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    Annual Report REAAL NV The original financial statements were drafted in Dutch. This document is an English translation of the original. In the case of any discrepancies between the English and the Dutch text, the latter will prevail.


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    1 Annual Report REAAL NV Cont ent s Key figures 3 1 VIVAT Group at a glance 4 1.1 General 4 1.2 Internal developments 6 1.3 Our brands 9 2 Foreword 10 3 Corporate governance 12 3.1 The Statutory Board of VIVAT Verzekeringen 12 3.2 Composition of the Supervisory Board 13 3.3 Report of the Supervisory Board 14 3.4 Governance Principles of the Dutch Association of Insurers 20 3.5 Management statements 20 4 Strategy and developments 22 4.1 External developments 22 4.2 Strategic themes 26 4.3 Business developments 32 4.4 Our people 40 4.5 Our world 43 5 Risk and capital management 47 5.1 Introduction 47 5.2 Risk management framework 47 5.3 Risk governance 49 5.4 Underwriting risk 55 5.5 Market risk 66 5.6 Counterparty risk 70 5.7 Liquidity risk 75 5.8 Non-financial risks 76 5.9 Capital management 79 Financial statements 85 6 Consolidated financial statements 88 7 Notes to the consolidated financial statements 94 8 Company financial statements 175 9 Notes to the company financial statements 176


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    2 Annual Report REAAL NV 10 Other information 185 10.1 Post balance sheet events 185 10.2 Provisions regarding appropriation of profit or loss 185 10.3 Independent auditor’s report 186 Additional Information 191 1 Insurers'Code 191 2 GRI-table and Assurance report 204 3 Principles of non-financial reporting 210 4 Responsibilities, curricula vitae of and other positions held by Executive Board members 214 5 Curricula vitae, appointment terms and other positions of Supervisory Board members 217


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    3 Annual Report REAAL NV Key figures Key figures In € millions 2014 2013 2012 2011 2010 Result REAAL Life 100 -439 72 246 208 REAAL Non-life -110 -- -84 32 16 REAAL Other -- -43 -15 1 -18 REAAL -10 -482 -27 279 206 ACTIAM1 11 -- -- -- -- Zwitserleven -613 -143 -122 -87 36 REAAL NV -612 -625 -149 192 242 Income Net premium income 2,898 2,967 3,232 3,450 3,574 Investment income 1,469 1,434 1,598 1,432 1,498 Investment income for account of policyholders 2,159 628 1,511 -39 815 Other income 8 132 96 277 212 Total income 6,534 5,161 6,437 5,120 6,099 Total expenses 7,349 5,934 6,579 4,868 5,793 Result before taxation -815 -773 -142 252 306 Taxation -203 -148 4 59 63 Net result discontinued operations and minority -- -- 3 1 1 interests Net result -612 -625 -149 192 242 Statement of financial position Total assets 60,525 55,475 56,464 53,990 53,044 Investments 36,648 32,979 34,768 32,818 33,940 Investments for account of policyholders 14,559 13,491 13,265 12,443 12,641 Loans and advances to banks 321 362 452 499 356 Total equity 2,015 2,589 2,932 4,020 3,630 Insurance contracts 46,646 41,263 42,102 38,827 38,844 Amounts due to banks 1,754 3,035 3,745 3,154 4,506 Ratios New annual premium equivalent (in € millions) 260 172 315 384 328 Operating cost/premium ratio REAAL 15.2% 14.2% 11.9% 11.2% 12.2% Operating cost/premium ratio Zwitserleven 15.1% 14.9% 14.5% 14.9% 15.4% Regulatory solvency REAAL NV 136% 172% 176% 203% 195% Regulatory solvency SRLEV NV 141% 187% 211% 234% 205% Regulatory solvency REAAL Schadeverzekeringen 191% 235% 490% 464% 398% NV (Non-life) 1 As part of the restructuring of SNS REAAL Group, VIVAT Group acquired all shares in ACTIAM NV from SNS REAAL NV on 1 July 2014. This acquisition was a result of the disentanglement of the insurance business given that ACTIAM NV primarily manages investments for the insurance business. ACTIAM NV is regarded as a separate segment.


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    4 Annual Report REAAL NV VIVAT Group at a glance the sale, subject to a reduction if REAAL NV’s IFRS- 1 VIVAT Group at a glance based equity shows a downward trend. In addition, REAAL NV will fully repay the intra-group loan from 1.1 General SNS Bank NV in the sum of € 250 million. Anbang will make a capital contribution to restore REAAL NV’s solvency position to an adequate level. The parties have 1.1.1 New name, new st art agreed that REAAL NV’s solvency ratio will be shored up New name to a level of between 140 percent and 150 percent under VIVAT Verzekeringen is a combination of the insurance the Solvency II regime, which will come into effect on 1 business of SNS REAAL NV which is separated from January 2016. SNS REAAL NV in order to comply with a decision of the European Commission following the nationalisation of The completion of the sale of REAAL NV to Anbang is SNS REAAL NV VIVAT Verzekeringen has been the subject to approval by the Dutch and Chinese regulators. trade name of REAAL NV, the parent insurance Another condition is that REAAL NV’s IFRS-based company, since 1 July 2014. equity does not drop below defined limits. In this annual report, we use the name 'VIVAT 1.1.2 Legal st ruct ure and governance Verzekeringen' to refer to the company financial statements of REAAL NV. For the consolidated financial st ruct ure statements of the insurance business as a whole, we The shares in the insurance holding company REAAL use the name 'VIVAT Group'. NV are held by SNS REAAL NV In the current situation, Stichting Administratiekantoor Beheer Financiële The new name VIVAT Verzekeringen helps the insurer Instellingen (NLFI) is the owner of SNS REAAL NV since as a whole to distinguish itself from the five insurance the Dutch state transferred the shares to NLFI in late brands which mainly focus on consumers, and the asset 2013. management services which VIVAT Group actively markets. No services or products will be developed under the VIVAT Verzekeringen trade name. The name change is primarily intended to avoid any confusion with the Reaal brand and to show that we have more brands than Reaal alone. New start The transfer of the insurance holding company REAAL NV to the new shareholder, Anbang Group Holdings Co., Ltd., a wholly owned subsidiary of Anbang Insurance Group Co. Ltd. ("Anbang"), a leading Chinese insurance group, is being prepared under the new trade name. On 16 February 2015, SNS REAAL NV announced the signing of a contract with Anbang for the sale of REAAL NV. Based on the agreement, Anbang will acquire 100 percent of the shares in REAAL NV for the sum of € 150 million. This amount may vary as a result of adjustments in IFRS-based equity of REAAL NV between 31 December 2014 and 30 June 2015, the expected effective date. As part of the agreement, REAAL NV and SRLEV NV will repay to SNS REAAL € 302 million in subordinated intra-group loans after the completion of


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    5 Annual Report REAAL NV VIVAT Group at a glance NLFI Stichting administratiekantoor beheer financiële instellingen 100% SNS REAAL NV REAAL NV Trade name: VIVAT Verzekeringen SRLEV NV Reaal Schadeverzekeringen NV Proteq Levensverzekeringen NV Zwitserleven PPI NV ACTIAM NV Figure 1: Legal structure of VIVAT Verzekeringen and key entities at 31 December 2014. These entities are wholly owned.


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    6 Annual Report REAAL NV VIVAT Group at a glance IT & Change CEO Facility Services VIVAT Verzekeringen Multi-brand Balance Sheet CEO CEO CEO CRO VIVAT CFO VIVAT Management / Zwitserleven Reaal ACTIAM Verzekeringen Verzekeringen Corporate Strategy Secretary VIVAT Verzekeringen COO Corporate CCO Reaal CCO ACTIAM Financial Risk Control Zwitserleven Strategy Human Resources COO Business Information Balance Sheet Marketing CIO ACTIAM Non-life Support Services Optimisation COO Risk Analytics Financial Shared Distribution COO ACTIAM Life & Change Services Finance Proteq Reporting Reporting Corporate Non-Financial tax affairs, Risk Finance Risk Product tax affairs Risk Legal Procurement Figure 2: VIVAT Group governance structure at 31 December 2014 (combination of departments and key positions). The Finance and Risk departments (indicated with dotted lines) work for the Zwitserleven and Reaal business units, but are under the management of the CFO and CRO of VIVAT Verzekeringen respectively. to gradually separate all the financial links between the 1.2 Int ernal development s bank and the insurance business. The overall restructuring plan runs until the end of 2017, by which 1.2.1 Nat ionalisat ion and time the disentanglement and the sale must have been finalised. disent anglement of SNS REAAL NV Nationalisation of SNS REAAL NV In its decision of 19 December 2013, the EC imposed a In 2013, the Dutch state gave a commitment to the EC to number of conditions and restrictions on SNS REAAL divest all insurance and asset management activities of NV which, unless determined otherwise, remain in place SNS REAAL NV by selling VIVAT Verzekeringen. Partly until the end of the restructuring period. The key by way of preparation for this divestment, SNS REAAL conditions, apart from the aforementioned carve-out, NV undertook not only to transfer the administrative include: structure implemented by SNS REAAL NV to the • An acquisition ban is in place for a period of three banking business and the insurance business, but also years from the date of the EC's decision;


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    7 Annual Report REAAL NV VIVAT Group at a glance • SNS REAAL NV will refrain from making payments under a savings proposition offered to its individual on hybrid debt instruments outstanding at the time customers under the Zwitserleven brand. On the other of the EC's decision, unless those payments stem hand, the Non-life business of VIVAT Verzekeringen will from a legal obligation ('hybrid coupon ban'); continue to be the 'engine' for the insurance products • Remuneration restrictions are in place for offered by SNS Bank under its own brand through a employees and senior management at SNS REAAL mandate arrangement. NV until the end of the restructuring period or until SNS REAAL NV has paid back the state aid. The separation of the IT systems of the banking business and the insurance business is a huge operation These conditions and restrictions continued to apply that will be concluded in H1 2015. The bank and the throughout 2014. With the signing of the agreement with insurer share the use of around 90 ICT systems. On top Anbang, the conditions and restrictions that applied to of this, five hundred applications used by the insurer the insurance business came to an end, with the have been transitioned to VIVAT Group's new exception of the acquisition ban, which continues to infrastructure. The separation of the IT environment is apply to VIVAT Group until 19 December 2016. progressing with minimum disruption to our primary business processes. It is not causing any disruption to The agreement also brought an end to the coupon ban our customers. which the EC had imposed on outstanding subordinated bonds issued by SRLEV NV subscribed by third parties. The disentanglement has been extremely demanding on However, until the sale transaction is finalised, SRLEV our employees and asked a lot of them in terms of their NV will avail of its optional right to defer interest flexibility, adaptability and endurance. The sale process, payments on the subordinated bonds and on the which is expected to be finalised in Q3 2015, is a cause subordinated intra-group loan of SNS REAAL NV. of concern for employees. Employees are kept informed about the disentanglement and the sale process through Disentanglement of SNS REAAL NV their line managers and various communication The disentanglement of the banking and insurance resources. Furthermore, meetings have been organised businesses of SNS REAAL NV took shape in 2014. by the new management team of VIVAT Verzekeringen. Thanks to the expertise in complex organisational and IT At 1 January 2015, nearly all employees transferred projects gained by VIVAT Group in recent years, we are employer for legal purposes from SNS REAAL to REAAL on track with the implementation of the complex NV. This transfer did not affect their pay-and-benefits disentanglement process. package. The scope of the collective labour agreement, the staff guide, the pension plan and the social plan now SNS REAAL NV is no longer governed as an integrated also applies to REAAL NV. The pension entitlements of banc assurance business, but has been transformed into most of the employees of REAAL NV, including the a financial holding company. VIVAT Verzekeringen is an accrual of all new pension entitlements of active independent entity, on an equal footing with SNS Bank employees, were transferred to the defined contribution NV. The two entities came under new management on 1 plan administrated by Stichting Pensioenfonds July 2014. The corporate staff at holding company level SNS REAAL, an independent pension fund. of SNS REAAL NV were to a large extent allocated to the bank and the insurer in 2014. Because of the A 'monitoring committee' of the employee representation complexity of the IT operations, the separation of IT & body is monitoring the disentanglement process. The Change will be carried out in H1 2015. The Audit monitoring check-list prepared by the employee department will also be separated in this period. representation body and the directors enables them to monitor how each group staff department is making As a result of the disentanglement, there will no longer progress on the disentanglement of their own be any operational links between the insurance company organisational unit. The check-list includes agreements and the bank. The bank and the insurer intend to on issues such as workload and supervision of this continue their cooperation in commercial activities, which major change. will be laid down in a long-term distribution agreement. On the one hand, SNS Bank NV will provide the ‘engine’


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    8 Annual Report REAAL NV VIVAT Group at a glance 1.2.2 Financial posit ion 1.2.3 Ot her development s The insurance market is facing difficult circumstances: The brands of VIVAT Group served their customers well we are seeing not just an increase in life expectancy, but in 2014, with the top priority being ‘honesty in business’. interest rates are low – and have recently fallen further As in 2013, Zwitserleven and Reaal scored first and still – meaning that investment yields are structurally second place in VBDO's ranking of most sustainable reduced. The markets for individual Life insurance, Non- insurers. The Dutch Association of Insurers asked Zelf to life and pension insurance products are contracting. This give a lecture on the transparency of its complaints puts pressure on prices, and VIVAT Group is feeling the management process, in which its takes a vulnerable effects. Furthermore, solvency requirements have stance and even displays poor customer reviews on its become stricter, most notably with the transition to website. Reaal in particular managed to maintain its Solvency II. VIVAT Group regards the stricter solvency market share in the term Life and occupational disability requirements as a positive development that will help insurance business. Zwitserleven saw its market share insurance businesses in adequately meeting their in pensions fall in 2014, as the brand suffered from the obligations in the years ahead. This is crucial given that alarm resulting from the sale of VIVAT Group and low the business of insurance is inextricably linked to the level of capitalisation. concept of trust. The disentanglement of SNS REAAL NV and the restructuring will result in one-off and Developments on the financial markets have ensured ongoing costs for VIVAT Group. that the brands of VIVAT Group have thoroughly reviewed their actively marketed product range. The The Life and Non-life insurance businesses lost market range is limited and in line with contemporary demands. share in 2014. At 17 percent, the share of the regular For instance, Reaal intends to stop offering banking and individual Life premiums market fell to a limited extent; mortgage products. the market share of regular group Life premiums saw a drop to 7 percent. The share of the Non-life market stood Shrinking markets demand changes to how the business at 5 percent. is organised and to its scale. In this light, all parts of VIVAT Group have undergone a reorganisation in 2014. The results of VIVAT Group came under pressure in Again in 2015, VIVAT Group will change its internal 2014. The net loss was fully caused by negative one-off organisation in line with market demands. items totalling € 690 million, which mainly concerned a € 648 million expense in connection with the IFRS LAT The poor claims performance in Non-life triggered a shortfall. As a result our net loss amounted to € 612 review of the premium levels of our products. This million. Excluding the one-off items, VIVAT Groups net means that we unfortunately have had to confront a result was € 78 million. number of our customers with higher premiums. This development is necessary - together with ongoing cost Underlying earnings were positive for REAAL Life (profit reductions - in the years ahead in order to move towards of € 65 million), Zwitserleven (profit of € 3 million) and a sustainable and profitable Non-life business. ACTIAM (profit of € 10 million in the second half of the year), but earnings were negative for REAAL Non-life 1.2.4 Out look (loss of € 63 million). Although our individual brands are commercially doing reasonably to quite well, in part thanks to our loyal VIVAT Group’s regulatory solvency ratio dropped from customers, VIVAT Group faces continued challenging 172 percent to 136 percent in 2014, which was largely circumstances in 2015 as well, amongst others because attributable to the fall in interest rates and adjustments to of the low interest rate and a shrinking market for Life models and cost assumptions. Owing to the low insurance, Non-life insurance and for pensions alike. solvency, we have reduced the risk profile of the investment portfolio; this puts pressure on the return on Therefore, it is important in the process of the sale to investment. seek a party that can support VIVAT Group, both financially and otherwise. Major progress was made in this process, when a Sale and Purchase Agreement was


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    9 Annual Report REAAL NV VIVAT Group at a glance signed with Anbang in February 2015. The transaction is Numbers expected to be completed in the third quarter of 2015. At Number of customers 108,000 the time of adoption of the financial statements for 2014, there was no reason to assume that the conditions for Reaal completion of the sale will not be met. However, there is Reaal offers Life and Non-life insurance products. Reaal no absolute certainty in this regard at the time of improves the financial resilience of customers by helping adoption. The going concern assumption in Section them make well-considered choices about their financial 5.9.4 provides further details about the conditions for situation. completion of the sale. Numbers 1.3 Our brands Number of customers Life 1,357,000 Numer of customers Non-life 337,000 Total number of customers 1,694,000 Zwitserleven Zwitserleven is the leading pension insurer in the Proteq Dier & Zorg Netherlands, managing the pension capital of around Proteq Dier & Zorg exclusively offers healthcare 786,000 people. Zwitserleven offers group and individual insurance for pet dogs and cats, and the brand is the pension products. market leader in the Netherlands. Numbers Numbers No. of directors/major shareholders 21,000 Number of customers 75,000 No. of self-employed 49,000 No. of group participants 716,000 ACTIAM Total no. of pensions administrated 786,000 ACTIAM is the leading sensible investor for institutional No. of employers 36,000 clients. With sustainable performance, service and advice, our asset management business helps clients to Zelf achieve their investment objectives. Zelf is an online insurer targeting independent-minded people who like to decide for themselves how they live. In € millions 2014 2013 The motto is: 'You live. Zelf insures.' Managed assets for VIVAT Group 42,856 36,531 Managed assets for SNS Bank NV 4,456 4,049 Numbers Managed assets for external parties 4,044 3,630 No. of customers Non-life 229,000 Total managed assets 51,356 44,210 No. of customers Life 867,000 Total number of customers 1,096,000 Route Mobiel Route Mobiel offers mobility-related insurance: roadside assistance, travel, motor. It is the second roadside assistance organisation in the Netherlands.


