ASR Nederland N.V.

Good day and welcome to the ASR Netherlands NV conference on the half-year results of 2022. Today's conference is being recorded. At this time, I would like to turn the conference over to Michel Hoelters. Please go ahead.

Thank you, operator, and good morning, ladies and gentlemen. Thank you for joining us today. Welcome to the ASR conference call on our first half-year results. Now, on the call with me are Jos Baten, our CEO, and Ewald Hollegien, our CFO. And Jos will kick it off, as is customary, with highlights of the financial results. And he will also discuss the business performance. Ewald will then talk about the developments of our capital and solvency position, the OCC and investment portfolio. And after that, we'll open up for Q&A. As usual, please do have a look at the disclaimer that we have at the back of the presentation for any forward-looking statements that we may make during the call. Having said that, Jos, the floor is yours.

Thanks, Michel, and also on my behalf, good morning to everyone joining on this call. I hope all of you have been able to enjoy a relaxing vacation and that you have returned with fresh energy and new ideas to deal with these erratic and volatile markets. Despite the geopolitical tensions and economic uncertainties, our financial performance in the first half year was strong and our balance sheet remained very resilient. I am proud that in these times our commercial momentum remained strong and allowed us to grow profitability going forward. Without further ado, let's turn to slide two for the financial highlights. And I'm sure you have been able to review this presentation this morning already, so let me just briefly discuss the key achievements. We continue to run our business with focus and discipline, and strong performance of the business was offset against the impact of storms in FAP. Operating results decreased just slightly to 513 million which includes next to the storm impact also the ongoing normalization of claims post-COVID-19, as COVID-19 restrictions have been lifted in the first quarter this year. Combined ratio of 92.8 includes the impact from the storms in February this year, which amounted to about 2.6 percentage points. even including the storms, we are still outperforming the target range of 93 to 95%. In my introduction, I already mentioned the strong commercial momentum. In the first half this year, organic growth of P&C and disability amounted to almost 8%. And in combination with continued rational pricing, this drives our strong underlying business performance in non-life. Our organic capital generation is strongly up by 56 million. The increase reflects mainly the lower UFR drag due to the higher interest rates as well as higher investment returns. But of course, these positive impacts come on top of the fundament of continued solid business performance. Later on in this call, AWOUD will provide further detail on the OCC number and will give you some guidance for the second half of this year. But I believe it is important to note that in line with our current capital management policy, a higher capital generation than anticipated translates into an enhanced capacity for higher share buybacks, but as you know, we would prefer inorganic growth. The upside for 2022 at least seems considerable though. Our solvency has remained resilient and stood at 214% after interim dividend and the SBB of 75 million, which we executed in the first half. And as you all have seen, there have been quite considerable changes in various drivers of our solvency, such as interest rates, spreads, and the volatility adjustments. And finally, Today we announced an interim dividend of 98 cents per share, which equals 40% of the dividend for 2021. Let's now briefly discuss our progress for the first half year in executing our strategic plan, and that's on slide three. Just as a quick reminder, the bottom half of this slide shows the key parts of our strategic plans which we have presented at the investor update at the 7th of December last year and are executing diligently. These eight focus areas drive the continued profitable growth and sustainable value creation for all of our stakeholders. Let me highlight some of our achievements in the first half of 2022. In P&C and disability, we realized strong growth with solid profitability, and in Pension DC, we continued the solid commercial momentum with a 32% increase of gross written premium compared to last year, and increasing the number of active participants to over 140,000, up from 130,000. And in our IORP pension business, we have seen a growth in our participants to over 150,000, up from 120. Enhancing the customer experience is important, and we are steadily increasing the number of customers that we can serve fully in a digital way. This was up by five percentage points in the first half to 47.5. Ewout, of course, will discuss developments in our investment portfolio, I would like to highlight that we have been fairly active in adding specific asset categories such as wind and solar farms, and we announced the acquisition of a portfolio of private loans of 250 million, which will be added in the second half of this year. With regard to M&A, we have acquired a real estate investment