NN GROUP N.V. Press Release 18 February 2021
NN Group reports full‐year 2020 operating result of EUR 1.9 billion
Strong financial and commercial performance; cost reduction target achieved
Operating result increased to EUR 963 million from EUR 881 million in the second half of 2019, mainly driven by a higher investment margin and lower administrative expenses at Netherlands Life; Full‐year 2020 operating result of EUR 1,889 million, up 5.3% on 2019
Operating capital generation of EUR 450 million versus EUR 653 million in the second half of 2019, reflecting the negative impact of lower interest rates; Full‐year 2020 operating capital generation of EUR 993 million, compared with EUR 1,349 million in 2019
Limited negative impact of Covid‐19 on operating result of around EUR 23 million in the second half of 2020, bringing the full‐year 2020 impact to EUR 53 million
Net result of EUR 1,317 million, up from EUR 844 million in the second half of 2019; Full‐year 2020 net result of EUR 1,904 million versus EUR 1,962 million in 2019
Further cost reductions of EUR 23 million in the second half of 2020; total cost reductions of EUR 404 million versus the full‐year 2016 administrative expense base, thereby achieving the cost reduction target
Value of new business of EUR 144 million, up 17.9% from the second half of 2019, mainly driven by the recovery in sales of COLI products in Japan Life
Focus on all stakeholders; high employee engagement and increased ESG‐integrated Assets under Management
Customer satisfaction remained broadly stable amidst the pandemic, with 4 of our businesses scoring an above market average Net Promotor Score
Employee engagement increased substantially with an overall score of 7.9, up from 7.4 in 2019
ESG‐integrated Assets under Management increased to 74% from 68% in 2019
Resilient balance sheet; delivering on our commitment to attractive capital returns to shareholders
NN Group Solvency II ratio of 210% versus 221% at 30 June 2020, mainly reflecting the inclusion of NN Bank in the Group Solvency II calculations as of the end of 2020 and the deduction of the proposed 2020 final dividend, partly offset by operating capital generation
Cash capital position at the holding decreased to EUR 1,170 million in the second half of 2020, reflecting capital flows to shareholders and remittances from subsidiaries
2020 final dividend proposal of EUR 1.47 per ordinary share or approximately EUR 456 million, bringing the pro forma total 2020 dividend to EUR 2.33 per ordinary share, up 7.9% on 20191)
New share buyback programme of EUR 250 million announced in line with dividend policy
Statement of David Knibbe, CEO
'In 2020 we delivered a strong financial and commercial performance, even though it clearly was an unprecedented year, marked by the Covid‐19 pandemic and various other economic, political and regulatory developments. These circumstances impacted people and societies, and are reshaping markets, industries and companies ‐ which requires adaptability and resilience from us all. When designing our new strategy in the first half of the year, we took these changes into account as much as possible. It is our aim to pursue long‐term value creation, based on the belief that a focus on the well‐being of customers and employees is in the end beneficial for all our stakeholder groups.
For our employees, we want to create an inclusive and inspiring working environment, which stimulates agility, efficiency and transformation. Last year, our people demonstrated proactivity and flexibility in giving unwavering attention to our customers in a difficult change environment. This has also proven to be a strong accelerator for the transformation journey we embarked on, of becoming more customer centric and data driven. Thanks to the efforts of our colleagues, who were mostly working remotely, we were able to continue to go the extra mile for our customers. We were for example able to provide payment holidays for insurance premiums and mortgages to customers facing financial difficulties, and temporary coverage of delivery services for businesses that normally do not deliver products. Also, we supported the communities in which we live and work, for example by computerdonations, enabling children to home school. Besides supporting customers to navigate today's challenges, we also want to help by giving them the confidence to look and plan ahead. This way, insurers can make an important contribution to economic recovery, a goal we are very committed to support.
Our overall financial performance remained strong in 2020. The second half‐year operating result was up more than 9% compared with the same period in 2019, with Netherlands Life posting solid results on the back of the accelerated shift to higher‐yielding assets in the first half of the year. At Netherlands Non‐life, lower underwriting results in Disability & Accident were partly offset by lower claims in Property & Casualty and the inclusion of the results of VIVAT Non‐life. The overall combined ratio held up well at 95.7%. Further expense savings were achieved across the company, allowing us to achieve the cost savings target of EUR 400 million.
We saw resilient commercial momentum in the second half of the year as sales were up at Japan Life and Insurance Europe, resulting in a higher value of new business, despite Covid‐19 restrictions. Defined Contribution assets under management increased to EUR 24.6 billion, reflecting our market leading position in Dutch pensions. Total Assets under Management at NN Investment Partners increased to EUR 300 billion, driven by positive market performance and strong net third party inflows of EUR 10.1 billion. NN Bank, the fifth largest mortgage originator in the Netherlands, originated new mortgages for a total amount of EUR 3.8 billion.
As expected, operating capital generation 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, our accelerated shift to higher‐yielding assets provided some offset in the form of higher investment margins. Our strong solvency and capital generation support attractive and growing cash returns to shareholders. We followed the request for prudence from regulators, and limited dividend flows from our subsidiaries to the holding. However, our strong Solvency II ratio and capital generation allows us to fulfill the commitments made in our dividend policy.
With the aim to contribute to the well‐being of people and planet, we supported the transition to a sustainable economy by engaging with hundreds of investee companies, and voting for change at more than 2,500 AGMs. Through these actions, we also give substance to our ambition to transition our proprietary investment portfolio to net‐zero carbon emissions by 2050, in line with the Paris Agreement. Together with around 40 financial institutions, NN Investment Partners signed the Finance for Biodiversity Pledge calling on global leaders to act, and committing ourselves to protect and restore biodiversity through our finance activities and investments. We are pleased to have received external recognition for our ESG performance by again being included in the Dow Jones Sustainability Indices, both the World and Europe index, and by our improved CDP climate change disclosure A‐ rating.
All in all, we have made a promising start with the implementation of our new strategy and have a solid foundation for delivering both on our financial and non‐financial target.'
NN Group key figures
In EUR million
2H20
2H19
ChangeFY20
FY19
ChangeOperating capital generation2) 450
Value of new business 144
Net result 1,317
Operating result3) 963
653 122 881 844
−31.1% 17.9% 9.4% 56.0%
993 266 1,889 1,904
1,349 −26.4%
358 −25.7%
1,794 5.3%
1,962 −2.9%
31 Dec 20
30 Jun 20
Solvency II ratio4)29)30)
210%
221%
31 Dec 19 224%
31 Dec 20
30 Jun 20
31 Dec 19
No. of insurance businesses scoring above market average NPS5)
4
4 4
Brand consideration6)
Employee engagement7)
21% 25%
7.9 7.4
Women in senior management positions ESG‐integrated AuM8)
33%
33% 36%
74%
71% 68%
Contribution to society in annual charitable donations (in EUR million)
4.7 3.2
Note: All footnotes are included on page 30
Business update
At NN, we help people care for what matters most to them. Our purpose reflects the kind of company we aspire to be: a company that delivers long‐term value for all stakeholders. Our ambition is to be an industry leader, known for our customer engagement, talented people, and contribution to society. To realise our ambition, we identified five strategic commitments, with all parts of our business contributing.
Customers and distribution
As part of our efforts to enhance customer engagement and focus on service solutions, we aim to be an active participant in platforms on key themes such as Selfcare and Carefree Retirement. In the Netherlands, we launched several initiatives such as Zorggenoot, a network of local experts who can help find, arrange and finance informal elderly homecare. We initiated Kwiek, a platform supporting people over 65 years find a job and fight loneliness, and we invested in Klup, a social platform for people over 50 years old.
Our distribution partners play a vital role in engaging with our customers. Our tied agents throughout Europe adjusted swiftly to remote sales and service processes and adapted to our customers' changing needs. They made a major contribution to Insurance International results, increasing sales by 2% compared with 2019, despite challenges from Covid‐19. In the Netherlands Life business, we managed to further grow the overall satisfaction of our business partners to 7.6. In the Netherlands Non‐life and Bank business we steadily improved our broker and customer satisfaction over the year.
We continued to strengthen and expand our partnerships. In the Netherlands, we partnered with Insify, a digital insurance platform that enables small businesses to arrange their own insurance anytime, anywhere. Nationale‐ Nederlanden acquired a stake in Invers, a company developing smart technology to analyse and deliver financial data. In the Czech Republic, we entered a partnership with AirBank to sell and service our pension products. NN Belgium Life partnered with one of the most prominent brokers in Belgium, Wilink, strengthening our distribution in the retail and self‐employed broker segments.
NN started the integration of Keerpunt in its label, HCS. Keerpunt is a quality player in the occupational health and safety service market. Its expertise and products, combined with HCS's IT and innovation power, will enable us to further develop services for our customers.
Products and services
We launched several protection and living benefit products meeting our customers' evolving needs. NN Romania entered the general insurance market by launching a home insurance product, and in just two months issued over 1,700 policies, of which 30% to new customers. In Spain, we introduced a flexible, transparent and guaranteed protection product targeted to the self‐employed which allows them to pay only for the coverage they need. Sales of COLI products in Japan showed signs of recovery in the second half of 2020, supported by the launch of two new products at the beginning of the year, the Emergency Plus CSV and Emergency Plus LCV which offer sudden‐death insurance to small and medium‐sized enterprise (SME) owners.
In the Netherlands, we collaborated with Hyfen, APG, PGGM and Blue Sky Group to develop our first blockchain solution, an automated and digitised value transfer process for individual pensions, which also offers support with customer questions and reduces processing time. We also entered a collaboration with the Dutch Consumers' Association (Consumentenbond) which will offer NN's cybersecurity emergency call service, Cyberwacht, to their customers for one year.
NN Bank developed NOVA app, a digital household budget providing insights on customers' actual spending. NN Bank also introduced Woonnu, a new mortgage label which incentivises sustainable living, for example by linking the mortgage interest rate to the home's energy label.
NN IP expanded its mortgage proposition with two new funds. Partnering with Channel Capital Advisors LLP, NN IP also initiated the NN (L) Flex Trade Finance fund, offering institutional investors access to a conservative portfolio of globally sourced, short‐dated trade finance loans. In addition, NN IP strengthened its global Emerging Markets Debt (EMD) team by transferring MN's EMD team including USD 4 billion of MN's in‐house managed EMD assets to NN IP. The total size of NN IP's AuM in EMD is now over USD 17 billion.
People and organisation
We are on a journey to transform our company, which also means enabling colleagues to adapt to change. The Covid‐19 pandemic measures in 2020 required great flexibility from employees, while at the same time led to enhanced digitisation and new ways of working. Our colleagues embraced these ongoing changes throughout the year, as evidenced by the high engagement score of 7.9 based on the semi‐annual survey carried out in the second half of 2020.
We want to be known for our talented employees, and we do this by fostering the NN culture and creating an inclusive working environment. In December, we launched NN's diversity and inclusion (D&I) statement, explaining our approach to creating a more inclusive workforce, customer experience and community support. We also started the internal series Wo{men}talk to discuss D&I‐related topics, and we initiated the NN Pride Network to connect colleagues within the LGBTI+ community.
