Athora Netherlands Interim Results 2022

9 september 2022

Strategic delivery underpinned by strong Solvency II ratio of 202%

Significant progress with the execution of our Ambition 2025 strategy

Financial Results

• Net Underlying Result of EUR 215 million (HY21: EUR 152 million) driven primarily by higher investment income, supported by the ongoing repositioning of the asset portfolio.
• Increase in pension premiums of 5%, consistent with our strategy to grow in this market.
• Gross premiums of EUR 864 million (HY21: EUR 888 million) were slightly lower due to the planned runoff of the Dutch individual life book.
• Zwitserleven PPI continued to grow with deposits increasing by 24% from EUR 123 million to EUR 153 million.
• Total operating costs of EUR 103 million are marginally higher. Underlying costs, excluding scope changes and strategic & transformation initiatives, came down by 6%.
• The Net Result IFRS for continuing operations of -/- EUR 828 million (HY21: -/- EUR 98 million) was negatively impacted by the impact on the market value of investments from higher interest rates, spread widening and expense provisions.

Solvency

• Athora Netherlands’ Solvency II ratio increased to 202% (YE21: 180%), primarily driven by the impact of market movements and the associated effect of the volatility adjustment, and supported by operating capital generation. The increase in solvency was partially offset by the impact of the continued repositioning of the asset portfolio and the decrease of the UFR from 3.60 % to 3.45%.
• Solvency II ratio of SRLEV of 211% (YE21: 180%) improved for the same reasons as Athora Netherlands.
• In May, Fitch upgraded the Insurer Financial Strength rating for SRLEV N.V. from A- to A. The Issuer Default rating of Athora Netherlands N.V. has also been upgraded, from BBB+ to A-.
• Athora Netherlands issued EUR 500 million of subordinated notes during the second quarter. The vast majority of the proceeds of these new Tier 2 notes were used to fund the repurchasing of subordinated notes that were issued by VIVAT N.V. in 2017.

Strategic Progress

• Athora Netherlands continues to make progress towards its Ambition 2025 strategy which is based upon three key levers: (1) growth in pensions, (2) enhanced investment returns and capital efficiency measures and (3) a simplified operating model while further building on our strong sustainability credentials. Solid inflows to our pensions supported by a successful buy-out of a pension fund, a lower underlying cost base, higher investment income and a capital position which supports further growth of our business in addition to the continued repositioning of our asset portfolio are evidence of the progress made in the first half of 2022.
• Appointment of Jan-Hendrik Erasmus as new CFO in the Executive Board.

Jan de Pooter, Chairman of Athora Netherlands’ Executive Board:

“The first half of 2022 has been a very volatile and uncertain period for the world. The war in Ukraine is not only a humanitarian tragedy with far reaching geo-political consequences but also has a very substantial impact on the global economy, food and energy prices and financial markets.

In this uncertain and volatile environment, Athora Netherlands was able to continue to provide security to its customers. Starting from a relatively low risk position, the impact of higher rates and increased spreads in the bond markets resulted in a solid increase in the solvency of our company. Moreover, we were not affected directly by materially higher inflation expectations thanks to various inflation hedges which were put in place last year. Our Solvency II ratio of 202% at the end of June should provide further comfort to our customers for being their true ‘partner for life’ and allows us to continue the expeditious execution of our Ambition 2025 strategy.

One of the levers of our strategy is to increase our investment income through the repositioning of some of our investments towards higher yielding private assets. This shift was the prime reason for the improvement of our Net Underlying Result and is expected to further contribute to our capital generation which was already positive in the first half of 2022 and is expected to improve further going forward, creating a strong and sustainable platform for the development of our business. Our capital efficiency was further enhanced by an increased allowance for LAC DT and other measures. The strengthening of our financial position was also recognized by Fitch rating agency who upgraded the ratings of Athora Netherlands and Athora Group for the second time within a year.

We also made good progress in the implementation of our operating model. As of March 2022, we started with a new functional organizational structure facilitating our ambition to become a more simplified and efficient company that is better suited to our pension-focused strategy after the completion of the sale of our non-life and asset management activities.

Our business developed favorably in the first half of the year. Zwitserleven, as a leading provider of solutions for pension needs, was able to deliver solid growth in pension premiums. The increased volume in our accumulation business was partly offset by a small decrease in decumulation as customers delayed their decision to buy annuities in anticipation of higher interest rates. We were again able to support a pension fund with the transfer of its assets and liabilities ahead of the upcoming pension reform. And we launched our new annuity product to address the growing need of certain customers to only guarantee part of their pension income with the rest of the pension income remaining more reliant on the evolution of financial markets.

We continue to strive to be the most sustainable insurer in the Netherlands. We launched a new dedicated Sustainability department coordinating and consolidating all our efforts in this important domain. Under the Zwitserleven brand we recently started a campaign to further highlight our commitment to a better world. The upcoming renovation of the Holbeinhuis, our former office in Rotterdam, into an office building with the highest energy label is a good example of the tangible impact we can make in creating a more sustainable environment.

I am very pleased with our performance during the first half of 2022 and would like to thank our customers for their continued trust and our valued employees for their support in making this possible. I look forward to the remainder of 2022 with confidence as we continue to build for the long term in becoming the leading pension solutions provider in the Netherlands that will address the needs of the life and pensions market in the Netherlands.”

Source: Athora