224 121676

Lehman BrothersDutch insurance field trip : 

Lehman Brothers Dutch insurance field trip Niek Hoek CEO Delta Lloyd Group Amsterdam, 1st September 2004

Agenda: 

Agenda

Powerful life market: 

Source: AM Jaarboek 2003 / 2004 using 2002 data * Including ABN AMRO Powerful life market 4.5% of total European life premium income $1,345 per capita spending 5.7% of Dutch GDP CAGR 9.6% over 1980 - 2001 GWP life Euro 24 bn = 60% of total GWP 55% regular premium / 45% single premium 33% group life / 67% individual Average solvency margin 229%

The Dutch insurance market is facing significant challenges ...: 

... but offers a wide range of opportunities for well-positioned professional players! The Dutch insurance market is facing significant challenges ... Regulator taking a more sophisticated approach on capital adequacy Enhanced consumer protection Tax relief on products under pressure Historically low long-term bond yields Profitability is highly geared to investment returns Demographic trends remain favourable to insurers Increasing demand for “private pensions” Government withdrawing from social security / healthcare Increasing value management Corporate tax decrease from 34.5% to 31.5% ( 2005 ) and 30.0% ( 2007 )

Dutch and Germans are less likely to take financial risks: 

Dutch and Germans are less likely to take financial risks More likely to take financial risks Less likely to take financial risks Source: Aviva research by The Henley Centre on Consumer Attitudes to Savings Study, February 2004 Are you more or less likely to take financial risks than you were 5 years ago ?

Dutch and Germans are most likely to keep on saving after retirement: 

Dutch and Germans are most likely to keep on saving after retirement Source: Aviva research by The Henley Centre on Consumer Attitudes to Savings Study, February 2004 Do you save or invest on a regular basis during retirement ? ( Base: those who have already retired )

GWP and APE by distribution channel: 

GWP and APE by distribution channel Total EUR 1,335 m Total EUR 146 m

APE figures show Delta Lloyd well positioned …: 

APE figures show Delta Lloyd well positioned … Aegon Delta Lloyd Group ( Netherlands ) Fortis ING Group EUR m / Dutch GAAP H1 2004 H1 2003 118 146 n.y.a. 145 148 139 n.y.a 141

Delta Lloyd’s key success factors in the Dutch pension market : 

Delta Lloyd is a sophisticated player in the Dutch pension market with enormous distribution power and the potential to become the future market leader Delta Lloyd’s key success factors in the Dutch pension market Strong labels Innovative and profitable products Huge private, SME and corporate customer base Attractive partner for individuals, employers and brokers Innovative, flexible and efficient technical solutions for group pension business Delta Lloyd’s Universal Life concept: integrated proposition for individual, semi-group and large group life a step change in the Dutch insurance market for administrating group life business a highly efficient and unique system Via Internet: Real online access for employers on pension insurance data of there employees for alterations Dedicated pensionfunds services unit

Agenda: 

Agenda

Strategy: 7 - 3 - 7 Model: 

  Strategy: 7 - 3 - 7 Model

Multi Label - Multi Channel delivers a variety of choice for the customer: 

Distribution channel linked to exclusive label Channel / label relation concerning product development, pricing and marketing Full range of competitive and profitable products No captive agents in the intermediary channel, but franchise formula Cross-selling potential between the sectors Access to a huge private, SME and corporate customer base Multi Label - Multi Channel delivers a variety of choice for the customer

Intermediaries will remain the main distribution channel for financial service products: 

Intermediaries will remain the main distribution channel for financial service products Source: Delta Lloyd own research

‘The future secured’Strategy of Delta Lloyd Group: 

‘The future secured’ Strategy of Delta Lloyd Group

Agenda: 

Agenda

Key benefits for Delta Lloyd: 

The right venture at the right moment with the right partner! Key benefits for Delta Lloyd Expands distribution capabilities with minimal channel conflict Expands client base Creates leading market positions in new business Economies of scale / synergies through SSC strategy Conversion opportunities from ‘third party’ products to JV products Opportunity to market full product range to ABN AMRO clients Asset management opportunities

Framework of the ABN AMRO joint venture: 

Target: To double penetration ratio from current levels Framework of the ABN AMRO joint venture Exclusive distribution agreement with a 30 years duration Usage of ABN AMRO brand in The Netherlands Agreement covers existing Life and GI in-force business of ABN AMRO Delta Lloyd management control (51%/49%) Fund management (own risk) provided by Delta Lloyd Exclusive access to >500 ABN AMRO Bank shops and 78 regional offices Access to ABN AMRO customer base: 4.5 million private customers / 325,000 SME’s / 80,000 private / affluent banking clients ABN AMRO achieved a stand alone top 10 position in Dutch market / together with Delta Lloyd top 4

Achievements 15 months after start: 

Achievements 15 months after start Products & Sales Brokered GI converted to own risk Reduced intermediary function for other suppliers Stopped writing loss-making direct annuities (was 50% of book) Full range of new pension products to cover SME demand Successful integration of Employee Benefit Consultants (EBC) New Flexible Pension Plan launched in 2004 (FPP product) Organisation & Synergies Restructured organisation Back-office integration started Administration of new products on Delta Lloyd systems ABN AMRO staff on DL Group payroll Significant reduction of operational expenses - EUR 8m achieved to date

Agenda: 

Agenda

Group-wide focus on margin improvement and cost reductions: 

Initiative Achievements 1H 2004 vs. 1H 2003 Future target Permanent staff numbers 3% reduction in FTE 3% reduction per year Cost reduction EUR 37m achieved ( 9% reduction ) Further reduction Margin improvement 1H 2004 margin to 31.9% mainly through change in product mix Expand margins further Group-wide focus on margin improvement and cost reductions

Life achieved and MSSB profit development: 

Results affected by poor financial market conditions Life achieved and MSSB profit development £ m / UK GAAP / BeNeLux

Life new business volumes and margins: 

ABN AMRO, expense control and other management actions all having a beneficial effect on margins £ m / UK GAAP / BeNeLux Life new business volumes and margins

Conclusions: 

Delta Lloyd - well positioned in a challenging market! Conclusions Strong brands give DL scope to become market leader in life new business sales ABN AMRO venture delivering strong returns Specific projects underway to increase operational efficiency Cost efficiencies/margin improvements achieved and targeted Increasing new business margins due to actions taken Distribution power is key

End of presentation: 

End of presentation