The integration of VIVAT Non‐life is progressing well, and a total of 380 new colleagues from VIVAT joined NN and received a warm virtual welcome.
Financial strength
We aim to maintain a strong balance sheet and generate attractive financial returns for shareholders.
On 17 December 2020, European regulator EIOPA published an Opinion to the European Commission on the review of Solvency II. A change of legislation is expected to be implemented at the earliest in 2024. Based on the EIOPA Opinion and the prevailing market conditions in December, the net impact from the proposed changes to NN Group's Solvency II ratio at the anticipated implementation date is expected to be manageable.
In September, NN Bank issued a EUR 500 million 15‐year Soft Bullet Covered bond at an attractive yield, thereby further broadening its investor base and lengthening its funding profile.
Society
NN IP has again been awarded the top score (A+) from the UN Principles for Responsible Investment (UN PRI), for its strategy and governance approach to responsible investing and its ESG integration. NN IP also ranked sixth amongst the world's largest asset managers using proxy voting for action on climate and social issues, by ShareAction, an association dedicated to raising awareness and participation of sustainable practices in financial activities.
Once more NN was the top‐scoring company in the annual Tax Transparency Benchmark, published by the Dutch association of investors for Sustainable Development (VBDO). The jury praised NN for further improving the disclosures of direct and other taxes on a country‐by‐country basis, and for gaining third‐party tax assurance on its 2019 Total Tax Contribution Report.
We continue to focus on supporting our communities during Covid‐19 through various initiatives. For example, in the Czech Republic, 150 employees took part in a challenge to support single parent families, lonely seniors and people in senior care homes. In the Netherlands, 350 colleagues were trained as home administration volunteers, a training developed by the National Institute for Family Finance Information (Nibud), and are now able to help family members and friends when they face challenging financial circumstances. We also made donations to the association of Dutch food banks and other charitable organisations.
Consolidated results
In EUR million | 2H20 | 2H19 | Change | FY20 | FY19 | Change |
Operating capital generation2) | ||||||
Netherlands Life | 266 | 330 | −19.3% | 642 | 770 | −16.6% |
Netherlands Non‐life | 14 | 83 | −82.9% | 76 | 132 | −42.8% |
Insurance Europe | 135 | 121 | 11.3% | 253 | 251 | 1.0% |
Japan Life | 63 | 103 | −38.9% | 133 | 173 | −23.3% |
Asset Management | 53 | 60 | −11.0% | 103 | 122 | −15.2% |
Banking | 0 | 26 | 0 | 82 | ||
Other | −81 | −70 | −214 | −180 | ||
Operating capital generation | 450 | 653 | −31.1% | 993 | 1,349 | −26.4% |
In EUR million | 2H20 | 2H19 | Change | FY20 | FY19 | Change |
Analysis of results3) | ||||||
Netherlands Life | 500 | 397 | 25.9% | 994 | 922 | 7.9% |
Netherlands Non‐life | 103 | 119 | −12.9% | 215 | 203 | 5.7% |
Insurance Europe | 152 | 143 | 6.3% | 285 | 283 | 0.7% |
Japan Life | 102 | 100 | 2.0% | 240 | 218 | 10.3% |
Asset Management | 78 | 85 | −7.8% | 152 | 161 | −5.3% |
Banking | 74 | 92 | −20.0% | 154 | 152 | 1.1% |
Other | −47 | −56 | −151 | −144 | ||
Operating result | 963 | 881 | 9.4% | 1,889 | 1,794 | 5.3% |
Non‐operating items | 605 | 295 | 105.3% | 662 | 887 | −25.4% |
of which gains/losses and impairments | 472 | 241 | 95.6% | 640 | 335 | 90.8% |
of which revaluations | 170 | 254 | −33.1% | 337 | 827 | −59.3% |
of which market and other impacts | −36 | −200 | −315 | −275 | ||
Special items | −155 | −155 | −278 | −262 | ||
Acquisition intangibles and goodwill | −11 | −16 | −24 | 1 | ||
Result on divestments | 100 | 0 | 100 | 8 | ||
Result before tax | 1,502 | 1,005 | 49.5% | 2,349 | 2,429 | −3.3% |
Taxation | 172 | 148 | 16.7% | 422 | 444 | −4.9% |
Minority interests | 13 | 13 | −0.0% | 22 | 23 | −2.5% |
Net result | 1,317 | 844 | 56.0% | 1,904 | 1,962 | −2.9% |
Basic earnings per ordinary share in EUR9) | 4.12 | 2.49 | 65.6% | 5.88 | 5.76 | 2.0% |
Key figures | ||||||
Gross premium income | 6,071 | 6,689 | −9.2% | 13,822 | 14,508 | −4.7% |
New sales life insurance (APE) | 507 | 553 | −8.3% | 1,127 | 1,741 | −35.3% |
Value of new business | 144 | 122 | 17.9% | 266 | 358 | −25.7% |
Total administrative expenses | 1,078 | 1,046 | 3.1% | 2,121 | 2,076 | 2.2% |
Combined ratio (Netherlands Non‐life)10) | 95.7% | 93.9% | 95.3% | 95.4% | ||
In EUR billion | 31 Dec 20 | 30 Jun 20 | Change | 31 Dec 20 | 31 Dec 19 | Change |
Key figures | ||||||
Asset Management Assets under Management | 300 | 285 | 5.2% | 300 | 276 | 8.6% |
Life general account invested assets | 149 | 148 | 0.1% | 149 | 143 | 3.8% |
Total provisions for insurance and investment contracts | 171 | 170 | 0.3% | 171 | 168 | 1.4% |
of which for risk policyholder | 35 | 32 | 7.8% | 35 | 34 | 1.2% |
Solvency II ratio4)29)30) | 210% | 221% | 210% | 224% | ||
NN Life Solvency II ratio4) | 220% | 226% | 220% | 213% | ||
CET1 ratio11) | 17.4% | 16.7% | 17.4% | 15.7% | ||
Total assets | 264 | 262 | 0.6% | 264 | 249 | 6.1% |
Employees (internal FTEs, end of period) | 14,845 | 14,884 | −0.3% | 14,845 | 14,343 | 3.5% |
NN Group Press Release - 2H20, 18 February 2021 | 5 |
NN Group's operating capital generation decreased to EUR 450 million from EUR 653 million in the second half of 2019, mainly reflecting a lower contribution from Netherlands Non‐life, Netherlands Life, Japan Life and Banking, partly compensated by a higher contribution from Insurance Europe
Operating result increased to EUR 963 million from EUR 881 million in the second half of 2019, mainly driven by a higher investment margin at Netherlands Life
Value of new business was EUR 144 million for the second half of 2020, up 17.9% from the second half of 2019, mainly driven by the recovery in sales of COLI products in Japan Life
Administrative expense base of the business units in scope of the cost reduction target reduced by EUR 23 million in the second half of 2020; total cost reductions achieved of EUR 404 million
Full‐year 2020 operating capital generation decreased to EUR 993 million from EUR 1,349 million in 2019, mainly reflecting a lower contribution from Netherlands Life, Netherlands Non‐life and Banking
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
Value of new business for full‐year 2020 down 25.7% to EUR 266 million, reflecting lower sales in Japan and Insurance Europe impacted by Covid‐19 restrictions
Operating capital generation
NN Group's operating capital generation was EUR 450 million compared with EUR 653 million in the second half of 2019. The decrease reflects the negative impact of lower interest rates, unfavourable developments in the Disability & Accident (D&A) portfolio of Netherlands Non‐life, higher sales in Japan Life which have a negative impact due to a higher new business strain, as well as the suspension of dividend payments from NN Bank. This was partly compensated by a higher investment return mainly in Netherlands Life reflecting the shift to higher‐yielding assets as well as a higher new business contribution in Insurance Europe.
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.
Operating result
Operating result increased to EUR 963 million from EUR 881 million in the second half of 2019, which included EUR 54 million of non‐recurring benefits, while the second half of 2020 includes EUR 8 million of non‐recurring benefits. Excluding these items, the increase in the operating result was mainly driven by a higher investment margin at Netherlands Life.
The negative impact of Covid‐19 on the operating result for the second half of 2020 was around EUR 23 million, mainly in the segments Other, Insurance Europe, Japan Life and Banking.
The administrative expenses of the business units in the scope of the cost reduction target decreased by EUR 23 million in the second half of 2020, bringing the administrative expense base down to EUR 1,566 million on a last 12‐months basis. Total cost reductions amount to EUR 404 million. Consequently, the target to reduce the full‐ year 2016 administrative expense base of EUR 1,970 million by EUR 400 million by the end of 2020 has been achieved.
The operating result of Netherlands Life was EUR 500 million compared with EUR 397 million in the second half of 2019, reflecting a higher investment margin, a higher technical margin and lower administrative expenses, partly offset by lower fees and premium‐based revenues.
The operating result of Netherlands Non‐life decreased to EUR 103 million from EUR 119 million in the second half of 2019, reflecting lower underwriting results in D&A including a negative impact from Covid‐19, and the reduction of the discount rate of the IFRS technical provisions to reflect the current low interest rate environment. This was partly compensated by lower claims in Property & Casualty including a positive impact from Covid‐19, as well as the inclusion of the results of VIVAT Non‐life of EUR 26 million. The combined ratio was 95.7% versus 93.9% in the second half of 2019.
The operating result of Insurance Europe increased to EUR 152 million from EUR 143 million in the second half of 2019, mainly driven by a higher investment margin in Belgium and higher pension fees in Romania, partly offset by lower Non‐life results as well as a negative Covid‐19 impact of EUR 6 million.
The operating result of Japan Life was EUR 102 million, up 6.0% from the second half of 2019, excluding currency effects, reflecting lower DAC amortisation and trail commissions and lower administrative expenses, partly offset by a negative impact of Covid‐19 of EUR 4 million.
The operating result of Asset Management decreased to EUR 78 million from EUR 85 million in the second half of 2019 due to lower fees, as well as higher administrative expenses.
The operating result of Banking decreased to EUR 74 million from EUR 92 million in the second half of 2019, which included EUR 26 million of non‐recurring premiums on mortgage sales to the NN IP Dutch Residential Mortgage Fund while the current period reflects a higher interest result. The negative Covid‐19 impact in the second half of 2020 was EUR 2 million, reflecting higher operating expenses for acceptance and arrears management.
The operating result of the segment Other was EUR ‐47 million versus EUR ‐56 million in the second half of 2019, mainly reflecting the higher operating result of the reinsurance business, absorbing the negative Covid‐19 impact of EUR 11 million, partly offset by lower other results.
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 result before tax increased to EUR 1,502 million from EUR 1,005 million in the second half of 2019, primarily driven by higher non‐operating items mainly reflecting the volatile markets as a result of Covid‐19 as well as a higher result on divestments and the higher operating result.
Gains/losses and impairments were EUR 472 million compared with EUR 241 million in the second half of 2019, mainly reflecting higher capital gains on public equities and lower impairments on equities, partly offset by lower gains on the sale of debt securities.
