NN Group reports 4Q16 and 2016 results 4Q16 operating

4Q16 operating result up 13%; Solvency II ratio at 241%

• 4Q16 operating result ongoing business of EUR 282 million, up 12.6% from 4Q15, reflecting a higher investment margin at Netherlands Life, higher fees and premium-based revenues at Insurance Europe and improved results at NN Bank and the reinsurance business, partly offset by unfavourable claims experience at Netherlands Non-life
• Full-year 2016 operating result decreased to EUR 1,227 million from EUR 1,435 million in 2015 which benefited from higher private equity dividends and a significantly higher technical margin in Netherlands Life, while 2016 was impacted by severe storms at Netherlands Non-life
• Net result of EUR 148 million, down 58.9% from 4Q15 mainly due to lower non-operating items and negative results on divestments. Full-year 2016 net result down to EUR 1,189 million from EUR 1,565 million in 2015
• Further costs savings in the Netherlands bringing the expense base down to EUR 761 million
• Robust commercial momentum in the quarter, with APE up 12.0% at constant currencies in the insurance businesses, net third party inflows of EUR 1 billion at Asset Management and mortgage production of EUR 0.9 billion at NN Bank. Full year VNB of EUR 214 million, up 6.4% from 2015
• Strong capital position: Solvency II ratio increased from 236% to 241% at the end of 4Q16, reflecting market impacts, the reversal of the EUR 333 million suspended share buyback and the deduction of the proposed final 2016 dividend of EUR 307 million
• Holding company cash capital higher at EUR 2,489 million, driven by dividends received from subsidiaries, partly offset by capital injections and share buybacks
• Final 2016 dividend proposal of EUR 0.95 per ordinary share, or approximately EUR 307 million in total, bringing the full-year 2016 dividend to EUR 1.55 per ordinary share

Statement of Lard Friese, CEO

'2016 was an eventful and important year for NN Group, a year in which we made considerable steps. We invested in accelerating change and innovating our customer experience, and worked on new and improved products and services. In April, ING completed its divestment of NN Group. We were able to maintain a strong capital position, making us well-positioned to weather volatile markets. This strong financial position allowed us to take an important step in bringing consolidation to the Dutch insurance and asset management markets and to announce an intended offer for the outstanding shares of Delta Lloyd in October 2016. After a period of constructive interactions, on 23 December we announced that the Boards of NN Group and Delta Lloyd reached an agreement on a recommended public offer with the aim to combine Delta Lloyd with the Dutch and Belgian activities of NN Group. Early February we launched the offer for all issued and outstanding ordinary shares in Delta Lloyd at EUR 5.40 per share and announced that we increased our stake in Delta Lloyd to 8.0% of ordinary shares. This transaction represents a significant step in our journey to build a profitable business for the future, and to strengthen our leading position in the Netherlands and Belgium.

NN Group reported a healthy operating result in the fourth quarter of 2016. Most of our businesses are making steady progress in delivering on their strategic targets. The Netherlands units achieved a further reduction in their cost base, which is targeted to be reduced to EUR 685 million by the end of 2018, ahead of the reduction that was expected to be achieved in 2016. Our European and Japanese insurance businesses reported higher sales as a result of the successful launch of new products, while the total value of new business increased for the full year, despite lower interest rates. NN Bank continues to generate considerable growth in the mortgage and savings markets and our asset manager, NN Investment Partners, again attracted net inflows of third-party assets in the fourth quarter. There is still more work to do, for example in bringing down the combined ratio of our Non-life business.

Our Solvency II and cash capital positions remain robust, at 241% and EUR 2,489 million respectively. We will propose a final 2016 dividend of EUR 0.95 per ordinary share at our Annual General Meeting of Shareholders on 1 June 2017. Together with the interim dividend paid in September 2016, this represents a pay-out ratio of around 51% of the 2016 full-year net operating result of the ongoing business. In January 2017, we successfully refinanced part of our outstanding debt and allowing us to repay the final tranche of hybrid debt to ING.

