NN Group unveils more cost reductions post Delta Lloyd acquisition
Profits dipped at NN Group, one of the biggest insurers in the Netherlands, in the first quarter of 2018 but its gross premium income rocketed on the back of its 2017 acquisition of Delta Lloyd as its chief executive said he anticipates the integration of the two companies will be largely finalised by the end of the year.
The company made a net profit of €399 million in the first quarter, a decrease of 8.4 percent compared with the same period in 2017. Its gross premium income increased, however, to €4.5 billion in the period, an increase of 32.2 percent.
The company noted that, post the acquisition, it had achieved cost reductions of €175 million, €42 million of which was achieved in the first quarter of 2018. It now anticipates that total cost reductions will reach €400 million by 2020 of which at least half will be achieved by the end of 2018.
The company also noted that the company’s international insurance unit was enjoying strong growth.
Lard Friese, the chief executive of NN Group, said: “In the first quarter of 2018, we have made further progress in integrating Delta Lloyd, with the completion of the legal mergers of the banking activities, asset management companies, and the life businesses in Belgium. The rebranding of products and services is well on its way and we expect this process to be largely finalised by the end of the year.
“Building on our strong track record of cost discipline, we further improved efficiency with €42 million of cost savings this quarter in the business units in the scope of the integration. We have now achieved total cost reductions of €175 million compared with the full-year 2016 administrative expense base representing half of our targeted cost reduction of €350 million by 2020, well ahead of the earlier envisaged schedule.
“Given the strong progress so far, we announce today that we are raising the cost reduction guidance to €400 million by the end of 2020. We expect to achieve at least half of these savings by the end of this year.”
He added that the current quarter operating result decreased from last year mainly due to the impact of the severe storm in January.
“As it is our aim to support our customers in times of need, we were able to settle most of the thousands of storm claims within one month. We want to provide relevant products for our customers, while writing profitable new business, focusing on value rather than volume. New sales at Netherlands Life were down in the first quarter of 2018 compared with a year ago, reflecting a lower volume of group pension contracts that were up for renewal, while new sales in Japan remained broadly stable - despite increased local competition.”
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