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

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    2018 Annual Report


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    Cover Photo of a stained glass window which shows the image of the tree planter from the former office building of the Life Insurance Company Utrecht in Brussels. The young man with the spade is planting a tree. On the other side of the tree he’s an old man and watches his children and grandchildren reap the fruits of his effort. This artwork was created by J. Vosch. ASR Nederland N.V. Archimedeslaan 10 P.O. Box 2072 3500 HB Utrecht The Netherlands www.asrnl.com


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    2018 Annual Report


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    Art in the Annual Report a.s.r.’s history goes back to 1720. It’s a history we are proud of and of which we like to be reminded. Not only in the form of documents and historical objects, but also in the form of the art collection built up over the years which demonstrates our social involvement. Our art collection now boasts hundreds of objects representing the themes human, day-to-day life and nature. The basic idea behind the creation of the art collection is to make the working environment as inspiring as possible for employees and visitors. Art is often seen as an interpretation of reality and therefore, in our opinion, creates a fitting link with the concrete contents of this Annual Report.


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    7 About a.s.r. Contents Operating environment 1 About a.s.r. 9 7 Financial statements 2018 137 1.1 At a glance 10 7.1 Introduction 140 1.2 Key figures 12 7.2 Consolidated financial statements 142 1.3 Message from the CEO 15 7.3 Accounting policies 149 1.4 Value creation model 17 7.4 Group structure and segment information 172 1.5 Reporting segments 18 7.5 Notes to the consolidated balance sheet 185 7.6 Notes to the consolidated income statement 213 2 Operating environment 21 7.7 Other notes 220 2.1 Trends and developments 22 7.8 Risk management 239 Strategy 2.2 Stakeholders 28 7.9 Capital management 271 2.3 Material topics 29 7.10 Company financial statements 275 3 Strategy 35 8 Other information 283 3.1 The story of a.s.r. 36 8.1 Report on the audit of the financial statements 3.2 Strategic targets 41 2018 included in the annual report 284 Long term value creation 8.2 Provisions of the Articles of Association 4 Long term value creation 47 regarding profit appropriation 294 4.1 Customers 48 4.2 Investors 53 9 Report of Stichting Continuïteit 4.3 Employees 56 ASR Nederland 297 4.4 Sustainable management 62 9.1 Report of Stichting Continuïteit 4.5 Role in society 67 ASR Nederland 298 4.6 Sustainable investor 69 4.7 Overview Sustainable Development Goals 74 10 Annexes 301 A Facts and figures 302 Business performance 5 Business performance 77 B About this report 309 5.1 Group and segment information 78 C Glossary 310 5.2 Risk management 99 D Abbreviations 314 5.3 Compliance 106 E Materiality analysis and stakeholder dialogue 316 5.4 Statements Executive Board 107 F GRI Content Index 318 5.5 Assurance report of the G EU Directive: disclosure on non-financial independent auditor 108 information and diversity information 323 6 Governance 111 6.1 Corporate governance 112 Governance 6.2 Report of the Supervisory Board 123 6.3 Remuneration report 129 6.4 Employee participation 133 Financial statements 2018 Other


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    Object Room Made by Levi van Veluw Chosen by Maaike van de Laar, HR development coach ‘This photograph intrigues me. What exactly is going on in this room? The furniture looks as though it’s being blown backwards by an enormous gust of wind. How on earth has it been photographed? And what is it saying? I like it when a work of art raises questions when you go on thinking about it. I often come across art in this building that surprises me. Which is an added bonus in what’s already a great working environment.’


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    About a.s.r. Operating environment Strategy Long term value creation Business performance Governance Financial statements 2018 Other About a.s.r. 1


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    About a.s.r. | 1.1 At a glance 10 1.1 At a glance Short introduction 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 insurance products in the areas of non-life and life insurance. a.s.r. offers investment products and mortgages and is also active as an investor and in offering 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. Overview of brands Multi-brand model Products Products Products Property & Casualty (P&C), Disability and Health P&C and Health Individual life, Pensions and Mortgages Distribution Distribution Distribution Intermediaries and specialists Intermediaries and specialists Online Products Products Products Travel Funeral Asset management Distribution Distribution Distribution Multi-channel Multi-channel Specialised salesforce


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    About a.s.r. | 1.1 At a glance 11 About a.s.r. #3 Operating environment Founded in 3,683 Head office Leading market 1720, deeply employees in Utrecht positions and rooted in Dutch (FTEs) #3 overall in society Dutch market based on GWP (excl. Health) Strategy Important dates in 2018 Long term value creation 1 January 5 February 19 March Start of first own Completion of a.s.r. included Collective Labour acquisition Generali in AEX Agreement (CLA) De Nederland Andere cao Business performance 13 June 26 June 20 September Over € 1 billion raised a.s.r. signs the a.s.r. becomes for a.s.r.’s mortgage Spitsbergen supporter of the Task fund Ambition for Climate Force on Climate- Governance Agreement related Financial Disclosures (TCFD) Financial statements 2018 10 October 19 November 4 December Capital Markets Day a.s.r. announces Announcement a.s.r. presents changes in of acquisition strategy update management of Loyalis and new medium- structure term targets Other


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    About a.s.r. | 1.2 Key figures 12 1.2 Key figures Financial key figures Operating result IFRS net result Organic capital creation (€ million) (€ million) (€ million) 728 742 906 377 372 348 622 659 655 2016 2017 2018 2016 2017 2018 2016 2017 2018 € 742m € 655m € 372m Solvency II Operating expense reduction Combined ratio (Standard formula, %) (€ million) (%) Target: € 50 million Target: safely above 160% Period 2016-2018 Target: < 97% 189 196 197 14 55 95.6 95.1 96.5 18 14 23 2016 2017 2018 2016 2017 2018 Total 2016 2017 2018 197% € 55m 96.5% Operating return on equity Total equity attributable to Total assets under shareholders management (%) (€ billion) (€ billion) Target: up to 12% 4.5 55.9 55.4 59.0 4.4 14.6 16.0 3.8 14.2 2016 2017 2018 2016 2017 2018 2016 2017 2018 14.2% € 4.5bn € 59.0bn


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    About a.s.r. | 1.2 Key figures 13 About a.s.r. Operating environment Non-financial key figures Net Promoter Score (NPS) Asset Management 100% of the assets under management by Group Asset Management are compliant with a.s.r. SRI policy Target: > 40 Strategy 100 100 100 40 42 NA Long term value creation 2016 2017 2018 2016 2017 2018 42 100% Employee contribution to local society Target: 975 Target: 7,312 Business performance Total voluntary contribution Total voluntary contribution in number of times in number of hours 9,437 1,256 1,167 8,733 769 5,634 2016 2017 2018 2016 2017 2018 1,167 8,733 Governance Gender diversity workforce (%) Target: at least 30% Female/30% Male Financial statements 2018 25 25 40 25 25 25 23 27 29 22 18 19 40 40 40 77 78 82 81 75 75 75 75 75 73 71 60 60 60 60 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 Male Female Supervisory Executive Senior Management Employees Board Board management Other


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    Object Silver scale-model of De Oude Hoofdpoort (1879) Made by C. Koops Chosen by Jos Baeten, CEO ‘For me, this silver model of the Hoofdpoort, which doubles as a salt and pepper cruet, symbolises the transition we’ve made at a.s.r. The Hoofdpoort was the first headquarters of the Maatschappij van Assurantie, Discontering en Beleening der Stad Rotterdam Anno 1720, and next year it will be 300 years since it was founded. De Oude Hoofdpoort has long since disappeared, having been demolished in 1856 to make way for a railway station. When we still had boardrooms at a.s.r., this silver model stood in the chairman’s office - my office - until 2009. The decision to do away with separate boardrooms and offices, and the light and transparent layout of our building following its complete redesign in 2016, testify to the enormous changes we’ve gone through as a company.’


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    About a.s.r. | 1.3 Message from the CEO 15 About a.s.r. 1.3 Message from the CEO Operating environment ‘2018 was a good year for a.s.r., in which we either met or exceeded all the targets we set ourselves when the IPO was announced in 2016. It was our first full year of operating as an independent listed company and also the year in which we were included in the Euronext AEX index. In addition to posting sound financial results, we also performed well in non-financial terms, demonstrating that sustainable business and profitable growth can go well together.’ Strategy ‘The key figures show that a.s.r. performed well in 2018. a concept that can help our customers to live healthier and At € 742 million, our operating result was higher than it was have more vital lives. We will also increase our focus on in 2017, which at € 728 million was our best result to date. raising awareness and prevention, and we have developed The gross written premiums (GWP) for Non-life and Life integrated solutions as part of our disability and health care went up in 2018 and the combined ratio in Non-life came to packages aimed at prevention, occupational reintegration Long term value creation 96.5%, ahead of our target of <97%. The operational return and claims processing. on equity was 14.2%, well above the target of ‘up to 12%’. While the net result for 2018 was below that in 2017, this In Pensions the new ‘WerknemersPensioen’ premiums rose can be explained by incidental windfalls in 2017. At 197%, by 65% to more than € 85 million and the related assets rose our Solvency II ratio is robust. Not only the absolute to approximately € 675 million. a.s.r. WerknemersPensioen level but also the quality of our solvency is high, with puts it comfortably in third place on the Dutch market for Tier 1 capital accounting for 85% of the capital present. new DC pension transactions. Funeral insurance also had a Our capital base gives us considerable financial flexibility. good year. GWP rose by € 19 million and the entire funeral insurance portfolio of Generali Nederland was integrated into a.s.r. For individual life policies, this integration will be Business performance completed in 2019. Our ability to successfully complete ‘We show that sustainable acquisitions within the specified deadlines and budgets shows evidence of our effectiveness. business and profitable growth can go well together’ a.s.r. also posted good results for 2018 in the other segments. Third party assets under management (AuM) rose by € 1.7 billion to € 16.0 billion (2017: € 14.3 billion) for a.s.r. asset management and a.s.r. real estate Improving our service and focusing on our customers, jointly. The ‘ASR Mortgage fund’ grew by € 1.3 billion including through the offer of new innovative products, and now manages a total of € 2.3 billion in committed Governance remained high on the agenda in 2018. We were the first external assets. Our activities in the Distribution and in the Netherlands to successfully introduce a 40-year Services segment, which generates fee-based income, mortgage, for example. In Non-life, we saw an increase in also reported good progress. Asset Management and customer interest for our ‘Vernieuwde Voordeel Pakket’. Distribution and Services together added € 41 million to In 2018, sales of this successful non-life product rose by the operating result, which represents approximately 25% to more than 70,000. Our ‘Doorgaan’ proposition, 1 %-point in organic capital growth in 2018. a combined disability and health insurance product, was Financial statements 2018 also popular, with over 52,000 self employed and small Part of a.s.r.’s strategy is to grow, both organically and business entrepreneurs having taken it out. Our disability through targeted acquisitions. In 2017, we announced the and health insurance businesses are highly committed acquisition of Generali Nederland. The transaction was to the sustainable deployability of employees and self closed in February 2018. As well as being able to welcome employed individuals and small business entrepreneurs. the Generali Nederland customers, the integration of We have seen growing interest in our ‘Langer mee AOV’ Generali Nederland into the various lines of business is also scheme, which provides affordable and accessible cover proceeding successfully. Already in the first year, Generali for physically demanding professions that are difficult or Nederland contributed to the operating result. We expect expensive to insure. I am particularly proud to be able to complete the full integration of Generali Nederland by to announce an exclusive partnership with Discovery for 2020. At the end of 2018, we were also able to announce our disability insurance and health insurance customers. that we are acquiring Loyalis from pension provider Other Together, we will this year be launching a.s.r. vitality, Algemene Pensioen Groep N.V. (APG). The company,