Revaluations amounted to EUR 170 million versus EUR 254 million in the second half of 2019. The second half of 2020 includes positive revaluations on real estate, private equity and on derivatives used for hedging purposes mainly reflecting accounting asymmetries.
Market and other impacts amounted to EUR ‐36 million compared with EUR ‐200 million in the second half of 2019. The second half of 2020 mainly reflects movements in the provision for guarantees on unit‐linked, separate account pension contracts and inflation‐linked liabilities (all net of hedging) at Netherlands Life.
Special items were EUR 155 million for the second half of 2020, stable compared with the same period of 2019.
Acquisition intangibles and goodwill amounted to EUR ‐11 million versus EUR ‐16 million in the second half of 2019.
The result on divestments amounted to EUR 100 million compared with EUR 0 million in the second half of 2019, mainly reflecting a provision release following the completion of a tax audit on ING Australia Holdings.
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
The net result in the second half of 2020 increased to EUR 1,317 million from EUR 844 million in the second half of 2019. The effective tax rate in the second half of 2020 was 11.5%, reflecting a relatively low tax charge on the investment income, mainly due to tax exempt dividends and capital gains in the Netherlands, the tax exempt release of a provision related to ING Australia Holdings and non‐recurring tax adjustments.
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
Total new sales (APE) were EUR 507 million, down 4.7% from the second half of 2019 on a constant currency basis. New sales at Netherlands Life were EUR 41 million compared with EUR 152 million in the second half of 2019. As from 2020, new sales related to defined contribution (DC) accumulation contracts are no longer reported as insurance new sales but are reported as part of the DC assets under management. At Japan Life, new sales were EUR 140 million, up 92.9. % from the second half of 2019, excluding currency effects, reflecting the recovery in sales of COLI products following the revised tax regulations and despite Covid‐19 restrictions. New sales at Insurance Europe were up 5.9% on a constant currency basis, mainly reflecting increased pension sales in Slovakia, partly offset by lower life sales in Turkey and Belgium.
Value of new business was EUR 144 million, up 17.9% from the second half of 2019, mainly driven by the recovery in sales of COLI products in Japan Life.
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.
Capital Management
Solvency II ratio of NN Group decreased to 210% from 221% at the end of the first half of 2020, mainly reflecting the inclusion of NN Bank in the Group Solvency II calculations as of the end of 2020 and the deduction of the proposed 2020 final dividend, partly offset by operating capital generation
NN Group's operating capital generation decreased to EUR 450 million from EUR 653 million in the second half of 2019, mainly reflecting a lower contribution from Netherlands Non‐life, Netherlands Life, Japan Life and Banking, partly offset by a higher contribution from Insurance Europe
Cash capital position at the holding decreased to EUR 1,170 million from EUR 1,315 million at the end of the first half of 2020, reflecting capital flows to shareholders of EUR 758 million, partly offset by free cash flow to the holding
Free cash flow to the holding in the second half of 2020 was EUR 613 million, mainly driven by EUR 592 million of remittances from subsidiaries
2020 final dividend proposal of EUR 1.47 per ordinary share, bringing the full‐year 2020 dividend to EUR 2.33 per ordinary share1)
Solvency II
In EUR million | 31 Dec 20 | 30 Jun 20 | 31 Dec 19 |
Basic Own Funds | 21,228 | 19,510 | 19,491 |
Non‐available Own Funds | 1,200 | 1,123 | 1,252 |
Non‐eligible Own Funds | 0 | 0 | 0 |
Eligible Own Funds (a) | 20,028 | 18,388 | 18,240 |
of which Tier 1 Unrestricted | 12,484 | 12,235 | 11,836 |
of which Tier 1 Restricted | 1,927 | 1,938 | 1,922 |
of which Tier 2 | 2,484 | 2,470 | 2,474 |
of which Tier 3 | 733 | 500 | 703 |
of which non‐solvency II regulated entities | 2,400 | 1,244 | 1,305 |
Solvency Capital Requirements (b) | 9,534 | 8,338 | 8,154 |
of which non‐solvency II regulated entities | 1,368 | 486 | 542 |
NN Group Solvency II ratio (a/b)4)29)30) | 210% | 221% | 224% |
NN Life Solvency II ratio4) | 220% | 226% | 213% |
The NN Group Solvency II ratio decreased to 210% from 221% at the end of the first half of 2020, mainly reflecting the inclusion of NN Bank in the Group Solvency II calculations as of the end of 2020, the proposed 2020 final dividend and EUR 67 million of share buybacks in the second half of 2020. These items were partly offset by operating capital generation as well as the impact of model and assumption changes including the reversal of the corporate tax rate change in the Netherlands.
The NN Life Solvency II ratio decreased to 220% from 226% at the end of the first half of 2020, due to the EUR 450 million dividend payments to the holding company, partly offset by operating capital generation and the impact of the aforementioned model and assumption changes.
Operating capital generation
In EUR million | 2H20 | 2H19 | Change | FY20 | FY19 | Change |
Investment return | 654 | 580 | 12.8% | 1,223 | 1,089 | 12.3% |
Life ‐ UFR drag | −557 | −383 | −978 | −626 | ||
Life ‐ Risk margin release | 225 | 230 | −2.2% | 440 | 436 | 1.0% |
Life ‐ Experience variance | −42 | 10 | −5 | 7 | ||
Life ‐ New business | 39 | 14 | 173.8% | 92 | 123 | −24.9% |
Non‐life underwriting | 49 | 67 | ‐27.6% | 92 | 90 | 2.9% |
Non‐Solvency II entities (Asset Management,Japan,Bank,Other12) | 146 | 213 | −31.6% | 298 | 433 | −31.1% |
Holding expenses and debt costs | −136 | −145 | −277 | −279 | ||
Change in SCR | 73 | 66 | 10.2% | 108 | 78 | 38.1% |
Operating capital generation | 450 | 653 | −31.1% | 993 | 1,349 | −26.4% |
NN Group's operating capital generation was EUR 450 million compared with EUR 653 million in the second half of 2019. The decrease reflects the negative impact of lower interest rates, unfavourable developments in the Disability & Accident (D&A) portfolio of Netherlands Non‐life, higher sales in Japan Life which have a negative impact due to a higher new business strain, as well as the suspension of dividend payments from NN Bank. This was partly offset by a higher investment return mainly in Netherlands Life reflecting the shift to higher‐yielding assets as well as a higher new business contribution in Insurance Europe.
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 offset by a higher investment return mainly in Netherlands life reflecting the shift to higher‐yielding assets.
Cash capital position at the holding company
In EUR million | 2H20 | FY20 |
Beginning of period | 1,315 | 1,989 |
Cash divestment proceeds | 0 | 0 |
Remittances from subsidiaries13) | 592 | 1,310 |
Capital injections into subsidiaries14) | −5 | −56 |
Other15) | 26 | −183 |
Free cash flow to the holding16) | 613 | 1,070 |
Acquisitions | 0 | −572 |
Capital flow from / (to) shareholders | −758 | −1,017 |
Increase / (decrease) in debt and loans | 0 | −300 |
End of period | 1,170 | 1,170 |
Note: cash capital is defined as net current assets available at the holding company |
The cash capital position at the holding company decreased to EUR 1,170 million from EUR 1,315 million at the end of the first half of 2020. The decrease mainly reflects EUR 758 million of capital flows to shareholders, partly compensated by EUR 592 million of remittances from subsidiaries. Capital flows to shareholders include the 2020 interim cash dividend of EUR 394 million and the repurchase of EUR 364 million of own shares.
Financial leverage
In EUR million | 31 Dec 20 | 30 Jun 20 | 31 Dec 19 |
Shareholders' equity | 36,731 | 35,117 | 30,768 |
Adjustment for revaluation reserves17) | −17,790 | −17,519 | −13,397 |
Minority interests | 277 | 256 | 260 |
Capital base for financial leverage (a) | 19,219 | 17,854 | 17,632 |
Undated subordinated notes19) | 1,764 | 1,764 | 1,764 |
Subordinated debt | 2,383 | 2,396 | 2,409 |
Total subordinated debt | 4,146 | 4,159 | 4,172 |
Debt securities issued | 1,694 | 1,693 | 1,992 |
Financial leverage (b) | 5,840 | 5,852 | 6,164 |
Financial leverage ratio (b/(a+b)) | 23.3% | 24.7% | 25.9% |
Fixed‐cost coverage ratio18)19) | 11.9x | 11.1x | 12.0x |
The financial leverage ratio of NN Group decreased to 23.3% at the end of 2020 compared with 24.7% at the end of the first half of 2020. This reflects an increase of the capital base for financial leverage driven by the second half‐ year net result of EUR 1,317 million and positive revaluations of equity investments, partly offset by capital flows to shareholders for an amount of EUR 758 million.
The fixed‐cost coverage ratio was 11.9x at the end of 2020 versus 11.1x at the end of the first half of 2020 (on a last 12‐months basis).
Dividend
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 (net of treasury shares). The final dividend will be paid either fully in cash, after deduction of withholding tax if applicable, or fully 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. If the proposed dividend is approved by the General Meeting, NN Group ordinary shares will be quoted ex‐dividend on 24 May 2021. The record date for the dividend will be 25 May 2021. The election period will run from 26 May up to and including 9 June 2021. The stock fraction for the stock dividend will be based on the volume weighted average price of NN Group ordinary shares on Euronext Amsterdam for the five trading days from 3 June through 9 June 2021. The dividend will be payable on 16 June 2021. (For more information:www.nn‐group.com/investors)
On 2 September 2020, NN Group paid an interim dividend of EUR 2.26 per ordinary share, comprising (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 proposed 2020 final dividend of EUR 1.47 per ordinary share plus the regular 2020 interim dividend of EUR 0.86 per ordinary share gives a pro forma total dividend for 2020 of EUR 2.33 per ordinary share.
Share buyback
NN Group announced today that it will execute an open market share buyback programme for an amount of EUR 250 million. The programme will be executed within 12 months and is anticipated to commence on 1 March 2021. The share buyback will be deducted in full from Solvency II Own Funds in the first half of 2021 and is estimated to reduce NN Group's Solvency II ratio by approximately 3%‐points. In addition to the share buyback programme announced today, NN Group intends to repurchase shares to neutralise the dilutive effect of any stock dividends. NN Group intends to cancel any repurchased NN Group shares under the programmes unless used to cover obligations under share‐based remuneration arrangements or to deliver stock dividend.
The share buyback programmes will be executed within the limitations of the existing authority granted by the General Meeting on 28 May 2020 and such authority to be granted by the General Meeting on 20 May 2021. The shares will be repurchased at a price that does not exceed the last independent trade or the highest currentindependent bid on the relevant trading platform. The programmes will be executed by financial intermediaries and will be performed in compliance with the safe harbour provisions for share buybacks.
On 13 February 2020, NN Group announced an open market share buyback programme for an amount up to EUR 250 million over a period of 12 months, commencing 2 March 2020. This share buyback is executed by financial intermediaries under an open market share buyback programme, which was temporarily suspended on 6 April 2020 and resumed on 6 August 2020. Up to 12 February 2021, shares for a total amount of EUR 247 million were repurchased, representing 98.7% of the total share buyback amount.
