In keeping with the strategy of the past few years, a.s.r. vastgoed ontwikkeling (property development) took important steps to reduce risk exposures in its portfolio. Developments have been scaled down, phased out and reduced. The property exposure (balance sheet position plus completion obligations) of the Property Development business was lowered by 25% in 2013; in line with this, total assets, pipeline revenue, the scale of the organization and internal financing were all scaled back in 2013.
Outlook for 2014
a.s.r. Bank will actively continue to roll out online savings products. On the investment front, preparations are in full swing to be able to offer a.s.r. mixed funds with efficient cost ratios to customers in 2014. A new fee structure will be introduced in 2014, based on which investors will be provided a better understanding of the fees associated with holding an account and conducting transactions. The Banking business has now taken steps in developing medium-term and long-term sustainability targets for selecting investments. The sustainability targets will apply to the a.s.r. house funds (for customers) and to portfolio investments alike.
The performance of the property development business will depend on the situation on the retail and residential property markets in the coming year as well. Going forward, property developments will primarily be undertaken in city centres. For this reason, a.s.r. vastgoed ontwikkeling, the Property Development business, has strengthened its strategic focus and expertise in the areas of complex urban development and redevelopment.
2.1.5 Investments
Over the past few years, a.s.r. has pursued an investment policy of de-risking. The exposure to financials and real estate has been drastically reduced, for instance. The main goal of this policy is to protect solvency against the backdrop of economic uncertainties in the wake of the credit and euro crises. Thanks to this policy, the solvency position has been robust for years. In 2013, the investment policy was characterized by stability in the risk profile of the entire portfolio. There have, however, been a few shifts in the portfolio. Put briefly, the share of mortgages has increased while the share of government bonds has fallen. Another shift was that from real estate to equities.
Assets (€ million, fair value) December 2013 December 2012
Fixed-income securities 18,791 21,425 Equities 2,059 1,735 Real estate 2,742 2,994 Mortgages/other loans 4,909 3,709 Other 228 213 Total investments 28,729 30,077
Investments on behalf of policyholders 8,049 8,217
Other assets 6,688 7,345
Total assets a.s.r. 43,466 45,639
Adjustment of fair value versus carrying amount (real estate &
loans) -1,035 -1,156
ToTAl ASSeTS a.s.r. 42,431 44,483
Nearly 75% of the government bond portfolio of € 9.6 billion has been invested in Dutch and German sovereign bonds. In the course of 2013, the exposure to German government bonds was increased at the expense of Dutch debt instruments. At € 36 million, the exposure to government bonds of peripheral eurozone countries remained highly limited. The exposure to financials was reduced by 16%, from € 5.5 billion to € 4.6 billion, in the reporting period. Senior and subordinated bonds, as well as covered bonds were scaled back through exchanges and sales. The fall in exposure to financials was due, in part, to the reclassification of a number of specific bonds from ‘bonds issued by financial’ to ‘government bonds’. The exposure to non-financials was virtually unchanged (+2% at € 3.4 billion). The total fixed-income portfolio was reduced from € 21.4 billion to € 18.8 billion. This drop was attributable to higher interest-rates and an increase in the mortgage portfolio. In 2013, the mortgage portfolio showed a 35% rise, from € 3.5 billion to € 4.8 billion. The interest-rate risk on assets versus liabilities is actively hedged via an overlay portfolio.
The equity portfolio rose from € 1.7 billion to € 2.1 billion, i.e. 19%, thanks to rising share prices and purchases of Dutch and European equities. This limited increase following purchases is in keeping with the policy of selective re-risking. The real estate portfolio showed an 8% fall from nearly € 3.0 billion to just over € 2.7 billion, primarily as a result of disposals.
These steps have clearly benefited a.s.r.’s robust solvency position and reduced the sensitivity of the balance sheet to market risks over the past few years.
66% 7% 9% 17% 1% 2013 2012 Fixed income 66% 71% Equities 7% 6% Real estate 9% 10% Mortgages/loans 17% 12% Other 1% 1% 6% 1% 71% 10% 12% Breakdown of investment portfolio at year-end 2012 Breakdown of investment portfolio at year-end 2013
Property management
a.s.r. vastgoed vermogensbeheer, the Property Development business, invests and manages retail and residential properties, and agricultural land. a.s.r. vastgoed vermogensbeheer seeks stable development of the value of real estate for users, investors and society at large, through active fund, asset and property management.
By creating property funds, a.s.r. wants to increase the flexibility of its investment property portfolio without affecting the portfolio’s critical mass that has taken more than a century to build. Boasting funds and in-house asset and property management specialists, a.s.r. vastgoed vermogensbeheer has a lot of experience and a good reputation in the Dutch property market. Some non-strategic residential investment properties were sold in 2013. This sale was in keeping with a.s.r. vastgoed vermogensbeheer’s strategy to concentrate the residential portfolio in the strongest economic regions and to rejuvenate the portfolio.
a.s.r. vastgoed vermogensbeheer issued second and third placements of the ASR Dutch Prime Retail Fund in 2013. As a result, the total share of the fund that has been placed since its creation now stands at over € 500 million. The ASR Dutch Prime Retail Fund plans a fourth placement in 2014.
The ASR Dutch Core Residential Fund was created on 1 January 2013. This fund comprises of a portfolio of apartments and single-family homes in the Netherlands with a fair market value of approximately € 750 million. In addition, the value of the pipeline of development and redevelopment projects to be completed in the next few years amounts to some € 75 million.