Capital
-
Solvency II Standard Formula (SF) ratio down to
127% (year-end 2015: 131%)
-
Pro forma Solvency II
Standard Formula (SF) ratio after rights issue at 154%
and within target range of 140-180%
-
Shareholders' funds (IFRS) at € 2.8 billion
(year-end 2015: € 2.6 billion)
-
Pro forma Shareholders'
funds (IFRS) after rights issue at € 3.5 billion
Commercial
-
Solvency II Life value new business (SII VNB) of
€ 22 million
-
Solvency II New business margin (SII NBM) at
3.7%
-
Solvency II Life new business, SII
NAPI[1] stable at €
132 million (3M 2015: € 132 million)
-
Combined ratio (COR) at 97.0%[2]
slightly up but better than target of 98% (3M 2015:
96.6%2).
-
General insurance: Gross written premiums (GWP)
increased to € 465 million[3] (3M 2015: €
434 million3)
Hans van der Noordaa, chairman of the Executive
Board:
"We welcome the support of investors for the
rights issue, which brings us now within our target range of 140 -
180%. The sharp fall in interest rates in the quarter adversely
impacted the capital position. This was partly mitigated by
progress on our capital management actions. The commercial momentum
with our clients in Life and General Insurance continues. We are
focussed on further unlocking the value of the franchise by
improving commercial and operational performance and we will make
sure that all product lines deliver acceptable returns."
Key figures |
|
(in millions of euros, unless otherwise
stated) |
3M 2016 |
3M 2015 |
% Change |
Solvency II
Life value new business |
22 |
n/a |
n/a |
Solvency II
NAPI |
132 |
132 |
1% |
Combined
ratio |
97.0% |
96.6% |
0.4pp |
GWP General
Insurance |
465 |
434 |
7% |
Solvency II
Standard formula (SF) ratio |
127% |
131%* |
-4pp |
Solvency II
Standard formula (SF) pro forma ratio after
rights issue |
154% |
n/a |
n/a |
Shareholders' funds (IFRS) after non-controlling interests |
2,805 |
2,569* |
9% |
Pro forma Shareholders' funds (IFRS) after rights
issue |
3,454 |
n/a |
n/a |
*compared to
year-end 2015
Overview of first three months of
2016
During the first quarter, we executed the rights
issue, which was an important step in the overall capital plan to
reach the targeted SII ratio range of 140 - 180%. The pro forma SF ratio, after the rights issue, was 154%.
The effect of the completed rights issue will be reported at our
half year results. During the first quarter, net capital generation
and management actions added to our capital position, partly
mitigating the effect of adverse market conditions. Subject to
market conditions, the sale of the shareholding in Van Lanschot by
way of a marketed offering is expected to have an 8% points
increase in the SF ratio. The implementation of a Partial Internal
Model by 2018, another important aspect of the capital plan, is
developing as planned.
We have an ongoing commitment to product
profitability and cost efficiency through our focus on margin over
volume. In Life new business, we reported good margins at 3.7% and
the SII NAPI amounted to € 132 million, which provided a positive
contribution to capital generation. In General Insurance, the COR
was slightly higher (up 0.4% points to 97.0%), but still better
than our target of 98%. In this segment, the overall margin is
solid, but we need to focus on areas of underperformance. To do so,
we initiated a performance improvement programme.
We continuously strive to improve the quality of
service to our customers and we actively respond to new market
developments such as the introduction of the general pension fund
APF. Delta Lloyd APF will offer company pension funds a solution to
the growing administrative and regulatory burden.
We expect to receive a license from the Dutch regulator for the
newly introduced Delta Lloyd APF general pension fund in the coming
months. We already see a clear interest from potential APF
clients.
Capital management
-
SF ratio down to 127% (year-end 2015:
131%)
-
Pro forma SF ratio after
rights issue at 154%
-
Shareholders' funds (IFRS) up 9% to € 2.8
billion (year-end 2015: € 2.6 billion)
-
Pro forma Shareholders'
funds (IFRS) after rights issue at € 3.5 billion
During the first quarter, the SF ratio decreased
by 4% points to 127%. Net capital generation delivered c. 2% points
increase. The run off regarding the equity transitionals resulted
in c. 2% points decrease during the quarter. Market movements had a
c. 10% points negative impact on the SF ratio. The latter was
partly mitigated by realised management actions, with a positive
effect on the SF ratio of c. 6% points. Realised management actions
include reduced equity, currency and credit spread exposures as
well as modelling enhancements in Belgium. More management actions
are planned for the remainder of 2016.