Following payment of the 2020 interim dividend, NN Group announced that it would repurchase ordinary shares for a total amount of EUR 310 million, equivalent to the value of the stock dividends, to neutralise the dilutive effect. This share buyback programme was completed on 30 October 2020.
NN Group reports on the progress of the share buyback programmes on its corporate website (www.nn‐ group.com/investors) on a weekly basis.
Share capital
The total number of NN Group shares outstanding (net of 20,099,918 treasury shares) on 12 February 2021 was 310,178,292.
Credit ratings
On 14 December 2020, Standard & Poor's published a report affirming NN Group's 'A' financial strength rating and 'BBB+' credit rating with a stable outlook.
On 16 October 2020, Fitch Ratings published a report affirming NN Group's 'A+' financial strength rating and 'A' credit rating with a stable outlook.
Credit ratings of NN Group on 17 February 2021
Standard & Poor's
A StableBBB+ StableFitch
A+ Stable
A Stable
Netherlands Life
Operating capital generation decreased to EUR 266 million from EUR 330 million in the second half of 2019, mainly reflecting the impact of lower interest rates, partly compensated by the shift to higher‐yielding assets
Operating result of EUR 500 million compared with EUR 397 million in the second half of 2019, mainly reflecting a higher investment margin and lower administrative expenses
Full‐year 2020 operating capital generation decreased to EUR 642 million from EUR 770 million in 2019, reflecting the impact of lower interest rates, partly compensated by the shift to higher‐yielding assets
Full‐year 2020 operating result increased to EUR 994 million from EUR 922 million in 2019, driven by a higher investment margin, higher technical margin and lower administrative expenses, partly offset by lower fees and premium‐based revenues
In EUR million | 2H20 | 2H19 | Change | FY20 | FY19 | Change |
Analysis of results | ||||||
Investment margin | 457 | 362 | 26.4% | 890 | 844 | 5.5% |
Fees and premium‐based revenues | 191 | 202 | −5.3% | 392 | 412 | −4.7% |
Technical margin | 87 | 80 | 7.7% | 184 | 161 | 14.3% |
Operating income non‐modelled business | 0 | 0 | 0 | 0 | −99.1% | |
Operating income | 735 | 645 | 14.1% | 1,467 | 1,417 | 3.5% |
Administrative expenses | 220 | 232 | −5.2% | 440 | 462 | −4.7% |
DAC amortisation and trail commissions | 16 | 16 | 0.1% | 33 | 33 | −1.6% |
Total expenses | 235 | 247 | −4.9% | 473 | 495 | −4.5% |
Operating result | 500 | 397 | 25.9% | 994 | 922 | 7.9% |
Non‐operating items | 531 | 269 | 97.3% | 680 | 833 | −18.3% |
of which gains/losses and impairments | 409 | 191 | 114.0% | 620 | 205 | 201.8% |
of which revaluations | 159 | 251 | −36.7% | 371 | 864 | −57.1% |
of which market and other impacts | −36 | −172 | −310 | −237 | ||
Special items | −46 | −36 | −77 | −57 | ||
Result on divestments | 0 | 0 | 0 | 5 | ||
Result before tax | 985 | 630 | 56.4% | 1,597 | 1,703 | −6.2% |
Taxation | 138 | 84 | 64.4% | 330 | 308 | 7.0% |
Minority interests | 0 | 4 | −98.1% | 8 | 8 | −10.5% |
Net result | 847 | 542 | 56.3% | 1,260 | 1,386 | −9.1% |
New business | ||||||
Single premiums | 244 | 1,056 | −76.9% | 485 | 1,286 | −62.3% |
Regular premiums | 17 | 46 | −63.5% | 170 | 351 | −51.5% |
New sales life insurance (APE) | 41 | 152 | −72.8% | 219 | 480 | −54.4% |
Value of new business | −1 | 8 | 8 | 9 | −2.6% | |
Key figures | ||||||
Operating capital generation2) | 266 | 330 | −19.3% | 642 | 770 | −16.6% |
Gross premium income | 1,551 | 2,252 | −31.1% | 3,544 | 4,373 | −18.9% |
Administrative expenses | 220 | 232 | −5.2% | 440 | 462 | −4.7% |
In EUR billion | 31 Dec 20 | 30 Jun 20 | Change | 31 Dec 20 | 31 Dec 19 | Change |
Key figures | ||||||
Life general account invested assets | 113 | 113 | 0.7% | 113 | 108 | 5.4% |
Assets under Management DC business total20) | 25 | 22 | 10.5% | 25 | 21 | 15.2% |
Total provisions for insurance and investment contracts | 117 | 116 | 0.7% | 117 | 116 | 0.8% |
of which for risk policyholder | 24 | 22 | 8.5% | 24 | 24 | 1.9% |
NN Life Solvency II ratio4) | 220% | 226% | 220% | 213% | ||
Employees (internal FTEs, end of period) | 2,172 | 2,234 | −2.8% | 2,172 | 2,317 | −6.3% |
NN Group Press Release - 2H20, 18 February 2021 | 13 |
Operating capital generation of Netherlands Life decreased to EUR 266 million from EUR 330 million in the second half of 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, and the negative impact of the longevity reinsurance transactions. This was partly compensated by a higher investment return reflecting the shift to higher‐yielding assets.
The operating result was EUR 500 million compared with EUR 397 million in the second half of 2019, reflecting a higher investment margin, a higher technical margin and lower administrative expenses, partly offset by lower fees and premium‐based revenues.
The investment margin increased to EUR 457 million compared with EUR 362 million in the second half of 2019. The current half‐year reflects higher income driven by the shift to higher‐yielding assets and higher dividends, partly offset by lower real estate income as a result of Covid‐19, whereas the second half of 2019 benefited from a special dividend of EUR 16 million.
Fees and premium‐based revenues decreased to EUR 191 million from EUR 202 million in the second half of 2019, due to the run‐off of the individual life closed book as well as lower margins in the pension business.
The technical margin increased to EUR 87 million from EUR 80 million in the second half of 2019. The current half‐ year reflects non‐recurring benefits as well as favourable longevity results, partly offset by the reinsurance premiums related to the longevity transactions completed in May 2020.
Administrative expenses decreased to EUR 220 million from EUR 232 million in the second half of 2019 mainly driven by lower staff expenses.
DAC amortisation and trail commissions were in line with the second half of 2019 at EUR 16 million.
The result before tax increased to EUR 985 million from EUR 630 million in the second half of 2019 due to higher non‐operating items and the higher operating result.
Gains/losses and impairments amounted to EUR 409 million in the second half of 2020 compared with EUR 191 million in the same period of 2019. The current half‐year mainly reflects capital gains on public equities and bonds. Revaluations were EUR 159 million compared with EUR 251 million in the second half of 2019. The current half‐year mainly reflects positive revaluations on real estate, private equity and on derivatives used for hedging purposes reflecting accounting asymmetries. Market and other impacts were EUR ‐36 million versus EUR ‐172 million in the second half of 2019, mainly reflecting movements in the provisions for guarantees on unit linked and separate account pension contracts and inflation‐linked liabilities (all net of hedging).
New sales (APE) were EUR 41 million compared with EUR 152 million in the second half of 2019. As from 2020, new sales related to defined contribution (DC) accumulation contracts are no longer reported as insurance new sales but are reported as part of the DC assets under management. On a comparable basis, based on the new definition, new sales (APE) were down EUR 82 million compared with the second half of 2019 which benefited from a higher volume of group pension contracts.
The value of new business was EUR ‐1 million compared with EUR 8 million in the same period of 2019 which benefited from a higher volume of group pension contracts.
Assets under management DC increased to EUR 24.6 billion at 31 December 2020, from EUR 22.3 billion at 30 June 2020.
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 return reflecting the shift to higher‐yielding assets.
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 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.
Netherlands Non‐life
Operating capital generation decreased to EUR 14 million from EUR 83 million in the second half of 2019, mainly reflecting unfavourable developments in the Disability & Accident portfolio
Operating result decreased to EUR 103 million from EUR 119 million in the second half of 2019, reflecting lower underwriting results in Disability & Accident, partly compensated by lower claims in Property & Casualty and the inclusion of the results of VIVAT Non‐life
Combined ratio was 95.7% versus 93.9% in the second half of 2019
Full‐year 2020 operating capital generation decreased to EUR 76 million from EUR 132 million in 2019, mainly reflecting unfavourable developments in the Disability & Accident portfolio
Full‐year 2020 operating result of Netherlands Non‐life increased to EUR 215 million from EUR 203 million in 2019 reflecting the contribution of VIVAT Non‐life and lower claims in Property & Casualty, partly offset by lower underwriting results in Disability & Accident
In EUR million | 2H20 | 2H19 | Change | FY20 | FY19 | Change |
Analysis of results | ||||||
Earned premiums | 1,780 | 1,464 | 21.6% | 3,418 | 2,941 | 16.2% |
Investment income | 48 | 51 | −6.1% | 98 | 106 | −7.9% |
Other income | 1 | −4 | −1 | −5 | ||
Operating income | 1,829 | 1,511 | 21.1% | 3,515 | 3,042 | 15.5% |
Claims incurred, net of reinsurance | 1,212 | 1,000 | 21.3% | 2,350 | 2,045 | 14.9% |
Acquisition costs | 338 | 254 | 33.1% | 630 | 516 | 22.0% |
Administrative expenses | 183 | 151 | 21.1% | 340 | 305 | 11.3% |
Acquisition costs and administrative expenses | 521 | 405 | 28.6% | 970 | 821 | 18.0% |
Expenditure | 1,734 | 1,405 | 23.4% | 3,319 | 2,866 | 15.8% |
Operating result insurance businesses | 95 | 105 | −10.0% | 196 | 176 | 11.4% |
Operating result non‐insurance businesses | 8 | 13 | −36.2% | 19 | 28 | −30.6% |
Total operating result | 103 | 119 | −12.9% | 215 | 203 | 5.7% |
Non‐operating items | 40 | 49 | −19.0% | 3 | 61 | −94.8% |
of which gains/losses and impairments | 24 | 40 | −41.4% | 0 | 48 | −100.0% |
of which revaluations | 7 | 8 | −9.1% | −9 | 12 | |
of which market and other impacts | 9 | 1 | 12 | 1 | ||
Special items | −45 | −41 | −79 | −67 | ||
Result on divestments | 0 | 0 | 0 | 0 | ||
Result before tax | 98 | 127 | −22.6% | 138 | 197 | −29.7% |
Taxation | 21 | 26 | −20.6% | 31 | 42 | −25.6% |
Minority interests | 11 | 7 | 46.9% | 11 | 13 | −15.3% |
Net result | 67 | 93 | −28.6% | 97 | 143 | −32.2% |
Key figures | ||||||
Operating capital generation2) | 14 | 83 | −82.9% | 76 | 132 | −42.8% |
Gross premium income | 1,428 | 1,142 | 25.1% | 3,521 | 3,097 | 13.7% |
Total administrative expenses21) | 249 | 193 | 28.6% | 451 | 385 | 17.1% |
Combined ratio10) | 95.7% | 93.9% | 95.3% | 95.4% | ||
of which Claims ratio10) | 66.4% | 66.2% | 67.0% | 67.4% | ||
of which Expense ratio10) | 29.3% | 27.7% | 28.4% | 27.9% | ||
EUR billion | 31 Dec 20 | 30 Jun 20 | Change | 31 Dec 20 | 31 Dec 19 | Change |
Key figures | ||||||
Total insurance provisions | 7 | 8 | −6.2% | 7 | 6 | 21.7% |
Employees (internal FTEs, end of period) | 3,330 | 3,309 | 0.6% | 3,330 | 2,775 | 20.0% |
NN Group Press Release - 2H20, 18 February 2021 | 16 |
In
Operating capital generation of Netherlands Non‐life decreased to EUR 14 million from EUR 83 million in the second half of 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 Disability & Accident (D&A).
