DELIVERING TOGETHER: BUILDING ON IMPROVED FUNDAMENTALS

Transcription

1 Willem van Duin Chairman of the Executive Board Strategy Update Capital Markets Day June 1, 2017 DELIVERING TOGETHER: BUILDING ON IMPROVED FUNDAMENTALS

2 DELIVERING TOGETHER: BUILDING ON IMPROVED FUNDAMENTALS Achmea has cooperative roots. We balance the interests of our four stakeholders: customers first, next to employees, partners and capital providers We have four unique competitive advantages: 1. Strong brands with leading positions in customer satisfaction ratings 2. Best in class distribution, mainly via the growing direct and banc assurance channels 3. A large customer base with leading positions in our core markets 4. Leading position in mobile and online services Since 2008 we ve consistently improved our business fundamentals with successful completion of two change programmes. We lowered costs, boosted innovation, developed new business models and made clear strategic choices. With Delivering Together we build on our improved business fundamentals and for 2020 we aim at: Better products and services, supported by innovations Lower cost base by 200 million and reduction of FTE Operational result ambition of 600 million Key ratio s in line with S&P IFS rating A 2

3 PROGRAMME Part 1: Achmea at a glance: A unique insurer in the Dutch market Part 2: Strategy execution to date: Proven change capabilities Part 3: Our strategic approach through 2020: Delivering Together 3

4 OPERATIONAL RESULT 2016 AT APPROXIMATELY 230 MILLION NET OF EXCEPTIONAL ITEMS Operational result 2016 strongly influenced by several exceptional items: Exceptional weather such as the hail calamity in June Reserve strengthening personal injury Operational result 2016 Excluding health and exceptional items Reorganisation provision for reduction 2,000 FTE and number of office locations 178 ~230 High income from investments as a result of: Realisations in Non-Life due to change in investment mandate Strong recovery of commodities and real estate prices in Pension & Life Result in basic health, expected to be at a break-even level, was impacted by: Loss provision premium setting 2017 Higher than expected health care expenses 2016 (reported) Result Health 2016 (ex-health) Exceptional weather Personal Injury Reorganisation Investment result 2016 (Ex-health, normalised) Changes in portfolio composition Operational result excluding Health is approximately 230 million 4

5 FIVE KEY INDICATORS DEFINING OUR FINANCIAL AMBITIONS Operational result ( million) 230 (normalised) ~600 ~150 ~450 Health Operational expenses ( million) ~2.128 Free capital generation ( million) 98 (normalised) ~ Fixed Charge Coverage (in x) 2.7 (normalised) -0.9 >5.0 S&P Capital AA S&P rating Maintain S&P IFS rating at A

6 STRATEGIC DIRECTION: CUSTOMER RELEVANT AND TREND SETTING Customer driven We balance the interests of our four stakeholders: customers first, next to employees, partners and capital providers We invest in innovations to improve the (digital) service for our customers We help our customers to achieve long term financial sustainability Profile We focus on P&C, income protection and health insurance Delivered through the direct and bank-distribution channels We service the existing (closed) books pension and life insurance and grow in term life We diversify our earnings capacity by investing in capital light pension products, asset management and our international activities While maintaining a prudent risk appetite in line with our cooperative background Strategic direction We provide more than just insurance products but also offer services on prevention and advice We set the trend with our expertise We operate as a data- and technology-driven company Our products and services make society safer, healthier and more future proof 6

7 CORE ACTIVITIES: NON-LIFE, HEALTH, PENSION & LIFE AND ASSET MANAGEMENT GWP 2016: 19.5 billion 6% International 17% Non-Life 10% Pension & Life 67% Health Non-life 3.2 billion Health 13.1 billion Pension & Life 1.8 billion Assets under Management 116 billion Achmea serves approximately 13 million customers P&C Retail Ø 7.2¹ P&C Wholesale Ø 7.4² Health Ø 8.0³ Life Retail Ø 6.8¹ Interpolis Centraal Beheer FBTO Generali NN Group Delta Lloyd Aegon ASR Centraal Beheer Interpolis ASR NN Group De Friesland OZF Achmea Pro life FBTO CZ Interpolis Zilveren Kruis VGZ , Centraal Beheer Interpolis NN group Aegon ASR ¹ Source: the Dutch Association of Insurers 2016 (www. verzekeraarsinbeeld.nl). / ²Dutch Association of Insurers customer satisfaction research / ³ SAMR research

8 ACHMEA HAS FOUR COMPETITIVE ADVANTAGES Strong brands with leading positions in customer satisfaction ratings Best in class distribution mainly via direct and bancassurance channels 14% 7% 70% 79% 3% 6% Direct (total) Bancassurance Broker Direct Health Leading in mobile, online; proven track record launching new concepts A large customer base with leading positions in our core markets Property & Casualty #1 Health #1 Income Protection #2 Individual Life #2 Asset Management #5 Een initiatief van Zilveren Kruis Achmea 21% NN/Delta Lloyd ASR Allianz Other Achmea 31% VGZ CZ Group Menzis Other NN/Delta Lloyd ASR Achmea 19% Goudse Aegon Other NN/Delta Lloyd Vivat Achmea 14% Aegon ASR Other APG Blackrock NL PGGM MN Achmea 6% Other 8

