(2007) Parque de vivienda total 773.201 775.437
1. Planeamiento y política de gestión de suelo
2014 annual report Report of the Supervisory Board
5.1 Report of the
Supervisory Board
5.1.1 Financial statements and profit appropriation
The Executive Board submitted the Report of the Executive Board and the financial statements for 2014 to the Supervisory Board. After having discussed the financial statements with KPMG, the independent external auditor, the Supervisory Board approved them in its meeting on 2 April 2015. The financial statements were audited by KPMG, who issued an unqualified auditor’s report on them. For the independent auditor’s report, see page 220. The Supervisory Board established that the external auditor was independent from a.s.r.The Supervisory Board has presented the financial statements for adoption to the Annual General Meeting of Shareholders (AGM). The Supervisory Board proposes that the financial statements be adopted and the members of the Executive Board be discharged of responsibility for their policies and the members of the Supervisory Board be discharged of responsibility for their supervision of the policies pursued by the Executive Board and of the general conduct of business at the company and its affiliated entities. For the Executive Board’s profit appropriation proposal to the AGM, which was approved by the Supervisory Board, see page 226 of this report.
Supervision
The Supervisory Board addressed the following issues:
Routine topics Specific issues
• Financial performance (quarterly, interim and annual results) • Solvency
• Investment plan • Dividend proposal • Multi-year budget
• Risk management and risk appetite • Own risk and solvency assessment (ORSA) • Strategy and future exit to private market • Treating Customers Fairly (TCF)
• Integrity reports • Audit reports • Governance
• Performance targets of identified staff • ICT-projects
• Consolidation (including VIVAT/REAAL) • Unit-linked policies
• Market changes • Continuing education • Supervised entities in practice • Appointment of new CFO
• Remuneration policy and pension plan • Funding plan
Financial performance
The Supervisory Board met every quarter to discuss the financial performance, covering standing issues such as developments in earnings, premium income, returns and solvency.
The members of the Supervisory Board were satisfied with a.s.r.’s financial performance for 2014. The increase in earnings was primarily attributable to improvements in the underwriting result, which have lifted earnings to a sustainable level.
2014 annual report Report of the Supervisory Board
The progress of cost cuts and improvements in claims management was discussed extensively. The combined ratios of all product lines in the Non-life segment were below 100%, meaning that a.s.r. met the target of restoring its profitability. The solvency ratio is more than adequate. Although the improved commercial performance is gradually manifesting itself, the Supervisory Board considers it important to give priority to value over volume – despite the fact that the market can be challenging at times due to factors such as saturated sub-markets and low interest rates.
At year end, the Supervisory Board approved the multi-year budget 2015-2017; the supervisory directors qualified the budget for the coming years as ambitious and realistic.
Risk management and solvency
At the beginning of the year, the Supervisory Board approved the risk appetite for both ASR Nederland N.V. and the supervised entities.
The members of the Supervisory Board are satisfied with the execution of the risk policy. Solvency levels remain good and comfortably adequate thanks to the organization’s prompt and adequate response to external developments based on the chosen risk appetite and the associated risk- mitigating measures. In the middle of the reporting period, the Supervisory Board followed up the Audit & Risk Committee’s recommendation when it adopted the funding plan, which resulted in further optimization of the capital position of ASR Nederland N.V.
The risk appetite continued to be an important criterion for the Supervisory Board in making both tactical and strategic decisions in 2014.
Market developments and strategy
A key issue in the meetings of the Supervisory Board in 2014 was the potential consolidation of the insurance sector and a.s.r.’s possible role in it. In June 2014, the Dutch Minister of Finance gave a.s.r. the opportunity to take part in the bidding process for Reaal N.V. (currently VIVAT/REAAL). The Supervisory Board sets store by a.s.r.’s responsibility towards customers and the shareholder to work towards consolidation in the Dutch insurance market where appropriate and possible. A potential bid was subject to the condition of external funding. With this in mind, the Supervisory Board focused closely in 2014 on the procedures and decision-making processes involved in attracting potential investors and possibly submitting a bid for VIVAT/REAAL. The members of the Supervisory Board looked at both form and content, while monitoring the Executive Board’s careful deliberations every step of the way. They also took the time to form their own independent opinions.
In addition, developments in the non-life, health and pension insurance markets were specific topics of discussion. These sessions took the form of ‘deep dives’; presentations by senior managers gave the Supervisory Board members an in-depth perspective on current and future market developments. This in-depth approach was also used to discuss developments in and the status of organizational changes in the life, pensions and IT&C businesses. As a result, the Supervisory Board gained a good understanding of how a.s.r. translates the strategy into organizational changes that help it to move with the changing market and applies it in practice. In the life business, for instance, a broad debate was held about the fact that fewer and fewer new policies are being sold and that sub-portfolios are contracting, which makes the principle of scalability of costs in value models a key issue at present that is also being assessed by the Dutch Central Bank (DNB), the auditor and the certifying actuary. The Supervisory Board welcomes the fact that a.s.r. started to implement sustainable changes and improvements early, so that a.s.r. has been able to demonstrate for a number of consecutive years now that it can control costs in such a way that they keep pace with premium income.
