avatar ASR Nederland N.V. Finance, Insurance, And Real Estate
  • Location: UTRECHT 
  • Founded: 1971-04-11
  • Website:

Pages

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    2017 Annual Report


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    ASR Nederland N.V. Archimedeslaan 10 P.O. Box 2072 3500 HB Utrecht www.asrnl.com


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    2017 Annual Report


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    Annual Report | 2017 4 2017 Annual Report 1 Introduction 1.1 At a glance 6 1.2 Key figures 8 1.3 Message from the Chairman 10 2 About a.s.r. 2.1 Our strategy 12 2.2 Value creation model 17 2.3 Key trends 22 2.4 Our stakeholders and material issues 29 2.5 Our people 33 3 Business performance 3.1 Group performance 38 3.2 Segment performance 49 3.3 Risk management and Compliance 78 3.4 Statements Executive Board 86 3.5 Assurance report of the independent auditor 87 4 Governance 4.1 Corporate governance 90 4.2 Our investors 98 4.3 Supervisory Board report 102 4.4 Remuneration report 110 4.5 Employee participation 114


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    Annual Report | 2017 5 Introduction 5 Financial statements 2017 5.1 Introduction 121 5.2 Consolidated financial statements 123 5.3 Accounting policies 130 5.4 Group structure and segment information 153 5.5 Notes to the consolidated balance sheet 164 5.6 Notes to the consolidated income statement 191 About a.s.r. 5.7 Other notes 198 5.8 Risk management 216 5.9 Capital management 250 5.10 Company financial statements 254 6 Business performance Other information 6.1 Independent auditor’s report 261 6.2 Provisions of the Articles of Association regarding profit appropriation 271 7 Report of Stichting Continuïteit ASR Nederland 273 Governance Annexes A Notes to the reader 275 B Glossary 277 C Abbreviations 283 D Stakeholder engagement 285 Financial statements 2017 E Additional employee information 286 F GRI Content Index 287 G EU Directive: disclosure of non-financial information and diversity information 293 Other


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    Introduction Introduction | 1.1 At a glance 6 1.1 At a glance ASR Nederland N.V., hereinafter ‘a.s.r.’, is the Dutch insurance company for all types of insurance. a.s.r. offers a broad range of financial products in the areas of non-life, life and income protection insurance. a.s.r. also offers investment and (bank) savings products. a.s.r. is also active as an investor and offers asset management services to institutional clients. Furthermore a.s.r. is a full-service provider for intermediaries. a.s.r. operates exclusively in the Dutch market, except for a small Belgian funeral insurance portfolio, which is recognised as a business line of ASR Levensverzekering N.V. Structure ASR Nederland N.V. Non-life Life Banking and Asset Distribution and Holding and Other Management Services • P&C • Pensions • a.s.r. bank • VKG • Disability • Individual life • a.s.r. mortgages • Dutch ID • Health • Funeral • a.s.r. asset • SuperGarant management • Corins • a.s.r. real estate • PoliService investment management Our brands Multi-brand and multi-channel distribution; focus on intermediary.


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    Introduction | 1.1 At a glance 7 Introduction Founded in Head office of a.s.r. Utrecht, The Netherlands 1720 Other locations: Ardanta in Enschede and a number of distribution units at various locations in the Netherlands. About a.s.r. Number of employees a.s.r. is the (Internal FTEs) third largest 3,493 Business performance insurance company in the Netherlands measured by GWP (excluding health insurance). Highlights of 2017 Governance Privatisation completed Announcement of proposed acquisition of Financial statements 2017 Generali Nederland a.s.r. first insurer issuing Euro dominated Restricted Tier 1 Contingent Convertible capital instrument Other Development of new Collective Labour Agreement (CLA) De Andere Cao Effective date: 1 January 2018


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    Introduction | 1.2 Key figures 8 1.2 Key figures Financial key figures Operating result IFRS net result Operating ROE € 729 m € 906 m 15.6 % +17.2% +37.5% up to 12% target (2016: € 622m) (2016: € 659m) (2016: 14.6%) Solvency II Organic capital creation Combined ratio 196 % € 377 m 95.1 % +7% pts 11% on SCR Target <97% (2016: 189%) (2016: € 348m) (2016: 95.6%)


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    Introduction | 1.2 Key figures 9 Introduction Non-financial key figures Net Promoter Score Sustainable Asset Management About a.s.r. +40 +56 100 % Business performance for customers for intermediaries of the assets under management by Group Asset (2017: Q4) (2017: Q4) Management are compliant with a.s.r. SRI policy. Diversity Governance 25% 25% 27% 40% 60% 75% 75% 73% Supervisory Board Executive Board Senior Management Other employees Financial statements 2017 Female Male Other


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    Introduction | 1.3 Message from the Chairman 10 1.3 Message from the Chairman ‘Pride in looking back over a good year, but our focus remains on the future’ 2017 was in many respects an excellent year for a.s.r. We achieved full privatisation, posted an operating result of € 729 million and can take pride in a strong solvency ratio of 196%. Our customers and intermediaries awarded us a higher Net Promoter Score (NPS), and we welcomed Generali Nederland, among others, to the group. ‘Pride in what we achieved in 2017 is certainly appropriate, but we are also resolutely looking forward.’ The Executive Board is pleased with the results obtained by a.s.r. Discipline in executing our strategy led us to exceed all our medium-term financial targets in 2017. Our operating result rose by 17.2% to € 729 million, with all business segments contributing to the increase. At 15.6%, operating return on equity was well above our target of ‘up to 12%’. In non-life insurance, our expertise was reflected in an increase in Gross Written Premiums (GWP) of nearly 6%, while at the same time we managed to reduce our cost base by € 3 million. The Combined Ratio was 95.1%, which was well below the target of ‘less than 97%’. Our Solvency II ratio, based on the standard formula and taking into account the dividend proposal, was robust at 196% and exceeded our target of ‘safely above 160%’. The sharp rise in the operating result allows us to pay out a higher dividend. Based on the results for 2017, we are proposing a dividend of € 229.7 million. This is a cash dividend of € 1.63 per share, an increase of more than 28% compared to last year. As of this year, we also start paying out interim dividends, which will be set at 40% of the total dividend of the previous year (€ 0.65). We strive for a stable growing dividend per share in the long-term. a.s.r. is ambitious to grow, both organically and through acquisitions. In 2017, we finalised the integration of the insurance portfolio of funeral services company NIVO, the integration and migration of De Eendracht Pensioenen, announced the acquisition of Generali Nederland and completed the acquisition of First Investments. We have already taken initial steps to integrate the various businesses in anticipation of closing Generali Nederland into a.s.r., and on 1 June 2018 our new colleagues are planned to relocate to Utrecht. Improving our service and focusing on customers is a top priority which we are working on each day. The Net Promoter Score from customers and intermediaries is a reliable yardstick in this regard. We are therefore delighted that the NPS from customers went up in 2017 from +36 to +40 and from intermediaries from +50 to +56. Their appreciation was also reflected in growth in our sales figures, with an increase of more than 32% in the number of Vernieuwde Voordeel Pakketten (non-life insurance packages) sold and a 48% increase in premiums for the WerknemersPensioen (employee pension). a.s.r.’s brand awareness also rose in 2017, and we are increasingly being recognised as a socially responsible insurer. This shows that profitable growth and serving the public benefit can go hand in hand. In 2017, we achieved a number of visible results in this area, such as the creation of a Health Impact Bond for the successful occupational reintegration of cancer patients, the creation of a new credit ESG fund in which external investors can participate and the announcement of our intention to provide, in conjunction with Triodos Bank, € 600 million in financing to sustainable projects over the next four years. a.s.r. is also increasingly being recognised and acknowledged in the market as a prominent exponent of sustainability. In 2017, this was confirmed by various studies (VBDO, Eerlijke Verzekeringswijzer and the annual sustainability report of the United Nations Principles for Responsible Investments (UN PRI)). We will continue to focus on operating in a smarter, more efficient and more cost-effective way. To this end, in 2017 we further simplified our organisation by merging a number of staff departments. To speed up the digital transformation and better anticipate evolving customer needs, we also established the Innovation & Digital team to meet growing customer demand for online communication. Using artificial intelligence and robotics, this team is further automating (simple) processes to give our employees more scope to focus on complex customer queries and work that adds greater value. The Innovation & Digital team is also exploring evaluating new (insurtech) initiatives and testing and building initiatives of its own.


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    Introduction | 1.3 Message from the Chairman 11 In September 2017, NLFI sold the remaining interest in a.s.r. on behalf of the Dutch State. In the fifteen months Introduction since the initial public offering (IPO) in June 2016, a.s.r. has made a full return to the stock market. Looking back on the process from nationalisation to full privatisation, we are proud of the way this was achieved. The total proceeds from the sale was € 3.80 billion against an initial investment of € 3.65 billion. During the period of State ownership, a dividend of € 636 million was paid out. This is an achievement that would certainly not have been realised without the effort and dedication of our employees. We are grateful to them for their significant contribution to this process. We are also of course indebted to NLFI and the Dutch Ministry of Finance for their constructive cooperation over the past years, of which I and my fellow Board Members have very positive recollections. 2018 looks set to be another interesting year for a.s.r. We will continue to shape the integration of Generali Nederland, and its contribution to our results will become visible as a result. We will in the meantime also carry About a.s.r. on seeking out more opportunities for organic growth and acquisitions. We will closely monitor developments of the financial markets in order to gauge their consequences for our investment policy. Extreme weather events are another aspect we must take into account, especially following the winter storms of January 2018. 2018 is the final year of the medium-term targets that we announced at the IPO in 2016. During the fourth quarter, at our first Capital Markets Day on 10 October, we will present an update on our strategy and renewed medium- term financial targets. Before this, we have our General Shareholders’ Meeting on 31 May, where we look forward to meeting our shareholders and presenting our results. Business performance We will continue to focus on long-term value creation for our customers, shareholders, employees and other stakeholders in the year ahead. The phrase ‘past performance is no guarantee of future results’ is one of which we are acutely conscious. So, while it is good to celebrate our strong results, we will be swiftly shifting our focus back to tomorrow and beyond. Jos Baeten, Chairman of the Executive Board Governance Financial statements 2017 Other


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    About a.s.r. About a.s.r. | 2.1 Our strategy 12 2.1 Our strategy The story of a.s.r. Helping by doing a.s.r.’s raison d’être is to help people. We help customers share risks and build up capital for the future. We are committed to understand what they need and to deliver it clearly and transparently. Using our expertise, we fulfil their needs in a service-driven way. We pay a great deal of attention to sustainability because we feel responsible for our environment and are convinced that in the near future consumers will only want to do business with sustainable companies. This can only be achieved with enthusiastic and committed employees. Our work is guided by our core values: I’m helpful, I think ahead and I act decisively. These values drive our behaviour. a.s.r. will focus on learning in order to develop continuously. We are committed to understanding our customers’ needs and will continue to innovate and develop new services. We aim to proactively offer innovative solutions for prevention and in addressing risk issues of our customers. We are also committed to competent and efficient claims handling, which allows us to continuously offer our customers attractively priced solutions to cover their risks. To enable our customers to build up capital, we focus on developing asset management solutions. We are highly cost-conscious in our business operations, compile well-founded risk assessments and are financially sound, realising sustainable, attractive returns for our shareholders. In addition to organic growth, we strive for growth through the acquisition of small and medium-sized insurers and/or asset management companies. We are only satisfied if our customers are getting value for premium paid and their financial advisors believe that a.s.r. is providing the right level of service and offering the right products and services, if our employees are continuously developing their skills and our shareholders are being given attractive returns. Our customers need to be convinced on a daily basis that we are doing our job with dedication and expertise. Our aim is to be a future-proof insurer who performs above expectations.