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    About a.s.r. | 1.3 Message from the CEO 16 which is based in Heerlen, employs approximately 300 continue to realise the strong operating result of previous staff. Loyalis sells disability insurance and supplementary years in 2019. pension cover. Following the acquisition, Loyalis’ disability insurance business will continue to trade under its own I am delighted that we have reached a negotiating name from its offices in Heerlen, while the life and pension outcome with the trade unions on behalf of our employees, insurance businesses will be integrated into a.s.r. This in which we have agreed to increase staff salaries by 3% in process is due for completion in mid-2020. 2019 and another 3% in March 2020, and that we have also concluded numerous agreements to continue working with In 2018, to further improve our service to our customers, the unions on a future-proof package of working conditions we took additional measures in the form of a for a.s.r.’s employees. transformation programme in IT&C to respond more effectively to future developments. The Innovation & We are especially proud of the high scores awarded to us Digital (I&D) team, which was set up in 2017, will play a key by our customers, measured through the NPS. Our NPS has role in this. The partnership between I&D and the lines of risen steadily in recent years, leading in 2018 to an increase business have not yet generated the result we were hoping from +40 to +42. We will continue to make every effort for. This will be an important focus for 2019. In 2018, we also to further improve our service to them and to match our revised our goals for a.s.r. bank. This ultimately led us to products even more closely to their wishes throughout 2019. decide in the second half of the year to qualify a.s.r. bank as ‘non-core’ and to more explicitly consider what future To ensure that a.s.r. continues to operate decisively, scenarios there might be for the bank. In Non-life, we were including in a subsequent phase, we announced at the confronted by higher than usual claims and the impact of a end of 2018 that we would change our management severe winter storm. These are events we cannot influence structure. This was effected on 1 February 2019 through but whose effects we can significantly limit through risk the appointment of a Business Executive Committee acceptance, information to policyholders and prevention. (BEC) to encourage more direct involvement of the senior In 2018, we gave considerable attention to the vitality of managers of the product lines. As a result of this decision, our employees. Here too, awareness and prevention were Michel Verwoest and Karin Bergstein relinquished their two of the instruments we used. Although absenteeism has positions as Executive Board members with effect from decreased, we have not achieved our goal in this area. We 1 February. We are indebted to them for their hard work will maintain our efforts on behalf of the health and vitality and dedication over the years and for their contribution of our employees in 2019. in helping to make a.s.r. what it is today. The selection procedure for a new member of the Executive Board has Throughout the year, a.s.r. was given recognition for its begun and the nomination of the candidate will be notified activities in many different areas. We consolidated our as soon as possible. number 1 position as a sustainable investor in the Dutch Fair Insurance Guide. By conducting a sharper investment The results we posted in 2018 could not have been policy on labour laws, gender equility and transparency, achieved without the support of our investors and a.s.r. improved its score compared with 2017 and ended customers or the dedication and hard work of our the year above other insurers. Recently, investment employees. I would therefore like to take this opportunity company RobecoSAM announced that a.s.r. had been to thank them all for the confidence they have placed in included in the 2019 Sustainability Yearbook as the biggest a.s.r. throughout the year. climber up in the DJSI ranking in the insurance industry worldwide. We received less positive recognition for Our strategy will continue to focus on selective profitable the commercial related to the campaign we launched to growth, and our strong financial discipline and value-over- reflect our social engagement, with viewers of a Dutch volume principle will continue to guide all our activities, TV consumer programme voting our commercial as the as before. At the same time, we will give considerable ‘most irritating’ of the year. We will take this on board when attention to social developments and to concern about preparing the campaign for 2019, in the knowledge that it the climate. The associated risks of climate change for will probably never be possible to win-over everyone with our customers and for a.s.r. itself will be increasingly felt any single commercial. in the years to come. We are acutely aware of this and it is very much top of mind. This is also why a.s.r. has set itself The growth of our operating result and management’s a new medium-term goal of investing € 1.2 billion up to confidence in the year ahead means we will be proposing 2021 for impact investing and for carefully analysing the a higher dividend payout for our shareholders consisting carbon footprint of our investments in order to evaluate of a cash dividend of € 1.74 per share: a 6.7% increase its impact and ways to mitigate it. We will do all this in compared with the year before. In line with our dividend the full conviction that a.s.r. is a company with added policy, we will strive to offer our shareholders a stable, value for society, to which it can and must make an active modestly increasing ordinary dividend per share in the contribution. After all, it is our purpose to help people’. long term. The ongoing strong operational performance of the various segments, disciplined execution of our strategy Jos Baeten, and robust capital position make us confident that we can CEO and Chairman of the Executive Board


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    About a.s.r. | 1.4 Value creation model 17 About a.s.r. 1.4 Value creation model Operating environment The value creation model shows how a.s.r.’s inputs are Additionally, the value creation model shows which transformed within its businesses into value (outputs and Sustainable Development Goals (SDGs) are most relevant outcomes) that benefits the company and its stakeholders. for a.s.r. Input Financial capital Manufactured capital Human and intellectual capital Social and relationship capital • Shareholders equity • Customers • Employees • Intermediaries • Eligable own funds • GWP • Average years of service • Other business partners Strategy • Total debt • Investment returns • Training employees • Memberships • Total assets • Organic Capital Creation • Development of employees • Trade unions • Company alumni Business model • Non-life incl. Distribution & Services • Life • Life related fee business (Asset Management and Pension DC) Long term value creation principle: Value ov te gic er a vo y str lu ic principles m Ke ateg e Str customer needs ting M ee Key trends r core values Ou So Our skills lid fina Technological nc Service I think head ial framework I’m helpful Business performance Our purpose ffectiveness Environmental and Helping customers to demographic a mitigate risks and Craftsmanship accumulate wealth Economic and st e Sober financial markets Co I ac t Social responsible decisively Political and , regulatory i ng Excellence in pric n d underwriting a ent claims managem Value created Governance 4.1 Customers 4.2 Investors 4.3 Employees 4.4 Sustainable 4.5 Role in society 4.6 Sustainable • Customer satisfaction • Dividend • 30% women in senior management • Employee contribution investor Financial statements 2018 (NPS) • Organic Capital positions • Tax paid in NL to local society • SRI funds and mandates • Claims and benefits Creation • Paid salaries and wages • Paid to suppliers • Financial self-reliance • Impact investing paid • (Hybrid) coupons • Top 30% in international • % carbon neutral in • Foundations • Carbon footprint: • Customer trust and • Shareholder return Denison Scan 2020 Measure investment loyalty • Sustainable • Human rights portfolio • Transparant products employability and services • Highly skilled workforce • Integrity • Filling 30% of vacancies • Solvency by internal candidates 4.7 Contributing to the SDGs Other


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    About a.s.r. | 1.5 Reporting segments 18 1.5 Reporting segments a.s.r.’s operations are divided into six operating segments. This chapter presents a short summary of these segments. More detailed information per segment can be found in chapter 5.1 Group and segment performance. Non-life Life Banking and Asset Management Consists of Consists of Consists of • Property and Casualty (P&C) • Pensions • Mortgages • Disability • Individual life • Asset Management • Health • Funeral • Real Estate • Bank (non-core) a.s.r. does not consider banking activities to be a part of its core business Products and Services Products and Services Products and Services P&C Pensions Mortgages • Motor • Defined Contribution (DC) •Several types of mortgages • Fire • Defined Benefit (DB) • Liability Asset Management • Travel and leisure Individual life • Fixed income • Other • Term life insurance • Interest overlay • Immediate annuities • Liability Driven Investing (LDI), Disability equities • Disability self-employed Funeral • Mandates individuals • Funeral insurance • Portfolios • Sickness Leave • Group Disability Real Estate • Direct and indirect real estate Health investments on behalf of a.s.r.’s • Basic insurance own account and for institutional • Supplementary insurance investors • Portfolio of agricultural land in the Netherlands Bank • Bank annuities • Deferred annuities • Savings accounts • Retail investments Customers Customers Customers • Retail customers • Retail customers • Institutional investors • Small- and medium-sized • Small- and medium-sized • Pension funds, insurance enterprises (SMEs) enterprises (SMEs) companies, local and regional • Large corporate clients • Large corporate clients authorities and parties in the and their employees and their employees social playing field • Self-employed individuals • Pensionfunds • Retail customers (a.s.r. bank) • Self-employed individuals • Het nederlandse pensioenfonds (Hnpf)