Unit-linked policies
The members of the Supervisory Board thoroughly educated themselves as part of an ongoing process about developments in unit-linked policies in 2014. They appreciate the manner in which the Executive Board and the managers involved have taken up the extra challenge that was put to them after the publication of a report on how insurance companies followed up with customers after having missold them unit-linked policies. a.s.r. has gone to great lengths for its unit-linked policyholders, having followed up with nearly all of them now. The Supervisory Board encourages a.s.r. to make every effort needed to spur even more customers into action.
2014 annual report Report of the Supervisory Board
Treating Customers Fairly (TCF)
Every quarter, the Supervisory Board considered the theme of Treating Customers Fairly (TCF) on the basis of various reports, including the a.s.r. TCF Dashboard, which provides an understanding of developments and results with respect to the TCF theme and of the best practices shared and lessons learned in this regard across the organization. The Supervisory Board has found that good progress is being made on this theme and that a.s.r. undertakes substantial efforts to deliver a good TCF performance. The progress made is also reflected in a.s.r.’s performance on the AFM’s TCF Dashboard. This survey by the regulator annually benchmarks the extent to which Dutch financial institutions focus on customer interests in their products, services and processes. a.s.r. achieved a score of 3.6 out of 5 for 2013 on the Dashboard, better than a year earlier (2012: 3.3) and higher than the average in the financial sector (3.5). a.s.r. scored well above average on claims handling, complaints management and customer contacts in particular.
In addition to the TCF Dashboard, the Supervisory Board also discussed other reports and disclosures. They are designed to give its members an understanding of the results achieved on quality mark requirements and the NPS scores. The members of the Supervisory Board are happy about the progress that was made on treating customers fairly; they will continue to weigh customer interests when forming their opinion and making decisions on key issues in the year to come.
Risk Management, Integrity and Audit
The Supervisory Board discussed the reports of Risk Management, Integrity and Audit on a quarterly basis. Reports issued by, and findings of, the external regulators were also reviewed extensively. The Supervisory Board is satisfied with the heightened management focus and discipline aimed at continuing the previously initiated policy of resolving issues at an accelerated pace. The Supervisory Board will again focus extensively on testing the quality of the business practices and customer service as part of its supervision in 2015.
Governance
The governance structure of some supervised entities has changed with effect from 1 January 2014. The executive and supervisory bodies of the supervised entities met at least four times in 2014. The seven relevant supervised entities are ASR Levensverzekering N.V., ASR Schadeverzekering N.V., N.V. Amersfoortse Algemene Verzekering Maatschappij, Europeesche Verzekering Maatschappij N.V., ASR Basis Ziektekostenverzekeringen N.V., ASR Aanvullende Ziektekostenverzekeringen N.V. and ASR Bank N.V. The standing agenda items included the financial (quarterly) results and the audit, integrity and risk reports. Other topics of discussion were entity-specific issues, including the impact of the changing markets for various entities.
The executives and non-executives of the first four entities are the same as those of
ASR Nederland N.V. This is not the case for the other three entities (see Section 5.1.3, Management and supervision, Procedures, Appointment and reappointment of executive and supervisory directors, page 85).
Variable pay and pension plan of a.s.r. employees
With a view to cost cuts and market conformity, the Supervisory Board discussed changing the employee pay-and-benefits package, focusing in particular on eliminating variable pay for all employees except for a small group of 139 sales employees and amending the pension plan. The arrangements for the replacement of variable pay and the other changes to the pay-and- benefits package apply to all employees, including higher and senior management. In line with the arrangements for employees covered by the Collective Bargaining Agreement (CBA), this will similarly scale back the remuneration of higher and senior management. In this context, arrangements have been made about the conversion of variable pay (for more information page 59). The members of the Executive Board have not been entitled to variable pay since 2011. This was motivated by the statutory provisions governing the bonus prohibition for state-aided enterprises.
In addition, the decision was taken to amend the pension plan so as to simplify its administration and manage its cost level and cost variability in the long term. The amendments, which apply to active members, former employees and retired employees alike, were implemented in 2014. The pension plan for active members has now been brought into line with the amended tax regulations and the
2014 annual report Report of the Supervisory Board
plan for deferred members has been aligned with that for active members. A reserve has been formed as compensation for the amendment. The Supervisory Board monitored this process critically from the start; it is satisfied with how the amendments to the pension plan were designed and implemented to sustainably benefit both current and former employees as well as a.s.r. in its capacity as the employer.