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    About a.s.r. | 2.1 Our strategy 13 2.1.1 Strategic pillars Introduction a.s.r. defines four pillars as guiding principles in its strategy. These principles ensure that a.s.r. creates value for all its stakeholders within its general ‘value over volume’ principle. Four principles of strategy Stable cash Meeting customers’ needs A flows and value- generating business About a.s.r. Excellence in pricing, underwriting and claims handling Robust and Our principles drive long-term value in our business portfolio B predictable back books Cost effectiveness Business performance Business Cash-generating business model C enhancement opportunities Meeting customers’ needs a.s.r. offers customers transparent products that aim to meet their needs. a.s.r. continuously strives to improve its services to its customers and to the intermediary channel. a.s.r. is aware of its position and its role in the wider community, and gives due consideration to its impact on the environment. Governance a.s.r. operates a multi-brand, multi-channel distribution strategy. The key distribution channel is the intermediary channel in the form of independent advisors and brokers. a.s.r. feels that advisors and brokers are well-positioned to provide customers with independent advice and to help them select the products that are best tailored to their individual needs, be it the transfer of risks or savings and pension solutions. a.s.r. also offers products and services directly to customers wishing to take out insurance without the advice of an independent advisor. a.s.r.’s employees are dedicated to helping customers whenever possible, in accordance with its core values. Its staff helps to identify key solutions for customers needs and to implement them effectively. a.s.r. focuses on retail customers, the self-employed and small and medium-sized enterprises (SMEs). It also provides pension, disability Financial statements 2017 and asset management products to pension funds and large institutional investors. a.s.r. fosters close contact with its customers, both directly through customer panels and surveys, and through feedback from intermediaries. It monitors changes in customers’ needs and uses customer feedback to improve existing products and to develop new products and services. Customer and intermediary satisfaction is monitored closely through the measurement of closed-loop feedback such as the NPS. In order to respond swiftly to market trends and evolving customer behaviour and needs, a.s.r. has an efficient, streamlined organisational structure in which business lines generally have end-to-end responsibility through the inclusion of decentralised functions such as distribution, product marketing and IT. In recent years, a.s.r. has also acquired distribution service providers, giving it an additional source of information on changing customer behaviour and needs. Other


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    About a.s.r. | 2.1 Our strategy 14 Excellence in pricing, underwriting and claims handling a.s.r. maintains a disciplined pricing strategy based on an in-depth understanding of customer behaviour. a.s.r. continues to build on its experience and skills in pricing, underwriting and claims handling, since these are key drivers in the creation of sustainable value. a.s.r. applies these capabilities to all of its insurance products. a.s.r.’s insurance expertise has contributed to a strong combined ratio in the Non-life segment for many years. Cost effectiveness Cost competitiveness is a key prerequisite for commercial success as well as for bottom-line performance. Cost awareness is embedded throughout the organisation. It has become an integral part of a.s.r.’s culture. a.s.r. is permanently focused on responsible expenditure management, and aims to further improve its cost effectiveness over the coming years. End-to-end responsibility in the various business lines, fewer management layers and the decentralisation of certain functions such as distribution, product marketing and IT will all help to maintain cost effective. a.s.r. will continue to simplify and rationalise its existing product portfolio, particularly in the life and pensions businesses. a.s.r. is reducing the number of back-office systems in its business lines. a.s.r.’s cost base has become more agile. It has been outsourcing certain activities to third parties, enabling it to achieve cost benefits. a.s.r. does not outsource activities involving its intellectual capital, which is seen as essential to its insurance operations and contributes to its unique competitive position. Such activities include pricing, underwriting, asset management and claims management (including medical advisors and personal injury claims). Cash-generating business model a.s.r.’s financial objective is to achieve robust, high-quality earnings and strong capital generation backed by a moderate financial framework. This enables a.s.r. to deliver on its promises, providing customers with the financial protection they expect and offering attractive returns to shareholders. a.s.r.’s risk appetite is a key factor in executive and senior management decisions. a.s.r. has a moderate risk profile and sets minimum solvency levels in order to remain entrepreneurial, to absorb potential losses, and to remain financially robust and resilient. With these levels, the requirements of the regulator are also respected.


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    About a.s.r. | 2.1 Our strategy 15 2.1.2 Portfolio and execution Introduction The four strategic principles described in Chapter 2.1.1 (Strategic pillars) are the value drivers in a.s.r.’s business portfolio. On an ongoing basis, a.s.r. reviews its business portfolio for its contribution to profits, as well as its future growth outlook. Given the profit contribution and growth outlook of the businesses, a.s.r. divides its portfolio info four categories: I Activities that provide stable cash flows and generate value with relatively strong growth potential; II Businesses that represent robust and predictable back books and contribute to current profits; III Activities that offer business enhancement opportunities, typically capital-light, and; IV Non-core activities which will eventually be divested. About a.s.r. Acquisitions are evaluated against strict financial criteria as well as the stategic fit in the categories mentioned above. Generali Nederland was signed in 2017 (and closed in February 2018) adding € 313 million¹ of GWP in Disability/Property and Casualty (P&C) and € 96 million¹ of GWP to a.s.r.’s life segment. Optimal and balanced business mix Long term growth prospects High Stable cash flows and value generating businesses Businesses enhancement opportunities Business performance Disability Distribution and Services Pension DC, IORP, pension administration for Hnpf Property and Casualty Asset Management Funeral Health a.s.r. bank Robust and predictable back books Divestments Pension DB Governance Individual life Real Estate Development Low High Low Current profit contribution Stable cash flow and value-generating business with relatively strong growth potential Financial statements 2017 In P&C and Disability, a.s.r. focuses on maintaining profitable underwriting and pricing discipline combined with excellent claims handling for customers. a.s.r. strives for selective organic and inorganic growth in this segment. Maintaining its leadership position in the intermediary distribution channel is key to this ambition. Non-life insurance offers a.s.r. organic growth potential, which is reflected in the organic GWP growth of these business lines in 2017. The customers of Generali Nederland will be migrated in 2019, strengthening our market position. a.s.r.’s cost-efficient platform in the funeral insurance business gives it a strong competitive position. Moreover, the funeral insurance business carries mortality risks that strongly diversify the longevity risk in a.s.r.’s pensions businesses. With its strong market position, a.s.r. is well positioned to buy ‘blocks of business’ in funeral and to offer a high level of service and generating long-term value for its customers and shareholders. Robust and predictable backbooks This category represents large life and pension-insurance books that have been built up over many years and Other are major contributors to a.s.r.’s profit. These businesses offer limited or no growth potential except for buying ‘blocks of business’. These books are excepted to inevitably decline over time. a.s.r. is committed to safeguard the value of these service books by lowering and variabilising its cost base, by providing a high level of customer 1 Unaudited indicative figures


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    About a.s.r. | 2.1 Our strategy 16 service to prevent unnatural lapses and by protecting the investment margin by hedging interest rate sensitivity. To make the individual life cost base, more variable, a.s.r. is migrating its individual life portfolios to a Software as a Service (SaaS) platform, managed by an external provider. a.s.r. has been successful in this strategy given the portfolios which have already been migrated in time and on budget. This migration is on track and is scheduled for completion mid-2019. The Generali Nederland book will be migrated to this platform, presenting the first external ‘block of business’. This will also enable a.s.r. to become a consolidator of individual life backbooks. Business enhancement opportunities a.s.r. sees growth opportunities in the capital-light business. These include capital-light pension propositions such as defined contribution (DC) plans. With new legislation on ‘doorbeleggen’, a.s.r. has enhanced the defined contribution solution with an individual pay-out product. The Distribution and Services segment delivers fee revenues and has grown organically and through acquisitions in recent years. a.s.r. has acquired specialist distribution companies and its aim now is to unlock the earnings potential that a.s.r. envisages for each of these companies. In asset management, a.s.r. is focused on expanding its third-party asset management activities through product development and bolt-on acquisitions. With the acquisition of BNG in 2016 and First Investments in 2017, skills and approximately € 5.5 billion in assets under management were added. Regarding asset management product development, a.s.r. launched the ASR Hypotheek fonds (‘a.s.r. mortgage fund’) in 2017. Divestments Managing the business portfolio is not just about acquiring businesses and integrating them into the a.s.r. organisation. It is equally about divesting businesses that are either strategically no longer core or that structurally underperform. a.s.r. has for example terminated its real estate development business and divested a large portion of its real estate development projects. The remaining property development activities (Leidse Rijn Centrum) are in run-off and divestment opportunities are explored continuously.


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    About a.s.r. | 2.2 Value creation model 17 2.2 Value creation model Introduction a.s.r. operates in a broader context, developments in the environment and key trends influence the organisation’s policies, products and services and performance. At the same time, a.s.r.’s activities have an impact on stakeholders. This is further illustrated by the value creation model. The International Integrated Reporting Council (IIRC) framework was used to present the value creation model of a.s.r. together with a brief explanation of the input, business model and output & outcome. About a.s.r. Input: An important input for an insurer such as a.s.r. is financial capital. In addition, human capital is crucial in order to deliver services and products. The relationships with and knowledge of intermediaries and other partners are also vital in this context. Business performance Business model: a.s.r. offers a wide range of insurance products and services to both private and corporate customers. a.s.r. uses different labels, each with its own mix of products and distribution channels. It is important that employees are professional and service-oriented. In order to serve customers now and in the future, a.s.r. pays a great deal of attention to the vitality and development of its employees. a.s.r. also invests in innovation to further improve its existing products and services and to develop new business models. The Banking and Asset Management segment focuses on responsible management of financial resources in order to achieve optimal investment results. As an investor, a.s.r. is also active in the management of real estate. a.s.r. also offers asset management services to pension funds, insurance companies, guarantee funds and wealth funds, charities, local governments, health and educational institutions and other parties. Governance Output & outcome: a.s.r. creates value for its customers by helping them to prevent or mitigate risks and to build up capital for the future. a.s.r. does this by offering sustainable, transparent and comprehensible insurance products and by investing customer premiums carefully and responsibly. An important objective of its activities is satisfied customers, shareholders and engaged employees. Also important is the mandate, the license to operate, that a.s.r. receives from the society at large (e.g. media, regulators, business partners) to continue operating. Financial statements 2017 Providing the right services and products leads to loyal customers that provide long term value that leads to an attractive return for shareholders. A long-term employable workforce contributes to this and a.s.r. thus also creates (long-term) value for its employees. a.s.r. also wants to contribute to sustainable economic development by investing resources responsibly. a.s.r. therefore follows a strict investment policy based on Environment, Social, Governance (ESG) good practices. Organisations with above-average performance in the field of ESG are preferred. a.s.r. also cares about its direct impact on the environment. In order to minimise environmental impact, a.s.r. uses resources such as energy and water efficiently. To conclude, the a.s.r. foundation helps people with financial self-reliance through the voluntary dedication of knowledge and skills of its employees. Other


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    About a.s.r. | 2.2 Value creation model 18 Value creation model Input Business model Output Outcome Financial capital • Insurances and • Shareholders cover of risks equity • Risk prevention, • (Hybrid) Debt Meeting customers’ need reduction, • Knowledge • Premiums hedging and and advice in • Investment sharing the context of returns • Non-life: P&C, Disability, Health prevention and • Life: Individual life, Excellence in pricing, underwriting and claims handling • Building up risk issues Pensions, Funeral capital for the • Sustainable long future term dividend Human capital • Skilled and • Responsible talented investments Cost effectiveness employees • Impact The story of a.s.r. investments to make a Helping by doing • Professionalism, sustainable Intellectual vitality and contribution to capital & Social sustainable society and relationship development of capital employees • Intermediaries • Banking and Asset Management: • Business a.s.r. bank, a.s.r. mortgages, • Long-term partners a.s.r. asset management, employable a.s.r. real estate • Contributing to workforce investment management financial self- • Distribution and Services: sufficiency VKG, Dutch ID, Corins, Manufactured SuperGarant, PoliService capital and Natural capital • Energy use • Impact on • Buildings Cash-generating business model of buildings, climate change • ICT systems & • Energy mobility External environment & key trends * The above model provides a simplified representation of the a.s.r. business model.


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    About a.s.r. | 2.2 Value creation model 19 2.2.1 Sustainability governance Introduction a.s.r. seeks to be a leader in sustainable business practices in the financial sector and takes account of sustainability wherever possible. a.s.r. does this on the basis of four themes that fall under Corporate Social Responsibility (CSR): ‘Sustainable insurer’, ‘Sustainable investor’, ‘Sustainable employer’ and the ‘Social role of a.s.r.’. In order to continue to drive and monitor sustainability in all its aspects within a.s.r., sustainability has been earmarked as a separate topic. Within the Executive Board, the CEO is ultimately responsible for a.s.r.’s CSR themes. The Director of Corporate Communications coordinates the implementation together with a CSR Task Force. The Task Force consists of a secretary, the directors of the departments Services, Human Resources, Asset Management, Real Estate Investment Management, Integrity, Group Risk Management, Non-life, Pensions and About a.s.r. Bank & Mortgages and the secretary of the Executive Board. The Task Force meets regularly to form an integral CSR vision and set objectives. All members of the Task Force subsequently promote this vision and objectives within their own focus areas. The Task Force also establishes CSR Key Performance Indicators (KPIs). Under the Task Force, an CSR Work Force operates with delegates from the directors above. It reports quarterly on the established CSR KPIs to the Task Force, which evaluates the results achieved or take actions where necessary. Each focus area has a CSR Work Force for substantive discussions and working out (sub)activities. Business performance Governance Financial statements 2017 Other


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    About a.s.r. | 2.2 Value creation model 20 2.2.2 a.s.r.’s contribution to the UN Sustainable Development Goals On 25 September 2015, 193 world leaders committed themselves to seventeen Sustainable Development Goals (SDGs) to work on sustainable development worldwide. Between now and 2030, these goals will focus on the eradication of global poverty and inequality, combating climate change and creating a prosperous and peaceful life for all. Not only governments, but also companies have a contribution to make in this context. a.s.r. contributes to the SDGs in its value creation process. a.s.r. examined where the largest contribution is made. Although the seventeen SDGs are related and a.s.r. has an impact on different fronts, a.s.r. contributes to SDG 8 (Decent work and economic growth) objectives in all four roles. As an insurer, a.s.r. contributes to income and work by focusing on prevention (and reducing the risks) of unemployment due to sickness or disability. As an investor, a.s.r. invests with a strict ESG policy aimed at stimulating sustainable economic growth. As an employer, a.s.r. contributes to economic productivity through a strong focus on vitality and development. And, to conclude, a.s.r. contributes to people’s financial self-reliance and is committed to keeping products available for customers with payment problems (access to financial services). Decent work and economic growth: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. a.s.r. also contributes to other SDGs that are further reflected in the relevant sections. Below is a brief overview of its impact, subdivided into the four themes: ‘Sustainable insurer’, ‘Sustainable investor’, ‘Sustainable employer’ and ‘Social role’. Sustainable insurer a.s.r. investigates the possibilities of making its insurance products and services more sustainable. a.s.r. focuses on prevention, safety and building up capital responsibly. For example, there is attention for climate adaptation (SDG 13) within Non-life. Within Pensions, the SRI policy and the exclusion list of Group Asset Management is pragmatically applied (for the relevant SDGs, see below, under ‘Sustainable investor’). And within Disability, De Amersfoortse has started a partnership with other parties to get people, who have or had cancer, back to work (SDG 3 and 8). Also, in order to further strengthen the impact of a.s.r., conscious choices are made in whether or not to enter into relationships with customers and suppliers by pursuing the Customer Due Diligence (CDD) policy (for more information about CDD policy see also Chapter 2.4 and 3.1.3). Read more about a.s.r.’s impact regard its products and services in Chapter 3.2 (Segment performance). Sustainable investor In the investment process, a.s.r. pays special attention to impact investing, seeking to make a sustainable contribution to society, for instance through investing in renewable energy (solar and wind, SDG 7) and social enterprises (SDG 8). On the other hand, a.s.r. does not invest in arms trading (SDG 16) or the tobacco industry (SDG 3). As a real estate investment manager, a.s.r. contributes to sustainable and liveable cities (SDG 11) by investing in, among other things, energy-efficient buildings, renewable energy applications, greenery and liveability. As a sustainable investor, a.s.r. touches on a wide range of SDGs. Read more about sustainable investing and sustainable real estate investing on pages 66 and 70. Sustainable employer a.s.r. strives for an inclusive culture, in which the diversity of employees is recognised, valued and put to use, and in which people with a distance from the labour market also have a place (SDG 8). Specific targets have been set in the context of gender equality (SDG 5). Read more about a.s.r.’s diversity policy on page 35.


