NN Group and Delta Lloyd agree on recommended tran

This is a joint press release by NN Group N.V. ('NN Group') and Delta Lloyd N.V. ('Delta Lloyd'), pursuant to the provisions of Section 4 Paragraph 3, Section 5 Paragraph 1 and Section 7 Paragraph 4 of the Decree on Public Takeover Bids (Besluit Openbare Biedingen Wft) (the 'Decree') in connection with the intended public offer by NN Group for all the issued and outstanding ordinary shares in the capital of Delta Lloyd. This announcement does not constitute an offer, or any solicitation of any offer, to buy or subscribe for any securities. Any offer will be made only by means of an offer memorandum. This announcement is not for release, publication or distribution, in whole or in part, in or into, directly or indirectly, the United States, Canada or Japan or in any other jurisdiction in which such release, publication or distribution would be unlawful.

To form a leading insurance and asset management company in the Netherlands

• NN Group and Delta Lloyd reached a conditional agreement on a recommended all-cash public offer of EUR 5.40 (cum dividend) per issued and outstanding ordinary share of Delta Lloyd representing a total consideration of EUR 2.5 billion
• Transaction supported and recommended by Delta Lloyd's Executive Board and Supervisory Board
• Offer price represents a premium of 55% over the 3-months average closing price prior to the initial announcement on 5 October 2016, delivering immediate and certain value to Delta Lloyd shareholders
• Creation of a well-diversified leader in the Dutch pensions, life and non-life insurance and banking sectors, with a strong asset management platform, attractive international presence, ample growth opportunities and appealing customer propositions
• NN Group anticipates a return on investment of around 10% and a double digit accretion in dividend per share (DPS) for 2018 and onwards
• Robust combined balance sheet and solid 3Q16 pro-forma Solvency II ratio of approximately 189%
• NN Group has committed financing in place and will fund the transaction via a combination of existing cash resources and debt
• Draft offer memorandum will be submitted to AFM no later than 28 December 2016

               NN Group and Delta Lloyd announce today that a conditional agreement (the 'Merger Protocol') has been reached on a recommended public offer (the 'Offer') to be made by NN Group for the entire issued and outstanding ordinary share capital of Delta Lloyd (the 'Shares') for EUR 5.40 in cash per ordinary Delta Lloyd share (cum dividend) (the 'Offer Price'). This announcement follows constructive interactions between the boards and management teams of both companies including a period of targeted due diligence.

Lard Friese, CEO of NN Group: 'Today's announcement is a significant step in our journey to build a sustainable, profitable business for the future, and to strengthen our leading position in the Netherlands and Belgium. I value the entrepreneurial spirit, customer focus, the commercial agility, and strong distribution capabilities of Delta Lloyd. Customers of both companies will benefit from an enhanced proposition by complementing our product offering and distribution. Consolidation in the insurance sector will bring additional stability in our markets, and will generate a materially higher cash return to our shareholders over time, through the benefits of scale. We strongly believe this transaction to be in the best interest of both companies' stakeholders, and I am pleased the transaction has the support and recommendation of the Delta Lloyd Boards. '

Hans van der Noordaa, CEO of Delta Lloyd: 'Delta Lloyd is a highly client focused organisation with excellent market positions. I am proud of how the management and employees of Delta Lloyd have worked together over the last years to improve the operations and capital of the Group. We have been making good progress towards our goals. But our Boards have recognised the risks to the achievement of those goals which exist particularly in respect of the ongoing evolution of Solvency II capital requirements and a competitive market, that is on the verge of consolidation. After extensive analysis of different alternatives, we made a clear decision that a combination of NN Group and Delta Lloyd is in the long term interest of our stakeholders including our shareholders. The offer provides a certain cash premium for shareholders and also a secure future for policyholders.'

Strategic rationale NN Group and Delta Lloyd believe that a combination of Delta Lloyd and the Dutch and Belgian activities of NN Group (the 'Combined Company') is compelling. The transaction will result in an overall stronger platform within the Benelux from which to provide enhanced customer propositions and generate shareholder return:

• Additional scale and capabilities will result in an improved customer proposition within the Dutch pension market;
• Doubling the size of the non-life insurance business will drive underwriting results and customer experience;
• The integration of two leading asset management businesses creates additional scale and expertise;
• Increased size and scale of the banking business, thereby improving the competitive offering to existing and new customers;
• Doubling the presence in Belgium, leading to a strong life insurance market share with a more diversified offering through additional channels.

The Combined Company will be better placed to capture opportunities that technological innovation brings and will provide increased possibilities for knowledge sharing, strengthening capabilities and talent development. It will bring a perspective of growth and lead to opportunities for employees of both companies and will facilitate continuous improvement in customer service and experience.

Transaction details The Offer envisions the acquisition of Shares pursuant to a recommended public offer by NN Group. The Offer Price represents:

• a premium of approximately 31% over the closing price of EUR 4.12 per Share on 4 October 2016, the last trading day before NN Group initially announced its intention to make an offer for Delta Lloyd;
• a premium of approximately 38% relative to the average closing price per Share during the last month prior to the initial announcement; and
• a premium of approximately 55% relative to the average closing price per Share of Delta Lloyd during the last three months prior to the initial announcement.

