Cost savings boost NN Group’s Q3 results
Dutch insurer NN Group saw a major net result loss in its full year results but Lard Friese, NN Group’s CEO, pointed to a positive operating result in a year that saw the integration of Delta Lloyd and a major cost reduction program.
In 2018, the full-year net result was down 47.1 percent to €1.1billion versus €2.1 billion in 2017. While the group's Q4 2018 net result showed a loss of €533 million compared with a €700 million profit in the same three months in 2017.
The company said the Q4 figures reflected, in part, a “goodwill impairment” as NN Life integrated with recently acquired Delta Lloyd Life.
Operating results for the full year showed a 2.5 percent increase from 2017 rising to €1.6 billion from €1.6 billion the year before. Fourth quarter operating results showed a dip of 0.7 percent to €343 million from €345 million. The company said the “broadly stable” figures reflected improved results at Netherlands Life, Netherlands Non-life, Insurance Europe and Japan Life, which were offset by lower results in other segments.
Lard Friese, NN Group’s CEO, said 2018 was a successful year as the company strengthened its market position and progressed with integrating Delta Lloyd's asset management, banking and the Dutch and Belgium insurance businesses.
“We obtained approval from the Dutch Central Bank (DNB) to expand our Partial Internal Model to include the Delta Lloyd Life and Non-life entities in the Netherlands, and we merged Delta Lloyd Life and Non-life into NN Life and Non-life on 1 January 2019.
“In the Netherlands and Belgium, we have achieved total cost reductions to date of €289 million compared with the full-year 2016 administrative expense base.
“We have further integrated teams, systems and processes, increased efficiency, and introduced new products and services to meet our customers' needs. The rebranding of Delta Lloyd's products and services to Nationale-Nederlanden is virtually complete.
"The 2018 operating result was up 3 percent compared with 2017, driven by better performance at Netherlands Life, Netherlands Non-life and Insurance Europe, while at the same time Japan Life, our asset manager and the reinsurance business faced some headwinds.”
He said commercial momentum had continued, supported by an improved product mix that produced a 19.6 percent increase in the value of new business in Europe and a 10.3 percent increase in Japan in 2018 versus 2017.
However, the CEO added that new sales were down compared with 2017, as pension contracts in the Netherlands are not renewed each year and in 2018 the insurer saw a lower volume of pension contracts coming up for renewal.
“In line with our objective to achieve value creation and profitable growth, we completed the acquisition of Aegon's life insurance business in the Czech Republic and its life insurance and pension businesses in Slovakia in January 2019,” Friese added.
He said the company's balance sheet had “remained strong” in the fourth quarter, with a Solvency II ratio of 230 percent after deducting the final dividend, and a cash capital position of €2 billion.
NN Group, Delta Lloyd, 2018 Results, Q4, Lard Friese, Europe