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2016-05-18

Delta Lloyd: Solid commercial performance; ongoing focus on capital and operational progress

Capital
* Solvency II Standard Formula (SF) ratio down to 127% (year-end 2015: 131%)
* Pro forma Solvency II Standard Formula (SF) ratio after rights issue at
154% and within target range of 140-180%
* Shareholders' funds (IFRS) at € 2.8 billion (year-end 2015: € 2.6 billion)
* Pro forma Shareholders' funds (IFRS) after rights issue at € 3.5 billion

Commercial
* Solvency II Life value new business (SII VNB) of € 22 million
* Solvency II New business margin (SII NBM) at 3.7%
* Solvency II Life new business, SII NAPI[1]stable at € 132 million (3M 2015:
€ 132 million)
* Combined ratio (COR) at 97.0%[2]slightly up but better than target of 98%
(3M 2015: 96.6%2).
* General insurance: Gross written premiums (GWP) increased to € 465
million[3](3M 2015: € 434 million3)

Hans van der Noordaa, chairman of the Executive Board:
"We welcome the support of investors for the rights issue, which brings us now
within our target range of 140 - 180%. The sharp fall in interest rates in
the quarter adversely impacted the capital position. This was partly
mitigated by progress on our capital management actions. The commercial
momentum with our clients in Life and General Insurance continues. We are
focussed on further unlocking the value of the franchise by improving
commercial and operational performance and we will make sure that all product
lines deliver acceptable returns."

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| Key figures |
| (in millions of euros, unless otherwise stated) 3M 2016 3M 2015 % Change |
| Solvency II Life value new business 22 n/a n/a |
| Solvency II NAPI 132 132 1% |
| Combined ratio 97.0% 96.6% 0.4pp |
| GWP General Insurance 465 434 7% |
| Solvency II Standard formula (SF) ratio 127% 131%* -4pp |
| Solvency II Standard formula (SF)pro forma 154% n/a n/a |
|ratio after rights issue |
| Shareholders' funds (IFRS) after non-controlling interests 2,805 2,569* 9% |
| Pro forma 3,454 n/a n/a |
|Shareholders' funds (IFRS) after rights issue |
------------------------------------------------------------------------------------------
*compared to year-end 2015
Overview of first three months of 2016

During the first quarter, we executed the rights issue, which was an important
step in the overall capital plan to reach the targeted SII ratio range of 140
- 180%. Thepro forma
SF ratio, after the rights issue, was 154%. The effect of the completed rights
issue will be reported at our half year results. During the first quarter,
net capital generation and management actions added to our capital position,
partly mitigating the effect of adverse market conditions. Subject to market
conditions, the sale of the shareholding in Van Lanschot by way of a marketed
offering is expected to have an 8% points increase in the SF ratio. The
implementation of a Partial Internal Model by 2018, another important aspect
of the capital plan, is developing as planned.

We have an ongoing commitment to product profitability and cost efficiency
through our focus on margin over volume. In Life new business, we reported
good margins at 3.7% and the SII NAPI amounted to € 132 million, which
provided a positive contribution to capital generation. In General Insurance,
the COR was slightly higher (up 0.4% points to 97.0%), but still better than
our target of 98%. In this segment, the overall margin is solid, but we need
to focus on areas of underperformance. To do so, we initiated a performance
improvement programme.

We continuously strive to improve the quality of service to our customers and
we actively respond to new market developments such as the introduction of
the general pension fund APF. Delta Lloyd APF will offer company pension
funds a solution to the growing administrative and regulatory burden.
We expect to receive a license from the Dutch regulator for the newly
introduced Delta Lloyd APF general pension fund in the coming months. We
already see a clear interest from potential APF clients.

Capital
management

* SF ratio down to 127% (year-end 2015: 131%)
* Pro forma SF ratio after rights issue at 154%
* Shareholders' funds (IFRS) up 9% to € 2.8 billion (year-end 2015: € 2.6
billion)
* Pro forma Shareholders' funds (IFRS) after rights issue at € 3.5 billion

During the first quarter, the SF ratio decreased by 4% points to 127%. Net
capital generation delivered c. 2% points increase. The run off regarding the
equity transitionals resulted in c. 2% points decrease during the quarter.
Market movements had a c. 10% points negative impact on the SF ratio. The
latter was partly mitigated by realised management actions, with a positive
effect on the SF ratio of c. 6% points. Realised management actions include
reduced equity, currency and credit spread exposures as well as modelling
enhancements in Belgium. More management actions are planned for the
remainder of 2016.

