Delivering on strategic commitments
At NN, we help people pay attention to what matters most to them. Our purpose reflects who we aspire to be as a company that delivers sustainable, long-term value for all our stakeholders. Our goal is to be an industry leader known for customer engagement, talent, and commitment to society. To realize our goals, we have identified five strategic initiatives to which every part of the business contributes.
Customers and Distribution – Improving our services through new initiatives and partnerships
NN has reached a final settlement with five interest groups, including Delta Lloyd and ABN AMRO Lebenswerzekering, regarding unit-linked insurance products sold in the Netherlands by Nationale-Nederlanden. The settlement relates to all unit-linked insurance products for customers affiliated with either interest group and is subject to a 90% acceptance rate of affiliated policyholders who receive individual coverage offers. As part of the settlement, all pending (class) litigation against Nationale-Nederlanden regarding unit-linked products will be discontinued upon conclusion of the settlement, which is expected to be final on June 30, 2025. The settlement also includes no new legal proceedings. It may be initiated by an interest group or its affiliates. This settlement allows us to provide clarity to our customers and finally resolve this issue. A provision of €360 million was recognized in the fourth quarter of 2023 to cover the settlement costs. This includes her €60 million in difficult litigation and for clients not belonging to interest groups who have so far received no compensation.
At NN, we focus on improving the customer experience through the use of data and artificial intelligence (AI). Our Dutch brand OHRA uses machine learning models to automatically draft email responses to customer claims, enabling faster claim payments. The company uses his AI-powered solutions across international markets to personalize product offerings for existing customers and increase the efficiency of new customer acquisition by affiliated agents. The solution has been implemented in Poland, Romania, Spain, Hungary and Greece.
Continuing its focus on improving and simplifying communication and interaction with customers, NN Belgium has introduced the Pension Passport, a physical booklet that supports the digital version. This tool summarizes Belgian state pension annual reports in plain language, which improves customers' knowledge of their personal pension situation.
Improving customer engagement remains a top priority, and we have seen a continued upward trend in Relational Net Promoter Score (NPS-r), particularly in Europe. At an aggregate level, the NPS of our Dutch business remained stable with a score on par with the market average, while our international business saw significant underlying improvements in Belgium, the Czech Republic, Japan and Poland, and for the first time surpassed the market average. exceeded.
Products and Services – Meet your needs with new protection products
Aiming to support the transition to a sustainable society, the Dutch property and casualty insurance business has launched a series of initiatives for sustainable loss remediation. For example, following the success of our pilot, we are now offering retail customers the opportunity to upgrade to better insulating glass as a new standard in home insurance, allowing them to save on energy consumption and reduce carbon emissions. I am. Additionally, OHRA announced its intention to make sustainable damage repair the standard for customers, aiming for sustainable claim recovery of at least 65% of home insurance policies.
We continued our efforts to meet our customers' evolving needs for protection. Romania has launched critical illness insurance that covers cancer, heart surgery, neurosurgery and transplant treatment abroad. In Greece, we launched health products to help customers stay in the hospital, and provided various benefits for hospitalization, surgery, and home care. This product is especially valuable for people living in small cities who cannot afford hospital access or hospitalization costs.
People and Organization – Helping employees achieve their best performance
In the semi-annual survey conducted in the second half of 2023, employee engagement was 7.8, reflecting a slight decrease of 0.1 compared to the mid-2023 result. Our findings show that our colleagues feel they have the right resources and support to work successfully in a hybrid environment, that their work is valued, and that our colleagues – Care, Clear and Commitment – feel they have the right resources and support to work successfully in a hybrid environment. It shows that you identify with the values of Cross-functional collaboration and process efficiency continue to be areas for improvement, and management is considering this and taking steps to correct course at the team level.
As the macroeconomic and technological landscape rapidly evolves, we need to ensure that our skills align with our strategic needs. With this in mind, we have announced a program to help senior executives build the data and digital capabilities they need for the future. The program will be rolled out to a wider range of employees over the next few years.
Financial strength – improved performance and solid capital base
Full-year OCG increased by 13% in real terms to €1.9 billion in 2023, ahead of schedule for the 2025 target of €1.8 billion. We have increased our OCG target to €1.9 billion and introduced an FCF target of €1.6 billion in 2025.
The Company has announced that it has increased its final dividend proposal to EUR 2.08 per share, bringing the total dividend for 2023 to EUR 3.20 per share, an increase of 15% compared to 2022. The company also announced a structural increase to its annual share repurchase program. The amount is 300 million euros.
NN Life has completed two transactions to transfer the entire longevity risk associated with pension liabilities in the Netherlands totaling approximately €13 billion. This transaction reduced NN's longevity risk and thereby further strengthened NN's capital base. Unit-linked settlements have also further reduced the balance sheet risk profile. At the end of December 2023, NN Group decided to inject 1 billion euros into NN Life. The capital injection will cover the settlement provisions linked to the units and the remainder will be deployed over time in accordance with NN Life's strategic asset allocation.
At the end of 2023, NN Group's Solvency II ratio was strong at 197%, while NN Life's Solvency II ratio was 196%.
Society – Further progress in responsible investment
We continued to advance our responsible investment strategy. By the end of 2023, total investments in climate solutions, such as certified green buildings and renewable energy, amounted to €10.8 billion. It also reported a 10% reduction in greenhouse gas emissions for its corporate investment portfolio, making progress towards its goal of reducing greenhouse gas emissions by 25% by 2025 compared to 2021 levels. Over the coming years, we will continue to focus on our long-term decarbonization strategy through a combination of best-in-class approaches and initiatives that encourage and support the decarbonization of our portfolio companies.
In recognition of our efforts, NN Group has been ranked as one of the best-performing insurance companies in an important benchmark for responsible investment in the Netherlands. The Association of Investors for Sustainable Development (VBDO) gave NN an absolute score of 4.1 out of 5 points, a slight improvement from the previous benchmark.
With €20 million in charitable contributions, we supported more than 165 partners to reach their goal of donating 1% of pre-tax operating profits to communities in 2023. Our group-wide community investment programs supported people financially, physically and/or spiritually. In 2023, we will reach 172,000 people (from 2022 to 2023, a total of 401,000 people) and are on track to reach our strategic goal of supporting 1 million people by the end of 2025. It's progressing.
NN Group has been included in the 2023 Dow Jones Sustainability World Index (DJSI World) for the seventh consecutive year. Benchmarking ranks NN in the top 10% of the global insurance industry for sustainability performance. Overall, NN received a score of 70 (out of 100), with an average score of 31 for the insurance sector.
