ASR Nederland continues to improve

Annual results 2010


ASR Nederland continues to improve

  • Net result increased by 24% to € 317 mln (2009: € 255 mln);
  • DNB solvency rate is strong at 221% (2009: 232%);
  • Gross insurance premiums decreased by 4% to € 4,738 mln (2009: € 4,914 mln);
  • Life production (APE) increased by 4%
  • Targets cost savings programme achieved;
  • Increased life expectancy fully recognized in 2010;
  • Reduced complexity in organization and systems;
  • Introduction Next Generation products in Life and Non-life;
  • Progress made in customer interest and recovering customer confidence;
  • Initiatives regarding resolving issues with unit linked insurance, announced in 2011.

(€ mln)

​2010 ​2009 ​Change

​Net result

​317 255​ ​24%

​Bruto verzekeringspremieGross insurance premiums

​4.738 ​4.914 ​-4%

​New production Life segment (APE)

​196 ​188 ​4%

Operating expenses Life and Non-life segment

​-541 ​-572 ​-5%

Operating expenses segment other

​-131 ​-80 ​64%

​Employees with permanent contract (FTE)

​4.333 ​4.454 ​-3%

Total equity*

​3.493 ​2.975 ​17%

​DNB solvency rate

​221% ​232% ​-11%p

​Buffer capital (IFRS)

​262% ​293% ​-31%p

​Cost-premium ratio

​12,7% ​13,3% ​-0,6%p

​Combined ratio

​100,3% ​101,4% ​-1,1%p

* Total equity including net revaluation of the property portfolio.


Jos Baeten, Chairman of ASR Nederland's Executive Board:

'Our financial performance and strong solvency position are the result of the improvements, which have been initiated in 2009. Our risk profile further decreased, we reduced the complexity of our organization and improved efficiency. We increased the longevity provisions to account for increased life expectancy. Despite a decrease in premiums of 4% the cost-premium ratio improved from 13.3% to 12.7%. Our expenses decreased by 5%. We invested in the banking organization and in early 2011 introduced tax-driven bank savings products.

We took the initiative to offer customers with unit linked insurance contracts the alternative of a modern and transparent product with lower costs. We have reaffirmed our position as a solid financial institution with a strong solvency and a conservative risk profile. With this initiative, we emphasize among others, our focus on acting in the customer's best interest.'

Key developments during 2010

Good result, solid balance sheet, revenue under pressure

In a strongly changing market, ASR increased the net result by 24%. This increase, compared to 2009, was mainly due to the recovery of the financial markets, lower financing costs and the improvement of the Non-life combined ratio. Solvency remained strong at 221%, despite the declined interest rate and increased longevity. Revenues decreased by 4%.

In the Life segment, ASR was cautious with regard to the pensions market, due to the low interest rate. The new production (APE) increased by 4%.For Capital Accumulation, the traditional market moved away from insured savings towards tax-driven bank savings products. ASR was not yet present in this market in 2010. With the investment in ASR Bank, ASR has laid the foundation for a position in this market.

The Non-life segment developed in line with market trends. The distribution of products within this segment shows growth in internet-based distribution.

Lower costs

ASR Nederland's objective to realize a structural cost saving of € 100 mln was fully achieved. The cost-premium ratio has decreased from 13.3% in 2009 to 12.7% in 2010 despite decreasing sales. The increase in operating expenses during 2010 was mainly due to the start-up of ASR Bank.

In order to maintain the profitability at the same level in the future, we need to continue our efforts to structurally decrease costs. This is achieved by gradually replacing obsolete systems by more efficient systems, resulting in a fundamental reduction in operating costs. Furthermore, we are working on permanently improving the efficiency by means of the Operational Excellence (OpEx) programme, based on the lean principle. This focuses on optimizing the organization to prevent waste, which is in the interest of the customers. Furthermore, this has led to standardization of processes and products, increasing the degree of Straight Through Processing (automation of the processing course) and reduction of both the complexity and number of products. Supporting services such as HR and ICT work on attuning the organization to the lean principles.

Location policy

During 2010, ASR Nederland achieved important milestones with respect to centralizing its operating locations. The location policy implies that ASR will move from 15 locations in 2009 to 3 locations in 2015. During the past year, seven locations were closed and over 1,000 employees were moved to a different location.

Furthermore, we worked on the Next Generation Working programme during 2010, with the objective of gradually enabling all ASR employees to work in accordance with this principle. A number of departments already work in accordance with this concept. ASR Nederland expects to reduce the 1.2 work stations per FTE in the traditional office environment to 0.7 work stations per FTE. The Next Generation Working programme will significantly contribute to improving customer value, sustainability, employee involvement and reducing costs.

Progress in strategy

ASR Nederland's strategy is based on three connected pillars: customer interest, financial solidity and being an efficient market player. In 2010 progress was made in each of these pillars.

Customer interest

  • Expansion of Next Generation products, characterized by low costs, transparency and clarity to customers;
  • Start to resolve issues relating to unit linked insurance contracts;
  • Quicker and more effective assistance to customers via the Customer Contact Centre;
  • Customer satisfaction component included in remuneration structure of Executive Board and Senior Management.

New generation products

By late 2009, ASR Nederland introduced Next Generation products in Life and Non-life. This concerns products characterized by very low and transparent costs. During 2010, the number of Next Generation products was expanded by introducing ASR VermogenGarant.