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    About a.s.r. | 1.5 Reporting segments 19 About a.s.r. Non-life Life Banking and Asset Management Financial performance (€m) Financial performance (€m) Financial performance (€m) Gross written premiums € 3,014 Gross written premiums € 1,566 Assets under management Operating environment Operating expenses € -222 Operating expenses € -185 for third parties € 16,000 Operating result € 145 Operating result € 664 Operating expenses € -78 Profit/(loss) for the year Profit/(loss) for the year Operating result € 16 attributable to holders of attributable to holders of Profit/(loss) for the year equity instruments € 132 equity instruments € 569 attributable to holders of Cost/premium ratio (APE) 11.1% equity instruments € -26 Combined ratio New business (APE) € 119 Non-life segment 96.5% P&C 98.4% Disability 90.8% Health 99.2% NPS NPS NPS Strategy P&C 47 Pensions 47 Bank 36 Disability 45 Individual life 37 Health 39 Funeral 41 FTEs (in- and external) 1,549 FTEs (in- and external) 619 FTEs (in- and external) 381 Detailed information in chapter Detailed information in chapter Detailed information in chapter 5.1.2 5.1.3 5.1.4 Long term value creation Distribution and Services Holding and Other Real Estate Development Consists of Consists of Consists of • Van Kampen Groep Holding B.V. Primarily the holding activities a.s.r. does not consider Real Estate • Dutch ID B.V. of a.s.r. (including the Group-related Development activities to be a part • Corins B.V. activities), other holding and of its core business Business performance • SuperGarant Verzekeringen B.V. intermediate holding companies • Anac B.V. and the activities of ASR • Stoutenburgh Adviesgroep B.V. Deelnemingen N.V. • PoliService B.V. Services • Distribution of insurance contracts • Intermediary services Governance Customers • Retail customers • Intermediaries • SMEs • Corporate Financial performance (€m) Financial performance (€m) Financial performance (€m) Financial statements 2018 Total income € 79 Operating expenses € -60 Operating expenses € -4 Operating expenses € -51 Operating result € -108 Operating result - Operating result € 25 Profit/(loss) before tax € -127 Profit/(loss) for the year Profit/(loss) for the year Profit/(loss) for the year attributable to holders of attributable to holders of attributable to holders of equity instruments € 27 equity instruments € 19 equity instruments € -68 FTEs (in- and external) 507 FTEs (in- and external) 1,241 FTEs (in- and external) 17 Detailed information in chapter Detailed information in chapter Detailed information in chapter 5.1.5 5.1.6 5.1.7 Other


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    Object Portrait of Johan de Witt Made by Jan de Baen Chosen by Jordi van Baardewijk, communications consultant ‘This portrait of Johan de Witt by Jan de Baen was painted in the second half of the 17th century. De Witt was councillor pensionary of the Dutch Republic, but what many people don’t know is that he’s also seen as the first actuary and laid the foundations for pension calculations. A clever man, in other words. This portrait hangs in our meeting room, next to that of his brother Cornelis. Every time I see them I realise how lucky we are to have these works of art. Sometimes you feel as if you’re in a museum.’


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    About a.s.r. Operating environment Strategy Long term value creation Business performance Governance Financial statements 2018 Other environment Operating 2


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    Operating environment | 2.1 Trends and developments 22 2.1 Trends and developments a.s.r. operates in a changing and highly regulated environment. It has to stay on top of trends that impact its business models. Therefore, a.s.r. aims to be adaptive to benefit from opportunities as well as to mitigate risks to its business models that originate from those trends. a.s.r. classifies trends into four themes¹ Technological Environmental & demographic • Ease of use & internet of • Increased workforce things flexibility and more self- • Customer data & data employed individuals analytics • Ageing population & • Robotics increasing life expectancy • Artificial intelligence & • Corporate social machine learning responsibility • Cyber • Climate change Economic & financial markets Political & regulatory • Volatile financial markets • Withdrawing government • Low(er) interest rates for • From collective to longer individual arrangements • Reduced risk premiums • Higher capital • Value chain integration requirements • Rising retirement age 1 It should be noted that this is not an exhaustive list, nor does the order in which the trends are presented indicate their relative importance.


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    Operating environment | 2.1 Trends and developments 23 About a.s.r. Technological The internet of things, where devices are constantly online and send or receive relevant information, could improve Various technological developments will have an impact on prevention of damage, resulting in a reduction of claims. the scope and position of insurers in society. Smartphones and tablets are increasingly used in customer Operating environment interfaces to improve ease of use and require simple and Big data generates a vast amount of information that straightforward digital services. can be used for a range of purposes such as customised solutions, risk pricing, improvement of retention rates, Technological developments in the area of artificial prevention, lead generation and fraud detection. In order intelligence (AI), blockchain, quant computing, machine for big data to have an impact it has to be transformed into learning and robotics have a significant impact and have big relevance. Health-related technology can contribute to the potential to disrupt or to help re-invent the insurance a longer, healthier life. Predicting and determining factors industry. These technologies could change the nature, influencing people’s health are increasingly measurable as magnitude and types of risks that customers want to a result of wearables, which give customers and insurance mitigate and which insurers may want to provide cover for. companies, where possible and desired, more information Insurers’ role could be to cover residual risks and their role Strategy that could help them move from cure to prevention. could therefore shift to helping customers prevent risks. Robotics could also strongly improve the efficiency as well as the quality of processes. Long term value creation Opportunities and threats • Customers are becoming comfortable with exploring opportunities with non-traditional ‘start-up’ companies in the financial sector; • Technology can improve customer experience; • Talent for digital work is required for developing solutions and is difficult to attract. In-house development of this kind of talent is key; • Through technology, customers or alternative platforms can offer services themselves without, or with less, help from traditional parties; • New technologies are creating new types of risk for which customers seek cover; Balance between advanced service opportunities and privacy of customers and employees; Business performance • • Technological developments could disrupt traditional insurance models. a.s.r.’s answers Additionally, a.s.r. is developing more personalised Technological developments change the lives of chatbots to suit preferences of younger target groups, consumers. a.s.r. constantly scans the market for to take away any thresholds that might keep them from technological trends, emerging customer needs and gathering information about insurance policies and assess new ways of interacting. a.s.r. has a specialised team what is relevant to them. Governance I&D in place to support optimisation, transformation and disruption. I&D reports directly to the Executive Examples Board. Disruptive initiatives are managed and organised separately from the a.s.r. organisation. Chatbot For more than 2 years, a.s.r. has been using a chatbot as When needed, a.s.r. assists its customers in a 1:1 a main conversational interface on its website. With the conversation. Increasingly however, technology allows a.s.r. interface, a.s.r. was seen as a first mover in the Netherlands Financial statements 2018 to replace these conversations with 1:many dialogues. For and is therefore often used as an example for other customers this means that they can reach a.s.r. at any time businesses. Many steps have been made to optimise the with any question. For a.s.r., this means it can be relevant in ‘first time fix’, which stands for helping a customer at once. an efficient and scalable manner. Smart technology is used to ‘scan and read’ the current telephone conversations a.s.r. has and to analyse questions To enabIe a high volume of parallel dialogues, a.s.r. has customers have. These data are very useful for improving in-depth customer knowledge and is able to handle a lot the chatbot and the content a.s.r. has on its website. By of data. Changes to the digital infrastructure are vital in this using a conversation interface as the main contact point process. with customers, a.s.r. is flexible since it can adapt very fast. As a result, a.s.r. manages to enhance the value of its The a.s.r. website is an example where a.s.r. has shown website every day. Other that it can serve its customers, personally and fluently.


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    Operating environment | 2.1 Trends and developments 24 Transformation tries to raise awareness of the risks these people run and to The Netherlands is a country with one of the highest enable them to take action, with financial planning and risk adoption rates of voice interfaces and a.s.r. is developing assessment tools. technologies to incorporate voice in its operations. Voice is very different from the conversational interface that a.s.r. Robotic Process Automation (RPA) within a.s.r. currently uses on its website, e.g. ‘buttons’ that are intuitive In 2018, RPA pilots were carried out at the Life, Non-life, in a visual conversational interface are not as intuitive Health and Group departments to determine whether in ‘voice’. Not only does a.s.r. learn about this ‘new’ RPA provides added value for a.s.r. The conclusion is technology, a.s.r. also applies these lessons in its current that the use of RPA indeed offers opportunities. With interface. RPA, a.s.r. creates virtual employees who carry out certain tasks. These activities are often repetitive and are Disruption perceived by ‘employees’ as unpleasant. As a result, the The Netherlands has one of the highest self-employed use of RPA contributes to the quality of the execution as labour ratios compared to other developed economies. well as employee satisfaction. At the end of 2018, a.s.r. This group, often young entrepreneurs, inherently take decided on RPA tooling across business units to optimise more risks and are less likely to take longer term decisions the deployment of RPA. a.s.r. sees this optimisation in into consideration, such as financial planning. Beside this, knowledge sharing, deployment of virtual staff capacity and the Dutch Government is stepping back in providing social a re-use of solutions between the business units. The use security. As a result of both trends, a growing number of RPA now mainly focuses on processes with structured of self employed individuals is uninsured. a.s.r. started information. In 2019, its deployment will be expanded several initiatives to experiment with ways to reach this further, whereby a.s.r. will consider whether the use of AI can group of self-employed individuals. By doing this, a.s.r. also process unstructured information via RPA. Economic & financial markets The insurance industry has been operating in a low interest With the relatively strong economic performance of the US rate environment for many years. Investment returns are an and the Fed in tightening mode, US bond yields rose and important source of income for insurers and its customers. US equities performed relatively well, especially during The low interest rate environment has put significant the first half of 2018. However, bond yields in the eurozone challenges on insurers to achieve adequate returns. remained at historically low levels and European equities as well as emerging market equities registered negative 2018 turned out to be a transitory year for the world returns, albeit to different degrees. As a consequence, economy. Overall, economic growth was quite similar to conditions for insurers and other institutional investors 2017, but growth prospects worsened towards the end remained challenging, with low interest rates and low risk of the year as the initial positive impact of fiscal stimuli in premiums resulting in reduced investment returns, while the United States (US) on economic growth dissipated margins on traditional, capital intensive spread-based gradually. At the same time, the focus on downside products remained thin. Taking into account the background political risk (US-China trade war, ‘Brexit’) became ever of a still positive, but decreasing economic growth, subdued prominent. Inflationary pressures remained relatively inflationary pressures, and heightened political risk, a.s.r. subdued, partly due to a sharp decrease in the oil price. recognises the possibility that the current environment of Central banks continued reducing their monetary low investment returns and volatile financial markets may expansion of the past years, with the Federal Reserve in the continue. US continuing on its path of raising interest rates at regular intervals and the European Central Bank (ECB) gradually In addition, a.s.r. has identified a trend of value chain winding down its programme of ‘quantitative easing’. integration in economic sectors. Through controlling stakes and partnerships, insurance companies increasingly integrate the value chain. This can be seen in distribution channels, claims prevention and added services as well as claims handling. It enables insurers to become a full-service provider to customers.


