Thursday, 22 August 2019

Unlocking new frontiers in P&C insurance

The availability of digital data is growing exponentially as the use of sensor networks and digital platforms becomes increasingly widespread. At the same time, the ongoing development of advanced analytics capabilities affords P&C insurers the means to unlock untapped potential across the insurance value chain, our latest sigma says. By processing structured and unstructured data sources, insurers will be able to price new markets and risk classes, and make existing processes more efficient.
"Most insurers aim for a success rate of one-third in operationalising pilots. Too high a success rate may mean that the use cases are not challenging enough." 
Daniel Knüsli, Swiss Re's Head P&C Analytics, P&C Solutions
Data analytics can support important insurance business needs in the following areas: (1) enable growth by providing insights for insurers to better target markets and also improve understanding of consumer preferences and behaviours; (2) improve in-house portfolio value accumulation and steering through multiple linkages with external datasets. Insurers are targeting 2-5% improvement in loss ratios under real trading conditions; and (3) improve operational efficiency by automating underwriting and claims processing functions.
Commercial lines continue to lag personal lines insurance in the implementation of advanced analytics techniques. This is because personal line insurers have had access to better data quality and higher transaction volumes. Now larger and more stable commercial lines such as property are also benefitting from the explosion in data. They are seeing early signs that incorporating new data sources can reduce the length of risk assessment and improve risk selection. Combining multiple data sources in new ways can fine-tune risk appetite and underwriting strategy.
"There needs to be more investment of time and resources on data curation. Many new data sources are not created for insurance, and owners of the data may neither understand insurance nor how to make the data usable for insurers." 
Daniel Ryan, Head of Insurance Risk Research, Swiss Re Institute
The outlook is promising, but patience is crucial due to the inherent complexity of the insurance value chain. Challenges remain in the form of legacy systems, traditional mind sets and scarce talent at the intersection of data science, risk knowledge and technology. Nevertheless, we believe that as more insurers seek out differentiating capabilities, the ongoing development of industry-specific infrastructure, resources and knowledge will help unlock the full potential of analytics in P&C insurance.
Learn more about the new frontiers in the latest sigma.

Wednesday, 21 August 2019

Response provided to IAIS systemic risk consultation

Insurance Europe has today published its response to a consultation by the International Association of Insurance Supervisors (IAIS) on systemic risk.

Conventional insurance is not systemically risky, and systemic risk can only originate from a very limited number of activities undertaken on a large scale in the wrong conditions. A greater focus by the IAIS on potentially systemic activities of the insurance sector as a whole is therefore warranted, according to Insurance Europe.
In its response to an IAIS consultation on its new holistic framework for assessing systemic risk in insurance, Insurance Europe highlighted the need for every jurisdiction to achieve comparable outcomes when applying the framework, to ensure a global level playing field.
Insurance Europe also stressed the need for a strict and consistent application of the principle of proportionality. It added that proportionality should not be limited to requiring insurers to apply a measure with different expectations of granularity; rather, it means questioning whether an insurer should be subject to a certain measure at all.
Insurance Europe also stressed that the new data collection requirements proposed by the IAIS would significantly increase reporting burdens for both insurers and supervisors. Additional data collection from insurers should in fact be minimised and data that is already available should be taken fully into account.

