VIVAT Annual Results 2019

VIVAT Well Prepared for Future

Solid Financial Performance and Resilient Solvency II Capital

• Net Underlying Result improved to EUR 322 million (2018: EUR 242 million), driven by higher investment income (interest rate derivatives and re-risking) and improved claims ratio of P&C
• Gross premium income (excluding pension fund buy-outs) was stable at EUR 2,638 million. Gross premium income for Life Corporate and Property & Casualty increased
• Total operating costs decreased slightly to EUR 366 million (2018: EUR 370 million)
• Combined ratio significantly improved to 91.4%, reflecting a lower claims ratio (YE18: 96.8%)
• Net Result IFRS increased to EUR 399 million (2018: -/- EUR 282 million) as a result of a decrease in the Liability Adequacy Test (LAT) shortfall including a positive update of operating assumptions by updated expectations relating to mortality
• The contribution of P&C to the Net Result IFRS was EUR 66 million (2018: EUR 16 million) and the Net Underlying Result was EUR 45 million (2018: EUR 8 million)
• Solvency II ratio (standard model) of VIVAT NV decreased to 170% (YE18: 192%) mainly as a result of a sharp decrease of the Volatility Adjustment (VA) and a decrease in interest rates
• Solvency II ratio (standard model) of SRLEV NV decreased to 163% (YE18: 188%)
• Capital generation remained low at 2% as the UFR drag increased due to decrease in interest rates
• The ongoing re-risking activities resulted in an increase of the direct investment income by 3%
• Liquidity position holding at EUR 516 million (YE18: EUR 535 million)
• Increase of Assets under Management at ACTIAM of 14% to EUR 63.8 billion
• Extensive preparations for the integration and migration have been executed, making VIVAT ready for the future. The closing of the acquisition by Athora with a follow-on sale of the P&C business to NN Group is expected to take place in the first quarter of 2020, subject to regulatory approvals

Yinhua Cao, Chief Financial Officer of VIVAT's Executive Board:

“2019 was a memorable year for VIVAT in which we continuously demonstrated our strong Dutch market presence, with a solid financial performance and a resilient capital position, dedicating focus in customer centricity and sustainability as well as preparing for the upcoming new shareholder. I would like to take this opportunity to express my sincere appreciation to all of our employees and business partners.

In 2019, VIVAT showed a solid financial performance. Both the Net Underlying Result and Net Result IFRS increased significantly compared to 2018. Stringent cost management, a higher investment income and a further reduced combined ratio of 91.4% were important drivers of this increase.

Commercially we saw continuous growth in the Pension and P&C business. Life Corporate pension premium reached a five-year high at EUR 1.09 billion, a 4% increase compared to 2018 by strong new business inflows and a stable retention rate of 87%. The annual premium contribution of Zwitserleven PPI grew by 47% in volume to EUR 144 million. At P&C, premium income rose by 7%. Lower premium income at Individual Life, following the continuously shrinking individual life market, resulted in a stable gross premium income for VIVAT.

Despite volatile capital markets with significantly lower interest rates and tightened credit spreads, VIVAT's Solvency II capital position showed resilience at 170% year-end. During 2019, a sharp decrease of the Volatility Adjustment (VA) from 24bps to 7bps made the Solvency II ratio decrease significantly. Interest rate exposure in the first half year 2019 has been mitigated and its Solvency II impact was largely offset by positive developments in the operating assumptions and management actions taken, including the expansion of the quota share longevity insurance from 70% to 90%. VIVAT's capital generation was increasing, but limited at 2% in 2019 as the UFR drag increased due to a decrease in interest rates. The on-going re-risking activities did result in a higher direct investment income which will help capital generation going forward.

All product lines, as always, put a lot of efforts in customer centricity. At Life Corporate pension events were organised for people nearing their retirement age, advising them on their financial future. Also the overall targeted service level for implementing pension contracts was reduced from six weeks to four weeks. Individual Life successfully launched term life insurances for first time home owners and seniors. The focus on Operational Excellence, by continuing an extensive business automation project, resulted in a substantial decrease of the total handling time on all our processes. P&C increased its efforts in data collection and analysis to improve the insurance technical cycle. The Dynamic Pricing Programme was implemented, in which data is centralised and more effective methods are used for portfolio management. A successful campaign and a new proposition for pet insurance has ensured that Reaal Dier & Zorg is now the market leader in pet insurance.

VIVAT, with its asset manager ACTIAM, continues to be a frontrunner in the field of sustainability. This was acknowledged by the Dutch Fair Insurance Guide where VIVAT scored positive on all twenty one defined themes regarding investment policies. From an international perspective ACTIAM was rewarded with thirteen times a maximum score (A+) out of 14 topics according to the PRI standards in 2019. The acknowledgement was a result of the newly introduced sustainability framework. This framework aligns with the concepts of the Sustainable Developments Goals (part of the VIVAT strategy) and planetary boundaries.
Last but not the least, Anbang has reached a conditional agreement on the sale of VIVAT to Athora with a follow-on sale of the P&C business to NN Group. Over the past months extensive preparations for the integration and migration have been executed, making VIVAT ready for the future. The closing of the acquisition is expected to take place in the first quarter of 2020, subject to regulatory approvals.

All these achievements would not have been possible without the dedication and efforts of our employees and business partners. I am confident that VIVAT is well-positioned for the future and will continue to deliver the high service level towards our customers going forward.”