Financing The Offer values 100% of the Shares at EUR 2.5 billion. NN Group will be able to pay the Offer consideration for an amount of EUR 1.4 billion with cash from its own available resources. For the remainder, NN Group has, subject to customary conditions, committed debt financing made available to it from reputable global financial institutions. The financial leverage ratio and fixed cost coverage ratios of the Combined Company are estimated in a range of 30% and 9x on a pro-forma basis at 30 September 2016.

Synergies and cash generation The combination of Delta Lloyd and the Dutch and Belgian activities of NN Group will facilitate a drive for further efficiency, supporting the Combined Company's cash generation capacity. NN Group will provide additional information on potential cost and capital synergies in due course, but is currently anticipating cost synergies of approximately EUR 150 million pre-tax by 2020. This is anticipated to occur in a range of areas including:

• Integration of operational and supporting activities in Life and Non-Life, including commercial migration
• Full integration of Bank & Asset Management
• Removal of overlap in centralised functions
• Reduction in project spend

With respect to capital, NN Group estimates the 3Q16 pro-forma Solvency II ratio of the combination to be at 189%, taking into account the reversal of the EUR 333 million deduction of the share buy-back and assuming the base case of senior debt issuance. Based on its due diligence, NN Group believes that there will be some initial capital synergies from the combination but also expects meaningful negative impacts from the alignment of actuarial assumptions under NN Group ownership. The combination of these is anticipated to result in the 3Q16 pro-forma Solvency II ratio declining from 189% to approximately 185%.

Over time, NN Group sees potential for further capital synergies, the transition of Delta Lloyd's legal entities onto the NN Group Partial Internal Model, but also the removal of the longevity hedge benefit currently included in Delta Lloyd's standard formula approach.               NN Group anticipates the transaction to generate a return on investment of around 10% and a double digit accretion in DPS for 2018 and onwards. The Combined Company will remain focussed on generating capital within its operating units and remitting this capital to the holding company where it will be subject to NN Group's unchanged dividend policy.

Wires call Lard Friese, Hans van der Noordaa, Delfin Rueda and Clifford Abrahams will host a wires conference call at 7.30 CET on 23 December 2016. Journalists can join the conference call at +31 20 531 5851 (NL).

Investor call Lard Friese, Hans van der Noordaa, Delfin Rueda and Clifford Abrahams will host an analyst and investor conference call at 9.15 CET on 23 December 2016. Members of the investment community can join the conference call at +31 20 531 5851(NL), +44 20 3365 3210 (UK), +1 866 349 6093 (US) or follow the webcast on www.nn-group.com .

Press conference and webcast Lard Friese and Hans van der Noordaa will host a Press conference at 11.00 CET on 23 December 2016. Journalists join the conference at NN Group Headquarters, Prinses Beatrixlaan 35, The Hague or follow the webcast on www.nn-group.com . Please confirm your attendance via mediarelations@nn-group.com or +31 70 513 1918.

General restrictions This announcement is for information purposes only and does not constitute an offer or an invitation to acquire or dispose of any securities or investment advice or an inducement to enter into investment activity. This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire the securities of Delta Lloyd or NN Group in any jurisdiction.

The distribution of this press release may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, NN Group disclaims any responsibility or liability for the violation of any such restrictions by any person. Any failure to comply with these restrictions may constitute a violation of the securities laws of that jurisdiction. Neither NN Group, nor any of its advisors assumes any responsibility for any violation by any person of any of these restrictions. Any shareholder who is in any doubt as to its position should consult an appropriate professional advisor without delay. This announcement is not to be published or distributed in or to the United States, Canada or Japan.

Important legal information All figures in this document are unaudited. Small differences are possible in the tables due to rounding. Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation: (1) changes in general economic conditions, in particular economic conditions in NN Group's and Delta Lloyd's core markets, (2) changes in performance of financial markets, including developing markets, (3) consequences of a potential (partial) break-up of the euro, (4) changes in the availability of, and costs associated with, sources of liquidity as well as conditions in the credit markets generally, (5) the frequency and severity of insured loss events, (6) changes affecting mortality and morbidity levels and trends, (7) changes affecting persistency levels, (8) changes affecting interest rate levels, (9) changes affecting currency exchange rates, (10) changes in investor, customer and policyholder behaviour, (11) changes in general competitive factors, (12) changes in laws and regulations, (13) changes in the policies of governments and/or regulatory authorities, (14) conclusions with regard to accounting assumptions and methodologies, (15) changes in ownership that could affect the future availability to us of net operating loss, net capital and built-in loss carry forwards, (16) changes in credit and financial strength ratings, (17) NN Group's ability to achieve projected operational synergies and (18) the other risks and uncertainties detailed in the Risk Factors section contained in recent public disclosures made by NN Group or Delta Lloyd.

Any forward-looking statements made by or on behalf of NN Group or Delta Lloyd speak only as of the date they are made, and, NN Group or Delta Lloyd assume no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States or any other jurisdiction.

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