Latest Financials From NN Group: Resilient, But in The Red

Here are highlights from the latest NN Group Financials;

Solid business performance driving strong operating capital generation and attractive returns to shareholders 

• Operating capital generation (OCG) increased to EUR 812 million from EUR 804 million in the second half of 2021 despite the sale of the Asset Management business (NN IP), reflecting a higher contribution from Netherlands Life and Insurance Europe; Full-year 2022 OCG up 8.0% to EUR 1,711 million 
• NN Group Solvency II ratio of 197% versus 196% at 30 June 2022, reflecting strong OCG and asset and liability management transactions, partly offset by market impacts and deduction of the proposed 2022 final dividend 
• Proposed 2022 final dividend of EUR 1.79 per ordinary share, bringing total 2022 dividend to EUR 2.79 per ordinary share, up 12% on 2021 
• New share buyback programme for an amount of EUR 250 million 
• Operating result of EUR 760 million versus EUR 917 million in the second half of 2021, largely due to the sale of NN IP; Full-year 2022 operating result of EUR 1,743 million compared with EUR 2,036 million in 2021 
• Net result of EUR -444 million versus EUR 1,864 million in the second half of 2021, reflecting negative real estate revaluations and impairments on equity securities, while the comparative period included gains on the sale of public equities and government bonds as well as positive real estate revaluations;

Full-year 2022 net result of EUR 1,562 million versus EUR 3,278 million in 2021 

Resilient commercial performance 

• Value of new business (VNB) of EUR 177 million versus EUR 186 million in the second half of 2021, mainly reflecting lower VNB at Insurance Europe as a result of the negative impact of discounting at higher interest rates; Full-year 2022 VNB up 0.7% to EUR 431 million 
• Strong net inflows of EUR 2.0 billion in Defined Contribution pension business in 2022 
• NN Bank and Woonnu originated EUR 8.7 billion of new mortgages in 2022, maintaining a stable market share 

IE Comment;

It’s interesting that the loss is being ignored by the mainstream media, instead the newswires are reporting the latest results as a “decline in operating profit.” Which it is, a rapid decline since the heady days of 2021 when Goldman Sachs announced its $1.6 billion takeover deal. It’s in black and white in the press release, you can see the minus symbol where once a net profit of over 2 billion was reported.

So every big company makes a loss and has a bad year sometimes. The thing that matters is the recovery plan and with Goldman Sachs at the wheel the future should be brighter for NN Group in the next few years. Some strategic acquisitions in the Life and healthcare sectors in Europe and perhaps more investment in sharing automated systems across its brands, should help boost the margin.

Maybe 250 million euros is better invested in new insurtech innovation rather than a share buyback. But there are always Solvency II considerations for EU businesses, which in a time of higher lending costs mean it’s arguably better to improve the ratio, rather than borrow to fund the acqusition of profitable rivals.