Compensation unit linked insurance contracts

In 2010, we achieved important milestones towards realizing our ambitions. New products were introduced, which show that ASR is more focused on customer interest. During 2010, we conducted customer surveys on various topics, including having discussions with customers. This provided extensive insight into the preferences of our customers, and how we could respond to them. For example, customers do not understand or accept the fact that compensation for unit linked insurance will only be paid out at the end of the insurance contract. At the same time, customers indicated that compensation is self-evident, but that they want an alternative for their current policy. This is why we started discussions with the Foundations to pay out the compensation that the customers are entitled to during 2011, rather than at the end of the insurance contract. Also, we are offering customers with unit linked insurance policies, advice from their intermediary, free of charge, in order to determine the best individual solution for each customer. This may include continuation of the existing unit linked insurance, or transferring to one of the new ASR products, ASR VermogenGarant, ASR VermogenBelegd, or a tax-driven bank savings product. In all cases, no penalties will be charged to the customer following surrenders or transfers.

In order to make the focus on customer interest a more explicit priority, the remuneration criteria for the Executive Board and Senior Management includes this focus. The variable remuneration for the Executive Board and Senior Management is dependent on customer satisfaction, the financial performance of ASR and individual performance. Each of these three factors form one third of the variable remuneration. The variable remuneration is therefore dependent on non-financial criteria for 40% to 60%. The Executive Board intends to include customer interest as a factor in the remuneration structure of all employees. This is currently under negotiations with the unions.

Financial solidity reinforced

  • Diversification benefits achieved by legal restructuring;
  • DNB solvency rate remains strong at 221% (2009: 232%), buffer capital amounts to 262% (2009: 293%)
  • Risks within the investment portfolio further reduced:
    • Investments in PIIGS countries reduced;
    • Investments in financial institutions reduced, in particular in Tier 1 loans;
    • Property investments further reduced;
  • New framework implemented for risk management.

Legal restructuring

During 2010, various life insurance entities were merged into a single entity: ASR Levensverzekering N.V. This realizes diversification benefits in mortality and longevity risk for ASR Nederland. ASR Levensverzekering N.V. now sells both mortality risk insurance (short-life risk) and life insurance (longevity risk).Due to this legal merger, DNB solvency of ASR Levensverzekering N.V. remains virtually unchanged and the increased life expectancy of the Dutch population has a limited impact on the solvency rate.

Continued strong solvency rate

The 11%p decrease in the DNB solvency rate (to 221% at year-end 2010; 2009: 232%), is mainly due to an increase of the value of the insurance obligations as a result of the decreased interest rate during 2010. This fall in interest rate was partially compensated by the related increase in the value of government bonds and swaptions. Due to the low interest rate, the DNB solvency and the buffer capital are more sensitive to interest rate developments, despite risk-limiting measures. The value increase in equities and property made a positive contribution to the solvency.

Reduced risk in investment portfolio

The risks within the investment portfolio further decreased, due to among others, the sale of bonds issued by financial institutions, reducing the investment in PIIGS countries' (Portugal, Italy, Ireland, Greece and Spain) government bonds and disposal of property. The bond exposure in financial institutions was reduced by 11% to € 6.7 bln during 2010. This reduction was mainly realized in Tier 1 loans. The interest in government bonds issued by PIIGS countries was strongly reduced from € 606 mln at year end 2009 to € 164 mln. As a result ASR Nederland mainly reinvested in AAA fixed-interest investments, including long-term German and Dutch government bonds and Dutch mortgages. The ASR Vastgoed Vermogensbeheer property portfolio, was aligned with ASR Nederland's strategic asset mix following the tactical disposals. A total of € 346 mln in property was sold during 2010.

New framework integral risk management

During 2010, a new framework for integral risk management was established. This framework is in accordance with Solvency II, which will become effective as per 2013. This framework includes structures for Control Risk Self Assessment (CRSA) and the ORSA (Own Risk Solvency Assessment). Furthermore, a risk framework was developed for ASR Nederland, designed to determine the economic capital (ECAP) to be reserved for both insurance and investment risks. This ECAP framework, which is based on Solvency II, will be rolled out to the product lines during 2011. This is an important milestone in steering towards value creation in the product lines. Additionally, the strategic investment mix was optimized in accordance with Solvency II for the first time. These steps in the field of risk management constitute major progress in technically preparing the organization for future privatization.

Increased efficiency

  • Complexity reduction programme;
  • Integration Falcon into ASR Verzekeringen.

Complexity reduction

ASR aims to increase its efficiency with the Complexity reduction programme as one of the instruments to realize this. The programme is important because processes and product variations have become too complex, due to mergers and integrations and the continually changing legislation and changing customer requirements. As a consequence, the costs of product management and system maintenance have increased over the last few years.

The Complexity Reduction programme has provided more insight into the number and degree of overlap between product variations, processes and IT systems. These insights will be used for reducing overlap and will form the starting point for further development of Next Generation products.

Integration Falcon into ASR Verzekeringen

Due to the significant changes in the market for individual life insurance policies and in particular unit linked insurance policies, Falcon Leven was integrated into ASR Verzekeringen as per 1 September 2010. In order to generate an optimal and efficient response to market developments and changing customer requirements, various business units were integrated. This integration is also in line with the strategy of centralization of back-offices for similar products.


ASR proposes to add the net results 2010 to Total equity and will not pay out a dividend.

Future perspective

Since 3 October 2008, the Dutch Government is the 100% shareholder of ASR Nederland. Contrary to many other financial institutions, ASR Nederland did not receive any capital relief aid. No guarantees or loans were provided.

As indicated by the shareholder, ASR Nederland made progress to prepare for privatization. The shareholder's considerations primarily focus on an initial public offering, but other forms of disposal are not excluded, keeping all strategic and financial options open.The manner and timing of privatization is still subject of discussion.