Titel-­‐slide 9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 Capital Markets Day 5 June 2014 │ Leiden │ the Netherlands Inhoudsopgave-­‐slide AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 Contents • Achmea non-­‐life insurance Robert van de Graaf, CFO of Non-­‐life division 3, B 075 ooruit erug pt.) 20 pt.) Klik o
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• Achmea health insurance Norbert Hoogers, Chairman of Health division 2 1, B 076 3, B 003 1 • Achmea pension & life insurance Bianca TeVeroo, Chairwoman of Pension & Life division Miranda Hendriks, CFO of Pension & Life division • ImplementaNon of Solvency II Gert Madorf, SII expert Mathieu Filippo, SII expert Zoek
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Titel-­‐slide 9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 Achmea non-­‐life insurance 5 June 2014 │ Robert van de Graaf │ Leiden Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 Key messages 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 • We are the leading non-­‐life insurance company in the Netherlands ooruit erug pt.) 20 pt.) Klik o
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• #1 in Property & Casualty • #2 in Income Protec_on 3, B 003 3, B 075 1 • In the next period we will con_nue to capitalize on our compe__ve advantages • Big data / Geo Data • Pricing desk / Dynamic Pricing • Advanced value management 2 Zoek
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Inhoudsopgave-­‐slide AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 Contents • Introduc_on Achmea non-­‐life insurance 3, B 075 ooruit erug pt.) 20 pt.) Klik o
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• Current developments Dutch non-­‐life insurance market 2 1, B 076 3, B 003 1 • Current ini_a_ves Accelera_on & Innova_on program Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 1 Achmea has over €3 billion of €16 billion Dutch non-­‐life GWP 7, B 002 Dutch non-­‐life market in €billion GWP* 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 17.2 13,3 16.8 12,8 12,3 16.3 12,4 4.0 4.0 4.0 4.0 2008 2009 2010 2011 2012 Income Protec_on Banking distribuNon erug 20 pt.) 12,9 16.3 4.0 ooruit pt.) 16.9 ** source: CVS Verzekerd van Cijfers 2013 ** Figures relate to full year 2013 Gross wri^en premiums** (Achmea: €20.2 billion) Gross wri^en premiums** (Non-­‐life Netherlands: €3.2 billion) Life 13% 6% Interna_onal 16% Health 65% Non-­‐life IP 19% P&C 81% Property & Casualty Direct distribuNon Klik o
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Broker distribuNon 2 Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 Property & Casualty • Higher wriVen premiums in shrinking market translates into larger market share. • Large losses suffered by business customers reimbursed aier four serious industrial fires (€45 million) and October and December storms (€74 million). • Consistently strong opera_ng performance results in further reduc_on in cost ra_o. Income ProtecNon ooruit • Successful ac_on on WGA (group occupa_onal disability) porlolio to restore profitability. erug • Limited addi_onal increase in provision, due mainly to statutory increase in state re_rement age. pt.) 20 pt.) 1 Achmea non-­‐life insurance results 2013 Gross wri^en premiums Profit before tax  P&C  Income protec_on 3,172 3,151 604 629 2,568 2,522 2013 2012 Combined raNo P&C (%)  Claims ra_o  Cost ra_o 95.1 89.5 265 Klik o
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200 2 2013 2012 Combined raNo Inc. protecNon (%)  Claims ra_o  Cost ra_o 25.1 26.8 109.5 23.7 70.0 62.7 85.8 2013 2012 2013 139.5 26.4 113.1 2012 Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 1 Achmea is the overall market leader in Dutch Property & Casualty insurance Klik o
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7, B 002 3, B 135 7, B 162 Retail* ** (GWP: ~€6.2 billion) 2 Commercial* ** (GWP: ~€6.5 billion) 2 New entrants Others Amlin ARAG DAS Allianz Delta Lloyd NN ASR Achmea 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) 1 Motor Fire Liability Motor Fire 1. Achmea is market leader in Retail 2. New entrants gaining market share and exis_ng players use new internet based labels 3. In specific segments (legal, transport) niche-­‐players have strong posi_ons; no new entrants ** source: CVS, TOF/GfK ** Figures relate to full year 2012 Liability Transport 3 2 Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) 1 Achmea is second-­‐largest in Dutch Income ProtecNon insurance Income ProtecNon consists of three different types of insurance • AOV: insurance offering disability coverage for the self-­‐employed • Verzuim: insurance offering employee absence coverage. The first two years of employee absence are paid for by the employer, who can either take out private or public insurance or no insurance at all • WIA: insurance offering coverage for par_ally or temporarily incapacitated employees. If aier two years an employee is s_ll unable to work due to illness or injury, the employee will convert to the WIA. The next ten years of absence of par_ally or temporarily incapacitated employees are also paid for by the employer, who can choose between public or private insurance (WGA) of this risk ** source: CVS, TOF/GfK ** Figures relate to full year 2012 Dutch income protecNon market with three major players* ** (GWP: ~€4. billion) 100% 0% Klik o
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30% Others Market share (% of GWP) 6, B 131 2% 3% 5% 19% De Goudse Delta Lloyd AEGON ING 22% ASR 16% 21% 24% AOV Verzuim WIA 19% Achmea 2 Zoek
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Tekst/ tekst (50% / 50%) 9, B 165 6, B 131 Achmea is very well posiNoned due to its compeNNve advantages 7, B 002 Assets 3, B 135 • CooperaNve mindset strongly rooted in society 7, B 162 • CriNcal mass as largest property & casualty insurer in the Netherlands and second-­‐largest in the income protec_on market 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • Stable poriolio in size, composi_on and profitability Achmea is Property & Casualty market leader (19%)… …number 2 in Income ProtecNon (18%)… • Excellent claims handling and claims management leading to above average client sa_sfac_on • MulNchannel and mulN-­‐label distribu_on • Enormous volumes of data …and has very strong market posiNons in both the direct and banking channel Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 1 Current developments in the non-­‐life market 7, B 002 3, B 135 CHANGING CUSTOMER BEHAVIOUR CHANGING DISTRIBUTION AND NEW ENTRANTS CAPITALIZING ON BIG DATA / GEO GIS DATA Klik o
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7, B 162 5, B 034 1, B 076 2 3, B 003 Zoek
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3, B 075 ooruit erug pt.) 20 pt.) Customers are becoming more demanding, Compe__on is fierce, also from new entrants The volume and detail of informa_on available seeking simplicity and transparency, comparing into the market, with price and distribu_on keeps increasing, driven by the rise of offers, wan_ng assurance of con+nuity rather power as key differen_ators; distribu_on mul_media and social media; using these large than insurance against risk con_nues to shii to internet-­‐based channel data sets will become a key basis of compe__on Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 Changing customer behavior is bound to have impact on insurance proposiNons 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • Customers are becoming more demanding, seeking simplicity and transparency, comparing offers, wan_ng assurance of con+nuity rather than insurance against risk • We are seeing more and more customers assuming risks themselves and our business customers in par_cular want a different approach (e.g. customizes products and co-­‐