The negative impact of adverse market conditions of c. 10% points mainly
consisted of:

* A significant part of the large decrease in interest rates was covered by
the hedge programme at business unit level. Nonetheless, there was a
negative impact due to the flattening of the Solvency II VA curve and due
to increased spreads relating to the valuation of our residential mortgage
portfolio ;
* An increase in non-eligible Own Funds, mainly caused by the increase in the
value of restricted Tier 1 and Tier 2 (i.e. subordinated debts) due to
lower interest rates. Subordinated debt at group level is not included in
the interest hedge programme. The amount of non-eligible Own Funds will
reduce as a result of the executed rights issue.

At end of March, Shareholders' funds (IFRS) had increased by € 236 million to
€ 2.8 billion (year-end 2015: € 2.6 billion), due to a favourable credit
spread development between the Collateralised AAA curve and the swap curve.

Transition to Solvency II metrics

The year 2016 marks the start of Solvency II, which for Delta Lloyd as well as
other insurers, requires a further evolution of reporting metrics to further
align with Solvency II requirements. In particular VNB together with
respective volumes and margins have been impacted. In 2016 Delta Lloyd will
report on both old and new regimes in order to provide clarity on key trends.
The old regime was applicable in 2015 (and prior to 2015) and the new regime
applies as of 2016.

Specifically for VNB, a number of changes to the methodology were implemented
during the first quarter to further align with Solvency II requirements. Main
changes include the application of Solvency II contract boundaries, the
removal of frictional costs and the replacement of cost of non-hedgeable risk
with risk margin. Furthermore, look-through benefits are not included.

The application of contract boundaries also impacts new business volumes. New
business under the old regime included new contracts and extensions to
existing contracts. New business under the new regime includes new contracts
and renewals of existing contracts, whereas extensions are recognised as
existing business. These changes are reflected in our New Annualised Premium
Income (NAPI). In the first quarter NAPI is higher under the new regime which
is due to a higher NAPI for renewals than NAPI for extensions to existing
contracts.

Life Insurance

* Value of new business (SII VNB) at € 22 million
* SII New business margin (SII NBM) was 3.7%
* SII NAPI stable at € 132 million (3M 2015: € 132 million)
* Shift to DC continued, SII NAPI in DC was € 31 million (3M 2015: € 28
million)

Life SII VNB was € 22 million and taking into account a capital strain of € 13
million, the net capital generated due to new business sales was € 9 million.
The corresponding SII NBM was 3.7% and was driven by Belgian protection
products and profitable DB pension renewals.

SII VNB was slightly lower than VNB under the old regime, reflecting a
negative impact of contract boundaries for DC Pension, partly offset by a
positive contribution of DB Pension renewals.

For the quarter, VNB and NBM under the old regime showed an increase mainly
due to the Belgian protection products, partly offset by a reduction for DC
Pension which largely reflected a model correction. The impact of this model
correction was a decrease of VNB of around € 4 million.
SII NAPI was stable at € 132 million (3M 2015: € 132 million), the increase in
SII NAPI for DB products is due to the fact that renewals are now included in
this number. SII NAPI for DC increased by 8%.
General Insurance

* COR was better than target at 97.0% (3M 2015: 96.6%)
* GWP up 7% to € 465 million

Overall, the COR was better than target. The COR in Income&protection
decreased by nearly 6% points to 73.3%, reflecting some prior year reserve
releases and lower commissions. The COR in Property&Casualty (P&C), increased
by 1.3% points to 101.8%, reflecting adverse large claims experience in the
quarter. In the coming months we are reviewing the performance of all of our
general insurance product lines, to ensure that each delivers an acceptable
return. For example, we expect the COR of personal general insurance products
to be positively affected by the strategic partnership with service provider
Voogd&Voogd we announced in March. The increase of GWP in General Insurance
is mainly attributable to increased premium production at Authorised Agents.

Asset Management

* Net outflow of € 354 million (3M 2015: inflow of € 12 million)
* Assets under management € 73 billion (year-end 2015: € 70 billion)

In the Asset Management segment, there was a net outflow on third party base
(€ -354 million) due to an outflow of one large mandate and outflows in
retail funds. In asset management, we plan to concentrate more on
institutional clients.

Bank

* Production of new mortgages up € 289 million (3M 2015: € 258 million)
* The portfolio of mortgages was stable at € 13.3 billion (year-end 2015: €
13.3 billion)
* The savings portfolio was stable at € 3.4 billion (year-end 2015: € 3.4
billion)

In the first quarter, the production of new mortgages increased, supported by
the recovering Dutch housing market. The portfolio of Bank Annuity and
savings products stabilised, reflecting ...

Författare Hugin

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