The negative impact of adverse market conditions
of c. 10% points mainly consisted of:
-
A significant part of the large decrease in
interest rates was covered by the hedge programme at business unit
level. Nonetheless, there was a negative impact due to the
flattening of the Solvency II VA curve and due to increased spreads
relating to the valuation of our residential mortgage portfolio
;
-
An increase in non-eligible Own Funds, mainly
caused by the increase in the value of restricted Tier 1 and Tier 2
(i.e. subordinated debts) due to lower interest rates. Subordinated
debt at group level is not included in the interest hedge
programme. The amount of non-eligible Own Funds will reduce as a
result of the executed rights issue.
At end of March, Shareholders' funds (IFRS) had
increased by € 236 million to € 2.8 billion (year-end 2015: € 2.6
billion), due to a favourable credit spread development between the
Collateralised AAA curve and the swap curve.
Transition to Solvency II
metrics
The year 2016 marks the start of Solvency II, which for Delta Lloyd
as well as other insurers, requires a further evolution of
reporting metrics to further align with Solvency II requirements.
In particular VNB together with respective volumes and margins have
been impacted. In 2016 Delta Lloyd will report on both old and new
regimes in order to provide clarity on key trends. The old regime
was applicable in 2015 (and prior to 2015) and the new regime
applies as of 2016.
Specifically for VNB, a number of changes to the
methodology were implemented during the first quarter to further
align with Solvency II requirements. Main changes include the
application of Solvency II contract boundaries, the removal of
frictional costs and the replacement of cost of non-hedgeable risk
with risk margin. Furthermore, look-through benefits are not
included.
The application of contract boundaries also
impacts new business volumes. New business under the old regime
included new contracts and extensions to existing contracts. New
business under the new regime includes new contracts and renewals
of existing contracts, whereas extensions are recognised as
existing business. These changes are reflected in our New
Annualised Premium Income (NAPI). In the first quarter NAPI is
higher under the new regime which is due to a higher NAPI for
renewals than NAPI for extensions to existing contracts.
Life Insurance
-
Value of new business (SII VNB) at € 22
million
-
SII New business margin (SII NBM) was 3.7%
-
SII NAPI stable at € 132 million (3M 2015:
€ 132 million)
-
Shift to DC continued, SII NAPI in DC was
€ 31 million (3M 2015: € 28 million)
Life SII VNB was € 22 million and taking into
account a capital strain of € 13 million, the net capital generated
due to new business sales was € 9 million. The corresponding SII
NBM was 3.7% and was driven by Belgian protection products and
profitable DB pension renewals.
SII VNB was slightly lower than VNB under the old
regime, reflecting a negative impact of contract boundaries for DC
Pension, partly offset by a positive contribution of DB Pension
renewals.
For the quarter, VNB and NBM under the old regime
showed an increase mainly due to the Belgian protection products,
partly offset by a reduction for DC Pension which largely reflected
a model correction. The impact of this model correction was a
decrease of VNB of around € 4 million.
SII NAPI was stable at € 132 million (3M 2015: € 132 million), the
increase in SII NAPI for DB products is due to the fact that
renewals are now included in this number. SII NAPI for DC increased
by 8%.
General Insurance
Overall, the COR was better than target. The COR
in Income & protection decreased by nearly 6% points to 73.3%,
reflecting some prior year reserve releases and lower commissions.
The COR in Property & Casualty (P&C), increased by 1.3%
points to 101.8%, reflecting adverse large claims experience in the
quarter. In the coming months we are reviewing the performance of
all of our general insurance product lines, to ensure that each
delivers an acceptable return. For example, we expect the COR of
personal general insurance products to be positively affected by
the strategic partnership with service provider Voogd & Voogd
we announced in March. The increase of GWP in General Insurance is
mainly attributable to increased premium production at Authorised
Agents.
Asset Management
In the Asset Management segment, there was a net
outflow on third party base (€ -354 million) due to an outflow of
one large mandate and outflows in retail funds. In asset
management, we plan to concentrate more on institutional
clients.
Bank
-
Production of new mortgages up € 289
million (3M 2015: € 258 million)
-
The portfolio of mortgages was stable at € 13.3
billion (year-end 2015: € 13.3 billion)
-
The savings portfolio was stable at € 3.4
billion (year-end 2015: € 3.4 billion)
In the first quarter, the production of new
mortgages increased, supported by the recovering Dutch housing
market. The portfolio of Bank Annuity and savings products
stabilised, reflecting our focus on margin over volume. There is a
continued focus on improving operational efficiency and client
satisfaction, also by developing new services such as Instant
Payment. This is a service which allows customers to instantly
transfer money from their savings account to their bank account at
another bank.
Outlook
We will continue to execute the capital plan that we announced with
the rights issue. We are progressing with the sale of our
shareholding in Van Lanschot by way of a marketed offering in the
course of 2016. Further Asset & Liability Management (ALM)
actions will be executed to release capital and reduce volatility.