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    About a.s.r. | 2.2 Value creation model 21 Social role Introduction The department a.s.r. foundation initiates projects on awareness and financial self-reliance. By teaching and supporting people in reading and arithmetic, being able to handle money and organising their financial administration, a.s.r. contributes to financial self-reliance (SDG 1). a.s.r. also adheres to and executes the ethics manifesto ‘From Debts to Opportunities’: customers who are behind on payments are approached in a timely and pro-active manner to resolve their payment problems (SDG 8). Read more about the objectives and results regarding financial self-reliance on page 44. a.s.r. is convinced that it is important to pay attention to its own direct footprint and sets a good example as a responsible company by limiting its negative impact on the environment. a.s.r. therefore sets the ambition to become 100% carbon-neutral by 2020 (SDG 7). Read more about the targets and results regarding a.s.r.’s carbon About a.s.r. footprint on page 46. Business performance Governance Sustainable investor Sustainable insurer Sustainable employer Financial statements 2017 Social role Other


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    About a.s.r. | 2.3 Key trends 22 2.3 Key trends The coming years may bring changes that could have a major impact on a.s.r. The most important of these will be driven by technological innovation, economic developments and their impact on global financial markets, social and demographic trends, politics and regulatory supervision, climate change and a declining insurance market. Technological innovation Various technological innovations will have a significant impact on the scope and position of insurers in the value chain. Big data is generating a vast amount of information that can be used for a range of purposes such as customised solutions to meet customer requirements, risk pricing, improvement of retention rates, prevention, lead generation and fraud detection. The Internet of Things, where devices are constantly online and sending or receiving relevant information, could improve prevention of damage, resulting in a reduction of claims. Smartphones and tablets are increasingly being used in customer interfaces that require simple and straightforward digital services. Health-related technology can contribute to a longer, healthier life. Predictability and determination of factors influencing people’s health is improving thanks to wearables, which give customers (and insurance companies, where possible and desired) more information that could help them move from cure to prevention. Technological developments in the area of artificial intelligence, blockchain, quant computing and robotics have the potential to disrupt or to re-invent the insurance industry. Artificial intelligence and big data, for example, could prompt a shift from risk mitigation (via insurance solutions) towards risk prevention (e.g. self-driving cars, increased focus on preventing illness). These technologies could change the nature, magnitude and type of risks that customers want to mitigate. Insurers could help to cover the residual risk and their role could therefore shift to helping customers prevent risks. Robotics could also dramatically improve process efficiencies and, in the long term, could also improve the quality of processes. Opportunities Risks • New technology is creating new forms of risks • New technology is creating new forms of risk for which customers seek cover. (e.g. cyber risk for which customers seek cover. (e.g. cyber risk and security, for more information see Chapter and security, for more information see Chapter 3.3.1 (Risk Management); 3.3.1 (Risk Management); • Technological developments could disrupt • Technological developments could disrupt traditional insurance models; traditional insurance models; • Customers are becoming more comfortable • Customers are becoming more comfortable with exploring opportunities with non- with exploring opportunities with non- traditional ‘start-up’ companies in the financial traditional ‘start-up’ companies in the financial sector. They could be willing to consider sector. They could be willing to consider products that offer something different than products that offer something different than traditional savings and pension models; traditional savings and pension models; • Technologies can help customers and solve • Talent with digital skills is crucial for success their problems; and is becoming increasingly difficult to find. • Talent with digital skills is crucial for success The in-house development of this talent is key; and is becoming increasingly difficult to find. • Through technology, customers or alternative The in-house development of this talent is key; platforms are able to offer services themselves • Through technology, customers or alternative without or with less help from traditional platforms are able to offer services themselves parties. More and more alternative collectives without or with less help from traditional and several platforms are emerging in this way. parties. More and more alternative collectives and several platforms are emerging in this way.


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    About a.s.r. | 2.3 Key trends 23 a.s.r.’s answers Introduction Technological developments are changing the world. They are providing new opportunities for optimising current service delivery and developing additional services. Big data also poses an ethical dilemma. Full transparency on individual profiles could lead to a selective acceptance of risks, undermining the collective principle of insurance. Exploiting these new opportunities requires an innovative approach. In this context, a.s.r. distinguishes three horizons: 1. Optimisation of current processes, focusing on efficiency and cost savings (e.g. in distribution and communication); 2. Transforming the existing business model with the aim of making the end-to-end service provision more relevant, mainly through digitisation; About a.s.r. 3. Developing disruptive initiatives focusing on new business, service and revenue models (separate from the existing business). In 2017, a special team (Innovation & Digital) was set up to support the transformation and disruption. For disruptive initiatives with the potential to quickly capture market share or penetrate new markets, a new innovation space was also set up, the Mission Control lab. This team organises customer panels to test new concepts. A growing number of online tools are also being used and web and data analyses are being further developed. The selected approach is in line with the a.s.r. business strategy, which aims to improve and further develop the Business performance current business and to proactively develop new business. This can give rise to a conflict of interests, for example in finding a balance between the optimisation of current processes and transformation on the one hand and disruptive initiatives on the other. Investments in optimisation generally yield more revenue and security. Transformation and disruptive models, on the other hand, require different skills and metrics. They may create more risk in the short term, but in the longer term they could provide more value for all stakeholders. Bringing innovation together in one place within the organisation forces clear choices to be made. The Innovation & Digital team reports directly to the Executive Board. Disruptive initiatives are managed separately and are organised separate from the a.s.r. organisation. Governance In 2017, the Innovation & Digital team contributed to a new and dedicated website with an innovative tool: www.potjevoorlater.nl. This gives customers an easy way to decide how they want to live later on in life and how much money they will need to do so. The website serves a clear customer need now that the State is stepping back and people are having to save more for their pensions themselves. Big data plays an important role in many innovations. Mission Control is also considering applications such as prevention of damage to cars. a.s.r.’s knowledge on the number, times and locations of claims can be translated into customer information and used to develop new products and services, such as an insurance product for a specific route and/or a specified number of kilometres. Financial statements 2017 In 2017, the Innovation & Digital team built a new website for De Amersfoortse using an innovative ‘target group- driven’ concept. Customers don’t automatically see all information on the website, but each target group is offered only the information that is relevant. In late 2016, the asr.nl website was also overhauled, becoming a fully dialogue-driven insurance website in the Netherlands. The new website was further optimised during the year. In 2017, asr.nl was awarded a silver jury prize by ‘Lovie’ for Europe’s best website, chiefly for its uniqueness in financial services. Robotic Process Automation (RPA) is piloted in several departments (Finance, P&C and Individual life). If a process is not straight through, RPA can create further efficiency. In 2017, the Life segment began using a RPA to perform simple tasks. This primarily helps to reduce costs. It also frees up employees to focus more on tasks with added value for customers. Finally, the initiative gives a.s.r. the experience and knowledge to deploy robots elsewhere in its business processes. Other Economic developments The insurance industry has operated in a low interest rate environment for many years. Institutional investors such as insurance companies search for adequately yielding assets for their investment portfolios. Global economic growth accelerated in 2017. Economic growth in the Eurozone and the United States was healthy and stock markets in these regions performed very well. Interest rates rose somewhat, yet remained at historically low


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    About a.s.r. | 2.3 Key trends 24 levels, especially in the Eurozone, driven by the ECB’s policy of quantitative easing. On the back of ECB activity and compounded by strong economic growth, there was a further tightening of credit spreads. The investment portfolio consequently performed strongly in 2017, but conditions for insurers and other institutional investors remained challenging, with low interest rates and low risk premiums resulting in reduced investment returns. Against this background, a.s.r. expects the search for yield to continue. Central Banks, including the Federal Reserve in the US and the ECB in the Eurozone, have begun reducing their monetary expansion of past years, and are likely to continue doing so in the years ahead. Margins on traditional, capital intensive spread-based products have become thin. At the same time, regulators require insurers to hold more capital to ensure that policyholders’ interests are safeguarded at all times. Products with guaranteed minimum returns have become highly expensive. This is causing insurers to move from capital-intensive to capital-light products, such as defined contribution pensions and asset management propositions. Opportunities Risks • Capital-light life products (e.g. defined • Prolonged low interest rate environment contribution plan products); and/or financial markets turmoil, and • Further development of the Distribution reduced rewards for risk which may and Services segment; squeeze future profits and as reduced • Sustainable business enhancement via investment returns this may reduce the asset management solutions across all attractiveness of spread-based businesses assets classes for external clients. such as defined benefit plans. For more information see Chapter 3.3.1 (Risk Management); • Capital-light life products (e.g. defined contribution plan products). a.s.r.’s answers a.s.r. expects the risk of rising rates to be higher than that of lower rates. a.s.r. is positioning its investment portfolio and interest rate hedging strategy accordingly. a.s.r. is offering a wide range of capital-light pension products (defined contribution), het Nederlandse pensioen- fonds (Dutch pension fund; Hnpf) and IORP (Institution of Occupational Retirement Provision) products via a joint venture. a.s.r. has successfully increased its market share in the defined contribution product segment. During 2017, a.s.r. migrated a large part of the existing defined contribution products to a single platform. In the past years, a.s.r. strengthened its position in the Distribution and Services segment through the acquisition of Van Kampen Groep (VKG), Dutch ID, SuperGarant and Corins. In 2017, a.s.r. asset management significantly expanded its third-party asset management business, successfully introducing two flagship mutual funds for institutional investors in the mortgages and Euro ESG investment grade credits asset classes. The a.s.r. mortgage fund gives investors access to Dutch residential mortgages originated by a.s.r. A unique element of this fund is that it offers two subsidiary funds: investing in mortgages with or without national mortgage guarantee. The assets under management amount to € 0.5 billion at the end of 2017. The fund also received € 0.3 billion in commitments. The a.s.r. ESG Euro credit fund fully includes the a.s.r. Socially Responsible Investment (SRI) policy in its investment process and offers an attractive risk-return profile against the benchmark. The assets under management in this fund grew to approximately € 0.5 billion. At the end of 2017, a.s.r. further strengthened its asset management capabilities through the acquisition of First Investments, an asset manager specialising in liability-driven solutions for pension funds. Social and demographic developments Trends in society are encouraging the development of new products and services and/or altering the procedures adopted by insurance companies. Different factors play a role in this context. Consumer behaviour is shifting away from owning items and towards sharing them. There is a trend towards individualisation: ‘Why should I pay for the risk incurred by someone else?’ This development is intensified by what is termed usage-based insurance (UBI) and the growing availability of data, which allows for a radical differentiation which could lead to further individualisation. This is putting pressure on the solidarity principle, potentially resulting in ‘uninsurable risks’ at the peripheries of society.