9 PROGRAMME Part 1: Achmea at a glance: A unique insurer in the Dutch market Part 2: Strategy execution to date: Proven change capabilities Part 3: Our strategic approach through 2020: Delivering Together 9

10 FROM 2008 ONWARDS: TWO MAJOR CHANGE PROGRAMMES SUCCESSFULLY COMPLETED Change programmes House of Initiatives Our ambitions Customer focus What we realized Customer satisfaction to above market average Strong and improving NPS Scores (e.g.)²,³: CB P&C Retail: 2015: : 6 Interpolis P&C Commercial: 2015: : -3 Zilveren Kruis Health 2016: : 0 Acceleration & Innovation Maintain market leadership Reduce complexity Lower costs and FTE Focus on core activities Speed up level of innovation and new business models Market leader in Non-life and Health Number of IT application reduced by ~30% Number of offices reduced from 30 to 8 Operating expense reduction of 22% since 2009 Overall reduction of 30% FTE (internal FTE) Sold off or closed all loss making activities Divested over seven international operations More than 150 innovations launched Capital light retirement services strategy implemented Source: ¹ AFM KBC Score ² CB & Interpolis: Metrixlab brandtracer ³ Zilveren Kruis: SAMR Klantenmonitor zorgverzekeringen 10

11 WE INVEST IN INNOVATIONS TO IMPROVE THE SERVICE FOR OUR CUSTOMERS Ideation Discovery & Scoping Development Test & Validate MVP Commercialization Crossyn Thuismeester FBTO UBI ACTIFY Inshared CB Smarthome Neokidney Taloride Roadguard Homies Gate 1 Gate 2 Gate 3 Gate 4 11

12 low process integration high FROM 2008: REDUCED COMPLEXITY, LOWER COST AND GREATER DIGITAL CAPABILITIES Three Phases in Development of IT-structure Shared ~1,800 Number of IT applications Coordinated Digital Insurer ~1,400 ~1,250 Replicated Integrated insurer < 800 House in order low process standardisation high

13 PROGRAMME Part 1: Achmea at a glance: A unique insurer in the Dutch market Part 2: Strategy execution to date: Proven change capabilities Part 3: Our strategic approach through 2020: Delivering Together 13

14 ACTIVE IN CHANGING ENVIRONMENTS - FOUR MAIN MARKET TRENDS WITH IMPACT Technology Data and new technology can drive new services New ways of customer interaction Deeper insights into underwriting risks Politics and economy Low interest rate environment Societal pressure and political decisions: Potential new legislation for health insurers Revision of pension scheme/legislation Customer preferences Insurance as part of broader service offering Vitality and lifestyle trending issues More individual responsibility for pension Insurance market Changing risks: usage, cyber, climate New (disruptive) market players Consolidation in the market Our approach Launch of retirement service strategy Growth of Inshared, Independer Invest in new services en propositions Dynamic pricing, Big data Creating economies of scale Partnering with third parties Digitization of customer contact Optimize investment portfolio 14

15 OUR STRATEGY FOR THE PLANNING PERIOD TO 2020 DELIVERING TOGETHER Non-life Health Retirement services International Pension & Life (Closed Book) 15

16 STRATEGY FOR THE PLANNING PERIOD: 5 BUSINESS LINES WITH OWN ROLES Non-life: Profit pillar and online distribution champion Build on market leading positions, strong brands and distribution Back on track with strong profitability after decisive remedial actions Health: mid term a stable result contribution Balancing volume, profit, solvency and solidarity Manage short term market and political challenges (for two to three years). Retirement services: Investing in a growing business Grow in market with integrated capital light proposition Develop into Centraal Beheer branded full service financial service provider Pension & Life: servicing our closed book and growing term life Optimize profit and value of Pension & Life as closed book while maintaining high customer satisfaction International: Accelerate, Disrupt and Create Leverage on the core capabilities (e.g. online) of the group in existing and new countries 16

17 NON-LIFE: PROFIT PILLAR AND ONLINE DISTRIBUTION CHAMPION Our position Market leader P&C Top 3 position income protection High customer satisfaction and online capabilities Our ambitions Grow market share in retail Property & Casualty Strengthen combined ratio P&C to less than 96% Profit contribution in 2020 of 200 million Our actions Property & Casualty Set profitable premiums as market leader Combined Ratio 2 Property & Casualty Combined ratio underwriting year (excl. impact severe weather events) Combined ratio underwriting year Combined ratio book year 100 Lower claims by prevention and better underwriting Income Protection After re-pricing in previous years, focus is on shortening the time of re-integration ¹ GWP including Inshared, 2 Legal entity 17

