NN Life & Pensions completes acquisition of the life insurance subsidiary of ABN AMRO Verzekeringen
NN Group, ABN AMRO Bank and their joint venture ABN AMRO Verzekeringen (AAV) announced that they have completed the sale of the life insurance subsidiary of AAV to Nationale-Nederlanden Levensverzekering Maatschappij N.V. (NN Life & Pensions). The closing of the transaction, which was announced on 15 February 2022, follows the fulfilment of customary closing conditions, including receipt of all necessary regulatory approvals.
The transaction is in line with NN Life & Pension’s strategy to achieve further efficiencies by leveraging its existing closed book capabilities.
AAV is a joint venture between NN Group (51%) and ABN AMRO Bank (49%) that provides insurance products and services to over one million retail and corporate customers. As previously announced, ABN AMRO Bank and NN Group have agreed to extend their successful cooperation in AAV by 5 years until 2038, if certain customary performance criteria are met. Following the transaction, AAV will focus on its non-life insurance business and its insurance broker activities.
NN Life & Pensions to acquire ABN AMRO Verzekeringen’s life insurance subsidiary
NN Group, ABN AMRO Bank and their joint venture ABN AMRO Verzekeringen (AAV) announced that they have reached an agreement to sell AAV’s life insurance subsidiary to Nationale-Nederlanden Levensverzekering Maatschappij N.V. (NN Life & Pensions).
AAV is a joint venture between NN Group (51%) and ABN AMRO Bank (49%) that provides insurance products and services to over one million retail and corporate customers. NN Group already consolidates the life insurance activities of AAV. ABN AMRO Bank and NN Group have agreed to extend their successful cooperation in AAV by 5 years until 2038, if certain customary performance criteria are met. Following the transaction, AAV will focus on its non-life insurance business and its insurance broker activities. NN Group and ABN AMRO Bank have agreed to make additional investments in the coming years to strengthen AAV’s digital capabilities and further grow its non-life portfolio.
The life insurance subsidiary of AAV, ABN AMRO Levensverzekering N.V. (AAL), will be integrated into NN Life & Pensions. The intended transaction will have no impact on the services and guarantees to customers. NN Life & Pensions and ABN AMRO Bank intend to continue the sale of term life products via the bank’s channels.
Leon van Riet, CEO Netherlands Life & Pensions and member of the Management Board of NN Group: ‘This transaction is in line with our strategy to achieve further efficiencies by leveraging our existing closed book capabilities. We are pleased to continue our successful collaboration with ABN AMRO Bank and look forward to further supporting AAV’s growth strategy in non-life insurance.’
NN Life & Pensions will acquire 100% of ABN AMRO Levensverzekering N.V. from AAV for a total amount of EUR 253 million. This will be financed from existing cash resources of NN Life & Pensions. Following the transaction, AAV intends to distribute the proceeds from the transaction, after deduction of costs related to the transaction, to its shareholders NN Group and ABN AMRO Bank.
The transaction is expected to have a limited negative impact on NN Group’s Solvency II ratio on closing, which is expected to change into a limited positive impact following the envisaged legal merger of AAL and NN Life & Pensions and the application of NN Group’s Partial Internal Model. On a consolidated basis, the acquisition is expected to result in a net cash outflow from NN Group of EUR 128 million for the indirect 49% stake in AAL and an increase of its dividend capacity of approximately EUR 15 million per annum.
The transaction is subject to regulatory approvals and is expected to close in the second half of 2022.
NN Life completes longevity transactions
NN Group (NN) announces today that its subsidiary NN Life has completed three transactions to transfer the full longevity risk associated with in total approximately EUR 13.5 billion of pension liabilities in the Netherlands. This will reduce NN’s exposure to longevity risk, and consequently reduce the required capital and further strengthen NN’s capital position. These transactions cover the risks associated with the policies of over 200,000 pensioners and dependants. The longevity reinsurance agreements have no impact on the services and guarantees that NN provides to its policyholders.
The transactions have been entered into with reinsurance companies Canada Life, Munich Re and Swiss Re. The risk transfer is effective as of 1 January 2020, and the reinsurance agreements will continue until the portfolio has run off.
David Knibbe, CEO NN Group: “These transactions to transfer a part of our longevity exposure are part of our pro-active risk and capital management approach. We continuously investigate options to optimise our capital structure and to further strengthen our balance sheet, through our product mix, underwriting, asset optimisation and risk transfers.”
NN’s balance sheet remains strong after the recent volatility in financial markets. The NN Group Solvency II ratio at the end of April 2020 was estimated at approximately 225%. The transactions announced today are expected to increase the NN Group Solvency II ratio by approximately 17%-points.
The NN Life Solvency II ratio at the end of April 2020 was estimated at approximately 220%. The transactions announced today are expected to increase NN Life’s Solvency II ratio by approximately 25%-points.
The lower risk profile will result in an upfront capital benefit which is reflected in an improved Solvency II ratio, as well as lower future operating capital generation of approximately EUR 90 million per annum. The IFRS operating result before tax will decrease by approximately EUR 30 million per annum reflecting the ongoing reinsurance premiums. The negative impact on operating capital generation and the IFRS operating result will decrease over time in line with the maturity of the portfolio.
We intend to use the strengthened capital position to improve the capital generation profile of NN Life over time and increase the level of its remittances to NN Group as from the second quarter of this year.