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    About a.s.r. | 2.3 Key trends 25 Fewer people spend their entire working life with the same employer. Jobs are continually being created and Introduction evolve or disappear over time. This process also invokes many job switches, including from flexible to definite contracts, from having an employer to being self-employed and vice versa. In recent years, the trend towards fewer permanent employees, more employees on flexible contracts and more self-employed people has become more pronounced. Life expectancy is rising. This is making the existing social welfare system less affordable. In the future, pensions are likely to be designed more individually. This might affect the product portfolios offered by insurers and pension funds. Another consequence of the steady increase in life expectancy, combined with expensive technological innovations, is that health care will become more expensive year on year. This seems to be an ongoing trend which will put pressure on the existing medical insurance system. About a.s.r. Opportunities Risks • Changes in consumer behaviour, resulting • Changes in consumer behaviour, resulting in declining and evolving demand for in declining and evolving demand for insurance products. For more information insurance products. For more information see Chapter 3.3.1 (Risk Management); see Chapter 3.3.1 (Risk Management); • Supporting the health of customers and • Unforeseen rises in life expectancy may Business performance employees is in line with a.s.r.’s objective to have a major impact on future profitability, contribute to society and potentially lower though mitigated by a.s.r.’s funeral and claims in Health and Disability; term life business; • Further reduction of the principle of • The move from retail to wholesale purchase solidarity and growing attention for of insurance products (for instance, when individual solutions, possibly offset by consumers move from car ownership to mandatory solutions for uninsurable car-sharing, cover will be purchased by the groups; organisation that owns the vehicle), which • Increasing number of self-employed will squeeze margins; professionals (ZZP), seeking insurance and • Further reduction of the principle of savings solutions; solidarity and growing attention for • Customers need to prepare for longer individual solutions, possibly compensated Governance working life in order to sustain lifestyle. by mandatory solutions for uninsurable groups. a.s.r.’s answers a.s.r. pensions responds to the increasing rate of life expectancy by focusing on capital-light products (DC product with reinvestment, IORP). It also makes the best possible use of current legislation and closely monitors changes in legislation. The expected expansion of individual choices is already visible in legislation. a.s.r. pensions is anticipating this by facilitating communication and extensive digitisation with a personal touch. Within Disability Financial statements 2017 a.s.r. is providing customers (self-employed) with services to remain mentally and physically fit. a.s.r. encourages employees to continue to develop themselves and boost their long-term employability. This approach is also anchored in ‘De Andere Cao’, which has been in force since 1 January 2018. The ‘In Motion’ programme and the programmes linked to the annual employee review are also geared to personal development and sustainable employability. This is covered in more detail in Chapter 2.5 (Our people). Not only does a.s.r. encourages its employees to take preventive measures and remain healthy, it encourages its customers too, where possible. Other


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    About a.s.r. | 2.3 Key trends 26 Politics and regulatory supervision In the financial sector, the trend is towards more regulation and State intervention. Consumer protection (for example, regulations to increase the protection of personal information – the General Data Protection Regulation) takes precedence and risk mitigation is broadly supported by politicians and regulatory bodies alike. There is an increased effort needed to comply with regulation, as illustrated by the emergence of Solvency II and the upcoming change in accounting standards (e.g. IFRS 17). Opportunities Risks • Solvency II and increased scrutiny of the • New and increased levels of regulation, for capitalisation of insurance companies may instance, in the field of Pensions, Disability speed up consolidation in the Netherlands and Health, may impact existing business and enhance the opportunity-set for models. For more information see Chapter possible acquisitions for a.s.r.; 3.3.1 (Risk Management); • IFRS17; • Juridification of society with specific • Quicker reporting on Solvency II; political, regulatory and public attention to • Privacy / AVG. unit-linked life insurance policies. Current and/or future legal proceedings (e.g. of unit-linked life insurance products) brought upon a.s.r., could be applied to or be relevant for other insurance products. For more information see Chapter 3.3.1 (Risk Management); • Increasing levels of regulation, forcing a move from entrepreneurship to ‘de facto’ implementation of publicly established regulations. a.s.r.’s answers a.s.r. recognises the need for clear and sound regulation, as this will help to build and maintain trust in the financial sector. It is important, however, to achieve the right balance and prevent regulation from severely disrupting the business, which will in turn increase costs for customers and reduce their appetite for buying protection for risks, also those which they may not be able to bear individually. The Legal and Integrity departments supervise controlled and ethical business operations, investing heavily in awareness and knowledge. In 2017, for example, all employees were asked to take part in an online game and Q&A session (Gamification) which refreshed their knowledge of the code of conduct, among other aspects. A legislative and regulatory committee was set up in 2017 to respond efficiently to changing legislation and regulations. This committee helps the various business lines identify and apply legislative changes in time. a.s.r. is currently investigating to what extent automation can play a role. Products are also being rationalised and the ICT system landscape of e.g. P&C, Individual life and Pensions is being simplified. This will mitigate the impact of legislation and regulations.


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    About a.s.r. | 2.3 Key trends 27 Financial implications of climate change Introduction Climate change poses significant financial challenges and opportunities, now and in the future. The risk-return profile of organisations exposed to climate-related risks may change significantly as such organisations are increasingly impacted by the physical effects of climate change, climate policy and new technologies. Climate change also alters the risk profile of insurers as the predictability of the weather decreases and claim patterns potentially change over time. Well-educated and experienced employees who understand underwriting and risk-pricing are therefore crucial for the future profitability of insurers. Risk prevention is likely to become more important. About a.s.r. Opportunities Risks • Developing additional services to • Impact of climate change on the risk profile differentiate and help make customers of P&C business, P&C clients and a.s.r. itself more aware of the need for prevention as an asset manager. (expertise, inspection, prevention and damage repair); • Climate change may impact clients’ perception of exposure to risks they are unable or unwilling to bear and persuade Business performance them to seek insurance cover; • Growing investor attention for ESG criteria provides a basis for ESG-driven investment funds. a.s.r.’s answers a.s.r. is aware of the importance and responsibility of its combined role as an insurance company, asset-holder and manager of assets and real estate. Climate change poses a direct threat to a.s.r.’s business, both in term of its liabilities – the claims it has to pay out – and in terms of its assets – the value of its investments. Climate change also enforces unprecedented necessity for action. Governance As an insurer, there are various ways in which a.s.r. can be impacted by climate change risks. a.s.r. believes that climate change risks are mainly likely to affect the P&C business. For example, more frequent weather-related events such as wind or hailstorms could lead to a higher claims ratio, affecting the profitability in P&C. In October 2017, P&C set up the a.s.r. climate committee to examine what measures must be taken to manage risks and support customers as effectively as possible from the impact of climate change. a.s.r. currently manages the impact of climate change and weather-related events at different levels in its operations. It analyses climate change as a whole and calamities in particular on a regular basis. As a signatory to the Paris Pledge for Action, a.s.r. is involved in initiatives to limit global warming to 1.5°C. It has Financial statements 2017 also analysed and identified risks for the investment portfolio, such as stranded assets and changing business models in the mining and energy sectors. As a result, for its investment portfolio a.s.r. expanded its exclusion policy in July 2017 with controversial environmental activities, for example excluding companies that derive 33% or more of their revenues from tar-sands and shale oil. It also excludes countries that achieve a low score (below 50) on the environmental performance index. On the other hand, a.s.r. invests in renewable energy and ‘cleantech’ and endorses high-scoring countries and companies in its ESG integration policy. Its strict ESG policy (see page 67), which incorporates extensive requirements with regard to climate change, also makes a.s.r. more attractive for a growing number of (responsible) investors. a.s.r. aims to manage its environmental footprint effectively by reducing its use of natural resources, seeking green alternatives and offsetting its carbon emissions (see page 46). Other


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    About a.s.r. | 2.3 Key trends 28 Declining insurance market The Dutch insurance market is saturated. Looking at the volumes of GWP which includes higher lapses at this point in time, a.s.r. envisages a steady long-term run-off pattern in the individual life market. The volumes of a.s.r.’s GWP – excluding acquisitions – are roughly in line with market developments. If lapses and early surrenders continue at the present rate, a.s.r.’s life portfolio will be less than half its current size in a decade’s time. In pensions, where the market has also declined in recent years, traditional defined benefits contracts are slowly shifting towards defined contribution or asset management solutions. The P&C and disability markets have undergone cyclical contraction. Due to a.s.r.’s value-over-volume strategy, a limited fall in the GWP in P&C was noticed in the period 2012-2014, which – after having bottomed out – now has new scope for a limited and healthy increase driven by price and volumes. Opportunities Risks • Consolidation potential in the ‘closed’ • Further consolidation of other insurers book for life and funeral insurance; affecting a.s.r.’s position and resulting • Opportunities to grow organically and intense competition in the Dutch market. inorganically in the non-life and disability For more information see Chapter 3.3.1 insurance markets. (Risk Management); • Acceleration of decline, fuelling ‘cost squeeze’ at a.s.r. life. a.s.r.’s answer When opportunities for acquisitions arise in the market, a.s.r. reviews these opportunities carefully and thoroughly based on pre-determined criteria. a.s.r. does not acquire at any price, but only if doing so is in line with its strategy, complies with strict financial frameworks and strengthens the sum of the parts. The preference is for consolidation of single lines of business allowing other parts of the company to continue their day-to-day business without interference. In the past three years, a.s.r. has made ten acquisitions that fit this policy. In 2017, a.s.r. announced the acquisition of Generali Nederland. In addition to organic growth, a.s.r. sees further opportunities to grow its business through acquisitions.


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    About a.s.r. | 2.4 Our stakeholders and material issues 29 2.4 Our stakeholders and material issues Introduction a.s.r.’s main stakeholders are its customers, employees, shareholders and society at large. It is in continuous dialogue with these stakeholders about its priorities, objectives and policy, a context in which customers play a central role. Long-term relationships with its customers enable a.s.r. to create long-term value for its employees, shareholders and society at large as well. About a.s.r. Customers Customers entrust their assets (premiums) to a.s.r., giving it a ‘license to operate’. They need to be confident that these funds are being skilfully managed and that a.s.r. will continue to fulfil its long-term commitments. They also want this done in an impeccable, socially responsible, relevant and ethical way. Product requirements, perceptions and social standards are constantly evolving, and a.s.r. is committed to anticipating and responding to this changing context. Employees Employees want a professional working relationship allowing them to make their own career choices and to retain Business performance and enhance their attractiveness to the labour market. They also want to be proud of the company they work for. Personal development, pride and income security within (and eventually after) a.s.r. translate into employee engagement. All this makes a positive contribution to the interests of a.s.r. and its stakeholders. Shareholders a.s.r.’s shareholders rely on the implementation of its strategy. They expect management to seize the opportunities that arise and permanently monitor risks. They want a dividend that offers attractive return on their investment. Shareholders are also increasingly interested in the social relevance of the companies they invest in. It is in their interest that a.s.r. adequately represents the interests of all stakeholders in order to achieve long-term value creation and return on capital. Society at large Governance Other a.s.r. stakeholders are business partners including intermediaries, regulators, politicians, trade unions, the media and civil society organisations. They expect a.s.r. to create a sustainable and responsible societal value in both the short and long term. Dialogue with stakeholders a.s.r. believes it is important to maintain a good relationship and good communications with all of its stakeholders, therefore a.s.r. conducts an ongoing dialogue with its stakeholders. Last year, it invited a group of internal and external stakeholders to engage in an in-depth discussion of a number of material issues. This dialogue concerned the testing and updating of the materiality matrix from 2016 to determine relevant reporting themes for 2017 and Financial statements 2017 to support the development and implementation of (sustainability) policies. During the 2017 dialogue, members of the Executive Board discussed with a broad group of stakeholders the question ‘What does it mean to be a sustainable and socially valuable and desirable insurer?’. Discussions centred on three subsidiary themes: ‘Sustainable insurer’, ‘Sustainable investor’ and the ‘Social role of a.s.r.’. Participants were drawn from key internal and external stakeholder groups representing the broadest possible cross-section of a.s.r.’s stakeholders. One of the key discussion points during the dialogue with stakeholders was the coherence and consistency (and hence integration) between a.s.r.’s corporate strategy, investment policy and general policy. The organisation undertakes several roles: investor, supplier of insurance products and services, lessee and lessor of real estate and buyer of products and services. In some situations, these roles can conflict with one another and give rise to dilemmas. a.s.r. has therefore devised an assessment framework for addressing social and ethical dilemmas, Other the aim being to help each other, learn from each other and work together on a solution. The CSR Taskforce (Chapter 2.2 CSR Governance) acts as a platform within a.s.r. to discuss social and ethical dilemmas. Decision- making can also take place in the Taskforce if this is not possible in the business line. a.s.r. believes that external transparency on this issue is vital. Stakeholders also specifically mentioned this as a point requiring attention. As a sustainable insurer, a.s.r. wants to engage in dialogue and exert influence in order to set parties in motion rather than exclude them. This is in line with a.s.r.’s commitment to be a sustainable insurer.


