NN N : Group Financial Report 2020

March 11, 2021 at 03:46 am EST

Financial developments

NN Group �� 1

Netherlands Life �� 3

Netherlands Non-life �� 4

Insurance Europe �� 5

Japan Life �� 6

Asset Management �� 7

Banking �� 8

Other �� 9

Report of the Supervisory Board

Report of the Supervisory Board �� 10

Corporate governance

Corporate governance�� 23

Remuneration report�� 33

Works Councils �� 43 Statements Dutch Financial

Supervision Act and Dutch

Corporate Governance Code�� 44

Annual accounts

Consolidated annual accounts�� 45

Consolidated balance sheet �� 46

Consolidated profit and loss account �� 47 Consolidated statement

of comprehensive income �� 48

Consolidated statement of cash flows �� 49 Consolidated statement

of changes in equity �� 51 Notes to the Consolidated

annual accounts �� 53

Risk management (Note 51) �� 137 Capital and liquidity

management (Note 52) �� 166 Authorisation of the

Consolidated annual accounts �� 175

Parent company annual accounts

Parent company balance sheet �� 176 Parent company profit

and loss account �� 177 Parent company statement

of changes in equity �� 178 Notes to the Parent

company annual accounts �� 180 Authorisation of the Parent

company annual accounts �� 186

Other information

Independent auditor's report �� 187

Appropriation of result �� 204 Contact and legal information �� IBC

The 2020 Annual Report consists of the 2020 Annual Review and the 2020 Financial Report. It provides an integrated review of the performance of NN Group.

The Annual Report aligns relevant information about our governance, strategy, performance and future prospects in a way that reflects the economic, environmental and social contexts in which we operate� It is prepared in accordance with Dutch law and relevant reporting standards�

Together with this report, NN Group publishes a Solvency and Financial Condition Report, a Total Tax Contribution Report, and a Carbon Footprint Report� Next to that, NN Investment Partners launches a Responsible Investing Report� All these reports are published on

NN Group's corporate website in the Investors/Financial Report section�

Read more on our approach to reporting on pages 61-62 of the

Annual Review�

Visit our website for further informationwww.nn-group.com

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Founded in 1845, NN Group is a financial services company, active in several European countries and Japan.

For 175 years, we have been dedicated to meeting and exceeding our customers' expectations.

Our purpose is to help people care for what matters most to them. What we do centres around people, professionalism, and trust. In our day-to-day activities we pursue the creation of long-term value for all stakeholders.

What matters to you, matters to us.

Financial developments

This Financial developments section includes the analysis of results and key figures of NN Group and its reporting segments� The results presented in this section are derived from the 2020 annual accounts where relevant� In explaining the financial results, NN Group uses Operating result, Administrative expenses and Adjusted allocated equity (as used in the calculation of Net operating ROE for the Segment Banking only)� These are Alternative Performance Measures (APMs)� Alternative performance measures are non-IFRS-EU measures that have a relevant IFRS-EU equivalent from which these are derived�

For definitions of the Alternative Performance Measures and explanation of their use reference is made to Note 32 'Segments' in the section 'Alternative Performance Measures (Non-GAAP measures)' in the annual accounts� That section also includes a reconciliation between the Alternative Performance Measures and their IFRS equivalent� Furthermore, it includes definitions of other financial metrics used in this Financial developments section, including Operating Capital Generation�

The Solvency II ratios presented below are not final until filed with the regulators� The Solvency II ratios for NN Group and NN Life are based on the Partial Internal Model� The year-end 2019 NN Group Solvency II ratio was adjusted to reverse the deduction of the proposed 2019 final dividend following the decision to suspend dividend payments in light of the recommendations of EIOPA and the Dutch Central Bank (DNB)� NN Bank is included in the calculation of the NN Group Solvency II ratio as of the end of 2020�

NN Group

Analysis of result amounts in millions of euros

Netherlands Non-life Insurance Europe Japan Life

Asset Management Banking

Other

Operating result

Result before tax

Taxation

- of which revaluations
Acquisition intangibles and goodwill Result on divestments
Non-operating items:
- of which gains/losses and impairments
- of which market and other impacts

Special items

Netherlands Life	994	922
Netherlands Non-life	215	203
Insurance Europe	285	283
Japan Life	240	218
Asset Management	152	161
Banking	154	152
Other	-151	-144
Operating result	1,889	1,794
Non-operating items:	662	887
- of which gains/losses and impairments	640	335
- of which revaluations	337	827
- of which market and other impacts	-315	-275
Special items	-278	-262
Acquisition intangibles and goodwill	-24	1
Result on divestments	100	8
Result before tax	2,349	2,429

Taxation	422	444
Minority interests	22	23
Net result	1,904	1,962

Key figures amounts in millions of euros

Value of new business

Operating result

2020 2019

New sales life insurance (APE)	1,127	1,741
Value of new business	266	358
Total administrative expenses	2,121	2,076
Operating capital generation	993	1,349
Solvency II ratio	210%	224%

The full-year 2020 operating result increased to EUR 1,889 million from EUR 1,794 million in 2019, which included a total of EUR 121 million of non-recurring benefits, versus a total of EUR 24 million of non-recurring benefits in 2020� Excluding these items, the increase mainly reflects the higher investment margin at Netherlands Life driven by the shift to higher yielding assets, partly offset by the negative impact of Covid-19 of around EUR 53 million�

Result before tax

The full-year 2020 result before tax decreased to EUR 2,349 million from EUR 2,429 million in 2019, reflecting lower non-operating results, partly compensated by the higher operating result and a higher result on divestments�

Net result

2020

2019

The full-year 2020 net result was EUR 1,904 million compared with EUR 1,962 million in 2019� The effective tax rate for the full-year 2020 was 18�0%�

Sales and Value of New Business

The full-year 2020 total new sales (APE) were EUR 1,127 million, down 34�6% at constant currencies, mainly due to lower sales at Japan Life following the revised tax regulations of COLI products, as well as Covid-19 restrictions, and at Netherlands Life where the 2019 sales benefited from a higher volume of group pension contracts�

Value of new business for full-year 2020 amounted to EUR 266 million, down 25�7% on 2019, reflecting lower sales at Japan Life, partly compensated by an improved product mix, as well as lower sales at Insurance Europe due to Covid-19 restrictions and lower interest rates�

Operating capital generation

Full-year 2020 operating capital generation decreased to EUR 993 million from EUR 1,349 million in 2019� The decrease reflects the negative impact of lower interest rates, the suspension of dividend payments from NN Bank and unfavourable developments in the D&A portfolio of Netherlands Non-life� This was partly compensated by a higher investment return mainly in Netherlands life reflecting the shift to higher-yielding assets�

NN Group N.V. 2

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Netherlands Life

Analysis of result amounts in millions of euros

- of which revaluations
- of which market and other impacts

Non-operating items:

- of which gains/losses and impairments

Total expenses

Operating result

Special items

Operating income

Result on divestments

Fees and premium-based revenues Technical margin

Administrative expenses

DAC amortisation and trail commissions

Result before tax

Taxation Minority interests

Net result

Key figures amounts in millions of euros

Investment margin	890	844
Fees and premium-based revenues	392	412
Technical margin	184	161
Operating income	1,467	1,417
Administrative expenses	440	462
DAC amortisation and trail commissions	33	33
Total expenses	473	495
Operating result	994	922
Non-operating items:	680	833
- of which gains/losses and impairments	620	205
- of which revaluations	371	864
- of which market and other impacts	-310	-237
Special items	-77	-57
Result on divestments	5
Result before tax	1,597	1,703
Taxation	330	308
Minority interests	8	8
Net result	1,260	1,386

NN Life Solvency II ratio

Value of new business Administrative expenses

New sales life insurance (APE)	219	480
Value of new business	8	9
Administrative expenses	440	462
Operating capital generation	642	770
NN Life Solvency II ratio	220%	213%

The full-year 2020 operating result increased to EUR 994 million from EUR 922 million in 2019� The increase is driven by a higher investment

2020

2019 margin, higher technical margin and lower administrative expenses, partly offset by lower fees and premium-based revenues� The investment margin in 2020 includes private equity and special dividends for a total amount of EUR 9 million, whereas 2019 included EUR 83 million of such items� Excluding these items, the investment margin increased as a result of the shift to higher-yielding assets� The technical margin in 2020 benefited from non-recurring benefits as well as favourable longevity results� Administrative expenses decreased to EUR 440 million from EUR 462 million in 2019, mainly driven by lower staff expenses�
The full-year 2020 result before tax decreased to EUR 1,597 million compared with EUR 1,703 million in 2019� The decrease mainly reflects lower non-operating items, partly compensated by the higher operating result�
New sales (APE) for full-year 2020 decreased to EUR 219 million from EUR 480 million in 2019� On a comparable basis, based on the new definition, new sales (APE) were down EUR 97 million compared with 2019 which benefited from a higher volume of group pension contracts�
The value of new business for full-year 2020 was EUR 8 million compared with EUR 9 million in 2019�
Full-year 2020 operating capital generation decreased to EUR 642 million from EUR 770 million in 2019� The decrease is mainly due to the net negative impact of the UFR drag and risk margin release as a result of lower interest rates as well as the negative impact of the longevity reinsurance transactions, partly compensated by a higher investment
2020
2019 return reflecting the shift to higher-yielding assets�

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Netherlands Non-life

Analysis of result amounts in millions of euros

Operating income

Earned premiums	3,418	2,941
Investment income	98	106
Other income	-1	-5
Operating income	3,515	3,042
Claims incurred, net of reinsurance	2,350	2,045

Acquisition costs	630	516
Administrative expenses	340	305
Acquisition costs and administrative expenses	970	821
Expenditure	3,319	2,866
Operating result insurance businesses	196	176
Operating result non-insurance businesses	19	28
Total operating result	215	203
Non-operating items:	3	61
- of which gains/losses and impairments	48
- of which revaluations	-9	12
- of which market and other impacts	12	1
Special items	-79	-67
Result before tax	138	197
Taxation	31	42
Minority interests	11	13
Net result	97	143

2020 2019

The full-year 2020 operating result of Netherlands Non-life increased to EUR 215 million from EUR 203 million in 2019� The increase reflects a EUR 45 million contribution of VIVAT Non-life and lower claims in P&C, partly offset by lower underwriting results in D&A� The higher underwriting results in P&C reflect a favourable claims development including a positive impact from Covid-19 and favourable run-off results� Lower underwriting results in D&A include the reduction of the discount rate of the IFRS technical provisions to reflect the current low interest rate environment and an unfavourable claims development in the Group Income and Individual Disability portfolios, partly due to Covid-19�

The full-year 2020 result before tax decreased to EUR 138 million from EUR 197 million in 2019, reflecting lower non-operating items and higher special items, partly compensated by the higher operating result� Lower non-operating items include lower results on the sale of government bonds and lower revaluations on real estate and private equity� Special items mainly reflect integration expenses�

The combined ratio for 2020 was 95�3% compared with 95�4% in 2019�

Full-year 2020 operating capital generation decreased to EUR 76 million from EUR 132 million in 2019� The decrease is mainly due to a higher SCR following the termination of an internal reinsurance agreement in the Individual Disability portfolio, as well as a lower underwriting result in D&A, partly offset by better results in P&C and the acquisition of VIVAT Non-life�

Key figures amounts in millions of euros

Total administrative expenses - of w

Gross premium income	3,521	3,097
Total administrative expenses1	451	385
Combined ratio:2	95�3%	95�4%
- of which Claims ratio2	67�0%	67�4%
- of which Expense ratio2	28�4%	27�9%
Operating capital generation	76	132

2019 2018

1 Including non-insurance businesses (health business and broker business)�
2 Excluding non-insurance businesses (health business and broker business)�

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Insurance Europe

Analysis of result amounts in millions of euros

Acquisition intangibles and goodwill Result on divestments

Non-operating items:

- of which gains/losses and impairments
- of which revaluations
- of which market and other impacts

Special items

Results before tax

Taxation

Net result

Investment margin	110	102
Fees and premium-based revenues	730	737
Technical margin	252	239
Operating income non-modelled business	1	1
Operating income Life Insurance	1,093	1,080
Administrative expenses	417	419
DAC amortisation and trail commissions	389	386
Expenses Life Insurance	806	805
Operating result Life Insurance	287	275
Operating result Non-life	-3	8
Operating result	285	283
Non-operating items:	-11	51
- of which gains/losses and impairments	4	73
- of which revaluations	-12	-20
- of which market and other impacts	-4	-2
Special items	-29	-35
Acquisition intangibles and goodwill	33
Result on divestments	-11
Results before tax	234	331
Taxation	63	73
Net result	171	259

2020 2019

The full-year 2020 operating result was broadly stable at EUR 285 million compared with EUR 283 million in 2019, reflecting higher technical margin across the region, higher pension fees in Romania and a higher investment margin in Belgium, partly offset by lower fees due to Covid-19 and lower Non-life results�

The result before tax for full-year 2020 decreased to EUR 234 million from EUR 331 million in 2019, which included gains on the sale of government bonds as well as negative goodwill arising from the acquired Czech and Slovak businesses�

Full-year 2020 new sales (APE) decreased to EUR 644 million from

EUR 674 million in 2019, reflecting lower sales due to Covid-19 restrictions as well as negative currency impacts�

Value of new business for full-year 2020 decreased to EUR 183 million, down 10�3% from EUR 204 million in 2019, reflecting lower sales due to Covid-19 restrictions and lower interest rates�

Full-year 2020 operating capital generation was broadly stable at

EUR 253 million compared with EUR 251 million in 2019, mainly reflecting a lower new business contribution in the first half of the year due to Covid-19 restrictions which was compensated by higher new business contribution in the second half�

Key figures amounts in millions of euros

Value of new business

Total administrative expenses (Life and Non

Operating capital generation

New sales life insurance (APE)	644	674
Value of new business	183	204
Total administrative expenses (Life and Non-life)	432	431
Operating capital generation	253	251

2020 2019

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Japan Life

Analysis of result amounts in millions of euros

Investment margin	-14	-16
Fees and premium-based revenues	639	659
Technical margin	17	24
Operating income	642	667
Administrative expenses	144	148
DAC amortisation and trail commissions	258	302
Total expenses	402	449
Operating result	240	218
Non-operating items:	-27	-34
- of which gains/losses and impairments	-7	-6
- of which revaluations	-20	-28
Special items	-3	-4
Result before tax	210	180
Taxation	57	48
Net result	152	131

Key figures amounts in millions of euros

Value of new business Administrative expenses Operating capital generation

New sales life insurance (APE)	263	587
Value of new business	75	146
Administrative expenses	144	148
Operating capital generation	133	173

2020 2019

The full-year 2020 operating result was EUR 240 million, up 9�3% compared with 2019, excluding currency effects� The increase was primarily driven by lower DAC amortisation and trail commissions reflecting the increased persistency as well as lower administrative expenses, partly offset by the negative impact of Covid-19 of

EUR 13 million�

The result before tax for full-year 2020 was EUR 210 million, up 16�3% compared with 2019, excluding currency effects, reflecting the higher operating result and higher non-operating items�

New sales (APE) for full-year 2020 were EUR 263 million, down 55�9% from 2019, excluding currency effects, due to lower sales following the revised tax regulations of COLI products, as well as Covid-19 restrictions�

Full-year 2020 value of new business decreased to EUR 75 million from EUR 146 million in 2019, reflecting lower sales, partly offset by an improved product mix�

Full-year 2020 operating capital generation decreased to EUR 133 million from EUR 173 million in 2019, which benefited from the impact of a reinsurance transaction� The current period reflects the positive impact of lower new business strain as a result of lower sales following the revision of tax regulations of COLI products as well as Covid-19 restrictions, partly offset by a lower in-force contribution as a result of lower sales�

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Asset Management

Analysis of result amounts in millions of euros

Fees

Operating income

Administrative expenses

Investment income	-3	1
Fees	440	443
Operating income	438	444
Administrative expenses	286	283
Operating result	152	161
Special items	-15
Result before tax	152	146
Taxation	37	35
Minority interests	4	2
Net result	111	108

2020 2019

The full-year 2020 operating result was EUR 152 million compared with EUR 161 million in 2019� The decrease reflects lower fees, as well as higher administrative expenses�

The result before tax for 2020 increased to EUR 152 million from EUR 146 million in 2019 driven by lower special items, partly offset by the lower operating result�

Full-year 2020 operating capital generation was EUR 103 million mainly reflecting the net result, compared with EUR 122 million in 2019 which included non-recurring benefits�

Key figures amounts in millions of euros

Administrative expenses	286	283
Operating capital generation	103	122

amounts in billions of euros

Assets under Management

2020 2019

300 276

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Banking

Analysis of result amounts in millions of euros

Taxation

Net result

Result before tax

Non-operating items: - of which gains/losses and impairments - of which market and other impacts Special items

Operating result

Addition to loan loss provision

Total expenses

Operating expenses Regulatory levies

Operating income

Interest result	280	259
Commission income	48	35
Total investment and other income	45	67
Operating income	373	361
Operating expenses	195	192
Regulatory levies	20	17
Addition to loan loss provision	3	-1
Total expenses	219	209
Operating result	154	152
Non-operating items:	27	-14
- of which gains/losses and impairments	11	7
- of which market and other impacts	17	-21
Special items	-14	-15
Result before tax	167	123
Taxation	35	30
Net result	132	93

2020 2019

The full-year 2020 operating result increased to EUR 154 million from EUR 152 million in 2019, which included EUR 26 million of non-recurring premiums on mortgage sales to the NN IP Dutch Residential Mortgage Fund, while 2020 included EUR 7 million of such non-recurring benefits� Excluding these items, the higher 2020 operating result was mainly driven by a higher interest result, partly offset by higher operating expenses reflecting the impact of Covid-19�

The full-year 2020 result before tax increased to EUR 167 million from EUR 123 million in 2019, mainly reflecting higher non-operating items�

The full-year 2020 net operating RoE of Banking decreased to 13�8% compared with 15�0% for 2019, reflecting higher equity partly offset by a higher net operating result�

Full-year 2020 operating capital generation of nil compared with EUR 82 million in 2019 due to the suspension of dividend payments in 2020 in accordance with the recommendations of the Dutch regulator�

Key figures amounts in millions of euros

Cost/income ratio Ne

Total administrative expenses1	216	210
Cost/income ratio2	52�4%	53�3%
Net operating RoE	13�8%	15�0%
Operating capital generation	82

amounts in billions of euros

Total assets

1 Operating expenses plus regulatory levies�
2020 2019
2020 2019
25 25
2 Cost/income ratio is calculated as Operating expenses divided by Operating income�

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Other

Analysis of result amounts in millions of euros

Investment income and fees

Interest on hybrids and debt1	-108	-108
Investment income and fees	107	105
Holding expenses	-142	-145
Amortisation of intangible assets
Holding result	-143	-148
Operating result reinsurance business	-8	-5
Other results	10
Operating result	-151	-144
Non-operating items:	-10	-9
- of which gains/losses and impairments	12	8
- of which revaluations	7	-1
- of which market and other impacts	-29	-16
Special items	-75	-69
Acquisition intangibles and goodwill	-24	-32
Result on divestments	111	4
Result before tax	-149	-251
Taxation	-131	-92
Net result	-18	-158

Key figures amounts in millions of euros

Operating capital generation

Total administrative expenses:	153	158
- of which reinsurance business	8	7
- of which corporate/holding	144	152
Operating capital generation	-214	-180

Does not include interest costs on subordinated debt treated as equity�

2020 2019

The full-year 2020 operating result was EUR -151 million compared with EUR -144 million in 2019 mainly due to lower other results�

The full-year 2020 holding result improved to EUR -143 million from EUR -148 million in 2019, reflecting lower holding expenses and higher investment income and fees�

The operating result of the reinsurance business for full-year 2020 was EUR -8 million compared with EUR -5 million in 2019� Claims related to Netherlands Non-life's Disability portfolio amounted to EUR 31 million in 2020 versus EUR 22 million in 2019, while 2019 also included a large claim from a legacy reinsurance portfolio�

Other results in 2020 were nil compared with EUR 10 million in 2019, which included a higher net release of provisions related to a legacy entity�

The full-year 2020 result before tax of the segment Other was EUR -149 million compared with EUR -251 million in 2019, mainly driven by the result on divestments reflecting a provision release following the completion of a tax audit on ING Australia Holdings�

Full-year 2020 operating capital generation was EUR -214 million compared with EUR -180 million in 2019, which benefited from a reinsurance transaction with Japan Life, while the current period reflects a release of SCR following the termination of an internal reinsurance agreement with Netherlands Non-life�

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Report of the Supervisory Board

Introduction by the Supervisory Board Chair

The headlines in 2020 were dominated by Covid-19; this was true across the globe, no matter what country one lives in or the type of business one pursues� Covid-19 was definitely on the minds and the agenda of the Supervisory Board of NN Group too� After a few 'normal' physical meetings at the beginning of the year, the vast majority of our meetings, starting from March 2020, were held virtually� While practical aspects changed, the fundamental aspects of our work did not change� We stayed focused on fulfilling our duties to oversee and advise the Executive Board and Management Board, taking into account the interests of our various stakeholders, and taking the steps we could to support the health and safety of our customers, our partners and our employees�

In doing so, we particularly maintained a close eye on the long-term nature of

NN Group's business model and our overall aim to create sustainable, long-term value for all stakeholders� Important elements of our company's values, our purpose statement, our ambitions and our strategic commitments are elaborated on throughout this year's Annual Report�

For a comprehensive overview of the Supervisory Board's activities during 2020, I invite you to read the full report that starts after this introduction�

At this point, I would like to mention four key developments the Supervisory Board particularly was closely involved in during 2020� These were (1) the refinement of NN Group's strategy and purpose;

(2) the impact of Covid-19 on our company, customers, partners and employees;

(3) ongoing regulatory developments; and
(4) ongoing succession planning�

Regarding the refinement of the strategy and purpose, throughout 2020 the Supervisory Board advised and supervised the Executive Board and the Management Board on decisions that prioritised resources and maintained a balance between addressing current needs and preparing the company for a healthy future� The Supervisory Board challenged and approved the plans supporting the redefined strategy and the June 2020 Capital Markets Day announcements, including relevant financial and non-financial key performance indicators as well as value creation targets for various stakeholders� In doing so, the Supervisory Board took into consideration, amongst other aspects, a broad and robust capital management approach, with attention for investments in future growth, an ongoing review of the company's business portfolio, and an adequate return on capital for shareholders�

Next to the strategy and purpose, the Supervisory Board spent a significant amount of its time and attention on the impact of Covid-19� Unprecedented as the pandemic has been, both in terms of length and magnitude, we especially monitored the impact on the well-being of our customers, agents, staff and management; the impact on the financial markets; and on NN Group's businesses, investments and operations� With the ultimate aim of financial and organisational stability in mind, we focused on meeting the needs and expectations of our customers, providing appropriate support to our employees to facilitate working from home while maintaining the integrity of our operations and control environment� During the second half of the year, we also assessed the impact of the pandemic on the long-term objectives of the company and of management, and decided these were still valid and adjustments were therefore not necessary�

In 2020, as in previous years, there was a continuing focus on regulatory and legal developments, which we closely monitored and assessed� These developments ranged from EIOPA's Solvency II 2020 review in Europe, to pension reforms in the Netherlands and Eastern Europe, tax reforms in Japan, and multiple regulations in the areas of conduct and compliance�

In addition, the Supervisory Board was engaged in succession planning for the various Boards� Regarding the new Management Board members and roles, the Supervisory Board was consulted in the appointments of Bernard Kaufmann as CRO, Leon van Riet as CEO Netherlands Life & Pensions and Tjeerd Bosklopper as CEO Netherlands Non-life, Banking & Technology� The Supervisory Board is confident that, with these appointments, the Management Board is well positioned to lead the company in this fast-paced and dynamic environment, delivering on the company's purpose and strategic priorities while ensuring sustainable long-term value creation for all stakeholders� Regarding the Supervisory Board itself, we were pleased to communicate on

10 February 2021, the nomination of Cecilia Reyes and Rob Lelieveld for appointment as new members of our Supervisory Board� Cecilia and Rob will both bring highly relevant experience and insights to our deliberations and will contribute toward performing our duty� The proposals for their appointment will be submitted for adoption at the annual general meeting, to be held on 20 May 2021�

The Supervisory Board would like to thank NN Group's employees for their commitment, flexibility and hard work during a very challenging 2020� It is due to the spirit and dedication demonstrated by our employees that NN was able to support customers uninterruptedly during the severe and prolonged Covid-19 situation and that the financial and non-financial results of our company held up so well�

Together with the Executive Board and Management Board, the Supervisory Board looks forward to continue contributing to NN's purpose to help people care for what matters most to them and to create long-term value for all of the NN Group's stakeholders�

Yours faithfully,

David Cole

Chair Supervisory Board NN Group

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Supervisory Board

The Supervisory Board is responsible for supervising the management of the Executive Board and the general course of affairs of NN Group and the businesses affiliated with it.

David Cole

Chair

Nationality: Dutch, American

Date of birth: 1961

Hélène Vletter-van Dort

Vice-chair

Nationality: Dutch Date of birth: 1964

Heijo Hauser

Member

Nationality: German Date of birth: 1955

Robert Jenkins

Member

Nationality: American Date of birth: 1951

Hans Schoen

Member

Nationality: Dutch Date of birth: 1954

Clara Streit

Member

Nationality: German, American

Date of birth: 1968

Male 4

Supervisory Board meetings held in 2020

Supervisory Board composition

(after 28 May 2020)& figures

Female 2

17hours

In total, 17 hours spent on Permanent Education sessions arranged by NN Group Permanent Education attendance rate: 74.4%

Supervisory Board Committees

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Supervisory Board

The Supervisory Board is responsible for supervising the management of the Executive Board and the general course of affairs of NN Group and the businesses affiliated with it. The Supervisory Board also advises the Executive Board. In the performance of its duties, the Supervisory Board carefully considers and acts in accordance with the interests of NN Group and its affiliated businesses, taking into account the interests of all stakeholders.

This Supervisory Board Report section must be read in conjunction with the Corporate Governance section (pages 23-32) and the Remuneration Report section (pages 33-42) of this Financial Report�

Profile of the Supervisory Board

The composition of the Supervisory Board is such that the members are able to act critically and independently of one another, the Executive Board and any particular interests� The Supervisory Board operates as a collegial body and the knowledge, experience and background of its individual members is considered in the context of the Supervisory Board as a whole�

The overall composition of the Supervisory Board is balanced taking into account the members' (a) nationalities, gender, age, education, experience and work background, (b) affinity with the nature of the businesses and culture of NN Group, and (c) executive experience, experience in complex multinationals, and experience in the political and social environment in which such multinationals operate�

This ensures a wide range of relevant perspectives and opinions on NN Group, and the opportunities and challenges it faces today and will face tomorrow�

The Supervisory Board strives to ensure that all its members are independent (as defined in the 2016 Corporate Governance Code)�

The matrix on page 13 provides an overview of the range of knowledge, experience and backgrounds of the individual Supervisory Board members�

Supervisory Board meetings

The Supervisory Board held 14 Supervisory Board meetings in 2020� All meetings from March 2020 onwards were held virtually due to the Covid-19 pandemic� As a further result of the pandemic, the Supervisory Board did not visit one of the NN Group business units as is customary every year� The average attendance rate for Supervisory Board meetings was 98%� None of the Supervisory Board members were frequently absent from meetings, and at all meetings attendance was sufficient to constitute a valid quorum�

In addition to the formal meetings, the chair and other members of the Supervisory Board maintained regular contact with NN Group's Chief Executive Officer, other members of the Executive Board and Management Board, senior management, heads of staff, business unit CEOs, etc� The Supervisory Board met with the supervisory authorities as well, which meetings were also virtual as from March 2020� In these meetings, topical issues were discussed, as well as the general course of events at NN Group and its affiliated businesses� Finally, the chair and the Central Works Council-nominated members of the Supervisory Board were in contact with (representatives of) the Central Works Council�

The attendance rate of the individual Supervisory Board members was as follows:

1 Nomination and Corporate Governance Committee�
2 Mr Cole stepped down as member from the Risk Committee and Remuneration Committee and was appointed as a member of the Audit Committee on 14 July 2020�
3 Mr Harryvan's term of appointment ended at the close of the annual general meeting on 28 May 2020�
4 Mr Hauser was appointed as a member of the Nomination and Corporate Governance Committee on 14 July 2020�
5 Mr Jenkins' term ended at the close of the annual general meeting on 28 May 2020� He was reappointed at the annual general meeting on 28 May 2020� Mr Jenkins stepped down as a member from the Remuneration Committee and was appointed as a member of the Audit Committee on 14 July 2020�
6 Mr Ruijter's term of appointment ended on 12 April 2020�
7 Mr Schoen, who was considered as appointed pursuant to the enhanced recommendation right of the Central Works Council as of 12 April 2020, joined the Remuneration Committee�
8 Ms Streit's term of appointment ended on 12 April 2020� She was reappointed at the annual general meeting on 28 May 2020� On 14 July 2020, Ms Streit stepped down as a member of the Nomination and Corporate Governance Committee and was appointed as a member of the Remuneration Committee�

Ms Vletter-van Dort is a Works Council nominee, serves as Vice-chair of the Supervisory Board as of close of the annual general meeting on 28 May 2020 and stepped down as a member of the Risk Committee on 14 July 2020�

Remuneration	NomGovCo	Combined RemCo/
Name	Supervisory Board	Audit Committee	Risk Committee	Committee	Committee1	NomGovCo
David Cole2	14/14	2/2	2/2	2/2	6/6	2/2
Dick Harryvan3	9/9	4/4	2/2	3/3	2/2
Heijo Hauser4	13/14	6/6	4/4	3/3
Robert Jenkins5	14/14	2/2	4/4	2/2	2/2
Robert Ruijter6	6/7	3/3	1/1	2/2
Hans Schoen7	14/14	6/6	4/4	3/3
Clara Streit8	12/12	3/4	2/2	2/2	2/2
Hélène Vletter-van Dort9	14/14	2/2	4/4	6/6	2/2
Total weighted average	98%	100%	95%	100%	100%	100%

Corporate	Annual
governance	accounts
H. Vletter-
H. Schoen	C. Streit	van Dort
Nationality	NL/US	NL	US/DE	NL
Gender	Male	Male	Female	Female
Year of birth	1961	1954	1968	1964
Business	Economics	Business
Education	Administration	Mathematics	Auditing	Administration	Law
Insurance	√	√	√	√	√
Asset management	√	√	√	√
Banking	√	√
Risk	√	√	√	√	√
Finance & Control	√	√	√	√	√
Law & Governance	√	√	√	√	√
Technology	√	√	√
Organisation & Conduct	√	√	√	√	√
Executive maturity	√	√	√	√	√
Multinationals	√	√	√	√	√
Social antenna	√	√	√	√	√
International Business	√	√	√	√	√
Financial Expert1	√	√	√
ESG Experience	√	√	√	√	√

D. Cole

H. Hauser

DE Male 1955

R. Jenkins

US Male 1951 International

Studies √

√ √ √

√ √ √ √ √ √ √

As defined in article 39 (1) of Directive 2014/56/EU of the European Parliament and of the Council of 16 April 2014 amending Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts�

All members of the Supervisory Board are independent (as defined in the 2016 Dutch Corporate Governance Code)�

Supervisory Board Committees

Four committees support the Supervisory Board: the Risk Committee, Audit Committee, Remuneration Committee, and Nomination and Corporate Governance Committee� The committees are responsible for preparing matters delegated to them� The chair of each committee verbally reports the main points of discussion and resulting recommendations to the Supervisory Board� This enables the Supervisory Board as a whole to make a decision on these matters� For each committee, the key inputs and underlying considerations leading to a recommendation are recorded�

Please refer to pages 16 to 22 of this Report of the Supervisory Board for the reports of each of the committees�

Key developments

In 2020, the Supervisory Board was involved in two key developments aimed at long-term value creation for NN Group and its affiliated businesses�

Redefining NN Group's long-term strategic direction, implementation of the new strategy and Capital Markets Day

Six years after NN Group's initial public offering and with the appointment of the new NN Group Chief Executive Officer in October 2019, 2020 was a logical moment to revisit NN Group's strategic framework to ensure a sustainable business strategy�

Throughout 2020, the Supervisory Board advised and supervised the Executive Board and the Management Board on decisions that prioritised resources and maintained a balance between addressing the current needs and preparing for a future proof company�

The Supervisory Board was taken along in the journey of redefining NN Group's strategy and purpose statement� The Boards reflected on economic and other developments, the likely impact of and exposure to Covid-19, and market trends in the insurance industry, asset management and banking industry� The challenges being faced in the various industries and specifically by the businesses

of NN Group were taken into account, also in light of portfolio assessment and management� Throughout the process, long-term value creation and the interests of all stakeholders remained an integral part of redefining NN Group's strategy�

The process was kicked off by interactive sessions between the Executive Board, Management Board, Supervisory Board and senior staff� Despite the Covid-19 restrictions many productive and interactive online sessions were held with the Supervisory Board leading up to the finalisation of the redefined strategy� In May-June 2020, the Executive Board and Management Board presented their conclusions on the redefined strategy and Capital Markets Day announcements, including new financial and non-financial key performance indicators and targets, which were appropriately challenged and approved by the Supervisory Board�

The new strategy is focused on sustainable value creation for all stakeholders and aims for resilient and growing long-term capital generation for shareholders� NN will continue to build on the solid foundations of the company, while becoming a more customer-centric and data-driven company, accelerating management actions to increase cash flow generation and driving profitable growth in attractive markets� Our purpose is to help people care for what matters most to them� We are committed to doing business in a way that is consistent with our values: care, clear, commit�

It is our ambition to be an industry leader, known for our customer engagement, talented people and contribution to society�

The Executive Board and the Management Board ensure that the Supervisory Board is kept up to date on the implementation of the strategy as well as on the challenges being faced in the process of implementation on a regular basis�

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On 30 April 2020, NN Group announced an update of the composition of the Management Board as of 1 June 2020� Mr Bernhard Kaufmann was appointed as Chief Risk Officer (CRO) of NN Group, following the departure of Mr Jan-Hendrik Erasmus� Furthermore, given the growth of activities following recent acquisitions in the Netherlands, the Netherlands portfolio was reviewed and divided into two portfolios with separate responsibilities� Mr Leon van Riet was appointed to the Management Board as CEO Netherlands Life & Pensions� Mr Tjeerd Bosklopper, who was already a member of the Management Board, assumed the role of CEO Netherlands Non-life, Banking & Technology�

Changes in the Management Board

The Executive Board is authorised to appoint members to the Management Board following consultation of the Supervisory Board�

