Company shall be attached exclusively to the ordinary shares. The Company shall not attach any reserve to the preferred shares.
37.3 Without prejudice to Article 35.1, a distribution of profits shall be made only after the adoption of the annual accounts that show that such distribution is allowed.
‘As Director of Claims, I’m especially drawn to this poster which was made for the insurance company Holland-Dordt van 1859. For the designer, the golden disk symbolised ownership. The piece that has been broken out of it calls to mind a sudden calamity, and the red sweeping lines, which suggest a fall, accentuate the sense of catastrophe. The piece of gold which flies down to plug the broken gap symbolises the insurance company coming in to repair the damage that has been sustained.’
Ultimately after the Foundation has held preference shares for a period of 20 months (or for such longer period as the
Foundation deems appropriate given the facts and circumstances at hand), the Foundation may request, by means of a notice to that effect, that a.s.r. consider submitting, as soon as practicable, a proposal to the General Meeting for a resolution to cancel all preference shares. a.s.r. is free to propose such a resolution without this being requested by the Foundation if non-cancellation of the preference shares in a timely manner were to result in the Foundation being required to make a mandatory public offer in respect of a.s.r. In addition, if and when a.s.r. has issued preference shares to the Foundation, a.s.r. will convene a General Meeting, to be held within 20 months following such issuance, for the purpose of adopting a resolution on the cancellation of all such preference shares.
Report of Stichting Continuïteit ASR Nederland | 9.1 Report of Stichting Continuïteit ASR Nederland 299
Object Anniversary presentation volume Let op Uw Einde, ‘To the Managing Board of Let op uw Einde’, 6 December 1847-1872 Made by Let op Uw Einde
‘This book dates from 1872 and was a gift from the staff to the Managing Board of Let op Uw Einde, one of the legal precursors of a.s.r. It’s so beautifully made, with its velvet end-boards and silver tooling. It was obviously produced by a real craftsman. Inside are portrait photographs of the Board members and all the employees, taken when photography was in its infancy. It’s wonderful to think we have a tangible history, especially in what is such a modern building.’
Nominations and awards • a.s.r. wins Webby award for best homepage; • Website Ditzo wins the price for best and most popular website for the third time in a row; • For the third time in a row, De Amersfoortse achieved the highest score at MoneyView for AOV; • a.s.r. strengthens number 1 position in Fair Insurance Guide; • a.s.r. wins Golden Lotus Award for best home insurer; • Liability insurance a.s.r. receives maximum MoneyView rating; • The Services department won the Benchmark XL Award for the second time in a row in the ‘Best overall performance’
Not fully but follow up is clear to me 470 555 NA
Not fully and the follow up is unclear to me 205 205 NA
Market cap as at 31-12 (in € millions) 4,876 5,043 3,390
% of all a.s.r. staff working from the Utrecht location 95% 96% 96%
The information below regarding a.s.r. employees, is excluding employees of Van Kampen Groep, Dutch ID, SuperGarant, Corins, PoliService, Stoutenburg and ANAC.
Total employee wages and benefits (in € millions) 342 334 301
Euro equivalent working time spent on training (in € millions) 1.2 1.3 1.3
Assets under Management in SRI funds and mandates (end of period) 100% 100% 100%
Participating in number of engagement dialogues specific topics 12 NA 1
Number of screened companies excluded due to: Human rights violations 6 3 3
ASR Dutch Prime Retail Fund (score out of 100) 72 66 63
1 Includes doublecounts due to the facts that some companies are excluded on more than one criteria.
In this report, a.s.r. provides a transparent overview of its activities and results in 2018. In addition, in this report a.s.r. describes the relationship between its mission, strategy, governance and the social and economic context in which it operates. More information about a.s.r. can be found at www.asrnl.com.
Standards The consolidated financial statements of a.s.r. have been prepared in accordance with International Financial Reporting Standards (IFRS). The separate financial statements have been prepared on the same basis as those used for the consolidated financial statements. All amounts quoted in these financial statements are in euros and rounded to the nearest million, unless otherwise indicated. Calculations are made using unrounded figures. As a result rounding differences can occur.’
Audit and assurance of the auditor The consolidated financial statements have been audited by our external auditor, Ernst & Young Accountants LLP (EY). EY’s audit opinion can be found in chapter 8.1.
In addition to the financial results, EY also reviewed the sustainability information (chapter 1 - 5.1 and Annex A, B, C and F) in this annual report with ‘a limited level of assurance’ in accordance with Dutch law including Dutch Standard 3810 which is a specific Dutch Standard that is based on the International Standard on Assurance Engagements (ISAE) 3000. EY’s assurance report can be found in chapter 5.5 The Executive Board and senior executives are involved in seeking external assurance for the organisation’s sustainability information.
