ASR puts customer interests first. People are at the heart of everything we do. Our core values are personal, approachable and accountable and true to who we are. These are in everything we do to provide security and financial continuity to people.
We have three areas of focus. Firstly, we are driven by customer requirements in developing profitable products. The second criterion is that the product sells well. Thirdly, we should be able to run a product efficiently.
Contacts with government, politicians and public interest organizations are largely handled by the Public Affairs team, which is part of the Corporate Communications department. Colleagues from Public Affairs spend an average of two days a week in The Hague, the centre of political power and decision-making in the Netherlands. Here they represent the interests of our customers, employees and the company within the context of the insurance industry.
ASR entered into a dialogue in 2011 with around 40% of businesses in which it holds shares. ASR uses these dialogues to put the CSR policy of these businesses on the agenda and to address any controversial activities. ASR’s input is generally welcomed by the management of these companies as being constructive.
These steps have made our balance sheet less susceptible to risk. A robust balance sheet with fewer high-risk investments. We are opting for a sound level of solvency. This may adversely affect our profitability in the long run. Our investment
Customers increasingly decide for themselves who, when and how they seek contact, and what it concerns. This is a development that we need to take into consideration, in close contact with intermediaries. So that, together with advisors, we can be of help to customers at all times via various different means.
• Profit for the year decreased compared to 2010, from € 276 million to € 135 million
The volume of the Dutch life individual insurance market contracted for the second year in a row. The 41% drop in new business in 2011 was higher than in 2010 (20%). Insurancebased capital growth products experienced a further decline, due to the rise of bank savings products in particular. The issue surrounding unit-linked policies also continued to affect the market. The expected recovery did not materialize because of the euro crisis and its economic effects. Mortgages make up a large share of sales of new life products. This market again came under strong pressure in 2011.
The fall in the combined ratio was due to a decline in the expense ratio and the claims ratio, and was partly offset by an increase in the commission ratio. The increase in premiums from motor, liability, and travel and leisure insurance had a positive impact on the claims ratio. In addition, the profit for the year also received a boost from the harmonization of provisions related to further efforts towards integration at ASR. A large number of claims were received by the fire business in 2011, and this had an adverse effect on the claims ratio.
Treasury is responsible for capital management in the Financial Markets department. As part of the capital management procedures, Treasury is accountable to ASR’s risk committee structure that was specifically set up for this purpose. This guarantees its independent position and the segregation of duties, and is in keeping with ASR's governance structure.
In 2011, ASR again pursued an active policy to reduce its balance sheet risks. The DNB solvency ratio increased by 9%-points to 230% (2010: 221%). As in the past, solvency was based primarily on the ECB’s AAA yield curve at year end for the purposes of comparison and consistency. If the solvency were to be calculated using the three-month average yield curve, as temporarily permitted by DNB, DNB solvency would have been higher by 29%-points at year-end 2011. The buffer capital ratio increased by 29%-points to 291%.
The notes to the financial statements contain a detailed description of the risk profile and the trends seen in 2011 (see page 91).
Fixed annual remuneration: • The fixed remuneration is indexed in line with the rises under the collective labour agreement for the insurance industry. This percentage stood at 0.5% per 1 February 2011.
The composition of the Executive Board changed in 2011. The resignations of both Hans van der Knaap and Roeland van Vledder, and the proposal to appoint Karin Bergstein were discussed in the Supervisory Board after having been covered in the Selection, Appointment & Remuneration Committee.
on Restrained Remuneration Policy 2011, and submitted it to DNB on 30 March 2011. The Supervisory Board regrets that, in contrast with the policy adopted on 28 November 2010, which linked long-term variable pay to developments in customer satisfaction, the prevailing policy stipulates that deferred variable pay should be linked to development in ASR’s value.
Income tax relating to components of other comprehensive income 30 -74
Unrealized gains (losses) on investments at fair value through profit or loss -6 -7
Retained share of profit of associates and joint ventures 5 6
This category primarily includes unlisted fixed-interest preference shares and interest rate contracts. The valuation techniques use present value calculations and include for derivatives forward pricing and swap models.
ASR Levensverzekering N.V., an insurance company and a group entity, is the administrator of the post-employment benefit plans. ASR Levensverzekering N.V. holds the investments that are meant to cover the employee benefit obligation. However, in accordance with IFRS they do not qualify as plan assets in the consolidated financial statements.
2.47 Interest expense Interest expense for all the interest-bearing instruments is recognized in the income statement using the effective interest rate method, net of transaction costs incurred.
During 2011, interest rates decreased by more than 60 basis points for maturities longer than five years. This had a significant impact on the valuation of the best estimate of the insurance liabilities.
At year-end 2011, 1.7% (2010: 1.2%) of mortgages were in arrears.
Handling time The time required for handling and settling claims is an important factor. The settlement of claims that have a long handling time, such as injury or liability claims, can take years. Analyses are performed regularly, based, for instance, on ASR’s experience in similar cases, historical trends – such as the pattern of liabilities – increases in risk exposure, payment of damages, the scale of current and not yet settled damage claims, court rulings and economic conditions.
Amounts in euros x 1,000 2011 2010 retentions HigHest retention At risk HigHest retention At event HigHest retention At risk HigHest retention At event
Strategic and operational risk management The following areas were areas for concern in respect of strategic and operational risk in 2011: • CRSA (yearly process); • Operational loss registration (continual process); • Crisis training (yearly process); • Information security; • Management in Control.
The segment ‘Other’ includes the following entities: • ASR Nederland N.V.; • ASR Bank N.V.; • ASR Hypotheken B.V.
The following table shows the contractual cash flows of assets and liabilities (excluding investments on behalf of policyholders and insurance contracts on behalf of policyholders). For liabilities arising from insurance contracts, expected lapse and mortality risk are taken into account. Equities and property are not included.
5.5 Non-life insurance per business line 5.6 Non-life ratios The non-life combined ratio can be broken down as follows: • Claims ratio: the cost of claims, net of reinsurance in non-life, excluding the internal costs of handling non-life claims, expressed as a percentage of net earned premiums.
• Expense ratio: expenses, including internal costs of handling non-life claims, less internal investment expenses, expressed as a percentage of net earned premiums.
Hybrid Tier 1 instrument 10% fixed interest 382 382 Annually with effect from 26 October 2010
ASR uses these borrowings for investment purposes (property, group pension contracts), for balance sheet management, and for short-term cash flow management.
The table below provides an overview of total gross earned non- life insurance premiums. For further details on the individual business lines, see the segment information (see chapter 5.5).
Fee and commission income consists of the following components: In 2010 an incidental commission on reinsurance related to the termination of a Reinsurance contract was recognized amounting to € 42 million.
In accordance with the new remuneration law “Wet aansprakelijkheidsbeperking DNB en AFM en bonusverbod staatsgesteunde ondernemingen”, issued by the Dutch government, no variable remuneration shall be disbursed to the Executive Board Directors for the fiscal year 2011.
p lo ym en t b en ef it s p en si o n b en ef it s¹
As for other claims and legal proceedings against ASR known to management (and for which, in accordance with the defined principles, no provision has been formed), management feels, after having sought expert advice, that these claims have no chance of success, or that ASR can successfully mount a defence against them, or that the outcome of the proceedings is unlikely to result in a significant loss for ASR.
Assets 1 Subsidiaries, joint ventures and associates 2 Loans to group companies
9 Employee benefits Employee benefits can be broken down as follows (see chapter 19): 10 Provisions The table below shows movements in provisions: The provisions were formed for: • staff redundancies; • retained disability risk.