Delta Lloyd Group has in the first quarter of 2010 realised good commercial results in all sectors: life, general insurance, bank savings, mortgages and fund management.
- Delta Lloyd Group has in the first quarter of 2010 realised good commercial results in all sectors: life, general insurance, bank savings, mortgages and fund management.
- In a difficult market total gross written premiums grew over 10% to €1,547 million compared with the first quarter of 2009. Bank saving balances tripled to €430 million and net new assets of investment funds more than doubled to €595 million. The share of the ever tighter Dutch mortgage market rose to 2.6%.
- Delta Lloyd Group shareholders’ funds increased by 7% compared with 31 December 2009 to €4.2 billion, or €25.26 per ordinary share.
- Solvency remained stable during the first quarter.
- Active risk management limits exposure to Southern European and Irish bonds.
| Gross written premiums1 | First quarter | Change | |
| 2010 | 2009 | ||
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| Total gross written premiums | 1,547 | 1,404 | 10% |
| Life | 1,089 | 972 | 12% |
| General Insurance | 458 | 432 | 6% |
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Life
The cautious recovery in the pensions market that started towards the end of last year continued cautiously in the first quarter. As a result, pension contracts with total gross written premiums of €100 million were recorded in the first quarter. As a comparison, the market for large contracts was at a complete standstill in the first quarter of 2009. Delta Lloyd Group continues to focus on profitable growth in new group pension contracts.
Delta Lloyd Group’s new life business (PVNBP-base)1 in the first quarter was stable at €934 million (first quarter 2009: €939 million). The Present Value of New Business Premiums (PVNBP) is equal to the single premiums received plus the present value of new regular premiums, calculated on the basis of the same accounting policies used to calculate new business in the MCEV. See appendix for more details on premium volumes. NAPI2 in the first quarter was €99 million1 (first quarter 2009: €99 million).
A shift from unit-linked insurance towards more traditional forms of life insurance and wealth accumulating bank products is visible in the Dutch individual life insurance market. Delta Lloyd Group occupies a strong position in this evolving market, both for traditional term insurances and for bank savings products (reported in the bank division).
General Insurance
Delta Lloyd Group was able to increase gross written premiums to €458 million (first quarter 2009: €432 million). This increase is fully attributable to change in the administration of underwritten policies.3 Despite adverse weather conditions in the first quarter of 2010, the claims ratio has improved in comparison with the first quarter of 2009.
Bank and fund management
Delta Lloyd Group also strengthened its position in bank savings. Bank savings are an alternative to the declining market for individual unit-linked insurance products. Bank saving balances at Delta Lloyd Group tripled to €430 million compared with the first quarter of 2009 (€132 million). In relation to full year 2009 the value increased with €133 million (full year 2009: €297 million).
The overall number of new mortgages granted in the Netherlands and Belgium was significantly lower because of the current difficult economic conditions and the difficult housing market. As a consequence, Delta Lloyds mortgage origination in the Netherlands and Belgium decreased with 30% in the first quarter to €367 million (first quarter 2009: €521 million). Delta Lloyd Group was however able to further improve its relative position in this market. Market share in the Netherlands rose to 2.6% compared with 1.7% in the first quarter of 2009 and 2.5% at the end of 2009.
The popularity of the Delta Lloyd investment funds also rose strongly. The net new assets in the first quarter of 2010 amounted to €595 million, almost one and a half times higher in comparison with last year (first quarter 2009: €250 million).
Shareholders’ funds, solvency and exposure on South-European and Irish bonds
Shareholders’ funds of Delta Lloyd Group rose by 7%4 (€292 million) in the first quarter of 2010 to €4,183 million, or €25.26 per ordinary Delta Lloyd share. This increase in shareholders’ funds shows a stable development of Delta Lloyd Groups comprehensive result in the first quarter.
The solvency of Delta Lloyd Group on an IFRS basis rose further, from 256% at year end 2009 to 268% at the end of the first quarter of 2010. The regulatory solvency, although negatively impacted by yield curve movements, remained stable at 197% (full year 2009: 201%). The bank’s BIS ratio remained solid at 12.5% (full year 2009: 12.3%).
Active risk management contributed to the stable development of equity. In the first months of 2010 there was special focus on the developments of bonds of Eurozone sovereigns, especially from Southern Europe and Ireland. When market conditions were favourable the exposure to these countries has been reduced.
This results in the following exposure of Delta Lloyd Group to sovereigns and sub-sovereigns of these countries by 30 April 2010: Italy €1,457 million, Greece €265 million, Spain €309 million (over 80% in sub-sovereigns), Portugal €38 million (70% in sub-sovereigns) and Ireland €66 million (almost 60% in sub-sovereigns).
A full overview of the bond exposure on these countries is presented in appendix 2 of this press release.
| Exposure to sovereign and sub-sovereign bonds Southern Europe & Ireland (in millions of euros) | Fair value (as at) | ||
| April 2010 | March 2010 | December 2009 | |
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| Total Southern Europe & Ireland | 2,135 | 2,451 | 4,207 |
| Greece | 265 | 277 | 1,346 |
| Ireland | 66 | 70 | 70 |
| Italy | 1,457 | 1,655 | 2,392 |
| Portugal | 38 | 68 | 68 |
| Spain | 309 | 381 | 331 |
Given Delta Lloyd Groups marked-to-market IFRS-based balance sheet all realised and unrealised results on its investment portfolio, including those on interests in Southern Europe and Ireland, are reflected in its shareholders’ funds that grew by 7% at the end of the first quarter of 2010. The effects of interests in Southern Europe and Ireland was negligible. Delta Lloyd Groups firmly embedded risk management continuously looks for the best trade-off between risks taken in relation to their respective returns.