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    10 Annual Report REAAL NV Foreword have introduced a division within the Finance and Risk 2 Foreword department, and a new Finance and Risk organisation Message by the CEO of VIVAT Verzekeringen was smoothly established. This resulted in the new posts VIVAT Group has had a turbulent year. It was a year in of CRO and CFO taking their place on the Statutory which we became more independent, then preparing Board. At the end of 2014, Marcel van der Meulen ourselves for the sale of our business; two intensive decided to step down as CEO of Reaal and as statutory changes that demand a lot from our organisation and our director. I would like to thank Marcel for the contribution employees. he made to REAAL. Last year was one marked by transition. In July, we The Dutch Minister for Finance stated in June that he renamed the holding company of the individual brands to wanted to embark on the sale of VIVAT Group based on VIVAT Verzekeringen. VIVAT is a conjugation of the Latin recommendations by Stichting administratiekantoor verb vivere - to live. VIVAT stands for the core of our beheer financiële instellingen (NLFI), which holds the work: the lives of our customers. In recent months, we shares in SNS REAAL NV. In July, SNS REAAL NV have transformed ourselves to an insurance company started the preparations for a sale. A dedicated team with five trusted insurance brands and an asset within VIVAT Verzekeringen as well as the works management business that tries as hard as it can to get councils were intensively involved in this process. the most out of the current market dynamics. Given the Collaboration has been pleasant and constructive. It is market for financial services has been turbulent for a understandable that customers, shareholders, partners number of years now, this is a major challenge. Interest and employees may have many questions about the rates are falling, with a further cut in 2014 and low sale process, such as what is going to happen now? returns on investments. Solvency requirements are Wherever we could we handled such questions as becoming stricter, consumer behaviour is changing and adequately as possible. the Witteveen pension legislation, which came into effect on 1 January 2015 is shrinking the pension market. On 16 February 2015, SNS REAAL NV announced the agreement with Anbang Insurance Group. This is good Besides these trends in the financial market, a number news, and important for the position of all stakeholders; of our business units face low levels of capitalisation, for our customers as well as our employees. Anbang has which means there is limited capacity to absorb included several terms and conditions in the agreement, disappointing performance and/or make necessary such as the stability of the capital position. At present, investments. Because of dissynergies occurring once we are working hard on this issue. The completion of the the disentanglement of the businesses is complete, we sale will be subject to regulatory approval and the formal will also face higher costs, which has a knock-on effect advice of the works council. If all systems are go, the on solvency. We are clearly operating in difficult sale will probably be finalised in the summer. circumstances. Even though we are steadily working on the sale Despite the challenges we face, our employees are process, other matters also require attention. The interim highly committed to the organisation and they take a figures were presented in late August, followed by a great deal of initiative in tackling issues. Especially in trading update on Q3 in early November. This revealed these difficult times, our employees are an important that the capital position had further deteriorated and that force. I see many colleagues making impassioned results were under pressure. Standard & Poor’s Rating contributions because they want to, not because they Services adjusted their rating in response to the interim have to. The past year has shown that we can do so figures, and following the trading update in November, much more for our customers and brands with our Moody's Investor Service followed suit and adjusted its employees’ loyalty and commitment. rating in December. The new Statutory Board was appointed in July. I am Even the non-accruing policies require our continued pleased that the entire management and the senior attention. On 9 March 2015, the Netherlands Authority managers are all employees who have previously been for the Financial Markets (AFM) published a report on employed at SNS REAAL NV. Within VIVAT Group, we the activation of customers with a unit-linked policy.


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    11 Annual Report REAAL NV Foreword There was specific attention for customers with a non- are still great. Our key priority is to ensure that our accumulating policy. It showed that as of 31 December brands enter a new haven from where we can work for 2014, VIVAT Group had an activation rate of 61 percent our customers and brands. for these customers. On 1 March 2015, our score was 67 percent. Activation means that the customer is This haven would seem to be in sight, now that there is making a conscious choice on his non-accruing policy. an agreement with Anbang. I therefore look towards the Despite our unconditional effort to have our customers future with confidence. It goes without saying that we make that conscious choice, we failed to meet our target need to get to know each other and understand each rate of 80 percent by the end of 2014. We will continue other better, but Anbang's vision appealed to us from our our efforts unabated in 2015, together with our first meeting: 'Help customers to achieve dreams'. This intermediaries, to approach our customers so that they is what we stand for too. The best for our customers, can make a conscious choice. and hence also for the perspective of our business. Our relationship with the customer is the only constant factor Despite the current disentanglement of SNS REAAL NV and is the foundation of our existence. And it has been and the recent sale, business is as usual. We have for more than a hundred years. reached some important milestones. Many processes had to be re-established for VIVAT Group as a result of Utrecht, the Netherlands, 15 April 2015 the disentanglement. Group activities of SNS REAAL NV were separated, meaning that in May and July, VIVAT On behalf of the Board of VIVAT Verzekeringen, Group welcomed various employees from the corporate Wim Henk Steenpoorte, CEO staff of SNS REAAL NV. Almost all corporate staff functions were separated in the past year. Despite the uncertainties that go hand in hand with a sale process, many employees decided to stay at VIVAT Group, or decided to take up the challenge and transfer to VIVAT Group. This I take as a great compliment. We took the final step in January 2015, and started the technical separation of the IT systems of SNS REAAL. We will proceed step by step so that customers suffer no disruption. Almost all of the bank's and the insurer's systems are now no longer linked to each other. This has been an intensive process which has involved a lot of hard work over the past year. There have been many changes made in the past year, and this has stretched our employees. The milestones we have reached bear testimony to their enormous efforts and loyalty. In addition, we are thankful to business partners who have shown great patience and partnership in the past year. We would also like to thank our customers who remained loyal to us. Thankfully, this applied to many customers. Thank you for choosing us! In the period ahead, we will continue our efforts to serve our customers in the best possible way. The year 2015 will also demand our unconditional efforts. The challenges we face in this line of business


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    12 Annual Report REAAL NV Corporate governance support of business units from the group will be scaled 3 Corporat e governance back and support from VIVAT Group will increase. This Section covers the corporate governance of VIVAT Verzekeringen. We will first look at the Statutory Board Membership of the management of VIVAT of VIVAT Verzekeringen, before moving on to the Verzekeringen overlaps with that of the Statutory Boards Supervisory Board. The governance principles of the of Reaal Schadeverzekeringen NV and SRLEV NV. Dutch Association of Insurers (Insurers' Code) and compliance by VIVAT Verzekeringen and its subsidiaries The formal rules for the functioning of the Statutory with an insurance authorisation are annotated in Section Board are set out in the articles of association of VIVAT 3.4. We then turn to the various announcements made Verzekeringen (REAAL NV) and in the regulations for by management. the Statutory Board. These rules have been ratified by the Supervisory Board and by the Executive Board of 3.1 The St at ut ory Board of VIVAT SNS REAAL NV. Under the articles of association and the rules, certain decisions of the management require Verzekeringen the approval of the Supervisory Board and/or the Executive Board of SNS REAAL NV (in its capacity as sole shareholder of VIVAT Verzekeringen). These are, 3.1.1 Composit ion and f unct ioning for instance, decisions relating to far-reaching expansion As of the publication date of this annual report, the or changes to the business activities, proposals to Statutory Board of VIVAT Verzekeringen is composed of: amend the articles of association and entering into or • Wim Henk Steenpoorte, CEO ending long-term cooperation of material significance for • Seada van den Herik, Managing Director of the business. The rules also include provisions about Zwitserleven continuing education. • Willem Horstmann, Chief Risk Officer • Arjen Schouten, Chief Financial Officer The subjects of the continuing education sessions as set • Jacob de Wit, Managing Director of ACTIAM NV out in principle 3.1.3 of the Insurers’ Code are taken into consideration in the choices made by the management. Apart from the directors appointed to the Statutory Board The subjects chosen are based on topical matters such Boaz Magid, Director of Balance Sheet Management & as new legislation. Various continuing education Corporate Strategy, is also a member of the sessions were arranged for managing directors in 2014 management team of VIVAT Verzekeringen. He is not a in order to keep their expertise up to date and, where statutory director. For more information about the necessary, to build on it. In the past year, the sessions managing directors, see Additional Information 4 were still organised from SNS REAAL NV. The subject (Responsibilities, curricula vitae of and other positions matters therefore covered both the banking and the held). insurance business. The following subjects were covered in the past year: The new Statutory Board of VIVAT Verzekeringen was • ECB supervision: Legal Affairs presented appointed on 1 July 2014. Almost all vacancies were explanations of the developments within European filled internally. The Statutory Board is the day-to-day supervision and the impact it has on SNS REAAL governing body of VIVAT Verzekeringen and its business NV, including VIVAT Verzekeringen. Also covered operations, and is responsible for achieving the was the Dutch Financial Institutions Remuneration commercial, operational and financial objectives of Act and the Dutch Work and Security Act. VIVAT Verzekeringen in the short and long term. In • Culture and Conduct: during this session, performing its role, it carefully weighs the interests of all explanations were presented on how the Dutch its stakeholders and acts within established risk Central Bank (DNB) views the supervision of frameworks. More specifically, the Statutory Board is conduct and culture, with a specific focus on responsible for supporting the Executive Board of conduct in the boardrooms of financial institutions. SNS REAAL NV with the disentanglement of the • AIFMD: the structure and operation of the AIFMD businesses and the sale of VIVAT Verzekeringen. In was explained by a guest speaker from the De terms of organisation, the disentanglement means that Brauw, Blackstone & Westbroek law firm. The


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    13 Annual Report REAAL NV Corporate governance session then specifically zoomed in on the For more information about the supervisory directors, operation of AIFMD within SNS REAAL NV from refer to Additional Information 5 (Curricula vitae, the perspective of ACTIAM and ASN Bank. appointment terms and other positions of). • Information security: IT & Change and Compliance (Security Affairs) gave a presentation on resilience Supervisory Directors are appointed for a term of four against cyber attacks. An outline was provided of years. Reappointment for a further four-year period may developments relating to cybercrime attacks and only take place twice, and only after careful how SNS REAAL establishes its resilience. consideration. Reappointments must take account of the • Big Data: an overview was presented from multiple profile outline of the Supervisory Board, the functioning perspectives (Gartner, Architecture and Business) of the director in question, the term of the appointment of what Big Data is and what it can be used for. An and other as yet unspecified criteria. example was also given of how SNS Bank deals with Big Data. The Supervisory Board meets at least six times per year in accordance with an annual schedule. Decisions of the These topics are in line with the topics set out in Supervisory Board are taken by a majority of votes. The principle 3.1.3 of the Insurers’ Code. The sessions were Supervisory Board has drawn up regulations that given by a combination of internal and external elaborate on and expand on a number of provisions from speakers. The managing directors are obliged to attend the articles of association. These regulations set out at least three of the five sessions. All fulfilled this additional powers. All members of the Supervisory Board requirement in 2014. Aside from the management, other have declared their acceptance of the substance of managers in our insurance business are also invited to these regulations and have undertaken to abide by the attend the continuing education sessions on a voluntary rules contained therein. basis. The directors appointed to the Statutory Board also followed the Oxford Self Managing Leadership The Supervisory Board has appointed three committees programme, which is facilitated by Nyenrode Business from among its members; as of 31 December 2014, they University. The programme lays a profound link between were composed as follows: the individual, the team, the organisation and the • the Audit Committee, comprising Jos Nijhuis environment. (Chair), Jan Nooitgedagt, Ludo Wijngaarden and Jan van Rutte. • the Remuneration and Nomination Committee, 3.2 Composit ion of t he Super visory consisting of Ludo Wijngaarden (Chair), Jan Board Nooitgedagt, Charlotte Insinger and Monika Milz. • the Risk Committee, consisting of Jan Nijssen (Chair), Jan Nooitgedagt, Charlotte Insinger and Composition, appointment and functioning Jan van Rutte. As of the publication date of this annual report, the Supervisory Board of REAAL NV is composed of: The Nomination Committee and the Remuneration • Jan Nooitgedagt (Chair) Committee were merged to become a single committee • Charlotte Insinger (the Remuneration and Nomination Committee) as of 11 • Monika Milz November 2013. • Jos Nijhuis • Jan Nijssen The Supervisory Boards of SNS Bank NV, REAAL NV • Jan van Rutte and SRLEV NV and, as of November 2014, of Proteq • Ludo Wijngaarden Levensverzekeringen NV and Reaal Schadeverzekeringen NV, are comprised of the same Monika Milz is a German national, while all other individuals as the Supervisory Board of SNS REAAL and members of the Supervisory Board are Dutch nationals. therefore membership overlaps.


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    14 Annual Report REAAL NV Corporate governance Throughout 2014, SNS Bank NV and VIVAT Group 3.3 Report of t he Super visory increasingly began to operate as separate businesses. Board As a result, SNS REAAL NV made a transition in 2014 from being an operating company to a financial holding company. The financial holding company's role is to General provide adequate management of SNS REAAL Group The members of the Supervisory Board of REAAL NV, and to render financial account for the group as a whole. SRLEV NV, Reaal Schadeverzekeringen NV and Proteq The financial holding company also bears primary Levensverzekeringen NV are also members of the responsibility for the group vis-à-vis the supervisory Supervisory Board of SNS REAAL NV. The Supervisory authority. The financial holding company also bears Boards of SNS REAAL NV and REAAL NV, SRLEV NV, ultimate responsibility for the implantation of the Reaal Schadeverzekeringen NV and Proteq restructuring plan. The holding company supervises the Levensverzekeringen NV therefore form a personal disentanglement and sets the frameworks for an union. The Supervisory Boards of Reaal appropriate strategy for SNS Bank NV and VIVAT Schadeverzekeringen NV and Proteq Group, in consultation with their boards. Levensverzekeringen NV were created on 6 November 2014.This helps to safeguard uniform policy within the Themes company. Attention is being paid to the balance of Important topics and discussions of the Supervisory interests of the various entities. Board The sale of the insurance business of SNS REAAL is an In H1 2014, SNS REAAL NV (of which REAAL NV and important measure in the restructuring plan. Key steps SRLEV NV form a part) made strident efforts in were taken in H1 2014 to prepare for the sale of the separating the company's banking and insurance insurance business. The actual sale process began in businesses. This resulted in significant changes in the earnest in H2 2014. For more information on the sale governance and organisational structure of SNS REAAL process, please refer to Section 1. NV, REAAL NV and SRLEV NV. In this context, the meetings of the Supervisory Boards of SNS REAAL NV, The year 2014 was also dominated by VIVAT Group’s REAAL NV and SRLEV NV were no longer held in a vulnerable financial position. The Executive Board and combined format. The meetings of the Supervisory the management sought the engagement of the Boards of REAAL NV, SRLEV NV, Reaal Supervisory Board and periodically updated them about Schadeverzekeringen NV and Proteq the solvency situation of VIVAT Group. The Supervisory Levensverzekeringen NV have taken place in a Board of course emphasised how important it is to combined format since 6 November 2014. investigate opportunities to further improve solvency, the capital position and the business model. Apart from its For SNS REAAL NV, 2014 was a year marked by the supervision of the Executive Board and the implementation of the restructuring plan submitted to the management, the Supervisory Board has had an European Commission in August 2013, which was important role in advising these bodies. Extensive approved in December 2013. Part of the restructuring attention was devoted to measures to limit risk in order plan is the disentanglement of the bank and the insurer. to protect the balance sheet (statement of financial This led to significant changes in the governance and position) and improve operational efficiency. The organisational structure of VIVAT Group. The profitability of the insurance business was also composition and the allocation of responsibilities of the extensively discussed. Another subject of discussion Statutory Board of VIVAT Verzekeringen (REAAL NV) was the modifications to the actuarial models and cost and SRLEV NV were changed. At VIVAT Group level, a parameters, including the higher costs resulting from the number of corporate support positions have also been dissynergetic effects of the disentanglement. The created that were previously at the group level. A large Supervisory Board had periodic contact about these number of employees in staff positions within the subjects with other stakeholders of SNS REAAL NV, corporate staff who had previously worked at group level including the Dutch Central Bank (DNB), NLFI and the for both SNS Bank NV and VIVAT Group transferred to Dutch Ministry of Finance. SNS Bank NV or VIVAT Group in mid-2014.