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    Operating environment | 2.1 Trends and developments 25 About a.s.r. Opportunities and threats • Further development of fee business from the Distribution and Services segment; • Sustainable fee income and business enhancement via asset management solutions for all asset classes for Operating environment external clients; • Prolonged low interest rate environment and/or financial markets volatility due to uncertainty, and reduced rewards for financial risks which may reduce future investment related profits and the attractiveness of spread-based businesses such as defined benefit plans; • Further development of capital-light life products without guarantees that are funded through investment returns (e.g. defined contribution plan and asset management products). a.s.r.’s answers them. At a.s.r. asset management (AVB), Brexit will mainly Strategy a.s.r. actively manages its interest rate hedging to be impact flexibility with regard to the current portfolios prepared for sudden fluctuations. While higher interest in derivatives positions and new derivative transactions rates in general are positive for insurers, a sudden steep to be concluded in the future. Within AVB, a working rise in interest rates usually is not. The increased volatility group has been set up that is in contact with all relevant of financial markets poses an additional risk to future counterparties and contract adjustments are implemented. investment returns. In the course of 2018, a.s.r. reduced Long term value creation its market risk by stopping the re-risking process and In 2018, a.s.r. was successful, number 3 in the market, refocused from equities to real estate. in the ‘capital-light’ DC market. The DC proposition offers attractive life cycle strategies, leveraging on the a.s.r. has assessed the possible consequences of a capabilities of AVB, with a.s.r.’s ESG policy integrated in the ‘no-deal’ Brexit and found that these are relatively limited. entire investment process. The continuity of business operations and continuous service provision is guaranteed. The risk of non-compliance a.s.r. has further strengthened its third party asset with data protection and privacy legislation has been management proposition by offering several funds and classified as low. A number of additional (contractual) mandates to institutional investors. a.s.r. offers specific measures are in progress to further mitigate residual risks. niche product solutions e.g. the ASR Mortgage Fund, the Business performance Where possible, a.s.r. wants to limit the consequences of ASR ESG IndexPlus fund range, tailored LDI Solutions, a reduced coverage area for its customers. Fewer than balanced mandates and several real estate funds 400 customers have an address in the United Kingdom. (ASR Dutch Prime Retail Fund (DPRF), ASR Dutch Core With this group, a.s.r. will communicate in a personalised Residential Fund (DCRF), ASR Dutch Mobility Office Fund manner, even if there are no consequences (expected) for (DMOF)). Environmental & demographic Governance Developments in society encourages the development switches, including from permanent contracts to flexible of new products and services and/or altering the work or fixed-term contracts, from having an employer to being procedures of insurance companies. Different factors play a self-employed individual and vice versa. The trend is a part in this context. towards fewer permanent employees, more employees with flexible contracts and more self-employed individuals. Corporate Social Responsibility (CSR) is becoming an Employees seem to attach greater value to a good essential aspect for organisations. Environmental, Social Financial statements 2018 work-life balance that suits them at any stage in their life. and Governance (ESG) policies are increasingly taken into account by investors and also customers consider Life expectancy continues to increase (although the speed sustainability an important criterion in their purchasing with which it increases has slightly decreased). This makes decisions. In addition, the millennials generation, in the existing social welfare system in the Netherlands general, is expected to switch employers more often than less affordable. Pensions are increasingly tailored to the former generations of employees. Millennials do display individual. This affects the product portfolios offered by loyalty, particularly when employers demonstrate a strong insurers and pension funds. Another consequence of sense of societal purpose in addition to financial success. the steady increase in life expectancy, combined with expensive technological innovations, is that health care Fewer people spend their entire working life with the same is becoming more expensive year after year. This puts employer. Jobs are continuously being created and evolve pressure on the existing medical insurance system. Other or disappear over time. This process also invokes many job


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    Operating environment | 2.1 Trends and developments 26 Climate change poses financial challenges and alters the risk profile of insurers as it becomes more difficult opportunities. Organisations are impacted by the effects of to predict how related events and claims patterns will climate change (such as storms, hail and flooding), climate potentially change over time. Preventive measures will policies and new technologies as well as the impact of the become more relevant. transition to a climate neutral economy. Climate change Opportunities and threats • By supporting the health of customers and employees, they can live and work longer, while claims in Health and Disability will potentially be lower. This is in line with a.s.r.’s objective to contribute to society. • A further reduction of the principle of collective solidarity and growing attention for individual solutions, possibly offset by mandatory solutions for uninsurable groups; • An increasing number of self-employed individuals is seeking insurance and (retirement) savings solutions; • Highly educated and experienced employees, who understand underwriting and risk-pricing are therefore important for insurers’ future profitability; • Customers need to prepare for a longer working life in order to sustain their lifestyle; • A focus on sustainability enables a.s.r. to distinguish itself as an insurer and attract stakeholders such as investors, customers and new employees; • Climate change will continue to impact risk analyses and pricing decisions and, if performed inadequately or incorrectly, this poses a risk to a.s.r.’s revenue model; • Unforeseen elevations in life expectancy may have an impact on future profitability. a.s.r.’s answers a.s.r. aims to be best-in-class in sustainable business Pensions responds by focusing on capital-light pension practices in the financial sector and takes account of products that can support customers to build up capital/ sustainability whenever possible. a.s.r. continues to work savings for retirement, also when life expectancy on making its insurance products and services more continues to increase. a.s.r. closely monitors changes in sustainable (see chapter 4.1 Customers). legislation, such as the expected expansion of individual choices, which can already be discerned in current a.s.r. is fully aware of the importance and the responsibility legislation. Pensions anticipates this change by facilitating that is expected from its role as an investor; both as an communication and digitisation with a personal touch. asset manager at its own risk and as an asset manager for Within Disability, a.s.r. provides (self-employed) customers third parties. Therefore, sustainability is an essential part of with services pertaining to mental and physical fitness. a.s.r.’s investment beliefs. a.s.r. believes that the integration of ESG factors into the management of its investments a.s.r. is well equipped to benefit from the macro trends that contributes to a reduction of risks (both financial and are driving demand for services pertaining to sustainable reputational) and positively impacts its long-term employability. a.s.r. is the owner of an evolving disability performance and value creation. platform in which it leverages unique skills in distribution, in added services to assist employees and the increasing The developments in and the impact of climate change is group of self-employed individuals, in claims prevention discussed and assessed periodically in the multi-disciplined and in actual disability treatment and reintegration services. climate committee of a.s.r. recommendations of this a.s.r. serves customers throughout the value chain and committee led to initiatives in 2018 such as: receives customer data from all of those angles. As a result, • Climate maps to improve knowledge about what a.s.r. can use these data to improve customer services and kind of climate risks are most likely to occur in which grow profitably in each single part of the value chain and geographical areas; in disability underwriting performance and can introduce • Supporting new prospects to prevent damage as enhanced product solutions e.g. ‘Langer mee AOV’. a result of climate change through individual risk assessments: focus on preventing climate risks for new a.s.r. intends to be a good steward of nature and the applications; environment by reducing waste and limiting negative • Supporting policy holders to reduce the effects of impacts of its activities. a.s.r. places special focus on its climate change through individual claims assessments: carbon footprint directly and indirectly through investment focus on preventing climate claims to recur; activities and is a leader in the Dutch market in ESG • Through social media, a.s.r. shares advice on how to investing. prevent specific climate risks and in blogs, a.s.r. sends information on what to do in the event of weather warnings.


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    Operating environment | 2.1 Trends and developments 27 About a.s.r. P&C is currently looking into possibilities to expand its Additionally, a.s.r. explores opportunities to further reduce product range with new climate covers in exchange for an the carbon footprint of its investment portfolio in line appropriate premium increase. In addition, climate risk is with the Paris Agreement. a.s.r. measures and evaluates incorporated in P&C’s re-insurance arrangements. At the the results of its efforts, with the final goal of supporting Operating environment annual renewals, the latest developments, insights and the global energy transition. See chapter 4.6 Sustainable knowledge on climate developments are taken into account. investor for details about measures taken by a.s.r. as a P&C also monitors the financial performance of its product responsible investor with regard to the risks of climate portfolio continuously. As part of this monitoring, it assesses change and the energy transition. the impact of climate change on claims ratios, which may lead to an adjustment of premiums. For 2019, P&C will continue to take measures to adapt to climate change. Politics & regulatory Strategy In the financial sector, the ongoing trend is towards more minimum returns have become increasingly expensive. regulation to better safeguard the interests of customers This causes insurers to move from capital-intensive to and making the financial sector more resilient to prevent capital-light products, such as DC pensions and asset future state intervention. Consumer protection (for management propositions. example, regulations to increase the protection of personal information – the General Data Protection Regulation On the other hand, government is withdrawing from Long term value creation (GDPR)) has high priority and risk mitigation is broadly certain markets, be it disability insurance and related supported by politicians and regulatory bodies alike. services or building up sufficient capital for retirement. Continuous effort is needed to comply with regulation, The individualisation of society has also reached the as illustrated by the emergence of Solvency II and the insurance sector. Analysing customer data allows for more upcoming change in accounting standards (i.e. IFRS 17). individualised services and insurance products. Also, the solidarity principle within the pension framework in the The Solvency II framework requires insurers to hold Netherlands may be reformed to a more individualised sufficient capital to ensure that policyholders’ interests approach. are safeguarded at all times. Products with guaranteed Business performance Opportunities and threats • Increased levels of regulation, forcing a shift from entrepreneurship to a ‘de facto’ implementation of publicly established regulations; • Solvency II and an increased scrutiny of the capitalisation of insurance companies may speed up consolidation in the Netherlands and enhance the opportunity-set for possible acquisitions for a.s.r.; • The introduction of IFRS 17 will impact the way in which long-term contracts are handled and lead to additional reporting costs; • New and increased levels of regulation, for instance in the field of Pensions, Disability and Health, may Governance impact existing business models; • A juridification of society with specific political, regulatory and public attention to 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; • Privacy regulation that was implemented in 2018. Financial statements 2018 a.s.r.’s answers Legal and Compliance departments while they invest in a.s.r. recognises the need for clear and sound regulation, awareness and knowledge. A legislative and regulatory as this will help to build and maintain trust in the financial committee was set up to respond efficiently to changing sector. a.s.r. seeks to keep a local level playing field between legislation and regulations. The committee helps the vested insurance companies and new entries like fintech and various business units to identify and apply legislative insuretech. Customers’ ability to insure against the risks they changes in a timely manner. Products are also rationalised face should ideally not be constraint by new regulations. and the ICT system landscape of e.g. P&C, Individual life and Pensions is simplified. This will mitigate the impact of The business is primarily responsible for controlled and legislation and regulations. Other ethical business operations. This is supervised by both the