The Executive Board followed an extensive selection process using a specialised agency with the close involvement of the Nomination and Corporate Governance Committee (and other members of the Supervisory Board) in relation to the appointment of the new CRO, Mr Kaufmann�

The Nomination and Corporate Governance Committee was also consulted in the reorganisation of the Netherlands portfolio, which led to the appointment of Mr Van Riet as CEO Netherlands Life & Pensions and Mr Bosklopper as CEO Netherlands Non-life, Banking & Technology�

The Supervisory Board is confident that, with these appointments, the Management Board is well positioned to lead the company in this fast-paced and dynamic environment, delivering on the strategic priorities and ensuring sustainable long-term value creation for all stakeholders�

Other topics

As is required on an annual basis, the Nomination and Corporate Governance Committee reviewed and discussed the booklet on the application of the Dutch Corporate Governance Code for the financial year 2020� The Nomination and Corporate Governance Committee was further consulted in relation to the annual review and proposed changes in the Charters of the NN Group N�V� Executive Board, Management Board, Supervisory Board and Committees, and the Supervisory Board Profile (of which last mentioned was discussed at the annual general meeting held on 28 May 2020), and the NN Group N�V� Decision Structure�

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Closing

2020 was an extraordinary and challenging year, which prompted long-term changes in our personal and professional lives� It was also a year of innovation, digitalisation and new ways of working together� The Covid-19 pandemic highlighted the importance of focusing on our values, care, clear, commit, and our purpose to help people care for what matters most to them, especially in these unprecedented and challenging times�

In the midst of the Covid-19 pandemic a new strategy, focused on sustainable value creation for all stakeholders, was formulated leading up to the Capital Markets Day in June 2020� At the same time it was business as usual while working from home� The continuous involvement of the Supervisory Board in this important journey and the open dialogue and constructive cooperation between the Executive Board, Management Board and the Supervisory Board of NN Group was much appreciated by the Supervisory Board�

The Supervisory Board would like to extend its gratitude to Mr Ruijter, member of the Supervisory Board whose term of appointment ended on 12 April 2020, and Mr Harryvan, vice-chair of the Supervisory Board whose term of appointment ended at the close of the annual general meeting on 28 May 2020, for their valuable contribution over the past years�

In closing, we wanted to welcome Mr Kaufmann and Mr Van Riet to the Management Board�

Together with the Executive Board and Management Board, the Supervisory Board looks forward to continuing to contribute to NN's ambition to be an industry leader, known for its customer engagement, talented people, and contribution to society�

The Supervisory Board wishes to express its appreciation to the members of the Executive Board, the Management Board and all employees of NN Group and its businesses for their continued dedication and strong commitment in a remarkable 2020�

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Corporate governance

General

NN Group N�V� (NN Group) is a public limited company (naamloze vennootschap) incorporated under the laws of the Netherlands and has a two-tier board structure consisting of an executive board (Executive Board) and a supervisory board (Supervisory Board)� NN Group also has a management board (Management Board)�

NN Group was incorporated on 29 March 2011 under the name ING Insurance Topholding N�V� On 28 February 2014, NN Group entered into a legal merger with its wholly-owned subsidiary ING Verzekeringen N�V� (ING Verzekeringen), at that time a public limited company incorporated under the laws of the Netherlands� On 1 March 2014, the legal merger became effective� As a result of this merger, ING Verzekeringen ceased to exist, NN Group acquired all assets and liabilities of ING Verzekeringen under universal title of succession and was renamed NN Group N�V� At that time NN Group had one shareholder: ING Groep N�V� (ING Group), a public limited company incorporated under the laws of the Netherlands� On 2 July 2014,

ING Group offered part of its shares in the share capital of NN Group to the public and the shares in the capital of NN Group were listed on Euronext Amsterdam (IPO)� Settlement of the offering took place on 7 July 2014� ING Group completed its divestment of NN Group on 19 April 2016� As of 5 October 2015, NN Group voluntarily applied the full large company regime (volledig structuurregime)� Effective 29 May 2015, NN Group filed a declaration with the commercial register in which it stated to meet the requirements of paragraph 2 of clause 153 of book 2 of the Dutch Civil Code� As a result, and effective 29 May 2018, NN Group mandatorily applies the full large company regime�

On 2 February 2017, NN Group announced a recommended public cash offer to all holders of issued and outstanding ordinary shares in the capital of Delta Lloyd N�V� (Delta Lloyd) to acquire their shares� On 26 April 2017, NN Group announced that following the settlement, NN Group - via its wholly-owned subsidiary NN Group Bidco B�V�

(NN Group Bidco) - held 93�3% of the issued and outstanding ordinary shares in the capital of Delta Lloyd� On 31 May 2017, NN Group Bidco, NN Group and Delta Lloyd entered into a legal merger� On 1 June 2017, the legal merger became effective� As a result of this merger, remaining holders of Delta Lloyd ordinary shares received NN Group's ordinary shares, Delta Lloyd ceased to exist, and NN Group Bidco acquired all assets and liabilities of Delta Lloyd under universal title of succession� Subsequently, as part of the legal restructuring process, NN Group entered into a legal merger with NN Group Bidco, which became effective on 31 December 2017� As a result of this merger, NN Group Bidco ceased to exist and NN Group assumed all assets and liabilities of NN Group Bidco, including its subordinated notes of EUR 750 million and the Delta Lloyd legal entities�

Executive Board

Duties

The Executive Board is entrusted with the management, the strategy and the operations of NN Group under supervision of the Supervisory Board� In performing its duties, the Executive Board must carefully consider and act in accordance with the interests of NN Group and the business connected with it, taking into consideration the interests of all stakeholders of NN Group� The organisation, duties and working methods of the Executive Board are detailed in the charter of the Executive Board� This charter is available on the NN Group website�

Certain resolutions of the Executive Board require the approval of the Supervisory Board and/or general meeting of shareholders of NN Group (General Meeting)� These resolutions are outlined in the articles of association of NN Group (Articles of Association), which are available on the NN Group website, and in the charter of the Executive Board�

Appointment, removal and suspension

In 2020, NN Group applied the full large company regime� Under this regime the members of the Executive Board are appointed by the Supervisory Board� Prior to appointing a member of the Executive Board, the Supervisory Board must notify the General Meeting of such an intended appointment�

Under the full large company regime, only the Supervisory Board may suspend or remove a member of the Executive Board� However, the Supervisory Board is only entitled to remove a member of the Executive Board after the General Meeting has been consulted on the intended removal�

Composition

The Executive Board must consist of two or more members, with the total number of members of the Executive Board determined by the Supervisory Board after consultation with the Executive Board� Guiding principles for the appointment of members and the composition of the Executive Board are provided in the profile of the Executive Board and Management Board which includes the diversity policy for the composition of these boards� The profile including the diversity policy is available on the NN Group website�

As at 31 December 2020, the Executive Board consisted of the following persons:

Name

Position

David Knibbe Chair, Chief Executive Officer (CEO)

Date of birth

15 March 1971

Delfin RuedaVice-chair, Chief Financial Officer (CFO)

Gender

Male

8 April 1964

Male

Nationality

DutchSpanish

*Terms of appointment will end at the close of the annual general meeting (AGM) of NN Group in 2023 and 2022 respectively�

Appointment

1 October 2019 1 March 2014, reappointment 31 May 2018

Termination/ reappointment

2023*

Tenure 1 year

2022*

7 years

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David Knibbe was appointed to the Executive Board and designated as Chief Executive Officer of NN Group and chair of the Executive Board effective 1 October 2019� He is responsible for the business strategy, performance and day-to-day operations of NN Group� Mr Knibbe has already been a member of the Management Board since 7 July 2014� On 1 September 2014, Mr Knibbe was appointed Chief Executive Officer Netherlands� In this role Mr Knibbe was responsible for NN Group's insurance and banking business in the Netherlands and leading the integration of NN and Delta Lloyd� From 2013 until 2014, he served as Chief Executive Officer of ING Insurance International� In 2013, he became member of the NN Group Operating Committee� From 2011 to 2013, he served as Chief Executive Officer of ING Insurance Central and Rest of Europe� During 2010, Mr Knibbe was Chief Executive Officer Insurance Corporate Clients in the Netherlands� From 2007 to 2008, Mr Knibbe was General Manager of Nationale-Nederlanden Individual Life (retail life and individual pensions), which then became Intermediary Pensions and Retail Life with the addition of the SME pensions business in 2008� In 2009, Mr Knibbe became General Manager Pensions with the addition of corporate pensions and removal of retail life from his area of responsibility� Prior to that, from 2004 to 2007, Mr Knibbe was Director Disability and Accident Insurance of Nationale-Nederlanden� From 2002 to 2004, he was Managing Director of ING's life insurance and employee benefits joint venture with Piraeus Bank in Greece� Mr Knibbe was Head of Investments of Central-Holland of ING Bank from 2000 to 2002� Mr Knibbe started his professional career in 1997 when he joined ING, serving in various positions in investment management and banking� Mr Knibbe was chair of the board of the Dutch Association of Insurers (Verbond van Verzekeraars) from 9 December 2015 until 20 June 2018� From 20 July 2018 until 18 December 2019, he was vice-chair of the Dutch Association of Insurers� Mr Knibbe holds a Master's degree in monetary economics from the Erasmus University in Rotterdam (the Netherlands)� Furthermore, Mr Knibbe is member of the board and treasurer of the Confederation of Netherlands Industry and Employers (VNO-NCW), as well as member of the Federative Board VNO-NCW and MKB NL� He is also member of the board of the Johan Cruyff Foundation and member of the advisory board of JINC�

Delfin Rueda was appointed to the Executive Board as Chief Financial Officer on 1 March 2014� As of 7 July 2014, he serves as vice-chair of the Executive Board� On 31 May 2018, he was reappointed as member of the Executive Board and again designated Chief Financial Officer of NN Group and vice-chair of the Executive Board� Mr Rueda is responsible for NN Group's finance departments and investor relations� From 1 January to 1 June 2020, he assumed the Chief Risk Officer portfolio ad interim� From 1 October 2013 until the legal merger between NN Group and ING Verzekeringen, which became effective on 1 March 2014, he was a member of the management board and Chief Financial Officer of ING Verzekeringen� Mr Rueda served as Chief Financial Officer and as a member of the management board of ING Insurance Eurasia from 1 November 2012 until 7 July 2014� Prior to joining ING in November 2012, Mr Rueda served as Chief Financial and Risk Officer and as a member of the management board at Atradius from 2005 to 2012� From 2000 to 2005, Mr Rueda served as Senior Vice-president of the Financial Institutions

Group, Corporate Finance, at J�P� Morgan� Prior to that, from 1993 to 2000, he was Executive Director of the Financial Institutions Group, Corporate Finance, at UBS� Mr Rueda began his career with Andersen Consulting, which later became Accenture, where he undertook different advisory assignments in information systems and strategic management services from 1987 to 1991� Mr Rueda holds a Master's degree in economic analysis and quantitative economicsfrom the Complutense University of Madrid (Spain) and an MBA with a finance major from the Wharton School, University of Pennsylvania (USA)� Besides being a member of the Executive Board, Mr Rueda is supervisory board member and chairman of the audit committee of the supervisory board of Adyen N�V� and member of the Supervisory Committee of Alma Mundi Insurtech Fund� As of 23 December 2020, Mr Rueda serves as chair of the CFO Forum and as of 8 January 2021, Mr Rueda is also non-executive director of Allfunds Bank S�A�U�

Remuneration

Information on the remuneration policy for members of the Executive Board and on their individual remuneration can be found in the Remuneration Report, on pages 33-42�

Management Board

Role and duties

The Management Board is entrusted with the day-to-day management of NN Group and the overall strategic direction of NN Group� In performing its duties, the Management Board must carefully consider and act in accordance with the interests of NN Group and the business connected with it, taking into consideration the interests of all stakeholders of NN Group� The authority to manage NN Group is vested in the Executive Board as a whole, notwithstanding that each of the members of the Management Board is responsible and accountable to the Executive Board and within the Management Board for the specific tasks as assigned� Being comprised of the Executive Board members as well as key leaders with a divisional or functional responsibility, the Management Board allows for integral and holistic decision-making at the highest level of NN Group with functions, the businesses and Executive Board members represented� Besides serving balanced, effective and timely decision-making, NN Group having a Management Board also provides for flexibility in terms of composition, allocation of tasks and responsibilities and required knowledge�

In supervising the functioning of NN Group's corporate governance structure, including its checks and balances, the Supervisory Board pays specific attention to the dynamics and relationship between the Executive Board and the Management Board as well as the manner in which the Management Board operates� The Supervisory Board will be provided with all the information necessary for the proper performance of this duty� In principle, members of the Management Board are present at meetings with the Supervisory Board where topics are discussed that relate to their area of responsibility� Next to that, the Supervisory Board regularly meets with the full Management Board� The organisation, role, duties and working methods of the Management Board are detailed in the charter of the Management Board� The charter is available on the NN Group website�

Composition, appointment and removal

The Management Board consists of the members of the Executive Board and such other members as appointed by the Executive Board after consultation with the Supervisory Board� The number of members of the Management Board is determined by the Executive Board� Guiding principles for the appointment of members and the composition of the Management Board are provided in the profile of the Executive Board and Management Board which includes the diversity policy for the composition of these boards� The profile including the diversity policy is available on the NN Group website�

The members of the Management Board may be suspended and removed by the Executive Board after consultation with the Supervisory Board�

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As at 31 December 2020, the Management Board consisted of the following persons:

Name

David Knibbe

Delfin Rueda Satish Bapat

Tjeerd Bosklopper

Position

Chair, Chief Executive Officer (CEO) (as of 1 October 2019)

Vice-chair, Chief Financial Officer (CFO) CEO NN Investment Partners

CEO Netherlands Non-life, Banking & Technology (as of 1 June 2020)Bernhard Kaufmann Chief Risk Officer (CRO)Dailah Nihot

Leon van Riet

Fabian Rupprecht

Janet Stuijt

Chief Organisation & Corporate Relations

15 March 1971

3 March 1975

CEO Netherlands Life & PensionsCEO International Insurance

22 December 1969 MaleGeneral Counsel

Date of birth

Gender

Male

8 April 1964 23 June 1966

Male MaleMale

19 April 1969

Male

12 June 1973

Female Dutch

2 September 1964 Male

Nationality

DutchSpanish Dutch and IndianDutchGermanDutchGerman and 1 September 2018 Swiss

26 September 1969 Female Dutch

Appointment

7 July 2014

7 July 2014 1 April 2017

1 September 2018

Tenure

6 years
6 years
3 years
2 years

1 June 2020 Less than 1 year

1 September 2018

2 years

1 June 2020 Less than 1 year

1 September 2018

2 years 2 years

Satish Bapat was appointed to the Management Board as Chief Executive Officer NN Investment Partners as of 1 April 2017� Mr Bapat is responsible for NN Group's asset management business� From 2013 to 1 April 2017, he was Chief Executive Officer of NN Life Japan and, prior to this, Chief Executive Officer of Asia Pacific for ING Investment Management� From 2011 to 2012, Mr Bapat was Global Chief Financial Officer at ING Investment Management and from 2010 to 2011 he was Chief Financial Officer Europe for ING Investment Management� Before joining ING, Mr Bapat was Change Project Manager at RBS N�V� from 2009 to 2010� From 2008 to 2009, he served as Global Head of Finance at Robeco Asset Management, and from 2006 to 2008 as Global Head of Finance at ABN AMRO Asset Management� Prior to this, from 2005 to 2006 Mr Bapat was Group Financial Controller at TNT N�V� From 1998 to 2005, Mr Bapat served as Senior Manager at Deloitte & Touche in the Netherlands, after having held the role of Audit Senior at Deloitte & Touche in the USA since 1994� Mr Bapat holds a Master of Business Administration degree in finance from the Temple University of Philadelphia (USA) and a Bachelor's degree in Accounting from the University of Bombay (India)� He is also a public accountant (USA)�

Information in respect of the members of the Management Board who are also members of the Executive Board, David Knibbe and Delfin Rueda, can be found under 'Executive Board - Composition', on page 23�

Tjeerd Bosklopper was appointed CEO Netherlands Non-life, Banking & Technology as of 1 June 2020� In this role he is responsible for the Dutch Non-life and Banking business segments, Customer & Commerce, as well as for the Strategic Transformation Office and IT� Mr Bosklopper has been CEO Netherlands ad interim from 17 December 2019 until 1 June 2020� Mr Bosklopper was appointed to the Management Board as Chief Transformation Officer on

1 September 2018� In 2018, Mr Bosklopper was Head of Integration of Nationale-Nederlanden Netherlands and Belgium� From 2015 to 2018, Mr Bosklopper was Head of Individual Life at NN Group in the Netherlands� From 2012 to 2015, Mr Bosklopper was Chief Executive Officer at Nationale-Nederlanden Life & Pensions in Poland�

From 2010 to 2012, he was Chief Information & Transformation Officer at Nationale-Nederlanden Netherlands� From 2006 to 2010, he was Director Product Management at Nationale-Nederlanden Non-life Netherlands� From 2004 to 2006, Mr Bosklopper was Executive Vice-president and Chief Marketing Officer at ING LifeSouth Korea� From 2003 to 2004, he was Project Manager at ING Aetna Life Indonesia� From 2001 to 2003, he was Regional e-business Manager at ING Group's regional office in Hong Kong� From 1999 to 2001, he participated in the Global Management Programme (GMP) at ING Group� Mr Bosklopper holds a Master of Science in Business Information Technology from the University of Twente (the Netherlands)� Besides being a member of the Management Board, Mr Bosklopper is a member of the board of the Dutch Association of Insurers (Verbond van Verzekeraars)�

Bernhard Kaufmann was appointed Chief Risk Officer in the Management Board of NN Group as of 1 June 2020� In this role he is responsible for the overall risk framework with direct responsibility for the risk management departments� He is also responsible for the Actuarial function, reinsurance and procurement globally� From 2014 to 2020, Mr Kaufmann was Group Chief Risk Officer and Chief Risk Officer Reinsurance at Munich Re Group� From 2008 to 2013, he was Chief Risk Officer at ERGO Insurance Group� From 2000 to 2008, Mr Kaufmann worked at Munich Re Group holding various roles� From 2007 to 2008, he was Head of Treasury, from 2004 to 2007, he was Head of Asset Liability Management and from 2000 to 2004, he was Senior Consultant Financial Projects and Credit Risk Manager� From 1999 to 2000, Mr Kaufmann was Credit Risk Manager at HypoVereinsbank (UniCredit)� From 1995 to 1999, he worked as a researcher in the Physics Department at the Technical University of Munich (Germany)� Mr Kaufmann holds a PhD (Dr� rer� nat�) in theoretical physics, from the Technical University of Munich (Germany), an intermediate diploma in economics from the University of Hagen (Germany), and a diploma in theoretical physics from the Technical University of Munich (Germany)� Besides being a member of the Management Board, Mr Kaufmann is a member of the CRO Forum�

Dailah Nihot was appointed to the Management Board as Chief Organisation & Corporate Relations as of 1 September 2018� Ms Nihot is responsible for human resources, corporate communications, sustainability and corporate citizenship, branding and sponsorship, public and government affairs, and facility management� From 2013 to 2018, she was Managing Director of Corporate Relations for NN Group� Prior to this, from 2006 to 2013, she was Global Head of Sustainability, and Director of the ING for Something Better Foundation at ING Group, which focuses on the company's global ethical, social and environmental strategy and performance� Ms Nihot started her professional career in the external

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communications department of ING Group, and was a corporate spokesperson and strategic communications advisor from 2001 to 2006� Ms Nihot serves as management representative in the Central Works Council of NN Group (Central Works Council)� She holds a Master of European Studies from the University of Amsterdam (the Netherlands) and an Executive Master in Corporate Communication from the RSM Erasmus University in Rotterdam (the Netherlands)�

Leon van Riet was appointed CEO Netherlands Life & Pensions and member of the Management Board of NN Group as of 1 June 2020�

In this role, he is responsible for the Life and Pension businesses in the Netherlands� Mr Van Riet was CEO of Nationale-Nederlanden Non-life in the Netherlands from 2017 to May 2020� From 2016 to 2017, he was a member of the Board of Directors of Delta Lloyd, responsible for Delta Lloyd Life Insurance, Befrank N�V�, Information Technology & Services, Concern Relations, Delta Lloyd Asset Management, KMD (Digital) and Delta Lloyd Life Belgium� From 2010 to 2016, he was Chief Executive Officer Delta Lloyd Life in the Netherlands� From 2007 to 2010, he was Chief Information Officer and Chief Information Technology at Delta Lloyd Group� From 1999 to 2007, Mr Van Riet was Chief Information Officer, Chief of Information Communications Technology and E-Business at Delta Lloyd Insurance� From 1997 to 1999, he was Director of Information Technology and Chain Logistics for Brocacef� From 1994 to 1997, he was a senior manager at KPMG Management Consulting� From 1993 to 1994, he was a project manager and consultant at Encompass Europe NV� From 1986 to 1993, he was a Senior Organisation Advisor at KPMG Management Consulting� Mr Van Riet holds a degree in electrical engineering from Delft University of Technology (TU Delft, the Netherlands)�

Fabian Rupprecht was appointed to the Management Board as Chief Executive Officer International Insurance as of 1 September 2018�

Mr Rupprecht is responsible for NN Group's insurance businesses outside the Netherlands: Insurance Europe, Japan Life and Japan Closed Block VA businesses� From 1996 to 2018, Mr Rupprecht worked for AXA� From 2016 to 2018, he was Chief Executive Officer Middle East & Africa, and Regional Chief Financial Officer and member of the regional executive committee at AXA Emerging Markets (CEE, MEA, LATAM)� From 2013 to 2016, he was Regional Chief Financial Officer at AXA Mediterranean Holding, and member of the regional executive committee� From 2010 to 2013, he was Head of AXA Global Life, and member of the Global Life & Health board� From 2008 to 2010, he was Head of Individual Life, and member of the executive board of AXA-Winterthur� From 2001 to 2007, he was Head of Life & Annuity Offer at AXA Germany� From 1998 to 2000, Mr Rupprecht was Head of EquiVest Product Management at The Equitable Life Assurance (AXA) USA� From 1996 to 1998, he served as Head of Accounting for Health & Life Insurance at Colonia Konzern AG (AXA/UAP)� From 1994 to 1996, he was assistant to the executive board at Colonia Konzern AG (UAP)� Mr Rupprecht holds a Diploma in Business Administration, with majors in finance and controlling, from the WHU Otto Beisheim School of Management (Koblenz, Germany)�

Janet Stuijt was appointed to the Management Board as General Counsel as of 1 September 2018� Ms Stuijt is responsible for

NN Group's legal function and compliance function and holds the position of Company Secretary� Ms Stuijt joined ING Verzekeringen in 2011 in that same capacity� From 2008 to 2010, she was General Counsel Commercial Banking at ING Group� From 1998 to 2008, Ms Stuijt held various senior (global) management positions within ABN AMRO's legal department, primarily relating to ABN AMRO's corporate strategic and investment banking activities� In 1998,she was Regional Legal Counsel at ABN AMRO's regional office in Singapore� From 1993 to 1997, Ms Stuijt practised law as an associate at Loeff Claeys Verbeke/Allen Overy, Singapore office (1997) and De Brauw Blackstone Westbroek (1993-1997)� Ms Stuijt holds a Master's in Civil law, from the University of Leiden (the Netherlands)� Since 2016, she is a member of the supervisory board of N�V� Nederlandse Spoorwegen and a member of its risk & audit committee and chair of its nomination & remuneration committee�

Supervisory Board

Duties

The Supervisory Board is responsible for supervising the management of the Executive Board and the general course of affairs of NN Group and its businesses� The Supervisory Board may, on its own initiative, provide the Executive Board with advice and may request any information from the Executive Board that it deems appropriate� In performing its duties, the Supervisory Board must carefully consider and act in accordance with the interests of NN Group and the business connected with it, taking into consideration the relevant interests of all stakeholders of NN Group� The organisation, duties and working methods of the Supervisory Board are detailed in the charter of the Supervisory Board�

The charter is available on the NN Group website�

Appointment, removal and suspension

The members of the Supervisory Board are appointed by the General Meeting upon nomination of the Supervisory Board� The General Meeting and the Central Works Council may recommend candidates for nomination to the Supervisory Board� The Supervisory Board must simultaneously inform the General Meeting and the Central Works Council of the nomination� The nomination must state the reasons on which it is based� The Supervisory Board is required to nominate one-third of the Supervisory Board members on the enhanced recommendation (versterkt aanbevelingsrecht) of the Central Works Council, unless the Supervisory Board objects to the recommendation on the grounds that the recommended candidate is not suitable to fulfil the duties of a member of the Supervisory Board or that the Supervisory Board will not be properly composed if the nominated candidate is appointed�

The General Meeting may reject the nomination of a Supervisory Board member by an absolute majority of the votes cast by shareholders representing at least one-third of NN Group's issued share capital� If the General Meeting resolves to reject the nomination by an absolute majority of the votes cast, but this majority does not represent at least one-third of NN Group's issued share capital, a new meeting can be convened in which the nomination can be rejected by an absolute majority of the votes cast, irrespective of the part of NN Group's issued share capital represented� If the General Meeting resolves to reject the recommendation, the Supervisory Board will then prepare a new nomination� If the General Meeting does not appoint the person nominated by the Supervisory Board and does not resolve to reject the nomination, the Supervisory Board will appoint the person nominated�

A member of the Supervisory Board is appointed for a maximum period of four years� A Supervisory Board member can be reappointed once for a term of four years� A Supervisory Board member can subsequently be reappointed again for a period of two years, which appointment can be extended by at most two years� In the event of a reappointment after an eight-year period, such reappointment shall be

adequately motivated in the Supervisory Board Report� The members of the Supervisory Board retire periodically in accordance with a rotation schedule drawn up by the Supervisory Board� The rotation schedule is available on the NN Group website�

The Supervisory Board may suspend a member of the Supervisory Board� The suspension will lapse by law if NN Group has not submitted a petition to the Enterprise Chamber of the Amsterdam Court of Appeal (Ondernemingskamer van het Gerechtshof te Amsterdam) within one month after commencement of the suspension�

The General Meeting can, by an absolute majority of votes cast, representing at least one-third of the issued share capital, resolve to abandon its trust (het vertrouwen opzeggen) in the entire Supervisory Board� A resolution to remove the Supervisory Board for lack of confidence cannot be adopted until the Executive Board has notified the Central Works Council of the proposal for the resolution and the reasons therefore� If the General Meeting removes the Supervisory Board members for lack of confidence, the Executive Board must request the Commercial Division of the Amsterdam Court of Appeal to temporarily appoint one or more Supervisory Board members�

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Composition

The Supervisory Board must consist of three or more members, with the total number of members of the Supervisory Board determined by the Supervisory Board� As at 31 December 2020, the Supervisory Board consisted of six members, who are all independent within the meaning of best practice provision 2�1�8� of the Dutch Corporate Governance Code�

The profile of the Supervisory Board is available on the NN Group website�

As at 31 December 2020, the Supervisory Board consisted of the following persons:

Name

Position

David Cole

Chair (as of the close of the AGM on 29 May 2019)

Heijo HauserMember

Robert JenkinsMember

17 January 1951

Hans SchoenMember (recommended by Central Works Council)

Clara StreitMember

18 December 1968 Female

Hélène Vletter- van DortVice-chair (as of the close of the AGM on 28 May 2020) (recommended by Central Works Council)

Date of birth

2 October 1961

23 June 1955

2 August 1954

15 October 1964

The term of appointment of Dick Harryvan, who had been appointed to the Supervisory Board on 6 October 2015, which became effective on 2 February 2016 and who served as vice-chair of the Supervisory Board as of 24 February 2016, ended at the close of the AGM on

28 May 2020�

The term of appointment of Rob Ruijter who had been appointed to the Supervisory Board on 1 June 2017 as Continuing Member - as described in the Offer Memorandum, issued in connection with the recommended public cash offer to all holders of issued and outstanding ordinary shares in the capital of Delta Lloyd - and pursuant to the enhanced recommendation of the Central Works Council, ended on 12 April 2020�

As announced on 10 February 2021, the Supervisory Board has decided to nominate Cecilia Reyes (1959, Filipino/Swiss) and Rob Lelieveld (1962, Dutch) for appointment as members of the

Gender

Male

NationalityAppointment

Dutch and American

1 January 2019

MaleGerman

7 July 2014, reappointment 31 May 2018

MaleAmerican

2 February 2016, reappointment 28 May 2020

MaleDutch

7 July 2014, reappointment 31 May 2018

German and 1 June 2017,Americanreappointment 28 May 2020

FemaleDutch

6 October 2015, reappointment 29 May 2019

Termination/ reappointment 2022

2022

2024

2022

2024

2023

Tenure

2 years
6 years
5 years
6 years
3 years
5 yearsSupervisory Board for a term of four years� The proposals for appointment will be submitted for adoption at the AGM, to be held on 20 May 2021� If adopted, the appointment of Cecilia Reyes will become effective immediately, and the appointment of Rob Lelieveld will become effective 1 September 2021�

David Cole was appointed to the Supervisory Board on 31 May 2018, which became effective on 1 January 2019� As of the close of the AGM on 29 May 2019, he serves as chair of the Supervisory Board� Mr Cole was chief financial officer and chief risk officer of Swiss Re Ltd�, chief financial officer and chief risk officer of (former) ABN AMRO Holding (Bank) N�V� and member of the board of directors of FWD Group Management Holdings Ltd� Besides being a member of the Supervisory Board, Mr Cole is, amongst others, member of the board of directors of Vontobel Holding AG (Zürich) and of Swiss Re Asia Pte� Ltd (Singapore) and Swiss Re Corporate Solutions Brazil and chair of the supervisory board of IMC B�V�

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Heijo Hauser was appointed to the Supervisory Board as of 7 July 2014� On 31 May 2018, he was reappointed as Supervisory Board member� From January 1991 until June 2011, Mr Hauser was managing director of Towers Watson in Germany� He specialised in providing consulting services to insurance companies in areas such as strategy, distribution, product and risk management� He also managed Towers Watson's businesses in the German-speaking, Nordic and Central European countries� From September 1987 until December 1990, Mr Hauser was managing director of the travel and financial services subsidiaries of Metro in Germany� Other previous positions include sales director of Deutsche Krankenversicherung and marketing actuary of Victoria Lebensversicherung� Mr Hauser holds a Master's degree in mathematics from the Ruhr University of Bochum (Germany)� Besides being a member of the Supervisory Board,

Mr Hauser is chair of the board of Freundeskreis Elisabeth-Hospiz e�V�

Robert Jenkins was appointed to the Supervisory Board on

6 October 2015, which became effective on 2 February 2016� On 28 May 2020, he was reappointed as Supervisory Board member� Since 2009, he is adjunct professor of finance at London Business School where he teaches investment management� As of September 2020, he is also a member of the CFA Institute's The Future of Finance Advisory Council and on 1 December 2020, he became a strategic advisor to Carbon Cap Mgt LLP� From 2014 to 2016, he was founding chair of the AQR Asset Management Institute at LBS� From September 2013 through September 2019, Mr Jenkins was a member of the board of governors of CFA Institute� During his tenure he served as chairman of the board, chair of the audit and risk committee, chair of the remuneration committee and chair of the nominations committee� From 2009 until 2014, Mr Jenkins was a senior advisor to CVC Capital Partners and from 2011 until 2013 he was an external independent member of the interim Financial Policy Committee of the Bank of England� Mr Jenkins has served as chair of the Investment Management Association, UK, chair of the board of F&C Asset Management, plc (non-executive) and chief executive officer of the F&C Group� Other former positions include that of chief operating officer of Credit Suisse Asset Management Holding, UK, chief investment officer and head of asset management at Credit Suisse, Japan, and senior vice-president at Citigroup with executive assignments in the Middle East, Switzerland, United States and Japan� He was senior fellow at Better Markets, Washington, D�C�

Hans Schoen was appointed to the Supervisory Board as of

7 July 2014� On 31 May 2018, he was reappointed as Supervisory Board member� He is considered as appointed pursuant to the enhanced recommendation right of the Central Works Council as of 12 April 2020� From September 1977 until October 2008, Mr Schoen worked at KPMG Accountants and was a partner as of January 1989� He specialised in providing audit and advisory services to domestic and foreign insurance companies� Other former significant positions of Mr Schoen include member and chair of several insurance industry committees of the NIVRA and the Dutch Accounting Standards Board, member of the governmental advice committee Traas in respect of the financial and prudential reporting obligations of Dutch insurance companies, member of several advisory committees of the IASC/IASB on insurance company financial reporting requirements and member and part-time acting director of research of the Technical Expert Group of EFRAG in Brussels (Belgium)� Until 27 April 2016, Mr Schoen served as chair of the EFRAG Insurance Accounting Working Group� Mr Schoen holds a degree in economics and a postdoctoral degree in accountancy from the University of Amsterdam (the Netherlands)� In September 2015, he received a Doctorate (PhD) from the VU University Amsterdam (the Netherlands)�

Clara Streit was appointed to the Supervisory Board on 1 June 2017� She is a former member of the supervisory board of Delta Lloyd N�V� and served as one of the Continuing Members until 12 April 2020� At the AGM on 28 May 2020, she was reappointed as Supervisory Board member� Clara Streit was senior partner at McKinsey & Company Inc� in Munich and Frankfurt� Until 12 April 2018, she was member of the board of directors of Unicredit S�p�A (Milan)� Positions currently held by Ms Streit include membership of the board of directors of Vontobel Holding AG (Zürich) and membership of the supervisory board of Vonovia SE (Düsseldorf)� Ms Streit is also a member of the board of directors of Jerónimo Martins SGPS S�A� (Lisbon) and member of the supervisory board of Deutsche Börse AG (Frankfurt)�

Hélène Vletter-van Dort was appointed to the Supervisory Board on 6 October 2015 pursuant to the enhanced recommendation right of the Central Works Council� On 29 May 2019, she was reappointed as Supervisory Board member� As of the close of the AGM on 28 May 2020, Ms Vletter-van Dort serves as vice-chair of the Supervisory Board� In addition to being a member of the Supervisory Board, Ms Vletter-van Dort is, amongst others, a professor of financial law & governance at the Erasmus School of Law, chair of the supervisory board of Intertrust N�V� and chair of the board of Stichting Luchtmans� As of 1 May 2020, Ms Vletter also serves as member of the supervisory board of the Netherlands Public Broadcasting (NPO)� Ms Vletter-van Dort is a former non-executive board member

of Barclays Bank plc� Ms Vletter-van Dort also served as a member
of the supervisory board of the Dutch Central Bank (DNB) and chair
of its committee on supervisory policy� Other previous positions include, amongst others, visiting research professor at New York University, professor of securities law at the University of Groningen, judge at the Enterprise Chamber of the Amsterdam Court of Appeal, lawyer at Clifford Chance in Amsterdam (the Netherlands), member of the supervisory board of Fortis Bank Nederland (Holding) N�V� and Fortis Bank (Nederland) N�V�, chair of the Appeal Panel of the Single Resolution Board and member of the Monitoring Committee Corporate Governance Code�

More information on the composition of the Supervisory Board can be found in the Report of the Supervisory Board, on pages 10-22�

Remuneration

Information on the remuneration of the members of the Supervisory Board can be found in the Remuneration Report, on pages 33-42�

Committees of the Supervisory Board

The Supervisory Board has established four committees: the Audit Committee, the Risk Committee, the Remuneration Committee, and the Nomination and Corporate Governance Committee� The organisation, duties and working methods of the Supervisory Board committees are detailed in a separate charter for each committee� These charters are available on the NN Group website� Information on the duties and responsibilities of the respective committees and their composition can also be found in the Report of the Supervisory Board on pages 10-22�

Diversity

NN Group aims to have an adequate and balanced composition of its boards� When composing a board, several relevant selection criteria need to be balanced�

In the Executive Board, no women have been appointed� Since 1 June 2020, the composition of the Management Board is 22% female and 78% male� As from the AGM on 28 May 2020, one-third of

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the Supervisory Board members is female and two-thirds is male� As announced on 10 February 2021, the Supervisory Board has decided to nominate two persons for appointment as members of the Supervisory Board� The proposals for appointment will be submitted for adoption at the AGM, to be held on 20 May 2021� If adopted, the composition of the Supervisory Board will be 37�5% female and 62�5% male, effective 1 September 2021�

In future appointments of board members, NN Group will continue to take into account all applicable laws and regulations and relevant selection criteria including but not limited to executive experience, experience in corporate governance of large stock-listed companies, and experience in the political and social environment in which such companies operate� In the selection of the members of the Executive Board and the Management Board considered as a whole, and in the selection of the members of the Supervisory Board, there will be a balance in terms of nationality, gender, age, experience, education and work background� In addition, there will be a balance in the affinity with the nature and culture of the business of the company and its subsidiaries�

In order to ensure that the Executive Board, the Management Board and the Supervisory Board are at all times adequately composed, appointments to these boards are made on the basis of harmonised policies and visions of the various corporate bodies of NN Group and in accordance with legal and regulatory requirements� Both the profile of the Executive Board and Management Board and the profile of the Supervisory Board include a diversity policy� The guiding principles included in the profiles are taken into account when (re)appointing board members�

NN Group strives to grow the diversity of its people and sets a target by having at least 40% women in senior management positions by 2023� These positions include the Management Board and Management Board minus one managerial positions� Talent management, succession planning and NN Group's Diversity & Inclusion Statement are key instruments in our approach and are part of the Human Capital Development processes of NN Group� More information can be found in the Diversity and inclusion section on page 31 of the 2020 Annual Review� Considering the current state and group size of the Executive Board and the Management Board, NN Group will initially aim to have a gender balance of at least one-third men and at least one-third women for both the Executive Board and the Management Board�

The composition of the Supervisory Board meets the intended statutory diversity quota of at least one-third for both women and men on supervisory boards of listed companies, to be introduced by the bill which was approved by the House of Representatives on 11 February 2021 and which is now to be discussed and approved by the Senate� New appointments to the Supervisory Board must further the gender balance of this board if and as long as the gender balance of having at least one-third men and one-third women is not met�

Conflicts of interest

No transactions were entered into in 2020 in which there were conflicts of interest with Executive Board members and/or Supervisory Board members that are of material significance to NN Group and/or to the relevant board members�

General meeting

Frequency, notice and agenda

Each year, not later than the month of June, a general meeting is held� Its general purpose is to discuss the Report of the management board, advise on the Remuneration Report, adopt the annual accounts, release the members of the Executive Board and the members of the Supervisory Board from liability for their respective duties, appoint and reappoint members of the Supervisory Board, decide on dividend to be declared, if applicable, and decide on other items that require shareholder approval under Dutch law� Extraordinary general meetings are held whenever the Supervisory Board or the Executive Board deems such to be necessary�

In addition, one or more shareholders who jointly represent at least 10% of the issued share capital of NN Group may, on application, be authorised by the court in interlocutory proceedings of the district court to convene a general meeting�

General meetings are convened by a public notice via the NN Group website no later than on the 42nd day before the day of the general meeting� The notice includes the place and time of the meeting and the agenda items� Shareholders who, alone or jointly, represent at least 3% of the issued share capital of NN Group may request to place items on the agenda, provided that the reasons for the request are stated therein and the request is received by the chair of the Executive Board or the chair of the Supervisory Board in writing at least 60 days before the date of the general meeting�

Admission to the general meeting

Each holder of shares in the share capital of NN Group entitled to vote, and each other person entitled to attend and address the general meeting, is authorised to attend the general meeting, to address the general meeting and to exercise voting rights� For each general meeting a statutory record date will, in accordance with Dutch law, be set on the 28th day prior to the date of the general meeting, in order to determine whose voting rights and rights to attend and address the general meeting are vested� Those entitled to attend and address a general meeting may be represented at a general meeting by a proxy holder authorised in writing�

In view of the Covid-19 pandemic and pursuant to the Temporary Act COVID-19 Justice and Security (Tijdelijke Wet COVID-19 Justitie en Veiligheid), the 2020 AGM of NN Group was held virtually� Shareholders were able to follow the meeting via a live webcast� Questions could be submitted in advance and those shareholders who made use of this option could also ask follow-up questions during the meeting by electronic means� Voting rights could be exercised by providing an electronic proxy with voting instructions�

Voting and resolutions

Each share in the share capital of NN Group confers the right on the holder to cast one vote� At a general meeting all resolutions must be adopted by an absolute majority of the votes cast, except in those cases in which the law or the Articles of Association require a greater majority� If there is a tie in voting, the proposal concerned will be rejected�

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Powers of the General Meeting

The most important powers of the General Meeting are to:

• Powers of the General Meeting
• Appoint members of the Supervisory Board upon nomination of the Supervisory Board
• Recommend persons to the Supervisory Board for nomination as a member of that board
• Abandon its trust in the Supervisory Board
• Release the members of the Executive Board and the members of the Supervisory Board from liability for their respective duties
• Advise on the Remuneration Report
• Adopt the remuneration policy for the members of the Executive Board and the remuneration policy for the members of the Supervisory Board, including the remuneration for the Supervisory Board members, upon a proposal of the Supervisory Board
• Adopt the annual accounts
• Appoint the external auditor
• Approve resolutions of the Executive Board regarding important changes in the identity or character of NN Group or its business
• Issue shares, restrict or exclude pre-emptive rights of shareholders and delegate these powers to the Executive Board, upon a proposal of the Executive Board which has been approved by the Supervisory Board
• Authorise the Executive Board to repurchase shares
• Reduce the issued share capital, upon a proposal of the Executive Board which has been approved by the Supervisory Board
• Dispose the profit remaining after the payment of dividend on any outstanding preference shares and after a decision has been taken on the addition of all or part of the profits to the reserves, upon a proposal of the Executive Board which has been approved by the Supervisory Board
• Amend the Articles of Association, upon a proposal of the Executive Board which has been approved by the Supervisory Board

Shares and share capital

Classes of shares and NN Group Continuity Foundation The authorised share capital of NN Group consists of ordinary shares and preference shares� Depositary receipts for shares are not issued with the cooperation of NN Group�

Currently, only ordinary shares are issued, while a call option to acquire preference shares is granted to the foundation (stichting): Stichting Continuiteit NN Group (NN Group Continuity Foundation)� The objectives of NN Group Continuity Foundation are to protect the interests of NN Group, the business maintained by NN Group and the entities with which NN Group forms a group and all persons involved therein, in such a way that the interests of NN Group and those businesses and all persons involved therein are protected to the best of its abilities, and by making every effort to prevent anything which may affect the independence and/or the continuity and/or the identity of NN Group and of those businesses in violation of the interests referred above� NN Group Continuity Foundation shall pursue its objectives, inter alia, by acquiring and holding preference shares in the share capital of NN Group and by enforcing the rights, in particular the voting rights, attached to those preference shares� To this end, NN Group Continuity Foundation has been granted a call option by NN Group� According to the call option agreement concluded between NN Group and NN Group Continuity Foundation, NN Group Continuity Foundation has the right to subscribe for preference shares in the share capital of NN Group, consisting of the right to subscribe for such preference shares repeatedly� This may happen each time up to a maximum corresponding

with 100% of the issued share capital of NN Group in the form of ordinary shares, as outstanding immediately prior to the exercise of the subscribed rights, less one share, from which maximum shall be deducted any preference shares already placed with NN Group Continuity Foundation at the time of the exercise of the subscribed rights� NN Group Continuity Foundation qualifies as a legal entity independent from NN Group, within the meaning of section 5:71, paragraph 1, subparagraph c of the Dutch Financial Supervision Act�

As at 31 December 2020, the board of NN Continuity Foundation consisted of three members who are independent from NN Group: Marc van Gelder (chair), Hessel Lindenbergh (treasurer) and Steven Perrick (secretary)�

Issuance of shares and pre-emptive rights

The General Meeting may resolve to issue shares in the share capital of NN Group, or grant rights to subscribe for such shares, upon a proposal of the Executive Board which has been approved by the Supervisory Board� The Articles of Association provide that the General Meeting may delegate the authority to issue shares, or grant rights to subscribe for shares, to the Executive Board, upon a proposal of the Executive Board which has been approved by the Supervisory Board� If the Executive Board has been designated as the body authorised to resolve upon an issue of shares in the share capital of NN Group, the number of shares of each class concerned must be specified in such designation� Upon such designation, the duration of the designation shall be set, which shall not exceed five years� A resolution of the Executive Board to issue shares requires the approval of the Supervisory Board�

Upon the issue of new ordinary shares (or the granting of rights to subscribe for ordinary shares), each holder of ordinary shares in the share capital of NN Group has a pre-emptive right in proportion to the aggregate nominal value of his or her shareholding of ordinary shares� Holders of ordinary shares have no pre-emptive right upon (a) the issue of new ordinary shares (or the granting of rights to subscribe for ordinary shares): (i) against a payment in kind, (ii) to employees of NN Group or of a group company, or (iii) to persons exercising a previously-granted right to subscribe for ordinary shares and (b) the issue of preference shares�

Upon a proposal of the Executive Board which has been approved by the Supervisory Board, the General Meeting may resolve to limit or exclude the pre-emptive rights� According to the Articles of Association, the General Meeting may designate the Executive Board as the competent body to do so upon a proposal of the Executive Board which has been approved by the Supervisory Board� Both resolutions require a majority of at least two-thirds of the votes cast, if less than one-half of the issued share capital is represented at the general meeting� The designation to the Executive Board to resolve to limit or exclude the pre-emptive rights may be granted for a specified period of time of not more than five years and only if the Executive Board has also been designated or is simultaneously designated the authority to resolve to issue shares� A resolution of the Executive Board to limit or exclude the pre-emptive rights requires the approval of the Supervisory Board�

Designation of the Executive Board at the 2019 and 2020 AGM

Share issuance in the context of issuing Contingent Convertible Securities

On 29 May 2019, the General Meeting designated the Executive Board for a term of five years, from 29 May 2019 up to and including

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28 May 2024, as the competent body to resolve, subject to the approval of the Supervisory Board, on the issuance of ordinary shares in the share capital of NN Group (including the granting of rights to subscribe for ordinary shares) upon conversion of any Contingent Convertible Securities (CCS) instruments in accordance with its terms and conditions during the term of the CCS instruments� This authority of the Executive Board is limited to a maximum of 30% of the issued share capital of NN Group as at 29 May 2019� This designation enables the Executive Board to issue CCS instruments and to set the terms and conditions for any CCS instrument, including the limitation or exclusion of pre-emptive rights, the mechanism for the conversion and the conversion price�

Share issuance and limitation of pre-emptive rights On 28 May 2020, the General Meeting designated the Executive Board for a term of 18 months, from 28 May 2020 up to and including 27 November 2021, as the competent body to resolve, subject to the approval of the Supervisory Board:

• on the issuance of ordinary shares in the share capital of NN Group and on the granting of rights to subscribe for such shares; and
• to limit or exclude the pre-emptive rights of existing shareholders with respect to such issue of ordinary shares in the share capital of NN Group and such granting of rights to subscribe for ordinary shares�

The authority of the Executive Board is limited to a maximum of 10% of the issued share capital of NN Group as at 28 May 2020�

Rights issue

On 28 May 2020, the General Meeting designated the Executive Board for a term of 18 months, from 28 May 2020 up to and including 27 November 2021, as the competent body to resolve, subject to the approval of the Supervisory Board, on the issuance of ordinary shares in the share capital of NN Group and on the granting of rights to subscribe for ordinary shares by way of a rights issue� This authority of the Executive Board is limited to a maximum of 20% of the issued share capital of NN Group as at 28 May 2020� This authority to issue shares may be used for any purpose, including but not limited to safeguarding or conserving the capital position of NN Group and mergers or acquisitions�

Acquisition of own shares

NN Group may acquire fully paid-up shares in its own share capital for no consideration (om niet) or if: (a) NN Group's shareholder's equity less the payment required to make the acquisition does not fall below the sum of called-up and paid-in share capital and any statutory reserves, and (b) the nominal value of the shares which NN Group acquires, holds or holds as pledge, or which are held by a subsidiary, does not exceed half of the issued share capital� The acquisition of its own shares by NN Group for consideration requires authorisation by the General Meeting� The authorisation is not required for the acquisition of shares for employees of NN Group or of a group company under a scheme applicable to such employees� The Executive Board may resolve, subject to the approval of the Supervisory Board, to alienate the shares acquired by NN Group in its own share capital� The resolution of the Executive Board to acquire shares in its own share capital for consideration requires the prior approval of the Supervisory Board� No voting rights may be exercised in the general meeting with respect to any share or depositary receipt for such share held by NN Group or by a subsidiary, and no payments will be made on shares which NN Group holds in its own share capital�

On 28 May 2020, the General Meeting authorised the Executive Board for a term of 18 months, from 28 May 2020 up to and including 27 November 2021, to acquire in the name of NN Group, subject to the approval of the Supervisory Board, fully paid-up ordinary shares in the share capital of NN Group� This authorisation is subject to the condition that following such acquisition the par value of the ordinary shares in the share capital of NN Group which are held by NN Group or for which NN Group holds a right of pledge, or which are held by its subsidiaries for their own account, shall not exceed 10% of the issued share capital of NN Group as at 28 May 2020� Shares may be acquired on the stock exchange or otherwise, at a price not less than the par value of the ordinary shares in the share capital of NN Group and not higher than 110% of the highest market price of the shares on Euronext Amsterdam on the date of the acquisition or on the preceding day of stock market trading�

Cancellation of own shares

On 28 May 2020, the General Meeting adopted the proposal to reduce the issued share capital of NN Group by cancellation of ordinary shares held by NN Group in its own share capital up to a maximum of 20% of the issued share capital of NN Group as at 28 May 2020� The cancellation may be executed in one or more tranches� The number of ordinary shares to be cancelled shall be determined by the Executive Board� Capital reduction shall take place with due observance of the applicable statutory provisions and the articles of association of NN Group�

Transfer of shares and transfer restrictions

The transfer of ordinary shares in the share capital of NN Group included in the Statutory Giro System must take place in accordance with the provisions of the Dutch Securities Giro Act (Wet giraal effectenverkeer)� The transfer of shares in the share capital of NN Group not included in the Statutory Giro System requires an instrument intended for that purpose� To become effective, NN Group has to acknowledge the transfer, unless NN Group itself is a party to the transfer� The Articles of Association do not restrict the transfer of ordinary shares in the share capital of NN Group, while the transfer of preference shares in the share capital of NN Group requires the prior approval of the Executive Board� NN Group is not aware of the existence of any agreement pursuant to which the transfer of ordinary shares in the share capital of NN Group is restricted�

Significant shareholdings

Substantial shareholdings, gross and net short positions Under the Dutch Financial Supervision Act each legal and natural person having a substantial holding or gross short position in relation to the issued share capital and/or voting rights of NN Group that reaches, exceeds or falls below any one of the following thresholds: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%, must immediately give written notice to the Dutch Authority for Financial Markets� These notifications will be made public via the Register substantial holdings and gross short positions (Register substantiële deelnemingen en bruto shortposities) of the Dutch Authority for Financial Markets�

Pursuant to EU regulation No 236/2012, each legal and natural person holding a net short position representing 0�2% of the issued share capital of NN Group must report this position and any subsequent increase by 0�1% to the Dutch Authority for Financial Markets� Each net short position equal to 0�5% of the issued share capital of NN Group and any subsequent increase of that position by 0�1% will be made public via the short selling register of the Dutch Authority for Financial Markets�

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In 2020, no legal or natural person held at least 10% of the shares in NN Group, therefore NN Group did not enter into any transaction with any such person�

Information on shareholders with an (indirect) holding and/or gross short position of 3% or more can be found in the Annual Review on page 35 and is deemed to be incorporated by reference herein�

Dutch Corporate Governance Code

NN Group is subject to the Dutch Corporate Governance Code (Code)� The application of the Code by NN Group during the financial year 2020 is described in the publication 'Application of the Dutch Corporate Governance Code by NN Group', dated 10 March 2021, which is available on the website of NN Group� This publication is to be read in conjunction with this chapter and is deemed to be incorporated by reference herein� The Code is available on the website of the Dutch Corporate Governance Code Monitoring Committee (www�commissiecorporategovernance�nl)�

Articles of Association

The General Meeting may pass a resolution to amend the Articles of Association with an absolute majority of the votes cast, but only on a proposal of the Executive Board, which has been approved by the Supervisory Board� NN Group's Articles of Association were last amended on 28 May 2020�

Change of Control

NN Group is not party to any material agreement that takes effect, alters or terminates upon a change of control of NN Group following a take-over bid as referred to in article 5:70 of the Dutch Financial Supervision Act, other than a revolving credit facility agreement entered into with a syndicate of lenders� The revolving credit facility agreement includes a change of control provision which entitles the lenders to cancel the commitment under the facility and declare any outstanding amounts under the facility immediately due and payable�

The assignment contracts with the members of the Executive Board provide for severance payments, which are to become due in case of termination of the contract in connection with a public bid as defined in article 5:70 of the Dutch Financial Supervision Act� Severance payments to the members of the Executive Board are limited to a maximum of one year's fixed salary, in line with the Code and the Dutch Financial Supervision Act�

External auditor

The external auditor is appointed by the General Meeting upon nomination of the Supervisory Board, after recommendation by the Audit Committee� On 28 May 2015, the General Meeting appointed KPMG Accountants N�V� as the external auditor of NN Group for the financial years 2016 through 2019� On 29 May 2019, KPMG Accountants N�V� was reappointed as the external auditor of NN Group for the financial years 2020 through 2022�

The external auditor may be questioned at the general meeting in relation to its audit opinion on the annual accounts� The external auditor will therefore attend and be entitled to address this meeting� The external auditor attended the meetings of the Audit Committee and the Risk Committee of the Supervisory Board in 2020�

More information on NN Group's policy on external auditor independence is available on the website of NN Group (NN Group - Auditor information (nn-group.com)�

Risk management and control systems

A description of the main characteristics of the risk management and control systems of NN Group and its group companies can be found in Note 51 'Risk management' to the Consolidated annual accounts, which is deemed to be incorporated by reference herein�

The Executive Board is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the annual accounts in accordance with generally accepted accounting principles� Internal control over financial reporting includes those policies and procedures that:

• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets�
• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the annual accounts in accordance with generally accepted accounting principles (International Financial Reporting Standards as endorsed by the European Union and Part 9 of Book 2 of the Dutch Civil Code)�
• Provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of assets that could have a material effect on the annual accounts�

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements� Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate�

Corporate Governance Statement

This chapter, including parts of this Annual Report incorporated by reference, together with the separate publication 'Application of the Dutch Corporate Governance Code by NN Group', dated 10 March 2021, which is available on the NN Group website, also serves as the corporate governance statement referred to in section 2a of the Decree contents of the management report (Besluit inhoud bestuursverslag)�

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Remuneration report

Opening statement

On behalf of the Supervisory Board, I am pleased to present NN Group's 2020 Remuneration report� 2020 was a challenging year in which the Remuneration Committee addressed several relevant topics� On 1 December 2019, part of the Dutch law implementing the revised EU Shareholders' Rights Directive entered into force, and the 2019 Remuneration report was drafted in line with these new legal requirements� The remuneration policies of the Executive Board and the Supervisory Board were reviewed and brought in line with the new legislation� The Supervisory Board held various consultation sessions with stakeholders, including shareholders, proxy advisors, shareholder interest groups, employee representation, regulators, customers and the general public to obtain their feedback on the draft updated policies� Based on the outcome of these consultation sessions, the Executive Board Remuneration Policy and Supervisory Board Remuneration Policy were amended� We are pleased that these policies were adopted by the General Meeting on 28 May 2020, with 94�60% of votes in favour for the proposed Remuneration policy for the members of the Executive Board, and 97�57% of votes in favour for the proposed remuneration policy for the members of the Supervisory Board� The proposal, to give a positive advice on the 2019 Remuneration report, was adopted with 93�17% of the votes in favour for the proposal�

2020 was also marked by the Covid-19 pandemic and the launch of the company's new strategy� In August 2020, the Remuneration Committee reviewed the performance objectives for the Executive Board, which were approved by the Supervisory Board in January 2020 to ensure alignment with the new strategy as announced at the Capital Markets Day in June and to determine whether any changes were required in light of the Covid-19 pandemic� The Remuneration Committee concluded that the approved 2020 objectives should be maintained for the remainder of the year� We further elaborate on this in the paragraph on the performance objectives�

In preparation for the Supervisory Board decision-making in relation to the execution of the remuneration policies, including establishing the 2020 variable remuneration award and the Base Salary levels for the year 2021 for members of the Executive Board, we reached out to various stakeholders, including shareholders, proxy advisors, shareholder interest groups, and employee representation� During the informal dialogue sessions, views were gathered on, among other things, how the Covid-19 pandemic should be reflected in executive remuneration decisions, and other elements important to the various stakeholders� Furthermore, consideration has been given to statements and views as expressed by (inter)national regulators� The input allowed the Supervisory Board to balance the interest of different stakeholders in the decision making processes with regard to the execution of the Executive Board Remuneration Policy� The outcome of this process can be found in this remuneration report� Another topic that was addressed during the consultation sessions was increased transparency in relation to the performance objectives� The Supervisory Board is pleased to present more detailed disclosures on the 2020 performance objectives in this report compared with previous years, and this will remain a focus area in the coming years�

H.M. (Hélène) Vletter-van Dort

Chair of the Remuneration Committee

Introduction

This remuneration report describes NN Group's remuneration policy and methodology� Furthermore, details are provided on the remuneration of the Supervisory Board and the Executive Board� This Report is divided into the following subsections:

I Remuneration in general
II Remuneration of the Executive Board
III Remuneration of the Supervisory Board

Reference is made to Note 48 'Key management personnel compensation' in the Consolidated annual accounts for more information on the remuneration of the Executive Board, Management Board and Supervisory Board, including loans and advances provided to the members of these Boards� This remuneration report serves as the report referred to in article 2:135b of the Dutch Civil Code and Best Practice Provision 3�4�1 of the Dutch Corporate Governance Code� The information provided in this remuneration report is based on the current applicable remuneration policies of NN Group�

I Remuneration in general

NN Group has an overall remuneration policy, as described in the NN Group Remuneration Framework, which sets out guidelines and principles for all country and business unit remuneration policies within NN Group� NN Group aims to apply a clear and transparent remuneration policy that is adequate to attract and retain expert leaders, senior staff and other highly qualified employees� The remuneration policy is also designed to support NN Group's employees to act with integrity and to carefully balance the interests of our stakeholders�

It supports doing business with the future in mind, and aims to focus on creating long-term value for all stakeholders�

NN Group's remuneration policy for executives and senior staff is based on a total compensation approach, and is benchmarked on a regular basis with relevant national and international peers, both within the financial sector and outside the financial sector� Clear financial and non-financial performance objectives are set which are aligned with the overall strategy of NN Group, both in the short term and the long term, to ensure that remuneration is properly linked to individual, team and NN Group performance� The remuneration policy supports a focus on the company's long-term interests and the interests of its customers and various stakeholders by ensuring that there is careful management of risk and that staff are not encouraged, via remuneration, to take excessive risk� In addition, the remuneration policy ensures that NN Group complies with all the relevant (inter)national regulations on remuneration, such as the Act on the Remuneration Policies of Financial Undertakings (Wet beloningsbeleid financiële ondernemingen), as relevant to our business�

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With respect to performance year 2020, the total number of staff of NN Group eligible for variable remuneration is 6,264� The total amount of variable remuneration approved is EUR 71�3 million, which will be paid in March or April 2021� In 2020, five persons employed within NN Group and NN IP received a total remuneration of more than EUR 1 million� For this calculation, the individual base salary, awarded variable remuneration and, where applicable, life course savings schemes, individual saving allowances and pension contributions were included�

II Remuneration of the Executive Board

The Executive Board members have an assignment contract (in Dutch: overeenkomst van opdracht) with NN Group N�V� Mr Knibbe was appointed as member and chair of the Executive Board and CEO of NN Group by the Supervisory Board on 1 October 2019, after notification to the General Meeting of NN Group at an extraordinary general meeting (EGM) on 26 September 2019� The term of appointment of Mr Knibbe will end at the close of the annual general meeting to be held in 2023� Mr Rueda was appointed to the Executive Board as Chief Financial Officer and vice-chair on 1 March 2014 and as vice-chair of the Management Board on 7 July 2014� He was reappointed as member of the Executive Board and again designated as CFO of NN Group and as vice-chair of the Executive Board on 31 May 2018 for a term of four years� His term of appointment will end at the close of the annual general meeting to be held in 2022� Executive Board members can be reappointed by the Supervisory Board for consecutive periods of up to four years after notification to the General Meeting of NN Group� The remuneration policy for the Executive Board members was adopted by the General Meeting on 28 May 2020, effective as from 1 January 2020� The data presented in this report relates to remuneration awarded to the Executive Board members in respect of the whole of 2020� The 2020 total remuneration as provided to the members of the Executive Board is in line with the applicable remuneration policy� The Supervisory Board has not applied any deviation or derogation from the remuneration policy of the Executive Board�

The remuneration of the Executive Board members consists of a combination of fixed remuneration ('base salary'; of which 80% is paid in cash and 20% in shares) and base salary allowances, variable remuneration (of which 50% is paid in cash and 50% in shares), pension arrangements and other emoluments as described below� To support the long-term value creation, a retention period of five years starting from the date of award is applicable to all share awards� The detailed composition of the Executive Board remuneration is illustrated below�

Composition Executive Board remuneration

Remuneration elements

Base salary in cash Base salary in shares

Total base salary

Portion 80% 20% 100%Split

Awarded

Retention period

5 years

Variable remuneration

Min 0%

50% in cash

Target 16%

Max 20%

60% deferred 40% upfront

50% in shares

60% deferred 40% upfront

5 years 5 years

Total direct remuneration

Min 100%

Target 116%

Max 120%

Deferral periodRetention period

1 One-third of the deferred cash and deferred shares awards vest each year�
2 Subject to 'Hold-Back and Claw-Back' clauses and leaver provisions during the deferral period up to the third anniversary award moment�
3 Subject to 'Hold-Back and Claw-Back' clauses and leaver provisions during the deferral period� Subsequently, the retention period applies until the 5th anniversary award moment�

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The total compensation of the Executive Board members is benchmarked on a regular basis against market data that includes peers both inside and outside the financial sector in the Netherlands and abroad� The peers are selected with reference to asset base, market capitalisation, revenue and number of employees� For 2020, the peer group consists of ABN AMRO Bank, Achmea, Aegon, Ageas, Akzo Nobel, Aviva, CNP Assurances, Koninklijke DSM, Legal & General Group, Munich Re, Rabobank, Randstad, Swiss Life Holding, Talanx and Wolters Kluwer� The Supervisory Board has determined to continue with this peer group in 2021�

In line with the remuneration policy as adopted by the General Meeting on 28 May 2020, the Supervisory Board aims to set the remuneration levels below market median� If, based on the annual benchmark, the remuneration level is not in line with the approved policy, appropriate measures will be considered� The Supervisory Board also takes into account all stakeholders' interests, including social context, before finalising executive pay levels�

Only in the event of an involuntary exit (e�g� a mutual agreement at NN Group's initiative where the Executive Board member has been requested to leave), Executive Board members are eligible to an exit arrangement limited to a maximum of one year base salary�

Exit arrangements will in no way qualify as reward for failure (within the meaning of the applicable regulatory requirements)�

Executive Board base salary

The Executive Board base salary is based on the remuneration policy of the Executive Board, and aims to reflect the balanced interests of stakeholders� No changes in the base salary of the Executive Board members of NN Group have been adopted throughout 2020�

Executive Board variable remuneration

The remuneration policy for the Executive Board members combines the short- and long-term variable components into one structure� This structure supports both long-term value creation and short-term company objectives� Performance objectives reflect NN Group's medium-term strategic priorities as communicated to the market and as such contribute to the long-term strategy of NN Group� Variable remuneration is based on both the financial and non-financial performance of the individual and the company� The Supervisory Board annually determines the performance objectives at the start of the performance year and defines the relevant 'at target' level� Following the performance year, the Supervisory Board determines the extent to which the financial performance objectives are met based on the full-year financial results� The extent to which non-financial performance objectives are met is also assessed by the Supervisory Board�

The emphasis on long-term performance indicators within the variable component of the compensation package is realised by means of deferral of 60% of the total variable remuneration� Furthermore, an annual re-evaluation by the Supervisory Board takes place with the option to hold back (i�e� prevent from ever vesting) and/or claw back vested and paid variable remuneration� The Supervisory Board has the authority to reclaim any variable remuneration allocated to an Executive Board member based on inaccurate data and/or behaviour that led to significant harm to the company� In addition, the Supervisory Board has the authority to adjust variable remuneration in the event that the application of the predetermined performance criteria would result in an undesired outcome�

The maximum variable remuneration of the Executive Board members for performance year 2015 onwards has been capped at 20% of the base salary and the on target level of the annual variable remuneration has been set at 16% of the base salary� This is in line with the requirements of the Dutch regulatory regime as applicable to NN Group�

Additionally, the short-term component of variable remuneration (the so called 'Upfront Portion') is 40% of the total variable remuneration and is equally divided between an award in cash and an award in stock� The Deferred Portion is also equally divided between an award in deferred cash and an award in deferred stock� Both the deferred cash and the deferred stock awards are subject to a tiered vesting on the first, second and third anniversary of the grant date (one-third per annum)� Similar to the shares awarded as fixed remuneration, a retention period of five years starting from the date of award is applicable to all stock awards (both upfront and deferred), with the exception that part of the stock will be withheld at the relevant date of vesting to cover any income tax liability arising from the vested share award (withhold-to-cover)� In addition to the general principles described above, more specific details on the 2020 variable remuneration of the Executive Board members are provided below�

Performance for the year 2020 is assessed based on a number of objectives, as outlined in the paragraph below� Estimated risks and capital adequacy were also taken into account when determining the award of variable remuneration�

Performance objectives of the Executive Board members

The performance of the Executive Board members is assessed annually against their financial and non-financial objectives as set by the company's Supervisory Board� When determining the objectives for a specific performance year, the Supervisory Board takes into account the medium-term financial, as well as the non-financial company targets� When determining relative weighting between the financial and non-financial performance objectives, the Supervisory Board takes into account the requirements of the Dutch regulatory regime as applicable to NN Group and the Executive Board remuneration policy as in place per 2020� At the end of the year, the Supervisory Board executes a performance assessment to determine to what extent the objectives have been met� The Supervisory Board is supported by various departments, such as Finance, Corporate Development, Compliance, Corporate Relations, Risk and HR, to provide relevant input�

To keep pace with relevant developments, we need to continuously adapt and evolve as a company� In June 2020, the company presented a new strategy, including a new purpose, ambition, and five strategic commitments�

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The ambition of our company describes what we want to achieve in the years to come� We want to be an industry leader, known for our customer engagement, customer centric products, talented people, and contribution to society� All our different business entities are expected to contribute to the delivery of our ambition�

To realise this ambition, we identified the following five strategic commitments:

∙ Customers and distribution - we see our customers as the starting point of everything we do
∙ Products and services - we develop and provide attractive products and services
∙ People and organisation - we empower our colleagues to be their best
∙ Financial strength - we are financially strong and seek solid long-term returns for shareholders

∙

Society - we contribute to the well-being of people and the planetIn January 2020, the Supervisory Board approved the performance objectives for the Executive Board members for the year 2020� In May 2020, the Supervisory Board requested a review of these objectives, taking into account the potential impact of Covid-19 and the new strategic framework� The outcome of this review, as discussed in the Remuneration Committee meeting on 5 August 2020, was to continue with the approved 2020 performance objectives for the remainder of the year, as they were considered to remain relevant and applicable in the context of Covid-19 and the new strategic framework� As a result, the performance objectives and ambition levels for the Executive Board members for the year 2020 did not change, and the Executive Board members' performance was assessed against these objectives�

Strategy, customer and society	Weight CEO	Weight CFO
Serve our customers' lifetime needs and contribute positively to society	35%	35%

We have the ambition to be a preferred brand; delivering value added propositions, engaging with customers to meet their life time needs, and offering solutions that create long-term value� These components are covered by the following objectives and contribute to the commitments Customers and distribution and Products and services in our new strategic framework�

With regard to our broader reputation, and track record and role in society, we also monitor how our performance in these areas is being perceived� As we incorporate ESG criteria in our investment decisions, offer products and services with social and environmental added value, further strengthen our sustainability performance, and invest in local communities through donations and volunteering, we set specific objectives (covered in the commitment on Society in our new strategic framework)� It is our aim to contribute to the well-being of people and the planet, do business with the future in mind, and contribute to a world where people can thrive for many generations to come�

Key results areas and achievements: i. Redefine the corporate strategy, translate into a clear roadmap with actions and metrics, followed-up by successful implementation