  • Page 17

    15 Annual Report REAAL NV Corporate governance The Supervisory Board of course also discussed the in conjunction with an external evaluator. The evaluation important matters of the disentanglement of SNS REAAL focuses on the functioning of the Supervisory Board as a NV and teh related changes in the governance structure whole, the functioning of the individual committees, the as well as the customer focus during this process. individual supervisory directors, the relationship with the management and the effectiveness of continuing Other key topics included the financial statements for the education. The evaluation took the form of individual 2013 financial year, the remuneration policy, the capital interviews by the external evaluator covering the position of SNS REAAL NV, the EC commitments, risk subjects set out above. Apart from responses to the management and risk appetite, 'Treating Customers specific questions, the interviews also offered a lot of Fairly' (TCF), the blueprint for the Integrated Control scope for free-form feedback on the functioning of the Framework and the large number of strategic projects Supervisory Board, the committees and the individual within SNS REAAL NV. Later on in this Section, a more supervisory directors. The evaluator subsequently detailed description is given of the subjects discussed prepared a report of the outcomes of the interviews. The during the meetings of the Supervisory Board throughout report was discussed by the Supervisory Board in 2014. January 2015. The evaluation revealed that the Supervisory Board is functioning well. In terms of Composition and functioning of the substance and relationships, the Supervisory Board is Supervisory Board up to its task. It is clear that the role of supervisory Composition director is a demanding one in terms of complexity and There have been no changes in the composition of the is time-consuming; the members of the Supervisory Supervisory Board since 1 November 2013. As at 1 Board are highly committed. The Supervisory Board November 2013, the Supervisory Board comprised of makes a sufficiently thorough and balanced evaluation of seven members: Jan Nooitgedagt (Chairman), Charlotte the interests of all stakeholders. The composition of the Insinger, Monika Milz, Jos Nijhuis, Jan Nijssen, Jan van Supervisory Board is appropriate and includes the Rutte and Ludo Wijngaarden. Supervisory Boards were necessary expertise. Good dialogue takes place installed for Reaal Schadeverzekeringen NV and Proteq between the Supervisory Board, the Executive Board Levensverzekeringen NV on 6 November 2014. The and the management. However, there is scope for persons stated above also constitute the Supervisory improvement in meeting discipline (time management) Boards of Reaal Schadeverzekeringen NV and Proteq and making more pointed conclusions. A lot of the Levensverzekeringen NV. Before 6 November 2014, debate is dedicated to downward risks and perhaps too these entities were not required to have a Supervisory little to upward potential. Board under an exemption authorised by the Dutch Central Bank (DNB). Following consultations with DNB, Cooperation this exemption was withdrawn and the two Supervisory Cooperation with committees Boards were constituted accordingly. The Supervisory Board has three committees: the Audit Committee, the Risk Committee and the Remuneration As in the period prior to 1 July 2014, the meetings of the and Nomination Committee. Cooperation between the committees of the Supervisory Boards of SNS REAAL Supervisory Board and the committees in 2014 was NV, SNS Bank NV, REAAL NV, SRLEV NV, Proteq positive. The meetings of the committees drill down into Levensverzekeringen NV and Reaal the subjects so that the decisions of the Supervisory Schadeverzekeringen NV were held in a combined Board can be carefully prepared.The substance of the format. Where applicable, the topics addressed in the meetings of the committees is fed back to the meeting of committee meetings are differentiated according to the Supervisory Board to ensure the supervisory topics relating to the bank, the insurer or the financial directors are kept fully informed and are well positioned holding company. This is indicated in the agenda of the to take prudent decisions. relevant committee meeting. The so-called Technical Meeting (Dutch: 'Technisch Functioning Overleg') was established in Q4 2014, and is composed The Supervisory Board performs a self-evaluation on an of four supervisory directors nominated by the annual basis. This year's self-evaluation was performed Supervisory Board. The Technical Group was


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    16 Annual Report REAAL NV Corporate governance established to ensure the close involvement of the Profession Act. Any tender process will be performed Supervisory Board in the sale of VIVAT Verzekeringen. separately from SNS REAAL NV and SNS Bank NV. In this way, the Supervisory Board is kept frequently and intensively informed by the Executive Board, allowing Human resources the Supervisory Board to properly fulfil its role and to The Supervisory Board and the Remuneration and render advice to the Executive Board, and to maintain Nomination Committee have frequently discussed the oversight of the process. The Technical Meeting has no human resources policy of SNS REAAL NV as well as autonomous decision-making powers of its own, but the appraisals of the employees of SNS REAAL NV. The rather has a preparatory role in the decision-making consequences of the disentanglement of SNS REAAL process of the full Supervisory Board. The minutes kept NV were also a key subject for the Supervisory Board by the Technical Meeting are shared with all members of and the Remuneration and Nomination Committee. the Supervisory Board. The Technical Meeting met on three occasions in 2014. There is periodic contact between the Supervisory Board and the Central Works Council (CWC). Monika Milz (who Cooperation with management was made a supervisory director in accordance with the The Supervisory Board maintains oversight and advises enhanced right of recommendation of SNS REAAL's the management by taking a critical stance where CWC) and Jan Nijssen periodically meet with the needed, rendering advice when needed and by giving executive committee of the CWC. The same goes for the support where it can. The Supervisory Board ascertains Chairman of the Supervisory Board. They met on eight whether the decisions taken or yet to be taken by the occasions in 2014, one of which was their attendance at management are well-founded and have been arrived at a meeting of the CWC. During periodic meetings prudently. It can be concluded from the evaluation of the constructive talks took place on subjects such as the Supervisory Board that it strengthens and/or improves legal change in the employer. It is in part thanks to these the management. The Supervisory Board takes meetings that the change was effectuated successfully. responsibility where needed and desirable. Although the new governance structure only came into effect on 1 As a result of the disentanglement of activities, 2014 saw July 2014, it can be said that cooperation between the many changes that had an impact on employees. The Supervisory Board and the management has been good employee survey of 2014 showed that employee throughout 2014. An evaluation of the consequences of satisfaction had remained at the same level as the the new governance structure and the cooperation will previous year despite the insecurities and that the be explicitly addressed in the course of 2015. enthusiasm and commitment increased again (see Section 4.4). Cooperation with external experts Advice is sought from external experts where necessary The preparatory work on the sale of VIVAT for the proper execution of the Supervisory Board's Verzekeringen often comes on top of the day-to-day supervision role. Regular contact between the Audit work of our employees. SNS REAAL is proud that it was Committee and Risk Committee with the independent possible to maintain the result-driven, open and direct auditor and actuary is a corollary of this. The culture, and the Supervisory Board greatly appreciates Supervisory Board also has its own legal and financial the efforts of all employees of SNS REAAL. Despite the adviser with whom certain matters - where necessary - far-reaching changes that SNS REAAL and its can be checked and finalised. The Supervisory Board employees are still facing, there is faith in the hired a financial adviser and a legal adviser specifically management. The Supervisory Board trusts that for the sale of VIVAT Verzekeringen. employees will continue to work hard throughout 2015, also after the change in their employer from 1 January The external auditor of VIVAT Group is KPMG 2015. Accountants NV. In consultation with Anbang as the new shareholder, VIVAT Group will determine the Meetings of the Supervisory Board consequences for the audit of VIVAT Group from 2016 General onwards, also taking account of the Dutch Accountancy The formal meetings of the Supervisory Board are held eight times a year, as per the annual schedule. As in


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    17 Annual Report REAAL NV Corporate governance 2013, meetings (by telephone and in person) were held Including teleconferences, the frequency of the meetings more frequently in 2014. This was due to the closing of the Supervisory Board in 2014 was as follows: process for 2013, the vulnerable financial position of VIVAT Group and the sale process of VIVAT Verzekeringen. January Once (informal Meeting in combined format of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and meeting) SRLEV NV February Three times Meetings in combined format of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV March Twice Meetings in combined format of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV April Once Meeting in combined format of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV May Twice Meeting of the Supervisory Board of REAAL NV and SRLEV NV, and a telephone meeting in combined format of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV June Twice Meetings in combined format of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV July Twice Meetings in combined format of the Supervisory Boards of SNS REAAL NV, SNS Bank NV, REAAL NV and SRLEV NV August Twice Meeting of the Supervisory Board of REAAL NV and SRLEV NV, and a telephone meeting in combined format of the Supervisory Boards of SNS REAAL NV, REAAL NV and SRLEV NV November Once Meeting of the Supervisory Boards of REAAL NV and SRLEV NV December Once Meeting of the Supervisory Boards of REAAL NV, SRLEV NV, Proteq Levensverzekeringen NV and Reaal Schadeverzekeringen NV TOTAAL 17 Attendance subject of extra focus in a continuing education session Despite all the additional meetings planned at short in May. Following this session, the Supervisory Board notice, the Supervisory Board was generally complete. asked to be provided with customer experiences. In On occasions where a supervisory director was absent, September 2014, this led to the production of a "menu" they had generally already provided their input on the of customer experiences from which the members of the subject matter to be discussed, either to the Chair of the Supervisory Board could choose. These customer Supervisory Board or to all other members of the Board. experiences were offered group-wide and therefore Based on a normal frequency of eight meetings per year, covered all business units within SNS Bank NV and it is fair to say that the attendance rate was high, VIVAT Group. Examples included (i) listening in on the demonstrating the strength of the Supervisory Board's SNS Customer Service or REAAL Customer Service, (ii) commitment. a visit to a RegioBank branch or (iii) taking part in a Zwitserleven customer panel session. Most members of Business discussed at the meetings the Supervisory Board took part in a customer Until 1 July 2014, each regular meeting of the experience in 2014. Based on evaluations of these Supervisory Board heard updates on the business units customer experiences, feedback will be given during one of SNS REAAL NV. After 1 July 2014, these updates of the meetings of the Supervisory Board, and the were given in the meetings of the Supervisory Boards of opportunity will also be taken to further develop the REAAL NV, SRLEV NV and, as at 6 November 2014, menu. These evaluations will take place in 2015. Reaal Schadeverzekeringen NV and Proteq Levensverzekeringen NV. Throughout the year, the Supervisory Board has discussed the management of various risks that exist in The discussion of the business updates also devoted VIVAT Group. Internal control has come under pressure, attention to the theme of Treating Customers Fairly in part because of (i) a sharp increase in workload as a (TCF), and the Supervisory Board was informed of the result of new laws and regulations and, ensuing from continuity of the customer service. This theme was the this, a sharp increase in regulatory demands and


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    18 Annual Report REAAL NV Corporate governance requirements, the disentanglement of the banking and • the Operational Plan for 2015 – 2017 (August and insurance businesses, and the sale of VIVAT December) Verzekeringen, (ii) changes in the IT infrastructure (user, data and application migration), and (iii) organisational Feedback on the meetings of the committees is also changes. The Supervisory Board maintained oversight of provided during the meetings of the Supervisory Board. the individual components used to control the risk and of their effectiveness. The management has started work Continuing education (CE) on designing an integrated control framework within the The Supervisory Board followed three CE sessions in new governance structure. 2014 (together with the Executive Board), covering the subjects of (i) cybercrime, (ii) Treating Customers Fairly Partly in view of the disentanglement of the banking and (TCF) and (iii) retail bank of the future. In 2014, the insurance businesses, the Supervisory Board devoted subjects had a broad financial focus. The choice for attention to the financing structure of the holding subjects was based, for instance, on requirements by company, the operating companies and, in particular, to virtue of new and current laws and regulations. the intra-group balances. In late 2014, the meeting of the Supervisory Board devoted a lot of time and attention to Attendance by the management the solvency of VIVAT Group. The opening of the meetings (first half hour) takes place without the attendance of the managing directors. Matters discussed by the Supervisory Board in 2014 Following the opening, the Supervisory Board meets included the following: with the managing directors of VIVAT Verzekeringen and • the 2013 annual results, the 2013 Annual Report the Executive Board members of SNS REAAL NV in and financial statements of SNS REAAL NV attendance. At the start of 2015, a meeting of the (February and March) Supervisory Board was held without any managing • various aspects relating to the disentanglement of directors being present. During that meeting, the SNS Bank NV and VIVAT Group, including aspects external evaluation was one of the items discussed (see affecting employees, IT aspects, risks (throughout the Section ‘Composition and functioning of the the year) Supervisory Board’). • changes to the management of SNS Bank NV and VIVAT Group (February) Attendance by the external auditor • the governance structure of the Supervisory Board The external auditor attends all meetings of the Audit (March and April) Committee and, at least once a year, attends a meeting • amendments to the regulations of the Executive of the Risk Committee. The external auditor did not Board, the management and the Supervisory Board attend any meetings of the Risk Committee in 2014. A and its committees (May and September) and the meeting of the Risk Committee was held at the start of amendments to the articles of association of 2015 and this was attended by the external auditor. If REAAL NV, SRLEV NV, Proteq required, the external auditor can also attend the Levensverzekeringen NV and Reaal meetings of the Supervisory Board. In February 2014, Schadeverzekeringen NV (May) the external auditor was present for part of the meeting • the process of the sale of VIVAT Verzekeringen of the Supervisory Board. (throughout the second half of the year) • communication with various stakeholders Committee meetings • evaluating the integrated control framework (ICF) As of 11 November 2013, the Supervisory Board has the while at the preparatory stage (November) following three committees: • monitoring the actions arising from the EC's • Audit Committee restructuring plan (throughout the entire year) • Risk Committee • establishing Supervisory Boards for Proteq • Remuneration and Nomination Committee Levensverzekeringen NV and Reaal Schadeverzekeringen NV (October) A description of the work of the various committees is • the non-accruing policies (December) provided below. Further details of the composition of the


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    19 Annual Report REAAL NV Corporate governance committees and the rules under which each committee Charlotte Insinger and Jan van Rutte. Apart from the RC operates can be found on www.snsreaal.nl. members, the meetings of the RC were also attended by the CEO, the CFRO, the Secretary, the Group Audit Each committee prepares reports on the matters Director, the Group Risk Management Director and the delegated to it in order to facilitate decision-making by Manager of the staff department Compliance. As a result the Supervisory Board. of changes in the governance structure, from 1 July 2014 the CRO of SNS Bank NV attends the part of the Audit Committee (AC) meeting of the AC relating to SNS Bank NV, and the As of 31 December 2013, the composition of the AC is CRO of VIVAT Verzekeringen attends the part of the as follows: Jos Nijhuis (Chairman), Jan Nooitgedagt, meeting relating to VIVAT Verzekeringen. The RC is of Ludo Wijngaarden and Jan van Rutte. Apart from the AC course at liberty to invite other guests to attend the members, the meetings of the AC were also attended by meeting. The committee met on five occasions in 2014. the CEO, the CFRO, the Secretary, the Group Audit Director, the Group Finance Director and the external The RC works primarily on preparing and evaluating the auditor. As a result of changes in the governance financial and non-financial risk policy and the operation structure, from 1 July 2014 the CFO of SNS Bank NV of risk management. Throughout 2014, the RC focused attends the part of the meeting of the AC relating to on risk appetite, risk reporting, litigation risk, compliance SNS Bank NV, and the CFO of VIVAT Verzekeringen with the relevant codes and the risk aspects of attends the part of the meeting relating to VIVAT remuneration policy. Attention was in particular paid to Verzekeringen. The AC is of course at liberty to invite the solvency position of VIVAT Group and the other guests to attend the meeting. The external actuary consequences of the disentanglement of SNS Bank NV attended a meeting in February 2014. The AC met on and VIVAT Group in the field of IT. The Bank and VIVAT nine occasions in 2014. Group started on the establishment of an integrated control framework, which will provide the RC with greater A key subject of discussion and evaluation within the AC insight into risk aspects. in 2014 was the organisation and the operation of the financial reporting process at SNS REAAL and the Remuneration and Nomination Committee subsequent auditing process. This focused in particular (ReNomCo) on new IFRS rules (including IFRS 10), compliance with The Remuneration and Nomination Committee is commitments made to the EC, the solvency of VIVAT composed of: Ludo Wijngaarden (Chair), Jan Group, the financial reports, the audit reports, tax Nooitgedagt, Charlotte Insinger and Monika Milz. The matters, internal reporting by Group Audit and meetings of the committee are also attended by the management. Subjects discussed were for instance data CEO, the CFRO, the HR Director and the Secretary. The quality, model validation, application of the Banking committee met on nine occasions in 2014. Code and the Insurers' Code, the integrated control framework, results compared with the Operational Plan, The ReNomCo was established to select and propose and the preparatory work for the appointment of a new nominations of members of the Executive Board, the audit firm from 2016. Also extensively discussed were managing directors of the business units and the the work and the reports of the external auditor and the Supervisory Board. The ReNomCo also prepares the external actuary, including the annual plan, the mandate decision-making on remuneration policy applicable to of the external auditor and Group Audit, and the members of the Executive Board and senior management letter. The external auditor was present at management as well as remuneration policy for other all AC meetings, enabling a good dialogue between the employees of SNS REAAL NV, where it is competent in members of the AC and the auditor. The Chair of the AC these matters under the Restrained Remuneration Policy also maintained periodic contact with the external auditor Regulation in accordance with the Dutch Financial and a representative of Group Audit. Supervision Act 2011 (or a rule that may supersede these). Further details of the main thrust of the Risk Committee (RC) remuneration policy, including a substantiated account As of 31 December 2013, the composition of the RC is thereof, can be found in the remuneration report. The as follows: Jan Nijssen (Chair), Jan Nooitgedagt, subjects focused on by the ReNomCo in 2014 include:


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    20 Annual Report REAAL NV Corporate governance the Key Performance Indicators (KPIs) for the Executive Jan Nooitgedagt, Chairman Board and senior management (including an ex ante risk analysis), the change in the senior structure of SNS REAAL NV, including the composition of the 3.4 Governance Principles of t he management of the banking business and the insurance Dut ch Associat ion of Insurers business, and the overall variable remuneration envelope and the distribution of the variable emoluments The governance principles of the Dutch Association of for senior management. The proposed legislation on Insurers (Insurers' Code) and compliance by VIVAT remuneration policies within financial institutions, Verzekeringen and its subsidiaries holding an insurance introducing a bonus ceiling of 20 percent, which is authorisation are annotated in the Additional Information expected to come into law in 2015, was taken into 1 Insurers’ Code. account. In addition, the following subjects were covered: the ex post risk analysis of the remuneration policy of SNS REAAL NV and its implementation, the 3.5 Management st at ement s evaluation of the Supervisory Board and the Executive Board (and the corresponding profiles), monitoring and assuring management continuity, reporting on the 2013 3.5.1 In-cont rol st at ement annual evaluation of remuneration policy, and the The management of VIVAT Verzekeringen continued to Restrained Remuneration Policy Regulation in devote its attention to the further improvement of the accordance with the Dutch Financial Supervision Act design and operation of its internal risk management and 2011. control systems within the business. The management hereby declares that it has ascertained, with a Financial statements reasonable degree of assurance, that the material risks VIVAT Group published its financial statements 2014 on VIVAT Group is facing have been described and that the 2 April 2015. Prior to their publication, both the 2014 appropriate measures have been taken to mitigate these financial results and the financial statements 2014 were risks. This assurance is based on the risk management discussed at various meetings of the AC and the organisation described in Section 5. Supervisory Board. The financial statements were audited by KPMG, who issued an unqualified auditor’s The effectiveness of essential control measures is report on them. The financial statements will be reviewed at regular intervals. VIVAT Group has submitted to the General Meeting of Shareholders. established a structured process of internal in-control statements with corresponding evaluation by the Remuneration report management. The remuneration report of the Supervisory Board will be The following material risks and mitigating measures included in the annual report of SNS REAAL NV. have been identified for VIVAT Verzekeringen: • The currently low level of capitalisation of VIVAT Closing words Group makes the organisation extra vulnerable to The Supervisory Board would like to offer a word of possible losses. For this reason, it is important that thanks and appreciation to all employees of VIVAT VIVAT Group restores capitalisation to an Group, particularly for their dedication and hard work. appropriate level. Great demands have been made of them in the past • The operations of the insurance divisions require period, from within the organisation, but also from timely adjustments due to changing market outside. The management of VIVAT Group was also conditions to ensure a future-proof business model. challenged in the year under review to make an • Reliability of Solvency II reports and control exceptional effort. In spite of the challenges, cooperation information aimed at balance sheet management with the Supervisory Board was good, and for this the and pricing of the business units. Supervisory Board offers its thanks. • Because of continuing discussions in politics and society at large as well as legal rulings on existing Utrecht, the Netherlands, 15 April 2015 portfolios of unit-linked insurance policies, VIVAT On behalf of the Supervisory Board, Group - together with other insurers in the


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    21 Annual Report REAAL NV Corporate governance Netherlands - continues to retain a claims and 3.5.2 Int ernal management of financial reputation risk. • The disentanglement of SNS REAAL NV into a report ing separate banking and insurance businesses, each We believe that the internal risk management and with their own governance regime, the sale of the control systems of VIVAT Group offer a reasonable insurance business, cost reductions and the impact degree of assurance that the financial reporting will not of new laws and regulations have led to a clog of contain any material inaccuracies, and that the risk change programmes and an increase in the management and control systems in the year under workload for employees. review have been effective. From 1 July 2014, VIVAT Group operates within VIVAT Group is responsible for the totality of internal risk SNS REAAL NV within an independent governance management and control systems, for performing the structure. As a consequence of this, a new and management activities and for recording and reporting transparent risk organisation was introduced on 1 July on this in an accurate and fair way. The internal risk 2014, and a Chief Risk Officer was appointed to the management and control systems relating to the Statutory Board. The CFO and CRO duties were financial reporting form an integral part of the risk assigned to separate functions. This change means that management and control systems of VIVAT Group. the financial and non-financial risks now come under the same command, as does the responsibility for The most important components for managing financial compliance and legal affairs. reporting risks are: • A system of financial key controls within the VIVAT Group strives to ensure its business operations accounting and reporting departments monitor the are controlled and responsible. This ambition was consistent operation of the management and established throughout 2014, and the principles ensuing control systems for financial reporting. from this have been transposed into the integrated • The evaluation of the financial accounts, in part control framework (ICF). Improvements need to be based on the outcomes of the key controls, is implemented in various units of the organisation. These performed by the various financial and risk improvements relate primarily to strengthening risk committees within VIVAT Group. The subsequent governance, managing data quality, the actuarial data approval comes from the Statutory Board, and the models, and accountability for the internal control of findings on the reporting process are discussed in processes. the Audit Committee and the Supervisory Board together with the financial accounts themselves. A promising start was also made with the implementation of these principles in the business operations. In 2015, the various initiatives, improvement measures and change programmes will lay a firm foundation for a more mature control policy. The management of VIVAT Group is responsible for the design and the existence of an integrated risk control system and its operation. This system is focused on managing risks so that they do not hold VIVAT Group back from achieving its objectives. However, the system cannot offer absolute certainty that material misstatements, fraud or breaches of rules or regulations can be avoided.


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    22 Annual Report REAAL NV Strategy and developments As a result of the above, consumers are viewing the 4 St rat egy and development s amounts paid for advice in a more critical light, which is not in itself a bad thing. That said, this development may 4.1 Ext ernal development s also lead to people asking less advice than actually needed. In the long term, this can have detrimental consequences for the financial situation of the consumer, The activities of VIVAT Group are affected by a wide because the full impact of a decision cannot be range of external developments and trends, which in turn discussed in sufficient depth during a meeting with an have an impact on our financial results and our strategic adviser, or because the consumer did not request any choices. advice at all. 4.1.1 Economic and social t rends in t he The long-term trend towards individualisation undermined the principle of solidarity, which forms the Net herlands foundation of insurance. Today, however, there appears The Dutch economy is recovering cautiously, following once again to be a greater willingness to help each other years of recession. During the past few years, the and to share burdens collectively, but in a different way European Central Bank has pursued a loose monetary and on a more human scale. With people helping, and policy in order to fend off the economic crisis in Europe. being helped, by others who share the same values and The decline in the 20-year government bond rate, which ideas or by people within their family circle. Examples fell from 5 percent to 3 percent between 2008 and the include internet forums where people provide each other end of 2013, picked up pace in 2014, falling from 3 with advice, and websites where people can let their own percent to 1 percent in just one year. From a historical homes or lend and borrow items. perspective, interest rate levels in Europe are exceptionally low. As a consequence, the return on Insurance can, and must, be taken back to basics: a fixed-income securities that insurers can achieve going social safety net, organised jointly with the aim of forward is currently less than the interest guarantees we collectively absorbing the blows for the individual. It is in have provided to our customers. this area where opportunities are to be found for our sector in general, and VIVAT Group in particular. The poor economic situation in the Netherlands led to a change in the way policyholders handle their finances. They are now opting for cheaper solutions to cover 4.1.2 Development s in t he area of laws simple risks, and this has consequences for the premium and regulat ions income of insurers. Many consumers also have less Capital requirements under Solvency II money to spend, and they are therefore making more The regulator, the Dutch Central Bank (DNB), imposes claims on their Non-life insurance policies, including requirements in respect of the solvency of insurers, more claims for smaller amounts. This in turn has an based on the current solvency requirements (Solvency impact on the claims paid out by insurers. I). According to these requirements, which were formulated decades ago, the solvency ratio, i.e. the ratio The ban on commissions has resulted in people being of available capital to the technical provision, is less likely to obtain advice in relation to products related expressed using a simple formula. Under the new to building up pensions, accumulating capital and even Solvency II capital framework, which will fully enter into mortgages. Whereas it used to be possible to borrow force on 1 January 2016, a risk-weighted method is used additional finance to cover at least some of the costs of to calculate the required capital. 2015 is a transitional advice when taking out a mortgage, this has never been year for Solvency II, with insurers having to report in the case when it comes to capital accumulation accordance with both Solvency I and Solvency II. The products. As a consequence, sales of products of this more risk-oriented Solvency II supervisory regime is type have fallen visibly. Owing to the stricter standards leading insurers to make different management for mortgage loans, it is increasingly impossible for decisions. In 2014, the management of VIVAT Group customers to obtain additional finance to cover the fee decided to reduce the market risk in the balance sheet for mortgage advice. (statement of financial position). This led to a fall in the


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    23 Annual Report REAAL NV Strategy and developments Solvency II capital requirement, but also had 4.1.3 Market development s affecting consequences for the investment returns of insurance companies. The current situation regarding Solvency II financial ser vices providers in relation to VIVAT Group is discussed in Section 5. The market for financial products has changed a great deal in the recent years. For insurance products, the Pension system trend has been mostly one of declining premium During 2014, the state secretary for Social Affairs and volumes and pressure on margins in a saturated market. Employment initiated a broad public debate on the Since 2000, the market has been characterised by a pension system. Owing to the increase in life number of developments that reinforce each other. expectancy, the extremely low interest rates and rapidly changing social circumstances, the question regarding Distribution the tenability of the current pension system has become Digital channels, such as comparison websites, webcam more and more pressing. Following the increase in the advisers and advisory modules, are being used state retirement age, a retirement age of 67 has now increasingly for the distribution of insurance products for become the rule in the second pillar too. The public consumers and, to a lesser extent, businesses. This shift debate will be followed up in 2015. away from traditional face-to-face distribution through intermediaries towards direct distribution or distribution The Witteveen framework came into effect on 1 January through online intermediaries, is continuing unabated, in 2015. The pension build-up rate is being reduced from part because it is possible to provide advice on and sell 2.15 percent per year of service to 1.875 percent in the increasingly complex products online. case of a career average pension plan. In addition, the pension build-up is restricted for tax purposes to a gross Insurance processes will become more efficient, which annual income of € 100,000. As a result of these will improve the cost-benefit ratio for consumers and measures, less pension can be built up under the tax insurers alike. Digitisation also means it is easy for frameworks. In other words, there are fewer customers to compare and take out Non-life insurance contributions available to invest. These tax constraints cover online. will lead to a further decline in the pensions market in terms of the volume of contributions. On the other hand, We can see a transformation taking place, from a world there are also opportunities emerging in this area. As the in which the intermediary was at the centre of the amount of pension to be received will fall, there will be distribution of insurance policies, to an environment in new demand for additional insurance policies and which consumers are purchasing more frequently savings products (which may or may not comply with the complex products online. Moreover, comparison new 'pension savings' tax regime). websites have taken over part of the role played by intermediaries. Alongside a number of other initiatives, the Dutch Social- and Economic Council (SER) were asked to come up By contrast, demand for advice is rising for a number of with alternatives for a future pensions model. An initial more complex products and commercial insurance, such draft version of the SER report was published on 23 as pensions. We can see that the role of ‘the January 2015. One of the recommendations contained in intermediary’ is increasingly becoming one of an adviser the report is to carry out a more detailed study of a who is paid by the customer. In this market, the adviser pension system that is based on defined contributions still occupies a central position. for building up a pension through a personal pension savings account. This is very similar to the insights Life market gained by Zwitserleven, which is anticipating this trend The ending of tax benefits for capital accumulation for with its pension proposition. This development offers funding home purchases and providing an income in old good opportunities for both the insurer and the Defined age has had an impact on demand for mortgages and Contribution Plan Institution (DCPI) or General Pension related insurance as well as demand for pension-related Fund (GPF) to reinforce and expand their position in the Life insurance. Moreover, insurers are having to contend pensions market. with competition from alternatives, such as bank savings products.


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    24 Annual Report REAAL NV Strategy and developments Pensions market channel they wish to use to arrange their insurance In the group pensions market we have seen a decline in matters. the volume of contributions due to tax measures. In addition, demand for traditional (i.e. defined benefits) 4.1.4 SWOT analysis pension insurance has been falling. Competition from The insurance market is tough right now. Developments IORPs plays a major role when it comes to defined that have a negative impact on premium volume and contribution schemes. returns are currently taking place in all submarkets. On the other hand, there will always be a fundamental need The Witteveen framework will probably reduce the for insurance and for spreading risks, and the number of volume of contributions, but it also offers opportunities, people who wish to arrange matters themselves will only particularly for target groups that have to take additional increase. measures in order to maintain their pension income at an acceptable level. Using net income for voluntary additional pension savings is allowed by law. The Strengths and opportunities Multi-brand strategy amount saved in this way is exempt from wealth tax Under our multi-brand strategy, brands are close to insurers are permitted to offer this kind of top-up pension specific customer groups with shared values. Our brands savings scheme. are well positioned, and each brand has its own specialism and appeals to its own specific target groups. Non-life market With regard to Non-life insurance, customers are Zwitserleven, with its famous ‘Zwitserleven Feeling' expected to insure fewer risks. They are looking more slogan, is one of the few brands in the financial services critically at the products that they purchase. In the case sector that has succeeded in linking an abstract subject of residential developments, for example, we have seen such as pensions to a strong, positive emotion. Given that the use of more durable materials results in fewer the shift towards a pension system in which consumers claims related to residential property. Another reason is have to arrange even more themselves and the that the car industry is changing profoundly. In the case government's role is reduced further, this brand is well- of self-driving cars, the risk will shift to from the driver to positioned to support customers by providing sound the car manufacturer. Furthermore, the trend of no pension products and services. Moreover, the longer owning one or more cars towards sharing Zwitserleven brand offers opportunities for expansion vehicles is continuing. into other financial submarkets. Moreover, Non-life products in particular have become Zelf is taking the lead in developments, and seeks to more or less comparable, partly as a result of websites provide excellent online services to independently where consumers can compare premiums. This has minded, empowered customers. At the moment the main made it difficult for providers to make a difference. focus is on simple risk products, but more complex Insurance brands can only stand out if the insurance products can also be explained properly using brands succeed in offering the right service, quality, price increasingly sophisticated digital technology. Consumers and experience to attract and keep customers. who are prepared to study such products in depth can take out cover themselves. Conclusion Insurers will have to recalibrate their business models Reaal's omni-channel distribution strategy enables and focus on efficiency and simplicity in order to remain people to arrange insurance matters for themselves and relevant and viable in the future. The VIVAT Group obtain access to assistance and advice whenever this is brands also need to revise their activities and, by necessary. This customer approach, in combination with extension, adapt their organisation. The transformation Reaal's broad range of products, offers strong prospects that the VIVAT Group brands are going through will for growth. Reaal has a profitable portfolio in the area of create a more relevant offering that is more in line with occupational disability insurance, and it has traditionally customer requirements. One example of the progress held a strong position in the term Life insurance market, we are making in this area is our omni-channel distribution model, which allows customers to select the


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    25 Annual Report REAAL NV Strategy and developments which also offers opportunities in the area of online the most of new technological possibilities. The services. replacement of old systems has already got off to a good start, with the introduction of the Quinity system at the ACTIAM is one of the Netherlands' leading players in the Non-life business and of the Lifetime system at the area of sustainable investing, and it is the reason why Pensions business. Zwitserleven and Reaal came first and second in the rankings compiled by the Dutch Association of Investors The current low level of capitalisation and the specific for Sustainable Development (VBDO). It provides a core sensitivity of the Life and pension portfolio to low interest of sustainable investing for the set of insurance brands rates mean that solvency is a priority. Moreover, due to operated by VIVAT Group. the adjustments to models made by virtue of Solvency II, the resulting reports and the related management Consolidation information were sometimes not in line with new It is very likely that there will be a further wave of perspectives during the year. In that case adjustments consolidation in the insurance market. The new had to be made to them. combination formed by VIVAT Group and its new owner, Anbang, will be keen to have a part in this. The brands Changing market conditions are forcing us to review our of VIVAT Group have already been through many earnings model and make it more future-proof. The integration processes. That is why our IT divisions are fragmented Non-life portfolio is another factor, and it ready to successfully implement future combinations, needs to be rationalised and consolidated. too. Risk management Weaknesses and threats VIVAT Group is aware of the risks that have been In these difficult times, VIVAT Group has to do described, but these risks are under control. The basis everything in its power to exploit these opportunities. It is for controlling risks is the risk management organisation essential that costs are brought more into line with the as described in Section 5. See also the in-control structurally lower yields. The solvency level has to be statement by the management of VIVAT Verzekeringen maintained in order for our customers to trust that the contained in Section 3.5.1. risks they have insured with us are properly covered. At an operational level, a number of old, expensive, SWOT analysis of VIVAT Group inflexible administration systems still need to be replaced A summary of VIVAT Group's strengths, weaknesses, with efficient, flexible systems so that VIVAT Group can opportunities and threats, as described in Section 3.5.1 respond to the changing needs of customers and make and Section 4, are shown in the following matrix.