18 HEALTH: MID TERM A STABLE RESULT CONTRIBUTION Our position Market leader with around 30% of market share Efficient distribution channel: over 70% online Group benefits: cross sell, cost coverage, diversification Competitive pressure will drive solvency ratios to 130%-140% Our ambitions Maintain current market share Decrease expense levels further Annual result contribution ~ 150 million as of 2020 Our actions: Balance volume, profit, solvency and solidarity Use scale to strengthen purchasing capabilities Focus on adding value from services 25% 20% 15% 10% 5% 0% Financial buffers built in period Healthcare costs increase faster than premiums After gap is closed profitability will return to normal. 96% health care reimbursement 3% administrative expenses 1% margin to support business continuity Cumulative % increase/decrease in health care premium (basic insurance) compared to 2008 (base year) Cumulative % increase/decrease in health care costs (basic insurance) compared to 2008 (base year) 18

19 PROPOSED LEGISLATION PERMANENTLY BANNING DISTRIBUTION OF HEALTH CAPITAL The proposed new law Is unclear on many fronts and leaves much room for interpretations Is in direct contrast with earlier made agreements Serves no specific goal and as such is unnecessary Current political situation and trajectory The House of Representatives passed the bill on to the Senate for ratification or denial The bill was passed despite serious objections from the Minister of Health and the Council of State The Dutch Central Bank and the Netherlands Healthcare Authority see many issues around the law Premium increases throughout are seen as probable It is now up to the Senate to either accept the proposed law, or to send it back Our expectations We assume the Senate to conclude that the bill is not good for all insured and the Dutch health care system We will not speculate on any specific outcome and next steps 19

20 RETIREMENT SERVICES: INVESTING IN A GROWING PENSION BUSINESS Our position We offer an integrated proposition in 2nd, 3rd and 4th pension pillar We focus on: Centraal Beheer APF and company pension funds Achmea Bank and Asset Management are integral parts of our strategy Our ambitions Grow AuM CB APF and sales in 3th and 4th pillar Position Centraal Beheer as a full service provider for individual saving and investment products Profit contribution ~ 50 million in 2020 Our actions Invest in 2nd/3th/4th pillar products Improve profitability of Achmea Bank Corporate pension funds and employers consider APF as good alternative (survey March 2016) Join an APF Enter insurance contract Join sector pension fund Liquidation of fund Merge Join a PPI Fund is fit for the future Other 7% 10% 10% 13% The intention to build-up additional funds for retirement age has grown from 15% to 23% in last two years; growing awareness 40% of the boards of company pension funds find it (very) important that their participants can have overall insight in their pension, including the 3rd and 4th pillar 23% 23% 30% 53% 0% 10% 20% 30% 40% 50% 60% 20

21 PENSION & LIFE: SERVICING OUR CLOSED BOOKS AND GROWING IN TERM LIFE Our position Successful management of separate closed book life since 2013 Proven track record over the last years in cost reduction Achmea stopped selling Pension insurance contracts We continue selling term life and annuities insurance Our ambitions Pension & Life closed book will create value by lowering costs and optimizing its investment portfolio Contribution to our profit ~ 270 million in 2020 Our actions We will implement further value enhancement options Total expenses Pensions & Life , in million

22 INTERNATIONAL: ACCELERATE, CREATE AND DISRUPT Our position A presence in a limited number of promising economies Our current international presence Our ambitions Accelerate: Accelerate growth in existing markets Create: Exchange knowledge between the countries, especially digital capabilities Disrupt: Become a disruptor in a limited number of large markets where online insurance penetration is still low A profit contribution in the range of ~ 40 million in 2020 Our actions Implement the core capabilities of the group abroad Focus on countries with (foreseeable) profitable growth and aligning the core capabilities of the group 22

23 FIVE KEY INDICATORS DEFINING OUR FINANCIAL AMBITIONS Operational result ( million) 230 (normalised) ~600 ~150 ~450 Health Operational expenses ( million) ~2.128 Free capital generation ( million) 98 (normalised) ~ Fixed Charge Coverage (in x) 2.7 (normalised) -0.9 >5.0 S&P Capital AA S&P rating Maintain S&P IFS rating at A

24 DELIVERING TOGETHER: BUILDING ON IMPROVED FUNDAMENTALS Achmea has cooperative roots. We balance the interests of our four stakeholders: customers first, next to employees, partners and capital providers We have four unique competitive advantages: 1. Strong brands with leading positions in customer satisfaction ratings 2. Best in class distribution, mainly via the growing direct and banc assurance channels 3. A large customer base with leading positions in our core markets 4. Leading position in mobile and online services Since 2008 we ve consistently improved our business fundamentals with successful completion of two change programmes. We lowered costs, boosted innovation, developed new business models and made clear strategic choices. With Delivering Together we build on our improved business fundamentals and for 2020 we aim at: Better products and services, supported by innovations Lower cost base by 200 million and reduction of FTE Operational result ambition of 600 million Key ratio s in line with S&P IFS rating A 24

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