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    Operating environment | 2.2 Stakeholders 28 2.2 Stakeholders a.s.r.’s main stakeholders are its customers, investors, Employees employees and society at large. a.s.r. is in permanent Employees want a professional working environment dialogue with these stakeholders concerning its priorities, which offers them control over their own career choices objectives and policy. A context in which customers play and to enhance their attractiveness on the labour a key role. Long-term relationships with its customers market. They also want to be proud of the company they enables a.s.r. to create long-term value for all stakeholders. work for. Personal development, pride and sustainable employability (within and eventually after a.s.r.) translates Customers into employee engagement. All this makes a positive Customers entrust their financial assets to a.s.r., they need contribution to the interests of a.s.r. and its stakeholders. to be confident that their funds are skillfully managed and that a.s.r. will fulfil its long-term commitments. They also Society want it to be done in a socially responsible, relevant and a.s.r.’s stakeholders also include business partners ethical way. Product requirements, perceptions and social (intermediaries, regulators, politicians, tax authorities, standards are constantly evolving, and a.s.r. is committed trade unions, the media and civil society organisations to anticipating and create new solutions for customers in among others). They expect a.s.r. to create sustainable and this changing context. responsible societal value. Investors Dialogue with stakeholders Shareholders rely on the execution of a.s.r.’s strategy a.s.r. is committed to maintaining a good relationship to create value and are guided by the financial and and clear communication with all its stakeholders. It non-financial targets. They expect management to therefore maintains an ongoing dialogue with a wide seize the opportunities that arise and to monitor risks range of stakeholders at international, national and local continuously. Dividends and share price developments level. In 2018, a.s.r.’s communication and engagement should offer an attractive total return on their investment. with stakeholders on the selection of material topics Shareholders are also increasingly interested in the was reflected in an internal survey which was sent to all social relevance of the companies they invest in. It is employees and in 18 in-depth interviews with internal in their interest that a.s.r. represents the interests of all and external stakeholders. These dialogues sought to stakeholders in order to achieve long-term value creation gather information on the expectations of value creation and return on capital. by a.s.r. A more detailed description of this process and the outcomes of the stakeholder dialogue can be found in Annex E.


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    Operating environment | 2.3 Material topics 29 About a.s.r. 2.3 Material topics Operating environment The results of the dialogue with stakeholders were keep a.s.r.’s house in order on a daily basis. Each of the compiled with a view to determining reporting topics and topics is measured for its importance in short and long- mapping out stakeholders’ interests and expectations, term value creation for both a.s.r. and its stakeholders. which serves in turn as relevant input for policy design and a.s.r.’s main objectives remain unchanged. implementation. • The second category (B) comprises material topics that are important for employees and societal actors but are The outcomes of the materiality analysis (described more of a less strategic nature. fully in Annex E), including the stakeholder dialogue, were plotted in the materiality matrix on page 30. The topics are The materiality matrix has been validated by various Strategy grouped into two categories: internal stakeholders, including the CSR workforce and the • The first category (A) covers highly material topics. Executive Board. Most of these are required to run the business and to Sustainable insurer Sustainable management Long term value creation Customers need to be able to rely on a.s.r. a.s.r. seeks to minimise its impact on nature meeting its financial obligations because and the environment. One aspect of this is a.s.r. enters into long-term liabilities such as pension the efficient use of resources, energy and water. a.s.r. contracts. That is why sustainable financial robustness is actively getting to grips with waste management, is essential and one of a.s.r.’s top priorities. a.s.r.’s mobility, energy reduction and carbon emissions. a.s.r. sustainable commitment is reflected in the development has the ambition to reduce its emissions by 2% annually of its products and services. a.s.r. offers solutions and to remain ‘climate neutral’ in terms of its direct that address social issues and align with the needs of footprint of the headquarters. today’s customers. For example, an affordable disability insurance was designed, the Langer mee AOV, for a.s.r. imposes additional requirements on its suppliers Business performance entrepreneurs with a (physically) demanding profession. in the areas of the environment, human rights and Another example is the Starters Mortgage – which runs working conditions. These requirements are part of the for 40 years instead of 30 – enabling starters to purchase procurement contracts. a house with lower monthly payments. Furthermore, a.s.r. helps clients and insurance brokers by actively a.s.r. does not do business with partners involved in sharing relevant content and practical tips about crime or other socially undesirable acts such as money damage prevention. laundering, fraud or the financing of terrorism. a.s.r. has a Customer Due Dilligence (CDD) policy that requires Sustainable investor screening before a contract is signed. The contract As an institutional investor, one way in which management policy also stipulates that a screening is Governance a.s.r. takes ownership of social responsibility is carried out periodically. If, in the opinion of a.s.r., there is through the use of ethical and sustainability criteria in its reason to doubt the integrity of a supplier, appropriate investment policy. All investments are screened on the measures are taken. basis of the Socially Responsible Investment (SRI) policy, focusing on aspects such as social and environmental Society criteria. Countries and businesses that do not meet the a.s.r. foundation initiates projects on awareness criteria are excluded. These include producers of and financial self-reliance. By teaching and Financial statements 2018 controversial or offensive weapons, nuclear energy, coal, supporting people in reading and arithmetic, being able tar sand and shale oil and tobacco and the gambling to handle money and organising their financial adminis- industry. a.s.r. also require that businesses comply with tration. a.s.r. also adheres to and executes the ethics international conventions on environment, human rights manifesto ‘From Debts to Opportunities’: customers who and labour rights. are behind on payments are approached in a timely and pro-active manner to resolve their payment problems. Sustainable employer a.s.r.’s sponsorship and donation policy fits in with this Having a talented, qualified and healthy and is always focused on those starting points. The purely workforce is key for a.s.r. in achieving its financial support does not or hardly ever occur. It is often business targets. That is why a.s.r. is committed to a combination of material and substantive support. a.s.r. attracting, retaining and inspiring the best people, is committed to preserving cultural and social heritage, Other offering them extensive scope for training and which is why the company is involved in a number of development, and facilitating a sound work/life balance. nation-wide and local foundations.


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    Operating environment | 2.3 Material topics 30 Materiality matrix 2018 High A Relevance to stakeholders B Low Relevance to a.s.r. High A High material topics and descriptions Ref. chapter Customer satisfaction Degree of customer satisfaction in terms of quality and availability of services, comprehensible 4.1 communication and customer focus. Financial performance A financially reliable and stable institution which is strong enough to meet its financial targets 3.2 and 7 and objectives. Integrity Complying with applicable laws and regulations, ethical standards and the internal standards to 4.3 and 5.3 which they give rise. Meeting the (justified) expectations of stakeholders and putting the customer’s interests first. IT security/Privacy a.s.r.’s protection against, and response to, attack, theft or damage to infrastructure, hardware, 5.2 software or information (customer data), as well as the potential disruption or misdirection of the services it provides through managing people, processes and technology. Legal compliance Compliance with constantly evolving national and international laws and regulations and the 5.3 resulting requirements imposed by regulators. Risk management Risk management is an integral part of a.s.r.’s daily business operations. a.s.r. adopts an integral 5.2 approach to managing risks, thereby ensuring that strategic objectives are met. Socially responsible investments Investing with due regard for ethical standards, policies and procedures, in line with the interests 4.6 of a.s.r. stakeholders, in which the integration of ESG criteria is key. This includes respect for fundamental human rights, employment rights, the environment and adequate corporate governance.


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    Operating environment | 2.3 Material topics 31 About a.s.r. A High material topics and descriptions Ref. chapter Solvency Operating environment The solvency position reflects the extent to which a.s.r. can fulfil its short- and long-term 3.2 and 5.1.1 obligations and commitments to all its stakeholders. Sustainable employment Encouraging employees to develop themselves with the aim of maintaining and/or increasing 4.3 their opportunities on the internal and external labour market. Sustainable products/services To develop sustainable products and services and encourage customers to positively and 4.1 and 4.6 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. Strategy Vitality Helping employees to remain mentally and physically fit and vital at work so that they can 4.3 continue to add value to a.s.r. and its shareholders. Long term value creation B Material topics and descriptions Ref. chapter Contributing to financial self-reliance Offering the knowledge and skills of its employees to help people avoid getting into debt or to get 4.5 them out of debt. Diversity A balanced workforce composition based on age, gender, cultural or social origin, skills, views and 4.3 Business performance working styles. Energy/Climate neutral operations a.s.r.’s own efforts to help mitigate the impact and risks of climate change. 4.4 Responsible procurement Encouraging environmental and social standards in a.s.r.’s supply chain as well as assessing the 4.4 positive and negative impact of suppliers on society. Governance Financial statements 2018 Other


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    Operating environment | 2.3 Material topics 32 In addition to the material topics mentioned above, importance in determining, influencing and realising the the following trends, which are identified and explained strategy of a.s.r. in chapter 2.1 Trends and development, are of great Trends and developments Ref. chapter Technological Various technological innovations will have a significant impact on the scope and position of 2.1 insurers in the value chain. Environmental & demographic 2.1 • The impact and risks of climate change and energy transition on a.s.r.’s customers, intermediaries, products and services; • Trends in society are encouraging the development of new products and services and/or altering the procedures adopted by insurance companies, e.g. individualisation and rising life expectancy. Economic & financial markets The insurance industry has operated in a low interest rate environment for many years. 2.1 Institutional investors such as insurance companies are looking for assets that generate an adequate yield for their investment portfolios. Politics & regulatory The trend is towards increased regulation and state intervention. 2.1


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    About a.s.r. Operating environment Strategy Long term value creation Business performance Governance Financial statements 2018 Other 33 Operating environment | 2.3 Material topics This page has intentionally been left blank.