Self-assessment
The Supervisory Board finds it important to scrutinize its own performance on an ongoing basis. For this reason, the Supervisory Board assesses its own performance annually; in 2014, it did so with the help of an external expert. The overall impression that emerged from this self-assessment was positive. The few suggestions for improvement that came out of the self-assessment were discussed by the Supervisory Board in a plenary session and they will be included in the programme for the coming year.
5.1.2 Issues addressed by committees
Audit & Risk Committee
In addition to its supervisory responsibility for ASR Nederland N.V., the Committee has also, from 1 January 2014 onwards, overseen the supervised entities ASR Levensverzekering N.V.,
ASR Schadeverzekering N.V., N.V. Amersfoortse Algemene Verzekering Maatschappij and Europeesche Verzekering Maatschappij N.V. The standing agenda items included the financial (quarterly) results and the audit, compliance and risk reports. Other topics of discussion were entity-specific issues, including the impact of the changing markets for various entities.
After the close of every quarter, the Committee met to discuss the financial results based on detailed audit reports and analyses. The full reporting year 2014 was discussed on the basis of the annual report, the financial statements and the actuarial report. The Committee issued positive opinions on these matters to the Supervisory Board.
The effectiveness of the audit, compliance and risk management functions within
ASR Nederland N.V. was a specific focus area for the Audit & Risk Committee. The Committee covered the audit plans for 2015 of both the internal audit and the independent external auditor, and approved them. The Committee also debated and approved the annual plan of the Integrity department and the risk management plan for 2015. Every quarter, the Committee addressed the audit, compliance and risk reports, as well as the audit reports of the independent external auditor. During the year, the Committee met twice outside meetings with the audit, compliance and risk management functions in their role of countervailing powers. In 2014, the Committee also adopted the Actuarial Charter, which formalizes the duties, responsibilities and governance of the Actuarial Function of ASR Nederland N.V.
At the start of the year, the Audit & Risk Committee discussed the risk appetite, which is derived from a detailed risk assessment and has – since this year – also been based on Solvency II for both
ASR Nederland N.V. and the supervised entities. The Committee periodically tested the developments at a.s.r. in light of the risk appetite during the year, using such tools as the Integrated Risk Dashboard and the status report on the management of risk priorities. After the Committee had issued a positive opinion, the risk appetite was approved in the Supervisory Board.
In 2014, the Committee talked about large-scale impactful IT and other projects for the
implementation of new-generation platforms (credit management & collections and disbursements, occupational disability insurance, non-life and life insurance) in relation to the underlying cost reductions. The Committee named as priorities in 2014 the importance of completing large projects on schedule within a complex IT environment and continually changing rules and regulations. On the recommendation of the Committee, the Supervisory Board talked about how a.s.r. can keep the cost/ premium ratio low on a sustainable basis and what plans will be developed and carried out in that context starting next year.
Other topics of discussion in 2014 included the reinsurance programme and the positive effects of the diversification options within a.s.r. on the scale of the programme and the internal control structure
2014 annual report Report of the Supervisory Board
(Management in Control 2.0), which allows the a.s.r. management to visibly manage the principal risks that form a threat to achieving the strategic targets.
The funding plan was discussed in mid-2014. This plan gives a transparent view of the financing requirements of ASR Nederland N.V. and has optimized the capital position of ASR Nederland N.V. The Audit & Risk Committee of the Supervisory Board recommended the approval of the execution of the plan to raise external financing, tender for two existing hybrid instruments and repay the comparable hybrid instruments.
The multi-year budget 2015-2019, the investment plan and the risk priorities for 2015 were discussed at year end.
In the Committee’s opinion, a.s.r.’s financial foundation is robust. The solvency ratio is extremely sturdy, both under Solvency I and Solvency II. Sensitivities to fluctuations in the yield curve and changes in possible future stress scenarios within the various investment categories are firmly under control. This strong financial foundation allows a.s.r. to continue to adapt the organization to the changing insurance market in a responsible manner.
The Supervisory Board received all details of the topics of discussion at the same time as the Committee. The written report of the meeting of the Audit & Risk Committee was provided to the Supervisory Board before the start of the next Supervisory Board meeting. The chair of the Committee gave an account of the key issues discussed and the findings and recommendations of the Committee at the beginning of each Supervisory Board meeting.
Finally, acting for the Supervisory Board, the Audit & Risk Committee supervised the performance and independence of the external auditor. The Audit & Risk Committee also spoke about the implications of the changes in the law governing the accounting profession and the continued performance of the audit engagement by the current external auditor over the coming financial years. Making allowance for a.s.r.’s imminent privatization, the Committee advised the Supervisory Board to renew the audit engagement with the current external auditor up to and including the reporting year 2015 and to switch auditors after that reporting year, with the qualification that the switch could be made earlier if so warranted by the outcome of the privatization process.