The SB convened eight regular meetings, one of which was an offsite meeting with the EB and MB, and 12 extra meetings. The extra meetings related to specific topics such as the remuneration policy, the Aegon transaction and related governance changes. The SB members were available for consultation between scheduled meetings. Regular work meetings were also held in the absence of the EB and MB, at which matters such as the self-evaluation of the SB and the evaluation of the EB members were discussed.
The SB has a good working relationship with the EB and MB. The Chair of the SB is in regular contact with the CEO, and several members of the SB are periodically approached outside meetings to give advice on various files. The SB as a whole also receives bi-monthly updates from the EB outside meetings on various developments within the company, such as business developments and (potential) M&A transactions. See section 5.1.4 for information about the attendance at SB and SB committee meetings.
Highlights
The SB looks back on a unique year, in which several milestones were achieved. These were achieved through joint effort and determination of the EB, MB and all employees. On 17 January 2023, the Aegon transaction was approved by the EGM. In connection with this, the reappointment of Jos Baeten as CEO and the appointment of two new SB members were approved, as of the closing of the transaction on 4 July 2023. Shortly afterwards, it was decided to install the MB as of 4 July 2023, to ensure effective management of the integration and long-term management continuity. The SB is pleased with the closing of the transaction and appreciates the continued commitment and discipline of all employees involved in the integration process. The SB closely supervises this process and is satisfied that integration activities are on track, including preparations for the introduction of a partial internal model for a.s.r. The SB is also satisfied with the new management structure and the current composition of the EB and MB.
Other important topics in 2023 included the implementation of IFRS 17/9, geopolitical developments and the Court of Appeal ruling on unit-linked investment insurance. On 29 November 2023 a.s.r. announced to have reached a final settlement for unit-linked life insurance customers of Aegon and a.s.r. affiliated to the interest groups Consumentenclaim, Woekerpolis.nl, Woekerpolisproces, Wakkerpolis and Consumentenbond. The parties have since vigorously taken up the implementation of the arrangements. Once the settlement is final all collective proceedings of the interest groups against Aegon and a.s.r. will be terminated. This will mark the close of this file and give customers clarity.
Finally, on 1 February 2024, a.s.r. announced that it has reached an agreement to sell Aegon Bank (Knab) to BAWAG Group AG. Following a thorough strategic review of Knabs activities, in conjunction with an assessment of the proposal put forward by BAWAG, the MB and SB believe that the future of Knab and the service proposition to its customers is better served by being part of BAWAG. This transaction marks an important step for Knab and a.s.r. as it maximises value for all stakeholders involved. The closing of this transaction is expected in the second half of 2024.
Strategy based on long-term value creation
Each year, the EB presents various matters to the SB for approval, such as the (quarterly) figures, the multi-year budget, the investment plan and the risk appetite. These matters were all discussed and approved by the SB in 2023. Throughout the year, the progress of a.s.r.’s strategy and the realisation of sustainable value creation against the ambitious group and business targets for 2022-2024 was discussed in detail. For a.s.r. as an all-round insurer, this involves the portfolio strategy (as described in section 2.3) and the strategy for targeted acquisitions.
In implementing the strategy, a.s.r. adheres closely to a strict financial discipline in which value over volume is a key principle. A focus on cost and upholding financial solidity is essential for a continuation of the strong performance. Maintaining a strong balance sheet with financial flexibility offers scope for profitable growth. a.s.r. will continue to invest capital responsibly. As a result of the Aegon transaction, focus will also be on successfully integrating the two companies.
Sustainable value creation is an important part of a.s.r.'s strategy and as such an integrated part of the business processes. In the EB, the CEO is ultimately responsible for sustainable value creation. Targets, plans, progress and results are regularly discussed in the EB and MB and reported to the SB. Within the SB, sustainable value creation is integrated into the overall agenda. During the permanent education sessions of the EB, MB and the SB, attention is paid to current developments. This also includes the implementation of new and future legislation and regulations.
In 2023, SB discussions covered the following topics:
Review of the overall strategy, including a.s.r.’s long-term value creation and growth in various business areas such as P&C, Disability, Mortgages, Asset Management, Real Estate, Pensions DC, and also key topics such as brand, reputation, sustainability and vitality;
Digitalisation of customer service;
Closing of the Aegon transaction and integration activities such as the appointment of Senior Management and cultural integration;
Realisation of a partial internal model for a.s.r.;
Corporate governance and composition of the SB, EB and MB;
EB, MB and senior management succession planning;
EB and SB remuneration, including the evaluation and amendment of the remuneration policy;
HR & culture: reports on employee surveys, sustainable employability, DEI, and compliance with the a.s.r. code of conduct;
Cyber security, innovation and technology developments;
NPS-c and NPS-r reports and developments in the field of customer service, including the focus on reducing the number of customer complaints in 2023;
Financial and Enterprise Risk Management, including cyber security, EIOPA rules, the Risk Appetite Statements and the ORSA;
Annual and quarterly results, dividends, capital generation and the Solvency II capital position;
Investor relations;
Multi-year budget including the medium-term financial and non-financial targets framework and capital & dividend policy;
Legal, regulatory and compliance issues, including the relationship with the Dutch regulators;
Tax policy and developments.