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    26 Annual Report REAAL NV Strategy and developments Strengths Weaknesses • Brands focused on customer segments • Capital position and solvency under • Knowledge and experience of system pressure integration and separation • Operational scale at Non-life along with a • Large share of individual Life market high combined ratio • Profitable portfolio of individual occupa- • Integrated Control Framework combined tional disability insurance products with the dynamics of the Solvency II regime in further development Opportunities Threats • Pension liberalisation • Persistently low long-term interest rates • Brand extension: individual pension and • Longevity risk non-pension propositions • Unit-linked policies • Expansion of proposition online • Structural shrinking of Life market • Internal and external marketing of • Structural shrinking of intermediary sustainable asset management platform distribution Figure 3: SWOT analysis of VIVAT Group scale’ again, as people require services that target their 4.2 St rat egic t hemes specific needs and offer value for money. At the same time, we want to win back the trust of customers, Although the reorganisation and sale of our organisation something that has become vital in our sector since the required a great deal of attention, the brands of VIVAT financial crisis. We want to be close to the customer, be Group continued to work hard on improving services to sincere and flexible, and offer customised products, both customers and implementing our multi-brand strategy. online and offline. We need to be efficient and effective. Achieving this aim on an ongoing basis means that in 4.2.1 Mission, vision and core values addition to diversifying we need to offer continuity. Consolidation, soundness and expansion of scale are Mission vital. It is in the light of these considerations that we are Our mission is to empower people so they can manage preparing for the takeover by Anbang. their financial matters for themselves. We work on a basis of simplicity and sustainability: the customer, the individual, comes first. We are passionate and skilled in Core value Our core value is ‘CARE!’. This is more than just a our approach. We provide our customers with the best slogan; it sums up our thinking and our actions. It is the possible support to help them take responsible decisions guiding principle for how we should behave. This in the area of insurance. In this way we aim to add value behaviour forms the basis of the actions of all to their lives and their financial security. employees. It determines to a great extent the level of trust that stakeholders have in us, and the restoration of Vision that trust. Our core value is, first and foremost, a call to There is no such thing as a standard customer. Society all employees to connect in a very conscious way with is becoming more diverse in many ways, and the wishes our customers, with each other, with our results and with and expectations of our customers are becoming more the society we form part of. We treat customers as we diverse too. We are giving financial matters a ‘human wish to be treated ourselves, we act honestly and with


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    27 Annual Report REAAL NV Strategy and developments integrity, and we honour our agreements. We work with Financially sound our colleagues on a basis of trust and respect, we listen It is important for our services that VIVAT Group focuses to each other and we learn from each other. We are on maintaining a sound level of solvency. aware of the role of our company in society, and behave accordingly. We want to continue to offer competitively priced products by utilising the economies of scale in our organisation. One of the ways in which we do this is by 4.2.2 St rat egy allowing brands to use a central back office. Multi-brand strategy VIVAT Group aims to create value for customers and our Corporate Responsibility new shareholder by pursuing a multi-brand strategy. This Our core activity of insurance implicitly requires us to is a conscious decision. Our world view is that everyone take our role in society seriously. Corporate is different. Individuals have different situations in life, or Responsibility (CR) proceeds from our mission and their requirements may change as they enter a different vision, and it forms an integral part of our strategy and phase in their life. We are close to our customers and we business operations. In 2014, we established CR policy seek to meet their needs by offering a variety of brand framework at VIVAT Group in order to streamline our propositions. activities in this area. The reasoning behind the introduction of the CR policy framework is the value that VIVAT Group's range of products and services are we are able to create with our brands for our customers divided among five consumer brands. Each brand has a and, ultimately, for society. Our core mind-set, 'CARE!', specific proposition and focuses on the financial and drives how we behave within VIVAT Group and how we insurance needs of its own target group. The brands interact with the outside world. The customers who operate on the basis of an identity that is recognisable to purchase products and services from us, the employees customers, with specific brand themes. The basic who are committed to us, the resources we have at our principles of simplicity, sustainability and empowerment, disposal and the social policy we have implemented are however, remain the same. By talking to people on their all crucial for the future survival of our business. Our level and focussing on what they believe is important, we brands operate in a marketplace and within wider endeavour to build a relationship of trust. society. This is an interactive process in which society, the market and brands all have an influence on each We want to be close to our customers and enter into a other. This process is shown in the following diagram. dialogue with them. Only then will we be able to understand each other, win back trust and build long- Society lasting customer relations. This is also important for our new owner: the brands of VIVAT Group have a customer Market base that will continue to have a substantial value in the Brands future. Our brands demonstrate that this is a successful strategy, in part because it enhances customer es Re satisfaction, despite internal uncertainties and the ye so Emplo ongoing disentanglement and reorganisations. urce Internal business CARE! s operations Our ambition is for customers to consider us to be a customer-friendly service provider. We aim to treat CR p o li c y customers fairly, and to be the best at this in our sector. This means that our brands will need to have a distinctive position in their chosen customer segments, with recognisable themes, appropriate forms of Interaction with wider society distribution, service concepts and an appealing offering. Any partnerships that are entered into must also be in in Figure 4: Conceptual framework for Corporate Responsibility line with this mind-set.


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    28 Annual Report REAAL NV Strategy and developments To ensure responsible practices in our internal framework with the aim of putting into practice our operations and in our interactions with the outside world, mission, vision, multi-brand strategy and core value. these choices have been formalised in a CR policy Mission To promote financial empowerment, building on a basis of simplicity and sustainability Vision To offer specific services within a diverse society Multi-brand strategy: to respond to the diverse wishes and needs of specific customer segments Strategy in a more effective and targeted way CARE! Core value CARE! about the customer CARE! about society CARE! about each other CARE! about results Sustainable Responsible Sustainable customer relations Sustainable world employability risk-taking CR focus areas Customer relations Sustainable Public debate Sustainable results enhancement themes employment Figure 5: Corporate Responsibility policy framework In order to ensure our policy is in line with our core reduce carbon emissions, make more efficient use of value, we have broken down our core value into four paper and reduce waste. strategic pillars: CARE! about the customer, CARE! about society, CARE! about each other, and CARE! CARE! about each other about results. Our employees are the people who put our mission and vision into practice. We are a business that serves the CARE! about the customer financial interests of others, but we can only do this if we Treating Customers Fairly (TCF) is at the core of our employ people who are completely committed to this. mission and vision, and this is expressed in activities 'CARE! about each other' reflects what we understand focused on sustainable customer relations. We being a responsible employer to mean: we promote concentrate on themes that are of relevance for sustainable employability (e.g. vitality, personal customers, such as understandable products, the development) and sustainable employment relations availability and asccessibility of our call centres, and fair (flexibility, diversity). pricing. Customer relations enhancement themes have been defined for each brand. These range from CARE! about results promoting financial resilience to investing our assets The more financially focused activities that could have responsibly. an impact on our customers, our shareholders and our business are developed within this pillar. Responsible CARE! about society risk-taking and sustainable results are in line with the VIVAT Group operates at the heart of society and is philosophy of VIVAT Group. close to its customers. Acting on behalf of our customers, our brands have entered into public debates The following table indicates the Sections in which the on topics such as the changes to pension legislation, the focus areas are discussed. promotion of sustainable transport or responsible investing. We are working towards a sustainable world and the protection of the environment. We are working to


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    29 Annual Report REAAL NV Strategy and developments Discussion of CR focus areas TCF scores of VIVAT Group Focus area Section In anticipation of the introduction of a new, Sustainable customer relations 4.2.3 comprehensive monitor, the VIVAT Group brands have Customer relations enhancement themes 4.3 decided to publish their TCF scores. On a scale of 1 Sustainable world 4.5 (low) to 5 (high), our brands have a joint overall score of Public debate 4.3 3.7, compared to a market average of 3.5. This score Sustainable employability 4.4 reflects our efforts to treat customers fairly. Sustainable employment relations 4.4 Responsible risk-taking 4.1.4 & 5 TCF scores obtained in subcategories Sustainable results 4.1 & 4.3 VIVAT Group Category Market score score Insuring 3.6 3.3 4.2.3 Rest orat ion of t rust Transparency 4.2 3.4 Sustainable customer relations are essential for all Complaints management 4.0 4.2 VIVAT Group brands to win back the trust of our Pensions 2.9 2.5 customers. We forge sustainable customer relations by Score on scale of 1 (low) to 5 (high) being fair and transparent in the way we do business. This approach is embedded in our business. Besides the scores awarded by the AFM, we also use a number of internal KPIs to help us monitor the extent to In doing so, we apply the criteria of cost efficiency, which we treat customers fairly. In this context, usefulness, reliability and understandability prescribed Zwitserleven and Reaal measure the Net Promoter by the Netherlands Authority for the Financial Markets Score (NPS) every six months Route Mobiel does so on (AFM). This is reflected in our above-average TCF a monthly basis. scores. We gauge the opinion of customers on statements We also apply a number of additional criteria, based our including the following: own Corporate Responsibility policy framework. These • The brand puts my personal interests above the are simplicity, improved accessibility and clear, fair brand’s interests. pricing. • The brand gives me the feeling that I am important. • The brand fulfils its commitments. Treating Customers Fairly (TCF) The AFM tests whether we are succeeding in treating Our customer satisfaction scores and NPS scores customers fairly. In connection with this, the regulator remained stable in 2014. For the financial sector as a publishes TCF scores on a regular basis. VIVAT Group whole, the trend is one of low customer satisfaction believes that the opinions of customers should also be scores and NPS scores. Obviously we are dissatisfied obtained in order to form a full picture. The Dutch with our negative NPS score and we want to improve our Association of Insurers, acting on behalf of VIVAT Group score substantially. Our programmes related to Treating and other insurers, already performs customer Customers Fairly (TCF) should help us achieve this. satisfaction surveys for this purpose. We believe that the combination of this survey and the AFM's TCF monitor surveys can be used to provide consumers with guidance on making qualitative comparisons. Net Promoter Score and customer satisfaction score Zwitserleven Zelf Route Mobiel Reaal Proteq Dier & Zorg 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 Net Promoter Score -43.0% -43.0% 11.7% 11.2% 37.5% 36.8% -48.0% -47.0% 12.9% 9.6% Customer satisfaction score 6.9 6.9 7.9 7.8 8.2 8.2 6.8 6.8 7.2 7.6


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    30 Annual Report REAAL NV Strategy and developments Besides the NPS and customer satisfaction scores, we We try to keep our terms and conditions as transparent also keep records of the number of complaints for Reaal as possible, make products understandable and and Zwitserleven. We have noted that the number of communicate this clearly in product conditions, in letters complaints at Reaal has risen, while the figure for and on the websites of our brands. Zwitserleven has fallen slightly. Our aim is to achieve a significant reduction in these figures, not least because We measure the extent to which our customers think our this would also lead to improvements in our NPS and communication is transparent and clear. Zwitserleven customer satisfaction scores. appears to be succeeding in this area, 94 percent gives a score of 7 or higher. The same is true of Reaal Complaints received according to most of our customers, although there are Zwitserleven Reaal still a significant number who require clearer, more 2014 2013 2014 2013 transparent communications. Number of complaints received 1,563 1,722 9,227 8,424 Transparent and clear communication Quality of our business partners Zwitserleven Reaal With regard to the Reaal and Zwitserleven brands, 2014 2013 2014 2013 VIVAT Group works with a great many business partners Percentage of customers who think communication is 94% 82% 69% n.b. that provide advice to our customers and sell products transparent and clear on behalf of the brands. It is vital that they work in a way that is consistent with our ideas on integrity, quality and Customer contact continuity. We have prepared a framework to help us As we seek to treat customers fairly, it is essential that assess whether partners work in accordance with these we challenge ourselves to make further improvements in principles. The variables that are measured in this the area of customer contact. This means ensuring that framework are quality, integrity and continuity. A brands are easy to contact and that customers are dashboard of indicators shows whether the business provided with good support. We measure this constantly partners appear to meet the relevant quality standard. and make efforts to improve our performance in this We enter into a dialogue with partners that do not area. appear to meet the standard, with the aim of improving services to customers. Reaal actively focuses on first contact resolution, which refers to the ability to understand the customer and Finally, it goes without saying that it is vital that our address his or her concerns and/or problem the first time people are customer-oriented and open. They receive they contact us. Zelf follows up every customer who training in the TCF principles and the principles of cost- contacts us and asks if they are satisfied, whether they efficiency, usefulness, reliability and understandability, feel it is easy enough to contact us, and in particular and are aware of applicable legislation (e.g. the Dutch whether the expectations they have, and had, have been Financial Supervision Act). We also apply the two-man met. Zelf uses tests, such as the test of knowledge and rule. experience related to occupational disability insurance, to test whether the customer understands what he/she is Simplicity buying. Zwitserleven investigates whether the customers We believe it is our duty to help customers become have properly understood the complex matter of financially empowered. We therefore offer good quality, pensions; we measure whether communication was fair, transparent products. Simplicity is crucial. transparent and clear. Simplicity in finance is an important principle for the Pricing VIVAT Group brands. It means that we stand for We seek to provide transparent information on how the products that can be understood by all, that are open, prices we ask for our products are structured. Our aim is accessible and free from hidden terms, and are to offer customers a fair price. At the same time, we supported by a friendly service provision that seeks to need to ensure we are profitable so that we can fulfil our create lasting relationships. obligations today and in the future. It therefore makes


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    31 Annual Report REAAL NV Strategy and developments sense to test our prices against market conditions on a that are covered by the compensation scheme. We want constant basis. to talk to customers about their policies, through their intermediaries, and offer them an alternative if they so We believe it is important to offer the same prices to wish. VIVAT Group has sent out many hundreds of both new and existing customers. In order to achieve a thousands of letters and e-mails since the start of 2013, good balance, we have produced Decent Pricing Rules. and made phone calls to customers. In total, these add We use this normative framework to test the prices we up to nearly two million attempts to reach customers with ask for various products. The main starting point is that unit-linked policies (including non-accuring policies), we have to be willing and able to explain the pricing either by telephone or by letters (by registered mail). To policy to customers, including in situations where this end, we appointed a full-time call team of 80 people differences in prices arise. It is important to be trained in contacting customers by telephone. They transparent about this, as the precise prices of products make between five and ten attempts to reach the depend on many factors, such as risk, the term of the customer. product and its complexity We have also joined forces with advisers to set up the Unit-linked policies ‘Resolving it together’ programme. The online insurance VIVAT Group, and also Reaal, are having to contend check tool, Verzekeringscheck, is located on Reaal's with obligations that are the result of the unit-linked website and is used frequently: by the end of 2014 it had products. been logged on to over 700,000 times by over 120,000 customers. This is all aimed at encouraging customers Compensation for excessive fees charged for unit- to talk to their advisers so that they can make a linked policies conscious decision. VIVAT Group has reduced the percentage fees charged for unit-linked policies to a level that is acceptable to all In the course of 2014 we again stepped up our efforts to parties. Agreements were reached on this in 2009 and activate customers. At the end of 2014, again 42,000 2010 with consumer organisations including the Dutch letters were sent by registered post to customers who Homeowners' Association and the Dutch Investors' had not yet made a conscious decision, in which we Association. VIVAT Group has finished dealing with the specifically asked them to contact Reaal. Moreover, resulting compensation scheme, and has paid € 360 4,000 additional meetings with advisers were purchased million in compensation to customers. from financial advisers to ensure that customers can visit them to have a policy check performed. In addition, complementary measures for all unit-linked policies have been agreed in consultation with the Dutch VIVAT Group did its utmost to reach the activation target Minister of Finance. This will make it possible for all percentage as defined by us. Although VIVAT Group customers with a unit-linked policy to make changes or managed to activate the highest number of customers in switch to another provider.1 absolute terms compared with all other insurers, to our disappointment we did not reach the 80 percent target. Encouraging customers to act On 1 March 2015, VIVAT Group posted an activation VIVAT Group set itself the goal of encouraging rate of 67 percent. VIVAT Group did its utmost and customers who have a non-accruing policy to make a favoured accuracy rather than speed. conscious decision regarding their insurance policy. Non-accruing policies2 are a group of unit-linked policies Our choice to approach each individual customer to The AFM appreciates the efforts made in relation to after-sales make a conscious well-considered choice is taking more 1 services for unit-linked policies: Reaal scored 3.2 in the AFM's time than expected. For advice on unit-linked policies, dashboard module on after-sales services for unit-linked policies VIVAT Group seeks collaboration with the intermediary. (average of 3.1 for big six insurers 3.1 and 2.6 for market). Adequate advice is desirable to come to a conscious 2 Non-accruing policy: A category of 'non-accruing policies' has been identified in the context of unit-linked policies. The AFM defines non- choice. We underestimated the extra time needed for accruing policies as unit-linked policies which are not expected to by), we have reached agreements with the AFM on encouraging result in to capital accumulation based on the future premiums to be customers to take action. VIVAT Group is making additional efforts to paid. In an effort to further improve the situation of these customers encourage customers to make a conscious decision regarding their (and in addition to the compensation scheme they are also covered insurance.