The operating result decreased to EUR 103 million from EUR 119 million in the second half of 2019, reflecting lower underwriting results in D&A, partly compensated by lower claims in Property & Casualty (P&C) and the inclusion of the results of VIVAT Non‐life of EUR 26 million. The combined ratio was 95.7% versus 93.9% in the second half of 2019.
The operating result in D&A decreased to EUR ‐10 million from EUR 52 million in the second half of 2019, reflecting higher claims in the Group Income portfolio, including a negative impact from Covid‐19, and the reduction of the discount rate of the IFRS technical provisions to reflect the current low interest rate environment, partly compensated by the inclusion of VIVAT Non‐life D&A result. The D&A combined ratio was 102.0% versus 90.9% in the second half of 2019.
The operating result in P&C increased to EUR 105 million from EUR 53 million in the second half of 2019. The current half‐year reflects higher underwriting results in the Fire and Motor portfolios, including a positive impact from Covid‐ 19, and the inclusion of VIVAT Non‐life P&C result. The P&C combined ratio improved to 93.0% from 95.5% in the second half of 2019.
The increase in administrative expenses to EUR 183 million from EUR 151 million in the second half of 2019 reflects the impact of the VIVAT Non‐life acquisition, partly offset by expense reductions.
The operating result of the non‐insurance businesses decreased to EUR 8 million from EUR 13 million in the second half of 2019.
The result before tax of Netherlands Non‐life decreased to EUR 98 million from EUR 127 million in the second half of 2019, reflecting the lower operating result, lower non‐operating items and higher special items. Lower non‐ operating items mainly reflect lower gains on the sale of government bonds.
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.
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.
Insurance Europe
Operating capital generation increased to EUR 135 million from EUR 121 million in the second half of 2019, mainly reflecting a higher new business contribution
Value of new business increased to EUR 99 million from EUR 96 million in the second half of 2019, reflecting an improved life insurance business mix and higher pension sales in Slovakia
Operating result increased to EUR 152 million from EUR 143 million in the second half of 2019, mainly driven by higher pension fees in Romania
Full‐year 2020 operating capital generation was broadly stable at EUR 253 million
Full‐year 2020 value of new business was 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 result was broadly stable at EUR 285 million
In EUR million | 2H20 | 2H19 | Change | FY20 | FY19 | Change |
Analysis of results | ||||||
Investment margin | 61 | 53 | 15.5% | 110 | 102 | 7.1% |
Fees and premium‐based revenues | 363 | 377 | −3.8% | 730 | 737 | −1.0% |
Technical margin | 128 | 119 | 6.8% | 252 | 239 | 5.4% |
Operating income non‐modelled business | 0 | 0 | 1 | 1 | 57.0% | |
Operating income Life Insurance | 552 | 550 | 0.4% | 1,093 | 1,080 | 1.3% |
Administrative expenses | 203 | 212 | −4.6% | 417 | 419 | −0.5% |
DAC amortisation and trail commissions | 193 | 197 | −2.0% | 389 | 386 | 0.7% |
Expenses Life Insurance | 396 | 410 | −3.3% | 806 | 805 | 0.1% |
Operating result Life Insurance | 156 | 140 | 11.3% | 287 | 275 | 4.6% |
Operating result Non‐life | −4 | 3 | −3 | 8 | ||
Operating result | 152 | 143 | 6.3% | 285 | 283 | 0.7% |
Non‐operating items | 11 | 15 | −29.2% | −11 | 51 | |
of which gains/losses and impairments | 5 | 8 | −29.1% | 4 | 73 | −93.9% |
of which revaluations | 2 | 8 | −70.0% | −12 | −20 | |
of which market and other impacts | 3 | −1 | −4 | −2 | ||
Special items | −16 | −18 | −29 | −35 | ||
Acquisition intangibles and goodwill | 0 | 0 | 0 | 33 | ||
Result on divestments | −11 | 0 | −11 | 0 | ||
Result before tax | 136 | 140 | −3.3% | 234 | 331 | −29.5% |
Taxation | 39 | 37 | 4.2% | 63 | 73 | −13.4% |
Minority interests | 0 | 0 | 0 | 0 | ||
Net result | 97 | 103 | −5.9% | 171 | 259 | −34.1% |
New business | ||||||
Single premiums | 623 | 553 | 12.6% | 1,177 | 1,245 | −5.5% |
Regular premiums | 264 | 270 | −2.5% | 527 | 550 | −4.2% |
New sales life insurance (APE) | 326 | 326 | 0.0% | 644 | 674 | −4.4% |
Value of new business | 99 | 96 | 3.1% | 183 | 204 | −10.3% |
Key figures | ||||||
Operating capital generation2) | 135 | 121 | 11.3% | 253 | 251 | 1.0% |
Gross premium income | 1,489 | 1,540 | −3.3% | 3,001 | 3,073 | −2.3% |
Total administrative expenses (Life and Non‐life) | 212 | 218 | −2.7% | 432 | 431 | 0.3% |
EUR billion | 31 Dec 20 | 30 Jun 20 | Change | 31 Dec 20 | 31 Dec 19 | Change |
Key figures | ||||||
Life general account invested assets | 18 | 18 | −0.3% | 18 | 18 | −0.3% |
Total provisions for insurance and investment contracts | 27 | 26 | 2.5% | 27 | 27 | 0.7% |
of which for risk policyholder | 9 | 8 | 8.0% | 9 | 8 | 1.9% |
Assets under management pensions22) | 22 | 20 | 10.4% | 22 | 22 | −0.8% |
Employees (internal FTEs, end of period) | 4,820 | 4,952 | −2.7% | 4,820 | 4,942 | −2.5% |
18 |
In
Note: For data in constant currencies, refer to the 'NN Group Financial Supplement: 2.4.1 Analysis of results: Insurance Europe - Excluding currency effect
Operating capital generation of Insurance Europe increased to EUR 135 million from EUR 121 million in the second half of 2019, mainly driven by a higher new business contribution.
The operating result increased to EUR 152 million from EUR 143 million in the second half of 2019, mainly driven by a higher investment margin in Belgium and higher pension fees in Romania, partly offset by lower Non‐life results as well as a negative Covid‐19 impact of EUR 6 million.
The investment margin increased to EUR 61 million from EUR 53 million in the second half of 2019, mainly driven by a higher investment margin in Belgium.
Fees and premium‐based revenues decreased to EUR 363 million from EUR 377 million in the second half of 2019. This mainly reflects lower pension performance in Slovakia and Poland, currency impacts across the region and lower fee income in Turkey, partly offset by higher pension fees in Romania.
The technical margin increased to EUR 128 million from EUR 119 million in the second half of 2019, mainly driven by a EUR 9 million non‐recurring provision release in Belgium.
Administrative expenses decreased to EUR 203 million from EUR 212 million in the second half of 2019, reflecting currency impacts in Turkey and Poland and Covid‐19 related cost containment measures across the region.
DAC amortisation and trail commissions decreased to EUR 193 million from EUR 197 million in the second half of 2019, mainly as a result of lower life premiums and currency impact in Turkey. This was partly offset by a EUR 8 million non‐recurring item as a result of lower reinsurance commissions received related to the aforementioned provision release in Belgium.
The Non‐life operating result decreased to EUR ‐4 million from EUR 3 million in the second half of 2019, mainly due to higher claims in Spain, as well as higher expenses in Romania and Hungary.
The result before tax decreased to EUR 136 million from EUR 140 million in the second half of 2019, reflecting a loss on the sale of the broker business in Turkey, partly offset by the higher operating result.
New sales (APE) at Insurance Europe were up 5.9% from the second half of 2019 on a constant currency basis, mainly reflecting increased pension sales in Slovakia, partly offset by lower life sales in Turkey and Belgium.
Value of new business increased to EUR 99 million from EUR 96 million in the second half of 2019, reflecting an improved life insurance business mix and higher pension sales in Slovakia.
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.
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.
Japan Life
Value of new business was EUR 46 million, up from EUR 18 million in the second half of 2019, driven by the recovery in sales of COLI products
Operating capital generation decreased to EUR 63 million from EUR 103 million in the second half of 2019, mainly reflecting the negative impact of higher new business strain as a result of higher sales
Operating result was EUR 102 million, up 6.0% from the second half of 2019, excluding currency effects, reflecting lower DAC amortisation and trail commissions and lower administrative expenses
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, while 2020 reflects a positive impact of lower new business strain as a result of lower sales
Full‐year 2020 operating result was EUR 240 million, up 9.3% compared with 2019, excluding currency effects, reflecting lower DAC amortisation and trail commissions
In EUR million | 2H20 | 2H19 | Change | FY20 | FY19 | Change |
Analysis of results | ||||||
Investment margin | −6 | −9 | −14 | −16 | ||
Fees and premium‐based revenues | 275 | 294 | −6.3% | 639 | 659 | −3.1% |
Technical margin | 10 | 18 | −44.8% | 17 | 24 | −28.4% |
Operating income non‐modelled business | 0 | 0 | 0 | 0 | ||
Operating income | 279 | 302 | −7.8% | 642 | 667 | −3.7% |
Administrative expenses | 73 | 79 | −7.3% | 144 | 148 | −2.5% |
DAC amortisation and trail commissions | 103 | 123 | −16.2% | 258 | 302 | −14.5% |
Total expenses | 176 | 202 | −12.7% | 402 | 449 | −10.5% |
Operating result | 102 | 100 | 2.0% | 240 | 218 | 10.3% |
Non‐operating items | 5 | −16 | −27 | −34 | ||
of which gains/losses and impairments | 10 | −2 | −7 | −6 | ||
of which revaluations | −4 | −14 | −20 | −28 | ||
of which market and other impacts | 0 | 0 | 0 | 0 | ||
Special items | −1 | −2 | −3 | −4 | ||
Result on divestments | 0 | 0 | 0 | 0 | ||
Result before tax | 106 | 82 | 29.5% | 210 | 180 | 16.8% |
Taxation | 28 | 21 | 37.4% | 57 | 48 | 18.9% |
Minority interests | 0 | 0 | 0 | 0 | ||
Net result | 78 | 61 | 26.8% | 152 | 131 | 16.0% |
New business | ||||||
Single premiums | 0 | 0 | 0 | 0 | ||
Regular premiums | 140 | 75 | 85.6% | 263 | 587 | −55.1% |
New sales life insurance (APE) | 140 | 75 | 85.6% | 263 | 587 | −55.1% |
Value of new business | 46 | 18 | 153.9% | 75 | 146 | −48.7% |
Key figures | ||||||
Operating capital generation2) | 63 | 103 | −38.9% | 133 | 173 | −23.3% |
Gross premium income | 1,590 | 1,744 | −8.8% | 3,728 | 3,939 | −5.4% |
Administrative expenses | 73 | 79 | −7.3% | 144 | 148 | −2.5% |
EUR billion | 31 Dec 20 | 30 Jun 20 | Change | 31 Dec 20 | 31 Dec 19 | Change |
Key figures | ||||||
Life general account invested assets | 17 | 18 | −2.5% | 17 | 17 | −1.1% |
Total provisions for insurance and investment contracts | 17 | 18 | −1.8% | 17 | 17 | 2.6% |
of which for risk policyholder | 0 | 0 | 7.8% | 0 | 0 | |
Employees (internal FTEs, end of period) | 855 | 848 | 0.8% | 855 | 820 | 4.3% |
20 |
In
Note: For data in constant currencies, refer to the 'NN Group Financial Supplement: 2.5.1 Analysis of results: Japan Life - Excluding currency effects'
Value of new business of Japan life was EUR 46 million, up from EUR 18 million in the second half of 2019, driven by the recovery in sales of COLI products.