crea_on) • Average insured value is falling due to changes in insurance needs • Changing aotudes towards solidarity, resul_ng in new opportunis_c groupings 1 Klik o
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 Changing distribuNon and new entrants, especially in retail segment 7, B 002 Retail* ** (GWP: ~€6.2 billion) 3, B 135 Strong growth of aggregators (Retail) Commercial* ** (GWP: ~€6.5 billion) 3 7, B 162 Others Banking Direct Broker 5, B 034 1, B 076 3, B 003 1 1 1 1 1 1 1 1 2 2 2 2 2 ooruit erug pt.) 20 pt.) 1. Growth in direct distribu_on at the expense of Broker distribu_on 2. Growth of authorised agents within the broker channel 3. Transforma_on from separate channel focus to mul_/omni-­‐channel ** source: CVS, TOF/GfK ** Figures relate to full year 2012 2 2 Aggregators offer online price comparison and act as broker; aggregators’ market share in Motor is expected to be ~45% within 5 years •
Biggest players are Independer, Verzekeringssite, Consumentenbond and ANWB 1 3, B 075 2 •
2 •
Independer has highest conversion rate (35%), followed by ANWB (27%) and Univé (21%) •
Achmea has majority stake in Independer (78%), but independence c.q. objec_vity has been assured •
Through Independer, Achmea receives valuable informa_on about customer behavior and preferences 1 Klik o
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 Capitalizing on big data & Geo GIS data Big data: our ambiNon To be a data driven organizaNon, using predicNve analyNcs, decision support tools and standardizaNon to fully capitalize on the biggest P&C database in the Netherlands 1, B 076 3, B 003 •
3, B 075 ooruit erug pt.) 20 pt.) •
Wheel of claims: by combining knowledge, expecta_ons, predic_ons and external data with current data, we enhance our capabili_es on accepta_on, preven_on and claims handling. Wheel of underwri_ng: focused on predic_ng customer behavior and impact as well as to influence behavior and impact. Capitalizing on Geo GIS data through underwriNng, accumulaNon, claims processing and prevenNon 1 Klik o
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 1 Current iniNaNves: AcceleraNon & InnovaNon 7, B 002 3, B 135 PRICING DESK CLAIMS MANAGEMENT FOCUS ON COST & VALUE MANAGEMENT Klik o
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7, B 162 5, B 034 1, B 076 2 3, B 003 Zoek
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3, B 075 ooruit erug pt.) 20 pt.) Analysis of Independer data shows many We are puong a lot of effort in accelera_ng We combine capital analyses with market data opportuni_es for op_miza_on of pricing both in improvements in our claims management to to op_mize the risk / return profile of our terms of return and volume. The pricing desk lower claims paid; examples are the use of big porlolios and we employ cost benchmarks as a aims at further implementa_on of dynamic data, strong focus on preven_on of damages tool to iden_fy poten_al improvements pricing to help achieve this and improvements in fraud detec_on Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 5, B 034 • Regular adjustments of rates with a short _me to market taking into account 1, B 076 • our best es_mate of the risks 3, B 003 • compe_tor premiums 3, B 075 • Price elas_city e.g. customers’ behavior to price changes More commercial power because of acquisiNon of Independer pt.) 20 pt.) More dynamic pricing 2 Zoek
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Quick adjustments of rates ooruit erug Klik o
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ImplementaNon of Dynamic Pricing 3, B 135 7, B 162 1 Pricing desk Design products on customer and risk infomaNon Be^er view on customers behaviour Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 Wide array of claims management iniNaNves 1 Klik o
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3, B 135 We put a lot of effort in improving our claims management to lower claims paid 7, B 162 • Investments in preven_on of damages 5, B 034 • Improvements in fraud detec_on and preven_on 1, B 076 • Seeking recourse for claims paid 2 3, B 003 • More and beVer use of big data 3, B 075 • Calibra_on of risk profiles Zoek
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ooruit erug pt.) 20 pt.) • Lowering claims vola_lity Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 Focus on Value Management to opNmize risk/return profile and (cost) benchmarking to idenNfy potenNal improvements Capital analysis combined with market analysis to opNmize Cost Benchmarks as a tool to idenNfy risk/return profile of the book potenNal improvements 5, B 034 1
1, B 076 Capital levels are calculated each year, based on par_al internal models which reflect the risks of division Non-­‐Life… 3, B 003 3, B 075 2
ooruit 3
erug pt.) 20 pt.) 4
… Capital levels and Risk Appe_te requirements are translated into target combined ra_o’s… … leading to insights on gap between target return and actual return for products and labels… … leading to management ac_ons (PMC) to op_mize the use of capital 1 Klik o
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Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 Wrap-­‐up 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 • We are the leading non-­‐life insurance company in the Netherlands ooruit erug pt.) 20 pt.) Klik o
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• #1 in Property & Casualty • #`2 in Income Protec_on 3, B 003 3, B 075 1 • In the next period we will con_nue to capitalize on our compe__ve advantages • Big data / Geo Data • Pricing desk / Dynamic Pricing • Advanced value management 2 Zoek
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Titel-­‐slide 9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 Achmea health insurance 5 June 2014 │ Norbert Hoogers │ Leiden Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 Key messages 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • With the integra_on of Zilveren Kruis Achmea and Agis we are very well posi_oned as the largest health insurer in the Dutch market • In the coming years we con_nue to build on our strengths by focusing on the AcceleraNon & InnovaNon iniNaNves • Health procurement • Value management • Innova_on in products & services 1 Klik o
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Inhoudsopgave-­‐slide AFBE
9, B 165 6, B 131 7, B 002 3, B 135 Contents • Introduc_on Achmea health insurance 1 Klik o
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7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • Current developments Dutch health insurance market • Current ini_a_ves Accelera_on & Innova_on program 2 Zoek