Including the benefit of actions already implemented, the programme
of ALM actions will deliver a total of 10-15% points uplift. After
this, we expect to reach a solvency position in the top half of our
target range, which gives us a solid foundation from which to
execute our strategy and deliver customer-focused and profitable
new business.
We are committed to operational cost discipline
and our focus is on improving the operational performance by an
ongoing review of the business lines. We are on track to meet our
target for operational expenses of € 610 million for 2016.
In February 2016, alongside the rights issue we
presented our strategy and capital plan including targets. During
our Investor Day on 27 May 2016, we will provide a further update
and details regarding the progress of our strategy execution and
our capital plan.
Financial calendar 2016 |
Date |
Event |
19 May
2016 |
Annual
General Meeting |
27 May
2016 |
Investor
Day |
17 August
2016 |
Publication
of half-year 2016 results |
16 November
2016 |
Publication
of Interim management statement first nine months of 2016 |
Interim Management Statement
audio call on 18 May 2016
On Wednesday 18 May 2016 at 09.30 am (CET) Delta
Lloyd will host a conference call for analysts, which can also be
followed via audiocast on our website.
Conference call:
18 May 2016, 09.30 am (CET)
+31 20 716 84 27 (English language), PIN code 31026636#
This press release is also available at www.deltalloyd.com.
Investor Day 2016
Our Investor Day will take place on Friday 27 May
in London. All presentations are in English and will be webcasted
on the Delta Lloyd website (www.deltalloyd.com). The presentations
will be available on our website on 27 May 2016 from 07.30am
(CET).
Important information
-
This interim management statement contains
figures for the first three months of 2016 for Delta Lloyd NV
('Delta Lloyd'), inclusive of Delta Lloyd Levensverzekering, Delta
Lloyd Schadeverzekering, ABN AMRO Verzekeringen, Delta Lloyd Life
Belgium, Delta Lloyd Asset Management and Delta Lloyd Bank
Netherlands.
-
Certain statements contained in this press
release that are not historical facts are "forward-looking
statements". Forward-looking statements are typically identified by
the use of forward looking terminology such as "believes",
"expects", "may", "will", "could", "should", "intends",
"estimates", "plans", "assumes", "anticipates", "annualised",
"goal", "target" or "aim" or the negative thereof or other
variations thereof or comparable terminology, or by discussions of
strategy that involve risk and uncertainties. The forward-looking
statements in this press release are based on management's beliefs
and projections and on information currently available to them.
These forward-looking statements are subject to a number of risks
and uncertainties, many of which are beyond Delta Lloyd's control
and all of which are based on management's current beliefs and
expectations about future events.
-
Forward-looking statements involve inherent
risks and uncertainties and speak only as of the date they are
made. Delta Lloyd undertakes no duty to and will not update any of
the forward-looking statements in light of new information or
future events, except to the extent required by applicable law. A
number of important factors could cause actual results or outcomes
to differ materially from those expressed in any forward-looking
statement as a result of risks and uncertainties facing Delta Lloyd
and its subsidiaries. Such risks, uncertainties and other important
factors include, among others: (i) changes in the financial markets
and general economic conditions, (ii) changes in competition from
local, national and international companies, new entrants in the
market and self-insurance and changes to the competitive landscape
in which Delta Lloyd operates, (iii) the adoption of new, or
changes to existing, laws and regulations including Solvency II,
(iv) catastrophes and terrorist-related events, (v) default by
third parties owing money, securities or other assets on their
financial obligations, (vi) equity market losses, (vii) long-
and/or short-term interest rate volatility, (viii) illiquidity of
certain investment assets, (ix) flaws in underwriting assumptions,
pricing and/or claims reserves, (x) the termination of or changes
to relationships with principal intermediaries or partnerships,
(xi) the unavailability and unaffordability of reinsurance, (xii)
flaws in Delta Lloyd's underwriting, operating controls or IT
systems, or a failure to prevent fraud, (xiii) a downgrade (or
potential downgrade) of Delta Lloyd's credit ratings, and (xiv) the
outcome of pending, threatened or future litigation or
investigations, or other factors referred to in this press
release.
-
Should one or more of these risks or
uncertainties materialise, or should any underlying assumptions
prove to be incorrect, Delta Lloyd's actual financial condition or
results of operations could differ materially from those described
herein as anticipated, believed, estimated or expected.
-
Please see the Annual Report for the year-ended
31 December 2015 for a description of certain important factors,
risks and uncertainties that may affect Delta Lloyd's
businesses.
[1] New
Annualised Premium Income, 10% of new single premium, 100% of new
annual premium
[2] Excluding
terminated and run-off activities and market interest movements
[3] Excluding
terminated and run-off activities
Full press release IMS 3M
2016
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Delta Lloyd via Globenewswire
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