Operating capital generation decreased to EUR 63 million from EUR 103 million in the second half of 2019. This mainly reflects the negative impact of a higher new business strain as a result of higher sales following new COLI product launches reflecting the revised tax regulations and despite Covid‐19 restrictions, as well as a lower in‐force contribution as a result of lower sales in previous periods.
The operating result was EUR 102 million, up 6.0% from the second half of 2019, excluding currency effects, reflecting lower DAC amortisation and trail commissions and lower administrative expenses, partly offset by the negative impact of Covid‐19 of EUR 4 million.
Fees and premium‐based revenues were EUR 275 million, down 2.6% from the second half of 2019, excluding currency effects, due to lower in‐force premium affected by low sales following the revision of tax regulations in 2019, partly offset by higher new business sales.
The technical margin was EUR 10 million, down from EUR 18 million in the second half of 2019, mainly due to a lower surrender margin.
Administrative expenses were EUR 73 million, down 3.7% from the second half of 2019, excluding currency effects, reflecting various expense measures as well as lower sales‐related expenses due to the Covid‐19 restrictions.
DAC amortisation and trail commissions were EUR 103 million, down 12.8% from the second half of 2019, excluding currency effects, driven by lower surrenders reflecting the increased persistency.
The result before tax was EUR 106 million, up by EUR 27 million compared with the second half of 2019 excluding currency effects, driven by higher non‐operating items reflecting gains on the sale of securities in the second half of 2020 as well as lower hedging costs.
New sales (APE) increased to EUR 140 million from EUR 73 million in the second half of 2019, excluding currency effects, reflecting the recovery in sales of COLI products from low sales following the revised tax regulations and despite 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.
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.
Asset Management
Operating capital generation of EUR 53 million in the second half of 2020 mainly reflecting the net result, compared with EUR 60 million in the second half of 2019
Total Assets under Management (AuM) increased to EUR 300 billion compared with EUR 285 billion at the end of the first half of 2020 driven by positive market performance and net inflows
Operating result decreased to EUR 78 million from EUR 85 million in the second half of 2019 due to lower fees and higher administrative expenses
Full‐year 2020 operating capital generation of EUR 103 million mainly reflecting the net result, compared with EUR 122 million in 2019 which included non‐recurring benefits
Full‐year 2020 operating result was EUR 152 million compared with EUR 161 million in 2019 reflecting lower fees, as well as higher administrative expenses
In EUR million | 2H20 | 2H19 | Change | FY20 | FY19 | Change |
Analysis of results | ||||||
Investment income | −2 | −1 | −3 | 1 | ||
Fees | 224 | 228 | −1.7% | 440 | 443 | −0.6% |
Operating income | 222 | 227 | −2.1% | 438 | 444 | −1.4% |
Administrative expenses | 144 | 142 | 1.2% | 286 | 283 | 0.9% |
Operating result | 78 | 85 | −7.8% | 152 | 161 | −5.3% |
Non‐operating items | 0 | 0 | 0 | 0 | ||
of which gains/losses and impairments | 0 | 0 | 0 | 0 | ||
of which revaluations | 0 | 0 | 0 | 0 | ||
of which market and other impacts | 0 | 0 | 0 | 0 | ||
Special items | 0 | −9 | 0 | −15 | ||
Result on divestments | 0 | 0 | 0 | 0 | ||
Result before tax | 78 | 76 | 2.6% | 152 | 146 | 4.5% |
Taxation | 18 | 19 | −4.8% | 37 | 35 | 5.0% |
Minority interests | 2 | 2 | 2.6% | 4 | 2 | 98.3% |
Net result | 58 | 55 | 5.2% | 111 | 108 | 2.5% |
Key figures | ||||||
Operating capital generation2) | 53 | 60 | −11.0% | 103 | 122 | −15.2% |
Administrative expenses | 144 | 142 | 1.2% | 286 | 283 | 0.9% |
Cost/income ratio (Administrative expenses/Operating income) | 64.9% | 62.7% | 65.2% | 63.8% | ||
Fees/average Assets under Management (bps)23) | 15 | 17 | 15 | 17 | ||
EUR billion | 31 Dec 20 | 30 Jun 20 | Change | 31 Dec 20 | 31 Dec 19 | Change |
Key figures | ||||||
Assets under Management | 300 | 285 | 5.2% | 300 | 276 | 8.6% |
Employees (internal FTEs, end of period) | 955 | 943 | 1.3% | 955 | 941 | 1.4% |
2H20 | 1H20 | Change | FY20 | FY19 | Change | |
AuM roll‐forward | ||||||
Beginning of period | 285 | 276 | 3.2% | 276 | 246 | 12.3% |
Net inflow | 6 | 1 | 7 | 2 | ||
Acquisition / Divestments / Transfers | 0 | 3 | 3 | 0 | ||
Market performance (incl. FX impact) and other | 9 | 5 | 14 | 29 | ||
End of period | 300 | 285 | 5.2% | 300 | 276 | 8.6% |
NN Group Press Release - 2H20, 18 February 2021 | 22 |
In
Operating capital generation of Asset Management was EUR 53 million in the second half of 2020 mainly reflecting the net result, compared with EUR 60 million in the second half of 2019.
Total Assets under Management (AuM) increased to EUR 300 billion at the end of 2020 from EUR 285 billion at 30 June 2020, driven by positive market performance of EUR 9.1 billion as well as net inflows of EUR 5.7 billion. Positive market performance reflects the impact of lower interest rates, as well as higher equity markets. The second half of 2020 saw net inflows in Third Party (EUR 10.1 billion) mainly in fixed income and EMD strategies, as well as in Other affiliates (EUR 0.2 billion), partly offset by net outflows in Proprietary (EUR 4.6 billion) mainly due to the run‐off of the NN Life book.
The operating result decreased to EUR 78 million from EUR 85 million in the second half of 2019 due to lower fees, as well as higher administrative expenses.
Fees were EUR 224 million, down from EUR 228 million in the second half of 2019. The decrease reflects the asset mix moving more to lower‐margin strategies as well as fee pressure, partly offset by higher average AuM.
Administrative expenses increased to EUR 144 million compared with EUR 142 million in the second half of 2019, primarily due to higher staff‐related costs partly compensated by lower other expenses.
The result before tax increased to EUR 78 million compared with EUR 76 million in the second half of 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.
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.
Banking
Net operating Return on Equity (RoE) of Banking decreased to 12.8% compared with 18.1% in the second half of 2019, reflecting a lower net operating result and higher equity
Operating capital generation of EUR 0 million compared with EUR 26 million in the second half of 2019 due to the suspension of dividend payments in 2020 in accordance with the recommendations of the Dutch regulator
Operating result decreased to EUR 74 million from EUR 92 million in the second half of 2019, which included EUR 26 million of non‐recurring benefits
Full‐year 2020 net operating RoE 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 EUR 0 million 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
Full‐year 2020 operating result increased to EUR 154 million from EUR 152 million in 2019, which included EUR 26 million of non‐recurring benefits, while 2020 reflects EUR 7 million of non‐recurring benefits as well as a higher interest result
In EUR million | 2H20 | 2H19 | Change | FY20 | FY19 | Change |
Analysis of results | ||||||
Interest result | 141 | 132 | 6.5% | 280 | 259 | 8.4% |
Commission income | 30 | 18 | 68.5% | 48 | 35 | 36.6% |
Total investment and other income | 17 | 47 | −64.1% | 45 | 67 | −33.6% |
Operating income | 187 | 197 | −4.9% | 373 | 361 | 3.3% |
Operating expenses | 103 | 100 | 2.5% | 195 | 192 | 1.6% |
Regulatory levies | 8 | 7 | 10.9% | 20 | 17 | 17.7% |
Addition to loan loss provision | 3 | −2 | 3 | −1 | ||
Total expenses | 114 | 105 | 8.3% | 219 | 209 | 4.9% |
Operating result | 74 | 92 | −20.0% | 154 | 152 | 1.1% |
Non‐operating items | 27 | −11 | 27 | −14 | ||
of which gains/losses and impairments | 8 | 3 | 157.3% | 11 | 7 | 47.3% |
of which revaluations | 0 | 0 | 0 | 0 | ||
of which market and other impacts | 19 | −14 | 17 | −21 | ||
Special items | −7 | −6 | −14 | −15 | ||
Result before tax | 93 | 74 | 25.3% | 167 | 123 | 35.4% |
Taxation | 16 | 17 | −4.0% | 35 | 30 | 15.9% |
Minority interests | 0 | 0 | 0 | 0 | ||
Net result | 77 | 58 | 33.8% | 132 | 93 | 41.7% |
Key figures | ||||||
Operating capital generation2) | 0 | 26 | 0 | 82 | ||
Total administrative expenses24) | 111 | 108 | 3.0% | 216 | 210 | 2.9% |
Cost/income ratio25) | 54.7% | 50.8% | 52.4% | 53.3% | ||
Net Interest Margin (NIM)26) | 1.13% | 1.11% | ||||
Net operating RoE27) | 12.8% | 18.1% | 13.8% | 15.0% | ||
EUR billion | 31 Dec 20 | 30 Jun 20 | Change | 31 Dec 20 | 31 Dec 19 | Change |
Key figures | ||||||
CET1 ratio11) | 17.4% | 16.7% | 17.4% | 15.7% | ||
Total capital ratio11) | 18.9% | 18.1% | 18.9% | 17.2% | ||
Risk Weighted Assets (RWA)11) | 6 | 6 | 0.9% | 6 | 6 | 1.8% |
Savings and deposits | 16 | 16 | 1.4% | 16 | 15 | 4.4% |
Mortgages | 20 | 20 | 0.3% | 20 | 19 | 3.4% |
Total assets | 25 | 25 | 3.4% | 25 | 25 | 3.3% |
Employees (internal FTEs, end of period) | 919 | 875 | 5.1% | 919 | 847 | 8.5% |
NN Group Press Release - 2H20, 18 February 2021 | 24 |
In
Net operating Return on Equity (RoE) of Banking decreased to 12.8% compared with 18.1% in the second half of 2019, reflecting a lower net operating result and higher equity.