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    32 Annual Report REAAL NV Strategy and developments this. In addition, more customers than initially expected cost dis-synergies, valuation adjustments of mortgages do not respond to our letters and telephone calls. and other valuation changes. Furthermore, unfavorable movements in the yield curve and increased interest Our target is and remains to have our customers with volatility, especially in the fourth quarter of 2014, non-accruing policies make a conscious choice. We will contributed to the decrease in solvency. again step up our efforts; in 2015 VIVAT Group keeps reaching out to the customers, in a joint effort with As part of the sales process, VIVAT Group has focused independent advisers. on balance sheet protection by further de-risking the investment portfolio. The main objective was to reduce sensitivity of solvency to changes in interest rates, equity 4.3 Business development s markets and credit spreads under the Solvency II regime and only to a lesser extent under the current Solvency I 4.3.1 Financial result s of VIVAT Group regime. As a consequence, the development of the Solvency I ratio in 2014 does not fully reflect the VIVAT Group saw its gross premium income fall by 3 additional derisking measures. percent in 2014. At 16.8 percent, the share of the regular individual Life premiums market was slightly lower than The underlying net result of REAAL Life remained in 2013 (19.3 percent); the market share of regular group positive but showed a sharp decrease by € 50 million, Life premiums fell to 7.4 percent, down from 14.6 from € 115 to € 65 million, driven by lower direct percent in 2013. The share of the new Non-life market investment income and lower cost margins. The stood at 4.7 percent, another decline compared with underlying net result of REAAL Non-life fell by € 19 2013 (5.8 percent). million to € 63 million negative driven by lower direct investment income and higher claims, mostly at fire and VIVAT Group reported a profit for 2014 (adjusted for motor. Zwitserleven posted a lower underlying net profit incidental items) of € 78 million, compared with € 122 of € 3 million compared to € 17 million for 2013. The million for 2013. Adjusted for the effects of realised gains absence of a provision charge for the compensation of and losses on the investment portfolio and derivatives, unit-linked pension contracts was more than offset by underlying earnings plummeted to nil, down from € 71 lower technical and cost results and lower investment million in 2013. The positive underlying earnings from income. The underlying profit of ACTIAM was in line with the Life business were largely cancelled out by an 2013. Assets under management increased significantly underlying loss suffered by the Non-life business. The due to the lower yields on bonds. However the growth in weak results were largely attributable to a drop in income was offset by higher operational costs, mainly underwriting results and lower margins. What is more, driven by regulatory requirements for AIFMD services the derisking of the investment portfolio over the past and growth of the customer base. periods, in combination with falling interest rates, has led to a structural reduction in investment income. VIVAT Group segments its financial results by product group. A product group may encompass one or more of VIVAT Group incurred a loss for 2014 of € 612 million our brands (see the table below). (2013: loss of € 625 million). The loss for the year was entirely due to negative incidental items in the sum of € 690 million. These were primarily made up of an expense item of € 648 million that was recognised for the IFRS LAT shortfall. In 2014, the solvency ratio of VIVAT Group fell increasingly short of our internal minimum target of 175 percent. Regulatory solvency declined to 136 percent at year-end 2014 from 172 percent at the end of 2013. The decline was mainly due to the result of changes in models and cost parameters, partly due to envisaged


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    33 Annual Report REAAL NV Strategy and developments Business unit (BU) and brand/product group choose or whether they need to take action at all. A combination survey has shown that more than 90 percent of the Non-life Life Pensions Asset Management Dutch population do not know what changed on 1 BU Zwitserleven √ January 2015 in relation to pensions (the Witteveen Zwitserleven √ framework). BU Reaal √ √ Reaal √ √ Zwitserleven refuses to settle for a situation in which Zelf √ customers lack information about their pensions: they Proteq Dier & pay their insurance company good money towards their √ Zorg pensions in good faith for a period of 40 years so that Route Mobiel √ they can enjoy the Zwitserleven Feeling in later life. ACTIAM √ ACTIAM √ What were Zwitserleven's objectives in 2014? Zwitserleven believes it has a duty to help people 4.3.2 Zwit serleven understand their pensions and the consequences of changing laws and regulations. One of the objectives for Simplicity for Later 2014 was to create a targeted information campaign to Zwitserleven, our pension brand which manages the help achieve this. combined pension capital of 785,000 people, feels a responsibility for the financial futures of consumers. Another objective was to streamline the product offering Zwitserleven believes that the entire country of the and - where appropriate - to reduce it. This will allow Netherlands should be able to enjoy the ‘Zwitserleven Zwitserleven to offer a closer match to the needs of Feeling’ and that everyone should be given the chance customers with simple and comprehensible products. to shape their own financial future. Products would also be better protected against market developments, such as the continuing low interest rates It is proud to rank most sustainable insurance company and the longevity risk. for three years in a row. Zwitserleven invests sustainably, acts with respect for human life and the Pension products are distributed via a network of environment, with a continual focus on dialogue. The advisers, consultants, accountants, our own brand does what it's good at: transforming expertise and Zwitserleven Pension Service (ZPS) as well as directly experience into products that anyone can understand. through online service offering. A good partnership with external advisers is and will always be essential if we are Connecting, helping people: Zwitserleven does not to achieve our ambitions in the years ahead. regard this as just a moral or ethical issue, it is also a Zwitserleven planned to carry out targeted campaigns to way of doing things. To continue to be able to live up to restore its favour with external advisers. this, Zwitserleven aims to be a financially healthy business with realistic objectives. Within this objective, it Zwitserleven planned to simplify its internal organisation is important to consider the interests of our customers, in order to reduce costs. employees and other stakeholders. Customers of Zwitserleven include directors/major What has Zwitserleven achieved? Information on new legislation shareholders, SMEs, large businesses, their employees In late 2014, Zwitserleven embarked on an information and other individuals. For each of these customer campaign through the media of television, radio, groups, Zwitserleven has a pension product to match. websites and social media. In our new e-magazine ‘Straks’, we write articles and publish videos to explain Zwitserleven is focusing on ‘Simplicity for Later’ – herein the new pension system. In November, lies the raison d'être of this brand. Pensions in the Zwitserleven introduced a new online tool Netherlands have become too complicated. Consumers ('PensioenInzicht') which gives not just our customers, have a lack of understanding about their pension but every resident of the Netherlands a complete picture situation and they do not know what solution they should of their pension situation. Employers have also been


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    34 Annual Report REAAL NV Strategy and developments informed through pension events and seminars for there is scope for a simpler and more effective approach people in HR roles, but also through information with fewer systems and processes. A shared back office, sessions for employees themselves. Zwitserleven has in which all processes from making the proposal to also developed dedicated online portals which HR signing off the policy are performed electronically, departments can use to manage the pension plans. It is essential if we want to achieve structural cost-savings. will soon also be possible to link this to payroll systems. Zwitserleven expects costs per (new) customer to be lower than competitors' costs in due course. In 2014, the Changes in the product offering new accounting system ('Lifetime') for unit-linked Because of the changing circumstances, Zwitserleven pension plans was rolled out. More than 1,450 contracts has made a start on changing its product offering. From have now been entered into the Lifetime system, with 2018, Zwitserleven will no longer offer products that 24,000 pension plan members. include some form of guarantee. Our principle of 'Simplicity for Later' should create a business model fed Zwitserleven is proud that it was once again selected by by an influx of profitable new policies. The strong the Dutch Association of Investors for Sustainable awareness of the Zwitserleven brand and its healthy Development (VBDO) as the most sustainable pension image will help with achieving this. We have also insurer. Zwitserleven's image value has fallen introduced savings products, where the average amount slightly, but we are making efforts to turn this around and on deposit held per contract is high. improve in the year ahead. Zwitserleven has developed a new product for those VBDO score and image value wishing to save above the threshold of € 100,000, the 2014 2013 Net Pay Pension product, which fills a gap created by Most sustainable pension insurer 1st place 1st place new pension legislation introduced on 1 January 2015. according to VBDO The exact options available under the new law are still Image value for 'socially engaged' 12% 13% being investigated. Furthermore, Zwitserleven checked the knowledge of its In 2014, Zwitserleven launched its own Occupational customer base on the changes to the pension system. Retirement Provision (IORP) in response to increasing The conclusion was that many customers were not yet individualisation in the pensions market. Two products aware of them. Zwitserleven believes it has an important have been introduced: Zwitserleven Pension Now and role to play in this context. Zwitserleven Pension Account Now. Pension Now is intended for employers seeking to retrench and For customers who have recently taken out a product, standardise: a standard pension plan with a benefit for Zwitserleven measures the level of their pension survivors and orphans. Pension Account Now is an awareness. Compared to last year, the figure has fallen individual plan that pays benefits following death before to 18 percent. Zwitserleven aims to bring about an retirement. increase in this number. Improve cooperation with advisers Education & insight In 2014, we worked hard to restore the relationship and 2014 2013 communication channels with advisers. This included Figures on awareness, changes from 9% - opening proposal portals exclusively for advisers. 01/01/2015 Furthermore, clear arrangements were agreed on how Figures on pension awareness and after- 18% 26% sales survey Zwitserleven shares communications about its products and the role of advisers. An advisory board was also established to represent the views of advisers. Plans for the years ahead In 2018, Zwitserleven aims to reduce the number of Simpler and more effective group pension products from five to three. The number The motto 'Simplicity for Later' which Zwitserleven uses of products that include some form of guarantee is also in its customer-facing communications also applies to set to reduce (from eleven to two). At the same the internal organisation of Zwitserleven itself. Here too


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    35 Annual Report REAAL NV Strategy and developments time, Zwitserleven intends to increase the number of Net Promoter Score and Customer satisfaction individual products from three to seven. score 2014 2013 Zwitserleven is investigation opportunities to further Net Promoter Score 11.7% 11.2% expand the brand into the consumer market, for Customer satisfaction score 7.9 7.8 instance, by introducing new products and propositions for pension-related products, but also for other insurance Zelf has a number of new products. For instance, the products in line with the Zwitserleven brand and image. single-trip travel and cancellation insurance was A start was made by introducing the Zwitserleven successfully introduced. Savings Account in cooperation with SN Bank NV. Furthermore, Zelf has also adjusted its premiums and 4.3.3 Zelf conditions. The premium increase for the liability insurance for private individuals came into effect on 1 You live. Zelf insures May 2014. Zelf has succeeded in retaining customers, Zelf ('Self') is VIVAT Group's online brand that aims to helping to generate additional turnover. The policy help customers who want to take financial matters into excess for the travel insurance was increased with effect their own hands. With its motto ‘'You live. Zelf insures’, from 1 June 2014, leading to a slight increase in the Zelf positions itself as a brand for independent number of cancellations. In 2014, all existing motor consumers who like to decide for themselves how they insurance products were converted to a single sales organise their affairs, their life. Customers are therefore proposition, enhancing the transparency of the offering. given the opportunity to choose online from a clear and easy to understand offering of insurance products. Plans for the years ahead Zelf is aiming to further digitise processes and offer Service improves and it becomes clear where customers their own personal portal. Customers will be transparency of the terms and conditions of insurance able to visit the portal to manage many things can improve thanks to an ongoing dialogue themselves (such as making claims, changing their with customers. They can make their own views known personal details, making changes to their policies, etc.). via the website or can contact a member of staff. So far, Zelf has only used the internet as an advertising What were Zelf's objectives in 2014? medium. Zelf will also start advertising offline in order to Improving customer satisfaction is always a key driver further raise the brand's profile. for Zelf. Based on what we know of our customers and risk 4.3.4 Rout e Mobiel modelling, Zelf wanted to introduce further premium From B2C tot B2B differentiation and launch new products. By using online Since early 2004, Route Mobiel has grown to become marketing and a quantitative approach to product the second Dutch roadside assistance provider, with a development, Zelf aimed to achieve profitable growth. network of more than 180 bases across the Netherlands. What has Zelf achieved? In 2013, Route Mobiel changed course from the Zelf periodically measures customer satisfaction as well consumer market (B2C) to the business market (B2B) to as whether they would recommend the brand to other offer roadside assistance through partners. people (Net Promoter Score). Zelf has a positive Net Promoter Score and high scores for customer What were Route Mobiel's objectives in 2014? satisfaction. It wants to maintain these scores and where Route Mobiel wanted to embark on an active relationship possible improve them. marketing campaign to convince the B2B market to cooperate in jointly selling roadside assistance services. The plan was also to select businesses that offer a good match for Route Mobiel and offer potential for the sale of roadside assistance cover.


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    36 Annual Report REAAL NV Strategy and developments Furthermore, Route Mobiel aimed to be distinctive in and assistance. Reaal aims to meet this need. The focus its customer service as was to be reflected in a is on individual consumers in the Netherlands as well as continually high Net Promoter Score. small and medium-sized businesses, which Reaal serves via its network of advisers. What has Route Mobiel achieved? In 2014, Route Mobiel further strengthened its Reaal is working towards building a strong position in the partnership with Vakgarage: since the 2014 autumn insurance market. With the future-proof theme of 'Live campaign, the number of customers buying Route your Life’, the brand aims to set itself apart from its Mobiel roadside assistance via Vakgarage has more competitors. than doubled compared to 2013. Thanks to omni-channel products, customers can take Route Mobiel periodically measures customer control of their own affairs via the website or via the satisfaction and the extent to which customers would Reaal contact centre, by calling in an adviser or a recommend Route Mobiel. The stable scores are very combination of these. The wishes of the customer are good compared with competitors, but there is still scope the key focus. for improvement. What were Reaal's objectives in 2014? Net Promoter Score and Customer satisfaction Reaal wanted to make the transition from being a score traditional, integration and product-focused insurance 2014 2013 intermediary to a modern customer-focused financial Net Promoter Score 37.5% 36.8% services provider. The customer's needs are the key Customer satisfaction score 8.2 8.2 focus here. The omni-channel model must be realised in 2014, supported by a new logo and a contemporary Plans for the years ahead visual identity. Route Mobiel is investigating whether further cooperation with assistance provider SOS International To improve the quality of its service, Reaal intends to is possible. This should lead to an expansion of the concentrate on close cooperation with a smaller group of brand, improved access to the business-to-business distribution partners that can offer high quality. market, an international dimension for the brand, and access to 'non-insured roadside assistance’ (including Reaal believed it is necessary to reduce costs in order to vehicle fleets). maintain its competitive position. The market for Life insurance in particular consists, in terms of new policies sold, of term Life insurance and immediate annuities. 4.3.5 Reaal Owing to overcapacity in the Non-life market Reaal faces Financial resilience stiff competition. The Reaal brand offers individual Life insurance, Non-life insurance and occupational disability insurance. Up to Another important objective was to continue work on the end of May 2014, Reaal also offered banking laying the matter of mis-sold unit-linked policies to rest in products. Reaal wants to improve the financial resilience order to have our customers make a well-considered of customers by helping them make conscious choices choice. about their financial situation. Reaal has chosen a positive approach, as set out in the brand manifest What has Reaal achieved? 'Financial Resilience'. The brand emphasises not the Focus on customers' needs possible fear of suffering a loss, but rather the peace of Reaal is aiming for a high level of customer satisfaction mind and freedom that insurance products offer. and operational excellence for new and existing customers. Work on shaping the ambition to focus on The role that insurers play has changed. In a time in customers' needs continued in 2014, and customers can which the government is doing less and people are now choose how they search for or buy an insurance increasingly responsible for how they manage their own product, whether through an adviser, online, via the financial futures, customers need a clear-cut approach contact centre or a combination of these. An important