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Further information:
Delta Lloyd Group
Media relations +31 (0)20 594 44 88
Investor relations +31 (0)20 594 96 93
Conference call
Chief executive officer Niek Hoek will host a short conference call to this press release for analysts and investors today, 11 May 2010, at 09:00 (CEST). The telephone number for this call is +31 (0)10 – 2944 223. The lines will be available from 08:45 (CEST).
Appendix 1 New life production first quarter 2010 versus first quarter 2009
| New life insurance business5 (on a PVNBP basis, in millions of euros) | First quarter | Change | |
| 2010 | 2009 | ||
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| Total PVNBP | 934 | 939 | - |
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| Of which single premiums | 489 | 474 | 3% |
| - Life insurance and savings | 52 | 48 | 9% |
| - Pensions and annuities | 436 | 426 | 2% |
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| Of which regular premiums | 446 | 465 | -4% |
| - Life insurance and savings | 94 | 111 | -15% |
| - Pensions and annuities | 352 | 354 | -1% |
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Appendix 2 Total exposure Delta Lloyd Group on Southern Europe and Irish bonds as at 30 April 2010
| Total bond exposure to Southern Europe & Ireland as at 30 April 2010 (in millions of euros) | Total | Greece | Ireland | Italy | Portugal | Spain |
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| Sovereigns | 1,807 | 261 | 27 | 1,453 | 11 | 53 |
| Sub-sovereigns | 329 | 4 | 39 | 4 | 26 | 256 |
| Totaal (sub-)sovereigns | 2,135 | 265 | 66 | 1,457 | 38 | 309 |
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| Covered bonds | 1,245 | - | 345 | 174 | 96 | 630 |
| Corporate bonds | 636 | 55 | 80 | 190 | 7 | 303 |
About Delta Lloyd Group
Delta Lloyd Group is a financial services provider offering life insurance, general insurance, fund management and banking products and services. Delta Lloyd Group’s target markets are the Netherlands and Belgium. In the Netherlands it mainly operates under the brand names of Delta Lloyd, OHRA and ABN AMRO Insurance, in Belgium under the Delta Lloyd brand.
Delta Lloyd Group's goal is to be recognised as the most reliable and highly regarded insurer and financial services provider in its targeted markets, offering customers security through risk assurance, income protection and wealth creation. In the medium term, Delta Lloyd Group aims to become one of the three largest insurance companies in the Dutch market and one of the five largest insurance companies in the Belgian market.
Delta Lloyd Group believes that the strategy will be successful in enhancing shareholder value and enabling Delta Lloyd Group to deliver long-term benefits to all of its stakeholders: customers, shareholders, distribution partners, employees, suppliers and the community at large.
Notes
- The figures in this press release have not been audited.
- Certain statements contained in this press release that are not historical facts are "forward-looking statements". These forward-looking statements are based on management’s beliefs and projections and on information currently available to them. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Delta Lloyd Group's control and all of which are based on management's current beliefs and expectations about future events.
Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. Delta Lloyd Group undertakes no duty to and will not update any of the forward-looking statements in light of new information or future events, except to the extent required by applicable law.
A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement as a result of risks and uncertainties facing Delta Lloyd Group and its subsidiaries. Such risks, uncertainties and other important factors include, among others:
(i) changes in the financial markets and general economic conditions,
(ii) changes in competition from local, national and international companies, new entrants in the market and self-insurance and changes to the competitive landscape in which Delta Lloyd Group operates,
(iii) the adoption of new, or changes to existing, laws and regulations,
(iv) catastrophes and terrorist-related events,
(v) default by third parties owing money, securities or other assets on their financial obligations,
(vi) equity market losses,
(vii) long- and/or short-term interest rate volatility,
(viii) illiquidity of certain investment assets,
(ix) flaws in underwriting assumptions, pricing and/or claims reserves,
(x) the termination of or changes to relationships with principal intermediaries or partnerships,
(xi) the unavailability and unaffordability of reinsurance,
(xii) flaws in Delta Lloyd Group’s underwriting, operating controls or IT systems, or a failure to prevent fraud,
(xiii) a downgrade (or potential downgrade) of Delta Lloyd Group’s credit ratings,
(xiv) the outcome of pending, threatened or future litigation or investigations, and
(xv) a conflict between Aviva and minority shareholders in Delta Lloyd Group.
Should one or more of these risks or uncertainties materialise, or should any underlying assumptions prove to be incorrect, Delta Lloyd Group's actual financial condition or results of operations could differ materially from those described in this herein as anticipated, believed, estimated or expected. - Please refer to the Annual Report for the year ended 31 December 2009 for a description of certain important factors, risks and uncertainties that may affect Delta Lloyd Group’s businesses.
1 Excluding Germany, which announced on 4 March 2010 that it would cease writing new policies. Delta Lloyd Germany’s gross written premiums of €85 million (first quarter 2009: €113 million), PVNBP of €45 million (first quarter 2009: €81 million) and NAPI of €5 million (first quarter 2009: €9 million) have, therefore, been excluded.
2 New life business is expressed in NAPI, comprising 100% of the new annual premiums and 10% of new single premiums.
3 The gross written premiums from underwritten policies were up and until 2009 booked with a three-month delay. As of the first quarter of 2010 the actual written premiums for the underwritten policies have been booked for that quarter. With this the written premiums from underwritten policies of the last quarter 2009 (ie €49 million) have not yet been assigned. This will be corrected for in the publication of the half year 2010 results.
4 Shareholders’ equity 2009 is €4 million higher as a result of a change in accounting principles for Delta Lloyd Belgium.
5 Excluding Germany, which announced on 4 March 2010 that it would cease selling new policies. Delta Lloyd Germany’s total PVNBP of €45 million has, therefore, been excluded (first quarter 2009: €81 million).