A new Group strategy was created, with close involvement of senior management from different parts of the organisation, and considering the inputs of many stakeholders, including shareholders� In June 2020, the new strategy and targets were shared with investors at the virtual Capital Markets Day, and a Group-wide engagement programme was launched for NN Group's employees� As part of the strategic process, comprehensive portfolio reviews were performed� Detailed business unit strategies were updated to reflect the new Group strategy and incorporated strategic initiatives in the long-term financial planning cycle� This process was completed in December 2020� To ensure the new strategy is being implemented and the desired outcomes are achieved, the Management Board held regular Strategy & Transformation meetings, performed deep-dives into specific related initiatives, and invested in collecting external viewpoints and dialogue� The objective which was set in relation to redefining the corporate strategy and the implementation hereof has been met�

ii. Increase customer engagement and brand consideration

Through customer feedback we learn about their preferences and views, helping us modify our services to meet their needs� We focus on several key metrics such as Net Promoter Score (NPS), Brand Awareness, Brand Consideration and preference� All these metrics combined is what we refer to as the NN Global Brand Health Monitor (GBHM)� The GBHM is used to track how our brand is perceived externally, and to gain insights into brand performance and development over time�

Customer engagement

One of the key metrics of our GBHM is the internationally recognised NPS system to measure how likely it is that the customers recommend products and services to colleagues, friends, or family� There are different sorts of NPS� The relational NPS (NPS-r) is used to measure the strength of our relationship with customers, and to gain understanding of long-term customer satisfaction over time�

In 2020, NPS-r scores have been under pressure and decreased significantly in most markets� At the same time the scores of the market average also decreased� 4 (out of 11) insurance business units scored above market average NPS-r in 2020� The score is equal to the number of insurance business units that scored above market average in 2019� The overall objective to increase the NPS-r scores has not been met�

Brand Consideration

At least twice a year, key brand indicators are measured, such as brand consideration and brand preference� Brand consideration is measured to monitor the preferences of customers� Due to the pandemic many marketing communication plans had to be adjusted and activities were postponed� As a result most business units did not meet some of their brand targets� Overall, brand consideration has remained relatively stable for the majority of the business units�

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In order to improve our brand consideration scores over time, NN Group will continue to invest in a strong and relevant brand� In addition to brand consideration, the brand awareness, brand preference and the recognition of the brand promise are closely monitored� The overall objective to improve the brand consideration has not been met�

More information on how customers view our products and services can be found on page 28 of our Annual Review�

iii. Include in top 10% best performing companies in our sector

In line with the ambition to create long-term value creation for our stakeholders, policies and set KPIs and targets in the area of sustainability have been adopted� Internal management information processes and stakeholder dialogues are used to measure the progress and assess the performance� Valuable insight on our performance is provided from a variety of independent external organisations that perform sustainability ratings and benchmarks� This allows NN Group to keep track on the year-on-year progress we make and helps to identify areas for improvement�

NN Group remains within the top 10% of best performing companies in our sector according to various sustainability ratings and assessments� In 2020, NN Group prolonged its inclusion in the Dow Jones Sustainability Index (DJSI)� Scores are given on three different dimensions: economic, environmental, and social� Overall NN scored 84 (out of 100), compared with the average industry score of 39� Furthermore, NN Group's scores improved in the FTSE4Good (from 4�9 to 5) and MSCI (from A to AA) indices, and our score increased significantly in the CDP (from C to A-) for the disclosure and action on climate change� NN's ESG ranking by Sustainalytics decreased slightly from position 4 to 12, out of 256 insurance companies� The overall objective in relation to be included in the top 10% best performing companies in the sector has been met�

iv. Support customers to address relevant societal challenges and increase monetary donations and/or hours volunteered Support customers to address relevant societal challenges

In 2020, many different initiatives have been taken throughout the Group to support customers in addressing the challenges of the Covid-19 pandemic� For example, payment holidays for insurance premiums and mortgage interest to customers facing financial difficulties, and temporary coverage of delivery services for businesses that normally do not deliver products were provided� In the Netherlands, new products, services and partnerships were introduced to help customers address challenges in the area of sustainable housing (Powerly and Woonnu), loneliness (Klup) and household debt (Schuldhulproute) and these solutions have become an integral part of the new strategy going forward�

Increase monetary donations and/or hours volunteered

In 2020, the communities where we live and work were supported in different ways� Charitable donations increased from EUR 3�2 million in 2019 to EUR 4�7 million in 2020� This increase is mainly due to the donations given in response to emergencies and initiatives related to the pandemic� At the same time, because of the physical restrictions for volunteering caused by the Covid situation, the hours employees volunteered have decreased from approximately 12,000 to approximately 8,000� NN Group worked closely with external partners to find solutions by shifting to digital volunteering, which enabled NN Group to still donate valuable time to educate and coach young people and help people overcome financial difficulties�

The overall objective to support customers to address relevant societal challenges and increase monetary donations and/or hours volunteered has been met� NN Group will continue to put resources, expertise, and networks to use for the advancement of its communities and are committed to contribute to the well-being of people and the planet as part of the new strategy�

Financial targets	Weight CEO	Weight CFO
Attractive long-term return for our shareholders	40%	25%

We are committed to achieve a strong operation performance in our operating units, maintain a strong capital position, and deliver attractive and growing capital returns to shareholders� This is measured by the following objectives and contributes to the Financial strength commitment in our new strategic framework� We are focused on maintaining a strong balance sheet and creating solid financial returns for our shareholders by using our financial strength, scale and international footprint, and by efficiently managing our customers' assets, and our own insurance portfolios�

Key results areas and achievements: i. Operating result

The full-year 2020 operating result amounted to EUR 1,889 million, up 5�3% on 2019� This was mainly driven by a higher investment margin due to the shift to higher yielding assets at Netherlands Life� The 2020 operating result has been achieved in the context of a negative impact from the reinsurance premium related to the longevity transactions completed in May 2020� The operating result objective has been met�

ii. Solvency II operating capital generation (OCG)

As expected, the operating capital generation of NN Group in 2020 was impacted by the exceptional market circumstances and low interest rates, as well as the suspension of bank dividends� On the other hand, the accelerated shift to higher-yielding assets provided some offset in the form of higher investment return� The full-year 2020 operating capital generation amounted to EUR 993 million, compared with EUR 1,349 million in 2019�

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The OCG objective, as determined in January 2020, has not been met� Although the decrease in OCG was mainly market driven and additional guidance on the development of OCG was provided at the Capital Markets Day, the initial objective has continued to be used to assess the performance of the Executive Board members for the year 2020� The final OCG outcome was in line with the guidance given at the Capital Markets Day�

iii. Free cash flow to holding

The free cash flow to the holding during 2020 amounted to EUR 1,070 million, compared with EUR 1,187 million in 2019� NN Group followed the request for prudence from regulators and limited dividend flows from subsidiaries to the holding� As such, the remittances were negatively impacted by these Covid-19 related restrictions, which were partially offset by management actions, such as the longevity deal, which led to an increase in dividends from NN Life� The free cash flow to holding objective has been met�

iv. Administrative expense reduction

NN Group remained committed to further reduce administrative expenses during the year 2020� The 2020 administrative expenses of the business units in the scope of the cost reduction target amounted to EUR 1,566 million� The administrative expenses have been reduced by EUR 44 million compared with 2019� This ultimately resulted in the realisation of the longer-term ambition of reducing the administrative expenses by EUR 400 million compared with the full-year 2016 administrative expense base, given that the actual reduction amounted to EUR 404 million� The administrative expense reduction objective was around target level�

For the CFO, additional consideration has been given to the budget discipline of the Finance department�

Sustainable business and prudent management of risks	Weight CEO	Weight CFO
Sustainable control environment & operational culture	15%	30%

We are committed to operate our businesses within the risk appetite, and in accordance with regulations� This will be covered by the following objectives and contributes to the Financial strength commitment in our new strategic framework� We are focused on maintaining a strong balance sheet, and creating solid financial returns for shareholders by using our financial strength, scale and international footprint, and by efficiently managing our customers' assets and our own insurance portfolios�

Key results areas and achievements: i. Annual effective Control Framework (ECF) cycle with first and second line control monitoring materially completed in accordance with the Control Monitoring Standard, providing positive assurance for the conclusions

The annual ECF cycle was materially completed given sufficient first and second line control monitoring (following risk appetite setting and risk assessment) to enable conclusions whether NN Group and its units operate within risk appetite, despite some delay in control testing due to Covid-19�

ii. Understand business position relative to NN's Risk Appetite and either demonstrate through ECF that the business operates within NN's Risk Appetite or develop approved remediation plans

The business position relative to risk appetite is transparent through the ERM-ECF reporting� Relevant remediation actions resulting from the ERM-ECF Report are discussed in the MB, after which they are deemed approved�

A sound control environment is beneficial to customers and other stakeholders alike� The focus for 2020 was on further maturing a sustainable control environment and documenting the same in a single GRC (Governance, Risk & Control) application� Despite some delays due to Covid-19, this enabled to draw conclusions on whether or not NN Group and its units operated within risk appetite� Areas where units operate outside our risk appetite were, and are being, locally adequately addressed�

The overall objectives in relation to Sustainable business and prudent management of risks have been met�

Employee engagement	Weight CEO	Weight CFO
We empower our colleagues to be their best�	10%	10%

We are committed to empower our employees to bring our values, purpose and ambition to life for our customers� We encourage diversity of thinking and invest in new capabilities and personal development� These aspects will be covered by the following objectives and contribute to the People and organisation commitment in our new strategic framework� We nurture a culture aligned with our purpose, values and ambitions, which supports continuous learning, collaboration and diversity of thinking� We consider all colleagues to be talents and invest in an inclusive and inspiring environment, so we are together best equipped to take our business into the future�

Key results areas and achievements: i. 2020 Employee engagement ≥ 7.4 as measured by Peakon. Execute three personal actions following up the 2019 survey results

The most recent employee engagement survey as measured by the external provider Peakon (November 2020) resulted in an employee engagement score of 7�9 versus a target of ≥ 7�4� This is an increase of +0�5 compared with year-end 2019 (7�4)� The outcome of the survey shows that NN Group's employees work well together remotely and can achieve good results� 82% of our colleagues gave their opinions through the survey, providing meaningful insights to make NN an even better place to work� NN Group scored 0�1 higher on the driver engagement than the industry benchmark (which is composed of similar financial companies)� The overall employee engagement objective has been met�

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ii. Solid process to have ready-now successors in place for key/critical roles

In 2020, NN Group further built on its talent management approach� Important steps have been taken to design a group wide key talent management process that nurtures a structured and integrated identification, development, cross-organisation mobilisation and retainment of senior management and critical positions� NN Group will start working according to the key talent management process as of 2021�

This process will further improve the talent review, succession planning, and aims to stimulate ongoing dialogue and actionable development� The leadership development portfolio is strengthened by designing another leadership programme focusing on fast tracking potentials in order to build the internal succession pool� These processes are all based on the new behavioural profile, the i-LEAD profile, which NN Group developed with the launch of its new strategy in 2020� This objective has been met�

iii. Gender balanced appointments to maintain diversity level of 36% women in senior roles

In December 2020, NN's Statement on Diversity and Inclusion (D&I) was launched to explain what NN Group stands for, including the move towards a more inclusive work environment� The D&I approach focuses on different dimensions, of which gender diversity is one� A D&I target was set for gender diversity, aiming to reach 40% women in senior management positions by 2023� The male/female ratio across the company is well-balanced, but less so within senior management positions� A broader definition of senior management positions has been implemented in 2020, which increases the scope� In 2020, 33% of the senior management positions were fulfilled by women (based on the old definition: 34% in 2020 compared with 36% in 2019)� There is still work to be done to reach the target of 40% by 2023�

NN Group therefore enhanced its focus on topics such as succession planning, talent review and leadership development� Different actions were taken to better balance the male/female ratio and to increase awareness� In 2020, balanced participation was carefully considered in the new leadership development programme and the NN Group traineeship� Furthermore, NN Group introduced the organisation wide inspirational Wo{men}talk sessions, and sponsored the TEDxWomenAmsterdam event�

Based on the second biennial equal pay statistical analysis in the Netherlands, when comparing similar compensation grades and job profiles, gender does not influence pay: equal pay is offered for equal work� From 2021, this will be measured annually and across more countries� NN Group believes remaining focused on equal pay is key to driving D&I� It is therefore a recurring topic on the agenda of the Management Board and Supervisory Board� This objective has not been met�

2020 Variable Remuneration award

The Supervisory Board concluded that the Executive Board delivered a strong performance in an unprecedented year� The majority of the financial objectives were scored above or at around target� The exception was the Operating Capital Generation objective that was impacted by the exceptional market circumstances and low interest rates, as well as the suspension of bank dividends� As a result, the overall score on the financial objectives was below target� The overall assessment in relation to the achievements on the non-financial objectives was above target�

When establishing these awards, additional consideration has been given to the views and interests of the various stakeholders of NN Group, with a special focus of the effects of the Covid-19 pandemic� More specifically, the following factors were deemed relevant in determining the 2020 variable remuneration award� For NN Group shareholders, dividend payments and the share buyback programme were temporarily suspended in April 2020 in response to regulatory restrictions, and were resumed in August 2020�

Many actions were taken to ensure an uninterrupted service to NN Group customers and to find tailored solutions for specific needs� For employees, the Covid-19 pandemic in 2020 required great flexibility, while at the same time it led to enhanced digitisation and new ways of working� The employees embraced these ongoing changes throughout the year, as evidenced by the increase in the engagement score� No Covid-19 related reorganisations have been introduced, and the company has focused on the vitality and well-being of the employees� From a societal perspective, NN Group did not apply for government support during the pandemic, and has continued to focus on supporting our communities during Covid-19 through various initiatives, for example by donations of medical supplies, or through donating computers which enabled children to participate in home schooling�

It is obvious that the Covid-19 pandemic provided for an exceptional leadership challenge, where many actions have been taken to minimise the impact of the pandemic� Even though 2020 was an extraordinary year, the Supervisory Board concluded that NN Group has succeeded in maintaining the ordinary course of business to a great extent and as such delivering ongoing value to its various stakeholders, including the shareholders, customers, employees and society at large� In the context as described above, the Supervisory Board did not change the performance objectives and ambition levels for the Executive Board members for the year 2020, and the Executive Board members' performance was assessed against these objectives� All-in-all, it was deemed appropriate to apply the Executive Board remuneration policy as adopted by the General Meeting, without invoking discretionary adjustments�

On the basis of the overall assessment, the Supervisory Board concluded to award the CEO a variable remuneration of 100% of target, which is EUR 284,000 and the CFO a variable remuneration of 109% of target, which is EUR 247,788� In 2020, there was no hold back applied to unvested deferred variable remuneration nor was claw back applied to paid or vested variable remuneration for any of the Executive Board members�

Executive Board pension arrangements

The pension arrangement for the Executive Board members is the same as the pension arrangement that is applicable to all staff of NN Group in the Netherlands and comprises a collective defined contribution (CDC) plan up to the annual tax limit (EUR 110,111 as from 1 January 2020) and a taxable individual savings allowance on pensionable fixed remuneration exceeding the tax limit�

The table on the next page provides details on the amount of contribution that was paid by NN Group to the pension arrangement of the Executive Board members�

Financial	Report of the	Corporate	Annual
developments	Supervisory Board	governance	accounts

Executive Board other emoluments

The Executive Board members were eligible for a range of other emoluments, such as health care insurance, life cycle saving scheme, security, transportation, external tax advice and expat allowances (CFO only)� The Executive Board members were also able to obtain banking and insurance services from NN Group in the ordinary course of business and on terms that apply to all employees of NN Group in the Netherlands� As at 31 December 2020, the Executive Board members had EUR 320,000 of loans outstanding with NN Group regulated entities� No guarantees or advanced payments were granted to the Executive Board members� The table below provides details on the amount of emoluments that was paid by NN Group to the benefit of the Executive Board members�

Remuneration of the Executive Board members (in EUR 1,000 and gross)

David Knibbe	Delfin Rueda
2019 (3 months'
2020	period)3	2020	2019
Base salary in cash	1,420	355	1,137	1,137
Base salary in shares	355	89	284	284
Total base salary	1,775	444	1,421	1,421
Variable remuneration	284	71	248	284
Total direct remuneration	2,059	515	1,669	1,705
Employer contribution to pension fund	24	6	24	25
Individual savings allowance1	388	97	305	339
Other emoluments	146	38	221	227
Employer cost social security2	72	18	59	61
Relative proportion base salary versus variable remuneration	86�2%/13�8%	86�2%/13�8%	85�1%/14�9%	83�3%/16�7%

1 The individual saving allowance scheme is applicable for both the Executive Board and staff of NN Group in the Netherlands�
2 The employer social security contributions do not impact the overall remuneration received by Executive Board members�
3 Mr Knibbe was appointed by the Supervisory Board as member and chair of the Executive Board and CEO of NN Group on 1 October 2019� His 2019 remuneration in the capacity of CEO of NN Group is shown in the table above, which covers a period of three months�

The total remuneration as disclosed in the table above (for 2020: EUR 5�0 million) includes all variable remuneration related to the performance year 2020� Under IFRS-EU, certain components of variable remuneration are not recognised in the profit and loss account directly, but are allocated over the vesting period of the award� The comparable amount recognised in staff expenses in 2020 and therefore included in 'Total expenses' in 2020, relating to the fixed expenses of 2020 and the vesting of variable remuneration of 2020 and earlier performance years, is EUR 5�0 million�

2020 Variable remuneration of the Executive Board members (in EUR 1,000 and gross)

Upfront cash paid

Deferred cash	Upfront shares	Deferred shares
granted	granted	granted

Total

Delfin Rueda

David Knibbe

284

Delfin Rueda

248

Long-term incentives awarded in previous years and in 2020 to the Executive Board members

The Executive Board members receive deferred cash and upfront and deferred share awards under NN Group's Aligned Remuneration Plan (ARP)� The table below provides a summary of the number of NN Group shares awarded and vested for the Executive Board members during 2020 under the ARP�

Overview of number of NN Group shares awarded and vested for the Executive Board members during 2020

The overview of shares awarded and vested of Mr Knibbe also includes shares awarded for his performance prior to his appointment as member of the Executive Board on 1 October 2019�

Outstanding and	Outstanding and
unvested per	Awarded	Vested	unvested per	Vesting
1 January	during	during	31 December	price in
2020	2020	2020	2020	euros
40

Plan

Award Date

David Knibbe1

Deferred Shares Plan

20 March 2017

1,110

23�41

Deferred Shares Plan

15 March 2018

2,114

1,056

1,058

21�11

Deferred Shares Plan

18 March 2019

3,709

1,236

2,473

20�01

Deferred Shares Plan

16 March 2020

3,439

Upfront Shares Plan

16 March 2020

2,293

21�11

Delfin Rueda

Deferred Shares Plan

20 March 2017

681

23�41

Deferred Shares Plan

15 March 2018

1,214

606

608

21�11

Deferred Shares Plan

18 March 2019

2,123

707

1,416

20�01

Deferred Shares Plan

16 March 2020

2,379

Upfront Shares Plan

16 March 2020

1,586

21�11

Financial	Report of the	Corporate	Annual
developments	Supervisory Board	governance	accounts

The table below shows a summary of the (vested) NN Group shares held by the Executive Board members on 31 December 2020 (including the shares vested during 2020) and 31 December 2019�

NN Group shares held by the Executive Board members

2020 2019

David Knibbe	31,920	22,224
Delfin Rueda	50,988	43,760

Remuneration of the Executive Board members, company performance and average employee remuneration (amounts in EUR 1,000 and gross)

2020

2019

2018

2017 2016

Total direct remuneration Mr Friese

Executive Board remuneration
Total direct remuneration Mr Knibbe	2,059	515
Total direct remuneration Mr Friese1	1,061 1,970 1,713 1,558
Total direct remuneration Mr Rueda	1,669	1,705 1,586 1,292 1,230

Company performance
Operating capital generation	993	1,349
Operating result	1,889	1,794 1,626 1,586 1,227
Solvency II ratio	210%	224% 230% 199% 241%

Average remuneration
Average employee remuneration	90�3	88�6 85�1 83�7 84�3
Pay ratio2	30:1	26:1 30:1 29:1 26:1

Mr Friese stepped down as member and chair of the Executive Board and CEO of NN Group as of 12 August 2019� His remuneration in the capacity of CEO of NN Group is shown in the table above�

2 The ratio compares the total CEO compensation and the remuneration of all staff ('Pay ratio') as stated in the Dutch Corporate Governance Code� For the CEO, the total remuneration used in the pay ratio is the total remuneration as disclosed in the Remuneration report� For the staff members, the total remuneration used in the pay ratio is the total remuneration as disclosed in the Consolidated annual accounts Note 28 'Staff expenses'; in order to provide a meaningful comparison, the total remuneration of the staff population excludes external staff costs and the remuneration of the CEO of NN Group� NN Group adjusted the pay ratio calculation method in order to already align with the new prescribed method of the Dutch Monitoring Commission Corporate Governance, as published on 14 December 2020� Compared with previous years, the new pay ratio calculation includes components of variable remuneration under IFRS-EU and social security costs� The Supervisory Board takes the pay ratio into consideration when deciding on the remuneration for the Executive Board members�

III Remuneration of the Supervisory Board

The Supervisory Board was comprised of the following members in 2020: Mr Cole, Mr Harryvan (until the close of the annual general meeting on 28 May 2020), Mr Hauser, Mr Jenkins, Mr Ruijter (until 12 April 2020), Mr Schoen, Ms Streit and Ms Vletter-van Dort�

More information on the composition of the Supervisory Board and its Committees can be found in the Report of the Supervisory Board, on pages 10-22 of this Financial Report�

The remuneration policy of the Supervisory Board members and the remuneration for the individual members of the Supervisory Board were adopted by the General Meeting on 28 May 2020� The 2020 total remuneration as paid to each of the members of the Supervisory Board is in line with the adopted policy and the adopted remuneration for the individual members of the Supervisory Board�

NN Group does not grant variable remuneration, shares or options to the Supervisory Board members� This ensures the independence of the Supervisory Board, contributes to NN Group's long-term performance and is in line with the Dutch Corporate Governance Code� Supervisory Board members may obtain banking and insurance services from NN Group in the ordinary course of business and on terms that are customary in the sector� As from 31 December 2020, the Supervisory Board members do not have loans outstanding with NN Group regulated entities� No repayments were made during the year� No guarantees or advanced payments were granted to Supervisory

Board members�

In line with market practice, a distinction is made between chair, vice-chair and other Supervisory Board members� A fixed annual expense allowance is payable to cover all out-of-pocket expenses� Travel and lodging expenses in relation to meetings are paid by NN Group�

The remuneration for the members of the Supervisory Board (in EUR)

ChairVice-chairMember

Fixed annual fee Supervisory Board

Fixed annual fee for position in Committee

Fixed annual expense allowance to cover out of pocket expenses (travel and lodging will be paid)

110,000 17,000 9,000

72,500 65,000

n/a1 13,500

9,000 9,000

There are no vice-chair positions in Supervisory Board Committees�

Fees and allowances of Supervisory Board members1

Total fixed gross

Fixed annual fees expense allowanceIn EUR and gross1

2020

2019

2020

2019

Corporate	Annual
governance	accounts
Total international
attendance fees2	VAT	Total (including VAT)
2019

2019

2020

2019

J D

R R

D�A� (David) Cole (Chair)3	147,794	9,000	n/a	32,927	27,563	189,721	158,814
J�H� (Jan) Holsboer (Chair)4	47,500	3,750	n/a	10,763	62,013
D�H� (Dick) Harryvan5	47,083	90,000	3,750	6,500	n/a	4,000	10,675	21,105	61,508	121,605
H�J�G� (Heijo) Hauser	101,778	74,500	9,000	6,500	n/a	28,000	23,263	22,890	134,041	131,890
J�W� (Hans) Schoen	105,175	74,500	9,000	6,500	n/a	4,000	23,977	17,850	138,152	102,850
H�M� (Hélène) Vletter-van Dort6	107,133	74,584	9,000	6,500	n/a	4,000	24,388	17,868	140,521	102,952
R�W� (Robert) Jenkins	92,036	66,500	9,000	6,500	n/a	28,000	21,218	21,210	122,254	122,210
R�A� (Robert) Ruijter7	26,067	70,500	2,550	6,500	n/a	4,000	6,010	17,010	34,627	98,010
C�C�F�T� (Clara) Streit	92,036	66,500	9,000	6,500	n/a	28,000	21,218	21,210	122,254	122,210

1 This table shows the fixed fees, expense allowances and international attendance fees (applicable in 2019) for the members of the Supervisory Board of NN Group for 2020 and 2019� In addition, Mr Hauser was appointed as Supervisory Board member of Nationale-Nederlanden Schadeverzekering Maatschappij N�V�, NN Non-life Insurance N�V�, as from 21 January 2020, NN Re Netherlands N�V� as from 1 March
2020 and VIVAT Schadeverzekeringen N�V� as from 1 April 2020 and Mr Schoen was appointed as Supervisory Board member of Nationale-Nederlanden Levensverzekering Maatschappij N�V� as from
21 January 2020� The total fees (including VAT) for these roles were EUR 79,355�
2 In the remuneration policy of the Supervisory Board members, which was adopted by the General Meeting on 28 May 2020 and is effective from 1 January 2020, international attendance fees have been abolished�
3 Mr Cole was appointed as member of the Supervisory Board as per 1 January 2019� He was appointed Chair of the Supervisory Board as per 29 May 2019�
4 Mr Holsboer stepped down as member and Chair of the Supervisory Board as of 29 May 2019�
5 The term of appointment of Mr Harryvan ended at the close of the annual general meeting 28 May 2020� His remuneration in the capacity of vice-chair of the Supervisory Board of NN Group is shown in the table above�

6 Ms Vletter-van Dort was appointed Vice-chair of the Supervisory Board as per 28 May 2020�
7 The term of appointment of Mr Ruijter ended on 12 April 2020� His remuneration in the capacity of Supervisory Board member of NN Group is shown in the table above�

Works councils
Members Central Works Council 2020
Anne-Marieke Arendsen-Kramer
Casper Stokman	NN Group Staven
David Reijger	NN Investment Partners
Dennis Molenberg	Zicht
Dirk Meijer	NN Schade & Inkomen
Edwin Kramer	NN Schade & Inkomen
Frank Klein	NN Leven

Daily board member

Financial	Report of the	Corporate	Annual
developments	Supervisory Board	governance	accounts
NN Leven

Hans Grolle Henri Kruk

Jan Paul Rietveld Koen van Vliet Marcel Naumann Moulay Yakoubi Naomi Hoogstad Niels van Rosmalen Robert Heinsbroek Sebastiaan van der Wal Willem van der HelDaily board member Vice-chairSecretaryChair

NN Group Staven

Members European Works Council 2020

EU country

Belgium Bulgaria Czech Republic Greece Hungary Netherlands

Primary member

René de Meij (Secretary) Silvia Sabotinova

Svetlana Kuznetcová (Chair) Maria Tapini

Viktória Jeney-Schwartz Willem van der Hel

Anne Hesselman (Vice-chair) Niels van Rosmalen

Poland Romania Slovakia SpainAgnieszka Majerkiewicz Oana Rotariu

Mária Vitálošová Angel OteroNN Customer & Commerce NN Group Staven

NN Bank NN Bank

NN Investment Partners AZL

NN Leven

NN Schade & Inkomen ABN AMRO VerzekeringenNN Leven

Deputy

Wim Scheers Iva Doskova Jaroslav Čepelka Foteini Goublia Fanni Graf-Sarosi Jan Paul RietveldAnna Rejzler-Wojtyś Andreea Niculae Marcela Šarlinová Trini Aguilar

Financial	Report of the	Corporate	Annual
developments	Supervisory Board	governance	accounts

Statements Dutch Financial Supervision Act and Dutch Corporate Governance Code

The Executive Board is required to prepare the annual accounts and the Report of the management board (bestuursverslag) of NN Group N�V� for each financial year in accordance with applicable Dutch law and the International Financial Reporting Standards (IFRS) as endorsed by the European Union�

As required by section 5:25c paragraph 2(c) of the Dutch Financial Supervision Act, each of the signatories hereby confirms that to the best of his knowledge:

• The NN Group N�V� 2020 annual accounts, as referred to in section 2:361 of the Dutch Civil Code including the relevant additional information as referred to in section 2:392 paragraph 1 of the Dutch Civil Code, give a true and fair view of the assets, liabilities, financial position and profit or loss of NN Group N�V� and the enterprises included in the consolidation taken as a whole�
• The NN Group N�V� 2020 Report of the management board (bestuursverslag), as referred to in section 2:391 of the Dutch Civil Code, gives a true and fair view of the position at the balance sheet date, and the development and performance of the business during the 2020 financial year of NN Group N�V� and the enterprises included in the consolidation taken as a whole, together with a description of the principal risks NN Group N�V� is confronted with�

With reference to best practice provision 1�4�3(i), (iii) and (iv) of the Dutch Corporate Governance Code, the Executive Board hereby confirms that, to the best of its knowledge:

• The NN Group N�V�'s description of its risk management organisation and framework as described in the Report of the management board (bestuursverslag) including Note 51 'Risk management' to the Consolidated annual accounts provides sufficient insights into any material failings in the effectiveness of the internal risk management and control systems,
• Based on the current state of affairs, it is justified that the financial reporting is prepared on a going concern basis, and
• The NN Group N�V� 2020 Report of the management board (bestuursverslag) includes those material risks and uncertainties that are relevant to the expectation of NN Group N�V�'s continuity for the period of 12 months after the preparation of the report�

The Executive Board of NN Group N�V� assessed the effectiveness of the internal control over financial reporting during 2020� Based on the Executive Board's assessment, with reference to best practice provision 1�4�3(ii) of the Dutch Corporate Governance Code, the Executive Board of NN Group N�V� concluded that the risk management and control systems provide reasonable assurance that the financial reporting does not contain any material inaccuracies�

The Hague, 10 March 2021

David Knibbe

CEO, Chair of the Executive Board

Delfin Rueda

CFO, Vice-chair of the Executive Board

Financial	Report of the	Corporate	Annual
developments	Supervisory Board	governance	accounts

Annual accounts contents

Consolidated annual accounts

Consolidated balance sheet 46

Consolidated profit and loss account 47

Consolidated statement of comprehensive income 48

Consolidated statement of cash flows 49

Consolidated statement of changes in equity 51

Notes to the Consolidated annual accounts 53

1 Accounting policies 53

2 Covid-19 pandemic 68

3 Cash and cash equivalents 69

4 Financial assets at fair value through profit or loss 69

5 Available-for-sale investments 70

6 Loans 72

7 Associates and joint ventures 73

8 Real estate investments 75

9 Property and equipment 76

10 Intangible assets 77

11 Deferred acquisition costs 78

12 Assets and liabilities held for sale 78

13 Other assets 79

14 Equity 79

15 Subordinated debt 85

16 Debt securities issued 85

17 Other borrowed funds 85

18 Insurance and investment contracts, reinsurance contracts 86

19 Customer deposits and other funds on deposit 89

20 Financial liabilities at fair value through profit or loss 90

21 Other liabilities 90

22 Gross premium income 91

23 Investment income 92

24 Net fee and commission income 92

25 Valuation results on non-trading derivatives 93

26 Underwriting expenditure 93

27 Amortisation of intangible assets and other impairments 95

28 Staff expenses 95

29 Interest expenses 96

30 Other operating expenses 96

31 Earnings per ordinary share 97

32 Segments 97

33 Principal subsidiaries and geographical information 102

34 Taxation 105

35 Fair value of financial assets and liabilities 109

36 Fair value of non-financial assets 116

37 Derivatives and hedge accounting 119

38 Assets by contractual maturity 120

39 Liabilities by maturity 121

40 Assets not freely disposable 123

41 Transferred, but not derecognised financial assets 123

42 Offsetting of financial assets and liabilities 123

43 Contingent liabilities and commitments 124

44 Legal proceedings 125

45 Companies and businesses acquired and divested 127

46 Structured entities 132

47 Related parties 133

48 Key management personnel compensation 134

49 Fees of auditors 136

50 Subsequent events 137

51 Risk management 137

52 Capital and liquidity management 166

Authorisation of the Consolidated annual accounts 175

Parent company annual accounts

Parent company balance sheet 176

Parent company profit and loss account 177

Parent company statement of changes in equity 178

Notes to the Parent company annual accounts 180

Authorisation of the Parent company annual accounts 186

Other information

Independent auditor's report 187

Appropriation of result 204

Contact and legal information

IBC

Consolidated balance sheet Amounts in millions of euros, unless stated otherwise

Consolidated balance sheet

As at 31 December

Financial	Report of the	Corporate	Annual
developments	Supervisory Board	governance	accounts
2020

notes 2019

Financial assets at fair value through profit or loss:Reinsurance contracts

Real estate investmentsAssets held for sale Deferred tax assets

Total assets

Equity

Shareholders' equity (parent)Other borrowed funds

Customer deposits and other funds on deposit

Assets
Cash and cash equivalents 3	12,382	6,436
Financial assets at fair value through profit or loss: 4
- investments for risk of policyholders	34,797	34,433
- non-trading derivatives	14,833	10,189
- designated as at fair value through profit or loss	1,336	1,184
Available-for-sale investments 5	118,175	117,644
Loans 6	65,428	61,768
Reinsurance contracts 18	1,063	988
Associates and joint ventures 7	5,673	5,457
Real estate investments 8	2,444	2,571
Property and equipment 9	448	465
Intangible assets 10	1,063	995
Deferred acquisition costs 11	1,871	1,913
Assets held for sale 12	113
Deferred tax assets 34	73	84
Other assets 13	4,039	4,470
Total assets	263,738	248,597
Equity
Shareholders' equity (parent)	36,731	30,768
Minority interests	277	260
Undated subordinated notes	1,764	1,764
Total equity 14	38,772	32,792
Liabilities
Subordinated debt 15	2,383	2,409
Debt securities issued 16	1,694	1,992
Other borrowed funds 17	7,542	7,614
Insurance and investment contracts 18	170,672	168,251
Customer deposits and other funds on deposit 19	15,803	15,161
Financial liabilities at fair value through profit or loss: 20
- non-trading derivatives	4,012	3,232
Liabilities held for sale 12	93
Deferred tax liabilities 34	6,329	4,030
Other liabilities 21	16,438	13,116
Total liabilities	224,966	215,805
Total equity and liabilities	263,738	248,597

References relate to the notes starting with Note 1 'Accounting policies'� These form an integral part of the Consolidated annual accounts�

NN Group N.V. 46

Consolidated profit and loss account

For the year ended 31 December

notes

Gross premium income 22	13,822	14,508
Investment income 23	4,574	4,373
Result on disposals of group companies	100	8
- gross fee and commission income	1,042	1,037
- fee and commission expenses	-338	-328
Net fee and commission income: 24	704	709
Valuation results on non-trading derivatives 25	901	166
Foreign currency results	-434	-9
Share of result from associates and joint ventures 7	219	619
Other income	74	84
Total income	19,960	20,458
- gross underwriting expenditure	17,316	20,024
- investment result for risk of policyholders	-1,733	-4,794
- reinsurance recoveries	-1,095	-237
Underwriting expenditure: 26	14,488	14,993
Amortisation of intangible assets and other impairments 27	27	32
Staff expenses 28	1,621	1,564
Interest expenses 29	511	519
Other operating expenses 30	964	921
Total expenses	17,611	18,029
Result before tax	2,349	2,429
Taxation 34	423	444
Net result	1,926	1,985

2020 2019

Net result

For the year ended 31 December

Net result attributable to:
Shareholders of the parent	1,904	1,962
Minority interests	22	23
Net result	1,926	1,985

Earnings per ordinary share

For the year ended 31 December and amounts in euros

Earnings
Basic earnings	5�88	5�76
Diluted earnings	5�87	5�75

2020 2019

Reference is made to Note 31 'Earnings per ordinary share' for the disclosure on the Earnings per ordinary share�

NN Group N.V. 47

For the year ended 31 December 2019

Financial	Report of the	Corporate	Annual
developments	Supervisory Board	governance	accounts
2020

Consolidated statement of comprehensive income

- changes in cash flow hedge reserve

- unrealised revaluations available-for-sale investments and other

- realised gains/losses transferred to the profit and loss account

Net result	1,926	1,985
- unrealised revaluations available-for-sale investments and other	3,110	4,487
- realised gains/losses transferred to the profit and loss account	-574	-286
- changes in cash flow hedge reserve	3,422	4,284
- deferred interest credited to policyholders	-750	-1,403
- share of other comprehensive income of associates and joint ventures	5	-4
- exchange rate differences	-110	53
Items that may be reclassified subsequently to the profit and loss account:	5,103	7,131

- remeasurement of the net defined benefit asset/liability	6	-38
- unrealised revaluations property in own use	-3	3
Items that will not be reclassified to the profit and loss account:	3	-35
Total other comprehensive income	5,106	7,096
Total comprehensive income	7,032	9,081
Comprehensive income attributable to:
Shareholders of the parent	7,009	9,039
Minority interests	23	42
Total comprehensive income	7,032	9,081

Reference is made to Note 34 'Taxation' for the disclosure on the income tax effects on each component of comprehensive income�

NN Group N.V. 48

For the year ended 31 December 2019

Financial	Report of the	Corporate	Annual
developments	Supervisory Board	governance	accounts
2020

Consolidated statement of cash flows

- available-for-sale investments
Net cash flow from operating activities
Investments and advances:
- group companies, net of cash acquired
- loans
- associates and joint ventures
- real estate investments
- property and equipment
- investments for risk of policyholders
- other investments

Disposals and redemptions: - group companies - available-for-sale investments

Result before tax	2,349	2,429
Adjusted for:
- depreciation and amortisation	157	146
- deferred acquisition costs and value of business acquired	63	-41
- underwriting expenditure (change in insurance liabilities)	39	-277
- realised results and impairments of Available-for-sale investments	-654	-347
- other	188	15
Taxation paid (received)	-250	37
Changes in:
- non-trading derivatives	2,276	2,433
- other financial assets at fair value through profit or loss	-54	-493
- loans	-864	-2,140
- other assets	781	437
- customer deposits and other funds on deposit	522	464
- financial liabilities at fair value through profit or loss - non-trading derivatives	-886	-1,899
- other liabilities	3,337	3,177
Net cash flow from operating activities	7,004	3,941
Investments and advances:
- group companies, net of cash acquired	-539	-104
- available-for-sale investments	-24,928	-26,437
- loans	-7,589	-5,652
- associates and joint ventures	-349	-531
- real estate investments	-66	-120
- property and equipment	-51	-144
- investments for risk of policyholders	-10,005	-6,430
- other investments	-82	-43
Disposals and redemptions:
- group companies	38
- available-for-sale investments	28,717	19,750
- loans	4,903	4,465
- associates and joint ventures	121	497
- real estate investments	176	6
- property and equipment	2	2
- investments for risk of policyholders	10,240	7,182
- other investments	414
Net cash flow from investing activities	550	-7,107
Repayments of subordinated debt	-12
Repayments of debt securities issued	-300
Proceeds from other borrowed funds	5,144	4,704
Repayments of other borrowed funds	-5,249	-2,827
Dividend paid	-400	-411
Purchase/sale of treasury shares and warrants	-621	-697
Coupon on undated subordinated notes	-78	-78
Net cash flow from financing activities	-1,504	679
Net cash flow	6,050	-2,487

NN Group N.V. 49

Consolidated statement of cash flows continued

Included in Net cash flow from operating activities

For the year ended 31 December

Interest paid

Interest received

Interest received	4,272	4,410
Interest paid	-574	-533

Dividend received	533	512

Cash and cash equivalents

For the year ended 31 December

2020 2019

Effect of exchange rate changes on cash and cash equivalents

Cash and cash equivalents at end of the period

Cash and cash equivalents at beginning of the period	6,436	8,886
Net cash flow	6,050	-2,487
Effect of exchange rate changes on cash and cash equivalents	-96	37
Cash and cash equivalents at end of the period	12,390	6,436

2020 2019

NN Group N.V. 50

Consolidated statement of changes in equity

Consolidated statement of changes in equity (2020)

Balance at 31 December 2020

Balance at 1 January 2020

Employee stock option and share plans Coupon on undated subordinated notes Changes in the composition of the group and other changes

Balance at 1 January 2020	41 12,572 18,155 30,768 260 1,764 32,792
Unrealised revaluations available-for-sale investments and other	3,109 3,109 1 3,110
Realised gains/losses transferred to the profit and loss account	-574 -574 -574
Changes in cash flow hedge reserve	3,422 3,422 3,422
Deferred interest credited to policyholders	-750 -750 -750
Share of other comprehensive income of associates and joint ventures	5 5 5
Exchange rate differences	-110 -110 -110
Remeasurement of the net defined benefit asset/liability	6 6 6
Unrealised revaluations property in own use	-3 -3 -3
Total amount recognised directly in equity (Other comprehensive income)	- - 5,105 5,105 1 - 5,106
Net result for the period	1,904 1,904 22 1,926
Total comprehensive income	- - 7,009 7,009 23 - 7,032
Changes in share capital	-2 2 - -
Dividend	-394 -394 -6 -400
Purchase/sale of treasury shares	-622 -622 -622
Employee stock option and share plans	1 1 1
Coupon on undated subordinated notes	-59 -59 -59
Changes in the composition of the group and other changes	28 28 28
Balance at 31 December 2020	39 12,574 24,118 36,731 277 1,764 38,772

Total Shareholders'

Share capitalShare premiumUndatedReserves

equity (parent)

Minority	subordinated	Total
interest	notes	equity
51

Consolidated statement of changes in equity continued

Consolidated statement of changes in equity (2019)

Share capitalTotal Shareholders'

Share premiumUndatedReserves

equity (parent)Minority interestsubordinated notesTotal equity

Balance at 1 January 2019

12,572

10,237

22,850

234

1,764 24,848

Unrealised revaluations available-for-sale investments and other

Realised gains/losses transferred to the profit and loss account

Changes in cash flow hedge reserve Deferred interest credited to policyholders Share of other comprehensive income of associates and joint ventures

Exchange rate differences Remeasurement of the net defined benefit asset/liability

Unrealised revaluations property in own use

Total amount recognised directly in equity (Other comprehensive income)

-286 4,284 -1,403

4,468

-286 -286

4,284 4,284

-1,403 -1,403

4,468

-4 53 -38

53 53

-38 -38

-4 -4

19 4,487

3 3

7,077

- 7,096

Net result for the period

Total comprehensive income

1,962

23 1,985

9,039

- 9,081

Dividend

Purchase/sale of treasury shares Employee stock option and share plans Coupon on undated subordinated notes Changes in the composition of the group and other changes

Balance at 31 December 2019

-387 -707 2 -59 30

-707 -707

2 2

-59 -59

12,572

18,155

-387

-24 -411

8 38

30,768

260

1,764

32,792

Financial	Report of the	Corporate	Annual
developments	Supervisory Board	governance	accounts

Notes to the Consolidated annual accounts

NN Group N�V� (NN Group) is a public limited liability company (naamloze vennootschap) incorporated under Dutch law� NN Group has its official seat in Amsterdam, the Netherlands and its office address in The Hague, the Netherlands� NN Group is recorded in the Commercial Register no� 52387534� The principal activities of NN Group are described in the section 'About NN'� Amounts in the annual accounts are in millions of euros, unless stated otherwise�

1 Accounting policies

NN Group prepares its Consolidated annual accounts in accordance with International Financial Reporting Standards as endorsed by the European Union (IFRS-EU) and Part 9 of Book 2 of the Dutch Civil Code� In the Consolidated annual accounts, the term IFRS-EU is used to refer to these standards, including the decisions NN Group made with regard to the options available under IFRS-EU� IFRS-EU provides a number of options in accounting policies� The key areas, in which IFRS-EU allows accounting policy choices and the related NN Group accounting policy, are summarised as follows:

• Under IFRS 4, an insurer may continue to apply its existing pre-IFRS accounting policies for insurance contracts, provided that certain minimum requirements are met� Upon adoption of IFRS in 2005, NN Group decided to continue the then existing accounting principles for insurance contracts� NN Group operates in different countries and the accounting principles for insurance contracts follow local practice in these countries� For NN Group's businesses in the Netherlands, NN Group for example applies accounting standards generally accepted in the Netherlands (Dutch GAAP) for its insurance liabilities� Changes in those local accounting standards (including Dutch GAAP) subsequent to the adoption of IFRS-EU are considered for adoption on a case-by-case basis� If adopted, the impact thereof is accounted for as a change in accounting policy under IFRS-EU�
• NN Group's accounting policy for real estate investments is fair value, with changes in the fair value reflected immediately in the Consolidated profit and loss account�
• NN Group's accounting policy for property in own use is fair value, with changes in the fair value reflected, after tax, in the 'Revaluation reserve' in 'Other comprehensive income' (equity)� A net negative revaluation on individual properties is reflected immediately in the Consolidated profit and loss account�

NN Group applies fair value hedge accounting to portfolio hedges of interest rate risk (macro hedging) under the EU 'carve out' of IFRS-EU�

NN Group's accounting policies under IFRS-EU and its decision on the options available are included below� Except for the options included above, the principles are IFRS-EU and do not include other significant accounting policy choices made by NN Group� The accounting policies that are most significant to NN Group are included in the section 'Critical accounting policies'�

The preparation of the Consolidated annual accounts requires the use of estimates and assumptions� These estimates and assumptions affect the reported amounts of the assets and liabilities and the amounts of the contingent liabilities at the balance sheet date, as well as reported income and expenses for the year� The actual outcome may differ from these estimates�

Changes in IFRS-EU effective in 2020

Interest rate benchmark reform

In September 2019, the International Accounting Standards Board (IASB) issued amendments to IAS 39, IFRS 7 and IFRS 9 in relation to the interest rate benchmark reform� These amendments eliminate the impact, if any, of anticipated interest rate benchmark reforms on derivatives qualifying for hedge accounting under IFRS� The amendments are effective for NN Group as of 1 January 2020�

In August 2020, the IASB issued additional amendments regarding actual interest rate benchmark reforms that are effective as of 1 January 2021, but may be adopted early� NN Group adopted these amendments as of 1 January 2020�

There was no material impact on NN Group as a result of these amendments�

Other changes in accounting policies

Japan Closed Block VA

As of 2020 NN Group changed its accounting for the Japan Closed Block VA portfolio, part of the reporting segment Other� Under the revised accounting, further elements of the portfolio are accounted for at fair value through profit or loss in order to better align with the accounting of the related hedging derivatives� The impact of this change as at 1 January 2020, which was not material for NN Group, is included directly in shareholders' equity�

1 Accounting policies continued

Upcoming changes in IFRS-EU

The most relevant upcoming changes in IFRS-EU that are relevant for NN Group relate to IFRS 9 'Financial instruments' and IFRS 17 'Insurance contracts'�

IFRS 9 'Financial Instruments'

IFRS 9 'Financial Instruments' was issued by the IASB in July 2014� IFRS 9 replaces most of the current IAS 39 'Financial Instruments: Recognition and Measurement' and includes requirements for classification and measurement of financial assets and liabilities, impairment of financial assets and hedge accounting�

Classification and measurement

The classification and measurement of financial assets under IFRS 9 will depend on NN Group's business model and the instrument's contractual cash flow characteristics� These may result in financial assets being recognised at amortised cost, at fair value through other comprehensive income (equity) or at fair value through profit or loss� In many instances, the classification and measurement under IFRS 9 will be similar to IAS 39, although changes in classification will occur� The classification of financial liabilities remains unchanged�

Impairment

The recognition and measurement of impairments under IFRS 9 is intended to be more forward-looking than under IAS 39� The new impairment requirements will apply to all financial assets measured at amortised cost and at fair value through other comprehensive income (equity)� Initially, a provision is required for expected credit losses resulting from default events that are expected within the next twelve months� In the event of a significant increase in credit risk, a provision is required for expected credit losses resulting from all possible default events over the expected life of the financial assets�

Hedge accounting

The hedge accounting requirements of IFRS 9 aim to simplify hedge accounting� IFRS 9 includes the option to continue applying IAS 39 for hedge accounting�

IFRS 9 is effective as of 2018� However, in September 2016 the IASB issued an amendment to IFRS 4 'Insurance Contracts' (the 'Amendment')� This Amendment addresses the issue arising from the different effective dates of IFRS 9 and the new standard on accounting for insurance contracts (IFRS 17)� The Amendment allows applying a temporary exemption from implementing IFRS 9, so that it can be implemented together with IFRS 17� This exemption is only available to entities whose activities are predominantly connected with insurance�

NN Group's activities are predominantly connected with insurance as defined in this Amendment as more than 90% of liabilities are connected with insurance activities� Liabilities connected with insurance activities of NN Group include insurance liabilities within the scope of IFRS 4, certain investment contract liabilities and other liabilities relating to insurance entities and activities� Liabilities of NN Group that are not related to insurance activities represent mainly the liabilities of the Banking operations� NN Group qualified for the temporary exemption at the reference date (31 December 2015) and continued to qualify for the temporary exemption after the acquisition of Delta Lloyd in 2017�

NN Group applies the temporary exemption and, therefore, NN Group expects to implement IFRS 9 together with IFRS 17�

The Amendment requires certain additional disclosures on whether financial assets that remain accounted for under IAS 39 meet the definition of 'solely payments of principal and interest on the principal amount outstanding' in IFRS 9 as well as additional information on the credit rating of such assets and whether such assets are 'low credit risk'� In this context, 'low credit risk' is equivalent to 'investment grade' as defined by ratings agencies (generally a rating of BBB- or better)� These additional disclosures are included in Note 35 'Fair value of financial assets and liabilities' and in Note 51 'Risk management'� These disclosures reflect the current business models and the current accounting choices and interpretations� These may therefore change when IFRS 9 and IFRS 17 are implemented�

Certain subsidiaries within NN Group (mainly NN Bank) do not qualify under the Amendment� Therefore, the financial information of these entities is based on IFRS 9 in the statutory IFRS reporting of these entities, but not in the consolidated financial reporting of NN Group� The impact of applying IFRS 9 for these entities would not have been significant to NN Group� NN Group does not have associates or joint ventures for which IFRS 9 has a significant impact�

IFRS 17 'Insurance Contracts'

IFRS 17 'Insurance Contracts' was issued in May 2017 and a revised version was issued in June 2020� IFRS 17 covers the recognition and measurement, presentation and disclosure of insurance contracts and replaces the current IFRS 4� IFRS 17 will fundamentally change the accounting for insurance liabilities and deferred acquisition costs (DAC) for all insurance companies, including NN Group and its subsidiaries� IFRS 17 is not yet endorsed in the EU� If and when endorsed, IFRS 17 will be effective as of 1 January 2023�

NN Group will implement IFRS 17 together with IFRS 9 (see above)� NN Group initiated an implementation project and is performing impact assessments and parallel reporting runs� NN Group expects that the implementation of IFRS 9 and IFRS 17 will result in significant changes to its accounting policies and will have a significant impact on shareholders' equity, net result, presentation and disclosure� At this moment it is too early to disclose quantitative impact of the implementation as of 2023�

1 Accounting policies continued

The main features of IFRS 17 are:

• Measurement of the insurance liabilities in the balance sheet at current fulfilment value, being the sum of the present value of future cash flows and a risk adjustment
• Remeasurement of the current fulfilment value every reporting period using current assumptions and discount rates
• A Contractual Service Margin (CSM) recognised in the balance sheet that is equal to the unearned profit in the insurance contract at issue and is subsequently recognised as result in the profit and loss account over the remaining life of the portfolio
• Certain changes in the insurance liability are adjusted against the CSM and thereby recognised in the profit and loss account over the remaining life of the portfolio
• The effect of changes in discount rates is recognised either in the profit and loss account or in equity (OCI)
• The presentation of the profit and loss account and the disclosures in the notes will change fundamentally

IFRS 17 must be implemented retrospectively with amendment of comparative figures� However, several simplifications may be used on transition�

Changes in presentation

The presentation of and certain terms used in the Consolidated balance sheet, Consolidated profit and loss account, Consolidated statement of cash flows, Consolidated statement of changes in equity and the notes was changed to provide additional and more relevant information or (for changes in comparative information) to better align with the current period presentation� The impact of these changes is explained in the respective notes when significant�

Critical accounting policies and significant judgements

NN Group has identified the accounting policies that are most critical to its business operations and to the understanding of its results�

These critical accounting policies are those which involve the most complex or subjective judgements and assumptions and relate to insurance contracts, acquisition accounting, deferred acquisition costs, the determination of the fair value of real estate and financial assets and liabilities and impairments� In each case, the determination of these items is fundamental to the financial condition and results of operations and requires management to make complex judgements based on information and financial data that may change in future periods� As a result, determinations regarding these items necessarily involve the use of assumptions and subjective judgements as to future events and are subject to change, as the use of different assumptions or data could produce significantly different results� All valuation techniques used are subject to internal review and approval� For further details on the application of these accounting policies, reference is made to the applicable notes to the Consolidated annual accounts and the information below�

Reference is made to Note 51 'Risk management' for a sensitivity analysis of certain assumptions as listed below�

Acquisition accounting, goodwill and other intangible assets

NN Group's acquisitions are accounted for using the acquisition method of accounting� The consideration for each acquisition is measured at the aggregate of the fair value (at the date of acquisition) of assets acquired, liabilities incurred or assumed and equity instruments issued in exchange for control of the acquiree� Assets acquired include intangible assets such as brand names, client relationships and distribution channels� Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value� Goodwill, being the positive difference between the cost of the acquisition (including assumed debt) and NN Group's interest in the fair value of the acquired assets, liabilities and contingent liabilities as at the date of acquisition, is capitalised as an intangible asset� In case there is a negative difference between the cost of the acquisition (including assumed debt) and NN Group's interest in the fair value of the acquired assets, liabilities and contingent liabilities as at the date of acquisition, this is referred to as negative goodwill and is recognised in profit and loss in the reporting period the acquisition is finalised� Acquisition-related costs are recognised in the profit and loss account as incurred and presented in the profit and loss account as 'Other operating expenses'�

1 Accounting policies continued

The initial accounting for the fair value of the net assets of the companies acquired during the year may be determined only provisionally as the determination of the fair value can be complex and the time between the acquisition and the preparation of the annual accounts can be limited� The initial accounting shall be completed within a year after acquisition�

Valuation techniques are subjective in nature and significant judgement is involved in establishing the fair value for certain financial assets and liabilities� Valuation techniques involve various assumptions� The use of different valuation techniques and assumptions could produce significantly different estimates of the fair value�

Goodwill is allocated to cash generating units (reporting units) for the purpose of impairment testing of goodwill and other intangible assets� These cash generating units (reporting units) represent the lowest level at which goodwill is monitored for internal management purposes, which is either at the segment level or at a level below� This test is performed annually or more frequently if there are indicators of impairment� Under the impairment tests, the carrying value of the cash generating units (reporting units including goodwill) is compared to its recoverable amount which is the higher of its fair value less costs to sell and its value in use�

The identification of cash generating units and impairments is an inherently uncertain process involving various assumptions and factors, including expected future cash flows, discount rates, etc� Estimates and assumptions are based on management's judgement and other information available� Significantly different results can occur as circumstances change and additional information becomes known�

Insurance liabilities and deferred acquisition costs (DAC)

The determination of insurance liabilities and DAC is an inherently uncertain process, involving assumptions about factors such as social, economic and demographic trends, inflation, investment returns, policyholder behaviour, court decisions, changes in laws and other factors and, in the life insurance business, assumptions concerning mortality and morbidity trends� Specifically, assumptions that could have a significant impact on financial results include interest rates, mortality, morbidity, property and casualty claims, investment yields on equity and real estate and foreign currency exchange rates�

Insurance liabilities also include the impact of minimum guarantees which are contained within certain products� This impact is dependent upon the difference between the potential minimum benefits payable and the total account balance, expected mortality and surrender rates� The determination of the potential minimum benefits payable also involves the use of assumptions about factors such as inflation, investment returns, policyholder behaviour, mortality and morbidity trends and other factors�

The use of different assumptions could have a significant effect on insurance liabilities, DAC and underwriting expenditure� Changes in assumptions may lead to changes in insurance liabilities over time�

The adequacy of the insurance liabilities, net of DAC, is evaluated each reporting period by each business unit for the business originated in that business unit� The test involves comparing the established insurance liability with current best estimate actuarial assumptions� The use of different assumptions in this test could lead to a different outcome�

Fair value of real estate

Real estate investments are reported at fair value� The fair value of real estate investments is based on regular appraisals by external, qualified valuers� The fair value is established using valuation methods such as comparable market transactions, capitalisation of income methods or discounted cash flow calculations� The underlying assumption used in the valuation is that the properties are let or sold to third parties based on the actual letting status� The discounted cash flow analysis and capitalisation of income method are based on calculations of the future rental income in accordance with the terms in existing leases and estimations of the rental values for new leases when leases expire and incentives like rent-free periods� The cash flows are discounted using market-based interest rates that appropriately reflect the risk characteristics of real estate investments�

Reference is made to Note 36 'Fair value of non-financial assets' for more disclosure on fair value of real estate investments at the balance sheet date�

The use of different assumptions and techniques could produce significantly different valuations�

Fair value of financial assets and liabilities

The fair value of financial assets and liabilities is based on unadjusted quoted market prices at the balance sheet date where available� Such quoted market prices are primarily obtained from exchange prices for listed instruments� Where an exchange price is not available, market prices may be obtained from external market vendors, brokers or market makers� In general, positions are valued taking the bid price for a long position and the offer price for a short position� In some cases, positions are marked at mid-market prices�

When markets are less liquid there may be a range of prices for the same security from different price sources; selecting the most appropriate price requires judgement and could result in different estimates of the fair value�

1 Accounting policies continued

For certain financial assets and liabilities quoted market prices are not available� For these financial assets and liabilities, fair value is determined using valuation techniques, based on market conditions existing at each balance sheet date� These valuation techniques range from discounting of cash flows to valuation models, where relevant pricing factors including the market price of underlying reference instruments, market parameters (volatilities, correlations and credit ratings) and customer behaviour are taken into account�

Valuation techniques are subjective in nature and significant judgement is involved in establishing the fair value for certain financial assets and liabilities� Valuation techniques involve various assumptions regarding pricing factors� The use of different valuation techniques and assumptions could produce significantly different estimates of the fair value�

Reference is made to Note 35 'Fair value of financial assets and liabilities' for more disclosure on fair value of financial assets and liabilities at the balance sheet date�

Impairments

All debt and equity securities and loans (other than those carried at fair value through profit or loss) are subject to impairment testing every reporting period� The carrying value is reviewed in order to determine whether an impairment loss has been incurred� Evaluation for impairment includes both quantitative and qualitative considerations� For debt securities, such considerations include actual and estimated incurred credit losses indicated by payment default, market data on (estimated) incurred losses and other current evidence that the issuer may be unlikely to pay amounts when due� Equity securities are impaired when management believes that, based on a significant or prolonged decline of the fair value below the acquisition price, there is sufficient reason to believe that the acquisition cost may not be recovered� 'Significant' and 'prolonged' are interpreted on a case-by-case basis for specific equity securities� Generally, 25% and six months are used as triggers� Upon impairment of available-for-sale debt and equity securities, the full difference between the (acquisition) cost and fair value is removed from equity and recognised in net result� Impairments on debt securities may be reversed if there is a decrease in the amount of the impairment which can be objectively related to an observable event after the impairment� Impairments on equity securities cannot be reversed�

The identification of impairments is an inherently uncertain process involving various assumptions and factors, including financial condition of the counterparty, expected future cash flows, statistical loss data, discount rates, observable market prices, etc� Estimates and assumptions are based on management's judgement and other information available� Significantly different results can occur as circumstances change and additional information becomes known�

General accounting policies

Consolidation

NN Group comprises NN Group N�V� and all its subsidiaries� The Consolidated annual accounts of NN Group comprise the accounts of NN Group N�V� and all entities over which NN Group has control� NN Group has control over an entity when NN Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity� The assessment of control is based on the substance of the relationship between NN Group and the entity and considers existing and potential voting rights that are substantive� For a right to be substantive, the holder must have the practical ability to exercise that right�

For interests in investment entities, the existence of control is determined taking into account both NN Group's financial interests for own risk and its role as asset manager� Financial interests for risk of policyholders are not taken into account when the policyholders decide on the investment allocations of their insurance policies (i�e� the policyholder has the 'power') and assume all risks and benefits of these investments (i�e� the policyholder assumes the variable returns)�

The results of the operations and the net assets of subsidiaries are included in the profit and loss account and the balance sheet from the date control is obtained until the date control is lost� Minority interests are initially measured at their proportionate share of the subsidiaries' identifiable net assets at the date of acquisition� On disposal, the difference between the sales proceeds, net of directly attributable transaction costs, and the net assets is included in net result�

A subsidiary which NN Group has agreed to sell but is still legally owned by NN Group may still be controlled by NN Group at the balance sheet date and, therefore, still be included in the consolidation� Such a subsidiary may be presented as held for sale if certain conditions are met�

All intercompany transactions, balances and unrealised gains and losses on transactions between group companies are eliminated� Where necessary, the accounting policies used by subsidiaries are changed to ensure consistency with NN Group policies� In general, the reporting dates of subsidiaries are the same as the reporting date of NN Group N�V�

A list of principal subsidiaries is included in Note 33 'Principal subsidiaries and geographical information'�

Foreign currency translation

Functional and presentation currency

Items included in the annual accounts of each NN Group entity are measured using the currency of the primary economic environment in which the entity operates (the functional currency)� The Consolidated annual accounts are presented in euros, which is NN Group's functional and presentation currency�

1 Accounting policies continued

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions� Exchange rate differences resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account, except when deferred in equity as part of qualifying cash flow hedges or qualifying net investment hedges�

Exchange rate differences on non-monetary items, measured at fair value through profit or loss, are reported as part of the 'Fair value gain or loss'� Exchange rate differences on non-monetary items measured at fair value through other comprehensive income (equity) are included in the 'Revaluation reserve' in equity�

Exchange rate differences in the profit and loss account are generally included in 'Foreign currency results and net trading income'� Exchange rate differences relating to the disposal of available-for-sale debt and equity securities are considered to be an inherent part of the capital gains and losses recognised in 'Investment income'� As mentioned below in Group companies, on disposal of group companies, any exchange rate difference deferred in equity is recognised in the profit and loss account in 'Result on disposals of group companies'�

Group companies

The results and financial positions of all group companies that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• Assets and liabilities included in each balance sheet are translated at the closing rate at the date of that balance sheet
• Income and expenses included in each profit and loss account are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions)
• All resulting exchange rate differences are recognised in a separate component of equity in 'Currency translation reserve'

On consolidation, exchange rate differences arising from the translation of a monetary item that forms part of the net investment in a foreign operation and of borrowings and other instruments designated as hedges of such investments are taken to shareholders' equity� When a foreign operation is sold the corresponding exchange rate differences are recognised in the profit and loss account as part of the gain or loss on sale�

Goodwill and fair value adjustments arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the exchange rate prevailing at the balance sheet date�

Recognition and derecognition of financial instruments

Financial assets and liabilities are generally (de)recognised at trade date, which is the date on which NN Group commits to purchase or sell the asset� Loans and receivables are recognised at settlement date, which is the date on which NN Group receives or delivers the asset�

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where NN Group has transferred substantially all risks and rewards of ownership� If NN Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, it derecognises the financial asset if it no longer has control over the asset�

Realised gains and losses on investments are determined as the difference between the sales proceeds and (amortised) cost� For equity securities, the cost is determined using a weighted average per portfolio� For debt securities, the cost is determined by specific identification (generally FIFO)�

Fair value of financial assets and liabilities

The fair values of financial instruments are based on unadjusted quoted market prices at the balance sheet date where available� The quoted market price used for financial assets held by NN Group is the current bid price; the quoted market price used for financial liabilities is the current offer price�

The fair values of financial instruments that are not traded in an active market are determined using valuation techniques, based on market conditions existing at each balance sheet date� An active market for the financial instrument is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis� Assessing whether a market is active requires judgement, considering factors specific to the financial instrument�

Reference is made to Note 35 'Fair value of financial assets and liabilities' for the basis of determination of the fair value of financial instruments�

Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when NN Group has a current legally enforceable right to set off the recognised amounts and intends to either settle on a net basis or to realise the asset and settle the liability at the same time�

1 Accounting policies continued

Impairments of financial assets

NN Group assesses periodically and at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired� A financial asset or a group of financial assets is impaired and impairment losses are recognised if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, but before the balance sheet date, (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated� In the specific case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the assets are impaired� 'Significant' and 'prolonged' are interpreted on a case-by-case basis for specific equity securities; generally, 25% and six months are used as triggers�

In certain circumstances NN Group may grant borrowers postponement and/or reduction of loan principal and/or interest payments for a temporary period of time to maximise collection opportunities and, if possible, avoid default, foreclosure or repossession� When such postponement and/or reduction of loan principal and/or interest payments is executed based on credit concerns it is also referred to as 'forbearance'� In general, forbearance represents an impairment trigger under IFRS-EU� In such cases, the net present value of the postponement and/or reduction of loan principal and/or interest payments is taken into account in the determination of the appropriate level of loan loss provisioning as described below� If the forbearance results in a substantial modification of the terms of the loan, the original loan is derecognised and a new loan is recognised at its fair value at the modification date�

In determining the impairment loss, expected future cash flows are estimated on the basis of the contractual cash flows of the assets in the portfolio� NN Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant and then individually or collectively for financial assets that are not individually significant�

If there is objective evidence that an impairment loss on an asset carried at amortised cost has occurred, the amount of the loss is measured as the difference between the asset's carrying value and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate� The carrying value of the asset is reduced through the use of an allowance account (loan loss provisions) and the amount of the loss is recognised in the profit and loss account in 'Investment income'� If the asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract� When a loan is uncollectable, it is written off against the related loan loss provision� Such loans are written off after all the necessary procedures have been completed and the amount of the loss has been determined�

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the previously recognised impairment loss is reversed by adjusting the provision� The amount of the reversal is recognised in the profit and loss account�

If there is objective evidence that an impairment loss on available-for-sale debt and equity investments has occurred, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that asset previously recognised in net result - is removed from equity and recognised in the profit and loss account�

Impairment losses recognised on equity instruments can never be reversed� If, in a subsequent period, the impairment loss on a loan or a debt instrument classified as available-for-sale reverses, which can be objectively related to an event occurring after the impairment loss was recognised in the profit and loss account, the impairment loss is reversed through the profit and loss account�

Maximum credit risk exposure

The maximum credit risk exposure for items on the balance sheet is generally the carrying value for the relevant financial assets� For the off-balance sheet items, the maximum credit exposure is the maximum amount that could be required to be paid� Reference is made to Note 43 'Contingent liabilities and commitments' for these off-balance sheet items� Collateral received is not taken into account when determining the maximum credit risk exposure� The manner in which NN Group manages credit risk and determines credit risk exposures is explained in Note 51 'Risk management'�

Leases

The leases entered into by NN Group as a lessee are primarily operating leases� At inception of a contract, NN Group assesses whether a contract is, or contains, a lease� A contract is, or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration� The net present value of operating lease commitments is recognised on the balance sheet as a 'right of use asset' under Property and equipment or Real estate investments and a lease liability is recognised under Other liabilities� NN Group does not recognise a right of use asset and a lease liability for short-term leases that have a lease term of 12 months or less and for leases of low value assets� The lease payments associated with these leases are recognised as an expense�

1 Accounting policies continued

Taxation

Income tax on the result for the year comprises current and deferred tax� Income tax is generally recognised in the profit and loss account, but is recognised directly in equity if the tax relates to items that are recognised directly in equity�

Current tax consists of the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years� The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any� It is measured using tax rates enacted or substantively enacted at the reporting date�

Deferred tax is provided in full, using the liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying values in the balance sheet� Deferred tax is determined using tax rates (and laws) applicable in the jurisdictions in which NN Group is liable to taxation, that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled� Deferred tax assets and liabilities are not discounted�

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses carried forward where it is probable that future taxable profits will be available against which the temporary differences can be used� Unrecognised deferred tax assets are reassessed periodically and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used� Deferred tax is provided on temporary differences arising from investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by NN Group and it is probable that the difference will not reverse in the foreseeable future� The tax effects of income tax losses available for carry forward are recognised as an asset where it is probable that future taxable profits will be available against which these losses can be used�

Offsetting deferred tax assets with deferred tax liabilities is allowed as long as there is a legally enforceable right to offset current tax assets against current tax liabilities together with the intention to do so and the deferred taxes relate to income taxes levied by the same taxation authority on the same entity or on the same fiscal unity�

Employee benefits

Defined benefit pension plans

The net defined benefit asset or liability recognised in the balance sheet in respect of defined benefit pension plans is the fair value of the plan assets less the present value of the defined benefit obligation at the balance sheet date� Plan assets are measured at fair value at the balance sheet date� For determining the pension expense, the expected return on plan assets is determined using a high quality corporate bond rate identical to the discount rate used in determining the defined benefit obligation�

Defined contribution pension plans

For defined contribution plans, NN Group pays contributions to publicly or privately administered pension plans on a mandatory, contractual or voluntary basis� NN Group has no further payment obligations once the contributions have been paid� The contributions are recognised as staff expenses in the profit and loss account when they are due�

Other post-employment obligations

Some NN Group companies provide post-employment benefits to certain employees and former employees� The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period� The expected costs of these benefits are accrued over the period of employment using an accounting methodology similar to that for defined benefit pension plans�

Share-based payments

Share-based payment expenses are recognised as staff expenses over the vesting period� A corresponding increase in equity is recognised for equity-settled share-based payment transactions� The fair value of equity-settled share-based payment transactions is measured at the grant date� For cash-settled share-based payment transactions, a liability is recognised at fair value; this fair value is remeasured at every balance sheet date�

Interest income and expenses

Interest income and expenses are recognised in the profit and loss account using the effective interest method� The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expenses over the relevant period� The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts throughout the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying value of the financial asset or financial liability� When calculating the effective interest rate, NN Group estimates cash flows considering all contractual terms of the financial instrument (for example prepayment options) but does not consider future credit losses� The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts� Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss� Interest income and expenses from non-trading derivatives are classified as interest income and interest expenses in the profit and loss account, except for interest income/expense on derivatives for which no hedge accounting is applied� The latter is classified in 'Valuation results on non-trading derivatives', together with the changes in the (clean) fair value of these derivatives�

1 Accounting policies continued

Fiduciary activities

NN Group commonly acts as trustee and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions when conducting asset management activities� The assets and income arising thereon are excluded from these annual accounts, as they are not assets or income of NN Group� Fees received acting as trustee and in other fiduciary capacities are recognised as income�

Statement of cash flows

The Consolidated statement of cash flows is prepared in accordance with the indirect method, classifying cash flows as cash flows from operating, investing and financing activities� In the net cash flow from operating activities, the result before tax is adjusted for those items in the profit and loss account and changes in balance sheet items, which do not result in actual cash flows during the year�

Cash and cash equivalents comprise balances with less than three months maturity from the date of acquisition� Investments qualify as a cash equivalent if they are readily convertible into a known amount of cash and are not subject to significant risk of changes in value�

Cash flows arising from foreign currency transactions are translated into the functional currency using the exchange rates at the date of the cash flows�

The difference between the net cash flow in accordance with the statement of cash flows and the change in 'Cash and cash equivalents' in the balance sheet is due to exchange rate differences and is accounted for separately as part of the reconciliation of the net cash flow and the balance sheet change in 'Cash and cash equivalents'�

Cash flows arising from the issue of mortgage loans held in the banking operations are recognised under Net cash flows from operating activities, whereas cash flows related to mortgage loans held as investment in the insurance operations are recognised under Net cash flow from investing activities�

Accounting policies for specific items

Financial assets and liabilities at fair value through profit or loss (Notes 4 and 20)

A financial asset or liability is classified as at fair value through profit or loss if it is acquired principally for the purpose of selling in the short-term or if designated by management as such� Management will make this designation only if this eliminates a measurement inconsistency or if the related assets and liabilities are managed on a fair value basis�

Transaction costs on initial recognition are expensed as incurred� Interest income from debt securities and loans and receivables classified as at fair value through profit or loss is recognised in the profit and loss account using the effective interest method� Dividend income from equity instruments classified as at fair value through profit or loss is recognised in the profit and loss account when the dividend has been declared�

Investments for risk of policyholders

Investments for risk of policyholders are investments against insurance liabilities for which all changes in the fair value of invested assets are offset by similar changes in insurance liabilities� Investments for risk of policyholders are recognised at fair value; changes in fair value are recognised in the profit and loss account�

Derivatives and hedge accounting

Derivatives are recognised at fair value� Derivatives are presented as assets when the fair value is positive and as liabilities when the fair value is negative�

The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged� NN Group designates certain derivatives as hedges of highly probable future cash flows attributable to a recognised asset or liability or a forecast transaction (cash flow hedge), hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedge), or hedges of a net investment in a foreign operation� Hedge accounting is used for derivatives designated in this way provided certain criteria are met�

At the inception of the hedge transaction NN Group documents the relationship between hedging instruments and hedged items, its risk management objectives, together with the methods selected to assess hedge effectiveness� In addition, NN Group documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair value or cash flows of the hedged items� NN Group applies fair value hedge accounting to portfolio hedges of interest rate risk (macro hedging) under the EU 'carve out' of IFRS-EU� The EU 'carve-out' macro hedging enables a group of derivatives (or proportions) to be viewed in combination and jointly designated as the hedging instrument and removes some of the limitations in fair value hedge accounting relating to hedging deposits and under-hedging strategies� Under the IFRS-EU 'carve-out', hedge accounting may be applied to deposits and ineffectiveness only arises when the revised estimate of the amount of cash flows in scheduled time buckets falls below the designated amount of that bucket�

1 Accounting policies continued

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other comprehensive income (equity) in 'Cash flow hedge reserve'� The gain or loss relating to the ineffective portion is recognised immediately in the profit and loss account� Amounts accumulated in equity are recycled to the profit and loss account in the periods in which the hedged item affects Net result� When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the profit and loss account� When a forecast transaction is no longer expected to occur, the cumulative gain or loss previously reported in equity is transferred immediately to the profit and loss account�

Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in the profit and loss account, together with fair value adjustments to the hedged item attributable to the hedged risk� If the hedge relationship no longer meets the criteria for hedge accounting, the cumulative adjustment of the hedged item is, in the case of interest bearing instruments, amortised through the profit and loss account over the remaining term of the original hedge or recognised directly when the hedged item is derecognised� For non-interest bearing instruments, the cumulative adjustment of the hedged item is recognised in the profit and loss account only when the hedged item is derecognised�

Net investment hedges

Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges� Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income (equity) and the gain or loss relating to the ineffective portion is recognised immediately in the profit and loss account� Gains and losses in equity are included in the profit and loss account when the foreign operation is disposed�

Non-trading derivatives that do not qualify for hedge accounting

Derivatives that are used by NN Group as part of its risk management strategies, that do not qualify for hedge accounting under NN Group's accounting policies, are presented as non-trading derivatives� Non-trading derivatives are measured at fair value with changes in the fair value taken to 'Valuation results on non-trading derivatives' in the profit and loss account�

Certain derivatives embedded in other contracts are measured as separate derivatives if:

• Their economic characteristics and risks are not closely related to those of the host contract
• The host contract is not carried at fair value through profit or loss
• A separate instrument with the same terms as the embedded derivative would meet the definition of a derivative (unless the embedded derivative meets the definition of an insurance contract)

These embedded derivatives are measured at fair value with changes in fair value recognised in the profit and loss account� An assessment is carried out when NN Group first becomes party to the contract� A reassessment is carried out only when there is a change in the terms of the contract that significantly modifies the expected cash flows�

Available-for-sale investments (Note 5)

Available-for-sale financial assets include available-for-sale debt securities and available-for-sale equity securities� Available-for-sale financial assets are initially recognised at fair value plus transaction costs� For available-for-sale debt securities, the difference between cost and redemption value is amortised� Interest income is recognised using the effective interest method� Available-for-sale financial assets are subsequently measured at fair value� Interest income from debt securities classified as available-for-sale is recognised in the profit and loss account in 'Investment income'� Dividend income from equity instruments classified as available-for-sale is recognised in the profit and loss account in 'Investment income' when the dividend has been declared�

Unrealised gains and losses arising from changes in the fair value are recognised in other comprehensive income (equity)� On disposal, the related accumulated fair value adjustments are included in the profit and loss account as 'Investment income'� For impairments of available-for-sale financial assets reference is made to the section 'Impairments of financial assets'�

Loans (Note 6)

Loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market� They are initially recognised at fair value plus transaction costs� Subsequently, they are carried at amortised cost using the effective interest method less any impairment losses� Interest income from loans is recognised in the profit and loss account in 'Investment income' using the effective interest method�

1 Accounting policies continued

Associates and joint ventures (Note 7)

Associates are all entities over which NN Group has significant influence but not control� Significant influence generally results from a shareholding of 20% or more of the voting rights, but also the ability to participate in the financial and operating policies through situations including, but not limited to, one or more of the following:

• Representation on the board of directors
• Participation in the policy making process
• Interchange of managerial personnel

Joint ventures are all entities in which NN Group has joint control�

Associates and joint ventures are initially recognised at cost (including goodwill) and subsequently accounted for using the equity method of accounting� Subsequently, NN Group's share of profits or losses is recognised in the profit and loss account and its share of changes in reserves is recognised in other comprehensive income (equity)�

The cumulative changes are adjusted against the carrying value of the investment� When NN Group's share of losses in an associate or joint venture equals or exceeds the book value of the associate or joint venture, NN Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate or joint venture�

Unrealised gains and losses on transactions between NN Group and its associates and joint ventures are eliminated to the extent of NN Group's interest� Accounting policies of associates and joint ventures have been changed where necessary to ensure consistency with the policies of NN Group� The reporting dates of all significant associates and joint ventures are consistent with the reporting date of NN Group�

For interests in investment entities the existence of significant influence is determined taking into account both NN Group's financial interests for own risk and its role as asset manager�

Associates include interests in real estate funds and private equity funds� The underlying assets of both the real estate and the private equity funds are measured at fair value through profit or loss (i�e� no revaluations in other comprehensive income)� The fair value of underlying real estate in real estate funds is determined as set out below for Real estate investments� The fair value of underlying private equity investments in private equity funds is generally based on a forward-looking market approach� This approach uses a combination of company financials and quoted market multiples� In the absence of quoted prices in an active market, fair value is estimated on the basis of an analysis of the investee's financial position and results, risk profile, prospects, price, earnings comparisons and by reference to market valuations for similar entities quoted in an active market� Valuations of private equity investments are mainly based on an 'adjusted multiple of earnings' methodology on the following basis:

• Earnings: reported earnings are adjusted for non-recurring items, such as restructuring expenses, for significant corporate actions and, in exceptional cases, for run-rate adjustments to arrive at maintainable earnings� The most common measure is earnings before interest, tax, depreciation and amortisation (EBITDA)� Earnings used are usually management forecasts for the current year, unless data from management accounts for the 12 months preceding the reporting period or the latest audited annual accounts provide a more reliable estimate of maintainable earnings�
• Earnings multiples: earnings multiples are derived from comparable listed companies or relevant market transaction multiples for companies in the same industry and, where possible, with a similar business model and profile in terms of size, products, services and customers, growth rates and geographic focus� Adjustments are made for differences in the relative performance in the group of comparable companies�
• Adjustments: a marketability or liquidity discount is applied based on factors such as alignment with management and other investors and NN Group's investment rights in the deal structure�

Real estate investments (Note 8)

Real estate investments under construction are included in 'Real estate investments'� Real estate investments are held for long-term rental yields and are not occupied by NN Group� Real estate investments are initially measured at cost, including transaction cost and are subsequently measured at fair value� Changes in the carrying value resulting from revaluations are recognised in the profit and loss account� On disposal the difference between the sales proceeds and carrying value is recognised in the profit and loss account� The fair value of real estate investments is based on regular appraisals by independent qualified valuers� For each reporting period every property is valued by an external valuer� Market transactions and disposals made by NN Group are monitored as part of the validation procedures to test the valuations� Valuations performed earlier in the year are updated if necessary to reflect the situation at the year-end� All real estate investments are appraised externally at least annually�

The fair value represents the estimated amount for which the property could be exchanged on the date of valuation between a willing buyer and willing seller in an at-arm's-length transaction after proper marketing wherein the parties each acted knowledgeably, prudently and without compulsion� The fair value is based on appraisals using valuation methods such as comparable market transactions, capitalisation of income methods or discounted cash flow calculations� The underlying assumption used in the valuation is that the properties are let or sold to third parties based on the actual letting status� The discounted cash flow analysis and capitalisation of income method are based on calculations of the future rental income in accordance with the terms in existing leases and estimations of the rental values for new leases when leases expire and incentives like rent-free periods� The cash flows are discounted using market-based interest rates that reflect appropriately the risk characteristics of real estate� The valuation of real estate investments takes (expected) vacancies into account�

1 Accounting policies continued

Occupancy rates differ significantly from investment to investment� For real estate investments held through (minority shares in) real estate investment funds, the valuations are performed under the responsibility of the funds' asset manager�

Subsequent expenditures are recognised as part of the asset's carrying value only when it is probable that future economic benefits associated with the item will flow to NN Group and the cost of an item can be measured reliably� All other repairs and maintenance costs are recognised immediately in the profit and loss account� Borrowing costs on real estate investments under construction are capitalised until completion�

Property and equipment (Note 9)

Land and buildings held for own use are stated at fair value at the balance sheet date� Increases in the carrying value are recognised in other comprehensive income (equity)� Decreases in the carrying value that offset previous increases of the same asset are charged against other comprehensive income (equity); all other decreases are recognised in the profit and loss account� Increases that reverse a revaluation decrease on the same asset previously recognised in net result are recognised in the profit and loss account� Depreciation is recognised based on the fair value and the estimated useful life (in general 20-50 years)� On disposal, the related revaluation reserve in equity is transferred within equity to 'Retained earnings'�

The fair value of land and buildings is based on regular appraisals by independent, qualified valuers or internally, similar to appraisals of real estate investments� All significant holdings of land and buildings are appraised at least annually� Subsequent expenditure is included in the asset's carrying value when it is probable that future economic benefits associated with the item will flow to NN Group and the cost of the item can be measured reliably�

Equipment is stated at cost less accumulated depreciation and any impairment losses� The estimated useful lives are generally as follows: two to five years for data processing equipment and four to ten years for fixtures and fittings� Expenditure incurred on maintenance and repairs is recognised in the profit and loss account as incurred� Expenditure incurred on major improvements is capitalised and depreciated� The difference between the proceeds on disposal and net carrying value is recognised in the profit and loss account in 'Other income'�

Methods of depreciation and amortisation

Items of property and equipment are depreciated, intangible assets with finite useful lives are amortised� The carrying values of the assets are depreciated/amortised on a straight-line basis over the estimated useful lives� Methods of depreciation and amortisation, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate�

Intangible assets (Note 10)

Goodwill

NN Group's acquisitions are accounted for using the acquisition method of accounting� The consideration for each acquisition is measured at the aggregate of the fair value (at the date of acquisition) of assets given, liabilities incurred or assumed and equity instruments issued in exchange for control of the acquiree� Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value� Goodwill, being the positive difference between the cost of the acquisition (including assumed debt) and NN Group's interest in the fair value of the acquired assets, liabilities and contingent liabilities as at the date of acquisition, is capitalised as an intangible asset� Negative goodwill is recognised immediately in the profit and loss account as income� The results of the operations of the acquired companies are included in the profit and loss account from the date control is obtained�

Where a business combination is achieved in stages, NN Group's previously held interests in the assets and liabilities of the acquired entity are remeasured to fair value at the acquisition date (i�e� the date NN Group obtains control) and the resulting gain or loss, if any, is recognised in the profit and loss account� Amounts arising from interests in the acquiree before the acquisition date that have previously been recognised in other comprehensive income (equity) are reclassified to the profit and loss account, where such treatment would be appropriate if that interest were disposed of�

Acquisition-related costs are recognised in the profit and loss account as incurred and presented in the profit and loss account as 'Other operating expenses'�

Until 2009, before IFRS 3 'Business Combinations' was revised, the accounting of previously held interests in the assets and liabilities of the acquired entity were not remeasured at the acquisition date and the acquisition-related costs were considered to be part of the total consideration� Goodwill is only capitalised on acquisitions after the implementation date of IFRS-EU (1 January 2004)� Accounting for acquisitions before that date has not been restated; goodwill and internally generated intangibles on these acquisitions were recognised directly in shareholders' equity�

1 Accounting policies continued

Goodwill is allocated to cash generating units (reporting units) for the purpose of impairment testing� These cash generating units (reporting units) represent the lowest level at which goodwill is monitored for internal management purposes, which is either at the segment level or at a level below� This test is performed annually or more frequently if there are indicators of impairment� Under the impairment tests, the carrying value of the cash generating units (reporting units including goodwill) is compared to its recoverable amount which is the higher of its fair value less costs to sell and its value in use�

Computer software

Computer software that has been purchased or generated internally for own use is stated at cost less amortisation and any impairment losses� The expected useful life of computer software will generally not exceed three years� Amortisation is included in 'Other operating expenses'�

Value of business acquired (VOBA)

VOBA is an asset that represents the present value of estimated net cash flows embedded in the insurance contracts of an acquired company, which exists at the time the company was acquired� It represents the difference between the fair value of insurance liabilities and their carrying value� VOBA is amortised in a similar manner to the amortisation of the deferred acquisition costs as described in the section 'Deferred acquisition costs'�

Other intangible assets

Other intangible assets include brand names, client relationships and distribution channels� These assets are stated at cost less amortisation and any impairment losses� The expected useful life is between 2 and 17 years�

Impairment

Impairment reviews with respect to goodwill and intangible assets are performed at least annually and more frequently if events indicate that impairments may have occurred� Goodwill is tested for impairment by comparing the carrying value of the cash generating unit (reporting unit) to which the goodwill was allocated to the best estimate of the recoverable amount of that cash generating unit (reporting unit)� The carrying value is determined as the IFRS-EU net asset value including goodwill and acquisition intangibles� The recoverable amount is estimated as the higher of fair value less cost to sell and value in use� Several methodologies are applied to arrive at the best estimate of the recoverable amount� A cash generating unit (reporting unit) is the lowest level at which goodwill is monitored� Other intangible assets are tested for impairment by comparing the carrying value with the best estimate of the recoverable amount of the individual intangible asset�

Deferred acquisition costs (Note 11)

Deferred acquisition costs (DAC) represent costs of acquiring insurance and investment contracts that are deferred and amortised� The deferred costs, all of which vary with (and are primarily related to) the production of new and renewal business, consist principally of commissions, certain underwriting and contract issuance expenses and certain agency expenses�

For traditional life insurance contracts, certain types of flexible life insurance contracts and non-life contracts, DAC is amortised over the premium payment period in proportion to the premium revenue recognised�

For other types of flexible life insurance contracts DAC is amortised over the lives of the policies in relation to the emergence of estimated profits� Amortisation is adjusted when estimates of current or future profits, to be realised from a group of products, are revised�

DAC amortisation is included in the Underwriting expenditure in the profit and loss account�

DAC is evaluated for recoverability at issue� Subsequently it is tested on a regular basis together with the life insurance liabilities� The test for recoverability is described in the section 'Insurance and investment contracts, reinsurance contracts'�

For certain products DAC is adjusted for the impact of unrealised results on allocated investments through equity�

Assets and liabilities held for sale (Note 12)

Assets and liabilities of a business are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use� This is only the case when the sale is highly probable, the business is available for immediate sale in its present condition and management is committed to the sale, which is expected to occur within one year from the date of classification as held for sale� Classification into or out of held for sale does not result in restating comparative amounts in the balance sheet�

Subordinated debt, debt securities issued and other borrowed funds (Notes 15, 16 and 17)

Subordinated debt, debt securities issued and other borrowed funds are recognised initially at their issue proceeds (fair value of consideration received) net of transaction costs incurred� Borrowings are subsequently measured at amortised cost� Any difference between proceeds, net of transaction costs and the redemption value is recognised in the profit and loss account over the period of the borrowings using the effective interest method�

If NN Group purchases its own debt, it is derecognised from the balance sheet and the difference between the carrying value of the liability and the consideration paid is recognised in the profit and loss account�

1 Accounting policies continued

Financial liabilities include only instruments of which the terms and conditions represent a contractual obligation to pay interest and/or principal� Instruments that are similar in substance, but of which the terms and conditions do not include a contractual obligation to pay interest and principal are classified as equity�

Insurance and investment contracts, reinsurance contracts (Note 18)

Insurance liabilities are established in accordance with IFRS 4 'Insurance Contracts'� Under IFRS 4, an insurer may continue its existing pre-IFRS accounting policies for insurance contracts, provided that certain minimum requirements are met� Upon adoption of IFRS-EU in 2005, NN Group decided to continue the then existing accounting principles for insurance contracts under IFRS-EU� NN Group operates in many different countries and the accounting principles for insurance contracts follow local practice in these countries� For NN Group's businesses in the Netherlands, NN Group applies accounting standards generally accepted in the Netherlands (Dutch GAAP) for its insurance contracts� Changes in those local accounting standards (including Dutch GAAP) subsequent to the adoption of IFRS-EU are considered for adoption on a case-by-case basis� If adopted, the impact thereof is accounted for as a change in accounting policies under IFRS-EU�

In addition, for certain specific products or components thereof, NN Group applies the option in IFRS 4 to measure (components of) insurance liabilities using market consistent interest rates and other current estimates and assumptions� This relates mainly to certain guarantees embedded in insurance contracts in Japan�

Insurance contracts

Insurance policies which bear significant insurance risk and/or contain discretionary participation features (including investment contracts with discretionary participation features) are presented as insurance contracts� Insurance liabilities represent estimates of future pay-outs that will be required for life and non-life insurance claims, including expenses relating to such claims� For some insurance contracts the measurement reflects current market assumptions� Unless indicated otherwise below, changes in the insurance liabilities are recognised in the profit and loss account�

Life insurance liabilities

The life insurance liabilities are generally calculated on the basis of a prudent prospective actuarial method� Specific methodologies may differ between business units as they may reflect local regulatory requirements and local practices for specific product features in the local markets�

Insurance liabilities on traditional life policies are calculated using various assumptions, including assumptions on mortality, morbidity, expenses, investment returns and surrenders� Assumptions for insurance liabilities for traditional life insurance contracts, including traditional whole-life and term-life insurance contracts, are based on best estimate assumptions including margins for adverse deviations� Generally, these assumptions are set initially at the policy issue date and remain constant throughout the life of the policy� For the insurance liabilities that were taken over in the Delta Lloyd acquisition, these assumptions are set as at the date of acquisition, 1 April 2017�

Insurance liabilities for universal life, variable life and annuity contracts, unit-linked contracts, etc� are generally set equal to the balance that accrues to the benefit of the policyholders�

Certain contracts contain minimum (interest) guarantees on the amounts payable upon death and/or maturity� The insurance liabilities include the impact of these minimum (interest) guarantees, taking into account the difference between the potential minimum benefit payable and the total account balance, expected mortality and surrender rates�

Unamortised interest rate rebates on periodic and single premium contracts are deducted from the life insurance contract liabilities�

Interest rate rebates granted during the year are amortised in conformity with the anticipated recovery pattern and are recognised in the profit and loss account�

Liabilities for unearned premiums and unexpired insurance risks

The liabilities are calculated in proportion to the unexpired periods of risk� For insurance policies covering a risk increasing during the term of the policy at premium rates independent of age, this risk is taken into account when determining the liability� Further liabilities are formed to cover claims under unexpired insurance contracts, which may exceed the unearned premiums and the premiums due in respect of these contracts�

Claims liabilities

Claims liabilities are calculated either on a case-by-case basis or by approximation on the basis of experience� Liabilities have also been recognised for claims incurred but not reported (IBNR) and for future claims handling expenses� IBNR liabilities are set to recognise the estimated cost of losses that have occurred but which have not yet been notified to NN Group� The adequacy of the claims liabilities is evaluated each year using standard actuarial techniques�

1 Accounting policies continued

Deferred interest credited to policyholders

For insurance contracts and investment contracts with discretionary participation features, 'Deferred interest credited to policyholders' is recognised for the full amount of the unrealised revaluations on allocated investments� Upon realisation, the 'Deferred interest credited to policyholders' regarding unrealised revaluations is reversed and a deferred profit sharing amount is recognised for the share of realised results on allocated investments that is expected to be shared with policyholders� The amount of deferred profit sharing is reduced by the actual allocation to individual policyholders� The change in the amount of 'Deferred interest credited to policyholders' on unrealised revaluations (net of tax) is recognised in the 'Revaluation reserve' in other comprehensive income (equity)�

Liabilities for life insurance for risk of policyholders

Liabilities for life insurance for risk of policyholders are generally shown at the balance sheet value of the related investments�

Reinsurance contracts

Reinsurance premiums, commissions and claim settlements, as well as the reinsurance element of insurance contracts are accounted for in the same way as the original contracts for which the reinsurance was concluded� If the reinsurers are unable to meet their obligations, NN Group remains liable to its policyholders for the portion reinsured� Consequently, provisions are recognised for receivables on reinsurance contracts which are deemed uncollectable� Both reinsurance premiums and reinsurance recoveries are included in 'Underwriting expenditure' in the profit and loss account�

Adequacy test

The adequacy of the insurance liabilities is evaluated at each reporting period by each business unit for the business originated in that business unit� The test involves comparing the established insurance liability (gross of reinsurance and net of DAC and VOBA) to a liability based on current best estimate actuarial assumptions� The assumed investment returns are a combination of the run-off of current portfolio yields on existing assets and reinvestment rates in relation to maturing assets and anticipated new premiums, as a result (part of) the revaluation reserve in shareholders equity is taken into account in assessing the adequacy of insurance liabilities�

If, for any business unit, the established insurance liability is lower than the liability based on current best estimate actuarial assumptions the shortfall is recognised immediately in the profit and loss account�

If the insurance liabilities are determined to be more than adequate no reduction in the insurance liabilities is recognised�

Investment contracts

Insurance policies without discretionary participation features which do not bear significant insurance risk are presented as Investment contracts� Investment contract liabilities are determined at amortised cost, using the effective interest method (including certain initial acquisition expenses), or at fair value�

Other liabilities (Note 21)

Provisions

Other liabilities include reorganisation provisions, litigation provisions and other provisions� Reorganisation provisions include employee termination benefits when NN Group is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing termination benefits as a result of an offer made to encourage voluntary redundancy� Provisions are discounted when the effect of the time value of money is significant, using a before tax discount rate� The determination of provisions is an inherently uncertain process involving estimates regarding amounts and timing of cash flows�

Gross premium income (Note 22)

Premiums from insurance policies are recognised as income when due from the policyholder� Receipts under investment contracts are not recognised as gross premium income; instead, deposit accounting is applied� When applying deposit accounting, the amounts contributed by policyholders are recognised as direct increases in the provision for investment contracts, not as premium income and payments are deducted directly from the provision�

Net fee and commission income (Note 24)

Fees and commissions are generally recognised as the service is provided� Portfolio and other management advisory and service fees are recognised based on the applicable service contracts as the service is provided� Asset management fees related to investment funds and investment contract fees are recognised on a pro-rata basis over the period the service is provided� The same principle is applied for wealth management, financial planning and custody services that are continuously provided over an extended period of time�

1 Accounting policies continued

Earnings per ordinary share (Note 31)

Earnings per ordinary share is calculated on the basis of the weighted average number of ordinary shares outstanding� In calculating the weighted average number of ordinary shares outstanding, own shares held by group companies are deducted from the total number of ordinary shares in issue�

Changes in the number of ordinary shares outstanding without a corresponding change in resources are taken into account, including if these changes occurred after the reporting date but before the annual accounts are authorised for issue�

Diluted earnings per share data are computed as if all convertible instruments outstanding at the year-end were exercised at the beginning of the period� It is also assumed that NN Group uses the assumed proceeds received to buy its own shares against the average market price in the financial year� The net increase in the number of shares resulting from the exercise is added to the average number of shares used to calculate diluted earnings per share�

Segments and Principal subsidiaries and geographical information (Notes 32 and 33)

A segment is a distinguishable component of NN Group, engaged in providing products or services, subject to risks and returns that are different from those of other segments� A geographical area is a distinguishable component of NN Group engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments� The geographical analysis is based on the location of the business unit from which the transactions are originated�

2 Covid-19 pandemic

Since early 2020, the spread of the Covid-19 pandemic is causing significant disruption to society and the world-wide economy, impacting NN Group, its employees, its customers and its suppliers� Financial markets have been severely impacted by significant volatility in interest rates, equity prices and spreads and the world-wide economy has been significantly impacted as well� Governments and central banks worldwide are responding to this crisis with aid packages and further supporting measures� At the date of this report, the depth and length of this crisis is unknown� NN Group is constantly monitoring the developments and the (potential) impact on NN Group� The most significant risks that NN Group is facing in this context are related to the financial markets (including interest rates, equity prices and spreads), insurance risk (including mortality and policyholder behaviour) and operational risk (continuity of business processes)� Note 51 'Risk management' includes extensive disclosure on the exposure to such risks and the risk management thereof�

The Covid-19 pandemic, and the related impact on the financial markets, impacted the results of NN Group in 2020 mainly in the following areas:

• Increased amount of impairments on investments in equity securities, reflected in Investment income - Impairments of available-for-sale equity securities�
• Negative revaluations on real estate and private equity investments in certain market sectors, reflected in Investment income - Change in fair value of real estate investments and Share of result from associates and joint ventures�
• In Non-life, higher claims in Disability & Accident were partly compensated by lower claims in Property & Casualty� There was no significant net impact from the Covid-19 pandemic on the technical provisions for insurance contracts of NN Group�
• Additional uncertainties in the determination of the fair value of illiquid assets, including real estate investments and private equity investments� NN Group uses quarterly appraisals by external valuers as main input for the determination of fair value of its real estate investments� Uncertainties in the current environment have led to the inclusion of 'material valuation uncertainty' clauses in certain external valuation reports� Such clauses do not imply that the valuation cannot be relied upon, but are used to indicate that - in the current extraordinary circumstances - less certainty can be attached to valuations than would otherwise be the case�

In 2020, there were no significant impairments of other assets (including debt securities, loans and intangible assets)�

Postponements of interest and/or principal payments have been offered on an individual basis to retail borrowers who face temporary payment difficulties on their mortgage loans or consumer loans� The number of cases is limited and the financial impact for NN Group was not significant�

At the date of this report, it is too early to determine the structural impact of the Covid-19 pandemic on results, capitalisation and funding, long term assumptions and actual cash flows, if any� Also the amount and profitability of new sales may be impacted but, at the date of this report, it is too early to assess any (potential) structural impact�

NN Group has established a business continuity plan to help ensure the continuity of its businesses, the well-being of its staff and its capability to support its customers, whilst maintaining financial and operational resilience�

3 Cash and cash equivalents

Cash and cash equivalents

Cash and bank balances	6,157	4,900
Money market funds	4,568	1,362
Short-term deposits	1,657	174
Cash and cash equivalents	12,382	6,436
Cash and cash equivalents classified as assets held for sale	8
Cash and cash equivalents at the end of the year	12,390	6,436

As at 31 December 2020, NN Group held EUR 2,586 million (31 December 2019: EUR 1,660 million) at central banks�

2020

2019

NN Group invests in several types of money market funds, some qualifying as cash equivalents and some as investments� Short-term investments in money market funds are presented as cash equivalents only if these are highly liquid and quoted in an active market and have low investment risk�

4 Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss

Investments for risk of policyholders	34,797	34,433
Non-trading derivatives	14,833	10,189
Designated as at fair value through profit or loss	1,336	1,184
Financial assets at fair value through profit or loss	50,966	45,806

Investments for risk of policyholders

Loans and receivables

Equity securities	31,992	31,534
Debt securities	1,786	1,695
Loans and receivables	1,019	1,204
Investments for risk of policyholders	34,797	34,433

2020 2019

Investments in investment funds (with underlying investments in debt and equity securities, real estate and derivatives) are included in equity securities�

Non-trading derivatives

Other non-trading derivatives

- cash flow hedges

Non-trading derivatives

Derivatives used in:
- fair value hedges	1	52
- cash flow hedges	10,530	7,365
Other non-trading derivatives	4,302	2,772
Non-trading derivatives	14,833	10,189

Other non-trading derivatives includes derivatives for which no hedge accounting is applied�

2020 2019

NN Group N.V. 69

4 Financial assets at fair value through profit or loss continued

Designated as at fair value through profit or loss

2020

2019

Money market funds

Designated as at fair value through profit or loss

Equity securities	425	333
Debt securities	28	31
Money market funds	883	820
Designated as at fair value through profit or loss	1,336	1,184

5 Available-for-sale investments

The net increase in Available-for-sale investments from EUR 117,644 million as at 31 December 2019 to EUR 118,175 million as at 31 December 2020 includes EUR 1,517 million recognised on the acquisition of VIVAT Non-life� For more information reference is made to Note 45 'Companies and businesses acquired and divested'�

Available-for-sale investments

2020

2019

Equity securities:
- shares in NN Group managed investment funds	2,539	2,096
- shares in third-party managed investment funds	2,774	1,552
- other	5,986	4,430
Equity securities	11,299	8,078
Debt securities	106,876	109,566
Available-for-sale investments	118,175	117,644

Changes in Available-for-sale investments

Equity securities

Debt securities

2020

2019

2020

2019

2020

Total 2019

Available-for-sale investments - opening balance Additions

Transfers and reclassifications Changes in unrealised revaluations Impairments

Disposals and redemptions

Changes in the composition of the group and other changes

Exchange rate differences

Available-for-sale investments - closing balance

Available-for-sale investments - opening balance	8,078	6,734	109,566	97,595	117,644	104,329
Additions	4,545	1,582	20,383	24,855	24,928	26,437
Amortisation	-453	-485	-453	-485
Transfers and reclassifications	-100	-29	-1	-1	-101	-30
Changes in unrealised revaluations	1,341	976	3,660	5,780	5,001	6,756
Impairments	-338	-93	-6	-344	-93
Disposals and redemptions	-2,245	-1,099	-26,472	-18,651	-28,717	-19,750
Changes in the composition of the group and other changes	40	1,419	51	1,459	51
Exchange rate differences	-22	7	-1,220	422	-1,242	429
Available-for-sale investments - closing balance	11,299	8,078	106,876	109,566	118,175	117,644

Transfers and reclassifications mainly relate to the transfer of certain investments in real estate funds to associates and joint ventures due to an increase in level of influence�

Reference is also made to Note 23 'Investment income' for details on impairments by segment�

5 Available-for-sale investments continued

NN Group's total exposure to debt securities is included in the following balance sheet lines:

Total exposure to debt securities

Financial assets at fair value through profit or loss

Total exposure to debt securities

Investments for risk of policyholders Designated as at fair value through profit or loss

Loans

Available-for-sale investments and loans

Available-for-sale investments	106,876	109,566
Loans	667	1,251
Available-for-sale investments and loans	107,543	110,817
Investments for risk of policyholders	1,786	1,695
Designated as at fair value through profit or loss	28	31
Financial assets at fair value through profit or loss	1,814	1,726
Total exposure to debt securities	109,357	112,543