Operating capital generation reflects the dividends of the Banking segment to the holding and was EUR 0 million in the second half of 2020 compared with EUR 26 million in the second half of 2019, due to the suspension of dividend payments in accordance with the recommendation of the Dutch regulator.
The operating result decreased to EUR 74 million from EUR 92 million in the second half of 2019, which included EUR 26 million of non‐recurring premiums on mortgage sales to the NN IP Dutch Residential Mortgage Fund while the current period reflects a higher interest result. The negative Covid‐19 impact in the second half of 2020 was EUR 2 million, reflecting higher operating expenses for acceptance and arrears management.
The interest result increased to EUR 141 million from EUR 132 million in the second half of 2019, mainly reflecting lower funding costs and higher penalty interest received on a higher volume of mortgage redemptions, partly offset by lower mortgage rates. The net interest margin (NIM), calculated on a four‐quarter rolling average, remained broadly stable at 1.13%.
Commission income increased to EUR 30 million from EUR 18 million in the second half of 2019. The current period includes EUR 11 million of mortgage origination fees from the NN IP Dutch Residential Mortgage Fund previously reported under Investment and other income.
Total investment and other income decreased to EUR 17 million, compared with EUR 47 million in the second half of 2019 which included EUR 26 million of non‐recurring benefits relating to premiums on mortgage sales, as well as mortgage origination fees from the NN IP Dutch Residential Mortgage Fund which are now reported under Commission income.
Operating expenses increased to EUR 103 million from EUR 100 million in the second half of 2019 due to the additional expenses incurred as a result of Covid‐19.
The addition to loan loss provision was EUR 3 million versus a release of EUR 2 million in the second half of 2019, mainly reflecting new regulatory guidelines introducing a revised definition of loan default, offset by higher house prices.
The result before tax increased to EUR 93 million from EUR 74 million in the second half of 2019, which included lower non‐operating items reflecting the premium paid on the repurchase of Hypenn I RMBS notes in July 2019.
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 EUR 0 million 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.
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.
Other
Operating capital generation of EUR ‐81 million compared with EUR ‐70 million in the second half of 2019, which benefited from a reinsurance transaction with Japan Life
Operating result was EUR ‐47 million versus EUR ‐56 million in the second half of 2019, mainly reflecting the higher operating result of the reinsurance business, partly offset by lower other results
Operating result of the reinsurance business increased to EUR 17 million from EUR 0 million in the second half of 2019, as the current period includes an EUR 8 million release of the claims reserve related to Netherlands Non‐life's Disability portfolio, while the same period in 2019 included EUR 9 million of claims related to Netherlands Non‐life's Disability portfolio
Full‐year 2020 operating capital generation of EUR ‐214 million compared with EUR ‐180 million in 2019, which benefited from a reinsurance transaction with Japan Life
Full‐year 2020 operating result was EUR ‐151 million compared with EUR ‐144 million in 2019, mainly due to lower other results
Full‐year 2020 operating result of the reinsurance business was EUR ‐8 million compared with EUR ‐5 million in 2019, as 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
In EUR million
2H20
2H19
ChangeFY20
FY19
Change
Analysis of results
Interest on hybrids and debt28) −54
−54
Investment income and fees 52
Holding expenses −63
Amortisation of intangible assets 0
53 −2.4% −64 0
−108 −108 107 105 2.4% −142 −145 0 0
Holding result
−65
−65
−143
−148
Operating result reinsurance business 17
0
Other results 1
10 −85.6%
−8 0
−5 10
−99.0%
Operating result
−47
−56
−151
−144
Non‐operating items −8
−11
−10 −9
of which gains/losses and impairments 17
1
12 8 59.6%
of which revaluations 6
2 282.7%
7 −1
of which market and other impacts −31
−13
−29 −16
Special items −40
−42
−75 −69
Acquisition intangibles and goodwill −11
−16
−24 −32
Result on divestments 111
0
111 4
Result before tax Taxation Minority interests Net result
6 −88 0 94
−124−56 0 −68
−149 −131 0 −18
−251−92 0 −158
Key figures
Operating capital generation2) −81
Total administrative expenses 70
of which reinsurance business 5
of which corporate/holding 65
−70 74 3 71
−214 −180 −5.8% 153 158 −3.3% 37.1% 8 7 27.3% −7.8% 144 152 −4.7%
31 Dec 20
30 Jun 20
Change
31 Dec 20
31 Dec 19
Change
Key figures
Employees (internal FTEs, end of period)
1,794
1,722
4.2%
1,794
1,700
5.5%
In EUR million
Key figures Japan Closed Block VA
30 Jun 20
Change
31 Dec 20
31 Dec 19
Change
Account value
Net Amount at Risk Number of policies
1,691 20 17,888
1,691 78 19,105
−0.0% 1,691
1,865 −9.3%
−74.2%
20
34 −40.3%
−6.4% 17,888
20,047 −10.8%
Operating capital generation of the segment Other was EUR ‐81 million compared with EUR ‐70 million in the second half of 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.
The operating result was EUR ‐47 million versus EUR ‐56 million in the second half of 2019, mainly reflecting the higher operating result of the reinsurance business, partly offset by lower other results. The negative impact of Covid‐19 was EUR 11 million for the second half of the year, related to the reinsurance business.
The holding result was stable at EUR 65 million.
The operating result of the reinsurance business increased to EUR 17 million from EUR 0 million in the second half of 2019. The current period reflects an EUR 8 million release of the claims reserve related to Netherlands Non‐life's Disability portfolio, while the same period in 2019 included EUR 9 million of claims related to Netherlands Non‐life's Disability portfolio.
Other results decreased to EUR 1 million from EUR 10 million in the second half of 2019, which included a net release of provisions of EUR 12 million, while the current half year includes a net release of provisions of EUR 7 million both related to a legacy entity.
The result before tax of the segment Other increased to EUR 6 million from EUR ‐124 million in the second half of 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.
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 EUR 0 million 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.
Consolidated Balance Sheet
Total assets of NN Group increased by EUR 1.5 billion in the second half of 2020 to EUR 263.7 billion, reflecting the impact of lower interest rates and higher equity markets
Shareholders' equity increased by EUR 1.6 billion to EUR 36.7 billion, reflecting increased revaluation reserves as a result of lower interest rates
In EUR million | 31 Dec.20 | 30 Jun.20 31 Dec.19 | 31 Dec.20 | 30 Jun.20 31 Dec.19 | |
Assets | Equity and liabilities | ||||
Cash and cash equivalents | 12,382 | 12,388 6,436 | Shareholders' equity (parent) | 36,731 | 35,117 30,768 |
Financial assets at fair value through profit or loss | Minority interests | 277 | 256 260 | ||
‐ investments for risk of policyholders | 34,797 | 32,288 34,433 | Undated subordinated notes | 1,764 | 1,764 1,764 |
‐ non‐trading derivatives | 14,833 | 16,431 10,189 | Total equity | 38,772 | 37,137 32,792 |
‐ designated as at fair value through profit or loss | 1,336 | 1,344 1,184 | Subordinated debt | 2,383 | 2,396 2,409 |
Available‐for‐sale investments | 118,175 | 118,202 117,644 | Debt securities issued | 1,694 | 1,693 1,992 |
Loans | 65,428 | 64,580 61,768 | Other borrowed funds | 7,542 | 7,027 7,614 |
Reinsurance contracts | 1,063 | 1,173 988 | Insurance and investment contracts | 170,672 | 170,204 168,251 |
Associates and joint ventures | 5,673 | 5,396 5,457 | Customer deposits and other funds on deposit | 15,803 | 15,598 15,161 |
Real estate investments | 2,444 | 2,561 2,571 | Financial liabilities at fair value through profit or loss | ||
Property and equipment | 448 | 471 465 | ‐ non‐trading derivatives | 4,012 | 4,480 3,232 |
Intangible assets | 1,063 | 1,093 995 | Liabilities held for sale | 93 | 0 0 |
Deferred acquisition costs | 1,871 | 1,934 1,913 | Deferred tax liabilities | 6,329 | 5,185 4,030 |
Assets held for sale | 113 | 0 0 | Other liabilities | 16,438 | 18,549 13,116 |
Deferred tax assets | 73 | 82 84 | |||
Other assets | 4,039 | 4,326 4,470 | Total liabilities | 224,966 | 225,132 215,805 |
Total assets | 263,738 | 262,269 248,597 | Total equity and liabilities | 263,738 | 262,269 248,597 |
Assets
Investments for risk of policyholders
The investments for risk of policyholders increased by EUR 2.5 billion in the second half of 2020 to EUR 34.8 billion, driven by higher equity markets.
Available‐for‐sale investments
The Available‐for‐sale investments were stable at EUR 118.2 billion in the second half of 2020 as higher equity markets were largely offset by reinvestments in loans.
Liabilities
Insurance and investment contracts
Insurance and investment contracts increased by EUR 0.5 billion in the second half of 2020 to EUR 170.7 billion, mainly driven by the increase in liabilities for life insurance for risk of policyholders partly offset by a decrease in life insurance liabilities for risk of the company driven by portfolio movements.
Other liabilities
The decrease of Other liabilities of EUR 2.1 billion in the second half of 2020 to EUR 16.4 billion mainly reflects lower cash collateral due to transactions in derivatives used for hedging purposes.
Equity
Shareholders' equity increased by EUR 1.6 billion in the second half of 2020 to EUR 36.7 billion, reflecting increased revaluations reserves as a result of lower interest rates.