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Dutch healthcare system: 4 components Cure (insurance market) 2 Compulsory basic insurance Risk equalisa_on & mandatory enrolment Op_onal supplementary insurance DESCRIPTION Op_on to risk selec_on • Hospital care • Pharmaceu_cals • Specialists and general prac__oners •
•
•
•
COSTS COMPONENT 1 Dental care Supplementary cover Alterna_ve medicine Vitality • €37 billion (92% of cure costs) • €3 billion (8% of cure costs) Care (not an insurance market) 3 General Act on Excep_onal Health Expenses (AWBZ) 4 Social Support Act (Wmo) • Long-­‐term care • Social care and support • Care for mentally and physically disabled • Home care (nursing) • €28 billion (48% of care costs) • €28 billion (52% of care costs) Dutch healthcare system: 5 stakeholders and mulNple cash flows Consumer nt Pa_e t e
k
mar
Healthcare provider Provider market Insu
r
mar ance ket Insurance company Employer / self -­‐ employed Govern-­‐ ment (Healthcare
allowance) Employees / Self-­‐employed Income
compensa_on Government / tax authority Consumer Income-­‐related premium (50%) Government contribu_on (5%) Risk equalisa_on fund 55% Insurance company %) s (45
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Healthcare provider • Consumers: insured are basically free in their choice of insurer and healthcare provider • Insurance companies receive 55% of their GWP through the risk equalisa_on fund (government) • Insurance companies: compete on premium, quality and service level • Consumers annually pay about €1200-­‐1300 (nominal) premium to their health insurer (45% of the total income of an insurer) • Healthcare providers: compete for contracts with insurers on price & • In addi_on, they pay a contribu_on for some treatments and they quality of care have a legally required excess (deductable) of €360 (2014) Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 We serve over 5 million customers with strong and differenNated brands 7, B 002 Our Dutch Health brands 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) ** Figures relate to Q1 2014 Number of customers* (Total: 5,284,600) OZF 50.600 TakeCareNow! 69.500 ProLife 93.400 Interpolis 233.100 FBTO 340.300 Avéro 428.300 De Friesland Zorgverzekeraar 565.700 Agis 1.050.500 Zilveren Kruis 2.453.200 1 Klik o
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2 Agis and TakeCareNow! will be converted to Zilveren Kruis Achmea per 2015 Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 1 We are the #1 player in a concentrated market with moderate switch rate 7, B 002 Lower premiums lead to lower switch rate in 2013 Market leader in collecNve employers, alliances and individual market* Premium level 3, B 135 7, B 162 5, B 034 1, B 076 Small regionals Mid-­‐sized The big three -­‐1.1% -­‐10.0% 7,2% 6,0% 5,7% 20%
25%
ASR Z&Z Menzis CZ VGZ 32%
2009 2010 2011 2012 2013 2014: increase in premium and switch rate expected ** Figures relate to full year 2013 2 Zoek
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Switch rate 13%
ENO DSW ONVZ erug 20 pt.) +2.3% 3,9% 3, B 075 pt.) +9.5% 5,6% 3, B 003 ooruit +3.7% Klik o
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 1 Health insurance is at the core of the Achmea Group Klik o
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7, B 002 Gross wri^en premiums* (Achmea: €20.2 billion) 3, B 135 Capital allocaNon* (Achmea: €11.2 billion) 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit Basic health -­‐ direct premiums Basic Health -­‐ seVlement fund 20 pt.) €7.0 bn 35% Other Achmea business ** Figures relate to full year 2013 Pension & Life (NL) 15% 24% 9% €1.4 bn 7% Interna_onal €6.8 bn 33% Other Achmea business 2 Zoek
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Non-­‐life (NL) Supplementary Health -­‐ direct premiums erug pt.) Health (NL) €5.0 bn 25% 17% 35% Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 Basic health insurance • WriVen premiums lower due to customers op_ng for higher voluntary deduc_bles and a fall in the number of policyholders; reduc_on compensated by contribu_on from the health expenses seVlement fund 3, B 003 • Structural result stable; premiums remained unchanged despite higher healthcare expenditure 3, B 075 Supplementary health insurance ooruit • WriVen premiums lower as customers took less supplementary cover, especially for physiotherapy and dental care erug pt.) 20 pt.) 1 Health insurance results 2013 Gross wri^en premiums  Basic  Supplementary 13,235 13,105 1,410 1,534 11,825 11,571 2013 2012 321 352 2 2013 2012 Combined raNo basic health* (%) Combined raNo suppl. health* (%)  Claims ra_o  Cost ra_o 99.1 98.3 3.0 3.4 • Goodwill impairment of €90 million 96.1 94.9 • Higher incidental result of €208 million enabling us to reduce basic health insurance premiums for customers by an average of €100 per policy in 2014 2013 2012 ** Based on structural result Structural result Klik o
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 Claims ra_o  Cost ra_o 95.5 94.5 9.8 10.5 85.7 84.0 2013 2012 Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 1 Current developments in the Dutch health insurance market 7, B 002 3, B 135 INCREASING COST OF HEALTHCARE CHANGING CUSTOMER DEMANDS DIGITIZATION Klik o
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7, B 162 5, B 034 1, B 076 2 3, B 003 Zoek
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3, B 075 ooruit erug pt.) 20 pt.) The cost of healthcare is s_ll increasing due Consumers expect the best healthcare. They Digi_za_on offers various opportuni_es, such as to increasing prosperity, ageing popula_on, want transparent insurance products at a online comparison of insurance proposi_ons, changes in society, technological breakthroughs compe__ve premium. quality review of health care providers and apps and higher costs in real terms for claiming health expenses or ordering drugs Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) 1 Increasing cost of healthcare Measures taken by insurers, health suppliers and government to slow down growth • Healthcare Agreement (cure): puts pressure on accelera_on in contrac_ng cycle and requires consumer informa_on on treatment and care costs on invoices Development average healthcare costs per insured 2011-­‐2014* In 2014 expected growth Achmea health costs is +0.7% 2400 2300 In 2013 Achmea realised 1.4% lower
growth of healthcare costs compared
to the expected average healthcare
cost of Associa+on of Dutch Health
Insurers 2200 • System change in General Act on ExepNonal Health Costs (in Dutch: ‘AWBZ’): reform of long-­‐term care and support. Focus on quality of life, self-­‐
reliance, support networks, living inde-­‐
pendently for longer and par_cipa_on 2100 +0.7% +5.3% 2 +5,9% -­‐0.7% • Changes in risk equalisaNon pool: let health insurers bear more risk with effect from 2015 +4.5% Zoek
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+0.6% 2000 2011 Achmea Health ** Health costs also include the transi_on form AWBZ (Care) to the health insurers (Cure) Klik o
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2012 2013 Associa_on of Dutch Health Insurers 2014 Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) Changing customer demands Consumers expect the best healthcare 1 Klik o