Amortised cost The amount at which a financial asset or financial liability is measured on initial recognition net of principal repayments, plus or minus accumulated amortisation using the effective interest method or any difference between that initial amount and the amount at maturity, and minus any reduction for impairments or collectability.
Service Back books Back books consist of policies that are no longer sold but are still on the books as premium-paying policies with limited or no growth prospects.
Cash flow hedge A hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction.
Clean fair value The fair value of an asset or liability, exclusive of the unrealised portion of accrued interest.
Derivative A financial instrument with all three of the following characteristics: (a) Its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided, where a non-financial variable is concerned, that the variable is not specific to a party to the contract (sometimes referred to as the ‘underlying’); (b) It requires no initial net investment or an initial net investment that is lower than would be required for other types of contracts that would be expected to have a similar response to changes in market factors and
Discretionary Participation Feature (DPF) A contractual right to receive, as a supplement to guaranteed benefits, additional benefits that are likely to be a significant portion of the total contractual benefits, the amount or timing of which is contractually at the discretion of the issuer, that are contractually based on the performance of a specified pool of contracts or type of contract, realised and/or unrealised investment returns on a specified pool of assets held by the issuer, or the profit or loss of the company, fund or other entity that issues the contract.
Fair value The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Impact investments Investments made in companies, organizations and/or funds with the intention of having a beneficial impact on society and the environment while achieving an acceptable financial return. For a.s.r. Impact Investing goes a step further than the consideration of ESG criteria, and it seeks a positive contribution to the challenges facing our planet. This can be done via private equity undertakings such as the position in Social Impact Ventures as well as via listed initiatives such as the green bonds portfolio.
The NPS is calculated after customers had been in contact with one of the agents. Calculation of the NPS: With a score of 9 or 10, the customer is seen as a promoter (recommendation). With a score of 7 or 8, the customer gets the predicate passive. He or she will neither recommend nor discourage the brand. With a score of 0 to 6, the customer will discourage the brand. The NPS term for this is detractor (criticaster). The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. The NPS scores presented reflect the year end scores.
Operating Return on equity (Operating ROE) A measure of financial performance calculated by dividing the operating result (after hybrid costs and net of taxes) by the average adjusted equity attributable to shareholders for the reporting period. For the calculation of the Operating ROE see www.asrnl.com
Organic Capital Creation (OCC) The sustainable creation of capital from both the change in the Eligible Own Funds (=EOF) and the change in the Solvency Capital Requirement (=SCR) on Solvency II basis. To express the change in SCR in EOF-equivalent terms, the change in SCR is multiplied by the Solvency II ratio. The OCC consists of three elements: (1) Business Capital Generation, (2) Release of Capital and (3) Technical Movements. In this definition sustainable means: generated by the company on its own account, net of external and one-off effects. This results in a view on the Solvency II figures that is comparable with the definition of the operational result on IFRS basis.
Recoverable amount The recoverable amount of an asset or a cash-generating unit is its fair value less costs to sell or its value in use, whichever is higher.
Value Of Business Acquired (VOBA) The present value of future profits embedded in acquired insurance contracts. VOBA is recognised as an intangible asset and amortised over the effective life of the acquired contracts.
Volunteering Volunteer activities undertaken by a.s.r. employees, partly during work hours (eight hours per day) and partly during their own free time, to contribute to community initiatives/ social projects that are developed or supported by a.s.r. as part of its financial literacy drive.