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    About a.s.r. | 2.4 Our stakeholders and material issues 30 Social and ethical dilemmas a.s.r. wants to play a prominent role in corporate social responsibility (CSR) in the financial sector. As an insurer, investor, employer and as a committed member of the community, a.s.r. is always looking for the right balance between people, planet and profit. For a.s.r.’s insurance activities the Customer Due Diligence (CDD) policy has been put in place to avoid that business relations are established with customers (and suppliers) involved in crime or other socially undesired actions, thus jeopardising a.s.r.’s reputation and integrity. Examples include money laundering, tax fraud, insurance fraud, financing terrorism, corruption, environmental offences, conflicts of interest and insider trading. For the investments of Group Asset Management (GAM), the Socially Responsible Investment (SRI) policy applies. The SRI policy focuses on the screening of large, international and listed companies on ethical and sustainability criteria. Countries and external providers are also screened. These screenings result in an SRI exclusions list for investing. GAM also excludes businesses based on their conduct, such as gross violations of the UN Global Compact principles, for example in the area of human rights, labour rights and the environment. These different angles of CDD, SRI and CSR may however conflict with one another and create social and ethical dilemmas. For instance, is it an acceptable exception to offer employees of an excluded company a pension insurance solution? If so, under which conditions is such an exception justified to all stakeholders? Another example of a dilemma is when a company acting in violation of a.s.r.’s exclusions policy has formed a pension foundation for its staff in the past and now wants to transfer the existing entitlements of its (former) employees to a.s.r. (buy-out). This, too, poses the dilemma for a.s.r. as to whether the SRI policy should be guiding in such decisions, or whether the rights of individual participants should be prioritised. Considerations such as corporate versus private customers, new versus existing customers and the nature of products should be taken into account in this context. But also customers with a parent company that is active in a field of controversial activities, changes in the exclusion list (by the changing spirit of the age, for example) and customers arising from acquisitions, make that every case is unique and mean that careful consideration is required of the different interests of the stakeholders involved in relation to a.s.r.’s policy before a decision can be taken on, for example, whether or not to accept customers. A third key discussion point mentioned by stakeholders was cooperation. a.s.r. has considerable knowledge and operates a large network within and beyond the insurance industry. It can further strengthen its social role by working more closely with national and regional parties and players within the sector. In CSR and innovation in particular, a.s.r. is seeking opportunities to invest with other parties, exchange knowledge and help in the further development of social initiatives. In 2017, for example, it set up a financing structure with Triodos in order to exert a sustainable influence on the business community through investments. Other examples are the involvement in the ‘Beter Bereikbaar Utrecht-Oost’ (towards a more accessible Eastern Utrecht) platform, through which a.s.r. is contributing to the region’s accessibility in conjunction with the University Medical Center (UMC), Utrecht University (UU) and Utrecht University of Applied Sciences (HU). This takes the form of combined promotion of bicycle use and efforts to improve and encourage use of public transport, reduce traffic problems and cut the CO2 footprint. a.s.r. is also one of six partners in the GOUD project (Geothermie Oost Utrecht Duurzaam, or Sustainable East Utrecht Geothermics), which investigates whether ultra-deep geothermics is feasible in the eastern Utrecht region. In the area of sustainable deployment, a.s.r.’s career coaches seek, in collaboration with Stichting Tussenvoorziening in Utrecht, to help formerly homeless people to re-enter the job market by, for example, offering workshops (on how to apply for a job, for example). Also, a number of formerly homeless people received individual guidance from talented participants of the development programme. Furthermore, a.s.r. is seeking collaboration with fintech and insurtech start-ups and accelerators to develop new customer solutions and applications and explore new business models to create shared value for a.s.r. and its stakeholders. One of the points of attention for reporting which emerged was that a.s.r. could communicate more about its contribution to the Sustainable Development Goals (SDGs). In 2017, a.s.r. investigated where its impact on the goals was greatest and where it could make concrete contributions. Chapter 2.2 (Value creation model) discuss this in more detail. More information about the a.s.r.’s stakeholder approach can be found in Annex D (GRI 102-43).


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    About a.s.r. | 2.4 Our stakeholders and material issues 31 Determining a.s.r.’s most material topics Introduction a.s.r. compiles an annual materiality matrix. This is done to determine reporting themes and to map out stakeholders’ interests and expectations, which serves as relevant input for policy design and implementation. The materiality analysis takes issues into account that influence stakeholder assessments and decisions, and topics that are important for a.s.r.’s overall business performance. This also includes the impact a.s.r. has on the economy, the environment and the society, both positively and negatively. The results are shown in the materiality matrix below. The 2016 materiality matrix was the starting point for determining a.s.r.’s material themes for 2017. The themes in the materiality matrix were further tested during internal and external stakeholder dialogues and adjusted on the vertical axis where necessary. Senior managers at a.s.r. were also consulted to reassess the material themes. These are themes that are relevant for the implementation of the strategy and long-term value creation of a.s.r. About a.s.r. (horizontal axis). The Executive Board has validated the materiality matrix. Materiality matrix 2017 Relevance to stakeholders High C B E A Business performance D G F H J K I Q O N L M P Low Governance Low High Relevance to a.s.r. Reference # Material themes and description (Chapter) A Customer satisfaction 3.1.3, 3.2 Degree of customer satisfaction in terms of quality and availability of services, comprehensible communication and customer orientation. B Offering socially responsible products and services 3.2 Financial statements 2017 To develop sustainable products and services and encourage customers to positively and actively opt for them. The focus is on initiatives in the areas of safety (around the home, in traffic, at work, etc.), prevention (of care and disability) and sustainable asset-building. C Transparent product and service descriptions 3.1.3 Clear and accessible communication with customers about products and services to enable them to understand the added value and characteristics of a product or service in order to facilitate choice. D Financial performance 3.1.1, A financially reliable and stable institution strong enough to achieve its financial targets and objectives. 3.1.2, 5 E Continuing to meet increasingly stringent legislation and regulations 3.3 Compliance with ever-evolving national and international legislation and regulations and the resulting requirements of regulators. F Solvency 3.1.2, The solvency position reflects the way a.s.r. can fulfil its short-term and long-term obligations and commitments to all 5.8, 5.9 its stakeholders. This is expressed by the ratio of available capital and solvency capital requirement (SCR ratio). a.s.r. Other has set limits and internal targets for the statutory framework at different levels. The key objective in this context is to guarantee the required level of solvency and to uphold S&P ‘single A’ rating at group level. G Socially responsible investment 3.2.3 Investing with due regard for ethical standards, policies and procedures, in line with the interests of a.s.r. stakeholders, whereby the integration of ESG criteria is key. This includes respect for fundamental human rights, labour rights, the environment and adequate corporate governance.


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    About a.s.r. | 2.4 Our stakeholders and material issues 32 Reference # Material themes and description (Chapter) H Integrity 3.1.3 Acting in compliance with applicable laws and regulations, ethical standards and the internal standards to which they give rise. Meeting the (justified) expectations of stakeholders and putting the customer’s interests first. I Innovation 2.3 A corporate culture focused on continuously adapting and translating new customer expectations into new solutions and applications that deliver relevance and sustainable value for customers and society. This is achieved by adopting other ways of working (together) both internally and externally, as well as anticipating and applying new technologies. J Vitality 2.5 Helping employees to remain mentally and physically healthy and vital at work so that they can continue to add value to a.s.r. K Risk management 3.3.1, 5.8 Risk management is an integral part of daily business operations. a.s.r. applies an integral approach to managing risks, thereby ensuring that strategic objectives are met. Value is created by striking the right balance between risk and return, whilst ensuring that obligations to stakeholders are met. Risk management supports and advises a.s.r. in identifying, measuring and managing risks, and ensures that adequate and immediate action is taken in the event of changes in the risk profile. L Sustainable employment 2.5 Encouraging employees to develop themselves with the aim of maintaining and or increasing their opportunities in the internal and external labour market. M Information and cyber security 3.3.1 a.s.r.’s protection against, and response to, attack, theft or damage to infrastructure, hardware, software or information (customer data), as well as disruption or misdirection of the services it provides by managing people, processes and technology. N Climate change 2.3, 3.2.1 The impact and risks of climate change on a.s.r.’s customers, advisors, products and services. O Diversity 2.5 A balanced workforce composition based on age, gender, cultural or social origin, skills, views and working styles. P Assessing suppliers on their impact on society 3.1.3 Encouraging environmental and social standards in a.s.r.’s supply chain as well as assessing the positive and negative impact of suppliers on society. Q Contributing to financial self-reliance 3.1.3 Offering the knowledge and skills of its employees to help people avoid getting into debt or to get them out of debt.


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    About a.s.r. | 2.5 Our people 33 2.5 Our people Introduction Our mission is helping by doing. Employees are a crucial factor in successfully executing a.s.r.’s strategy. As described in the story of a.s.r. (Chapter 2.1 Our strategy), customers and the wider society benefit from the excellent service, expertise, positive attitude and social commitment of its employees. a.s.r. needs competent and vital employees who are enterprising and versatile to realise ‘the story of a.s.r.’. About a.s.r. Employees who can and dare to take control of their day to day work, including their own careers. That is why a.s.r.’s personnel policy focuses on employability, on supporting employees in their professional development and on boosting their continued employability and labour market attractiveness. This is also reflected in the starting points of ’De Andere Cao’, a.s.r.’s new, home-grown corporate Collective Labour Agreement (CLA) which took effect on 1 January 2018. The a.s.r. culture The story of a.s.r. was written in early 2017. a.s.r.’s strategy, mission, vision and core values were also reformulated at this time (see also Chapter 2.1 Our strategy). Business performance Everyone at a.s.r. abides by the organisation’s core values, which sets out the basic approach and are used as a behavioural compass. These core values are: • ‘I’m helpful’. Employees are approachable, listen attentively, then help with solutions using their expertise, experience and commitment; • ‘I think ahead’. Employees empathise and think ahead to proactively help customers, advisors and colleagues; • ‘I act decisively’. Employees are alert and sharp to content and process, and come up with solutions. They coordinate, are persistent and stand by their commitments. Leadership is key to all this. Not only from managers, but from everyone. The way in which employees interact with each other ties in with this: for example, in the sharing of practical dilemmas. There is no hierarchy in this regard. The point of departure is that employees help each other, learn from each other and work together to come up with a solution. There is room for dialogue, the framework in which work is done are clear and responsibility is Governance placed at the lowest possible level. It is about doing rather than talking. The story of a.s.r. was shared by the Executive Board with senior management and their management teams and subsequently within the business lines. It was transposed to make it applicable for each business line. The employees then set to work within their teams to discuss what the core values meant for their roles and where they could develop themselves further. The story of a.s.r. is regularly highlighted and made visible through various communication channels, like the gamification platform. The story of a.s.r. was also given a prominent role in the new in-house CLA which a.s.r. compiled with the trade unions in 2017. Financial statements 2017 Permanent employability and agility Development and vitality a.s.r. considers the promotion of ongoing employability and agility in its employees to be crucial. It therefore invests in development, vitality and facilities that encourage time- and location-independent work. In order to enhance professional knowledge and skills, employees are offered a wide range of job-related education and training courses. All employees can moreover call on career coaching and choose from a wide range of workshops on sustainable employability. In 2017, groups of employees were also offered tailor-made (development) programmes. These included the Professional development programme and the Talent development programme for employees identified as (emerging) professional talent or top talent in the annual employee review. a.s.r. also runs a Management Development Programme for employees who are in or may be assuming a leadership role. Finally, a special programme was launched in 2017 for employees who, based on the employee review, are in the designated ‘right person in the right place’ group. Other In motion a.s.r.’s ‘In Motion’ initiative encourages employees to continue to develop themselves in order to improve their employability (inside or outside a.s.r.) and avoid (future) redundancies. ‘In Motion’ is intended for all employees, with specific attention for those affected by a reorganisation. The resources used in this context are career guidance, development programmes, workshops and IM cafes, a live meeting place where career development and ongoing employability are the central focus. 12 IM cafes were organised in 2017 with 658 employees taking part.


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    About a.s.r. | 2.5 Our people 34 Annual employee review During the annual employee review, the performance and potential of all a.s.r. employees is discussed. The employee review is carried out by line manager, the HR advisor and at least one other manager within the same business line, based on the ‘4 eyes’ principle. The results of the employee review are discussed individually with each employee and are used for strategic personnel planning, succession planning, mobility and recruitment, as well as the targeted implementation of the development programmes. Vitality At the beginning of 2017, the Works Council approved the 2016-2020 working conditions policy, after which implementation began. One of the initiatives is Periodic Medical Examinations (PMEs) within all business lines. A PME, known within a.s.r. as the ‘vitality scan’, identifies vitality and health, the work-life balance and possible health risks in all employees. A PME has been offered on a voluntary basis and aims to make employees more aware of the interaction of work and health. They are also given advice on how to deal responsibly with potential health problems and work-related risks. Employees receive a personal report. If necessary, they are invited to attend an interview with an employment expert or the company doctor. a.s.r.’s policy on sickness absence was updated in 2017, with more emphasis given to employees’ responsibility in preventing absenteeism and their own role in the absenteeism process. The aim is to reduce absenteeism within a.s.r. The absenteeism rate for 2017 was 3.95% (2016: 3.68%). Absenteeism rates 31 December 2017 31 December 2016 Male 3.19% 2.76% Female¹ 5.30% 5.34% Total 3.95% 3.68% Employee development training 2017 2016 Employees have completed job-related training 1,729 1,506 Employees took part in one of the development programmes 819 661 Employees followed a workshop sustainable employability 589 948 Employees have completed an individual coaching programme 266 286 Employees were given guidance in the context of redundancy 182 112 Recruitment and selection a.s.r. is regularly looking for new employees who have the ability to learn and develop, have the right knowledge and skills and who feel attracted to ‘the story of a.s.r.’. For HR, therefore, 2017 was partly dominated by employer branding to increase the positive brand awareness of a.s.r. As a result, the recruitment site ‘werkenbijasr.nl’ was brought into line with ‘the story of a.s.r.’. The same was done with the social media which a.s.r. uses to recruit new employees. In 2017, 389 new employees joined a.s.r. In 2017, 31% of vacancies were filled internally; which was within the 30% target. a.s.r. also wants to attract young talent and introduce them to the company. It therefore entered into partnerships with various students’ associations and universities. In 2017, a.s.r. was represented at various events at colleges and universities, including National Econometrist Day, Utrecht University’s Career Day and the Erasmus Recruitment Days. a.s.r. invites college and university students to familiarise themselves with the company. In 2017, for example, a group of second-year Business Economics students from Utrecht University of Applied Sciences visited the company and a.s.r. also organised the Finance Expedition, which involved 24 top students studying Finance. 1 Excluding maternity leave.