Tuesday, 20 August 2019

NN Group reports 2Q19 results

  • Operating result of EUR 445 million versus EUR 508 million in 2Q18, reflecting lower private equity dividends at Netherlands Life and lower results of the reinsurance business, partly offset by improved results at Insurance Europe, Netherlands Non-life and Japan Life
  • Net result of EUR 606 million, up from EUR 463 million in 2Q18
  • Total cost reductions achieved to date of EUR 306 million versus the full-year 2016 administrative expense base
  • Value of new business (VNB) for 6M19 up 15.4% to EUR 236 million driven by Insurance Europe and Japan Life;
  • Total new sales (APE) of EUR 243 million, down 32.5% from 2Q18 at constant currencies
  • Solvency II ratio of 210% down from 213% at the end of 1Q19, reflecting movements in credit spreads and the deduction of the 2019 interim dividend, partly offset by operating capital generation
  • Holding company cash capital of EUR 2,220 million, including EUR 558 million dividends received from subsidiaries in all segments
  • 2019 interim dividend of EUR 0.76 per ordinary share or approximately EUR 252 million
Delfin Rueda, CFO of NN Group: ‘NN Group has today reported an operating result of EUR 445 million for the second quarter of 2019. We see continued improvement in the performance of Netherlands Non-life, with a combined ratio of 95.8% for this quarter. Insurance Europe and Japan Life also posted higher results. Conversely, private equity dividends at Netherlands Life were lower than a year ago and the reinsurance business received higher claims. We continue to focus on enhancing the efficiency of the organisation, with total expense reductions to date of the units in scope of the integration of EUR 306 million compared with the 2016 full-year administrative expense base. We are committed to reducing the cost base by EUR 400 million by the end of 2020, however we don’t expect expense reductions to be linear going forward as some units are incurring costs to support their growth and to make necessary investments.
The value of new business increased 15% in the first six months of this year, mainly driven by an improved business mix and higher life and pension sales in Europe, as well as higher sales in Japan in the first quarter of the year.
Our capital position remains strong with a cash capital position of EUR 2,220 million at the end of the second quarter and a Solvency II ratio of 210%, after deduction of the interim dividend announced today of EUR 0.76 per ordinary share to be paid in September.
The announcement in June to acquire VIVAT Non-life represents a next step in strengthening the Non-life business in the Netherlands, as scale is essential to deliver attractive and sustainable customer propositions in this competitive market in the long term.
As part of our efforts to support the Paris Agreement on climate change, we implemented a coal policy. By placing investment restrictions on thermal coal mining companies and intensifying our dialogue with power generation companies, we aim to accelerate the transition to a low-carbon economy.
Earlier this week we announced the intended appointment of David Knibbe as CEO of NN Group, as successor for Lard Friese who has stepped down from this role, effective 12 August 2019. We are convinced that David, currently CEO of our Netherlands businesses, is the right person to lead NN Group during the next phase of its journey. Following this change in the leadership we have decided to reschedule the Capital Markets Update to mid-2020.
Last month we celebrated our fifth anniversary as a standalone company. Together with our 15,000 employees, we have guided NN Group from the IPO in July 2014 to the company it is today. NN is well-positioned for the future and fully committed to helping our customers secure their financial futures.’