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    Object Demolished house, Piet Mondriaanstraat 1 Made by Marjan Teeuwen Chosen by Ingeborg Mellaart, marketing and communications consultant ‘I’d never especially noticed Marjan Teeuwen’s work before. It wasn’t until I went on a guided tour of the building and it was pointed out by our curator that I realised how unusual it was. In fact, I was so fascinated by it that I went in search of more information about the artist. In the end, I even bought one of her works. So it’s no exaggeration to say I’ve been inspired by the art here at a.s.r.!’


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    About a.s.r. Operating environment Strategy Long term value creation Business performance Governance Financial statements 2018 Other Strategy 3


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    Strategy | 3.1 The story of a.s.r. 36 3.1 The story of a.s.r. Helping by doing a.s.r.’s purpose is to help people to ensure their financial stability. We help them by mitigating the financial risks they are unable or unwilling to bear themselves. And we help them to accumulate wealth for financial needs later on in life. Our history goes back almost 300 years. a.s.r. is deeply medium-sized insurers and/or asset management or rooted in Dutch society and we go to great lengths to distribution companies. understand the needs and wishes of our customers. We are committed to delivering our services clearly We seek to be a leader in sustainable business practices and transparently, to understanding and fulfilling our in the financial sector. We feel responsible for our customers’ needs and we will continue to innovate and environment and believe that consumers prefer to do develop new services. Using our expertise, we meet business with sustainable companies. customers’ needs in a service-oriented way. Customers’ trust is essential to a.s.r., and we value independent All of this can only be achieved with motivated and third-party advice to customers, as reflected in our strong engaged employees. Having a talented, qualified and position in the intermediary channel. healthy workforce is key for a.s.r. in achieving its business targets. Our work is guided by our core values: We proactively offer innovative solutions for prevention I’m helpful, I think ahead and I act decisively. These values and address our customers’ risk-related issues. We are underlie our day-to-day conduct. committed to handle claims competently and efficiently, which allows us to offer our customers attractively priced We are only satisfied if: solutions. We also focus on developing asset management • Our customers get value for the premiums they pay for solutions to enable our customers to build up capital. and customers and their financial advisors believe that a.s.r. provides the right level of service and offers the We are highly cost-conscious in our business operations. right products and services at the right price; We make use of well-founded risk assessments and are • Our employees develop their skills continuously; financially sound, realising sustainable, attractive returns • Our shareholders are given attractive returns; and for our shareholders. We strive for organic growth, • Sustainability is included in a.s.r.’s day-to-day business. as well as for growth through the acquisition of small and


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    Strategy | 3.1 The story of a.s.r. 37 About a.s.r. 3.1.1 Strategic principles a.s.r.’s overarching strategic principle is ‘value over growth, but will only do so if this is value accretive. volume’. Value over volume continues to be a key principle Value over volume overarches the four principles which Operating environment when selling products and services. a.s.r. pursues volume drive the value of the a.s.r. organisation. Value over volume Strategy Meeting Excellence Cost Solid Long term value creation customer in pricing, effectiveness financial needs underwriting framework and claim management • a.s.r. serves its customers’ needs. As outlined in chapter • a.s.r. is committed to a ‘no waste’ cost principle. Cost 2.1 Trends and developments, there are many trends effectiveness is not something you do once every and developments affecting insurers, their business couple of years by announcing large one-off reduction Business performance models and customer behaviour. a.s.r. must stay on processes, but something a.s.r. believes should be ever- top of these trends and developments, be flexible and present. Cost effectiveness lays the foundations continue to meet its customers’ changing needs. for sustainable profitable business models. • To remain competitive in the Dutch market, a.s.r. • a.s.r. generates capital, a pursuit that derives from must continue to build on its expertise, which a.s.r. being a resilient and highly diversified insurer with solid refers to as ‘craftsmanship’. a.s.r. reflects excellence solvency and value-generating businesses. The sound in its disciplined pricing, underwriting and claims capital base allows a.s.r. to absorb shocks while also management. a.s.r. aims to be the Netherlands’ taking advantage of opportunities to grow through leading insurance expert. acquisitions as well as organically. Governance Financial statements 2018 Other


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    Strategy | 3.1 The story of a.s.r. 38 3.1.2 Portfolio and execution of strategy The four strategic principles described in chapter 3.1.1 portfolio for its contribution to profits, as well as its Strategic principles are the value drivers in a.s.r.’s business growth outlook. portfolio. On an ongoing basis, a.s.r. reviews its business Portfolio Given the profit contribution and growth outlook of the II Activities that offer business enhancement businesses, a.s.r. divides its portfolio into four categories: opportunities, typically capital-light; III Businesses that represent robust and predictable I Activities that provide stable cash flows and generate back books and contribute to profitability; value with relatively strong growth potential; IV Non-core activities which will eventually be divested. Business domains in Non-life Asset management related with growth potential growth businesses P&C Asset Management Distribution and Services Pensions DC Disability Health I II III IV Robust and predictable Non-core businesses service books Bank Individual life Leidsche Rijn Centrum Pensions DB Funeral In 2018 a.s.r. strengthened its position in several of the The basis for creating value and growing profitably in P&C above categories by acquiring Generali Nederland (P&C, lies in the following unique selling points: Disability, Individual life, Pensions, Funeral), ZZP Nederland • a.s.r.’s insurance craftsmanship, by which a.s.r. means (Distribution and Services) and PC Hooft (Funeral). At the its underwriting skills – risk selection and pricing, claims end of 2018 a.s.r. announced the acquisition of Loyalis management and cost-effective operations; (Disability, Individual life, Pensions), which is expected to • a.s.r.’s leading position in the intermediary channel and be finalised in 2019. with in-house distributors; • a.s.r.’s know-how in maintaining a superior combined Business domains in Non-life with growth ratio (COR) while growing organically; potential • a.s.r.’s know-how in integrating and optimising the This business domains focus on non-life insurance. Within portfolios a.s.r. has acquired. a.s.r.’s IT systems and the non-life domains, a.s.r. focusses on continued growth platforms can onboard more business. of P&C insurance and disability insurance, both organically and inorganically. Selected distribution and service Within P&C a.s.r. can continue to grow organically by companies have been acquired in recent years to facilitate gaining market share at the targeted COR and, where this growth and to enable a.s.r. to become an even more available, by adding books of business without increasing service-orientated company. a.s.r.’s knowledge of the operational expenses, consequently benefiting from end-customer has increased as a result. a.s.r. believes this is economies of scale. The marginal costs of new business are key to adapt to all the trends that are stated above. low. The distribution partners in the portfolio can facilitate this growth.


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    Strategy | 3.1 The story of a.s.r. 39 About a.s.r. a.s.r. is well equipped to benefit from the macro trends in • a.s.r. has been and continues to be a consolidator of Disability that are driving demands for services surrounding funeral books; sustainable employability. a.s.r. owns an evolving disability • a.s.r. has started to pursue individual life consolidation platform which comprises: as seen in the acquisition of Loyalis. Operating environment • Distributors; • Added services to assist employees and a growing Asset management related growth cohort of self-employed individuals; businesses • Claims prevention services; The growth of asset management and defined contribution • Disability treatment and reintegration services; pension business has been part of a.s.r.’s strategy. a.s.r. has • Access to the APG portfolio via Loyalis. been able to expand external assets under management efficiently and profitably. The Disability growth opportunity is that a.s.r. serves customers throughout the value chain. a.s.r. is The foundation of its operations lies in multiple aspects, consequently able to use these data to improve customer given that a.s.r. has gained extensive experience and services and grow profitably in every single part of this expertise in: Strategy value chain and in its underwriting performance. The • Liability-driven investment management solutions recent acquisition of Loyalis fits perfectly into this strategic based on its own insurance liabilities; position. • Niche asset classes such as in Dutch mortgages; • Unique proposition in real estate; Robust and predictable service books • ESG-related asset management solutions; Life premiums account for less than 40% of total premiums. • And, more recently, capital light pension solutions Long term value creation But the existing books contribute to the operating result which provide an opportunity to capture AuM. and capital generation is expected to remain substantial in the medium-term/long-term. The robustly capitalised a.s.r. sees clear opportunities to continue to expand this books that a.s.r. manages as service books are traditional segment. a.s.r. pursues a ‘buy and build’ strategy to add DB pensions, individual life and a large funeral book. scale and skills to a.s.r.’s asset management business Those books are not closed for new business. However, for external investors. a.s.r. aims to capture assets in the production has reduced over time due to (amongst other changing pensions landscape in the Netherlands. a.s.r. things), the low interest rate environment and the ban on continues to leverage on its expertise in mortgages, LDI commissions. solutions and ESG asset management services. And a.s.r. aims to continue to expand its real estate fund platform. Business performance a.s.r.’s profitability in this segment finds its origin in effective and simplified processes based on low and Non-core businesses variable costs, an excellent migration and conversion of a.s.r. considers banking activities for consumers no longer books of business and an optimisation of Solvency II capital a core activity and is held for sale. Real estate development and investment returns. has been classified as non-core since 2015 and has recently reduced in size substantially. A segment of Leidsche Rijn The growth opportunities within the life insurance services Centrum continues to be part of a.s.r.’s investment portfolio books include: as the last part of real estate development. Governance Financial statements 2018 Other


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    Strategy | 3.1 The story of a.s.r. 40 Execution of strategy Maintaining Managing Pursuing our financial the value from profitable growth discipline existing businesses in selective areas The section above, about a.s.r.’s portfolio, describes how against strict financial criteria, such as an ambitious a.s.r. manages the value from existing business as well as its ‘risk adjusted’ minimum hurdle rate of 12% return on pursuit of profitable growth in selective areas. Importantly, investment and various other financial and non-financial a.s.r. will maintain its financial discipline. First and foremost, criteria to comply with the way in which a.s.r. does business a.s.r.’s disciplined approach to manage the business is what and that are in line with its culture. defines it, and this has proven to be successful. Maintaining a strong balance sheet with ample financial Maintaining its disciplined approach to cost efficiency is flexibility remains an important element going forward. key to not return to past mistakes of the industry and to A robust solvency and capital position is key to existing maintain profitable and sustainable business models. customers. They need to be able to rely on a.s.r. Robustness is also key to enable the pursuit of profitable Opportunities to consolidate in-market will be looked at growth, both organically and through acquisitions. and expansions of the product and services portfolio are to be considered. However, this will at all times be evaluated


