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2016-02-24

Delta Lloyd: capital plan update, rights issue of EUR 650 million

Following today's publication of the Group's 2015 financial results and having
made good progress on announced management actions and regulatory
discussions, Delta Lloyd now confirms that it is seeking to raise EUR 650
million through the underwritten rights issue previously announced on 30
November 2015. In combination with identified management actions and capital
measures, the rights issue will position Delta Lloyd's Solvency II standard
formula (SF) ratio within its target range of 140-180%, reduce leverage and
lead to an improved net cash and capital position in the Group holding
company. Both the Executive Board and the Supervisory Board believe that the
rights issue will position Delta Lloyd to return greater value to
shareholders going forward through ongoing commitment to capital generation,
resulting in an attractive cash dividend, while safeguarding the interests of
all stakeholders.

Progress on key steps in Delta Lloyd's capital enhancement plan

* Clear progress since 30 November 2015 announcement: * Good commercial and
operational performance in 2015, confirming that the business model is
sound and offers upside * Q4 2015 SF ratio 131% (Q3 2015: 136%) * 7%-points
addition to solvency ratio (SF) achieved through management actions in Q4
2015 * Addressed material Solvency II uncertainties, including most notably
the treatment of LAC DT (subject to the rights issue) * Adverse impact of
(14)%-points to the solvency ratio (SF) from revised treatment of longevity
hedges
* Updated capital plan: * Rights issue of EUR 650 million to deliver c.
25%-point addition to solvency ratio (SF) * Tangible management actions
targeting c. 20%-point addition to solvency ratio (SF) in 2016, including
ALM optimisation and intention to pursue a sale of the shareholding in Van
Lanschot by way of a marketed offering
* Ongoing commitment to capital generation: * Grow profitable capital
light/reduce defined benefit business * Reduce operating expenses by 10% by
2018 * Upgrade risk and capital management infrastructure, including the
implementation of a Partial Internal Model by 2018 * Focus on ALM to drive
investment returns and reduce capital requirement * Re-fill pipeline of
management actions on an ongoing basis
* Expect to pay a targeted cash dividend of EUR 130 million for 2016

Hans van der Noordaa, chairman of the Executive Board: "Following months of
analysis, today's announcement brings clarity to the amount of capital that
we need to raise to reposition Delta Lloyd under Solvency II. We can see from
today's 2015 financial results that the Group is performing strongly and
producing good commercial and operational results. Our focus is to further
improve our business and capital base in order to drive sustainable capital
generation going forward. I am confident that, following the successful
completion of the proposed rights issue, in addition to management actions
and capital measures, we will be adequately capitalised to operate under
Solvency II and better positioned to deliver shareholder value."

Strong progress since 30 November 2015 announcement

In the fourth quarter of 2015, Delta Lloyd made good progress on executing the
near-term management actions announced on 30 November 2015, which contributed
a 7%-point increase in the solvency ratio (SF). These completed management
actions include the sale of the entire commercial real estate portfolio, the
unwind of a securitisation transaction and the restructuring of the internal
fee structure between the insurance subsidiaries and the asset management
business.

Delta Lloyd also addressed regulatory uncertainties during the period, with
clarity obtained from DNB for 2016 (excluding year end) on the Loss Absorbing
Capacity of Deferred Taxes (LAC DT) (which refers to the level of contingent
deferred tax, arising in the case of a 1-in-200 stress event, which is
permitted as an offset against the solvency capital requirement (SCR)). This
treatment depends on the improved capital position of the holding company
post rights issue which will underpin the recovery plans for the Delta Lloyd
Leven and Delta Lloyd Schade subsidiaries. The total eligible LAC DT amount
of EUR 524 million at 31 December 2015, comprises EUR 437 million for Delta
Lloyd Leven and Delta Lloyd Schade, EUR 87 million for ABN AMRO Verzekeringen
and zero for Delta Lloyd Life Belgium.

Adjustments were also made to the SF treatment of Delta Lloyd's longevity
hedge transactions entered into in 2014 and 2015. Following an onsite review
by DNB in December 2015, Delta Lloyd has excluded mitigating effects on the
risk margin beyond the current contract duration of 8 years. This resulted in
an impact on the solvency ratio (SF) of (14)%-points compared to the solvency
ratio (SF) at Q3 2015. Maintaining the risk margin benefit for the period up
to 8 years is subject to a restructuring of the hedge to ensure reinsurance
treatment - absent this there would be a further adverse impact of
(7)%-points. The current SCR benefit is retained, subject to moving to a
Partial Internal Model by 2018. Although the outcome of the longevity
treatment under Solvency II was disappointing, the Boards believe that it has
given a greater clarity on the amount of capital required and now feel
comfortable that Delta Lloyd has drawn a line under the major areas of
uncertainty specific to the Group. The solvency ratio (SF) at Q4 2015 is
131%.