Monday, 12 August 2019

David Knibbe to succeed Lard Friese as CEO of NN Group

David Knibbe

EGM to be held on 26 September 2019

NN Group announces that its Supervisory Board intends to appoint David Knibbe as CEO of the company. David Knibbe, currently CEO of NN Netherlands, succeeds Lard Friese who has stepped down as member and chair of the Executive Board and CEO of NN Group as of today, 12 August 2019, to join Aegon. The appointment of David Knibbe is subject to approval from the Dutch Central Bank. If approved, the appointment will be effective 1 October 2019, after notification to the General Meeting of NN Group at an extraordinary general meeting (EGM) to be held on 26 September 2019.
David Cole, chair of the Supervisory Board of NN Group: ‘Lard joined the company in 2008 as CEO of Nationale-Nederlanden in the Netherlands and joined ING’s Management Board Insurance in 2011 with responsibility for its European and Asian Insurance businesses. Lard was appointed as NN Group’s CEO in 2014. Over the years, he has done an outstanding job, leading the company through the separation from ING Group, the IPO process of NN Group, and the acquisition of Delta Lloyd and the announced acquisition of VIVAT Non-life. His drive and focus on performance, combined with his commitment to serving the long-term interests of the company, were important in shaping NN Group as the strong international player it is today. I would like to thank Lard personally, and on behalf of the Supervisory Board, the Management Board and the employees of NN Group, for his contribution to the company. We have a sound succession planning process in place and with the intended appointment of David Knibbe we have found an excellent successor from within the company. David has the right leadership skills to drive NN Group going forward. Having worked in a variety of senior management roles, David has a deep understanding and experience of our businesses, the sector, and the markets in which NN operates. He successfully led the integration of Delta Lloyd and is a dynamic, customer-focused and values-driven business leader, whose vision and execution track record will contribute to the future of NN Group.’
Lard Friese: ‘It has been a privilege to serve NN Group, and I am proud of what we together have achieved for the company, colleagues and customers. I am grateful for all the support I have received from the Supervisory Board and Management Board, from the nearly 15,000 colleagues, and from the company’s stakeholders. I congratulate David on his intended appointment. Having worked closely with him for many years, I am confident that under his leadership NN Group will continue to prosper and I wish him every success.’
David Knibbe has extensive experience in financial services and a proven track record in executive positions. David joined the asset management business of ING Group in 1997, and was later responsible for the ING International Insurance businesses. He was appointed as a member of the Management Board of NN Group and CEO of NN Netherlands in 2014. In recent years, David has played a pivotal role in the acquisition of Delta Lloyd and the announced acquisition of VIVAT Non-Life, and led the integration of the Delta Lloyd businesses into NN.
David Knibbe: ‘It is an honour to be offered the opportunity to be NN Group’s next CEO. NN is a strong international company, driven by talented people who are focused on serving our customers and creating long-term value for our stakeholders. I am fully committed to building, together with all our colleagues, on the solid foundation established under Lard’s leadership. We will continue to improve performance, by offering excellent products and services to our customers, by accelerating the transformation of our business model, and by allocating capital rationally. I would like to extend my gratitude to Lard, and wish him success in the future.’
The EGM of NN Group will be held on 26 September 2019, 10:00 CET, at the company’s head office in The Hague, the Netherlands. The meeting documents are available on the NN Group website ( The agenda comprises a single agenda item, the notice of the intended appointment of David Knibbe as member of the Executive Board of NN Group. According to Dutch law and the articles of association of NN Group, it is not a voting item.
The Central Works Council of NN Group will be asked for advice on the intended appointment of David Knibbe. The succession process for the position of CEO Netherlands has started and further announcements will follow in due course.

Sunday, 4 August 2019


The operating result increased thanks to positive developments in all business segments 
The Group net profit stood at € 1.8 billion (+34.6%), also including the result of discontinued operations. Adjusted net profit2 rose to € 1.3 billion (+6.4%)
Life net inflows grew to € 7.4 billion (+29.5%) and technical reserves reached € 358 billion (+4.3%). Gross written premiums stood at € 35.7 billion (+1.8%), due to the positive performance of both Life and P&C segments 
The technical excellence of the Group is confirmed with the combined ratio at 91.8% (-0.2 pps) and the New Business Margin at 4.40% (-0.18 pps) 
Asset Management net profit stood at € 133 million (+22%), with third-party AuM in this segment rising sharply to € 102 billion 
 The Preliminary Regulatory Solvency Ratio remains solid at 209% (217% FY 2018; -8 pps) 
 Generali Group CEO Philippe Donnet declared: “These results show the Group’s capacity to generate sustainable financial and industrial value for all of its stakeholders. The first half of the year confirms the effective and disciplined implementation of the three-year strategic plan ‘Generali 2021’ in all business segments. Generali today is an increasingly global insurance and asset management group, with technical excellence in the Life and P&C segments and distinctive expertise in asset management, allowing us to successfully overcome the competitive challenges of the sector to become lifetime partner to our customers.”

Saturday, 3 August 2019

Allianz reports strong profitability in 2Q 2019. Operating profit outlook for full-year confirmed.

 Internal revenue growth of 4.1 percent in 2Q 2019
 2Q 2019 operating profit up 5.4 percent to 3.2 billion euros
 2Q 2019 net income attributable to shareholders up 13.1 percent to 2.1 billion
 6M 2019 operating profit at 6.1 billion euros reaches 53 percent of full-year outlook
 6M 2019 net income attributable to shareholders rises 7.3 percent to 4.1 billion
 Solvency II capitalization ratio at 213 percent at the end of 2Q 2019 compared to
218 percent at the end of 1Q 2019
 Operating profit outlook for 2019 confirmed at 11.5 billion euros, plus or minus
500 million euros

Management Summary: Strong total revenues and profitability
After a successful start into 2019, Allianz Group continued with a very strong operating performance in thesecond quarter of the year. At the heart of this result is Allianz’ focused strategy, strong execution, and its diversified business portfolio. Internal revenue growth, which adjusts for currency and consolidation effects, was 4.1 percent in the second quarter of 2019. Total revenues increased 6.1 percent to 33.2 (second quarter of 2018: 31.3) billion euros. Operating profit grew 5.4 percent to 3.2 (3.0) billion euros in the second quarter of 2019, largely driven by our Life/Health business segment with a good underlying performance and a one-off profit in the United States. Our Asset Management business segment’s operating profit increased mainly as a result of higher assets under management driven revenues. A lower investment result led to a decrease in our Property-Casualty business segment’s operating profit.