2020

2019

NN Group's total exposure to debt securities included in 'Available-for-sale investments' and 'Loans' is specified as follows by type of exposure:

Debt securities by type

Bond portfolio (excluding ABS)

Available-for-sale investments

2020

Loans

2019

2020

2019

Government bonds	70,716	74,271	70,716	74,271
Corporate bonds	20,544	19,024	20,544	19,024
Financial institution and Covered bonds	12,247	13,318	12,247	13,318
Bond portfolio (excluding ABS)	103,507	106,613	-	-	103,507	106,613

US RMBS	517	552	517	552
Non-US RMBS	2,318	1,987	575	1,138	2,893	3,125
CDO/CLO	6	-	6
Other ABS	534	408	92	113	626	521
ABS portfolio	3,369	2,953	667	1,251	4,036	4,204
Debt securities - Available-for-sale investments and Loans	106,876	109,566	667	1,251	107,543	110,817

For more details, reference is made to Note 51 'Risk management'�

Available-for-sale equity securities

Unlisted

Available-for-sale equity securities

Listed	6,431	5,354
Unlisted	4,868	2,724
Available-for-sale equity securities	11,299	8,078

Total

2020 2019

NN Group N.V. 71

6 Loans

Loans

Loans related to savings mortgages

Loans secured by mortgages	55,310	51,382
Loans related to savings mortgages	1,532	1,672
Loans to or guaranteed by public authorities	1,830	1,879
Asset-backed securities	667	1,251
Policy loans	947	666
Other loans	5,324	5,084
Loans - before loan loss provisions	65,610	61,934
Loan loss provisions	-182	-166
Loans	65,428	61,768

Changes in Loans secured by mortgages

Loans secured by mortgages - closing balance

Changes in the composition of the group and other changes

Loans secured by mortgages - opening balance	51,382	47,605
Additions/origination	9,188	7,513
Amortisation	-170	-199
Redemption	-4,909	-3,699
Disposals	-520	-299
Impairments and write-offs	-2
Fair value changes recognised on hedged items	341	402
Changes in the composition of the group and other changes	-2	61
Loans secured by mortgages - closing balance	55,310	51,382

2020 2019

NN Group has sold mortgage loans to securitisation entities that, in turn, issued notes to investors that are collateralised by the purchased assets� These mortgage loans continue to be recognised on NN Group's balance sheet as NN Group retained all or substantially all of the risks and rewards of the mortgage loans� Reference is made to Note 46 'Structured entities'�

Changes in Loan loss provisions

Write-offs

Increase/decrease in loan loss provisions

Loan loss provisions - closing balance

Loan loss provisions - opening balance	166	211
Write-offs	-6	-52
Increase/decrease in loan loss provisions	19	11
Changes in the composition of the group and other changes	3	-4
Loan loss provisions - closing balance	182	166

2020 2019

NN Group N.V. 72

7 Associates and joint ventures

Associates and joint ventures (2020)

Total
expenses
The above associates and joint ventures mainly consist of non-listed investment entities investing in real estate and private equity�
NN Group N.V.	73
2020 Financial Report

Interest held

Balance sheet valueTotal assetsTotal liabilitiesTotal income

Vesteda Residential Fund FGR	24% 1,531 7,333 1,050 558 103
CBRE Dutch Office Fund FGR	19% 370 2,709 718 154 67
CBRE European Industrial Fund C�V�	26% 240 1,344 416 148 37
CBRE Retail Property Fund Iberica L�P�	50% 218 518 82 -34 30
CBRE Dutch Residential Fund FGR	9% 209 2,562 108 175 31
Lazora S�I�I� S�A�	22% 209 1,531 588 86 41
NRP Nordic Logistic Fund AS	42% 203 501 18 36 11
CBRE Dutch Retail Fund FGR	20% 201 1,382 392 -32 36
CBRE UK Property Fund PAIF	10% 163 1,605 -46 5
Dutch Urban Living Venture FGR	45% 127 384 105 61 7
Allee center Kft	50% 126 276 24 5 10
Achmea Dutch Health Care Property Fund	23% 121 543 14 23 3
Dutch Student and Young Professional Housing fund FGR	49% 120 323 79 34 8
Parcom Buy-Out Fund V CV	21% 119 579 15 -38 5
Robeco Bedrijfsleningen FGR	26% 117 451 1 15 2
Rivage Euro Debt infrastructure 3	34% 104 306 1 5 3
Fiumaranuova s�r�l�	50% 100 234 34 8 10
Siresa House S�L�	49% 96 490 293 39 47
DPE Deutschland III (Parallel) GmbH & Co	17% 93 575 21 83 4
Boccaccio - Closed-end Real Estate Mutual Investment Fund	50% 88 238 61 3
The Fizz Student Housing Fund SCS	50% 87 250 75 11 1
Parcom Buy Out Fund IV B�V�	100% 82 96 14 5
CBRE Dutch Retail Fund II FGR	10% 69 703 12 -36 11
Delta Mainlog Holding GmbH & Co� KG	50% 64 129 1 16
CBRE Property Fund Central and Eastern Europe FGR	50% 60 -119 9 9
DPE Deutschland II B GmbH & Co KG	37% 56 196 45 -19 1
Parquest Capital II B FPCI	28% 54 197 4 8
NL Boompjes Property 5 C�V�	50% 54 108 6
Other	592
Associates and joint ventures	5,673

7 Associates and joint ventures continued

Significant influence exists for certain associates in which the interest held is below 20%, based on the combination of NN Group's financial interest for own risk and other arrangements, such as participation in the relevant boards�

NN Group holds associates over which it cannot exercise control despite holding more than 50% of the share capital� For this reason, these are classified as associates and are not consolidated�

Other includes EUR 389 million of associates and joint ventures with an individual balance sheet value of less than EUR 50 million and EUR 203 million of receivables from associates and joint ventures�

The amounts presented in the table above could differ from the individual annual accounts of the associates due to the fact that the individual amounts have been brought in line with NN Group's accounting principles�

The reporting dates of all significant associates and joint ventures are consistent with the reporting date of NN Group�

The associates and joint ventures of NN Group are subject to legal and regulatory restrictions regarding the amount of dividends that can be paid to NN Group� These restrictions are, for example, dependent on the laws in the country of incorporation for declaring dividends or as a result of minimum capital requirements imposed by industry regulators in the countries in which the associates and joint ventures operate� In addition, the associates and joint ventures also consider other factors in determining the appropriate levels of equity needed� These factors and limitations include, but are not limited to, rating agency and regulatory views, which can change over time�

Associates and joint ventures (2019)

Interest	Balance	Total	Total	Total	Total
held	sheet value	assets	liabilities	income	expenses
Vesteda Residential Fund FGR	24%	1,467	7,333	1,313	955	103
CBRE Dutch Office Fund FGR	19%	361	2,664	720	405	61
CBRE Retail Property Fund Iberica L�P�	50%	265	616	84	78	33
CBRE Dutch Retail Fund FGR	20%	218	1,601	529	60	40
Lazora S�I�I� S�A�	22%	205	1,435	508	154	42
CBRE Dutch Residential Fund FGR	10%	200	2,024	56	255	29
NRP Nordic Logistic Fund AS	42%	190	454	2	58	10
CBRE UK Property Fund PAIF	10%	182	1,890	27
CBRE European Industrial Fund C�V�	19%	151	1,145	370	169	33
Allee center Kft	50%	129	277	20	37	8
Achmea Dutch Health Care Property Fund	27%	119	446	10	50	5
DPE Deutschland II B GmbH & Co KG	35%	117	378	47	16
Dutch Student and Young Professional Housing
fund FGR	49%	113	296	68	43	9
Robeco Bedrijfsleningen FGR	26%	112	434	11	1
Fiumaranuova s�r�l�	50%	101	238	36	17	9
Siresa House S�L�	49%	96	512	314	56	53
Parcom Buy-Out Fund V CV	21%	96	481	26	18	5
Boccaccio - Closed-end Real Estate Mutual
Investment Fund	50%	93	249	64	17	4
Parcom Investment Fund III B�V�	100%	91	91	15	1
Parcom Buy Out Fund IV B�V�	100%	89	89	18	8
The Fizz Student Housing Fund SCS	50%	83	227	59	18	6
CBRE Dutch Retail Fund II FGR	10%	74	759	15	18	11
Dutch Urban Living Venture FGR	42%	71	221	50	17	1
CBRE Property Fund Central and Eastern
Europe FGR	50%	62	170	46	36	8
Delta Mainlog Holding GmbH & Co� KG	50%	61	122	1	16	2
DPE Deutschland III (Parallel) GmbH & Co	17%	56	341	1	18	1
Parquest Capital II B FPCI	29%	53	190	5	1	7
Other	602
Associates and joint ventures	5,457
NN Group N.V.	74
2020 Financial Report

7 Associates and joint ventures continued

Changes in Associates and joint ventures

2020

2019

Share of result Dividends received Disposals

Changes in the composition of the group and other changes Exchange rate differences

Associates and joint ventures - closing balance

Associates and joint ventures - opening balance	5,457	5,000
Additions	349	531
Transfers to/from available-for-sale investments	19	14
Share in changes in equity (Revaluations)	8	-4
Share of result	219	619
Dividends received	-277	-212
Disposals	-121	-497
Changes in the composition of the group and other changes	21
Exchange rate differences	-2	6
Associates and joint ventures - closing balance	5,673	5,457

Transfers to/from available-for-sale investments mainly relate to the transfer of certain investments in real estate funds to associates and joint ventures due to an increase in level of influence�

Disposals mainly relate to the sale of investments in real estate funds�

8 Real estate investments

Changes in Real estate investments

2020

2019

Additions

Exchange rate differences

Real estate investments - closing balance

Real estate investments - opening balance	2,571	2,374
Additions	66	158
Transfers to/from other assets	3	3
Fair value gains/losses	-21	42
Disposals	-176	-6
Exchange rate differences	1
Real estate investments - closing balance	2,444	2,571

The total amount of rental income recognised in the profit and loss account for the year ended 31 December 2020 is EUR 163 million (2019: EUR 146 million)� The Real estate investments include properties that are leased (ground lease)� At 31 December 2020, the corresponding right of use assets amount to EUR 45 million (2019: EUR 38 million)�

The total amount of direct operating expenses (including repairs and maintenance) in relation to real estate investments recognised in rental income for the year ended 31 December 2020 is EUR 54 million (2019: EUR 46 million)�

Real estate investments by year of most recent appraisal

2020 2019

Most recent appraisal in current year	100%	100%
100%	100%

NN Group's total exposure to real estate is included in the following balance sheet lines:

Real estate exposure

2020 2019

Real estate investments	2,444	2,571
Available-for-sale investments	1,950	1,116
Associates and joint ventures	4,834	4,631
Property and equipment - property in own use	74	82
Real estate exposure	9,302	8,400

Furthermore, the exposure is impacted by third-party interests, leverage in funds and off-balance commitments� Reference is made to Note 51 'Risk management'�

9 Property and equipment

Property and equipment

Right of use assets

Property and equipment owned

Property and equipment total

Equipment

Property in own use	74	82
Equipment	93	79
Property and equipment owned	167	161
Right of use assets	281	304
Property and equipment total	448	465

Changes in Property in own use

Gross carrying value

Reversal of impairments

Changes in the composition of the group and other changes Exchange rate differences

Property in own use - closing balance

Revaluation surplus - closing balance

Revaluation surplus - opening balance Revaluation in year

Net carrying value

Accumulated depreciation, revaluations and (reversal of) impairments

Property in own use - opening balance	82	75
Additions	1	4
Revaluations	-4	4
Depreciation	-2	-2
Reversal of impairments	1
Changes in the composition of the group and other changes	-2
Exchange rate differences	-1
Property in own use - closing balance	74	82
Gross carrying value	118	120
Accumulated depreciation, revaluations and (reversal of) impairments	-44	-38
Net carrying value	74	82
Revaluation surplus - opening balance	16	12
Revaluation in year	-4	4
Revaluation surplus - closing balance	12	16

Changes in Equipment

Gross carrying value Accumulated depreciation

Net carrying value

Equipment - closing balance

Exchange rate differences

Disposals Depreciation

Equipment - opening balance	28	23	51	53	79	76
Additions	13	17	37	14	50	31
Disposals	-1	-1	-1	-2	-1
Depreciation	-13	-12	-19	-15	-32	-27
Exchange rate differences	-1	-1	-2	-
Equipment - closing balance	26	28	67	51	93	79
Gross carrying value	147	137	229	194	376	331
Accumulated depreciation	-121	-109	-162	-143	-283	-252
Net carrying value	26	28	67	51	93	79

Data processing equipment

2020

Changes in Right of use assets

Exchange rate differences

Net carrying value

Additions Disposals Depreciation

Right of use assets - opening balance	281	23	304	-
Additions	33	321	14	36	47	357
Disposals	-8	-1	-9	-
Depreciation	-45	-39	-12	-13	-57	-52
Exchange rate differences	-4	-1	-4	-1
Right of use assets - closing balance	257	281	24	23	281	304
Gross carrying value	341	320	49	36	390	356
Accumulated depreciation	-84	-39	-25	-13	-109	-52
Net carrying value	257	281	24	23	281	304

2020

2019

PropertyFixtures and fittings and other equipment

2020

2019

2020

2020 2019

2019

Equipment

2019

2020

2020 2019

Total 2019

Total

NN Group N.V. 76

10 Intangible assets

Intangible assets (2020)

GoodwillValue of business acquiredSoftware

Other

Total

Additions Capitalised expenses Amortisation Disposals

Changes in the composition of the group and other changes

Gross carrying value

Accumulated amortisation Accumulated impairments

Net carrying value

Intangible assets - opening balance	539 149 79 228 995
Additions	47 12 59
Capitalised expenses	4 4
Amortisation	-66 -39 -27 -132
Disposals	-1 -1
Changes in the composition of the group and other changes	129 21 150
Exchange rate differences	-6 -2 -3 -1 -12
Intangible assets - closing balance	533 210 87 233 1,063
Gross carrying value	1,506 306 900 675 3,387
Accumulated amortisation	-96 -747 -394 -1,237
Accumulated impairments	-973 -66 -48 -1,087
Net carrying value	533 210 87 233 1,063

Intangible assets (2019)

GoodwillValue of business acquiredSoftware

Other

Total

Intangible assets - opening balance Additions

532 8

73 37

258 863

5 50

Amortisation

Changes in the composition of the group and other changes Exchange rate differences

-30 178

-33 2

-33 -96

Intangible assets - closing balance

-1 539

1 149

-2 178 -

228 995

Gross carrying value

1,512

Accumulated amortisation Accumulated impairments

179 -30

853 -708

643 3,187

-367 -1,105

Net carrying value

-973 539

-66

-48 -1,087

149

228 995

Other intangible assets include the intangibles recognised upon the acquisition of VIVAT Non-life and the remaining part of the intangibles recognised in 2017 on the acquisition of Delta Lloyd� The acquisition intangibles comprise:

• Brand names - with an average expected remaining useful life at the acquisition date of approximately 10 years
• Client relationships - with an average expected remaining useful life at the acquisition date of approximately 6 years
• Distribution channels/agreements - with an average expected remaining useful life at the acquisition date of approximately 18 years

The increase in 2020 in Value of business acquired includes the impact of the acquisition of VIVAT Non-life� The increase in 2019 in Value of business acquired includes the impact of the acquisitions in Czech Republic and Slovakia� Reference is made to Note 45 'Companies and businesses acquired and divested'�

Amortisation of software and other intangible assets is included in the profit and loss account in 'Other operating expenses' and 'Amortisation of intangible assets and other impairments' respectively�

Goodwill by cash generating unit (reporting unit)

2020 2019

Asset Management

Bank

Goodwill

Netherlands Non-life	90	90
Insurance Europe	70	76
Asset Management	311	311
Bank	62	62
Goodwill	533	539

Reference is made to Note 45 'Companies and businesses acquired and divested'�

NN Group N.V. 77

10 Intangible assets continued

Goodwill impairment

Goodwill is tested for impairment at the lowest level at which it is monitored for internal management purposes� This level is defined as the cash generating unit (reporting unit) as set out above� Goodwill is tested for impairment by comparing the carrying value of the cash generating unit (reporting unit) to the best estimate of the recoverable amount of that cash generating unit (reporting unit)� The carrying value is determined as the IFRS-EU book value including goodwill and certain acquisition intangibles� The recoverable amount is estimated as the higher of fair value less cost to sell and value in use� Several methodologies are applied to arrive at the best estimate of the recoverable amount�

The identification of impairment is an inherently uncertain process involving various assumptions and factors� Estimates and assumptions (including unobservable Level 3 inputs) are based on management's judgement and other information available�

For the goodwill recognised there is a significant excess of recoverable amount over book value for the cash generating units (reporting units) to which goodwill is allocated�

There was no impairment of goodwill in 2020�

11 Deferred acquisition costs

Changes in Deferred acquisition costs

2020

Life insurance	Total
2019	2020	2019

Non-life insurance

2020

2019

Deferred acquisition costs - opening balance Capitalised expenses

Amortisation and unlocking

Deferred acquisition costs - opening balance	1,838	1,766	75	77	1,913	1,843
Capitalised expenses	388	497	591	478	979	975
Amortisation and unlocking	-398	-424	-578	-480	-976	-904
Changes in the composition of the group and other changes	4	2	2	4
Exchange rate differences	-47	-5	-47	-5
Deferred acquisition costs - closing balance	1,781	1,838	90	75	1,871	1,913

12 Assets and liabilities held for sale

As at 31 December 2020 assets and liabilities held for sale relate to NN Group's Bulgarian Pension and Life businesses� For more information on the agreed sale of NN's Bulgarian operations (part of the segment Insurance Europe), reference is made to Note 45 'Companies and businesses acquired and divested'�

Assets held for sale

2020

Available-for-sale investments

Loans

Property and equipment Deferred acquisition costs Other assets

Total assets

Cash and cash equivalents	8
Financial assets at fair value through profit or loss	38
Available-for-sale investments	59
Loans	1
Property and equipment	1
Deferred acquisition costs	1
Other assets	5
Total assets	113

Liabilities held for sale

2020

Insurance and investment contracts	90
Other liabilities	3
Total liabilities	93

13 Other assets

Other assets

Insurance and reinsurance receivables	724	824
Income tax receivables	55	29
Accrued interest and rents	1,467	1,512
Other accrued assets	249	258
Cash collateral amounts paid	1,000	1,326
Other	544	521
Other assets	4,039	4,470

Insurance and reinsurance receivables

- intermediaries Reinsurance receivables

Insurance and reinsurance receivables

Receivables on account of direct insurance from:
- policyholders	454	566
- intermediaries	115	161
Reinsurance receivables	155	97
Insurance and reinsurance receivables	724	824

2020 2019

The allowance for uncollectable insurance and reinsurance receivables amounts to EUR 36 million as at 31 December 2020 (2019: EUR 25 million)� The receivable is presented net of this allowance�

14 Equity

Total equity

Net defined benefit asset/liability remeasurement reserve Other reserves

Shareholders' equity (parent)

Currency translation reserve

Minority interests

Share capital	39	41
Share premium	12,574	12,572
Revaluation reserve	20,468	15,269
Currency translation reserve	-97	3
Net defined benefit asset/liability remeasurement reserve	-138	-144
Other reserves	3,885	3,027
Shareholders' equity (parent)	36,731	30,768

Minority interests	277	260
Undated subordinated notes	1,764	1,764
Total equity	38,772	32,792

Changes in Equity (2020)

Equity - closing balance

Purchase/sale of treasury shares Employee stock option and share plans Coupon on undated subordinated notes

Changes in the composition of the group and other changes

Equity - opening balance	41 12,572 18,155 30,768
Total amount recognised directly in equity (Other comprehensive income)	5,105 5,105
Net result for the period	1,904 1,904
Changes in share capital	-2 2 -
Dividend	-394 -394
Purchase/sale of treasury shares	-622 -622
Employee stock option and share plans	1 1
Coupon on undated subordinated notes	-59 -59
Changes in the composition of the group and other changes	28 28
Equity - closing balance	39 12,574 24,118 36,731

2020 2019

Share capitalShare premiumReserves

Total

shareholders'

equity (parent)

14 Equity continued

Purchase/sale of treasury shares (2020)

In 2020, 21,817,879 ordinary shares for a total amount of EUR 627 million were repurchased under an open market share buyback programme, including repurchases to neutralise the dilutive effect of stock dividends� Treasury shares for an amount of EUR 5 million were delivered under Employee share plans� The repurchased shares are held by NN Group and the amount was deducted from Other reserves (Purchase/sale of treasury shares)�

In 2020, 23,289,558 NN Group treasury shares were cancelled�

As at 31 December 2020, 19,822,194 treasury shares were held by NN Group�

Issue of ordinary shares (2020)

In 2020, 10,011,647 NN Group shares were issued for the interim dividend�

Coupon paid on undated subordinated notes (2020)

The undated subordinated notes have optional annual coupon payments in June and July� The annual coupons resulted in a deduction of EUR 59 million (net of tax) from equity�

Changes in Equity (2019)

Total

shareholders'

Share capitalShare premiumReservesequity (parent)

Equity - opening balance

12,572

10,237 22,850

Total amount recognised directly in equity (Other comprehensive income) Net result for the period

7,077 7,077

1,962 1,962

Dividend

-387 -387

Purchase/sale of treasury shares Employee stock option and share plans Coupon on undated subordinated notes

-707 -707

2 2

-59 -59

Changes in the composition of the group and other changes

30 30

Equity - closing balance

12,572

18,155

30,768

Purchase/sale of treasury shares (2019)

In 2019, 20,996,349 ordinary shares for a total amount of EUR 712 million were repurchased under open market share buyback programmes to neutralise the dilutive effect of stock dividends and treasury shares for an amount of EUR 5 million were delivered under Employee share plans� The repurchased shares are held by NN Group and the amount was deducted from Other reserves (Purchase/sale of treasury shares)�

In 2019, 5,850,000 NN Group treasury shares were cancelled�

As at 31 December 2019, 21,485,285 treasury shares were held by NN Group�

Issue of ordinary shares (2019)

In 2019, 4,807,859 NN Group shares (for the shareholders that opted to receive a stock dividend) were issued for the final dividend and 3,539,191 NN Group shares were issued for the interim dividend�

Coupon paid on undated subordinated notes (2019)

The undated subordinated notes have optional annual coupon payments in June and July� The annual coupons resulted in a deduction of EUR 59 million (net of tax) from equity�

Shareholders' equity (parent)

Share capital

Ordinary sharesOrdinary shares (in number)

(amounts in millions of euros)

2020

2019

2020 2019

Authorised share capital	700,000,000	700,000,000	84	84
Unissued share capital	369,721,790	356,443,879	45	43
Issued share capital	330,278,210	343,556,121	39	41

Ordinary shares

The authorised ordinary share capital consists of 700,000,000 ordinary shares with a par value of EUR 0�12 per share� At 31 December 2020 issued and fully paid ordinary share capital consists of 330,278,210 ordinary shares with a par value of EUR 0�12 per share�

NN Group N.V. 80

14 Equity continued

Distributable reserves

NN Group N�V� is subject to legal restrictions regarding the amount of dividends it can pay to its shareholders� The Dutch Civil Code contains the restriction that dividends can only be paid up to an amount equal to total shareholders' equity less the paid-up and called share capital and less the reserves required pursuant to law or the Articles of Association� In case of negative balances for individual reserves legally to be retained, no distributions can be made out of retained earnings to the level of these negative amounts�

In addition, NN Group's ability to pay dividends is dependent on the dividend payment ability of its subsidiaries, associates and joint ventures� NN Group is legally required to create a non-distributable reserve insofar profits of its subsidiaries, associates and joint ventures are subject to dividend payment restrictions� Such restrictions may among others be of a similar nature as the restrictions which apply to NN Group�

Legally distributable reserves, determined in accordance with the financial reporting requirements included in Part 9 of Book 2 of the Dutch Civil Code, from NN Group's subsidiaries, associates and joint ventures are as follows:

Distributable reserves based on the Dutch Civil Code

2020

2019

- share capital - revaluation reserve

- other non-distributable reserves

Total non-distributable part of shareholders' equity:

Total shareholders' equity	36,731	30,768
- share capital	39	41
- revaluation reserve	20,468	15,269
- currency translation reserve	3
- share of associates reserve	1,412	1,271
- other non-distributable reserves	208	198
Total non-distributable part of shareholders' equity:	22,127	16,782
Distributable reserves based on the Dutch Civil Code	14,604	13,986

The Dutch supervisory rules and regulations stemming from the Dutch Financial Supervision Act (Wet op het financieel toezicht) provide a second restriction on the possibility to distribute dividends� Total freely distributable reserves is the minimum of freely distributable capital on the basis of solvency requirements and freely distributable capital on the basis of capital protection�

Freely distributable reserves

2020

2019

Solvency requirement under the Financial Supervision Act	9,534	8,154
Reserves available for financial supervision purposes	20,028	18,240
Total freely distributable reserves on the basis of solvency requirements	10,494	10,086
Total freely distributable reserves on the basis of the Dutch Civil Code	14,604	13,986
Total freely distributable reserves (lower of the values above)	10,494	10,086

Reference is made to Note 52 'Capital and liquidity management' for more information on solvency requirements�

Other restrictions

There are other restrictions to the ability of subsidiaries, associates and joint ventures to distribute reserves to NN Group as a result of minimum capital requirements that are imposed by industry regulators in the countries in which the group companies operate� Reference is made to Note 52 'Capital and liquidity management' for the minimum capital requirements�

In addition to the legal and regulatory restrictions on distributing dividends from subsidiaries, associates and joint ventures to NN Group there are various other considerations and limitations that are taken into account in determining the appropriate levels of equity in the Group's subsidiaries, associates and joint ventures� These considerations and limitations include, but are not restricted to, rating agency and regulatory views, which can change over time; it is not possible to disclose a reliable quantification of these limitations�

Without prejudice to the authority of the Executive Board to allocate profits to reserves and to the fact that the ordinary shares are the most junior securities issued by NN Group, no specific dividend payment restrictions with respect to ordinary shares exist�

Furthermore, NN Group is subject to legal restrictions with respect to repayment of nominal share capital to holders of ordinary shares� Nominal share capital may be repaid to the holders of ordinary shares pursuant to an amendment of NN Group's Articles of Association whereby the ordinary shares are written down� Pursuant to the Dutch Civil Code, capital may only be repaid if none of NN Group's creditors opposes such a repayment within two months following the announcement of a resolution to that effect�

14 Equity continued

Preference shares

As at 31 December 2020, none of the preference shares had been issued� The authorised number of preference shares is 700,000,000 shares�

Changes in Revaluation reserve (2020)

Property	Available-	Cash flow
revaluation	for-sale	hedge
reserve	reserve	reserve	Total
Changes in Revaluation reserve (2019)
Property	Available-	Cash flow
revaluation	for-sale	hedge
reserve	reserve	reserve	Total
Revaluation reserve - opening balance	9	3,675	4,514	8,198
Unrealised revaluations	3	4,473	4,476
Realised gains/losses transferred to the profit and loss account	-286	-286
Changes in cash flow hedge reserve	4,284	4,284
Deferred interest credited to policyholders	-1,403	-1,403
Revaluation reserve - closing balance	12	6,459	8,798	15,269

Revaluation reserve - opening balance	12 6,459 8,798 15,269
Unrealised revaluations	-3 3,104 3,101
Realised gains/losses transferred to the profit and loss account	-574 -574
Changes in cash flow hedge reserve	3,422 3,422
Deferred interest credited to policyholders	-750 -750
Revaluation reserve - closing balance	9 8,239 12,220 20,468

Deferred interest credited to policyholders reflects the change in the deferred profit sharing liabilities (net of deferred tax)� Reference is made to Note 18 'Insurance and investment contracts, reinsurance contracts'�

Changes in Currency translation reserve

Other reserves - closing balance

Unrealised revaluations relate to changes in the value of hedging instruments that are designated as net investment hedges�

Changes in Other reserves (2020)

Employee stock option and share plans Coupon on subordinated notes

Changes in the composition of the group and other changes

Purchase/sale of treasury shares

Net result for the period

Transfers to/from share of associates reserve

Other reserves - opening balance	1,756 1,271 3,027
Net result for the period	1,904 1,904
Transfers to/from share of associates reserve	-141 141 -
Dividend	-394 -394
Purchase/sale of treasury shares	-622 -622
Employee stock option and share plans	1 1
Coupon on subordinated notes	-59 -59
Changes in the composition of the group and other changes	28 28
Other reserves - closing balance	2,473 1,412 3,885

2019
Share of
Retained	associates
earnings	reserve	Total
82

2020

Currency translation reserve - opening balance	3	-34
Unrealised revaluations after taxation	10	-16
Exchange rate differences for the period	-110	53
Currency translation reserve - closing balance	-97	3

14 Equity continued

Changes in Other reserves (2019)

Retained earnings

Share of associates reserve

Total

Other reserves - opening balance Net result for the period

1,432

747 2,179

1,962 1,962

Transfers to/from share of associates reserve Dividend

-524

524

--387 -387

Purchase/sale of treasury shares Employee stock option and share plans Coupon on subordinated notes

-707 -707

2 2

-59 -59

Changes in the composition of the group and other changes

37 37

Other reserves - closing balance

1,756

1,271 3,027

Dividends

2020 2019

Stock dividend (final previous year)

Total dividend

Dividend distributed from Other reserves:
Dividend paid in cash (interim current year)	394	144
Dividend paid in cash (final previous year)	243

Stock dividend (interim current year)	311	106
Stock dividend (final previous year)	172
Total dividend	705	665

Interim dividend 2020

In September 2020, NN Group paid a 2020 interim dividend of EUR 2�26 per ordinary share, or approximately EUR 705 million in total�

This amount comprises (i) EUR 1�40 per ordinary share, equal to the amount of the 2019 final dividend that was suspended in April 2020 plus ii) EUR 0�86 per ordinary share, equal to the regular 2020 interim dividend calculated in accordance with the NN Group dividend policy� The 2020 interim dividend was paid either in cash, after deduction of withholding tax if applicable, or ordinary shares at the election of the shareholder� As a result, an amount of EUR 394 million was distributed out of Other reserves (cash dividend) and 10,011,647 ordinary shares, with a par value of EUR 0�12 per share, were issued (EUR 311 million stock dividend)� To neutralise the dilutive effect of the interim stock dividend, NN Group repurchased ordinary shares for an amount equivalent to the stock dividend�

Proposed final dividend 2020

At the annual general meeting on 20 May 2021, a final dividend will be proposed of EUR 1�47 per ordinary share, or approximately EUR 456 million in total based on the current number of outstanding shares� The final dividend will be paid either in cash, after deduction of withholding tax if applicable, or in ordinary shares, at the election of the shareholders� Dividends paid in the form of ordinary shares will be delivered from NN Group treasury shares or issued from the share premium reserve� To neutralise the dilutive effect of the stock dividend, NN Group will repurchase ordinary shares for an amount equivalent to the stock dividend� This is subject to adoption by the General Meeting at the annual general meeting to be held on 20 May 2021�

Interim dividend 2019

In September 2019, NN Group paid a 2019 interim dividend of EUR 0�76 per ordinary share, or approximately EUR 250 million in total� The 2019 interim dividend was paid either in cash, after deduction of withholding tax if applicable, or ordinary shares at the election of the shareholder� As a result, an amount of EUR 144 million was distributed out of Other reserves (cash dividend) and 3,539,191 ordinary shares, with a par value of EUR 0�12 per share, were issued (EUR 106 million stock dividend)� To neutralise the dilutive effect of the interim stock dividend, NN Group repurchased ordinary shares for an amount equivalent to the stock dividend�

14 Equity continued

2019 Final dividend

On 6 April 2020 NN Group announced that it would act in accordance with the recommendations of EIOPA and the Dutch Central Bank (DNB) published on 2 April 2020, which urged insurers to temporarily suspend their dividend distributions and share buyback programmes as a consequence of the Covid-19 pandemic�

Although NN Group is well capitalised and has a strong liquidity position, it decided to postpone the payment of dividends on its ordinary shares in line with the EIOPA and DNB recommendations� The proposal to pay a 2019 final dividend that was included in the 2019 Annual Accounts was not included in the agenda of the annual general meeting of 28 May 2020� In addition, the EUR 250 million share buyback programme, which commenced on 2 March 2020, was suspended� Up to and including 3 April 2020, shares for a total amount of EUR 183 million had been repurchased under this programme and were deducted from shareholders' equity and own funds in 2020�

Proposed appropriation of result

The result is appropriated pursuant to Article 34 of the Articles of Association of NN Group N�V�, of which the relevant provisions state that the appropriation of result shall be determined by the General Meeting, on the proposal of the Executive Board, as approved by the Supervisory Board� It is proposed to add the 2020 net result less the (interim and final) cash dividends to the retained earnings�

Minority interest

Through the acquisition of Delta Lloyd, NN Group owns 51% of the shares of ABN AMRO Verzekeringen Holding B�V� (ABN AMRO Verzekeringen)� ABN AMRO Verzekeringen's principal place of business is Zwolle, the Netherlands� ABN AMRO Verzekeringen is fully consolidated by NN Group, with a minority interest recognised of 49%�

At 31 December 2020, the minority interest relating to ABN AMRO Verzekeringen recognised in equity was EUR 259 million (2019: EUR 241 million)�

Summarised information ABN AMRO Verzekeringen1

2020

2019

Total assets	4,706	4,867
Total liabilities	4,176	4,375
Total income	546	561
Total expenses	489	503
Net result recognised in period	37	42
Other comprehensive income recognised in period	6	46
Dividends paid	5	49

All on 100% basis�

Undated subordinated notes

In July 2014, NN Group N�V� issued fixed to floating rate undated subordinated notes with a par value of EUR 1,000 million� The notes are undated, but are callable after 11�5 years and every quarter thereafter (subject to regulatory approval)� The coupon is fixed at 4�5% per annum for the first 11�5 years and will be floating thereafter� As these notes are undated and include optional deferral of interest at the discretion of NN Group, these are classified under IFRS-EU as equity� Coupon payments are distributed out of equity if and when paid or contractually due� The discount to the par value and certain issue costs were deducted from equity at issue, resulting in a balance sheet value equal to the net proceeds of EUR 986 million�

In June 2014, fixed to floating rate undated subordinated notes with a par value of EUR 750 million were originally issued by Delta Lloyd which are classified as equity under IFRS-EU� The notes are undated, but are callable as from 13 June 2024 and every quarter thereafter (subject to regulatory approval)� The coupon is fixed at 4�375% per annum until 13 June 2024 and will be floating thereafter� Coupon payments are distributed out of equity if and when paid or contractually due� These notes were recognised upon acquisition of Delta Lloyd for an amount of EUR 778 million�

15 Subordinated debt

Subordinated debt

Interest rate 4

Subordinated debt

Year of issueNotional amount

Balance Sheet ValueDue date

First call date

4�625% 2014 8 April 2044 8 April 2024	1,000	1,000	994	993
4�625% 2017 13 January 2048 13 January 2028	850	850	840	839
9�000% 2017 29 August 2042 29 August 2022	500	500	549	577
Subordinated debt	2,383	2,409

2020

2019

2020

2019

The above subordinated debt instruments have been issued to raise hybrid capital� Under IFRS-EU these debt instruments are classified as liabilities� They are considered capital for regulatory purposes� All subordinated debt is euro denominated�

16 Debt securities issued

Debt securities issued

Interest rate 1 0

Year of issue

17 Other borrowed funds

Other borrowed funds

Due date

First call date

1�000% 2015 18 March 2022 Not applicable	600	600	600	599
0�875% 2017 13 January 2023 13 October 2022	500	500	498	497
0�250% 2017 1 June 2020 1 March 2020	300	300
1�625% 2017 1 June 2027 1 March 2027	600	600	596	596
Debt securities issued	1,694	1,992

Notional amount

2020

2019

Other

Other borrowed funds

Credit institutions	1,402	1,556
Other	6,140	6,058
Other borrowed funds	7,542	7,614

Balance Sheet Value

2020 2019

Other borrowed funds includes the funding of the consolidated securitisation programmes as disclosed in Note 46 'Structured entities' and unsecured Debt Issuance�

During 2020, NN Bank issued EUR 1�3 billion bonds under its Covered Bond Programme, backed by Dutch prime residential mortgage loans (2019 EUR 1�1 billion)�

NN Group N.V. 85

18 Insurance and investment contracts, reinsurance contracts

The increase in Insurance and investment contracts, reinsurance contracts from EUR 167,263 million as at 31 December 2019 to EUR 169,609 million as at 31 December 2020� It includes EUR 1,278 million Insurance and investment contracts and EUR 70 million reinsurance contracts recognised on the acquisition of VIVAT Non-life� For more information, reference is made to Note 45 'Companies and businesses acquired and divested'�

Insurance and investment contracts, reinsurance contracts

Insurance andLiabilities net of reinsurance

Reinsurance contracts

investment contracts

2020

2019

2020

2019

2020 2019

Non-participating life policy liabilities

Non-participating life policy liabilities	55,968	57,376	284	225	56,252	57,601
Participating life policy liabilities	55,451	54,114	397	454	55,848	54,568
Investment contracts with discretionary participation features	5,601	6,073	5,601	6,073
Liabilities for (deferred) profit sharing and rebates	9,822	8,526	9,822	8,526
Life insurance liabilities excluding liabilities for risk of policyholders	126,842	126,089	681	679	127,523	126,768
Liabilities for life insurance for risk of policyholders	33,287	32,979	36	34	33,323	33,013
Investment contract with discretionary participation features for risk of policyholders	245	245	245	245
Life insurance liabilities	160,374	159,313	717	713	161,091	160,026

Liabilities for unearned premiums and unexpired risks

443

390

459 405

Reported claims liabilities	4,908	3,991	255	203	5,163	4,194
Claims incurred but not reported (IBNR)	1,632	1,409	75	57	1,707	1,466
Claims liabilities	6,540	5,400	330	260	6,870	5,660

Insurance liabilities and investment contracts with discretionary participation features

167,357

165,103

1,063

988

168,420

166,091

Investment contracts	1,002	1,025	1,002	1,025
Investment contracts for risk of policyholders	1,250	1,135	1,250	1,135
Investment contracts liabilities	2,252	2,160	2,252	2,160
Insurance and investment contracts, reinsurance contracts	169,609	167,263	1,063	988	170,672	168,251

The liabilities for insurance and investment contracts are presented gross in the balance sheet as 'Insurance and investment contracts'� The related reinsurance is presented as 'Reinsurance contracts' under Assets in the balance sheet�

Deferred interest credited to policyholders is included in the 'Liabilities for (deferred) profit sharing and rebates' and amounts to EUR 9,538 million as at 31 December 2020 (2019: EUR 8,245 million)�

Deferred interest credited to policyholders

Changes in the composition of the group and other changes

Life insurance liabilities - opening balance Deferred interest credited to policyholders Current year liabilities

Corporate	Annual
governance	accounts
18 Insurance and investment contracts, reinsurance contracts continued
Changes in Life insurance liabilities (2020)
Reinsurance	Life insurance
contracts	liabilities
Reinsurance	Life insurance
contracts	liabilities
738	153,167
1,905
16	9,315
-
-45	-12,302
7	2,532
4,792
1	-3
-128
-8	254
4	494
713	160,026

Net liabilities for risk of policyholders2

Net life insurance liabilities1

Life insurance liabilities - opening balance	126,089 33,224 713 160,026
Deferred interest credited to policyholders	1,298 1,298
Current year liabilities	5,713 2,059 855 8,627
Prior years liabilities:
- benefit payments to policyholders	-8,539 -2,258 -853 -11,650
- interest accrual and changes in fair value of liabilities	2,351 7 2,358
- valuation changes for risk of policyholders	1,731 1,731
- effect of changes in discount rate assumptions	14 1 15
- effect of changes in other assumptions	-105 -24 -129
Changes in the composition of the group and other changes	752 -964 5 -207
Exchange rate differences	-731 -236 -11 -978
Life insurance liabilities - closing balance	126,842 33,532 717 161,091

1 Net of reinsurance and liabilities for risk of policyholders�
2 Net of reinsurance�

Changes in Life insurance liabilities (2019)

Net life insurance liabilities1

Net liabilities for risk of policyholders2

Prior years liabilities:

- benefit payments to policyholders
- interest accrual and changes in fair value of liabilities
123,243 1,905 7,092 -9,347 2,525
- valuation changes for risk of policyholders
29,186 2,207 -2,910 4,792
- effect of changes in discount rate assumptions
- effect of changes in other assumptions

Changes in the composition of the group and other changes Exchange rate differences

Life insurance liabilities - closing balance

-4 -97 328 444 126,089

-31 -66 46 33,224

1 Net of reinsurance and liabilities for risk of policyholders�
2 Net of reinsurance�

Where discounting is used in the calculation of life insurance liabilities, the discount rate for the main units in the Netherlands was in a range of 1�0% to 4�0% (2019: 1�0% to 4�0%)� The range of discount rates in the international entities was -1�0% to 8�0% (2019: 0�0% to 6�0%)� The 8�0% relates to NN Turkey�

Changes in the composition of the group and other changes includes insurance contracts for risk of policyholders with guarantees that were extended as general account contracts and the transfer of certain insurance contracts�

Longevity reinsurance

In May 2020, NN Group entered into three reinsurance agreements to reinsure the full longevity risk associated with in total approximately EUR 13�5 billion of pension liabilities in NN Life in the Netherlands� This reinsurance reduces NN Group's exposure to longevity risk and, consequently, the required capital under Solvency II� The three reinsurance agreements are similar in nature but are agreed with three different assuming reinsurers, Canada Life, Munich Re and Swiss Re� The risk transfer is effective as of 1 January 2020 and will continue until the relevant portfolio has run off�

Financial	Report of the	Corporate	Annual
developments	Supervisory Board	governance	accounts
Notes to the Consolidated annual accounts continued

18 Insurance and investment contracts, reinsurance contracts continued

The relevant portfolio continues to be included in the Life insurance provisions in the IFRS balance sheet� There is no impact from the reinsurance on the recognition and measurement of the life insurance provisions in the balance sheet� NN Group will recognise premiums due to the reinsurers in Reinsurance and retrocession premiums and will recognise recoveries from the reinsurers in Reinsurance recoveries, both part of Underwriting expenditure in the profit and loss account� Reinsurance premiums and recoveries are settled with the reinsurers on an annual basis� In addition, a reinsurance asset is recognised under Reinsurance contracts for any reinsurance share of the underlying insurance liability based on NN Group's accounting policies for insurance contracts under IFRS� The reinsurance does not impact NN Group's liabilities towards its policyholders; to the extent that the assuming reinsurers would be unable to meet their obligations, NN Group remains liable to its policyholders for the portion reinsured� Consequently, provisions will be made for receivables on reinsurance contracts which are deemed uncollectable if and when relevant; no provision was recognised at 31 December 2020� There is no impact on the Reserve Adequacy Test, which is performed on the insurance liability gross of reinsurance�

The best estimate of all premiums and benefits due under the reinsurance are directly reflected in Solvency II Own Funds� The reduction of the longevity risk is reflected in a lower Solvency Capital Requirement� In combination, the lower risk profile resulted in an increase in the Solvency II ratio of NN Group of approximately 17%-points at the announcement of the reinsurance�

The premium payable to the assuming reinsurers is fixed and includes a margin of approximately EUR 451 million over the best estimate at inception of the reinsurance contract of benefits payable under the related portfolios� This margin, which represents a cost of reinsurance to NN Group is recognised in the profit and loss account over the duration of the reinsurance� An amount of EUR 25 million was recognised in Underwriting expenditure in the profit and loss account in 2020� An amount of approximately EUR 426 million (undiscounted) remains to be recognised in future periods�

Changes in Liabilities for unearned premiums and unexpired risks

Liabilities for unearnedLiabilities net of reinsurance

Reinsurance contracts

premiums and unexpired risk

Premiums written

Premiums earned during the year

Changes in the composition of the group and other changes

Liabilities for unearned premiums and unexpired risks - opening balance	390	401	15	13	405	414
Premiums written	3,363	2,990	216	164	3,579	3,154
Premiums earned during the year	-3,478	-3,001	-216	-162	-3,694	-3,163
Changes in the composition of the group and other changes	168	1	169	-
Liabilities for unearned premiums and unexpired risks - closing balance	443	390	16	15	459	405

Changes in Claims liabilities

2020	2019
Liabilities net of reinsurance	Claims liabilities
2020	2019

2020

2019

2020

2019

Reinsurance contracts

2020

2019

2020

2019

Claims liabilities - opening balance	5,400	5,282	260	259	5,660	5,541
Additions:
- for the current year	2,391	2,071	95	35	2,486	2,106
- for prior years	-125	-126	-15	7	-140	-119
- interest accrual of liabilities	61	70	-8	61	62
Additions	2,327	2,015	80	34	2,407	2,049
Claim settlements and claim settlement costs:
- for the current year	-918	-805	-30	20	-948	-785
- for prior years	-1,306	-1,093	-49	-53	-1,355	-1,146
Claim settlements and claim settlement cost	-2,224	-1,898	-79	-33	-2,303	-1,931
Changes in the composition of the group and other changes	1,040	69	1,109	-
Exchange rate differences	-3	1	-3	1
Claims liabilities - closing balance	6,540	5,400	330	260	6,870	5,660

Where discounting is used in the calculation of the claims liabilities the rate is within the range of -1�0% to 4�0% (2019: 1�0% to 4�0%)�

18 Insurance and investment contracts, reinsurance contracts continued

Changes in Investment contracts

2020

2019

Current year liabilities Prior years liabilities:

- payments to contract holders
- interest accrual
- valuation changes investments

Investment contracts - closing balance

Investment contracts - opening balance	2,160	1,996
Current year liabilities	209	268
Prior years liabilities:
- payments to contract holders	-179	-261
- interest accrual	10	27
- valuation changes investments	52	130
Investment contracts - closing balance	2,252	2,160

Gross claims development table

Accident year

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Total

Estimate of cumulative claims
At the end of accident year	2,771 2,943 2,789 2,669 2,546 2,709 2,602 2,837 2,640 2,675
1 year later	2,913 2,869 2,874 2,687 2,596 2,721 2,598 2,792 2,648
2 years later	2,865 2,828 2,839 2,661 2,615 2,699 2,539 2,795
3 years later	2,821 2,788 2,814 2,680 2,611 2,715 2,555
4 years later	2,797 2,778 2,778 2,656 2,577 2,658
5 years later	2,779 2,770 2,762 2,655 2,569
6 years later	2,764 2,779 2,769 2,670
7 years later	2,763 2,770 2,772
8 years later	2,751 2,757
9 years later	2,751
Estimate of cumulative claims	2,751 2,757 2,772 2,670 2,569 2,658 2,555 2,795 2,648 2,675 26,850
Cumulative payments	-2,550 -2,502 -2,467 -2,290 -2,154 -2,210 -1,926 -1,940 -1,615 -974 -20,628
201 255 305 380 415 448 629 855 1,033 1,701 6,222
Effect of discounting	-21 -26 -25 -26 -32 -31 -38 -49 -54 -38 -340
Liabilities recognised	180 229 280 354 383 417 591 806 979 1,663 5,882
Liabilities relating to accident years prior to 2011	988
Gross claims	6,870

To the extent that the assuming reinsurers are unable to meet their obligations, NN Group is liable to its policyholders for the portion reinsured� Consequently, provisions are made for receivables on reinsurance contracts if and when they are deemed uncollectable�

As at 31 December 2020, the total reinsurance exposure including reinsurance contracts and receivables from reinsurers (presented in Note 13 'Other assets') amounts to EUR 1,218 million (2019: EUR 1,085 million)�

19 Customer deposits and other funds on deposit

Customer deposits and other funds on deposit

2020 2019

Bank annuities

Corporate deposits

Customer deposits and other funds on deposit

Savings	7,278	6,718
Bank annuities	8,521	8,443
Corporate deposits	4
Customer deposits and other funds on deposit	15,803	15,161

Customers have not entrusted any funds to NN Group on terms other than those prevailing in the normal course of business� All customer deposits and other funds on deposit are interest bearing�

NN Group N.V. 89

19 Customer deposits and other funds on deposit continued

Changes in Customer deposits and other funds on deposit

2020 2019

Deposits received

Withdrawals Amortisation

Customer deposits and other funds on deposit - closing balance

Customer deposits and other funds on deposit - opening balance	15,161	14,729
Deposits received	4,220	3,877
Withdrawals	-3,549	-3,413
Amortisation	-29	-32
Customer deposits and other funds on deposit - closing balance	15,803	15,161

20 Financial liabilities at fair value through profit or loss

Non-trading derivatives

2020 2019

Derivatives used in:
- fair value hedges	547	691
- cash flow hedges	159	375
- hedges of net investments in foreign operations	12	3
Other non-trading derivatives	3,294	2,163
Non-trading derivatives	4,012	3,232

Other non-trading derivatives includes derivatives for which no hedge accounting is applied�

21 Other liabilities

Other liabilities

2020 2019

Net defined benefit liability

Other post-employment benefits Other staff-related liabilities

Other taxation and social security contributions Deposits from reinsurers

Lease liabilities Accrued interest Costs payable

Amounts payable to policyholders Provisions

Amounts to be settled

Income tax payable	92	83
Net defined benefit liability	167	175
Other post-employment benefits	14	17
Other staff-related liabilities	124	106
Other taxation and social security contributions	169	133
Deposits from reinsurers	327	321
Lease liabilities	335	345
Accrued interest	240	245
Costs payable	324	289
Amounts payable to policyholders	1,002	1,052
Provisions	158	292
Amounts to be settled	1,126	1,290
Cash collateral amounts received	11,594	7,978
Other	766	790
Other liabilities	16,438	13,116

Other staff-related liabilities include vacation leave provisions, variable compensation provisions, jubilee provisions and disability/illness provisions�

Cash collateral amounts received relate to collateralised derivatives� The increase is a result of the increase in fair value of outstanding collateralised derivatives following declines in market interest rates�

Other mainly relates to year-end accruals in the normal course of business�

Net defined benefit liability

2020 2019

Defined benefit obligation

Net defined benefit liability recognised in the balance sheet (funded status)

Fair value of plan assets	76	26
Defined benefit obligation	243	201
Net defined benefit liability recognised in the balance sheet (funded status)	167	175

NN Group N.V. 90

21 Other liabilities continued

Changes in Provisions

2020

2019

Charges

Exchange rate differences

Provisions - closing balance

Provisions - opening balance	292	293
Additions	99	97
Releases	-135	-16
Charges	-95	-82
Exchange rate differences	-3
Provisions - closing balance	158	292

Provisions relate to reorganisation provisions, litigation provisions and other provisions�

Provisions in 2019 include the provision relating to ING Australia Holdings� Following a settlement in 2020, NN Group made a final payment and released the remainder of the provision� Reference is made to Note 44 'Legal proceedings'�

Reorganisation provisions were recognised for operations in the Netherlands for the cost of workforce reductions� Additions to the reorganisation provision were recognised in 2020 and 2019 due to additional initiatives announced during the year� During 2020 EUR 65 million was charged to the reorganisation provision for the cost of workforce reductions (2019: EUR 76 million)�

22 Gross premium income

Gross premium income

2020

2019

Gross premium income from non-life insurance policies

Gross premium income

Gross premium income from life insurance policies	10,243	11,354
Gross premium income from non-life insurance policies	3,579	3,154
Gross premium income	13,822	14,508

Gross premium income is presented before deduction of reinsurance and retrocession premiums� Gross premium income excludes premium received for investment contracts, for which deposit accounting is applied�

Premiums written - net of reinsurance

Life

Non-life

Total

2020

2019

2020

2019

2020 2019

Reinsurance assumed gross premiums written

Gross premiums written

Reinsurance ceded

Premiums written net of reinsurance

Direct gross premiums written	10,209	11,320	3,576	3,152	13,785	14,472
Reinsurance assumed gross premiums written	34	34	3	2	37	36
Gross premiums written	10,243	11,354	3,579	3,154	13,822	14,508
Reinsurance ceded	-1,119	-298	-216	-164	-1,335	-462
Premiums written net of reinsurance	9,124	11,056	3,363	2,990	12,487	14,046

Non-life premiums earned - net of reinsurance

2020 2019

Direct gross premiums earned	3,692	3,162
Reinsurance assumed gross premiums earned	2	1
Gross premiums earned	3,694	3,163
Reinsurance ceded	-216	-162
Non-life premiums earned - net of reinsurance	3,478	3,001

Reinsurance ceded is included in Underwriting expenditure� Reference is made to Note 26 'Underwriting expenditure'�

NN Group N.V. 91

23 Investment income

Investment income

Interest income from investments in debt securities	1,752	1,781
Interest income from loans	1,604	1,594
Interest income from investments in debt securities and loans	3,356	3,375
Realised gains/losses on disposal of available-for-sale debt securities	595	330
Impairments of available-for-sale debt securities	-6
Realised gains/losses and impairments of available-for-sale debt securities	589	330
Realised gains/losses on disposal of available-for-sale equity securities	403	109
Impairments of available-for-sale equity securities	-338	-93
Realised gains/losses and impairments of available-for-sale equity securities	65	16
Interest income on non-trading derivatives	239	221
Increase in loan loss provisions	-19	-11
Income from real estate investments	109	100
Dividend income	256	300
Change in fair value of real estate investments	-21	42
Investment income	4,574	4,373

Impairments on investments by segment

Netherlands Non-life Insurance Europe Japan Life

Other

Netherlands Life	-283	-73
Netherlands Non-life	-24	-9
Insurance Europe	-4	-7
Japan Life	-17	-3
Other	-16	-1
Impairments on investments	-344	-93

24 Net fee and commission income

Net fee and commission income

Insurance brokerage and advisory fees

Other

Gross fee and commission income

Asset management fees	758	764
Insurance brokerage and advisory fees	134	118
Other	150	155
Gross fee and commission income	1,042	1,037
Trailer fees	173	175
Asset management fees	41	43
Commission expenses and other	124	110
Fee and commission expenses	338	328
Net fee and commission income	704	709

2020 2019

NN Group N.V. 92

25 Valuation results on non-trading derivatives

Valuation results on non-trading derivatives

2020

2019

- cash flow hedges (ineffective portion) - other non-trading derivatives

Net result on non-trading derivatives

Change in fair value of assets and liabilities (hedged items)

Valuation results on assets and liabilities designated as at fair value through profit or loss

Valuation results on non-trading derivatives

Change in fair value of derivatives relating to:
- fair value hedges	-670	-1,395
- cash flow hedges (ineffective portion)	2	11
- other non-trading derivatives	883	163
Net result on non-trading derivatives	215	-1,221
Change in fair value of assets and liabilities (hedged items)	678	1,385
Valuation results on assets and liabilities designated as at fair value through profit or loss	8	2
Valuation results on non-trading derivatives	901	166

Included in 'Valuation results on non-trading derivatives' are the fair value movements on derivatives used to economically hedge exposures, but for which no hedge accounting is applied� These derivatives hedge exposures in insurance contract liabilities� The fair value movements on the derivatives are influenced by changes in the market conditions, such as share prices, interest rates and currency exchange rates� The change in fair value of the derivatives is partly offset by changes in insurance contract liabilities, which are included in 'Underwriting expenditure' and partly offset by foreign currency results� Reference is made to Note 26 'Underwriting expenditure' and the line Foreign currency results in the consolidated profit and loss account�

Valuation results on non-trading derivatives are reflected in the Consolidated statement of cash flows in the section 'Result before tax', in the line item 'Adjusted for: other'�

Reference is made to Note 37 'Derivatives and hedge accounting'�

26 Underwriting expenditure

Underwriting expenditure

2020

2019

Underwriting expenditure

Gross underwriting expenditure:
- before effect of investment result for risk of policyholders	15,583	15,230
- effect of investment result for risk of policyholders	1,733	4,794
Gross underwriting expenditure	17,316	20,024
Investment result for risk of policyholders	-1,733	-4,794
Reinsurance recoveries	-1,095	-237
Underwriting expenditure	14,488	14,993

The investment income and valuation results regarding investments for risk of policyholders is EUR 1,733 million (2019: EUR 4,794 million)�

This amount is recognised in 'Underwriting expenditure'� As a result, it is shown together with the equal amount of related change in insurance liabilities for risk of policyholders�

26 Underwriting expenditure continued

Underwriting expenditure by class

2020 2019

- costs of acquiring insurance business
- other underwriting expenditure
- profit sharing and rebates

Expenditure from life underwriting

Expenditure from non-life underwriting: - reinsurance and retrocession premiums

- changes in claims liabilities
- costs of acquiring insurance business
- other underwriting expenditure

Expenditure from life underwriting:
- reinsurance and retrocession premiums	1,119	298
- gross benefits	11,426	11,973
- reinsurance recoveries	-1,007	-157
- change in life insurance liabilities	-828	-597
- costs of acquiring insurance business	499	445
- other underwriting expenditure	182	278
- profit sharing and rebates	81	70
Expenditure from life underwriting	11,472	12,310
Expenditure from non-life underwriting:
- reinsurance and retrocession premiums	216	164
- gross claims	2,238	1,934
- reinsurance recoveries	-88	-80
- changes in the liabilities for unearned premiums	-115	-11
- changes in claims liabilities	110	118
- costs of acquiring insurance business	676	552
- other underwriting expenditure	-32	-23
Expenditure from non-life underwriting	3,005	2,654
Expenditure from investment contracts:
- costs of acquiring investment contracts	1	1
- other changes in investment contract liabilities	10	28
Expenditure from investment contracts	11	29
Underwriting expenditure	14,488	14,993

Profit sharing and rebates

2020 2019

Distributions on account of interest or underwriting results	18	8
Bonuses added to policies	63	62
Profit sharing and rebates	81	70

The total costs of acquiring insurance business (life and non-life) and investment contracts amounted to EUR 1,176 million (2019: EUR 998 million)� This includes amortisation and unlocking of DAC of EUR 976 million (2019: EUR 904 million) and the net amount of commissions paid of EUR 1,179 million (2019: EUR 1,069 million) and commissions capitalised in DAC of EUR 979 million (2019: EUR 975 million)�

The total amount of commission paid and commission payable amounted to EUR 1,288 million (2019: EUR 1,294 million)� This includes the commissions recognised in 'costs of acquiring insurance business' of EUR 1,179 million (2019: EUR 1,069 million) referred to above and commissions recognised in 'other underwriting expenditure' of EUR 109 million (2019: EUR 225 million)� Other underwriting expenditure also includes reinsurance commissions received of EUR 81 million (2019: EUR 63 million)�

As set out in the section 'Accounting policies for specific items - Insurance and investment contracts, reinsurance contracts', NN Group applies, for certain specific products or components thereof, the option in IFRS 4 to measure (components of) the liabilities for insurance contracts using market-consistent interest rates and other current estimates and assumptions� This relates mainly to certain guarantees embedded in insurance contracts in Japan� The impact of these market-consistent assumptions is reflected in 'Underwriting expenditure - change in life insurance liabilities'�

This impact is largely offset by the impact of related hedging derivatives� As disclosed in Note 25 'Valuation results on non-trading derivatives', the valuation results on non-trading derivatives include the fair value movements on derivatives used to economically hedge exposures, but for which no hedge accounting is applied� For insurance operations, these derivatives hedge mainly exposures in Insurance contract liabilities� The fair value movements on the derivatives are influenced by changes in the market conditions, such as stock prices, interest rates and currency exchange rates� The change in fair value of the derivatives is partly offset by changes in insurance contract liabilities, which are included in 'Underwriting expenditure'�

27 Amortisation of intangible assets and other impairments

Amortisation of intangible assets and other impairments

2020 2019

Other impairments and reversals of other impairments

Amortisation of intangible assets and other impairments

Property and equipment	-1
Other impairments and reversals of other impairments	-	-1
Amortisation of other intangible assets	27	33
Amortisation of intangible assets and other impairments	27	32

Impairment on debt securities, equity securities and loans are included in Note 23 'Investment income'�

28 Staff expenses

Staff expenses

2020 2019

Variable salaries

Pension costs

Salaries	887	831
Variable salaries	76	78
Pension costs	134	126
Social security costs	134	144
Share-based compensation arrangements	8	12
External staff costs	300	301
Education	13	19
Other staff costs	69	53
Staff expenses	1,621	1,564

Pension costs

2020 2019

Net interest cost

Defined benefit plans

Defined contribution plans

Pension costs

Current service cost	9	7
Net interest cost	-6	-3
Defined benefit plans	3	4
Defined contribution plans	131	122
Pension costs	134	126

Defined contribution plans

Certain group companies sponsor defined contribution pension plans� The assets of all NN Group's defined contribution plans are held in independently administered funds� Contributions are generally determined as a percentage of pay� These plans do not give rise to balance sheet provisions, other than relating to short-term timing differences included in 'Other assets' or 'Other liabilities'�

Number of employees

Reference is made to Note 33 'Principal subsidiaries and geographical information' for information on the average number of employees�

Remuneration of Executive Board, Management Board and Supervisory Board

Reference is made to Note 48 'Key management personnel compensation'�

Share plans

NN Group has granted shares to a number of senior executives (members of the Management Board, general managers and other officers nominated by the Management Board)� The purpose of the share schemes is to attract, retain and motivate senior executives and staff�

Share awards comprise upfront shares and deferred shares� The entitlement to the deferred shares is granted conditionally� If the participant remains in employment for an uninterrupted period between the grant date and the vesting date, the entitlement becomes unconditional�

A retention period applies from the moment of vesting these awards (five years for Management Board and one year for Identified Staff)�

28 Staff expenses continued

Share awards

Changes in Share awards outstanding

Share awards (in number)Weighted average grant date fair value (in euros)

2020

2019

2020

2019

Share awards outstanding - opening balance	478,058	613,118	36�38	33�38
Granted	292,189	267,338	20�78	38�96
Vested	-298,899	-362,048	32�02	34�00
Forfeited	-16,610	-40,350	34�55	29�35
Share awards outstanding - closing balance	454,738	478,058	29.29	36.38

In 2020, 40,278 (2019: 30,801) share awards on NN Group shares were granted to the members of the Executive and Management Board� In 2020, 251,911 (2019: 236,537) share awards on NN Group shares were granted to senior management and other employees�

As at 31 December 2020, the share awards on NN Group shares consist of 427,305 (2019: 449,781) share awards relating to equity-settled share-based payment arrangements and 27,433 (2019: 28,277) share awards relating to cash-settled share-based payment arrangements�

The fair value of share awards granted is allocated over the vesting period of the share awards as an expense under staff expenses�

As at 31 December 2020, total unrecognised compensation costs related to share awards amount to EUR 4 million (2019: EUR 6 million)� These costs are expected to be recognised over a weighted average period of 1�3 years (2019: 1�5 years)�

29 Interest expenses

Interest expenses

2020

2019

Other interest expenses

Interest expenses on non-trading derivatives	228	177
Other interest expenses	283	342
Interest expenses	511	519

In 2020, total interest income and total interest expenses for items not valued at fair value through profit or loss were EUR 3,356 million (2019: EUR 3,375 million) and EUR 283 million (2019: EUR 342 million) respectively�

Interest income and expenses are included in the following profit and loss account lines�

Total net interest income

2020	2019
30 Other operating expenses
Other operating expenses
2020	2019
NN Group N.V.	96
2020 Financial Report

Investment income	3,595	3,596
Interest expenses on non-trading derivatives	-228	-177
Other interest expenses	-283	-342
Total net interest income	3,084	3,077

Depreciation of property and equipment	91	81
Amortisation of software	39	33
Computer costs	311	309
Office expenses	70	68
Travel and accommodation expenses	7	21
Advertising and public relations	68	87
External advisory fees	195	175
Addition/(releases) of provisions for reorganisation and relocations	72	55
Other	111	92
Other operating expenses	964	921

31 Earnings per ordinary share

Earnings per ordinary share shows earnings per share amounts for profit or loss attributable to shareholders of the parent� Earnings per ordinary share is calculated on the basis of the weighted average number of ordinary shares outstanding� In calculating the weighted average number of ordinary shares outstanding, own shares held by group companies are deducted from the total number of ordinary shares in issue�

Diluted earnings per share is calculated as if the share plans had been exercised at the beginning of the period and assuming that the cash received from exercised share plans and warrants was used to buy own shares against the average market price during the period� The net increase in the number of shares resulting from exercising share plans and warrants is added to the average number of shares used for the calculation of diluted earnings per share�

Earnings per ordinary share

Weighted average

number of ordinary shares

Amounts (in millions of euros)

(in millions)

Per ordinary share (in euros)

2020

2019

2020

2019

2020

2019

Coupon on undated subordinated notes

Basic earnings

Dilutive instruments: - Share plans

Dilu

Diluted earnings

Net result	1,904	1,962
Coupon on undated subordinated notes	-59	-59
Basic earnings	1,845	1,903	314.1	330.5	5.88	5.76
Dilutive instruments:
- Share plans	0�5	0�5
Dilutive instruments	0.5	0.5
Diluted earnings	1,845	1,903	314.6	331.0	5.87	5.75

32 Segments

The reporting segments for NN Group, based on the internal reporting structure, are as follows:

• Netherlands Life (Group life and individual life insurance products in the Netherlands)
• Netherlands Non-life (Non-life insurance in the Netherlands including disability and accident, fire, motor and transport insurance)
• Insurance Europe (Life insurance, pension products and to a small extent non-life insurance and retirement services in Central and Rest of Europe)
• Japan Life (Life insurance primarily Corporate Owned Life Insurance (COLI) business)
• Asset Management (Asset management activities)
• Banking
• Other (Operating segments that have been aggregated due to their respective size; including Japan Closed Block VA (Closed block single premium variable annuity individual life insurance portfolio in Japan, including the internally reinsured minimum guarantee risk, which has been closed to new business and which is being managed in run-off), reinsurance and items related to capital management and the head office)

The Executive Board and the Management Board set the performance targets and approve and monitor the budgets prepared by the reporting segments� The segments formulate strategic, commercial and financial policies in conformity with the strategy and performance targets set by the Executive Board and the Management Board�

The accounting policies of the segments are the same as those described in Note 1 'Accounting policies'� Transfer prices for inter-segment transactions are set at arm's length� Corporate expenses are allocated to segments based on time spent by head office personnel, the relative number of staff, or on the basis of income and/or assets of the segment� Intercompany loans that qualify as equity instruments under IFRS-EU are presented in the segment reporting as debt; related coupon payments are presented as income and expenses in the respective segments�

32 Segments continued

Operating result (before tax) is used by NN Group to evaluate the financial performance of its segments�

The operating result for the life insurance business is analysed through a margin analysis, which includes the investment margin, fees and premium-based revenues and the technical margin� Disclosures on comparative years also reflect the impact of current year's divestments� Operating result as presented below is an Alternative Performance Measure (non-GAAP financial measure) and is not a measure of financial performance under IFRS-EU� Because it is not determined in accordance with IFRS-EU, operating result as presented by NN Group may not be comparable to other similarly titled measures of performance of other companies� The net result on transactions between segments is eliminated in the net result of the relevant segment� Operating result is calculated as explained below in the section Alternative Performance Measures�

Segments (2020)

Total
segments
Special items in 2020 mainly reflect integration expenses and other project related expenses such as the implementation of IFRS 17�
NN Group N.V.	98
2020 Financial Report

Netherlands Netherlands

Insurance

Asset

2020

Life Non-life

Europe

Japan Life ManagementBankingOther

Investment margin

Administrative expenses

DAC amortisation and trail commissions

Expenses

Operating result non-life Operating result banking Operating result other

Operating result

Non-operating items:

- gains/losses and impairments
- revaluations
- market and other impacts

Special items before tax Acquisition intangibles and goodwill Result on divestments

Result before tax

Taxation Minority interests

Net result

Investment margin	890 110 -14 -3 983
Fees and premium-based revenues	392 730 639 440 2,202
Technical margin	184 252 17 454
Operating income non-modelled life business	1 1
Operating income	1,467 - 1,093 642 438 - - 3,640
Administrative expenses	440 417 144 286 1,286
DAC amortisation and trail commissions	33 389 258 680
Expenses	473 - 806 402 286 - - 1,966
Operating result non-life	215 -3 212
Operating result banking	154 154
Operating result other	-151 -151
Operating result	994 215 285 240 152 154 -151 1,889
Non-operating items:
- gains/losses and impairments	620 4 -7 11 12 640
- revaluations	371 -9 -12 -20 7 337
- market and other impacts	-310 12 -4 17 -29 -315
Special items before tax	-77 -79 -29 -3 -14 -75 -278
Acquisition intangibles and goodwill	-24 -24
Result on divestments	-11 111 100
Result before tax	1,597 138 234 210 152 167 -149 2,349
Taxation	330 31 63 57 37 35 -131 423
Minority interests	8 11 4 22
Net result	1,260 97 171 152 111 132 -18 1,904

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NN Group NV published this content on 10 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 March 2021 08:45:01 UTC.

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Life & Health Insurance

NN N : Group Financial Report 2020

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Sector Life Insurance

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