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    About a.s.r. | 2.5 Our people 35 Trainee programme Introduction a.s.r. has its own trainee programme in which young talented people carry out roughly four different assignments in one business line over an 18-month period. In addition to the assignments, trainees follow a customised development programme which includes training courses, a buddy programme and projects. After their traineeship, most of the trainees successfully leave the organisation. They particularly appreciate the help and scope they are given to explore what they are good at and what they want to specialise in or further develop themselves in. Eleven trainees started at the company in 2017. Diversity and inclusivity a.s.r. strives for an inclusive culture in which differences between employees are recognised, valued and exploited. About a.s.r. At a.s.r., everyone who wants to use their talents to achieve the company’s objectives will have the opportunity to do so, regardless of gender, age, ethnicity or sexual orientation. By diversity, a.s.r. means all aspects in which people differ from each other: both visible differences, such as age or gender, and less visible ones, such as cultural and social background, physical and mental capacity and styles of working. The fundamental principles of a.s.r.’s diversity policy: 1. A balanced workforce composition based on age, gender, cultural or ethnic origin, physical and mental capacity, beliefs and working styles; 2. Promotion of a balanced composition of management through a policy of positive discrimination; Business performance 3. Equal development opportunities for all employees; 4. Participation of people with limited labour market potential. Objectives of the diversity policy At least 30% of the Supervisory Board, Executive Board and senior management are women. In 2017, both the Supervisory and Executive Boards had three male members and one female member. This brings the representation of women to 25% on both Boards. On 31 December 2017, senior management consisted of 22 members, 6 of whom were women and 16 of whom were men (27%:73%). In order to achieve the 30% target, application of the diversity policy has been explicitly included in the recruitment of the Supervisory and Executive Board members. Diversity policy is part of the recruitment process and the employee review, in which, among other things, succession planning is discussed. Governance a.s.r. is committed to employing at least 70 people through the Participation Desk by 2026. These are individuals with an employment restriction who are covered by the Labour Participation Act. In 2017 a.s.r. had 31 employees with an occupational impairment. In order to achieve the target, the Participation Desk was further professionalised in 2017. Attention was also drawn to this theme within the Management Teams (MTs), the aim being to increase awareness of the Participation Desk and hence the scope to employ people with limited labour market prospects. Employee engagement and organisational success In early 2017, a.s.r. replaced the employee engagement survey for measuring employee satisfaction with the Denison organisational success survey, which measures the success of an organisation in several dimensions and Financial statements 2017 hence gives a broader picture than engagement alone. The results are more comparable to the global benchmark of large organisations, which use the Denison organisational success survey. Over two thirds of a.s.r. employees (69%) took part in this scan. As this was a new research method, the results could not be directly compared to those of previous employee engagement surveys. However, it is clear that a.s.r. achieved a high score for engagement in 2017 compared to other companies. In ‘commitment’ (a co-determining factor for engagement in which vision, core values and and behaviour, knowledge development and empowerment are included), a.s.r. attained a place in the highest scoring 30% of the global benchmark using the new methodology. The overall results show that employees characterise a.s.r. as a learning organisation. They also show that they want more clarity about the strategic direction the company is moving in. Translating customer requirements into concrete solutions is also sometimes experienced as difficult. ‘The a.s.r. story’ focuses on several of these issues. Other The results of the scan differed for each business line. Each MT discussed the results for each business line and devised a follow-up.


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    About a.s.r. | 2.5 Our people 36 Working conditions ‘De Andere Cao’ a.s.r. and the trade unions De Unie, CNV and FNV together established that the sectoral CLA of the Dutch Association of Insurers was no longer sufficiently aligned with the ambition, strategy and ‘the story of a.s.r.’ The parties therefore responded by compiling their own CLA for a.s.r. in 2017: ‘De Andere Cao’. ‘De Andere Cao’ contributes to a sustainable and future-proof a.s.r. A consultation with a.s.r. employees who belonged to one of the aforementioned trade unions showed that all three trade unions were individually supportive of ‘De Andere Cao’. ‘De Andere Cao’ runs for a year and took effect on 1 January 2018. The underlying aim of ‘De Andere Cao’ is self-management, a mature employment relationship and boosting the labour market value of employees. Freedom of choice is possible though not compulsory, and the relationship between manager and employee is based on trust rather than control. The customer is central and ‘De Andere Cao’ contributes to a better work-life balance. The hallmark of ‘De Andere Cao’ is ‘Het Andere Gesprek’. This is held on an ongoing basis and conversation partners and topics can change. ’Het Andere Gesprek’ is used to discuss personal development, conclude agreements on, and evaluate, goals, behaviour and performance, give or ask for coaching and to coordinate efforts, attendance and absence. The ‘De Andere Cao’ consists of four clusters: Culture, Development, Time and Mobility and applies to all employees. The key implications of ‘De Andere Cao’ are: 1. The standard assessment cycle has been abolished; performance, behaviour and development are reviewed on an ongoing basis; 2. Intensive and substantial investment in development, expertise, sustainable employability and vitality and making use of each other’s talents; 3. Working with a standard number of annual hours with no fixed schedules. Attendance and absence at the office and working hours are agreed between manager and employee; 4. The timeframes within which work is done have been extended; 5. A system with plus and minus hours gives employees and managers more scope to absorb peaks and troughs in workloads within the annual standard hours; 6. The allowance for travel expenses will take place via a mobility budget based on, among other things, a kilometrage allowance. With effect from 1 January 2018, all employees will be paid a negotiated pay raise of 2%. Remuneration Principles and governance Chapter 1.3 of the published remuneration policy (see www.asrnl.com) sets out the applicable principles. Governance is covered in Chapter 7. Peer groups Once every three years, an independent consultancy is hired to perform a market comparison (remuneration benchmark). The ASR Remuneration Policy starts from the principle that the average level of total remuneration should actually be below the median of the peer group. The relevant peer group for a.s.r. employees (excluding the Executive Board of ASR Nederland N.V. and Asset Management) consists of the general market. Key features of the remuneration system The fixed pay awarded to the a.s.r. employees consists of a fixed gross monthly salary, a fixed allowance (as a result of the conversion of variable pay for those employed at a.s.r. on 1 July 2014), 8% holiday allowance and a year- end compensation. The level of fixed pay depends on the weight attributed to an employee’s role, the relevant salary group and the employee’s general performance rating (assessment of deliverables and agreements on appropriate conduct). Fixed pay is adjusted for structural wage developments in accordance with the 2017 CLA. Variable remuneration awarded to identified staff prior to 1 July 2014 is paid in instalments over the next few years. Identified staff are conditionally awarded a material share (i.e. 50%) of their variable pay in the form of cash and non-cash instruments. The conditional variable pay is deferred for three years; a reappraisal is carried out at the end of the three-year period, after which the cash component is paid out. The non-cash component is subject to an additional retention period of two years. Some of the unconditional variable pay is paid out in cash immediately. The non-cash component of the unconditional variable pay is also retained for two years. In compliance with the remuneration policy, the remuneration of our employees consists solely of fixed remuneration, with the exception of a number of specific small groups. In addition, a.s.r. knows a few other special


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    About a.s.r. | 2.5 Our people 37 forms of variable remuneration which occur only occasionally and are awarded in accordance with legislation and Introduction regulations. The same applies to severance pay. In December 2017, the Supervisory Board and the Executive Board decided to grant all employees of a.s.r. a one-off payment equal to a monthly salary. It has been agreed with DNB to qualify this payment as a one-off variable payment. A clawback mechanism, fairness clause and penalty scheme are applicable, meaning that the Supervisory Board can claw back any variable pay already awarded if it was based on incorrect information. The Supervisory Board is also entitled to adjust the level of the conditional variable pay if leaving the payment unchanged would go against the principles of reasonableness and fairness. For the complete a.s.r. remuneration policy, see: www.asrnl.com. About a.s.r. ’Het Andere Plan’ In order to provide the best possible support and guidance for employees during a reorganisation, a.s.r. applies ’Het Andere Plan’. This is a social plan centring on guidance from work to work which places emphasis on the development and sustainable employability of employees. ’Het Andere Plan’ 2017-2018 divides a possible reorganisation into three phases: 1. My plan phase 1: in anticipation of (potential) redundancy; 2. My plan phase 2: following notice of redundancy; 3. My plan phase 3: from the moment of redundancy. Business performance The aim of this phased approach is to encourage employees to work at an early stage on increasing their labour market value and thus take more control of their own career opportunities. The sooner they start working on their development, the bigger the budget a.s.r. will make available. Employees made use of ’Het Andere Plan’ 2017 Phase 1 243 Phase 2 87 Phase 3 54 Guidance by In Motion team 174 Governance The a.s.r. code of conduct The a.s.r. code of conduct sets out the required attitude and behaviour of employees. The aim of the code of conduct is to protect a.s.r.’s reputation through the integrity and professional conduct of all its employees. It covers behaviour that upholds the principles of a.s.r. as expressed in ‘the story of a.s.r.’. Anyone who carries out work (on a regular basis) at or for a.s.r. must take the oath or make a solemn affirmation. New employees (both internal and external) must take this oath or make this affirmation within 3 months of taking up their duties. Financial statements 2017 In 2017, a.s.r. introduced ‘Gamification’ to keep knowledge of the code of conduct up to date. By daily answering related questions, employees can refresh their knowledge of the code of conduct. Since its launch, 46% of employees played the game 2 to 3 times a week. This has led to an 18% increase from 67% to 85% in knowledge of the code of conduct. Ethical behaviour a.s.r. attaches great importance to maintaining its integrity and good reputation as a financial institution, and actively takes measures to prevent unethical behaviour such as fraud and corruption. a.s.r.’s policy to prevent unethical behaviour is based on the sector-wide policy that financial institutions use to combat fraud. This policy promotes compliance with relevant laws, regulations, internal procedures and ethical standards. a.s.r. has an incident policy and allows employees to report incidents and data leaks (anonymously). Other Under the Whistleblower policy, employees and third parties, including former employees, clients and other contracting parties, can report cases of alleged malpractice anonymously, freely and without feeling threatened. Violation of or non-compliance with the a.s.r. code of conduct may lead to disciplinary action. An integrity screening is carried out prior to hiring new employees. This also applies to everyone who regularly works for a.s.r., including suppliers and brokers. In this way, a.s.r. seeks to prevent the risk of physical, financial or reputational damage to the company, its customers and/or other business relations.


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    Business performance Business performance | 3.1 Group performance 38 3.1 Group performance 3.1.1 Financial review Premiums Solvency GWP Solvency II ratio (standard formula) 1 € 3,920 m 196 % (2016: € 4,328m) (2016: 189%) Expenses Profit/loss Profit/loss Profit / (loss) for the year attributable to Operating expenses Operating result holders of equity instruments € 584 m € 729 m € 906 m (2016: € 569m) (2016: € 622m) (2016: € 659m) Number of FTEs (internal) Operating return on equity Return on IFRS equity 3,493 15.6 % 21.2 % (2016: 3,461) (2016: 14.6%) (2016: 17.0%) 1 After proposed dividend and excluding a.s.r. bank. Solvency II ratio 203% pre-dividend.


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    Business performance | 3.1 Group performance 39 3.1.2 Performance on financial targets Introduction During the IPO-process and listing in 2016 on Euronext Amsterdam, a.s.r. communicated the following targets for the medium-term. Medium-term financial targets Financial targets Performance 2017 Operating return on equity (ROE) a.s.r. seeks to generate an ROE of up to 12% per year in the medium term. For the long- 15.6% term, a.s.r. aims to achieve an operating ROE of above 10% on average. About a.s.r. Cost savings a.s.r.’s aim is to reduce operating expenses by an aggregate € 50 million in the medium On target term. Effectively already realised € 41 million of € 50 million Business performance Dividend In 2016, a.s.r. announced a dividend policy with effect as from 2017. The annual dividend 45% will be based on a pay-out ratio of 45% to 55% of net operating result attributable to € 229.7 million shareholders (i.e. net of hybrid costs). a.s.r. applies a boundary condition based on its Solvency II position. a.s.r. does not plan to pay a cash dividend if the Solvency II ratio were to fall below 140%. In 2018, a.s.r. announced the intention to introduce an interim dividend as of 2018. 40% Combined ratio In the Non-life segment, a.s.r. strives to achieve an overall combined ratio (‘COR’) of below 95.1% 98%, and below 97% for 2017. Governance Solvency/capital a.s.r. aims to maintain a Solvency II ratio – based on the Standard formula – of above 160%. 196% Additionally, a.s.r. wants to attain a single A (S&P) ‘Financial Strength Rating’ for its Single A insurance subsidiaries and a financial leverage of below 30%. 25.3% Financial statements 2017 Operating return on equity increased to 15.6% (2016: 14.6%). The increase was attributable to an increase in the operating result which exceeded the increase in equity. The outcome remains well above the target of up to 12%. Return on equity on IFRS basis stood at 21.2% (2016: 17.0%). Operating expenses amounted to € 584 million (2016: € 569 million). Operating expenses associated with ordinary activities (part of the operating result) were € 560 million, which is an increase of € 11 million compared with the same period last year. This was mainly attributable to higher current net service costs for a.s.r.’s own pension scheme, an increased cost base because of acquisitions and investments in the growth segments Banking and Asset Management and Distribution and Services. In the Non-life and Life segment operating expenses decreased. Combined ratio amounted to 95.1%, which is an improvement of 0.5%-point (2016: 95.6%). Operating result in the Non-life segment rose 26.5% to € 172 million mainly due to the exceptionally low level of claims in H1 2017. Other Dividend Management proposes to distribute a cash dividend of € 229.7 million for the full year 2017. This is a € 43 million (23%) increase compared to the cash dividend of € 187.0 million for 2016. The increase in dividend is driven by the improved operating result. The proposed annual dividend is in line with the earlier announced dividend policy for 2017 and based on a pay-out ratio of 45% to 55% of net operating result attributable to shareholders (i.e. net of hybrid costs).