  • Page 41

    Strategy | 3.2 Strategic targets 41 About a.s.r. 3.2 Strategic targets Operating environment As part of its IPO and listing on Euronext Amsterdam in (2016-2018). All targets were met or outperformed in 2018. 2016, a.s.r. communicated its targets for the medium-term 3.2.1 Group financial targets for 2016-2018 The financial results for 2018 reflect the continued strong performance and delivery on ambitious financial targets. Strategy Targets for the 2016-2018 period Solvency II Operating return on equity (Standard formula, %) Long term value creation 189 196 197 16.0 14.6 14.2 Target: Target: up to 12% safely above 160% 197% 14.2% 2016 2017 2018 2016 2017 2018 Business performance S&P rating Combined ratio Non-life (%) 96.5 Target: < 97% 95.6 95.1 Single A 96.5% Governance 2016 2017 2018 2016 2017 2018 Operating expense reduction Dividend pay-out ratio Financial statements 2018 (€ million) (% of net operating result after hybrid expenses) 245 14 55 Target: € 50 milion 230 Target: 45-55% 18 187 Period 2016-2018 € 55m 48% 23 2016 2017 2018 Total 2016 2017 2018 Other


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    Strategy | 3.2 Strategic targets 42 The Solvency II ratio (after proposed dividend) increased segments of Banking and Asset Management and by 1% point to 197% (year-end 2017: 196%) and was Distribution and Services, for which no correction was well above the target of ‘safely above 160%’. During the made. The outcome is in line with the realisation of the planned period (2016-2018), the Solvency II ratio remained medium target owing to a strict cost discipline, which well above the target of safely above 160%. remained strong. The operating return on equity stood at 14.2% and was well Dividend pay-out ratio above the target of ‘up to 12%’. Management proposes a total dividend of € 245 million for the full year of 2018. This is a 6.7% increase compared to During the 2016-2018 period, a.s.r. maintained a single A the cash dividend of 2017. The proposed annual dividend Standard & Poor’s (S&P) Insurer Financial Strength (IFS) is in line with the dividend policy and based on a pay-out rating and met the target of at least a Single A S&P IFS ratio of 48% of the net operating result distributable to rating. shareholders (net of hybrid costs). The COR amounted to 96.5% and was better than the The proposed total dividend per share for 2018 amounts target of ‘< 97%’ for 2018. For each of the years during the to € 1.74 per share, an increase of 6.7% compared to last planned period, the COR was better than the target of year (2017: € 1.63). Taking into account the interim dividend < 97%. of € 0.65 per share (paid in cash on 7 September 2018), the proposed final dividend amounts to € 1.09 per share. Operating expenses were reduced by € 55 million during the 2016-2018 period. The operating expenses Following the approval of the Annual General Meeting were corrected for the absorbed cost bases of several (AGM) on 22 May 2019, the final dividend will be payable acquisitions during the 2016-2018 period. The operating with effect from 29 May 2019. The a.s.r. shares will trade expenses increased due to investments in the growth ex-dividend on 24 May 2019.


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    Strategy | 3.2 Strategic targets 43 About a.s.r. 3.2.2 Strategic targets for adjustment also better reflects the IFRS methodology of shadow accounting that is applied by a.s.r. and is 2019-2021 consistent with a.s.r.’s unchanged S&P A rating target. Given the strong performance in recent years and the Operating environment At its first Capital Markets Day (CMD) on 10 October confidence a.s.r. has in its business for the medium term, 2018, a.s.r. introduced targets for the 2019-2021 period. a.s.r. has raised the target for operating ROE to the range The targets can be divided into group financial targets, of 12%-14%. business financial targets and non-financial targets, the latter reflecting the position a.s.r. wants to take in society. Organic capital creation (OCC) is a recently introduced target. a.s.r. aims for OCC to rise from € 372 million in 2018 Group financial targets to at least € 430 million by 2021. This target is based on a.s.r. has determined a set of ambitious group targets. a.s.r.’s position as at 10 October 2018. As such, it excludes Positioning itself for profitable growth. a.s.r. will continue the impact from any future acquisition (including the to run the company with a strong capital position and a acquisition of Loyalis, which was announced on Solvency II ratio safely above 160% (standard formula). 4 December 2018) and assumes the 2018 excess Strategy This enables a.s.r. to deploy capital for entrepreneurial investment returns and increasing forward rates. purposes. The maximum level of financial leverage has been set at 35% to bring this ratio more in line with Dutch a.s.r. keeps its dividend policy unchanged as well as its and international peers on an underlying basis. This target of a stable to slightly growing dividend per share. Long term value creation Targets for the 2019-2021 period1 Solvency II Operating return on equity (Standard formula) (%) Safely above 160% 12-14% Business performance Substantial capital for entrepreneurship Per annum Dividend pay-out ratio Organic capital creation (% of net operating result after hybrid expenses²) (€ million) 45-55% > € 430m Governance Ambition to offer a stable to growing dividend per share To be realised in 2021 Financial leverage Rating Financial statements 2018 (%) (S&P) < 35% Single A At least 1 Targets are based on the assumption of normal market, environmental and economic conditions and no material regulatory changes and on a stand-alone basis. Other 2 In general, a.s.r. does not expect to pay cash dividends if the Solvency II ratio (calculated in accordance with the standard formula) falls below 140%.


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    Strategy | 3.2 Strategic targets 44 Business financial targets a.s.r. aims to keep its operating result in Life stable In P&C and Disability together, a.s.r. aims to achieve a compared to 2017 levels. Although a.s.r. expects to COR of 94%-96%. This range reflects a.s.r.’s leadership experience a decline in the reserves, particularly in to manage these businesses profitably while remaining Individual life, it remains confident that, in terms of competitive. The range also allows a.s.r. to absorb the earnings, it will be able to maintain its operating result normal level of calamities, such as major fires and heavy at the level of 2017 for the next three years. In addition, storms. a.s.r. expects that in a year with a normal level of a.s.r. aims to decrease the Life operation costs from storms and large claims, it can deliver a COR of 96%. a.s.r. 57 basis points (bps) on its reserves in 2017 to within the decided to exclude Health from the target as the pricing range of 45-55 bps on the insurance provision excluding and profitability of this product line is more prone to shadow accounting and capital gain reserve. political scrutiny. At 99%, the target for Health stand-alone remains stable. a.s.r.’s fee generating businesses are growing in terms of absolute and relative contributions to operating results. Importantly, the COR target goes hand in hand with a.s.r. aims to achieve more than € 40 million of operating a.s.r.’s non-life growth target. It is a.s.r.’s ambition to grow result for the two segments of Distribution and Services organically by 3%-5% per annum while remaining within and Asset Management, excluding banking activities. the stated COR range. In pursuit of growth, a.s.r. will not a.s.r. expects to increase this number by 5% thereafter. forfeit its core discipline of value over volume. Targets for the 2019-2021 period1 Combined ratio Life operating result 94-96% Stable Non-life (excluding Health) Compared to € 633m in 2017 GWP growth (organic) per annum Life operating expenses 3-5% 45-55 bps Non-life (excluding Health) On basic life provision Fee based businesses, operating result² € 40m 5% growth per annum thereafter 1 Targets are based on the assumption of normal market, environmental and economic conditions and no material regulatory changes and on a stand-alone basis. 2 Asset Management and Distribution and Services.


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    Strategy | 3.2 Strategic targets 45 About a.s.r. Group non-financial targets credits) for its own account. Real estate and mortgages a.s.r. aspires to become increasingly relevant to customers are to be included. The objective is to regularly measure and society and as such has identified a set of non-financial 95% of a.s.r.’s entire investment portfolio for own account targets which a.s.r. also presented at its CMD. and internally managed by 2021. In addition, a.s.r. aims Operating environment for a total amount of € 1.2 billion in impact investing for In the first place, a.s.r. measures how its customers own account by 2021. This can be done in line with a.s.r.’s experience its services via the NPS. In 2018, its customers return requirements. a.s.r. defines impact investing as a gave a.s.r. a NPS of 42 points, which is a strong sustainable contribution to society, for instance, through performance. The ambition is to grow from this level to waste recycling, renewable energy (solar and wind), social achieve at least a NPS score of 44 points by 2021. enterprises or contributing to health improvements. The second non-financial target relates to a.s.r.’s To conclude, a.s.r. stimulates its employees to help local investment portfolio, specifically to measuring the carbon society and communities by allocating part of their time to footprint and the level of impact investment a.s.r. commits offer help to individuals and/or groups with financial issues. to for the next three years. a.s.r. explores opportunities a.s.r. provides financial courses to children, helps families Strategy to further reduce the carbon footprint of its investment to improve their financial planning and assists communities portfolio in line with the Paris Agreement on climate in more general terms. change. In addition, a.s.r. measures and evaluates the results of its efforts, with the final goal of supporting the a.s.r. aims for an annual growth of 5% compared to global energy transition. a.s.r. already measures the carbon the base year 2018 by participating in activities of a.s.r. footprint for both sovereigns and corporates (equity and foundation. Long term value creation Targets for the 2019-2021 period1 Meeting customer needs Investments (Net Promoter Score) Business performance > 44 95% Carbon footprint: % measured of By 2021 investment portfolio (for own account) Employee contribution to local society Sustainable investments (in no. of hours) Governance +5% € 1.2bn Per annum Impact investments (for own account) by 2021 Financial statements 2018 1 Targets are based on the assumption of normal market, environmental and economic conditions and no material regulatory changes and on Other stand-alone basis.


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    Object Adding machine Made by Justin Wilhelm Bamberger (München) Chosen by Dmitriy Silov, portfolio manager fixed income Asset Management ‘The great thing about these old adding machines is that whenever I look at them I’m reminded how little has changed over the centuries. Whether it’s 2019 or the year zero, people have always been busy trying to make their future more manageable, calculating how much money they’ve got (or are owed) and communicating with their loved ones and business partners. Seeing this old calculating machine also makes me realise that our activities don’t essentially change over the centuries; only our methods and machinery become more efficient. Our tools go on improving, but we stay the same.’