Net income attributable to shareholders increased 13.1 percent to 2.1 (1.9) billion euros in the second
quarter of 2019 due to operating profit growth and an improved non-operating result. The latter improvedas the second quarter of 2018 was burdened by a negative impact from the sale of our traditional life insurance portfolio in Taiwan.

Basic Earnings per Share (EPS) increased 10.2 percent to 9.76 (8.86) euros in the first half-year of 2019. Annualized Return on Equity (RoE) amounted to 14.7 percent (full year 2018: 13.2 percent). The Solvency II capitalization ratio decreased from 218 percent at the end of the first quarter 2019 to 213 percent at the end of the second quarter 2019. The decrease was predominantly driven by market movements and capital management actions, which were partially offset by positive operating Solvency II earnings.

In the first half-year of 2019, operating profit grew by 6.4 percent to 6.1 (5.8) billion euros, which is above the mid-point of our full-year target range. Our Life/Health business segment’s operating profit increased, supported by a one-off profit in the United States. Property-Casualty business segment recorded an improved underwriting result while our Asset Management business segment operating profit was stable.
Our operating profit growth was the main driver for the 7.3 percent increase of net income attributable toshareholders to 4.1 billion euros.
On February 14, 2019, Allianz announced a new share buy-back program of up to 1.5 billion euros.
6.2 million shares have been acquired by June 30, 2019, representing 1.5 percent of outstanding capital. “I am proud that the Allianz team has once again delivered a healthy performance,” said Oliver Bäte, Chief Executive Officer of Allianz SE. “Sustainable performance is the result of our rigorous strategy execution that provides desired solutions for our customers. Our half-year results testify that Allianz is on track to achieve its full-year targets.”

Half Year 2019 Earnings: Disciplined execution and delivery

• Total revenues1 up 4% to Euro 57.9 billion 
• Underlying earnings2 up 7% to Euro 3.6 billion 
• Underlying earnings per share2 up 10% to Euro 1.46

“AXA continued to deliver strong operating performance, with a +4% growth in revenues and a +10% increase in underlying earnings per share in the first half of 2019”, said Thomas Buberl, Chief Executive Officer of AXA. “AXA’s earnings benefitted from a virtuous double dynamic, both growing volumes and improving profitability across all our geographies and preferred segments.” “AXA XL had a great first half with continued and disciplined growth in revenues and a solid contribution to the Group’s earnings. Synergies are materializing well, and AXA XL should benefit from the increasingly positive pricing context.” “AXA is very well advanced on its transformation journey. The Group has reduced its sensitivity to financial markets, created the #1 Global P&C Commercial lines insurance platform and strengthened its position as a world leader in Health insurance. We also further advanced in our Payerto Partner strategy by launching our own medical centers, notably in Mexico and Egypt, with the aim to simplify and enhance the healthcare journey of our customers.” “I would like to thank all our colleagues and partners for their critical role in the execution of our transformation, as well as our clients for their continued trust.”

Tuesday, 30 July 2019

EU insurers suggest improvements to EIOPA paper on sustainability in Solvency II

Insurance Europe has responded to a European Insurance and Occupational Pensions Authority (EIOPA) opinion paper on sustainability in Solvency II. Insurance Europe said that Solvency II is not a barrier to the integration of sustainability and also noted that sustainability risks are already incorporated into the framework.
Insurance Europe warned that the direct incorporation of a uniform quantitative approach into the own risk assessment (ORSA), based on a standardised set of climate change scenarios, would contrast with the very nature of the ORSA, which is company-specific and with a unique time horizon.
With respect to the use of a forward-looking approach, Insurance Europe said that insurers should be given maximum flexibility to use the most suitable tools to deal with sustainability risks in line with their undertakings’ characteristics.
Insurance Europe added that proportionality should be duly considered in any proposed requirements.