management company that strengthens our position towards institutional clients in the field of real estate and especially infrastructure investments. Activity in this market was admittedly a little bit slow in the first half, but we continue to believe that consolidation of smaller and mid-sized players should provide opportunities in the coming years. We have received improved recognition in certain ESG benchmarks, therefore regaining our number two position worldwide by Sustainalytics and improvement in the ISS OECOM rating to C plus prime and the number one position in the Dutch fare insurance guide. I do not want to overemphasize the relevancy of these benchmarks, but being highly ranked by quite a few is saying something. Let's turn to slide four to look at our business performance in the non-life segment. I'm actually proud of the performance in this segment. solid underlying business and underwriting performance was more than offset by the impact from the FAP storms with 38 million and an ongoing normalization of claims post-COVID due to the fact that all restrictions have been terminated in the first quarter of this year. You may recall that in the same period last year, the non-live operating results benefited a positive impact from COVID-19 for an amount of 68 million Unfortunately, it's not really possible anymore to identify and quantify the impact from COVID-19. And I think we should assume that from here onwards, we are operating at a more normalized level. Organic growth of almost 8%, exceeding the target of 3% to 5% per annum, and is driven by higher sales volumes and some selective tariff adjustments. Our disability business continued to grow strongly by well over 10%. The growth is approximately two-thirds driven by price increases and one-third in sales volumes. So profitability improved reflecting price actions and the quality also improved by better portfolio management of the sickness leave and individual portfolios. Growth in P&C amounted 5.1% driven by higher sales volumes I'm particularly pleased to see that we have realized further growth in the commercial fire business. Combined ratio of 92.8 includes a set 2.6 percentage points impact from the storms and the normalization of claims and is still ahead of medium term target of 93 to 95%. So far, we are seeing only limited inflation risk in our non-live segments. we are relatively protected by the fact that products can be repriced annually and that the product terms and conditions include annual inflation charge. The full year number in February we already alluded to the anticipated decline of the health portfolio, which is reversing part of the extraordinary growth in the prior year. While we maintained our rational pricing policy and continued to pursue value over volume, we did experience more price competition, primarily in the basic health proposition. It shows in our health gross written premium and combined ratio. Let's now go to slide five about our life business. Operating results of the life segment increased by 9 million to 385 million. The operating result is mainly due to a higher investment margin driven by the further optimization of the investment portfolio and the lower required interest due to the gradual runoff of the individual life portfolio. The higher contribution to operating result in the life segment was partially offset by a decline in the technical result of 34 million, driven mainly by the 26 million of additional unit link provisioning due to lower equity markets and higher interest rates. GWP increased by 3.9%, mainly due to the commercial success of our Pension DC product. which saw an increase in premiums of 32% to 450 million. The total assets under management of Pension DC, including the former brand-new day IORC, decreased slightly to 4.7 billion due to revaluations reflecting the higher interest rate environments. And finally, our operating expenses are relatively stable at 46 BIPs, in the middle of our target range, and these basis points include the investments in our IT systems needed to adapt the ongoing transition within the pension business. So let's now turn to slide six for our other segments. Operating result of the two fee generating segments, asset management and distribution and services, combined amount to 36 million up to 6.4% compared to the last year. Asset management results was driven by positive revaluations within real estate. The inflows into the mortgage funds and pension DC related mix funds were offset by lower market valuations due to higher interest rates and lower equity markets. This led to a 1.5% 1 billion decrease of assets under management. Mortgage origination amounted to 3.7 billion, up 1.1 billion compared to last year, but in the current interest rate environment is something we expect to come down a little bit in the second half. Operating result of the distribution and services segment increased by 1 million, mainly driven by small acquisitions and organic growth. Finally, holding another operating result decreased slightly to minus 58 million due to higher operating expenses on one-off projects. So this concludes the financial highlight and business overview. And I now with pleasure hand over to Ewout who will discuss our solvency and capital generation.