Result impacted by severe weather and high healthcare costs
- Net loss of €24 million negative for first six months of 2016
- Total damage caused by severe weather: €267 million for 30,000 customers
- Strong progress in compensation payments and assistance provided to customers
- Continued innovation of services and business operations
- Healthcare expenses higher than projected due to increase in farmaceutical expenditures
- Excellent progress in further reducing cost as part of Acceleration & Innovation program
- Centraal Beheer Algemeen Pensioenfonds launched after obtaining permit from the Dutch Central Bank
- Solid financial position, with a Solvency II solvency rate of roughly 204%
Achmea CEO and Executive Board Chairman Willem van Duin:
Around 30,000 of our customers were affected by severe weather conditions (including storms, hail and flooding) in June of this year, with many suffering both material damage and considerable mental distress. Our employees and partners have done everything – and continue to do everything – within their powers to help our policyholders get back on track. As an insurer founded as a cooperative organisation, we believe it is important to be there for our customers when they need us – that is why our organisation was established in the first place. After making a careful estimate of the damage suffered by all our customers, a large part of our customers have received the support they needed. We are aware, however, that there is a great deal of work left to be done, and are currently working hard on this together with our employees and partners.
The damage caused to vehicles, homes, agricultural businesses added up to €267 million. We hedged more than half of this claim amount through reinsurance for reasons of prudence. The remaining claims burden has significantly reduced our earnings. In addition, health insurance expenditure increased more than previously estimated as a result of higher expenses on medications and less compensation from equalisation. As a result, Achmea incurred a net loss of €24 million during the first six months of 2016, despite positive effects due to cost reductions and higher investment returns in Pension & Life.
Despite the payments for damages relating to the severe weather conditions and the higher healthcare expenditure, we managed to maintain our healthy and solid financial position. With a consistently solid Solvency II solvency of approximately 204%, we will be able to continue meeting our commitments to our customers in the future.
The permit granted to Centraal Beheer for the establishment of a General Pension Fund (APF) is a key milestone for Achmea in successfully implementing our pension insurance strategy. Pensionfunds and employers can now join Centraal Beheer APF in order to provide their employees with retirement pensions that are adapted to the times and future-proof. A few letters of intention have already been signed for entering the General Pension Fund.
Meanwhile, our organisation also continues to adapt and we are responding to the changing wishes of our customers. We will be completing our Acceleration & Innovation change program at the end of this year, as part of our strategy of putting innovation front and centre of our business operations. We are achieving the goals we have set and are taking our services to our customers to an even higher level. Adjusted for investments in strategic projects, we reduced our expenses by roughly €355 million and the number of jobs by approximately 3,000.
Although we have officially completed our change program, we will continue to upgrade out services and reduce our operating expenses. In fact, this will remain our focus over the next several years.