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    37 Annual Report REAAL NV Strategy and developments element in this omni-channel approach is the new Fix Your Risk ('Fix je Risk'). The target group of these website, which was launched in July. Reaal.nl offers non-profit organisations is wide-ranging. Through these customers the opportunity to take out a policy online, non-profit organisations, Reaal aims to help people with a focus on making a well-considered choice. manage their spending more wisely. Customers can contact a 'help line' whenever they need to, such as the contact centre, and they can even switch Repositioning the Reaal brand to an advice session with a selected adviser. In the The Reaal brand was given a new lease of life with a advertising campaign which started in September, Reaal new logo and the 'Live your Life' campaign. The idea is emphasising the fact that the customer is in the driving was to portray an image of contemporary optimism, not seat. emphasising everything that can go wrong in life, but instead showing that, with the right insurance Below are the figures on the number of products that arrangements in place, customers can make life more Reaal offers via the omni-channel approach. care-free. The brand campaign ties in seamlessly with Furthermore, Reaal has for the first time ever measured the new market approach. Reaal started direct sales of how many customers actually made a well-considered its products to customers via the new website and the choice. There are gains to be made here. Reaal wants to contact centre. investigate how information for customers can be further improved. Improving the combined ratio To improve the combined ratio, Reaal was forced in Omni-channel and well-considered choice 2014 to increase the price of its Non-life insurance 2014 2013 products. As a result, a number of customers left; the Number of omni-channel products 6 0 largest cancellation numbers being from Motor Percentage of customers that say they Insurance, followed by Household Contents and Building 61% - have made a well-considered choice Insurance. If Reaal is to put TCF first, it is essential that it Reaal Banking Services transferred to SNS Bank challenges itself to improve contact with customers. Because VIVAT Group will be left without a banking Firstly, this means that Reaal must be easy to contact authorisation after the disentanglement, it was found that and, secondly, that we need to serve customers well. A it would be impossible to operate the business model for key parameter in this is the concept of first contact the remaining banking activities of Reaal Banking resolution, which provides a way to measure the ability Services and still make a profit. It was therefore decided to understand a customer's need and/or resolve their to transfer Reaal Banking Services to SNS Bank NV, problem on first contact. Reaal is making active efforts in which will continue to operate the activities and the its drive on customer contact. Although our score is service to customers under its BLG Wonen brand. The improving, we need to ensure this continues. Reaal has transfer took effect on 1 January 2015. set itself a goal of achieving 95 percent for keeping its promises following customer contact (e.g. calling back, Unit-linked policies looking something up). In Section 4.2.3, we will take a closer look at the activities that Reaal worked on in 2014 on bringing the First contact resolution rate matter of unit-linked policies to a conclusion. 2014 2013 First Contact Resolution-rate 73% 62% Plans for the years ahead In 2014, a start was made on direct distribution, and In a broader context, Reaal is also profiling itself as an further steps will be made on this in the years ahead. organisation that wants to help people be more Reaal also intends to further improve its cooperation with financially self-reliant and independent. Reaal is involved its distribution partners. These partners will be selected with Stichting Geldinzicht (a non-profit organisation on the basis of the quality they can offer. In this context, established by SNS REAAL NV) and with Stichting Weet the continued cooperation with SNS Bank as a major Wat Je Besteedt, ('Know What You're Spending') and distribution partner is important. participates in Money Week ('Week van het Geld') with


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    38 Annual Report REAAL NV Strategy and developments Reaal is looking at the option to concentrate Life policies and SNS Asset Management NV (SNS AM). Under its which no longer generate any income into a separate new name, ACTIAM now operates as an investment Service Book Organisation. This organisation would then institution. SBB's authorisation transferred to ACTIAM by work efficiently, focusing on the legacy policies, so that operation of law on the merger. Asset management and the rest of the Reaal organisation could better organise the fund administrator remain unchanged. SBB had itself to focus on the wishes and needs of existing already outsourced both functions to SNS AM. customers and new business. The merger was conceived against the background of more stringent requirements for fund management 4.3.6 Prot eq Dier & Zorg following the introduction of new laws and regulations, Taking care of things together including European regulations for investment Proteq Dier & Zorg is dedicated to insuring the health institutions, notably the Alternative Investment Fund care costs of pet dogs and cats, and is the market leader Managers Directive (AIFMD). The merger also meant in the sector. that fund management expertise was combined. ACTIAM has been the AIF manager of ASN's What were Dier & Zorg's objectives in 2014? Investment Funds since 22 July 2014, meaning a growth Proteq Dier & Zorg sees opportunities to use risk-based in the assets under management of € 900 million. pricing for its insurance products in order to better manage the costs of claims. The risk analysis will take ACTIAM manages the assets of: account of risk factors of the pet and the pet owner. • Reaal and Zwitserleven; • ASN Bank; What has Proteq Dier & Zorg achieved? • ASN Investment Funds; In May, Proteq Dier & Zorg introduced a new insurance • SNS Investment Funds; product for price-conscious customers: the 'Bewust' • RZL Investment Funds; ('conscious') insurance. This policy is intended for • SNS Responsible Index Funds Equity (from 1 customers who are looking for security at a time when January 2015: ACTIAM Responsible Index Funds their pet needs an expensive procedure. Equity); • ACTIAM Impact Investing Micro and SME Proteq Dier & Zorg embarked on a new approach to Financing Funds; customer contact under the motto ‘Taking care of things • Zwitserleven Investment Funds; together’. Proteq Dier & Zorg gave a boost to knowledge • a select group of external clients. sharing via various internet forums. The brand also supports a number of local initiatives of customers ACTIAM's mission is to realise the investment objectives relating to animal nutrition, animal care and recreation. of its clients, achieving a sustainable investment result, service and advice. ACTIAM intends to continue to be a Plans for the years ahead source of surprise and inspiration for its clients. From Proteq Dier & Zorg wants its product to perfectly meet 'Good to Gold!' is the leading theme both internally and the desires of the target group, and it therefore closely externally. follows developments in the segment. Another key driver is to promote knowledge on animal health to help reduce Responsible investment claims. ACTIAM manages the assets entrusted to it in a responsible way. This means that all assets under 4.3.7 ACTIAM management (equities, fixed-income securities, manager From Good to Gold selection and alternative investments) are invested in ACTIAM is the sustainable investment manager of accordance with our Fundamental Investment Principles. VIVAT Group, with € 51.4 billion in assets under Investments must not be in contravention of international management. standards and conventions. Furthermore, the manager aims to act as an active and engaged shareholder in ACTIAM NV came into being on 1 July 2014 thanks to order to elicit a far-reaching change of conduct in the merger of SNS Beleggingsfondsen Beheer BV (SBB) businesses and in the regulatory frameworks. This form


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    39 Annual Report REAAL NV Strategy and developments of active shareholdership concentrates on natural What has ACTIAM achieved? resources (oil, gas, mining and food), Investment performance ACTIAM has managed to achieve a positive investment ACTIAM's Fundamental Investment Principles are performance for almost all of its funds. Notably, derived from international treaties, conventions and best positive performance in bonds and European equities practices, such as the UN Global Compact, and relate to has made a significant contribution. Assets under a variety of important social themes: human rights, management in 2014 grew from € 44.2 billion to € 51.4 fundamental employment rights, corruption, the billion, in part attributable to the sharp fall in interest environment, weapons, and customer and product rates and the influx of € 0.9 billion from ASN Investment integrity. ACTIAM ensures that investments meet the Funds. Furthermore, ACTIAM launched the Institutional internal standards and conventions of VIVAT Group. Microfinance Fund III in December 2014. Based on these investment principles and additional Morningstar Ratings of SNS Investment Funds sector-specific criteria, a dedicated ESG team The Morningstar Rating is an external, independent (Environmental, Social, Governance) studies whether a benchmark that compares the risk-adjusted performance business meets those criteria or not. If a business does of a fund with other funds in the same Morningstar not meet them, ACTIAM starts a dialogue about the category. The rating is calculated (where possible) over (potentially) controversial topics or it removes the a period of three, five and ten years. The best 10 percent business as an investment target. The ACTIAM of the funds in a given category are given a five-star Selection Committee decides whether a business is rating, the next 22.5 percent are given four stars, the removed or not, and the ESG team makes its middle 35 percent get three stars, the next 22.5 percent recommendations to the committee. two stars and the worst performing 10 percent get just one star. The Morningstar Rating Overall is an average What were ACTIAM's objectives in 2014? of the individual ratings. As every year, investment performance was a top priority in 2014. ACTIAM also made efforts to achieve good Five of the 15 SNS Investment Funds were awarded ratings for its investment funds from independent five stars, and a further five funds were given a four-star analysts, such as Morningstar. rating. As per the end of December 2014, the average number of stars stood at exactly four. ACTIAM wanted to operate more efficiently by introducing the LEAN method to reduce costs or to In 2013, the SNS Euro Mix Fund and the SNS Euro neutralise the effects of any cost increases. Bond Fund were given a Bronze Analyst Rating for the Further simplification of its partnerships, while at the first time by Morningstar. They managed to keep the title same achieving an improvement in customer satisfaction in 2014. was also an important objective. In 2014, the SNS Optimal Funds were appraised for the ACTIAM aims to have Zwitserleven and Reaal rated as first time by Morningstar and were given a Neutral rating. the most responsible insurance businesses in the Netherlands. It measures its performance based on a Responsible investment positive assessment by the Fair Finance Guide ('Eerlijke Based on its fundamental investment principles and Bankwijzer') and Fair Insurance Guide ('Eerlijke additional segment-specific criteria, ACTIAM studies Verzekeringswijzer'), the reports of the whether a business meets the stated criteria or not. If it Dutch Association of Investors for Sustainable does meet the criteria, it will be added to the investment Development (VBDO) as well as on a high score in the universe. If it does not, two options are available. Principles for Responsible Investment (PRI) Report on ACTIAM enters into a dialogue with the business on Progress. (potentially) controversial issues, or it excludes the business. By 31 December 2014, ACTIAM was involved in dialogue with 29 businesses and it had excluded 47 from the investment universe.


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    40 Annual Report REAAL NV Strategy and developments We measure how successful we are in investing At 31 December 2014, VIVAT Group employed 3,134 responsibly based on the number of times that we have FTEs: 1,715 of these at BU Reaal (which includes the moved a business in the right direction after we have brands Zelf, Route Mobiel, Reaal and Proteq Dier & engaged in a dialogue with them. We call this Zorg), 576 at Zwitserleven and 139 at ACTIAM. VIVAT ‘engagement’. We have once again managed to Group's corporate staff, which include Finance and Risk, convince a number of the business which we invest in to had a total of 691 FTEs, while management itself stood improve things or to embark on new programmes, at 13 FTEs. although the number was slightly lower than in 2013 On 31 December 2014, these 3,134 FTEs were in the Apart from achieving progress through engagement, it is employ of SNS REAAL NV, under direct management of also our ambition to take part in the voting at as many VIVAT Group. Early in 2015, a further 777 FTEs were shareholders' meetings (AGMs) as possible. We added from IT & Change and Audit among others. In managed to take part in the voting at almost all AGMs. connection with the disentanglement of SNS REAAL NV the management of these FTEs transfers from Focus on natural resources SNS REAAL NV to VIVAT Group. 2014 2013 Change in engagement milestones/ Key figures HR 6 15 progress 2014 Percentage of AGMs/EGMs > 99.5% > 99.5% Number of employees 3,300 Number of FTEs 3,134 Sustainable investments Ratio male-female 58% / 42% We are proud that Zwitserleven and Reaal have been Female managers 24% recognised for the second year running as the most Female members of senior management 26% sustainable insurer by the Dutch Association of Investors Average length of service 12 years for Sustainable Development (VBDO). We also obtained Average age 43 years a good score for asset management in the Fair Full-time/part-time ratio 74% / 26% Insurance Guide. Ratio permanent/temporary contract 93% / 7% Training costs € 3.96 million Sustainable investments Sickness absence 4.4% 2014 2013 Response staff survey 85% Zwitserleven Zwitserleven Owing to the disentanglement of SNS REAAL NV we are unable to Most sustainable pension insurer provide comparative historical figures for VIVAT Group. 1st , Reaal 1st , Reaal according to VBDO 2nd 2nd Score asset management from Fair Insurance Guide 9 out of 10 7 out of 10 4.4.1 Treat ing Cust omers Fairly remains Share transactions in excluded companies 0% - t he cornerst one 'Treating Customers Fairly' (TCF) will succeed or fail with Plans for the years ahead the conduct of our employees. To encourage the right In line with its strategy, ACTIAM will continue to conduct, the principles of TCF have been included in strengthen its partnerships and boost customer employees' job descriptions, vacancy announcements satisfaction. Furthermore, ACTIAM intends to further and in recruitment texts. Furthermore, at least one target expand its sustainable proposition in micro financing and will be set for every employee relating to specific ways sustainable tracker funds externally. that TCF principles are being observed. This includes targets that are set by departments involved in product 4.4 Our people development and promotion, the sales and advice process, customer service and after-sales service. VIVAT Group is made by and for people. Our brands can Employee satisfaction only forge sustainable relations with our customers that We are happy with the outcome of the annual staff we are in daily contact with thanks to the untiring efforts survey, which was taken by 85.4 percent of all of our employees.


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    41 Annual Report REAAL NV Strategy and developments employees in 2014. Overall satisfaction resulted in a Personal development score of 7.1. This year, we measured employee To achieve excellent customer service, we need satisfaction differently than we have done in previous motivated employees who have been trained to help years by asking multiple questions rather than just one. customers correctly and professionally. Employees are If we had used the same method as in 2013, we would encouraged to develop and grow. The performance and have scored 7.3. Employees appeared to need competency appraisal cycle was organised in 2014 in reassurances more than anything about the future. such a way that employees prepare themselves for each interview using an e-tool. Managers and employees Many employees were satisfied with their agree long-term (longer than three years) performance colleagues, managers, the atmosphere in the workplace, targets for personal development and career the benefits of new ways of working, such as flexibility, progression. Employees are supported with a range of working from home and finding a work-life balance. training courses in a learning portal, a network of However, there is sizeable number of employees who coaches and development tools, including 360 degree said that the pressure of work was too high and that they feedback. had no influence on it. Another problem area is pride and faith in the management of the organisation, which A profile has been created for managers based on the would seem to be explained by the uncertain situation 'Management is a profession' programme; this profile which the organisation found itself in at the time the includes a set of competencies, such as staff satisfaction surveys were being completed in September development, personal leadership, focus on results and 2014. focus on customers. A manager must always include one competency from the leadership profile in one of the agreed competency targets. 4.4.2 Sust ainable employabilit y Much attention has been devoted specifically to the Training & Education human aspects of corporate responsibility (CR) in the There was a strong focus in 2014 on staff development. policy framework for Corporate Responsibility. Within the Sustainable employability is a key driver within VIVAT core value of 'CARE! about each other', we are focusing Group. For this reason, the planning interview with every on sustainable employability and sustainable labour employee addressed the need for self-development, and relations. The concept of sustainable employability at further arrangements were then agreed. Specific VIVAT Group is focused on encouraging vitality and development programmes, such as personal development, but also on supporting work Management Development, Specialist Development and mobility. Talent Development, were reintroduced and they continue to score high appreciation ratings. Vitality VIVAT Group greatly values the good health of Despite the uncertain situation facing the organisation, its employees, and makes efforts to keep absences due we decided to recruit new trainees, and eight new to sickness to a minimum. We work in close consultation trainees embarked on their programmes on 1 September with the company doctors and company counsellors of 2014. In 2014, we also managed to maintain the level of the occupational health and safety service Beter. From focus in meeting the requirements of the Dutch Financial the perspective of prevention, we invite employees to Supervision Act (WFT). The HR information system take a free health check-up every three years. If informs managers of the status of their staff who require necessary, follow-up sessions can be arranged with a certain diplomas or qualifications. The minimum lifestyle coach. Work-related stress is a specific point of percentage for up-to-date ongoing training of employees focus in our health policy. This is a subject that was met. employees feel strongly about and this is reflected in the staff survey, but also in the absenteeism alerts from the Digital modules which every employee must follow were health and safety service Beter. For this reason, we offer offered via our learning portal. Topics in 2014: an appropriate package of interventions including, for • 'Common Sense, Common Knowledge' about the instance, a checklist, workshops and training, expert internal rules of conduct; coaching and communication.


