NN Group posts jump in Q1 profit, bullish on Delta Lloyd acquisition

Dutch insurance and asset management company NN Group posted a significant rise in its first quarter 2017 operating result for its ongoing business, driven by improvements in all segments while the CEO shows optimism about the benefits of the Delta Lloyd acquisition.

Operating result for the ongoing business increased 33.3 percent year on year to €406 million in the first quarter of 2017.

Annual premium equivalent was up 28.3 percent year on year at €620 million at constant currencies, driven by higher sales at Netherlands Life, Insurance Europe and Japan Life; net third party inflows of €2.1 billion at Asset Management; €1.1 billion of mortgage production at NN Bank.

Overall, net result was up 61.0 percent over the period at €435 million, reflecting the higher operating result and higher non-operating items, the company said in a statement.

“NN Group showed a strong performance in the first quarter of 2017, with all segments contributing to the increase in the Group's operating result compared with the first quarter of 2016,” said CEO Lard Friese.

“We continue to improve efficiency, with cost savings in the Netherlands bringing the expense base down further. And our balance sheet remains robust, with NN Group's Solvency II ratio at 238 percent.”

In April, NN Group completed the acquisition of 93.3 percent of its competitor Delta Lloyd.

“Preparations for the legal merger continue. We believe the combination of Delta Lloyd with the Dutch and Belgian activities of NN will benefit customers, by expanding our product offering and further broadening our distribution network. It will also generate a materially higher free cash flow available to shareholders over time through the benefits of scale,” Friese said.

In August, NN Group will publish the full consolidated results for the combined group for the second quarter of the year.

At Delta Lloyd, gross written premiums in General Insurance decreased to €447 million in the first quarter compared to €465 million in the same period a year ago, reflecting the exit of unprofitable and unattractive business segments, according to a statement. The combined ratio deteriorated slightly to 97.9 percent from 97.0 percent over the period.

During the quarter Delta Lloyd saw some underlying improvement compared to last year, reflecting actions on costs, pricing and our exiting of unprofitable and unattractive business segments, the company commented. However, the combined operating ratio in property/casualty remained high at 104.8 percent, reflecting adverse claims experience in Fire and the brokers channel, the company said.

The combined operating ratio in Income & Protection decreased by 8 percentage points to 65.3 percent, due to prior year reserve releases. Gross written premium in General Insurance decreased to €447 million from €465 million in the first quarter of 2016, reflecting actions to exit unprofitable and unattractive business segments.

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