Tuesday, 2 July 2019

EIOPA outlines key financial stability risks of the European insurance and pensions sector

The European Insurance and Occupational Pensions Authority (EIOPA) published its June 2019 Financial Stability Report of the (re)insurance and occupational pensions sectors in the European Economic Area.
The risk of a prolonged low yield environment has become more prominent in recent months, as central banks have put the process of monetary policy normalisation on hold amid concerns over economic growth following growing trade tensions and political uncertainty. The low yield environment remains the key risk for both, the insurance and pension fund sector, and continues to put pressure on profitability and solvency positions. This could trigger further search for yield behaviour by insurers and pension funds, which is slowly becoming visible in the investment portfolio of insurers. EIOPA will therefore continue to monitor closely this risk to identify at an early stage any potential vulnerabilities.
At the same time, valuations remain stretched across financial markets and a sudden re-assessment of risk premia cannot be ruled out, which could be exacerbated during a period of economic slowdown with concerns over debt sustainability. A sudden increase in yields driven by risk premia rather than an upward move of the risk free rate curve could significantly affect the financial and solvency position of insurers and pension funds in the short run, as the investment portfolios could suffer large losses, which may only be partly offset by lower liabilities. In this regard, the high degree of interconnectedness with banks and domestic sovereigns of insurers could lead to potential spillovers should a sudden reassessment of risk premia materialize. Relatively high exposures towards real estate can also be observed for insurers in certain countries, making them as well vulnerable to a potential downturn in real estate markets.
Furthermore, new types of risks are emerging with the onset of climate change and cyber risk. The climate related risks pose threats in particular for the insurance industry, as insurers act simultaneously as investors and underwriters, while the digital transformation makes insurers and pension funds increasingly exposed to cyber-attacks. In this respect, the 2019 EIOPA stress test exercise for occupational pension funds also incorporates Environmental, Social and Governance (ESG), while the results from the questionnaire on cyber risk included in the 2018 Insurance Stress Test exercise will be used to analyse the exposures of insurers towards cyber risk in more detail in the course of 2019.
This Financial Stability Report shows that while overall the insurance sector remains adequately capitalized, profitability is under increased pressure in the current low yield environment. The Solvency Capital Requirement ratio for the median company is 223% for life and 207% for non-life insurance sector, although significant disparities remain across undertakings and countries.
The reinsurance industry has proven resilient despite again suffering significant catastrophe losses in 2018, which ended up as the fourth costliest year in terms of insured catastrophe losses. In general, natural catastrophe losses are showing an upward trend, with the 10 costliest years in terms of overall losses all occurring after 2004. The price renewals continue to show only moderate price increases, indicating potential excess capacity in the reinsurance market, with the alternative reinsurance capital market in particular showing a strong appetite for insurance risks.
In the European occupational pension fund sector, total assets and cover ratios remained broadly stable. However, the current macroeconomic environment and ongoing low interest rates continue to pose significant challenges to the European occupational pension fund sector, in particular for the Defined Benefit (DB) pension schemes. The sector has also come under increased pressure in 2018 by the fall in stock values towards the end of the year, pertaining to significant losses in IORPs' equity investments.
Gabriel Bernardino, Chairman of EIOPA said: "The economic environment has become more challenging for European insurers and pension funds in recent months. The risk of a prolonged low yield environment has become more prominent again, as central banks have become more cautious about monetary tightening amid concerns over economic growth. This is particularly challenging for life insurers and pension funds with long-term liabilities and could trigger further search for yield behavior. At the same time, we continue to observe high valuations in certain equity, real estate and bond markets and a sudden reassessment of risk premia could potentially lead to significant losses in the investment portfolios of insurers, which could be exacerbated during a period of economic slowdown. EIOPA will continue to closely monitor these developments by assessing vulnerabilities at both, the macro- and micro-level and deliver its mandate of supporting the stability of the European financial system."
This Financial Stability Report also includes a thematic article assessing the impact of green bond policies on insurers. This study employs an empirical analysis based on the European equity market.