Delta Lloyd Germany intends to cease new sales

Delta Lloyd Germany, a full subsidiary of Delta Lloyd NV in the Netherlands, intends to stop accepting new insurance policies. This would be in line with Delta Lloyd Group’s strategy, as indicated at the time of its initial public offering, that Germany is no longer a core market for the Group.

Delta Lloyd Group’s decision is prompted by the fact that, whilst the German life insurance market is large and has great potential, its structure constitutes a major impediment to further progress of the German operations. In the current situation the risk of low investment returns is placed virtually entirely with the insurer, while the benefit of higher investment returns accrues almost entirely to the policyholders. The general expectation was, and is, that the structure will eventually be changed. However, in view of the results, the outlook and the modest market position, Delta Lloyd Group has decided to take action.

The intended cease of new sales implies that in future no new insurance policies will be accepted. Delta Lloyd Germany will retain an organisation to meet all future obligations to its current policyholders. A sale of Delta Lloyd Germany is presently not foreseen; however the company is examining alternative solutions for its credit life business. The retained German organisation is expected to employ less than one third of its current employees. A social plan is in place to deal with the expected redundancies. The implementation of the intended measures is subject to negotiations with the works council.

Delta Lloyd Germany realised € 579 million in Life gross written premium (GWP) in 2009, almost 16% of Delta Lloyd Groups’ total Life GWP of €3,642 million. After ceasing accepting new business Delta Lloyd Germany’s GWP is expected to decrease by two thirds to some € 200 million within the next three years. As a consequence future new business will be limited to indexations on the remaining portfolio, hence PVNBP1 is expected to decline over 90% from €385 million in 2009 to an expected € 28 million over the same period.

As a consequence of the intended cease of sales Delta Lloyd Germany is expected to make a loss over the year 2010, but is not expected to incur further losses beyond 2011.

1 The Present Value of New Business Premiums (PVNBP) is equal to the single premiums received plus the present value of new regular premiums, calculated on the basis of the same principles used to calculate new business in the MCEV.

The intended cease of new sales will have positive effects on new business margins (NBM). NBM for Delta Lloyd Group’s Life businesses in 2009 was 1.6% excluding Germany and 0.8% including Germany. MCEV for Delta Lloyd Germany is €135 million 3% of the Group’s €4.2 billion Life MCEV
at year-end 2009.

Delta Lloyd Group is a financial services provider offering life insurance, general insurance, fund management and banking products and services. Delta Lloyd Group’s target markets are the Netherlands and Belgium. In the Netherlands it mainly operates under the brand names of Delta Lloyd, OHRA and ABN AMRO Insurance, in Belgium under the Delta Lloyd brand.
Delta Lloyd Group's goal is to be recognised as the most reliable and highly regarded insurer and financial services provider in its targeted markets, offering customers security through risk assurance, income protection and wealth creation. In the medium term, Delta Lloyd Group aims to become one of the three largest insurance companies in the Dutch market and one of the five largest insurance companies in the Belgian market.
Delta Lloyd Group believes that the strategy will be successful in enhancing shareholder value and enabling Delta Lloyd Group to deliver long-term benefits to all of its stakeholders: customers, shareholders, distribution partners, employees, suppliers and the community at large.