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    Business performance | 3.1 Group performance 40 Proposed dividend over 2017 per share amounts to € 1.63 per share payable in cash, up 28.3% from 2016 (2016: € 1.27). Proposed dividend per share of € 1.63 is based on 141 million shares. Dividend over 2016 of € 1.27 was based on 147 million shares. Following the approval of the Annual General Meeting on 31 May 2018, the dividend will become payable with effect from 7 June 2018. The a.s.r. stock will trade ex-dividend on 4 June 2018. In 2018, a.s.r. intends to introduce interim dividend, set at 40% of the total dividend for the previous year (in 2018: € 0.65 per share). The interim dividend is within the framework of the dividend policy and under the condition of sufficient results payable after HY results. The Solvency II ratio increased by 7%-points to 196% (year-end 2016: 189%). The Solvency II ratio before the proposed dividend amounts to 203%. The Solvency II ratio increased mainly due to organic capital creation, positive capital market developments and issue of a Restricted Tier 1 bond (RT1). These developments were partially offset by re-risking of the investment portfolio (including impact of low interest rates), the lower volatility- adjustment, the proposed dividend over 2017 and the buy-backs of own shares. All medium-term financial targets were exceeded in 2017. Generali Nederland On 5 February 2018, ASR Nederland N.V. completed its acquisition of Generali Nederland N.V. (hereafter GNL) by acquiring all issued and outstanding shares in cash. GNL is the group company of a number of entities, the main being Generali levensverzekering maatschappij N.V. and Generali schadeverzekering maatschappij N.V. GNL focuses on non-life and life insurance contracts in the Dutch market. Generali Nederland N.V. has been renamed to ASR Utrecht N.V. The acquisition of GNL further strengthens a.s.r.’s position on the Dutch insurance market and ties in with a.s.r.’s strategy of combining organic growth and growth through targeted acquisitions. Business synergies, diversification benefits and elimination of capital tiering restrictions generate significant synergy potential. The full integration of GNL’s activities into a.s.r. will take place in phases and is likely to be completed by 2020 at the latest. GNL staff will move to a.s.r. locations in the course of 2018. The GNL products will be rebranded into a.s.r. or one of a.s.r.’s labels in due course. Legal mergers between Generali levensverzekering maatschappij N.V. and ASR Levensverzekering N.V. as well as Generali schadeverzekering maatschappij N.V and ASR Schadeverzekering N.V. are expected to take place in 2018. The acquisition price amounts to € 145 million which is paid at closing of the transaction on 5 February 2018. a.s.r. expects the total net capital commitment (including acquisition price) to amount to approximately € 200 million. The a.s.r. Solvency II SCR is expected to decrease by 9%-points as per 5 February 2018. To meet the a.s.r. solvency criteria, a.s.r. is planning to make capital injections to Generali levensverzekering maatschappij N.V. and Generali schadeverzekering maatschappij N.V. via ASR Levensverzekering N.V. and ASR Schadeverzekering N.V. respectively. GNL is expected to have a limited impact on the IFRS profit after tax and the operating result in 2018.


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    Business performance | 3.1 Group performance 41 3.1.3 Performance on non-financial themes Introduction Customer satisfaction ‘Meeting customer needs’ is one of the strategic pillars of a.s.r. Continuous efforts are being made to improve processes to better help customers and to develop sustainable insurance products. One of the ways in which this is done is by making information accessible and understandable. To this end, a.s.r. invests in new (more digital and accessible) IT platforms. Customers are increasingly asking for clear and comprehensible information. They want to be able to make an informed and fitting choice in the purchase of insurance products and services. In order to monitor and where necessary improve the performance of a.s.r., various customer and intermediary surveys are carried out. Two of those are the Net Promoter Score (NPS) and the Customer Interest Central Dashboard of ‘AFM’ (Dutch Authority for the Financial Markets). About a.s.r. NPS a.s.r. continuously measures the Net Promoter Score (per business line). At the beginning of 2017, a new method was chosen in which the questions were tightened. The question to the customer now places the emphasis on the employee of a.s.r.: How likely is it that you will recommend a.s.r. to family, friends and colleagues based on your experience with me? This used to be: How likely is it that you will recommend us to a friend or colleague? A comparison with earlier NPS measurements is therefore not possible (the score went from +5 in December 2016 to +36 in January 2017). Business performance In 2017, the NPS customer contact moment for customers increased by 4 points during the year, from 36 to 40¹. Intermediaries² were more positive: the NPS rose from 50 to 57. The business lines each monitor their own NPS scores. Many business lines themselves have also formulated targets on the NPS. The NPS per business line is presented in Chapter 3.2 (Business performance). Net Promoter Score - Customers 39.6 39.1 37.5 Governance 35.6 Q1 Q2 Q3 Q4 (n=23,298) (n=14,584) (n=14,679) (n=16,546) Net Promoter Score - Intermediaries Financial statements 2017 55.3 56.0 52.3 48.8 Q1 Q2 Q3 Q4 (n=1,836) (n=1,722) (n= 1,678) (n=1,822) Other 1 The NPS is calculated by subtracting from the percentage of promoters (rating 9-10) the percentage of detractors (rating 0-6) on a scale of 0-10. 2 Intermediaries and customers are asked the same question.


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    Business performance | 3.1 Group performance 42 Customer Interest Central Dashboard The Customer Interest Central Dashboard (Dutch abbreviation: KBC) provides insight into the extent to which the sector places customer interest at the centre of its products and services. Various research modules are the basis for this. The modules that formed part of the Customer Interest Central Dashboard in 2017 were ‘Mortgage Advice and Management’, ‘Payment Arrears at Mortgages’, ‘Claims handling’, ‘(Aftercare) Investment Insurance’ and ‘Information Provision by Insurers’. The table below shows the scores of a.s.r. The scores are compared to the average score of all the companies that were researched. a.s.r. scored above-average in the provision of information on life insurance policies. Just like last year, a.s.r. scored high in the research into claims handling at Non-life. a.s.r. also performed above-average in managing the existing mortgage portfolio. This was mainly due to the good score on the policy aspect. a.s.r. can improve even further in the module ‘Payment Arrears at Mortgages’. This involves providing information and activating and supporting vulnerable mortgage holders. A plan of action has now been drawn up for this purpose. a.s.r. also lags behind in the area of arrears management, particularly in terms of quality control and policy. A number of actions have already been taken to meet these concerns. It has also been established that a.s.r. has sufficiently complied with (the aftercare of) investment insurance policies. Surveys and quality checks have led to improvements. a.s.r. has made a great deal of effort to actively approach clients with an investment insurance policy and has achieved good results. Customer Interest Central Dashboard Scores on (sub)modules Score Average Mortgage Advice and Management 3.5 3.7 Payment Arrears at Mortgages 2.4 2.8 Claims handling 3.6 3.3 (Aftercare) Investment Insurance 3.7 3.2 Information Provision by Insurers 3.8 3.6 Complaints management The Complaints Management team monitors the implementation of a.s.r.’s complaints policy and directs the complaints organisation. The complaints handling itself is decentralised within the organisation. Key objectives of complaints management are: • a.s.r. is open to complaints, making it easier for customers to lodge a complaint; • a.s.r. communicates its views and a resolution of the complaint in an understandable fashion; • a.s.r. wants to learn from its mistakes. Therefore we welcome any complaints. Training complaints officers In collaboration with the bureau Interim & Meer, a.s.r. has developed tailor-made training programmes for complaints officers, enabling them to develop the necessary skills to conduct complaints interviews. During this training programme, the complaints officers will learn what the customer expects from them, and how this can be given shape in a proper way. After completing the training, the officers will be able to conduct a high- quality interview and will know the importance of a proper introduction. They will be capable of discovering the customer’s real question and bringing the interview to a satisfactory end. The training programmes are completed with personal coaching relating to complaints interviews conducted in which the subject matter is put into practice. Learning and improving In 2017, a.s.r. asked customers for their feedback on a.s.r.’s complaints handling. The questionnaire was personalised. For the first time customers can mark their satisfaction with the complaints officer. On a scale of 1:10, the average for 2017 was 7.9.


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    Business performance | 3.1 Group performance 43 Complaints settled Complaints handled Introduction One of the questions is whether the complaint has been settled in the customer’s opinion. 7% The outcome is as follows: 2017 2016 Yes, fully 74% Upheld 2,924 3,563 19% No, not fully but the 41.8% Rejected 2,103 2,754 follow-up is clear to me 19% No, not fully and the follow-up is unclear to me 7% 74% 58.2% About a.s.r. Transparent product and service descriptions Customers increasingly value transparent products and services with clear choices. This is also one of the outcomes of the central stakeholder dialogue (for more information see Chapter 2.4 Our stakeholders and material issues). Product Approval & Review Process Business performance The Product Approval & Review Process (PARP) is one of the internal tools for assessing the relevance of products and services. The focus is on customers and customer interests. The PARP process is implemented in various situations: when developing new products and services; in the event of changes due to, for example, changing legislation and regulations and in the event of complaints from customers. Products that are actively offered and inactive products and services are also regularly reviewed. The PARP tests Cost Efficiency, Usefulness, Safety and Comprehensibility (Dutch abbreviation: KNVB), among other things. This KNVB test includes AFM questions and own a.s.r. policy. For example, the usefulness of a product and/or service for the customer is assessed: to what extent is the product a response to a well-founded need of the target group and does it actually have added value? The comprehensibility test examines whether the target group can properly assess the functioning of a product on the basis of the information the customer receives from a.s.r. This includes tests for comparability, completeness of the information provided and whether the characteristics of the product are clearly defined. In 2017, the PARP Committee approved two new propositions and two propositions that had already been Governance initiated, 12 product adjustments and 25 reviews of existing products. Integrity a.s.r. strengthens its ultimate raison d’ être, helping people, by being a sustainable insurer at the heart of communities and having an unbreakable reputation as a solid and responsible financial institution. Integrity and ethical conduct are prerequisites for an unbreakable reputation. In addition to the use of clear frameworks, sound and controlled business operations are above all driven by good intrinsically secured core values. Ethical behavior is naturally and open to discussion. Ethical dilemmas are discussed and shared. The culture that accompanies this is one of continuous learning and being accessible. Financial statements 2017 a.s.r. has a central Integrity department, responsible for of Compliance and Security Matters. The department supervises sound and controlled business operations, including monitoring the reputational risks of a.s.r. The framework is formed by laws and regulations and standards of a.s.r. itself, including the a.s.r. code of conduct. Safeguarding the customer’s interests is central in this context. a.s.r. also wants to ensure in respect of all its employees that ethical behaviour is self-evident. That is why a.s.r. continually invests in raising awareness on the various themes of integrity. Employees are encouraged to make integrity issues open to discussion and enter into dialogue. Various activities took place in 2017 to further raise awareness. For more information on this, see Chapter 2.5 (Our People, page 37, paragraph ‘Ethical behaviour’). In order to guarantee sound and controlled business operations, a.s.r. has taken a number of control measures. This involves preventing, recognising and combating conduct that does not respect integrity, including the risk of corruption. a.s.r. uses the Dutch Central Bank’s definition: ‘Corruption risk is the risk that financial companies Other in the Netherlands are involved in forms of bribery and/or conflict of interest that impair the integrity of and trust in the financial company or the financial markets.’ Within a.s.r. this has been further elaborated in various policy documents, including an anti-corruption policy and an incentive policy. In 2017, 771 incentives were reported to Compliance and in 22 cases the advice was not to accept them. Within the a.s.r. businesses, high-risk processes are identified, as well as the risks and control of these risks.


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    Business performance | 3.1 Group performance 44 a.s.r. investigates signals of unethical behaviour of employees, intermediaries and suppliers. In the event of a lack of integrity, including corruption and fraud, a.s.r. imposes appropriate measures. This is done with due observance of the applicable laws and regulations and protocols within the sector. In 2017, 49 incidents were recorded at the Security Affairs department where there was a proven lack of integrity that led to the imposition of a measure. A lack of integrity involved in 17 cases the conduct of an employee, in 31 cases the conduct of an intermediary and in one case the conduct of a supplier. In general, the number and scope of integrity-related risks is limited. From a compliance perspective, changing legislation and regulations are the main risk to sound and controlled business operations. This is partly due to the usually short implementation time. Continued attention will also be needed for future changes in legislation and regulations and the related monitoring. Assessing suppliers on their impact on the society a.s.r. considers it important to operate in a responsible and sustainable manner. It also expects this from its suppliers. Screening a.s.r. does not do business with partners involved in crime or other socially undesirable acts such as money laundering, fraud or the financing of terrorism. This may endanger its reputation and integrity. a.s.r. has a Customer Due self-reliance Diligence (CDD) policy that requires screening before a contract is signed. The contract management policy also stipulates that a screening is carried out periodically. If, in the opinion of a.s.r., there is reason to doubt the integrity of a supplier, appropriate measures are taken. Socially Responsible Procurement policy a.s.r. imposes additional requirements on its suppliers in the areas of the environment, human rights and working conditions. These requirements are part of the procurement contracts concluded between a.s.r. and its suppliers. The main objective of the Social Responsible Procurement (SRP) policy is to be in dialogue with suppliers on these socially relevant themes. This subject is therefore a recurrent agenda item in the (board) meetings between a.s.r. and its suppliers. For 2017, the Procurement department’s objective was to add a specified SRP supplement to the contracts with the ten most strategic suppliers. This target was achieved by a.s.r. Since medio 2017, this annex has also been a standard part of the contract set used by a.s.r. In this way, all new suppliers automatically implement the SRP policy. KPI 2017 target 2017 result SRP annex is part of the procurement contracts SRP annex is part of the procurement contract concluded between a.s.r. and its suppliers. with the ten most strategic suppliers. Contributing to financial self-reliance a.s.r. helps customers in sharing risks and building up assets together for the future. Customers must be able to make conscious financial choices and be financially self-sufficient for this. a.s.r. foundation For a.s.r. social involvement is more than just sustainable entrepreneurship. It also means investing in various sustainable social initiatives. That is why a.s.r. foundation initiates projects with the help of the voluntary efforts of colleagues with regard to two themes: • Financial self-reliance: providing help to prevent people from getting into debt or to get people out of debt again with the help of voluntary commitments of employees; • Helping by doing: inspiring, motivating and mobilising a.s.r. employees to voluntarily engage in community activities in a broad sense, at home or in a team. The experiences a.s.r. employees gain in this way also contribute substantially to the customer contacts desired by a.s.r. The starting point is a helpful and service-oriented approach. The customer values a.s.r. for its excellent service and expertise, but also for its positive attitude and social commitment. The customer realises that what a.s.r. does is socially responsible and sustainable.