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Business to Business • Group schemes increasingly admiong two or more insurers • Integrated proposi_ons: health insurance with occupa_onal health & safety and/or income protec_on Business to Consumer • Calcula_ng behavior results in lower penetra_on of op_onal supplementary (dental) insurance • Increasing focus on selec_ve products versus free choice of provider • Switch triggers are a.o. premiums and coverage 2 Zoek
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Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) DigiNzaNon DigiNzaNon offers opportuniNes 1 Klik o
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• OrientaNon: most consumers start orienta_on process online. Nearly 1 in 5 close sale through Independer • Customer service: strong growth in use of online customer environment, even in B2B. Also increase in customer contact through social media with our webcare team • Self management: online health checks and adop_on of apps for claiming health expenses or ordering drugs • Quality review health care providers (‘Zorgkaart Nederland’) 2 Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 1 Current iniNaNves: AcceleraNon & InnovaNon 7, B 002 3, B 135 HEALTH CARE PROCUREMENT VALUE MANAGEMENT INNOVATIVE PRODUCTS & SERVICES Klik o
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7, B 162 5, B 034 1, B 076 2 3, B 003 Zoek
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3, B 075 ooruit erug pt.) 20 pt.) It is our strong ambi_on to let health care We improve the value of our porlolio through Customers can choose from a state-­‐of-­‐the art expenses per insured increase by a maximum of customer reten_on, supplementary coverage range of products suited to their changing up to the infla_on percentage every year, except adjustments, claims management and further needs. The largest corporate customers gain for system changes or other regulatory changes reduc_on of organiza_on and management insight into the effec_veness of work-­‐related costs care Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 Health care procurement It is our ambiNon to raise health care expenses per insured by a maximum of up to the inflaNon percentage every year • Lower growth than agreed in the na_onal Health Care Agreement • Improvement of the rela_ve posi_on per procurement segment versus the benchmark ooruit • Increasing the difference between the in-­‐kind policy and reimbursement policy erug • Ensure that the contracted and preferred care will be the best pt.) 20 pt.) 1 The best health care The lowest health costs Achmea offers consumers access to the best health care… …that leads to lower costs and lower premiums…  Good quality and service  Enough freedom of choice  Based on vitality and quality of life 
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…and the best suitable health infrastructure  Regional fit between supply and demand  Right care and cure in the right place The best suitable infrastructure Efficient usage of cure Balance between price and results Low cost per care path Sustainable basic insurance package …executed by an effecNve and efficient buying organizaNon…  Focus on lower organiza_on and IT costs  Adequate systems and IT support  First _me right Lower organiza+on costs Klik o
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Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 Value management •
Our commercial challenge is to execute a sustainable value approach •
Target is to maintain our market share in B2C and B2B, with a fair share in all segments 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) Market share Maintain ~30% market share in B2C and B2B… We improve the value and quality of our health poriolio 5, B 034 1, B 076 1 •
Focus on excellent claims management and also on further lowering IT and organizaNon costs 
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
Compe__ve premium Mul_ label strategy New distribu_on channels Value adding proposi_ons Cross buying …and at a compeNNve cost raNo  Further cost reduc_ons through digi_za_on en restructuring organiza_on  Long term target = best in class Compe++ve cost ra+o PorLolio quality …with a fair share in all segments…  Based on solidarity and the risk equalisa_on system, Achmea aims at a fair share of al ‘risk segments’, such as low income groups and chronically ill …Excellent claims management... …  Improving data warehouse, fraud tooling and people & organiza_on Claims management Klik o
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Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) InnovaNve products & services Customers can choose from a range of state-­‐of-­‐the-­‐art products suited to their changing needs 1 Klik o
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• New supplementary insurance, for example a no-­‐claim on dental insurance • ‘Healthy Enterprise’: introducing proven effec_ve interven_ons related to occupa_onal healthcare (o.a. vitality programs) • Living and Caring for Tomorrow: Integrated products and services in health, pensions and housing to support people to enjoy their old age as long as possible in their preferred environment • Be^er care management: matching demand and supply of care (offered in select number of regions) to improve quality and lower health costs 2 Zoek
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Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 Wrap-­‐up 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • With the integra_on of Zilveren Kruis Achmea and Agis we are very well posi_oned as the largest health insurer in the Dutch market • In the coming years we con_nue to build on our strengths by focusing on the AcceleraNon & InnovaNon iniNaNves • Health procurement • Value management • Innova_on in products & services 1 Klik o
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Titel-­‐slide 9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 Achmea pension & life insurance 5 June 2014 │ Bianca TeVeroo │ Miranda Hendriks │ Leiden Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 Key messages 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • Achmea is well posi_oned as an important player in the term life and pension market and develops this posi_on further to being a leading player in total re_rement provision • Previous years and coming year our focus is on ‘no-­‐
regret moves’ such as speeding up migra_ons and cost reduc_ons • In addi_on, we have build and implemented simple, innova_ve DC proposi_ons and portals • Volume is key to our future posi_on; from 2016 on we want to increase volumes significantly by improving our products even further and by increasing our sales effec_veness • In individual life focus remains on profitable growth with innova_ve, low-­‐cost and simple term life insurance products to grow our market share 1 Klik o
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Inhoudsopgave-­‐slide AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 Contents • Introduc_on Achmea pension & life insurance 3, B 075 ooruit erug pt.) 20 pt.) Klik o
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• Current developments Dutch pension & life insurance market 2 1, B 076 3, B 003 1 • Current ini_a_ves Accelera_on & Innova_on program Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 Our Dutch pension & life business is a sizeable part of the Achmea Group 7, B 002 Total insurance liabiliNes* (Achmea: €59.0 billion) 3, B 135 Gross wri^en premiums* (Achmea: €20.2 billion) 1 Klik o
