"Our second-quarter results were very strong and contributed to a good first half of the year. Overall operating result from the ongoing business was 90% higher, supported by several favourable items in the Netherlands, including a large private equity dividend. Even excluding these items, we saw healthy operating performance in all of our businesses, especially in Netherlands Life and Insurance Europe. With cumulative expense savings of EUR 198 million, we have essentially achieved our overall cost savings target of EUR 200 million in the Netherlands ahead of schedule. While we are pleased with another quarter of strong results, there is room for further improvement. We will continue to focus on efficiency, improving the combined ratio of our Non-life business, strengthening the capabilities of our asset manager and increasing the profitability of our international insurance businesses.
On 2 July, we celebrated the first anniversary of NN Group's listing on the Euronext Amsterdam stock exchange. In the first six months of this year, ING Group gradually sold down its stake in NN Group to 37.6% of outstanding shares. As part of ING's sell-down in May, we completed a EUR 150 million share buy-back in line with our policy to return excess capital to our shareholders, while preserving a robust capital position. We will distribute an interim dividend of EUR 0.46 per ordinary share. In line with our dividend policy, we intend to pay a full-year ordinary dividend in accordance with our medium-term financial performance, while envisaging a pay-out ratio of 40-50% of the net operating result from the ongoing business.
Across our businesses we continue our customer-focused strategy of providing transparent products and services through tailored multi-access distribution, and efficient and effective operations. In Japan, we are catering to the needs of SME business owners with a new protection product offering death or severe disability coverage up to the age of 90. In terms of distribution, we are making more of our services accessible to customers anywhere and anytime. For example, in Turkey we launched a new client portal that makes it easier for customers to conduct transactions online also via mobile devices. In the Netherlands, we launched our newly developed platform for our four core pension products, while improving efficiency. Our rebranding programme also gained momentum during the second quarter, media campaigns in various countries further raised awareness about our brand promise 'You matter'.
Going forward, we will continue to execute our strategy in order to achieve our financial objectives with a focus on capital generation and earnings improvement."
Strategy and business highlights
NN Group's strategy is to deliver an excellent customer experience based on great service and long-term relationships. We aim to achieve this by offering transparent products and services that serve customers' lifetime needs. We do this by making our multi-access distribution network available to customers wherever and whenever they want, and by maintaining effective operations that deliver excellent customer service.
In the Netherlands Life segment, the focus is to reduce expenses and gradually shift to higher-yielding assets. Both of these priorities continued to deliver results in the second quarter. Another pillar of NN Life's strategy is to benefit from its strong position in the pension market and selectively capture growth opportunities. Pension communication and awareness are important for customers to secure their financial future. That is the idea behind the 'Pensioen Ophelder Service' which was launched in the second quarter. This service has been designed for people who have built up pension rights with multiple employers and provides insight in their pension. This information can help them decide whether transferring the money to the pension fund of a new employer would be beneficial or not. New sales declined this quarter, mainly due to lower group pension renewals and lower sales of pension contracts. Cost reductions continued this quarter contributing to achieving the cumulative cost savings target in the Netherlands.
Netherlands Non-life focuses on offering transparent products and services. Ongoing management actions to improve underwriting performance resulted in a higher operating result, especially in Motor. The product rating index Moneyview awarded the Nationale-Nederlanden Retail Home Insurance product five stars (the maximum) for its terms and conditions. This product includes a guarantee against underinsurance with few restrictions or exclusions, as well as comprehensive coverage during repairs, renovation or the construction of a home.
Insurance Europe is shifting its business mix towards protection products and repositioning its savings and retirement products in response to the low interest rate environment. In line with the aim to provide customers with easy access to NN's products and services, NN Hayat ve Emeklilik in Turkey launched a renewed client portal, as well as a new mobile branch app. NN Group has also started an international partnership with the non-profit organisation Junior Achievement Europe as part of our corporate citizenship programme, NN Future Matters. NN and JA Europe have joined forces to empower youth in the area of financial literacy, entrepreneurship and workforce readiness. In the second quarter Junior Achievement awarded NN Romania the title of 'Investor in Education' 2015.
Political and economic turbulence in Greece continues. NN Group is present in Greece through NN Hellas, which offers life and health insurance products. Given the situation, NN Hellas has been closely managing operations with a focus on continuing its service to customers. NN Group's direct exposure to Greek assets is limited in the context of the overall size of the Group.
Japan Life continued to execute its business diversification strategy in the second quarter of 2015. A new product called Smart Term, was added to the COLI protection product range. It provides death or severe disability cover for SME owners up to the age of 90. We also successfully expanded our bancassurance network, with six new banks distributing our COLI products.
Assets under Management decreased to EUR 184 billion, mainly due to negative market performance as a result of higher interest rates in the second quarter of 2015. Investment Management aims to grow its third-party business by following a tailored approach for each client segment. In target markets, Investment Management plans to protect and further expand its leading position and continues to develop a more distinct range of products, among which its sustainable product offering. Assets under Management in its sustainable equity and fixed income products stood at EUR 4.2 billion at the end of the second quarter of 2015. Furthermore, Investment Management announced the launch of a sustainable emerging market loan fund in cooperation with Dutch development bank FMO.
NN Bank continued to expand its mortgage and customer savings activities. In line with its strategy, NN Bank's mortgage portfolio increased to EUR 9.5 billion from EUR 8.6 billion at the end of the first quarter. Customer deposits (internet savings and bank annuities) grew to EUR 8.0 billion at the end of the second quarter. NN Bank's phased-in Common Equity Tier 1 ratio increased to 14.2% at the end of the second quarter from 13.8% at the end of the first quarter. This increase reflects a capital injection of EUR 57 million by NN Group in NN Bank using the proceeds of a capital injection from ING Group to fulfill a commitment to the European Commission.
NN Group has applied for the usage of a Partial Internal Model for NN Group and the insurance entities in the Netherlands. The Solvency II capital ratio remains subject to significant uncertainties, including the final interpretations of the Solvency II regulations and the regulatory approval process.
Effective from 2015, NN Group intends to pay interim dividends calculated at approximately 40% of the prior year's full year dividend, barring unforeseen circumstances. NN Group will pay a 2015 interim dividend of EUR 0.46 per ordinary share, or EUR 156 million in total based on the current number of outstanding shares (net of treasury shares). The 2015 interim dividend will be paid either in cash or ordinary shares from the share premium reserve at the election of the shareholder. To neutralise the dilutive effect of the newly issued shares for the stock dividend on earnings per ordinary share, NN Group will repurchase ordinary shares from ING Group equal to the number of shares that NN Group will issue as stock dividend at a price similar to the price used to calculate the stock fraction for the stock dividend. The NN Group ordinary shares will be quoted ex-dividend on 10 August 2015. The record date for the dividend will be 11 August 2015. The election period will run from 10 August up to and including 31 August 2015. The stock fraction for the stock dividend will be based on the volume weighted average price of NN Group ordinary shares on Euronext Amsterdam for the five trading days from 25 August through 31 August 2015. The dividend will be payable on 7 September 2015.
In line with its dividend policy, NN Group intends to pay an ordinary dividend in line with its medium term financial performance and envisages an ordinary dividend pay-out ratio of 40-50% of the net operating result from ongoing business.
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NN Group posts strong 2Q15 results