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    Business performance | 3.1 Group performance 45 Financial self-reliance Introduction In the Netherlands, one in five households has high-risk or problematic debts. The debt burden is on average € 40,000 spread across fourteen different creditors 1. The chance of someone ending up with a hard to resolve debt burden is a combination of factors. However, it does appear that having a disorganised administration, a lack of proper financial upbringing and low literacy increase the risk of debt. a.s.r. foundation provides support: • In promoting the financial education of children and young people (reading and teaching); • To households with (a risk of) problematic debts. In 2017, a.s.r. foundation worked together with the following (social) organisations in the context of projects within Financial self-reliance: De Tussenvoorziening, Diversion, FC Utrecht Maatschappelijk, Feyenoord Maatschappelijk, Giovanni van Bronckhorst Foundation, Humanitas, Kinderzwerfboek, Nederlandse Vereniging van Banken About a.s.r. (Netherlands Bankers’ Association), Nibud (Dutch National Institute for Family Finance Information), Stichting Leven en Financiën (LEF), Taal doet meer, U-Centraal, Verbond van Verzekeraars (Dutch Association of Insurers). Helping by doing a.s.r. considers it important to play a broad social role in the community. This fits in well with the desire of many employees to be actively involved in the community in a meaningful way. Annually, a.s.r. makes time and finances available for this purpose. • In a team context – Social Team Activity (Dutch abbreviation: MTA) More and more departments within a.s.r. extend their help as a team in a social organisation. This creates a fine Business performance combination of team building and ‘helping by doing’. Teams work together with organisations that really need a helping hand. For example, a.s.r. teams took elderly people on a walk in the forest or picked fruit with mentally challenged people. • At home – Encouragement Plan An individual Encouragement Plan has been put in place to encourage volunteering in colleagues’ private environment. The financial contribution of up to € 500 plan by a.s.r. foundation is an extra backing. If an idea is only about receiving a financial contribution, the proposal will be rejected. Colleagues can apply for an Encouragement Plan once per calendar year. Total commitment for a.s.r. foundation KPI 2017 target 2017 result 2016 result Governance Voluntary contribution to financial self-reliance 170 254 179 (number of times²) Voluntary contribution to financial self-reliance 1,700 3,996 2,002 (number of hours) Voluntary contribution to Helping by doing/roll up your 30 times by 450 47 made by 945 18 made by 553 sleeves – MTA (number of times) colleagues colleagues colleagues Voluntary contribution to Helping by doing/roll up your 2,700 5,441 3,632 sleeves – MTA (number of hours) Voluntary contribution to Helping by doing/roll up your 40 applications 44 applications from 32 applications Financial statements 2017 sleeves – MTA Encouragement Plans (number of times) 57 colleagues Total Voluntary contribution (number of times) 975 1,256 7693 Total Voluntary contribution (number of hours) 6,825 9,437 5,634 Other 1 https://www.movisie.nl/artikel/schulden-nederland-wat-werkt-gaan-we-doen, https://schuldhulpmaatje.nl/feiten-op-een-rij/ 2 Because colleagues are or can be committed to various projects, we speak of number of times instead of a unique number of individuals. 3 In the 2016 Annual Report, the total voluntary commitment was 966 times and 6,426 hours. This included other projects that a.s.r. no longer offers in 2017, which is why a.s.r. excludes them from this comparison


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    Business performance | 3.1 Group performance 46 Contributing to prevent payment problems at customers In October 2016, a.s.r. signed the ethical manifesto From Debts to Opportunities. In this way, a.s.r. joined a group of companies committed to proactively helping customers who are behind on payments. These companies have united in the Creditors’ Coalition. Through this coalition, a.s.r. remains connected to developments in the market and the public debate surrounding the subject. Based on its raison d’ être helping by doing, a.s.r. wants to help customers avoid payment problems. a.s.r. makes every effort to ensure that customers are financially self-sufficient. This ties in with ‘the story of a.s.r.’ and with the core values. Signing and complying with the ten rules of the ethical manifesto fits in very well with this. In this way, a.s.r. wants to reduce the number of customer cancellations due to payment arrears and problems. It also wants to reduce situations in which customers are confronted with cost-increasing measures. In all cases, a.s.r. strives to avoid non-payment. If that happens, a solution that suits him or her will be considered together with the customer. a.s.r.’s businesses put the ten rules of the ethical manifesto into effect in their own way. Several results from 2017: • Suspension of 300 insured persons at the Dutch Central Administration Office (Dutch abbreviation: CAK) because payment arrangements were made with these customers via pro-active receivables management; • The development of arrears on mortgage loans from short-term to long-term (> 3 months) decreased strongly. From 0.57% (arrears percentage on mortgage loans) in 2015 to 0.21% in 2017. In addition to help from the economy, the deployment of a job coach and budget coach also contributed to the decline. Carbon footprint a.s.r. head office a.s.r. intends to be a good steward of nature and the environment by preventing waste and limiting negative impacts. a.s.r. puts special focus on its carbon footprint, which comes in two varieties: • Indirect footprint, as a result of investment activities (see Chapter 3.2.3 Banking and Asset Management); • Direct footprint, due to its own activities. The direct carbon footprint of a.s.r. itself is limited and therefore not defined as a material theme by the management of a.s.r. and its stakeholders when it comes to impact on the environment and its business. However, a.s.r. thinks it is important to pay attention to its own footprint to set a good example as a responsible organisation and limit its negative impact on the environment. a.s.r. therefore sets the ambition to become 100% carbon-neutral by 2020. Direct carbon footprint The direct footprint of a.s.r. head office consists of waste, fuel, heat, electricity, cooling, commuter travel and business travel1. In 2017, a.s.r. sought to reduce its direct footprint by 2% compared to 2016. This target is not achieved; the total footprint increased by 0.2%². When looking at the emissions per FTE, emissions remained more or less the same compared to 2016. The scope 1 emissions decreased by 194 tonnes of CO2-equivalent, mainly due to the use of fewer and more economical lease cars and the reduced use of natural gas. However, the scope 3 emissions increased by 210 tonnes of CO2-equivalent. This is due to an increase in commuter traffic in kilometres, with car use increasing proportionally (compared to, for example, public transport use). With a reduction of 6.8%, the target of achieving a 5% reduction in emissions from the a.s.r. fleet was achieved. As mentioned above, this is due to the use of fewer and more economical lease cars. Translated into kilometres, the reduction of carbon emissions is 21.9% per kilometre. Direct carbon footprint KPI Target 2017 Result 2017 Direct carbon footprint 2% reduction on 2016 + 0.2% Fossil fuel consumption (carbon emissions) with respect to mobility3 5% reduction on 2016 - 6.8% 1 87% of all lease cars are allocated to head office. 2 In 2017, a new more accurate calculation method was used, resulting in an increase in the total footprint of 3.65% compared to 2016. In order to be able to compare results with previous year, the results for 2016 have been recalculated in this overview on the basis of the new calculation method and adjusted emission factors for 2017 for waste and mobility. 3 This includes the fossil fuel consumption of all a.s.r. lease cars.


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    Business performance | 3.1 Group performance 47 Environmental performance a.s.r. head office Introduction Carbon emissions 2017 2016 Tons of carbon equivalents (scope 1, 2 and 3) 7,724.61 7,708.2 Category of carbon emissions (%) Fuel and heat 1.1 1.5 Electricity 0.0 0.0 Cooling 0.7 0.7 About a.s.r. Business travel 33.2 35.2 Commuting 62.8 60.0 Waste 2.2 2.6 Total 100.00 100.00 Energy consumption a.s.r. has undertaken the following measures to reduce its carbon emissions: • MYA3: achieved 4.1% energy1 savings in 2017, compared to 2016. A 30% energy efficiency improvement under the MYA3 covenant 2005-2020 was achieved back in 2014; Business performance • a.s.r. achieved further savings, 4.9% kWh in 2017, by reducing the energy consumption of the in-house data centre. In 2018, energy consumption will be further reduced by replacing equipment of the Data Centre with more energy-efficient units; • The building’s energy efficiency label is A++ and the building was awarded a BREEAM Excellent rating; • In 2017, electricity use was offset by the use of Swedish wind energy, using emission factor zero. Carbon emissions CO2 emissions (tons) 12,000 10,000 Governance 8,000 6,000 4,000 2,000 Financial statements 2017 0 2011 2012 2013 2014 2015 2016 2017 Emissions are compensated via ‘Trees for all’2 credits in 2017. Other 1 Usage of electricity and gas 2 Gold Standard Project Bolivia: Compensation via Gold Standard certificates stands for the amount of CO2 that the forest holds. Trees are planted if necessary, but compensation also takes place by the conservation of the forest through education, alternative income support for local residents etc.


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    Business performance | 3.1 Group performance 48 Mobility Mobility (business travel and commuter travel) accounts for a major proportion of a.s.r.’s carbon footprint. In 2017, fossil fuel consumption made up 96% of a.s.r.’s total carbon footprint. In 2017, mobility at a.s.r. can be broken down as follows: Mobility 2% 20% Car use 57% Bicycle use 21% Public transport use 20% Carpool use 2% 57% 21% Mileage clocked up by head office workers (in kilometres) 2017 2016 Commuting mileage 27,789,115 27,413,478 Airplane mileage 861,256 1,008,660 Geothermal energy In 2017, a.s.r. continued its collaboration with a consortium of organisations consisting of a.s.r., Utrecht University, Stichting Kantorenpark Rijnsweerd (Rijnsweerd business park foundation), energy firm Engie, the University of Applied Sciences Utrecht and University Medical Center Utrecht. The consortium submitted a research document to the Dutch Ministry of Economic Affairs about whether geothermal heat/electricity can be used to heat or cool office buildings, thus making them virtually carbon-neutral.


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    Business performance | 3.2 Segment performance 49 3.2 Segment performance Introduction At an organisational level, a.s.r.’s operations are divided into six operating segments. These segments are the Non-life and Life segment and the segments Banking and Asset Management, Distribution and Services, Holding and Other (including Eliminations) and Real Estate Development. Operating result & Gross written premiums (%) About a.s.r. 2.2% 1.0% 86.8% Non-life Life Banking and Asset Management 34% Distribution and Services Holding and Other (including Eliminations) 66% 23.6% Business performance -13.6% Operating result Gross written premiums Operating result 2017 2016 Non-life 172 136 Life 633 559 Banking and Asset Management 7 2 Governance Distribution and Services 16 12 Holding and Other (including Eliminations) -99 -87 Operating result 729 622 Segmentation of a.s.r.’s workforce1 Segments 2017 2016 Financial statements 2017 2017 2016 Non-life 1,498 1,460 Life 622 666 Banking and Asset Management 430 268 Distribution and Services 430 390 Holding and Other (including Eliminations) 1,114 1,356 Real Estate Development 23 20 Total workforce 4,117 4,160 Other 1 The total workforce consists of the number of internal and external FTEs.


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    Business performance | 3.2 Segment performance 50 3.2.1 Non-life The Non-life segment consists of P&C, Disability and Health. They offer non-life insurance contracts, including policies insuring risks related to motor vehicles, fire, travel and leisure, liability, legal assistance, disability and medical expenses. The most significant legal entities of the Non-life segment are ASR Schadeverzekering N.V., ASR Basis Ziektekostenverzekeringen N.V. and ASR Aanvullende Ziektekostenverzekeringen N.V. With an 10.9% market share in 2016¹ (2015: 8,5%), a.s.r. occupies a third place in the non-life market in the Netherlands. Financial performance Key figures (in € millions, unless stated otherwise) 2017 2016 Gross written premiums 2,579 2,433 Operating expenses -201 -204 Provision for restructuring expenses -2 -6 Operating result 172 136 Incidental items (not included in operating result) 69 51 - Investment income 70 30 - Underwriting incidentals - 27 - Other incidentals -1 -6 Profit / (loss) before tax 241 187 Profit / (loss) for the year attributable to holders of equity instruments 190 143 New business, Non-life 257 220 Combined ratio Non-life 2017 2016 Combined ratio 95.1% 95.6% - Commission ratio 14.7% 15.3% - Cost ratio 7.6% 8.3% - Claims ratio 72.8% 72.0% Combined ratio entities 2017 2016 P&C 95.5% 98.5% Disability 90.9% 88.2% Health 99.2% 99.1% 1 Source: DNB- At the moment of writing, the market share figures for 2017 are unknown.

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