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7, B 162 5, B 034 €2.6 bn 13% €14.8 bn 25% 1, B 076 3, B 003 Zoek
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3, B 075 €44.2 bn 75% ooruit erug pt.) 20 pt.) 2 Pension & Life Other Achmea ** Figures relate to full year 2013 €17.6 bn 87% Pension & Life Other Achmea Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 1 Our power brands offer both individual and group life contracts 7, B 002 Main product labels 3, B 135 Gross wri^en premiums composiNon* (€2.6 billion) Klik o
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7, B 162 Individual life -­‐ tradi_onal products 5, B 034 1, B 076 Individual life -­‐ unit-­‐linked products 3, B 003 Pension -­‐ tradi_onal products 3, B 075 Pension -­‐ unit-­‐linked products ooruit Achmea reinsurance company erug pt.) 20 pt.) 13% ** Figures relate to full year 2013 25% 2 Zoek
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20% 12% 30% Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) 1 Achmea pension & life insurance results 2013 • Lower wriVen premiums due to stalling housing and mortgage markets, compe__on from bank saving products and lower pension indexa_ons. • Result adversely affected by interest rate movements, including convergence of UFR curve and zero swap curve. • Gross opera_ng expenses 15% lower due to sustained focus on efficiency; opera_ng expenses down 3%. • Administra_on costs further reduced for separate closed life insurance porlolio, while maintaining high quality of service. • Investments in implementa_on of new legisla_on and regula_ons. • VNB margin adversely affected by strong price compe__on on individual life market ** Value of new business, not including mortgage produc_on (part of banking ac_vi_es) Gross wri^en premiums Profit before tax 383  Pension  Life 2,593 1,463 2,944 245 1,767 1,130 1,177 2013 2012 2 2013 Value of New Business* 2013 2012 -­‐19 2012 VNB margin 2013 -­‐4.3 -­‐25 Klik o
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9, B 165 6, B 131 1 Current developments in the Dutch pension & life market 7, B 002 3, B 135 NEW GENERATIONS CONNECT DIFFERENTLY INDIVIDUALISATION AND NEW COLLECTIVES FINANCING WELFARE STATE UNDER PRESSURE Klik o
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7, B 162 5, B 034 1, B 076 2 3, B 003 Zoek
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3, B 075 ooruit erug pt.) 20 pt.) Customers are higher educated, beVer informed Individualiza_on takes on new forms. People Challenges such as a shrinking labor force, a and more choice-­‐conscious than previous want authen_c products and services that are growing number of re_rees, a labor shortage by genera_ons; in addi_on, the bond between personally relevant to them; simplicity, 2020 and an increased life expectancy are employee and employer is weaker convenience, transparency and sustainability making the current system unsustainable have become a license to operate Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) New generaNons connect differently The bond between employer and employee is decreasing • Employees want to make their own choices • Alterna_ve and short term employment contracts emerge leading to more mobility on the labor market • Employer dilemma: good employer vs budgeted pension scheme expenses Dutch popula_on mainly consists of genera_on X and Y • Higher educated and literally wiser • Well informed • Cri_cally, want to make their own choices 1 Klik o
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Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 IndividualizaNon and new forms of collecNvity •
Individualiza_on has carried through •
People search for new forms of collec_vity to be connected, not only via their employer •
People want authen_c products and services that are personally relevant to them 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) •
We live in a digital world: 24/7 connected •
Simplicity, convenience, transparency and sustainability are license to operate 1 Klik o
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Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 •
Shrinking labor force, growing number of re_rees, labor shortage by 2020 •
Increased life expectancy is not sufficiently accounted for 7, B 162 5, B 034 1, B 076 3, B 003 •
1960: 40 years of employment vs 12 years of re_rement •
2015: 40 years of employment vs 20 years of re_rement 3, B 075 ooruit erug pt.) 20 pt.) 1 Financing of the welfare state is under pressure •
Dutch regula_on and decreasing fiscal advantages cause a decreasing second pillar Klik o
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Development number of working people
to 1 retired person
We are getting older.
For 40% of girls born today,
life expectancy is 100 years
1960: 7 to 1
2013: 4 to 1
2040: 2 to 1
Increased life expectancy is not sufficiently
accounted for: It increases faster than
expected
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Every year ʻlived longer than expectedʼ
would require 2.5% premium increase
Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) The Dutch pension system changes we anNcipated are materializing; we see confirmaNon of our strategic choices Expected developments • Risks shiw to employees (from DB to DC) • Illusion of 100% guaranteed pension en_tlements is broken and replaced with acceptable investment risks • Ongoing tax exemp_on (1,875% and capping at income > euro 100K) causes shii from 2nd to 3rd pillar and outside the pillars • Increasing cost pressures requires increasing scale (low administra_ve cost per policy) • Intensifying poli_cal debate about average premium AND solidarity may cause the mandatory par_cipa_on of employers in “BPF pension schemes” to expire (Par_cipa_on in a pension scheme (of own choice) likely to remain mandatory for employees) • Possible long-­‐term low interest rates cause that hard guarantees to be at the expense of a good pension • Life expectancy con_nues to increase rapidly; employees will only work marginally longer • Ongoing individualizaNon; employees make their own choices supported by modern technology Our strategic choices 1 2 3 4 5 6 7 8 9 1 Klik o
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We posi_on ourselves as a coopera_ve and most trusted player in the market of re_rement products Achmea has a dis_nc_ve employer approach and we do business with the top 500 organiza_ons in the Netherlands. Our ambi_on is to offer good DC pension schemes through innova_ve life cycles, including guarantees We reduce the size and costs of our organiza_on substan_ally Our focus is on volume and we serve the en_re market; free market, (s_ll) mandatory OPF/BPF market and Pensioner We realize opinion leadership by focusing our free publicity efforts and marke_ng spend; posi_oning one brand for pension We offer simple modular products We offer insight and overview to help customers make their op_mal choice in re_rement products; coopera_ve and personal We tailor our customer ac_vi_es and communica_on to important customer contact moments, centered around life events 2 Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 1 Current iniNaNves: AcceleraNon & InnovaNon 7, B 002 3, B 135 REDUCTION OF COSTS AND COMPLEXITY A NEW GENERATION DC PRODUCT INNOVATIVE COMMUNICATION Klik o