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    42 Annual Report REAAL NV Strategy and developments • Training on in-house emergency response: what Using what is known as a 'benefits budget', employees designated first responders should do in an can choose whatever benefits they consider important. emergency; • Training for new employees (an understanding of Diversity and inclusivity the business and its rules of conduct); To ensure that our customers are treated fairly, we aim • What to do if a notebook computer is lost and rules for a composition of our workforce reflecting that of our of conduct for working from home outside regular target groups. We also aim to strike a good balance office hours (for employees who sometimes work between male and female competencies. We have from home). diversity guidelines for the recruitment and career planning of our employees. Our policies are also Employment mobility governed by the Work-incapacitated Persons Given the phase that the business is currently in, it is Participation legislation and the workforce diversity very important that our employees are flexible and can monitor. fulfil a variety of roles. To support employees with this, we have created a Career Plaza, where VIVAT Group In March 2014 we joined the Women in Financial employees can find support for their development plans. Services (WIFS) network consisting of women in key The Career Plaza holds drop-in sessions and offers a positions in the financial services sector who are working number of instruments that can help employees with to achieve a sustainable financial sector. The purpose of their career development plans. joining is to strengthen the position of these women. This is necessary because although we have many talented women working for us, the percentage of women in management positions is still too low. The Executive 4.4.3 Sust ainable employment Board of VIVAT Verzekeringen consisted of one woman relat ionships and four men on 31 December 2014. At business unit Durable terms and conditions of employment level, the Zwitserleven management team consists of VIVAT Group aims to provide durable and sustainable two women and two men and the Reaal management terms and conditions of employment. We wish to be an team of three women and four men. The senior appealing and distinctive employer. management of VIVAT Verzekeringen included ten women (26.3 percent) in 2014. The Dutch Management Variable pay based on corporate profits is awarded to and Supervision (Public and Private Companies) Act) only a limited extent. The aim of this policy is to avoid provides that at least 30 percent of the seats on the perverse incentives. Its basic premise is to ensure that Executive Board and Supervisory Board must be held by customers are treated fairly in relation to employee women and at least 30 percent by men. Two of the remuneration. seven members of the Supervisory Board are women. The pensions of VIVAT Group's employees have been Employee representation placed with the SNS REAAL Pension Fund Foundation. The disentanglement of SNS REAAL NV in order to This foundation reports independently and publishes its create a bank and an insurer was the main item on the own annual report. Various aspects of the pension plan employee representation agenda in 2014. The changes were changed on 1 January 2014. The main change is made in 2014 to the senior management structure and that the retirement age has been raised from 62 to 67 control of the organisation also impacted the years. Further changes to the pension plan were made organisation of employee representation. In 2014 the on 1 January 2015. As a result of adjustments to the Central Works Council (CWC) remained responsible at Witteveen framework, the accrual rate for retirement group level for handling requests for formal opinion pension has been reduced from 2.15 percent to 1.875 concerning all employees. Owing to the percent from that date. disentanglement, for VIVAT Verzekeringen a separate Group Works Council (GWC) was established in Flexibility mid-2014. This consists of the various works councils of To further underline the attractiveness of VIVAT Group the business units (Zwitserleven Works Council, Reaal as an employer, we provide a flexible benefits package. Works Council and Staff Departments Works Council).


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    43 Annual Report REAAL NV Strategy and developments This also affects how employee representation works. encouraged and whether the risk of undesirable Requests for formal opinion are increasingly being dealt behaviour is being prevented or discovered as far as with by the VIVAT Verzekeringen GWC and the possible and adequately tackled. SNS Bank NV Works Council rather than by the CWC. VIVAT Group scores almost the same as SNS Bank NV In June 2014 the Dutch Minister of Finance decided to and SNS REAAL NV on the integrity questions. sell VIVAT Verzekeringen. The CWC has established a However, the conclusion of the survey is that we must committee to closely monitor the process of the sale of focus more on ensuring that the management teams and the company. The aim of this committee is to achieve a others in positions of authority set the right example. The sound future for VIVAT Group and its employees. findings also reveal major differences between Thanks to numerous talks it has held, for example with departments as regards setting an example and the Executive Board, the Supervisory Board and the openness to discussion. These topics are discussed in shareholder, the committee has managed to ensure that the various boards and management teams. Feedback the employees can exert real influence over the course will be provided to the Insurers' Risk Committee in early of the process of the sale. The key points for the 2015. Further information about integrity and measures committee and the works councils as a whole are to ensure compliance can be found in Section 5. reliability, continuity and transparency. 4.5 Our world 4.4.4 Int egrit y The pressure on the organisation and the employees Through its brands and investment policy VIVAT Group remains as high as ever. This is due to the transitional works to achieve a sustainable world. We also do this in phase, the complex challenges facing our company and our own business operations. Our efforts range from all the different social developments relating to pensions energy conservation measures to sustainable and the matter of unit-linked insurance policies. In these purchasing of products and services. circumstances, the focus on creating a culture of integrity is of great importance. To ensure that such a culture is reflected as closely as possible in how we 4.5.1 CO2-reduct ion operate, a large proportion of the employees took the e- One of the key elements of the 'Sustainable World' learning course 'Common Sense, Clear Conscience' in programme in our Corporate Responsibility framework is 2014. Those taking the course had the opportunity to the reduction of our CO2 emissions. Although as a provide feedback and made good use of it. Agreements financial services provider our emissions are fairly are also made during employee appraisals about the limited compared with those of other sectors, we feel a desired behaviour within VIVAT Group, how employees need to set ambitious targets. The targets we have set can hold each other accountable and how the for ourselves are: management can be notified, where necessary. • an annual reduction in energy consumption of at least 3 percent; In 2015 part of this feedback will be reflected in a • from 2015 onwards, the owner, occupant and workshop on the oath/affirmation for the financial sector. suppliers will choose only sustainable and energy- In this way we are involving our employees in fostering efficient materials for building management the desired conduct and culture within our business. purposes; Moreover, a large proportion of our managers have • by 2016 our buildings, operations and management attended the 'Train the Trainer' sessions, so that they will be fully 'climate neutral', with CO2 emissions themselves are able to give workshops on integrity being cut annually by at least 8 percent in relation awareness to their teams. to VIVAT Group's total emissions in 2012; • 100 percent of energy will be generated from Periodically we measure the integrity of our employees. renewables in 2015. This measurement is being conducted as part of the employee survey for the first time this year. Our aim is to By consuming less energy we will also cut CO2 ascertain whether the desired behaviour is being emissions and save raw materials. In terms of the


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    44 Annual Report REAAL NV Strategy and developments agreements made under the MJA3 energy covenant, Share of green energy offices VIVAT Group is more energy efficient per FTE than all % of total 2014 other financial services providers. We are committing to % Green electricity 100% our energy efficiency targets, which are monitored by the % Green gas 100% authorities. Owing to the disentanglement of SNS REAAL NV we are unable to provide comparative historical figures for VIVAT Group. Besides purchasing green energy, we will offset our remaining CO2 emissions from our internal business We report our CO2 emissions in accordance with the operations and travel and mobility by purchasing Gold principles of the Greenhouse Gas Protocol Standard credits. The funds used to purchase these (www.ghgprotocol.org). This means that we report per credits are being invested in efficient cookstoves in scope: Ghana, thereby reducing CO2 emissions there. The • Scope 1: report on CO2 emissions as a project meets the highest quality mark for CO2 credits, consequence of our direct energy consumption namely the Gold Standard. Nonetheless, carbon (e.g. gas); offsetting does not absolve us of the need to cut our own • Scope 2: report on CO2 emissions as a CO2 emissions, particularly those caused by the travel consequence of our direct energy consumption mobility of our own employees. (e.g. electricity); • Scope 3: report on our indirect CO2 emissions (e.g. In addition, VIVAT Group has once again obtained ISO as a consequence of commuter traffic, air travel, 14001 certification for its own internal operations. This leased cars, etc.) means that the management system we have established to mitigate environmental risks and It is apparent from our CO2 footprint that our scope 3 continuously improve our environmental performance emissions in particular still account for a substantial has been externally verified. share. Commuting by car is still the main cause of CO2 emissions for our business. In 2014 we took a number of To provide a further guarantee of the sustainability of our measures to promote sustainable mobility. For example, buildings, we have decided to have them BREEAM- we tightened up our parking policy and encouraged the certified. BREEAM is an environmental assessment use of public transport by providing our employees with method used to determine the sustainability performance NS Business Cards (for travel by train). of buildings. Our premises in Alkmaar (Wognumsebuurt) and Amstelveen have been certified as 'good' by In addition, the CO2 standard for leased cars has been BREEAM. The target for 2015 is to raise this to 'very reduced to 135 grams per kilometre. Finally, we have good'. participated in a project of Rijkswaterstaat (the Directorate-General for Public Works and Water Energy consumption of offices Management) to promote the use of e-bikes. in gigajoules 2014 Green gas 8,068 Generators 108 Green electricity 21,885 Total energy consumption 30,061 Energy consumption per FTE 10.6 Energy consumption per m² 0.65 Owing to the disentanglement of SNS REAAL NV we are unable to provide comparative historical figures for VIVAT Group.


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    45 Annual Report REAAL NV Strategy and developments Business traffic Business traffic (car) 7% (public transport) 1% Commuting Leased cars Scope 1 26% (public transport) Scope 3 25% 21% 44% Commuting Scope 2 traffic (car) 31% 43% Air travel 2% Figure 8: Mode of transport Figure 6: CO2 emissions (gross emissions as percentage of total) 4.5.2 Paper VIVAT Group is a large consumer of paper. We use a lot Air travel of paper for external marketing purposes, 2% correspondence and supplying insurance policies. On average we use 149 kilos of paper per FTE. Our aim is Business traffic to reduce paper consumption significantly by digitising 13% our processes. At the same time we are trying to put our paper consumption on a more sustainable footing, not just by using FSC-certified paper. We have the following Commuting objectives: 85% • to reduce the 2013 physical output to customers by 15 percent in 2015; • to fully digitise the customer application process in 2015; • to use in 2015 sustainable forms of paper which require at least 20 percent less water in the production process than standard FSC-certified Figure 7: Scope 3 emissions (as a percentage of total scope 3 paper. emissions) Paper consumption 2014 Paper consumption in tonnes 421 Paper consumption in kg/FTE 149 Owing to the disentanglement of SNS REAAL NV we are unable to provide comparative historical figures for VIVAT Group. 4.5.3 Wast e As a large organisation we generate a substantial volume of waste. To take responsibility for this aspect of our operations as well, we aim to reduce the volume of waste, sort waste into different types for separate collection and arrange for sustainable waste processing. We have adopted the following targets for waste:


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    46 Annual Report REAAL NV Strategy and developments • We want suppliers to use at least 30 percent less business with us before 1 January 2014 should packaging material and to take 100 percent of this sign our sustainability declaration or submit their material away with them; own sustainability declaration which has been seen • We aim to reduce the total quantity of waste per and accepted by us; FTE by 5 percent; • The suppliers should make an active contribution to • Residual waste may not exceed 20 percent per achieving the annual CO2 reduction of at least 3 building. percent; • The general purchasing conditions should have Unfortunately, a large proportion of our waste is still been modified so that suppliers can impose the residual waste. This is waste that is not sorted by us for provisions of the sustainability declaration on their separate collection. To reduce this proportion, we will own suppliers. have to arrange for more of our waste to be recycled. We check whether our main suppliers have signed a Waste sustainability declaration. Just as in 2013 all major in tonnes 2014 suppliers have done this. Residual waste 133 Organic waste 47 Small items of chemical waste 0 Industrial waste 7 Paper and cardboard waste 157 Plastics 21 Total 366 Share of residual waste 36% Waste in kg/FTE 129 Owing to the disentanglement of SNS REAAL NV we are unable to provide comparative historical figures for VIVAT Group. 4.5.4 Sust ainable purchasing Many of the improvements we can make in the context of Corporate Responsibility (CR) can be achieved through close cooperation with our suppliers. This means that we must challenge them to make responsible choices in their own business operations and at the same time help us to achieve our CR objectives. To guarantee this we have drawn up a sustainability declaration to be signed by suppliers. This contains provisions about respecting the principles of the International Labour Organisation (ILO), having or implementing an environmental management system and operating a social sponsoring policy. By signing the sustainability declaration, the supplier confirms that these provisions also apply to its own suppliers (and any subcontractors). Our aim is to conduct audits of our suppliers. The purpose of these audits will be to check whether the agreements are actually being performed. We have set the following objectives for sustainable purchasing: • All suppliers which provide VIVAT Group with goods or services worth € 500,000 or more and did not do


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    47 Annual Report REAAL NV Risk and capital management as desirable behaviour, the details of the risk appetite or 5 Risk and capit al management the assessment criteria. 5.1 Int roduct ion The Integrated Control Framework sets out how responsibility is designated within VIVAT Group and how this must be accounted for. This framework forms the This chapter contains information on risk management at basis for controlling the business processes. The VIVAT Group. It starts with a discussion of the risk management of the business units is responsible for framework of VIVAT Group and the main developments day-to-day operations within these frameworks and in the area of risk management. It then goes on to prepares operational plans on a yearly basis. These describe the different risk categories: underwriting risk, plans are subject to the approval of the management of market risk, counterparty risk, liquidity risk and non- VIVAT Verzekeringen. financial risks. For each risk category, we explain what the risk consists of and how it is managed. VIVAT Group has set up a procedure to assess, on a semi-annual basis how and to which extent, the The chapter concludes with a description of the way in management of each business unit and the corporate which VIVAT Group has organised its capital staff control essential risks. This relates in particular to management. the discussions between the levels of management on the risks in the business operations and the measures 5.2 Risk management f ramework taken to address such risks. The periodic in-control statements of each business unit form key input for this procedure. The outcome of this procedure contributes to 5.2.1 General the management statements that are included in the Assuming risks is an integral part of doing business and VIVAT Group Annual Report (see Section 3.5 demands a consistent and transparent assessment of Management Statements). opportunities and risks, aimed at growth and continuity of the company. The management of VIVAT Zwitserleven and ACTIAM comply with the external Verzekeringen has established frameworks in the areas ISAE3402 standard which provides guarantees in of strategy, culture and risk governance in order to respect of the system of internal control in relation to enable this assessment to be performed properly and their role as service organisations. efficiently. These frameworks apply to the entire organisation. VIVAT Group seeks to have an open 5.2.2 Int egrat ed Cont rol Framework culture in which risks can be discussed, employees feel a responsibility to share information on risks and active (ICF) (or even proactive) risk management is appreciated. 5.2.2.1 Int roduct ion Our system of risk management contributes to the VIVAT Group is working on further strengthening its controlled, effective achievement of the strategic Integrated Control Framework ('ICF'). The ICF contains objectives. It relates the risks to our strategic, financial the core components that together form the basis for and operational objectives as well as to our objectives in controlled and ethical business operations and hence for the areas of sustainability and our reputation. The visibly being in control of VIVAT Group and its individual system of risk governance consists of a number of business units (lines of business and corporate staff). organisational components,such as culture and controls. The management of VIVAT Verzekeringen recognises In the course of 2014, VIVAT Group's ambition with that transparency in the area of risk is a vital ingredient respect to controlled and responsible business in effective risk management. The management of operations was defined. In addition, the basic VIVAT Verzekeringen and the Insurer's Risk Committee assumptions of the Integrated Control Framework (which (IRC), which is responsible for setting the framework, proceed from this ambition) were ensure that the desired culture and level of risk established.Improvements need to be made in relation to awareness are translated into identifiable aspects, such


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    48 Annual Report REAAL NV Risk and capital management various parts of the organisation. These improvements VIVAT Group does not consider the ICF to be a static mainly relate to strengthening risk governance, entity, but rather to be a dynamic, living, growing managing data quality, the actuarial models, and structure which constantly adapts and grows in line with reporting on the internal control of processes. For each the business of VIVAT Group. The continued business unit, an improvement plan is prepared which development of the ICF is one of VIVAT Group's includes activities focusing on the themes of risk strategic objectives in the upcoming years, and is aimed awareness, policies, control, process management, risk at expanding and strengthening the profile of VIVAT monitoring, and project and change management. A Group. number of business units have already achieved the ambitions defined in the ICF project for 2015. The ICF is a dynamic method which we use to assess the controls and if necessary make further improvements The implementation of these starting points in business to these controls. During 2014, VIVAT Group carried out operations has got off to a flying start. In 2015, the a broad assessment of how it visibly and structurally various initiatives, improvement measures and change manages key risks, in terms of policy, processes and the programmes will create a solid foundation for an implementation of risk mitigating measures. In 2015, the increased maturity level of control. effectiveness of controls will further be structured by following up the action items resulting from the Management uses the ICF to direct the control and assessment and by continuing the integration of the integrity of its business processes, within the frameworks reporting structure. In this way, the ICF plays a key role of strategic objectives and risk attitude, based on an in the ongoing professionalisation of demonstrable, understanding and overview of the system of risk effective risk management throughout the organisation. management. The risk management functions, working together, make improvements, report on, and, in Management is not using the ICF to create a 'new conjunction with the lines of business and corporate world’. Rather, the ICF draws to a significant extent on staff, provide advice on the quality of the risk the existing governance and committee structure, management system, help guide the organisation’s formulated policies, organisational structure, processes course and facilitate the work of management. and structured process controls. Management aims at the ICF helping to promote risk awareness among all employees, in part by encouraging The ICF does not provide an absolute guarantee that interaction between value chains. surprises will be avoided. It does not guarantee, for instance, that human errors will not occur, that 5.2.2.2 The f ramework conspiring employees and third parties will not deliberately circumvent control procedures, or that The ICF is used for the improved management of all control mechanisms will not be evaded. However, the identified risk categories within VIVAT Group. As part of ICF does provide a framework that incorporates this, VIVAT Group has specifically opted for an preventive and repressive safeguards in such a way that integrated risk approach based on classified risks. The it is possible to state, in an efficient and effective way ICF applies at all levels within the organisation. In this and with a reasonable level of assurance, that the context, VIVAT Group uses a system of clear roles and internal control system is operating effectively. responsibilities. The ICF encompasses frameworks, management processes and infrastructure.

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