Solvency II ratio at year-end 185%, but still volatile. Positive developments in net income and investment income, commercial growth still behind on expectations.
Highlights
- Solvency II ratio up from 146% to 185% at year-end. Nevertheless, the ratio is still volatile, especially under the current turbulent market conditions. Negative impact of increased interest rates and reduced LACDT assumption, more than offset by capital generation and capital injections of € 85 million from the shareholder.
- Interest rate sensitivity of Solvency II ratio decreased, but still above desired levels. Management actions focused on further reduction.
- Net result improved from -/- € 80 million to -/- € 21 million. Improved investment income and lower expenses were partially offset by the negative impact of increased interest rates. Lifetri’s “economic” value increased further due to a reduced impact of the Ultimate Forward Rate on the liabilities of approximately € 100 million.
- Stable and continued progress towards the target asset allocation. 2023 goals on asset returns realized.
- New pension law approved. Pension Risk Transfer market starts to develop. Market opportunity remains high, despite the absence of growth in 2023.
- Last part of the legacy IT infrastructure decommissioned with the migration of the former Nuvema policies to the target IT infrastructure. After 4 years of investment the goal of a fully cloud based, non-legacy, and secure IT environment has been achieved.
Philippe Wits, CEO of Lifetri
“2023 was a turbulent year for Lifetri from different perspectives.
In 2023 the new pension law was approved by the Senate. An important moment for Lifetri. After a long period of uncertainty, the approval of the new law is the starting point of an unprecedented change in the pension schemes of pension funds in the Netherlands. In the past years, Lifetri has invested in its product development, processes, partnerships and in its operating core, to establish the required set up to play an important role in the market for Pension Risk Transfers. It is encouraging to see that in the course of 2023, this market finally started to develop and that Lifetri is recognized and appreciated in the processes that pension fund boards have started to explore their future. At the same time, I am disappointed that until now Lifetri has not been able to acquire further portfolios and grow its balance sheet.
The continued increase in interest rates in 2023 was an important area of attention. Lifetri’s very long dated liabilities lead to a discrepancy between economic and regulatory lenses given the Last Liquid Point in the Solvency II framework at 20 years. Lifetri’s (funeral) liabilities have durations far above the 20 years.
Until 2023 our interest rate hedge was predominately focused on the economic lens, resulting in high interest rate volatility of the Solvency II ratio. As a consequence, the unprecedented interest rate increases in 2022 and 2023 have put pressure on Lifetri’s Solvency II ratio. I am very happy that despite these turbulent market circumstances, the Solvency II ratio increased from 146% to 185%, following additional capital injections of the shareholder of € 85 million and strong capital generation. In 2023, initiatives to reduce the Solvency II interest rate sensitivity, to bring our hedge closer to the regulatory lens and to strengthen the capital position, were started and will further continue in 2024.
Our continuation to invest steadily in our strategic asset mix led to higher investment returns and helped improving our capital generation and underlying financial performance.
Another important milestone in 2023 for me was the full decommissioning of the last legacy part in our IT infrastructure. In the past 4 years Lifetri, invested in a modern and secure IT landscape which basically was built from scratch. In three migration blocks in 2021 and 2022, the majority of the Individual Life portfolio was transferred from legacy systems to the new IT landscape. In parallel, Lifetri successfully implemented a brand new, scalable and modern IT system for its pension activities. In 2023 this multi-year project was completed with the migration of around 200,000 former Nuvema funeral policies to the target infrastructure, resulting in a modern IT landscape supporting all of Lifetri’s activities.
I look forward to 2024. A year in which Lifetri aims to leverage on the investments done in the past years. Together with the numerous partners we cooperate with in areas like reinsurance, hedging, implementation, pension solutions and administration. Together with our shareholder who is showing ongoing commitment to invest in the growth of our platform. And together with my colleagues, whose ongoing dedication is pivotal for the success of Lifetri.”
Publication Lifetri Annual Report
Today, Lifetri Groep B.V. published its Annual Report 2023, as well as the Annual Reports 2023 of Lifetri Verzekeringen N.V. and Lifetri Uitvaartverzekeringen N.V. All documents can be downloaded at www.lifetri.nl
About Lifetri
Media contacts
Kees Jongsma, SPJ Financiële & Corporate Communicatie
cjongsma@spj.nl / +31 654 798 253
About Lifetri
Lifetri Groep (Lifetri) is a Dutch insurance group with a history that goes back seventy years. The name Lifetri was chosen in 2018 as a reference to the growth ambitions of the company and also refers to Lifetri’s roots in Dutch society.
Lifetri is located in the Netherlands and under supervision of the Dutch regulators, the Dutch Central Bank (De Nederlandsche Bank) and the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten). Lifetri focusses on guaranteed pensions, term life and funeral insurance in the Netherlands, servicing approximately 550,000 customers.
Lifetri currently provides pension guarantees to (former) employees of Allianz Nederland, and to (former) employees of Klaverblad Verzekeringen.
Lifetri’s principal shareholder is Sixth Street, a leading global investment firm with approximately US$75 billion in assets under management and committed capital. Sixth Street pursues investments, such as Lifetri, and strategic partnerships in the insurance and reinsurance industry through its Sixth Street TAO platform. In addition to Lifetri, the Sixth Street TAO platform holds other dedicated pension and insurance affiliates, including Talcott Financial Group in the US and Clara Pensions in the UK.
Disclaimer
This press release is released by Lifetri Groep B.V. and contains information that qualifies or may qualify as inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR).
This press release exclusively contains factual information and must not be interpreted as an opinion or recommendation with regard to the purchase or sale of securities issued by Lifetri Groep B.V. This press release does not contain any value judgements or predictions with regard to the financial results of Lifetri Groep B.V. and/or its subsidiaries.
This press release contains summary information only and does not purport to be comprehensive and is not intended to be (and should not be used as) the sole basis of any analysis or other evaluation and should be read in combination with the Annual Report 2023 of Lifetri Groep B.V.