  • Page 47

    About a.s.r. Operating environment Strategy Long term value creation Business performance Governance Financial statements 2018 Other value creation Long term 4


  • Page 48

    Long term value creation | 4.1 Customers 48 4.1 Customers ‘Meeting customer needs’ is one of a.s.r.’s strategic principles. In everything a.s.r. does, the focus is on its customers. a.s.r. continually seeks to improve its service to customers. Customers must experience that a.s.r.’s processes run smoothly and enable a logical customer journey. a.s.r. seeks to improve its processes on an ongoing Financial scope and flexibility with the basis, to better help customers and develop sustainable 40-year WelThuis Starters mortgage insurance products with long-term value. One of the ways On 24 May 2018, a.s.r. was the first in the mortgage market in which a.s.r. does this is by making information accessible to introduce a mortgage with a term of up to 40 years. This and understandable. For example, by investing in new mortgage is aimed at starters on the housing market. Due easy-to-acces IT platforms. Customers are increasingly to increasing house prices, starters are borrowing more asking for clear, comprehensible information so as to make and more when buying their first home. But borrowing a well-informed, and suitable choice when purchasing more means higher monthly costs, resulting in less financial insurance products and services. In order to monitor and room. This generation needs to work longer due to the where necessary improve its performance, a.s.r. carries out increase of the pension age. Why, then, not take more various customer and intermediary surveys. Two of these time to repay the mortgage, thus significantly reducing the are the NPS and the Customer Interest Central Dashboard monthly costs? Instead of the regular term of 30 years, the of AFM (the Dutch Authority for the Financial Markets). WelThuis Starters mortgage can be repaid in a maximum of 40 years. This offers starters extra financial scope in the build-up phase of their life (marriage, children, start of Sustainable products career). This mortgage is subject to the same borrowing conditions that apply to other mortgages. Is the financial ‘Langer mee AOV’ scope no longer needed? At a.s.r. you can repay 15% of The ‘Langer Mee AOV’ disability insurance is an affordable the original loan each year free of charge. In this way, this product developed for self-employed persons with a mortgage offers both flexibility and financial scope. (physically) demanding profession which runs until the retirement age. The ‘Langer Mee AOV’ is a sustainable solution in terms of being and staying healthy by making NPS timely adjustments to the professional’s tasks, training courses or the business which enable self-employed a.s.r. continuously measures the NPS¹ for a.s.r. and its individuals to continue their profession until they retire. business lines (the overall NPS score is based on the unweighted average of the business lines). The NPS Ditzo Pechvogelhulp and Pechvogelhulp Plus is a management tool that can be used to gauge the Pechvogelhulp and Pechvogelhulp Plus are insurance customer satisfaction of an organisation’s customers. In the products for medical expenses following a sudden, questions put to the customer, emphasis is placed on the unforeseen event. Pechvogelhulp provides cover for extra employee of a.s.r.: How likely is it that you will recommend medical expenses following an accident in the Netherlands a.s.r. to your family, friends and colleagues based on that are not covered by the basic insurance. Pechvogelhulp your experience with me? a.s.r. uses the NPS as the most is a standard package that is part of the Ditzo important KPI to monitor its services. Customers indicate Basisverzekering and provides cover for medical expenses on an ongoing basis how they experience a.s.r.’s service. up to € 10,000, such as dental care or physiotherapy. a.s.r. wants its customers to experience that it is continually No extra costs are charged for Pechvogelhulp. For a improving its services and strives for an increase of its NPS. small extra amount Ditzo offers the more extensive Pechvogelhulp Plus. With this package, customers are In 2018, the NPS customer contact moment for customers insured up to € 12,500 for extra medical expenses following increased by two points during the year, from 40 (2017) to an accident. It also provides worldwide cover and includes 42 (2018). a.s.r. measures the NPS in all business lines. Many a € 12,500 pay-out if the insured dies following an accident. business lines themselves have also formulated specific 1 The NPS is calculated after customers had been in contact with one of the agents. Calculation of the NPS: With a score of 9 or 10, the customer is seen as a promoter (recommendation). With a score of 7 or 8, the customer gets the predicate passive. He or she will neither recommend nor discourage the brand. With a score of 0 to 6, the customer will discourage the brand. The NPS term for this is detractor (criticaster). The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. The NPS scores presented reflect the year end scores.


  • Page 49

    Long term value creation | 4.1 Customers 49 About a.s.r. NPS targets. The NPS per business line is presented in Risk premiums mortgages chapter 1.5 Reporting segments. During the term of a mortgage, mortgage providers may apply one fixed interest rate or separate interest NPS rates per risk category. AFM assesses whether mortgage Operating environment providers communicate in a transparent way about how they determine and apply the risk premium during the term of the mortgage. The assessment showed that many 40 42 Target: 40 mortgage providers insufficiently acted in their customers’ interest. The risk premium for each mortgage must be in line with the specific risk of the customer and in case of NA 42 an equal risk profile, customers should pay the same risk premium. a.s.r. had a higher-than-average score (3.5, on average 1.9) in this research module. 2016 2017 2018 Code of conduct professional insurance Strategy policies In this module, AFM investigated to what extent insurers Customer Interests Central used a feasible planning in order to meet the new standards of the Insurance Distribution Directive (IDD). Dashboard The picture that emerged showed how insurers meet the current applicable statutory standards, i.e. to what extent Long term value creation The Customer Interests Central Dashboard (Dutch they have a feasible planning in place to meet the new abbreviation: KBC) of AFM makes clear to what degree standards of the IDD that came into force on 1 October the sector puts customer interests first in its products 2018. a.s.r. had a score of 3.0, slightly below the average and services. This is done on the basis of various research of 3.4. modules. The modules which in 2018 were part of the Customer Interests Central Dashboard concerned ‘Risk Claims handling premiums mortgages’, ‘Code of conduct professional In the investigation into claims handling at Non-life, a.s.r. insurance policies’, and ‘Claims handling’. The table below scored 4.2 with an average score of 3.8. This score shows shows a.s.r.’s scores. The scores are compared to the that orientation on the customer is recognised at a.s.r. average score of all businesses surveyed. The themes that were object of the investigation were: Business performance provision of information, claims handling and complaints and feedback management. Customer Interest Central Dashboard Scores on (sub)modules a.s.r. score Market average Risk premiums mortgages 3.5 1.9 Code of conduct professional insurance policies 3.0 3.4 Claims handling 4.2 3.8 Governance Consumer trust Consumer trust in a.s.r. a.s.r. has been measuring its media expenditure’s effect 100 on brand, media and creation on an ongoing basis, using 80 the Reality Analytics model of DVJ Insights. In this model, Financial statements 2018 all relevant brand and communication KPIs and media 60 expenditure are brought together in an online, interactive 40 platform. With the help of this platform, media investments 20 can be better deployed over time. 0 04-2018 05-2018 06-2018 07-2018 08-2018 09-2018 10-2018 11-2018 12-2018 One of the KPIs that is a constant factor in the Reality Analytics model is the consumer trust in a.s.r. Consumer trust in a.s.r. showed a declining trend from April 2018 to July 2018, followed by a period of recovery while confidence has remained stable since October 2018. Other


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    Long term value creation | 4.1 Customers 50 The decrease between April and July is largely due to a Traffic light Score System market effect. This appears to relate to the associations people have with the various campaign subjects used in this period: • Following the campaign flight in May (with as subject 80+ Excellent personal advice, in which the focus was on customised advice through intermediaries), people spontaneously 70-79 Strong associated a.s.r. in particular with the qualifications ‘reliable’, ‘honest’ and ‘sustainable’. Specifically, 60-69 Average ‘reliable’ and ‘honest’ are associated with trust. • In the period from mid-May to mid-June, the subject of the campaign was ‘Human effort’, the message 40-59 Weak being that a.s.r. is always ready to help when you really need it. People considered this subject < 40 Poor substantively somewhat less interesting, as expressed in the spontaneous associations such as ‘insurance’, ‘household effects’ and ‘bank’ that a.s.r. received as general feedback. Contributing to prevent • Because the subject of ‘Human effort’ had less appeal, a.s.r. decided to replace this by its commercials payment problems for from 2017 on SRI policy, resulting in consumers customers spontaneously associating a.s.r. again with the qualifications ‘reliable’ and ‘sustainable’. In October 2016, a.s.r. joined a group of companies committed to helping customers with late payments in In sum, there has been a market effect that explains in proactively finding a solution. These companies have particular the downward trend up until July. And the united in a coalition which has laid down ten rules of campaign subjects even enhanced this effect a little. Both conduct in an ethical manifesto. Through this coalition, the ‘lowest point’ of July and the ‘peak’ in October. After a.s.r. remains in sync with market developments and the October, the trust remained relatively stable. public debate surrounding the subject. a.s.r. makes every effort to ensure that customers are Reputation survey RepTrak financially self-sufficient. This ties in with ‘the story of a.s.r.’ and with its core values. Signing and complying with a.s.r.’s reputation was measured via the RepTrak model the ten rules of the ethical manifesto also fits in very well of the Reputation Institute. The survey was conducted with this. In this way, a.s.r. wants to reduce the number among three target groups: the general public, SMEs, of customer cancellations due to payment arrears and and intermediaries. In addition to the overall reputation, problems. It also wants to reduce situations in which the model focuses on the drivers of reputation customers are confronted with cost-increasing measures. (including governance, products and services and social In all cases, a.s.r. strives to avoid non-payment. responsibility), as well as the consequences of reputation (for example recommendations, willingness to buy a.s.r.’s businesses have put ten rules of the ethical manifesto products and services, and readiness to work for the into effect in their own way. A number of activities in 2018: company). The Reputation Institute has developed a Traffic light Score System which can be used to interpret the 1. a.s.r. actively engaged a job coach to help unemployed scores of the RepTrak. The colour labels of the Traffic light mortgage customers find a job. The job coach helps Score System are based on the normative data collected customers during a six-month period with drafting an by the Reputation Institute from more than 35 multi-market application letter and CV. In addition, customers are surveys for businesses over the last ten years. coached in job application skills. In the past years, 24 customers found a new job in this way (a success rate In particular among the general public and intermediaries, of more than 85%). a.s.r. also engaged a budget planner. 2018 showed a strong improvement of the score compared 19 customers were introduced to this budget planner, to previous measurements. The score among the general 15 of whom eventually followed a budget planning public rose to 66.4 (+5 compared to 2016¹) and among trajectory. advisors to 74.9 (+5.1 compared to 2016). An increase is also seen among SMEs (+1.7 compared to 2016) and arrives at a score of 67.7. Thus a.s.r.’s reputation moves between ‘Average’ and ‘Strong’. 1 In 2017 there was no survey conducted.

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