Strong Operating Capital Generation of € 457 million and commercial success supported by targeted inorganic growth
Jan de Pooter, CEO and Chair of the Executive Committee of Athora Netherlands:
“We delivered strong financial and commercial results in 2023 against a challenging macro-economic and geo-political backdrop. We are now halfway through the Ambition 2025 strategic plan and are delivering on all our targets.Commercially, we saw record business volumes in 2023, both organically and through acquisitions resulting in total growth of 29%. Business flows were healthy in both pensions and retirement. Our strategic focus on pensioners paid off with good results in our annuity business, where we were able to attract new business due to our focus on pensioners and their wellbeing. Organic business volumes were complemented by an innovative buy-out solution (that was developed together with Pensioenfonds Aon), the inclusion of WTW’s PPI, as well as the acquisition of the 2nd pillar pension portfolio of Onderlinge ‘s- Gravenhage. The legal merger of Zwitserleven PPI and WTW’s PPI was completed in December. The team is now focused on completing the operational integration of the two units, creating a combined platform to capture future growth.
In addition, we successfully migrated the 2nd pillar pension portfolio of Onderlinge ‘s- Gravenhage to our administration systems. In order to maintain a seamless experience for our customers, we continuously improve our portals recognising the significance of convenience and accessibility. We remain focused on the growth of our business and will continue to assess complementary inorganic opportunities that can accelerate our strategy.
We kept our costs under control while we continue to invest in the transformation and expansion of our business. Zwitserleven remains the leading brand in pensions and we recently launched the renewed Zwitserleven brand story: “the Zwitserleven Feeling, a feeling that we share”.
After many years, the new Dutch pension law (Wtp) came into force in 2023. As the only pension focused insurer, Athora Netherlands is optimally positioned to capture the opportunities in the dynamic Dutch pension market, together with our strategic partners. With our clear focus, robust capital position, talented workforce and commercial momentum, we have all the ingredients in place to build a leading position in the market.
We recently announced the settlement agreement with the interest groups regarding the investment-linked insurance policies. Through this agreement we provide clarity and aim to bring closure to this long-standing industry issue for our customers.
One of the key levers of our strategy is to increase our investment income through the repositioning of part of our investment portfolio towards higher returning assets, offering better risk-return characteristics. This allows us to offer competitive rates to our customers and drive substantially higher Operating Capital Generation, supporting the future trajectory of the business.
We are proud that our efforts and expertise on sustainable investing have once again been recognised, as we maintained the number one position in the VBDO as the most sustainable investor in the insurance sector in the Netherlands. We consider this as an encouragement to also explore more specific impact investments in the Netherlands. As an example, we recently provided funding to a Dutch company that provides smart mounting systems for solar panels.
Our Solvency II ratio is strong and has been stable and above 200% during the year, reflecting strong Operating Capital Generation and positive management actions, more than outweighing the impact of repositioning our investment portfolio and market variances. Our strong capital position provides comfort to our customers and forms a solid and sustainable platform to further develop our business.
Supported by our high Solvency II levels and strong capital generation, a capital distribution of € 75 million was approved by Athora Netherlands’ shareholder.
In 2023 we moved to our new office location Edge West in Amsterdam, while our location in Alkmaar has been redesigned. The new offices provide a sustainable and energising environment for all our colleagues. The Leesman survey, a global benchmark that measures how well office environments support employees’ work activities, awarded Athora Netherlands’ new office with the highest score in the Benelux. The improved work environment, commercial success, participation to various socially relevant initiatives and clarity about strategic direction have all contributed to a notable improvement of employee satisfaction.
I am very pleased with our performance in 2023 and would like to thank our employees for their hard work and commitment, as well as our customers and business partners for their continued trust. I look forward to continue executing our Ambition 2025 strategy to become a leading pension solutions provider in the Netherlands.”
Financial Results
- Solvency II Operating Capital Generation (OCG) 69% higher at € 457 million (2022:
€ 271 million) supported by repositioning of our investment portfolio and higher interest rates. - Gross inflows increased by 29% to € 2,682 million (2022: € 2,083 million), driven by increased premiums and deposits in the pensions and retirement business, a new innovative pension buy-out with Pensioenfonds Aon, the acquisition of Onderlinge ‘s- Gravenhage’s 2nd pillar pension portfolio and inflows from the acquired Willis Towers Watson’s (WTW) Dutch Premium Pension Institution (PPI).
- Athora Netherlands reached a settlement agreement with interest groups regarding investment-linked insurance policies, € 95 million provision taken in 2023.
- Operating Result (before taxation) of € 559 million more than doubled (2022: € 278 million) driven by higher investment income, supported by the repositioning towards higher returning assets.
- The IFRS Net Result of € 863 million (2022: € -619 million) is largely driven by the positive Operating Result and supported by the beneficial update of Illiquidity Premium (ILP). In 2022, the IFRS Net Result was negatively impacted by market impacts related to higher interest rates and spread widening.
Solvency
- Solvency II ratio stable at 206% (YE2022: 205%) for Athora Netherlands N.V. Strong Operating Capital Generation and management actions were partially offset by the impact of asset repositioning, market variances and the settlement agreement.
- SRLEV N.V. Solvency II ratio of 210% (YE2022: 207%)
Strategic Progress
- Strong progress in the execution of Ambition 2025 strategy.
- Legal merger of Zwitserleven PPI and WTW’s PPI completed with focus now turning to operational integration to drive commercial and cost benefits.
- Successful migration of the 2nd pillar pension portfolio of Onderlinge ‘s- Gravenhage to Athora Netherlands administration systems.
- Transfer of administrative tasks pertaining to the legacy individual life portfolio to Tata Consultancy Services (TCS).
- Move to modern and sustainable office building in Amsterdam.
- Athora Netherlands maintained number one position in the VBDO ranking as the most sustainable investor in the insurance sector in the Netherlands.
- On 27 March 2024, a capital distribution of € 75 million was approved by Athora Netherlands’ shareholder.