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7, B 162 5, B 034 1, B 076 2 3, B 003 Zoek
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3, B 075 ooruit erug pt.) 20 pt.) Focus on migra_ons, digitaliza_on to achieve a Core product is modular, simple, transparent We offer insight and overview by accelera_ng on low cost, flexible organiza_on and offers investment and risk op_miza_on innova_ve customer communica_on through 'life cycle' asset alloca_on Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 2012 – 2013 – 2014 3, B 075 Legacy business: ‘no-­‐regret’ moves •
Closed book organiza_on •
Migra_on to target products and systems: • DB products to the target system ‘Iris’ • DC products to the target system ‘Ibsen‘ Posi_oning as a trusted player in the market of re_rement products: •
Formatable DC player, with a simple product (Modulair), good DC pension schemes through innova_ve life cycles, including guarantees •
For the _me being offering DB (Marktrente product) to support customers currently in DB schemes to make the switch to DC schemes • Term life to the target system SAP •
Op_mizing: SAP for term life, finish Ibsen (DC) and improving straight through processing (STP) and generic services •
Combined proposi_ons pension 2nd and 3rd pillar Bank / Life / Housing / Care •
1 Process, 1 System, 1 Loca_on •
•
Digitaliza_on of processes Added value by a coopera_ve customer approach, powerbrand Centraal Beheer Achmea, a dis_nc_ve employer approach and doing business with the top 500 organiza_ons in the Netherlands erug 20 pt.) From our strategic vision 2020: new perspecNve Complexity and cost reduc_on: ooruit pt.) Klik o
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2020 1, B 076 3, B 003 1 Pension & life took on a huge challenge; next to running the business, we work on complexity / cost reducNons and on our strategic perspecNve 2 Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 Complexity and cost reducNon by commercial migraNon; we are achieving our goals 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) 2012 2013 • Development and introduc_on of DC proposi_on ‘Modulair Pensioen’ • Implementa_on of re_rement age 67 for DB and DC businessline • Crea_on of strategic vision 2020 (which has been confirmed over _me) • Breakthrough of new Solidair 2.0 product (possible to administrate in target system Iris) • Accelera_on of migra_on strategy DC (20% of ac_ve porlolio has been offered) • All ac_ve clients have been transferred to the target system Iris as of the first of January 2014 • Works council approval for moving to 1 process, 1 system, 1 loca_on 2014 • Achieving migra_on DC: • 20% of ac_ve DC porlolio has been accepted and administrated (Q1) • 80% of ac_ve DC porlolio has been offered • Implementa_on of ‘WiVeveen kader’ for DB and DC businessline • 1 process, 1 system, 1 loca_on is being implemented 1 Klik o
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2015 • Achieving migra_on DC: • 80% of ac_ve DC porlolio has been accepted and administrated • Migra_on inac_ve DB porlolio • Migra_on inac_ve DC porlolio • Comple_on of 1 process, 1 system, 1 loca_on 2 Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 RaNonalizaNon of our products and IT landscape is conNnued with acceleraNon of migraNon DC – we are on track towards full compleNon by the end of 2015 C 3, B 135 MigraNon DIL/DIP 7, B 162 2014 1, B 076 3, B 003 3, B 075 ooruit MigraNon DC A 2013 1 Clara/ Vi„a 7 2014 Ac_ve Cap vzi
6 Elvis, Libra 2014/ Maia 9 2015 Alpine 2015 2014/ 5 Thispas Vactas GZ 8 2015 2014 2014/ 2015 2015 4 Insunix 2 3 Vactas MKB 7 2013/ 2014 CRP Leven Nieuw 20 pt.) 2 E F CBPNS 1 B Elvis Collec_ve 2 2008 2010 MigraNon DB Elvis Individuall 3 2010 AVAS WAO hiaat 5 ANW 4 2010 6 2012 MigraNon Individual
life (ORV) RaNonalizing
archive Realized
In progress
2012 Klik o
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MigraNon Capital insurance Legend
erug pt.) D AcceleraNon of migraNon DC 5, B 034 1 Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 DC migraNon successfully in progress; customer retenNon on migrated DC poriolio 2013 is approximately 89%, customer saNsfacNon 7.1 3, B 135 CRP 7, B 162 Ibsen Old 5, B 034 Insunix 1, B 076 Leven nieuw 3, B 003 Thispas 3, B 075 ooruit erug pt.) 20 pt.) Alpine/Clara/ Vi{a Commercial migraNon acNve collecNve poriolio: 82,000 • offered before 1-­‐1-­‐2015 • Administrated before 1-­‐7-­‐2015 1
Commercial migraNon acNve individual poriolio: 3,000 • Offered before 1-­‐1-­‐2015 • Administrated before 1-­‐7-­‐2015 2
MigraNon inacNve poriolio: 220,000 • migrated before 1-­‐1-­‐2016 3
Legacy systems are phased out… Modular Pension
IBSEN …as Ibsen is being filled 1 Klik o
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 DB migraNon has reached its final phase; customer retenNon on migrated DB poriolio in 2013 approximately 89% 3, B 135 Mainframe 7, B 162 Vactas GZ 5, B 034 Vactas MKB 1, B 076 Elvis (DIP/DIL/Kap verz) 3, B 003 Maia ANW WAO Hiaat Elvis CollecNef ooruit 20 pt.) Completed DB migraNons Elvis Individueel erug Klik o
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2 DB target system IRIS CBPNS 3, B 075 pt.) Final commercial DB migraNons: • Ac_ve clients accepted and administrated by 1-­‐1-­‐2014 • Inac_ve clients accepted and administrated ul_mo 2015 • Implementa_on re_rement age 67 • Implementa_on New Dutch Pension Laws • Implementa_on tariff changes 1 Avas •
All ac_ve clients have been transferred to the target system Iris as of the first of January 2014 (463 employers and 17,500 employees) •
Transferring our inac_ve clients (back services) is currently conducted and will be completed in 2015 (3,200 employers and 77,500 employees) •
By end 2015 we will have one process, with one system at one loca_on for this business line. Zoek
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 1 Our efforts lead to significant cost savings Klik o
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System and release costs RUN (€mln) 3, B 135 • In coming years our system and release
costs will decrease significantly with 52% 7, B 162 5, B 034 • This reduc_on is mainly accomplished by
turning off legacy systems 1, B 076 3, B 003 2010 2010 -­‐ 2013 2013 Legacy DC (UL) Legacy DB (Rente) Ibsen Iris Specials Other Zoek
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2016 3, B 075 FTE reducNon RUN (# FTE) ooruit • Ra_onaliza_on enables us to realize a
reduced workforce erug • We decreased # FTE 21% (2010-­‐2013) en
will furthermore decrease by 30% in
coming years pt.) 20 pt.) 2010 2010 -­‐ 2013 2013 RaNonalizaNon RaNonalizaNon DC DB Lean Poriolio Budget SOL ComposiNon 2016 2 Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 We retain our leading posiNon in customer saNsfacNon while we enhance our efficiency Customer saNsfacNon 7.2 7.3 Overall Pension 7.0 7.0 6.4 6.7 7, B 162 2012 6.4 6.4 6.0 6.3 2013 6.4 6.3 6.6 5, B 034 1, B 076 3, B 003 3, B 075 CBA Interpolis Aegon Avéro Generali ASR Straight through processing (STP) DB 91% ooruit 60,4% 65,7% 92,3% 91,3% 95,4% 96,4% • We improved our straight through processing
