Dutch insurer NN beats solvency estimates, upbeat on insurance sales

By Diana Mandia

(Reuters) - Dutch insurer NN Group reported on Thursday a higher than expected solvency ratio and gave an upbeat assessment of sales trends, offsetting a decline in its 2022 operating profit.

The insurer also announced a rise in its annual dividend and a new share buyback programme of 250 million euros ($267.43 million) and said it planned to reappoint David Knibbe as CEO for another four-year term.

The company's shares were up around 2% at 1103 GMT.

NN's solvency ratio - the extra capital an insurer must hold over and above the claim amounts it is likely to incur - rose to 197% by the end of December from 196% in June 2022, above a 192% consensus forecast provided by the company.

Under the EU's Solvency II regime, a regulatory framework for the insurance industry, insurers should have a solvency capital requirement (SCR) of at least 99.5%.

NN said its total new sales rose last year to 1.33 billion euros, from 1.31 billion in 2021.

The COVID-19 crisis, which forced disruptions to business and events, has boosted insurance sales worldwide as people became more aware of the need for insurance cover, it said.

"We've always spoken about the underpenetration of the market, but it's clear that COVID, when people spent a lot more time at home and also became more aware of the vulnerability (...) there is a higher awareness," CEO Knibbe said in a call with analysts.

NN's operating capital generation (OCG), which measures the creation of surplus capital, exceeded estimates in both the second half of the year and for the full year, reflecting a higher contribution from Netherlands life and Insurance Europe business, the group said.

As a result, it already exceeded its OCG target of 1.5 billion euros set for 2023 by the end of 2022.

The Dutch group raised its total dividend for 2022 by 12% to 2.79 euros per ordinary share, above the consensus forecast for 2.70 euros.

However, it said operating profit in 2022 fell to 1.74 billion euros from 2.04 billion euros in 2021, citing the sale of NN Investment Partners to Goldman Sachs in April and lower results from its Netherlands non-life, Japan life and banking businesses.

It lagged analysts' average estimate for 2022 operating profit of 1.84 billion euros.

($1 = 0.9348 euros)

(Reporting by Diana Mandiá in Gdansk; Editing by Milla Nissi and Susan Fenton)