Markets AF Actuarial function AG Dutch Association of Actuaries AGM Annual General Meeting AI Artificial Intelligence AIFM Alternative Investment Fund Managers AIFMD Alternative Investment Fund Managers
Directive ALM Asset Liability Management AMX Amsterdam Midcap Index APG Algemene Pensioen Groep N.V. ASR DCRF ASR Dutch Core Residential Fund ASR DMOF ASR Dutch Mobility Office Fund ASR DPRF ASR Dutch Prime Retail Fund AuM Assets under Management AVB ASR Vermogensbeheer B.V. BEC Business Executive Committee bps basis points BRC Business Risk Committee BREEAM Building Research Establishment Environmental Assessment Methodology CAK Central Administration Office CCR Counterparty Credit rating (Standards and
Poor’s) CDD Customer Due Diligence CE Continuing education CLA Collective Labour Agreement CMD Capital Markets Day CoC Cost of Capital COR Combined ratio CPB Netherlands Bureau for Economic Policy
Method FR Financial risk FRC Financial Risk Committee FSCB Financial Services Complaints Board FTE Full-time equivalent GBC Green Building Certificates GDP Gross Domestic Product GDPR General Data Protection Regulation GRC Governance and Risk Compliance GRESB Global Real Estate Survey Benchmark GRI Global Reporting Initiative GRM Group Risk Management GWP Gross Written Premiums IAS International Accounting Standards IASB International Accounting Standards Board IBNR Incurred But Not Reported ICSR International Corporate Social Responsibility IDD Insurance Distribution Directive IFRIC International Financial Reporting Interpretations Committee IFRS International Financial Reporting Standards IFSR Insurer Financial Strength Rating (Standard &
Number KBC Customer Interest Central Dashboard KNVB Cost Efficiency, Usefulness, Safety and
Comprehensibility KPI Key Performance Indicator LAC DT Loss Absorbing Capacity Deferred Tax LAT Liability Adequacy Test LDI Liability Driven Investing LRC Leidse Rijn Centrum LTO Agriculture and Horticulture Organisation
Netherlands M&A Merger and Acquisitions NCSC National Cyber Security Center NFR Non-financial risk
Development OIS Overnight Index Swap ORM Operational Risk Management ORSA Own Risk and Solvency Assessment OTC Over The Counter OTSO Supervised insurance entity P&C Property and Casualty PARP Product Approval & Review Process PCAF Platform Carbon Accounting Financials PLWF Platform Living Wages Financials PME Periodic Medical Examinations PSO Performance Ladder for Social Business RAS Risk Appetite Statements RMF Risk Management Function ROE Return on Equity RPA Robotic Process Automation RT1 Restricted Tier 1 bond S&P Standard & Poor’s SA Separate account SAA Strategic Asset Allocation SaaS Software as a Service
Disclosures TNO Netherlands Organisation for applied scientific research TVOG Time Value of Financial Options and
Sustainable Development VPL early retirement and life cycle VVP Revised Value Pack Wft Dutch Financial Supervision Act
As an insurer the expectations on the short term are to offer customers clear and transparent products against a reasonable price, to be able to provide (non)-financial support in case damage has occurred and to ensure that privacy risks are well managed. All stakeholders stressed the importance of order in house, such as solid financial performance, full compliance with stringent regulations and robust risk management procedures.
On the long-term, stakeholders focused their feedback on a.s.r.’s possibilities towards concerns around social and demographic changes in the Dutch society. In particular feelings around a decline in solidarity were mentioned linked to the potential reality of uninsurable professions. a.s.r. is not expected to provide solutions on its own, nevertheless more visibility is expected in the debate around the limits of stretching solidarity. The example of launching a disability insurance for heavy occupations in 2018 was considered as an interesting development, often considered as positive. The focus on prevention before damage to health occurred was regarded as the most important element of the new product.
Trade unions • Regular meetings (more frequent consultation in case of CLA talks) Quarterly
102-7 Scale of the organisation Ch. 1.1, 1.2, 5.1, 7.2 (p.10, 12-13, 78-97, 142)
Annex A Facts and figures 102-9 Supply chain Ch. 4.4 (p. 63-66)
102-10 Significant changes to the organisation and its supply chain 102-11 Precautionary principle or approach Ch. 5.2 (p. 99-105)
GRI Standard Disclosure Location of disclosure, url(s) and/or information 102-40 List of stakeholder groups Ch. 2.2 (p. 28)
Annex E Stakeholder engagement 102-44 Key topics and concerns raised through stakeholder engagement 102-45 Entities included in the consolidated financial statements
Annex B About this report 102-47 List of material topics Ch. 2.3 (p. 30-31)
Non-compliance with laws and regulations in the social and economic area
Management Approach 2018 Disclosure on management approach Ch. 5.2, 7.8 (p. 99-105, 239-270)
418-1 Customer Privacy 2018 Substantiated complaints concerning breach of customer privacy and loss of customer data
Worker training on occupational health and safety 403-6 Occupational Health and
Management Approach 2018 Disclosure on management approach Ch. 1.2, 1.4, 4.3 (p. 13, 17)
Management Approach 2018 Disclosure on management approach Ch. 1.4, 2.2, 2.3, 4.3 (p. 17, 28, 31, 56-61)
Management Approach 2018 Disclosure on management approach Ch. 2.3, 5.2, 5.3 (p. 30, 102-106)
Management Approach 2018 Disclosure on management approach Ch. 2.3, 4.4, 4.6 (p. 29, 31, 66, 69-71)
Annexes | EU Directive: disclosure on non-financial information and diversity information 323
The outcome of those policies. Yes Ch. 4.3, 4.6 (p. 60-61,
A description of the policies pursued. Yes Ch. 1.2, 4.3 (p. 13, 58-59)
Description of how the policy is implemented Yes Ch. 4.3 (p. 58-59)
The 2018 Annual Report is published in the English language only. The report can be downloaded as PDF. We welcome feedback or questions on our report. Please contact us as follows: ASR Nederland N.V.
Photography Cover: ©Jannes Linders / Team V Architectuur Executive Board / Supervisory Board: Wilco van Dijen Art: Raphaël Drent