(STP) DB from 60% (2006) to 96% (2013) • This liied both speed of service as well as quality 73,4% erug pt.) 20 pt.) • We were able to retain our leading posi_on in
customer sa_sfac_on with our three brands in
pension, Centraal Beheer (CBA), Interpolis and
Avéro. • Cost reduc_on has not affected our customer
services strength • Administra_on CBA in target systems • We expect to accomplish the same in DC when
ra_onaliza_on and migra_on has been completed 2006 2007 2008 2009 2010 2011 2012 2013 1 Klik o
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Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) We have build a new generaNon DC product Core product is modular, simple, transparent and offers investment and risk opNmizaNon through 'life cycle' asset allocaNon • Building up a pension through various risk weighted alterna_ve mixes of asset alloca_on, which are adjusted over _me, so called life cycles • Ensure low cost for the employer by scale and synergy (asset management and administra_on) • Offer insight and transparency through portals, interac_ve employee communica_ons • Disability and survivor pension accounted for properly • Adapted to all recent legisla_on changes 1 Klik o
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9, B 165 6, B 131 7, B 002 We have accelerated on innovaNve customer communicaNon 3, B 135 Insight and overview 7, B 162 • Comprehensive employee informa_on and help desk 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • Online employee portal with scheduling func_onality • Digital interac_ve ‘Uniform Pensioenoverzicht’ (UPO) • App for employees • We use customer panels to improve our communica_on con_nuously; paying special aVen_on to communica_on to 'vulnerable groups' (such as people going a divorce) • Achmea has a leading score in quality of pension communica_ons in a recent review by the Dutch regulator AFM 1 Klik o
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Tekst & Beeld (25%/75%) AFBE
9, B 165 6, B 131 Wrap-­‐up 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • Achmea is well posi_oned as an important player in the term life and pension market and develops this posi_on further to being a leading player in total re_rement provision • Previous years and coming year our focus is on ‘no-­‐
regret moves’ such as speeding up migra_ons and cost reduc_ons • In addi_on, we have build and implemented simple, innova_ve DC proposi_ons and portals • Volume is key to our future posi_on; from 2016 on we want to increase volumes significantly by improving our products even further and by increasing our sales effec_veness • In individual life focus remains on profitable growth with innova_ve, low-­‐cost and simple term life insurance products to grow our market share 1 Klik o
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Titel-­‐slide 9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 Solvency II implementaNon at Achmea 5 June 2014 │ Gert Madorf │ Mathieu Filippo │ Leiden Inhoudsopgave-­‐slide AFBE
9, B 165 6, B 131 Contents 7, B 002 • IntroducNon 3, B 135 • Timeframe Solvency II 7, B 162 • Solvency II implementa_on at Achmea 5, B 034 • Important choices for Solvency II 1 Klik o
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3, B 075 ooruit erug pt.) 20 pt.) Achmea and Solvency II • Achmea is heavily involved in discussions on Solvency II in influen_al bodies • Insurance Europe • the Dutch Na_onal Associa_on of insurance companies • CRO Forum • Amice • Achmea par_cipates in the pre-­‐applica_on process on internal models • From May 2010 pre-­‐applica_on phase • From January 2014 “trial” applica_on phase • Achmea welcomes Solvency II as it s_mulates good risk management, proper policyholder protec_on and a level playing field across Europe Inhoudsopgave-­‐slide AFBE
9, B 165 6, B 131 Contents 7, B 002 • Introduc_on 3, B 135 • Timeframe Solvency II 7, B 162 • Solvency II implementa_on at Achmea 5, B 034 • Important choices for Solvency II 1 Klik o
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1, B 076 2 3, B 003 Zoek
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3, B 075 ooruit erug pt.) 20 pt.) 100% tekst 9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 Timelines for Solvency II implementaNon EP
elections
2014
Formal vote
EP
Publication
OII
2015
2016
Formal vote
- EP
- Council
Solvency II
enters into
force
1, B 076 3, B 003 Publication
DA
Omnibus II
EC Consultation
Delegated acts
3, B 075 Endorsement
EC
ooruit erug pt.) 20 pt.) EIOPA
Cons.
ITS 1
Cons.
ITS 2
Public consultation by EIOPA
Endorsement
EC
100% tekst 9, B 165 6, B 131 Contents 7, B 002 • Introduc_on 3, B 135 • Timeframe Solvency II 7, B 162 • Solvency II implementaNon at Achmea 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • Important choices for Solvency II Solvency II implementaNon at Achmea • Achmea already started preparing for Solvency II in 2008, par_cipated in all EIOPA Quan_ta_ve Impact Studies and is highly involved in discussions in influen_al bodies on Solvency II (Dutch Na_onal Associa_on, Insurance Europe, Amice). • Achmea executed in every year up to 2014 an own impact study in order to assess the new legisla_on • Implementa_on started with a central project team with separate projects for Data & IT, processes, risk management and internal models. • Since 2013 a core Solvency II team remains. Responsibility for most ac_vi_es has been shiied towards the line departments. • Focus of the core Solvency II team is on the transla_on of developments in legisla_on into Achmea requirements, lobby ac_vi_es and the coordina_on of the pre-­‐applica_on process with DNB. • Achmea made significant steps into implementa_on of Solvency II requirements. Solvency II consequences are important criteria in current decision-­‐making. Solvency Capital Requirements – parNal internal model SCR Internal model Adjustment Market Risk BSCR Opera_onal Life Risk Default Risk Health Risk Intangible Risk Equity SLT Cat Risk NSLT Interest rate Mortality Property Longevity Spread Disability & morbidity Lapse Currency Lapse Expense Concentra_on Expense Revision Revision Cat Non-­‐life Risk Mortality Premium & reserve Premium & Reserve Longevity Lapse Lapse Disability & Morbidity Cat Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 Differences between standard formula (SF) and (parNal) internal model (PIM) 7, B 002 Non-­‐life premium and reserve risk 3, B 135 • PIM is scenario based and forward looking (takes into account the run-­‐ off paVern). SF is factor based. 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • SF does not reflect differences in legisla_on per country. • SF takes log normal distribu_on as a star_ng point for all LOBs, which is considered too rigid. • No difference is made in the SF between small and large claims Non-­‐life catastrophe risk • Natural perils: Achmea uses wind storm and flood scenarios also for LOB Motor other. • BeVer reflec_on of reinsurance trea_es in the case of mul_ple events across mul_ple perils. • Man-­‐made scenarios: In SF based on average of local legisla_on. 1 Klik o
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Tekst & Beeld (75%/25%) AFBE