Changes in Shareholders' equity for current half‐year, the full‐year 2020 and the previous full‐year were as follows:
In EUR million | 2H20 | FY20 | FY19 |
Shareholders' equity beginning of period | 35,117 | 30,768 | 22,850 |
Net result for the period | 1,317 | 1,904 | 1,962 |
Unrealised revaluations available‐for‐sale investments and other | 1,881 | 3,106 | 4,471 |
Realised gains/losses transferred to the profit and loss account | −423 | −574 | −286 |
Change in cash flow hedge reserve | −327 | 3,422 | 4,284 |
Deferred interest credited to policyholders | −11 | −750 | −1,403 |
Share of other comprehensive income of associates and joint ventures | 1 | 5 | −4 |
Exchange rate differences | −75 | −110 | 53 |
Remeasurement of the net defined benefit asset/liability | 7 | 6 | −38 |
Dividend | −394 | −394 | −387 |
Purchase/sale treasury shares | −364 | −622 | −707 |
Employee stock option & share plans | 2 | 1 | 2 |
Coupon on undated subordinated notes | 0 | −59 | −59 |
Other | 0 | 28 | 30 |
Total changes | 1,614 | 5,963 | 7,918 |
Shareholders' equity end of period | 36,731 | 36,731 | 30,768 |
The composition of Total equity at 31 December 2020, 30 June 2020 and 31 December 2019 was as follows:
In EUR million | 31 Dec 20 | 30 Jun 20 | 31 Dec 19 |
Share capital | 39 | 38 | 41 |
Share premium | 12,574 | 12,575 | 12,572 |
Revaluation reserve available‐for‐sale investments and other | 8,248 | 6,786 | 6,471 |
Cash flow hedge reserve | 12,220 | 12,547 | 8,798 |
Currency translation reserve | −97 | −3 | 3 |
Net defined benefit asset/liability remeasurement reserve | −138 | −145 | −144 |
Retained earnings and other reserves | 3,885 | 3,319 | 3,027 |
Shareholders' equity (parent) | 36,731 | 35,117 | 30,768 |
Minority interests | 277 | 256 | 260 |
Undated subordinated notes | 1,764 | 1,764 | 1,764 |
Total equity | 38,772 | 37,137 | 32,792 |
NN Group Press Release - 2H20, 18 February 2021 | 29 |
Footnotes reference page
1) The pro forma total dividend for 2020 of EUR 2.33 per ordinary share comprises the proposed 2020 final dividend of EUR 1.47 per ordinary share plus the regular 2020 interim dividend of EUR 0.86 per ordinary share. The interim dividend of EUR 2.26 per ordinary share paid by NN Group in September 2020 comprised (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.
2) NN Group analyses the change in the excess of Solvency II Own Funds over the Solvency Capital Requirement ('SCR') in the following components: Operating Capital Generation, Market variance, Capital flows and Other. Operating Capital Generation is the movement in the solvency surplus (Own Funds before eligibility over SCR at 100%) in the period due to operating items, including the impact of new business, expected investment returns in excess of the unwind of liabilities, release of the risk margin, operating variances, non‐life underwriting result, contribution of non‐Solvency II entities and holding expenses and debt costs and the change in the SCR. It excludes economic variances, economic assumption changes and non‐ operating expenses.
3) Operating result is an Alternative Performance Measure. This measure is derived from figures according to IFRS‐EU. The operating result is derived by adjusting the reported result before tax to exclude the impact of result on divestments, the amortisation of acquisition intangibles, discontinued operations and special items, gains/losses and impairments, revaluations and market and other impacts. Alternative Performance Measures are non‐ IFRS‐EU measures that have a relevant IFRS‐EU equivalent. For definitions and explanations of the Alternative Performance Measures reference is made to the section 'Alternative Performance measures (Non‐GAAP measures)' in the NN Group N.V. 30 June 2020 Condensed consolidated interim financial information.
4) The solvency ratios 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.
5) The target indicates the number of our insurance business units scoring above the NPS market average. Japan will be included as of 2H20. Numbers are based on the Net Promoter Score (NPS), an internationally used method that measures customer satisfaction. It specifically assesses whether customers would recommend the company to friends or colleagues.
6) Both Customer engagement and Brand consideration metrics are part of the broader research called Global Brand Health Monitor, which provide a general overview of the NN brand and its position in all of its markets. The question posed to calculate the brand consideration rate is: 'If you were to take out a life insurance for yourself, which of the companies below would you consider?'. From 2H20, NN Group brand consideration score is based on adjusted relative weights of the business units in Insurance International, resulting in a restatement of the 1H20 brand consideration score to 21% (from 19%). 2H19 score is based on the average brand consideration score from 2017 to 2019.
7) We measure our employee engagement in our (semi) annual employee survey in which we want to hear views of our employees on how we are doing as a company, how they feel about working at NN, and how we can make our company an even better place to work. The metric indicates on a scale from 0 to 10 how likely it is that someone will recommend NN as an employer.
8) Indicates the percentage of AuM where environmental, social and governance (ESG) factors are integrated in the investment process in a documented and consistent way.
9) Basic earnings per ordinary share is calculated as the net result, adjusted to reflect the deduction of the accrued coupon on undated subordinated notes classified in equity, divided by the weighted average number of ordinary shares outstanding (net of treasury shares).
10) Excluding non‐insurance businesses (health business and broker business).
11) The Common Equity Tier 1 (CET1) ratio, Total capital ratio and Risk Weighted Assets (RWA) are not final until filed with the regulators.
12) Other comprises Europe pension funds as well as broker and services companies.
13) Includes interest on subordinated loans provided to subsidiaries by the holding company.
14) Includes the change of subordinated loans provided to subsidiaries by the holding company.
15) Includes interest on subordinated loans and debt, holding company expenses and other cash flows.
16) Free cash flow to the holding company is defined as the change in cash capital position of the holding company over the period, excluding acquisitions, capital transactions with shareholders and debtholders.
17) Includes revaluations on debt securities, on the cash flow hedge reserve and on the reserves crediting to life policyholders.
18) The fixed‐cost coverage ratio measures the ability of NN Group to pay its fixed financing expenses and is defined as the earnings before interest and tax (EBIT) divided by interest before tax on financial leverage; calculated on a last 12‐months basis. Special items, revaluations on derivatives that are non‐eligible for hedge accounting, market and other impacts, amortization of acquisition intangibles are excluded from EBIT.
19) The undated subordinated notes classified as equity are considered financial leverage in the calculation of the financial leverage ratio. The related interest is included on an accrual basis in the calculation of the fixed‐cost coverage ratio.
20) Assets under Management (AuM) DC business total includes both the AuM DC business in accumulation phase and AuM DC business in decumulation phase. For the latter the IFRS insurance liabilities are used as a proxy for the AuM.
21) Including non‐insurance businesses (health business and broker business).
22) The numbers shown under AuM are client balances which exclude IFRS shareholders' equity related to the respective pension businesses and include the assets under administration.
23) Fees/average Assets under Management (bps) is calculated as the (annualised) fees, divided by average AuM at the beginning and end of the half‐ year reporting period. The comparative figures have been restated accordingly.
24) Operating expenses plus regulatory levies.
25) Cost/income ratio is calculated as Operating expenses divided by Operating income.
26) Four‐quarter rolling average.
27) Net operating RoE is calculated as the (annualised) net operating result of the segment, divided by (average) adjusted allocated equity. Adjusted allocated equity is an Alternative Performance Measure. It is derived from IFRS equity by excluding revaluation reserves. Reference is made to the section 'Alternative Performance measures (Non‐GAAP measures)' in the NN Group N.V. 30 June 2020 Condensed consolidated interim financial information. As from 2H19, the average adjusted allocated equity is calculated based on the average of the adjusted allocated equity at the beginning and end of the half‐year reporting period. Prior‐period numbers were calculated on a quarterly basis and have not been restated.
28) Does not include interest costs on subordinated debt treated as equity.
29) The year‐end 2019 NN Group Solvency II ratio was restated 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).
30) NN Bank is included in the calculation of the NN Group Solvency II ratio as of the end of 2020.
NN Group profile
NN Group is an international financial services company, active in 20 countries, with a strong presence in a number of European countries and Japan. With all its employees, the Group provides retirement services, pensions, insurance, investments and banking to approximately 18 million customers. NN Group includes Nationale‐ Nederlanden, NN, NN Investment Partners, ABN AMRO Insurance, Movir, AZL, BeFrank and OHRA. NN Group is listed on Euronext Amsterdam (NN).
Press call
David Knibbe (CEO), Delfin Rueda (CFO) and Bernhard Kaufmann (CRO) will host a press call to discuss the 2H20 results at 07:45 am CET on Thursday 18 February 2021. Journalists can join the press call at +31 20 531 5863 (NL).
Analyst and investor call
David Knibbe (CEO) and Delfin Rueda (CFO) will host an analyst and investor conference call to discuss the 2H20 results at 10:00 am CET on Thursday 18 February 2021. Members of the investment community can join the conference call at +31 20 531 5865 (NL), +44 203 365 3210 (UK), +1 866 349 6093 (US) or follow the webcast onwww.nn‐group.com.
Financial calendar
AGM: 20 May 2021
Publication 1H21 results: 12 August 2021
Contact information | |
Press enquiries | Investor enquiries |
Media Relations | Investor Relations |
+31 70 513 1918 | +31 88 663 5464 |
mediarelations@nn‐group.com | investor.relations@nn‐group.com |
Additional information onwww.nn‐group.com
NN Group 2H20 Financial Supplement, NN Group 2H20 Analyst presentation, NN Group Company profile and NN Group ESG presentation
Photos of NN Group executives, buildings and events are available for download at Flickr
Important legal information
Elements of this press release contain or may contain information about NN Group N.V. within the meaning of Article 7(1) to (4) of EU Regulation No 596/ 2014 (Market Abuse Regulation). NN Group's Consolidated Annual Accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS‐EU") and with Part 9 of Book 2 of the Dutch Civil Code. In preparing the financial information in this document, the same accounting principles are applied as in the NN Group N.V. condensed consolidated interim accounts for the period ended 30 June 2020. The Annual Accounts for 2020 are in progress and may be subject to adjustments from subsequent events. All figures in this document are unaudited. Small differences are possible in the tables due to rounding. Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward‐looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation: (1) changes in general economic conditions, in particular economic conditions in NN Group's core markets, (2) the effects of the Covid‐19 pandemic and related response measures, including lockdowns and travel restrictions, on economic conditions in countries in which NN Group operates, on NN Group's business and operations and on NN Group's employees, customers and counterparties (3) changes in performance of financial markets, including developing markets, (4) consequences of a potential (partial) break‐up of the euro or European Union countries leaving the European Union, (5) changes in the availability of, and costs associated with, sources of liquidity as well as conditions in the credit markets generally, (6) the frequency and severity of insured loss events, (7) changes affecting mortality and morbidity levels and trends, (8) changes affecting persistency levels, (9) changes affecting interest rate levels, (10) changes affecting currency exchange rates, (11) changes in investor, customer and policyholder behaviour, (12) changes in general competitive factors, (13) changes in laws and regulations and the interpretation and application thereof, (14) changes in the policies and actions of governments and/or regulatory authorities, (15) conclusions with regard to accounting assumptions and methodologies, (16) changes in ownership that could affect the future availability to NN Group of net operating loss, net capital and built‐in loss carry forwards, (17) changes in credit and financial strength ratings, (18) NN Group's ability to achieve projected operational synergies, (19) catastrophes and terrorist‐related events, (20) adverse developments in legal and other proceedings and (21) the other risks and uncertainties contained in recent public disclosures made by NN Group. Any forward‐looking statements made by or on behalf of NN Group speak only as of the date they are made, and NN Group assumes no obligation to publicly update or revise any forward‐looking statements, whether as a result of new information or for any other reason. This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities.
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NN Group NV published this content on 18 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 March 2021 08:57:04 UTC.