Capital plan including EUR 650 million rights issue

Notwithstanding the additional management actions and greater regulatory
clarity outlined above, Delta Lloyd still requires additional capital to
ensure that it is sufficiently capitalised under Solvency II, and is in a
position to operate with appropriate leverage, capital and liquidity at the
holding company level. However, the Boards have determined that this capital
raising should be in an amount EUR 650 million. This amount reflects the
impact of positive business performance, planned and executed management
actions and is further enhanced by Solvency II clarity. The rights issue is
expected to add c. 25%-points to the solvency ratio (SF), with the year-end
solvency ratio (SF) pro forma for the rights issue expected to be c. 155%.

Management has identified additional management actions targeted to deliver a
c. 20%-point addition to the solvency ratio (SF) in 2016. Delta Lloyd has
informed Van Lanschot of its intention to pursue a sale of its shareholding
in Van Lanschot by way of a marketed offering in the course of 2016. Van
Lanschot has agreed to facilitate this process and to cooperate. This
approach is expected to lead to a significant increase in the liquidity of
the Van Lanschot stock and high quality execution by Delta Lloyd. Further
specific management actions are in place for Asset&Liability Management
optimisation and reducing volatility by addressing inefficiencies in the
investment portfolio. These actions are expected to deliver a further
10-15%-points to the solvency ratio (SF) in 2016, in addition to the Van
Lanschot related improvement of c. 8%-points.

Future capital generation and delivery of shareholder value

Delta Lloyd's is targeting a run-rate of Solvency II capital generation of EUR
200-250 million per annum. The Boards expect that this will enable the Group
to pay a targeted cash dividend of EUR 130 million for 2016, subject to
internal Solvency II thresholds, with a goal to increase cash generation and
dividends over time.

Delta Lloyd has an agenda of ongoing improvements to generate enhanced
shareholder returns. Delta Lloyd continues to grow in profitable, capital
light business, focusing on disciplined thresholds for new business and
reducing the back-book. There is an ongoing commitment to operational cost
discipline, especially in relation to managing the DB back-book in the most
efficient way possible. Delta Lloyd is committed to reducing operational
costs below EUR 560 million in 2018. The Group will strengthen its risk and
capital management infrastructure by investing in necessary resources. By
2018, it plans to move to a Partial Internal Model for Solvency II reporting.
The Group will focus on ALM to drive investment returns and reduce capital
requirements. Finally, management will continue to identify management
actions on an ongoing basis to become more capital efficient and thereby free
up capital.

Transaction Information

The rights issue will be effected by granting transferable subscription rights
to shareholders of Delta Lloyd. Subject to applicable securities laws, such
rights will entitle Delta Lloyd shareholders to subscribe for ordinary
shares. The terms (including price per new ordinary share) will be announced
in due course and set forth in a prospectus for the rights issue.

Delta Lloyd is party to a standby underwriting commitment with Goldman Sachs
International (Global Coordinator), BofA Merrill Lynch and Barclays, acting
as Joint Bookrunners, pursuant to which they undertake to underwrite the
rights issue amount, subject to customary conditions. The rights issue has
been submitted for the approval of our shareholders at an Extraordinary
General Meeting (EGM) on 16 March 2016.

* This press release contains regulated information (gereglementeerde
informatie ) within the meaning of the Dutch Financial Supervision Act (Wet
op het financieel toezicht ) which must be made publicly available pursuant
to Dutch law.
* Certain statements contained in this press release that are not historical
facts are "forward-looking statements". Forward-looking statements are
typically identified by the use of forward looking terminology such as
"believes", "expects", "may", "will", "could", "should", "intends",
"estimates", "plans", "assumes", "anticipates", "annualised", "goal",
"target" or "aim" or the negative thereof or other variations thereof or
comparable terminology, or by discussions of strategy that involve risk and
uncertainties. The forward-looking statements in this press release are
based on management's beliefs and projections and on information currently
available to them. These forward-looking statements are subject to a number
of risks and uncertainties, many of which are beyond Delta Lloyd's control
and all of which are based on management's current beliefs and expectations
about future events.
* Forward-looking statements involve inherent risks and uncertainties and
speak only as of the date they are made. Delta Lloyd undertakes no duty to
and will not update any of the forward-looking statements in light of new
information or future events, except to the extent required by applicable
law. A number of important factors could cause actual results or outcomes
to differ materially from those expressed in any forward-looking statement
as a result of risks and uncertainties facing Delta Lloyd and its
subs...

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