9, B 165 6, B 131 Differences between standard formula (SF) and (parNal) internal model (PIM) 7, B 002 Health – Non-­‐Similar to Life Techniques 3, B 135 • PIM is scenario based and forward looking (takes into account the run-­‐ off paVern). SF is factor based. 7, B 162 5, B 034 1, B 076 • SF calibra_on is based on data of Health insurers across Europe and does not reflect specifics of the Dutch Health care system (risk equalisa_on). 3, B 003 Health – Similar to Life Techniques 3, B 075 • SF is based on Life techniques, while for disability (AOV, WAO (run-­‐
off) and WIA) life risk types are insignificant. Morbidity/disability are dominant. ooruit • The SF sets a combined shock for incidence and recovery. The PIM treats both as separate processes. erug pt.) 20 pt.) • Achmea uses a three state Markov chain with states Ac_ve-­‐ Disabled and Lapsed/Deceased. Incidence rates (Ac_ve to Disabled) and Recovery rates (Disabled to Ac_ve) are dominant. 1 Klik o
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9, B 165 6, B 131 Differences between standard formula (SF) and (parNal) internal model (PIM) 7, B 002 Market risk 3, B 135 Equity risk 7, B 162 • Achmea uses a “look through approach” for calcula_ng capital requirements for par_cipa_ons. The SF does not look at the nature of the par_cipa_on and uses a standard 22% charge 5, B 034 1, B 076 3, B 003 3, B 075 ooruit erug pt.) 20 pt.) • Achmea does not use the “equity dampener” • Achmea uses a more granular approach, not just the categories “global” and “other” Interest risk • Achmea uses several scenarios for the shocks, with different shapes. The SF outcomes are based on two scenarios based on non-­‐parallel shiis • The SF uses a floor of 100 bp for each dura_on, leading to too high capital requirements in a low interest environment. In the PIM this floor is not applicable 1 Klik o
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9, B 165 6, B 131 Differences between standard formula (SF) and (parNal) internal model (PIM) 7, B 002 Market risk 3, B 135 Property risk 7, B 162 5, B 034 • The SF uses one scenario for calcula_ng property risk. Achmea has iden_fied several categories for property risk. 1, B 076 Spread risk 3, B 003 • The SF does not account for spread risk on government bonds of EEA countries issued in the local currency. The PIM calculates capital requirements that differen_ate between countries. 3, B 075 ooruit erug pt.) 20 pt.) • The SF calcula_on is based on one shock. The PIM approach uses a simula_on approach with 10,000 instantaneous shocks. 1 Klik o
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Pre-­‐applicaNon process – “trial applicaNon” • “Trial applica_on process” started on 1 January 2014. Around 30 June 2014 a leVer from DNB with findings on the first tranche compared to the requirements for the formal applica_on will be received. • The process regards a review of the applicable models, including onsite reviews and discussions with model developers and representa_ves from the valida_on team. • Data governance and quality of Data & IT are important review areas. Achmea implemented 69 measures for data quality and data governance. • Related to the use test, model governance and valida_on processes mee_ngs take place with Execu_ve Board members, representa_ves from the management Board and Risk & Compliance. Some preliminary findings from the “trial applicaNon process” • Documenta_on will need addi_onal aVen_on: Current documenta_on is extensive, meets internal requirements, however is difficult to access for supervisors. • Parts of the Solvency II developments are s_ll under development, e.g. the Profit & Loss AVribu_on test and the Risk ranking. • A self-­‐assessment based on an FSA format has been delivered to show compliance with CP56 (internal model) requirements. A final EIOPA template will be available per 1 November 2014. • Findings from Internal Audit and the Achmea Valida_on team are important inputs in the “trial applica_on process” and of importance for DNB. • Star_ng 1 July 2014 a dry-­‐run regarding “changes” of the internal model is in place. Use of internal models in Achmea – an example • Risk characteris_cs are translated into required capital. • Ambi_ons of the Group lead to target return levels. • Target return levels are translated into target Combined Ra_os for labels and products. • Comparison of target return levels and actual returns lead to steering on returns. • Steering on returns per channel is organised in the “supplementary steering”. Inhoudsopgave-­‐slide AFBE
9, B 165 6, B 131 Contents 7, B 002 • Introduc_on 3, B 135 • Timeframe Solvency II 7, B 162 • Solvency II implementa_on at Achmea 5, B 034 • Important choices for Solvency II 1 Klik o
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3, B 075 ooruit erug pt.) 20 pt.) Important choices to be made for Achmea under Solvency II Final treatment under Solvency II • Investments: Mortgages versus RMBS : Mortgages treated in CDR module, RMBS via spread risk (charges lowered). • Matching adjustment: yes/no?: Required asset porlolio that is managed separately and guarantees stable cash flows. Assessment on applicability for Immediate Annui_es. • Vola_lity adjustment: Use within Non-­‐life and Life insurance, not applied for NSLT health insurance • Possible use of USPs: Possible use for Health SLT in Interamerican Greece • Use of ancillary own funds: Inves_ga_on on capital that can be made available under specific circumstances and specific guarantees. Important choices to be made for Achmea under Solvency II (conNnued) Transi_onal measures • Curve for discoun_ng liabili_es: Possibility to transfer from the current Solvency I curve for discoun_ng to the Solvency II curve. Op_on not to be combined with the use of the matching adjustment. • Technical provisions: Possibility to take the difference between the liabili_es calculated under Solvency II versus Solvency I over a period of 16 years. Could be applicable depending on the outcome of discussions on “spaarhypotheken”. • Use of equity risk transi_onal: Charge at day 1 for type 1 is 22%, which will increase to 39% as a basis over a period of 7 years. Solvency III? IAIS -­‐ ComFrame • Interna_onal Capital Standards should not be an addi_onal Solvency regime on top of Solvency II • Solvency II principles are not to be watered down in order to achieve convergence • The Basic Solvency Requirement should act as a higher Minimum Capital Requirement • Risk management principles should be converged e.g. Solvency II principles and core ComFrame principles should be similar • Repor_ng should be a “one stream” process e.g. through local supervisors • Level playing field with other financial sectors Wrap-­‐up • Achmea is heavily involved in discussions on Solvency II in influen_al bodies • Insurance Europe • the Dutch Na_onal Associa_on of insurance companies • CRO Forum • Amice • Achmea par_cipates in the pre-­‐applica_on process on internal models • From May 2010 pre-­‐applica_on phase • From January 2014 “trial” applica_on phase • Achmea welcomes Solvency II as it s_mulates good risk management, proper policyholder protec_on and a level playing field across Europe AfsluiNngs-­‐slide 9, B 165 6, B 131 7, B 002 3, B 135 7, B 162 5, B 034 1, B 076 3, B 003 3, B 075 Thank you for your a^enNon 5 June 2014 │ Leiden │ the Netherlands