ASR Nederland agrees deal with special interest groups


ASR Nederland has reached agreement with Stichting Verliespolis, Stichting Woekerpolis Claim, the country's investors' association Vereniging van Effectenbezitters, homeowners association Vereniging Eigen Huis and the association for consumers and financial affairs Vereniging Consument & Geldzaken. In keeping with the financial services ombudsman's recommendation, the agreement specifies compensation to be paid for ASR Nederland's unit-linked products. In terms of criteria and set-up the agreement is generally comparable to previous deals between these special interest groups and Delta Lloyd and Nationale Nederlanden. However, because of the nature and size of ASR Nederland's unit-linked portfolio, the financial stakes were higher in this deal.

Since the Authority for the Financial Markets (AFM) released its report on unit-linked products in 2006, the provision of information and the level of costs charged on unit-linked products have come in for a great deal of public criticism.

As a result, new rules governing the provision of information about existing and new unit-linked products came into force on 1 January 2008, known as the 'De Ruiter models'. In addition, initiatives were launched to cap the costs of unit-linked policies agreed before 2008 and to reimburse policyholders for any excess costs charged. In March 2008, financial services ombudsman Jan Wolter Wabeke recommended that Dutch insurers cap the costs of unit-linked policies and compensate policyholders for any excess amounts paid.
At the initiative of Stichting Verliespolis and Stichting Woekerpolis Claim, special interest groups have joined forces on behalf of policyholders to negotiate compensation with providers of united-linked products. These groups recently announced they had reached agreement with Delta Lloyd and Nationale Nederlanden.
Deal with ASR Nederland
The parties today announce they have reached agreement about cost caps and compensation related to ASR Nederland's unit-linked products.
  • No guarantee
    • 2.85% (<€1,200 total premiums per annum; or single-premium policy of less than €12,000)
    • 2.45 % (≥€1,200 total premiums per annum; or single-premium policies in excess of €12,000)
    • For policies with maturities of more than 30 years and annual premiums exceeding €2,000 (or single-premium policies in excess of €20,000), costs are capped at 2.25%
  • Guaranteed ≥ 3% net fund return: cost cap + 0.45%
    • 3.3 % (<€1,200 total premiums per annum; or single-premium policy of less than €12,000)
    • 2.9 % (≥€1,200 total premiums per annum; or single-premium policies in excess of €12,000)
    • For policies with maturities of more than 30 years and annual premiums exceeding €2,000 (or single-premium policies in excess of €20,000) costs are capped at 2.7%

Distressing situations

ASR Nederland has earmarked a one-time amount of up to €85m for distressing situations, i.e. unforeseen major-impact implications for individual policyholders connected to special or specific risks related to their unit-linked product, excluding normal investment risk.

ASR Nederland is to launch a new generation of unit-linked products in 2009 and undertakes to offer customers the option to exchange their current policy with one from the new product line.
The deal covers individual, private unit-linked policies entered into before 1 January 2008. This involves over 1.1 million unit-linked policies, breaking down into more than 175 products and product types offered by de Amersfoortse, Falcon, Interlloyd Leven, VSB Leven and Fortis ASR and its predecessors AMEV,Stad Rotterdamand Woudsend. Well-known product names include ABC, Variabel InvesteringsPlan (VIP) and Waerdye.
Around 60% of existing policies will be eligible for compensation, with compensation ranging from a few euros to a few thousand.
Implications for policyholders
ASR Nederland will calculate eligibility for cost compensation per individual policy and retroactively settle any compensation at maturity. It will also actively advise policyholders of the implications for their individual policies by the third quarter of 2010 at the latest.
Under the new rules - De Ruiter Model #3 - policyholders will receive annual value statements on their unit-linked products with effect from 1 January 2009.
Financial impact for ASR Nederland
The impact on the embedded value of ASR Nederland's portfolio works out at €780m before tax (€580m after tax), with a proportion of the costs already taken in the 2007 annual accounts following the financial services ombudsman's recommendation.
CEO Jos Baeten:
"This agreement puts an end to the prolonged discussion about the lack of transparency regarding charges for unit-linked policies taken out in the past. That's good for all parties - our policyholders in the first place - and for the public's confidence in the insurance industry. It's also why we took on board the recommendation of the financial services ombudsman. The agreement underscores our commitment to respond to the public criticism.
The discussion about unit-linked products - intensified by the credit crisis - has prompted us to contemplate to what extent insurers should offer capital growth products. We believe these products should support a long-term objective and that they should offer sufficient guarantees for realising the targeted payment. That's why we've taken measures to ensure that our existing insurance policies meet the stricter rules governing the provision of information as well as the criteria for composition and costs. We're also working on expanding our product palette in line with our views on capital growth products."