M&A
The main focus of M&A in 2023 was on the closing of the Aegon transaction on 4 July 2023 and (the preparation of) the integration of the two companies. Although the EB and SB remain interested in other suitable acquisition opportunities, the main focus in the coming years will be on successfully integrating a.s.r. and Aegon NL.
Financial performance
The SB discusses the financial performance each quarter, covering standing issues such as developments in the premiums received, DC inflow, fee income, COR, Operating Result, long-term cost development, OCC and Solvency II ratio. The SB is satisfied with a.s.r.’s financial performance in 2023. The financial results are strong. The increase of the operating result reflects both organic growth and inorganic growth by the addition of Aegon NL over the second half of 2023. The FY2023 Solvency II ratio decreased to 176% reflecting amongst others the impact of the Aegon NL transaction and the unit-linked insurance product settlement. a.s.r. maintained a robust balance sheet. The impact of various scenarios were calculated and discussed, including the development of interest rates, and mortgage spread, Management actions were identified and discussed in detail.
External auditor
As of 1 January 2020, KPMG is the independent auditor of a.s.r. As a direct consequence of the Aegon transaction in July 2023, KPMG used the existing audit services of PWC in 2023 for the Aegon entities. KPMG remains the Group auditor. As part of the audit process, KPMG issued a management letter in February 2024 and a 2023 Audit report in March 2024 to the EB and SB.
KPMG has taken notice of the integration governance framework regarding the Aegon transaction in order to realise the strategic (synergy)ambition. KPMG observed that the set-up is effective and comprehensive monitoring reports are drafted. This Annual Report is the first one fully based on IFRS 17 & 9. Next step is to achieve further excellence in this finance process.
Starting from reporting year 2024 (published in 2025), a.s.r. is required to adhere to the CSRD requirements. The integration of CSRD within a.s.r. has made significant progress across various areas, but it is important to give priority to address the short timelines, workload, and available capacity. This requires the allocation of sufficient budget and capacity for effective management.
a.s.r. discussed with KPMG several migration programs that are currently planned with an impact on business processes and controls. This includes the integration plan of Aegon NL’s IT applications. The Digital Operational Resilience Act (DORA) - which becomes effective as from 17 January 2025 - was also discussed. Financial institutions, including a.s.r., are required to be compliant with this act.
In 2023, significant changes in processes, systems, and controls have been implemented as a result of the IFRS 17 & 9 implementation. These changes create an overlap between the market value calculations under IFRS and Solvency II. The possibilities which arise to further harmonize the processes and internal controls were discussed with KPMG.
KPMG has reported some observations regarding the existence and effectiveness of the risk and control framework. KPMG has also provided an update on observations made in previous year.
Risk management and solvency
At the end of 2022, the SB approved the risk appetite for 2023 for a.s.r. and its supervised entities. Due to the Aegon transaction, the risk appetite was supplemented halfway through the year. The Aegon entities have been added. a.s.r.’s risk appetite is based mainly on the Solvency II regime and a prudent approach to risk management translated into standards for solvency, liquidity, efficient processes and achievable returns. The SB was satisfied with the execution of the risk management framework. The level of solvency remains acceptable and adequate, thanks to the organisation’s prompt and adequate response to external developments based on the chosen risk appetite and associated risk-mitigating measures. The risk appetite is an important criterion for the SB in making tactical and strategic decisions. The SB appreciates the prudent approach taken to comply with Solvency II and other regulations and regularly engages in dialogue with the EB concerning its views on the targets and intervention level relating to Solvency II ratios.
Culture and customer interest
Every six months, the SB devotes attention to the development in customer satisfaction, based amongst others on the NPS-c report, the NPS-r report and the customer complaints report. The SB was satisfied that a.s.r. goes to considerable lengths to deliver a good NPS-c and NPS-r.
Contacts with the Works Council
As of 1 October 2023, a.s.r. implemented a Central Works Council, consisting of a delegation of the (central) Works Councils of a.s.r. and Aegon NL. All SB members attended one or more routine consultative meetings of the Works Council. In addition to these routine meetings, the Works Council maintained regular contact with the Works Council-appointed SB members, Gisella van Vollenhoven and Daniëlle Jansen Heijtmajer. The SB also held bilateral dialogues with the Works Council, which on several occasions were also attended by one or more members of the EB.
Taking into account the interests of both a.s.r. as a whole and its employees, the Works Council makes thorough preparations when addressing the wide range of issues it is presented with, discusses these in a constructive dialogue with the EB, and issues balanced, well-considered opinions and recommendations. This also applies to the numerous requests for advice regarding the integration, which are proceeding as scheduled, and to the request for advice for the proposed reappointment of Joop Wijn and appointment of Bob Elfring, on which they advised positively. The SB wishes to express its gratitude for the continued cooperation with the Works Council and the dedication shown by its members.
Contacts with external regulators and auditors
The SB periodically consulted with DNB and AFM in 2023. The independent external auditor, KPMG, attended the SB meetings at which the annual and interim financial results were discussed. During these meetings, the auditor elaborated on the audit reports and answered specific questions.