Looking ahead, ongoing uncertainty with regard to economic growth, macro developments, and potential political shifts are likely to impact the financial markets in 2017. Irrespective of these developments, we are committed to delivering an excellent customer service, innovating our products and further improving our businesses. The progress we made in these areas in 2016 is reflected in our employee engagement and Net Promotor Scores. This strong foundation enables us to further shape our ambition of creating a company that truly matters in the lives of our stakeholders.'

NN Group key figures

Note: All footnotes are included on page 28

Quarterly Business Update

NN Group's robust financial position in 2016 reflects the resilience of its businesses in an environment which continues to be characterised by low interest rates and market volatility. This provides a solid foundation for executing the company's strategy, which is to deliver an excellent customer experience based on transparent products and services and long-term relationships. NN Group aims to help people secure their financial futures, and is committed to delivering products and services that are easy to understand and meet customers' lifetime needs.

Transparent products and services

In the Dutch pension market, NN maintained its leading position in 2016. This was acknowledged by the Dutch magazine Management Team, which ranked Nationale-Nederlanden as the best pension provider in the Netherlands for the third year in a row. Moreover, the Dutch pension business introduced new features to further improve its product proposition, for example the 'additional savings' option for its Defined Contribution product which allows customers to increase their individual savings to secure future income. In Poland, the cooperation with Notus started and the Polish flagship product, a protection and investment proposition, was tailored for customers of Notus and launched in the fourth quarter.

Capturing growth

The fundamental need of people to protect themselves against uncertainties will continue to drive growth in the insurance industry over the long-term. NN Group adapts its businesses to capture this growth potential. In the fourth quarter of 2016, the sale of protection products grew 11% across Europe compared with the same quarter in 2015, with Romania, Turkey and Belgium as the largest contributors. In Turkey, a new law entered into force on 1 January 2017, under which all employees under the age of 45 will be enrolled in a new compulsory pension scheme while their employers can select a pension company. NN Hayat ve Emeklilik successfully introduced a new pension product to meet this new demand.

In the fourth quarter of 2016, total sales at Japan Life increased by 23%, excluding currency effects, driven by the sales of the COLI critical illness product launched in July. Bancassurance sales grew 37%, at constant currency, compared to the same quarter of 2015. This was driven by higher bank activation and the expansion of the bank distribution network, bringing the total to 61 banking partners at the end of 2016.

At the beginning of 2016, NN Romania launched the first health insurance on the local market. At the end of December 2016, over 10,000 clients contracted health insurance from NN, 50% more than initially expected for the first year.

In the Netherlands, NN Bank grew its mortgage portfolio by EUR 2.2 billion to EUR 12.7 billion in 2016. During that same period its customer savings grew by the same amount to EUR 10.2 billion. In the Dutch market, bank savings are increasingly replacing Life annuities, and NN Bank has established a strong position in this market. Movir, which offers individual disability insurance to self-employed workers in the Netherlands, successfully launched a campaign to inform medical specialists about their renewed product offering, which complements the existing disability insurance (AOV).

The fourth quarter also saw positive developments in the area of securing new contracts as NN Investment Partners was selected to become the fiduciary manager of assets under administration (AuA) for two large Dutch pension funds for a total amount of EUR 4.8 billion. In addition to this, NN Group's general pension fund 'De Nationale APF', secured its first client.

Multi-access distribution

NN Group serves its customers through multiple channels, comprising tied agents, bancassurance partners, brokers and direct channels. It is our aim to achieve profitable growth through multi-access distribution. In line with this strategy, our insurance company in the Czech Republic entered into a strategic partnership with Moneta Money Bank. This enables NN Czech to reach a larger number of customers and provide products to meet their protection and pension savings needs. Moneta Bank extended its product offering with NN's term life insurance and pension savings products.

In the Netherlands, the website NN.nl continues to attract an increasing number of visitors, and over 90% of NN Bank's new customer savings is generated through this online channel.

Effective and efficient operations

NN Group aims to make its processes as efficient and effective as possible. The businesses in the Netherlands continue to implement efficiency initiatives. For example, the pension business in the Netherlands established a system which links to salary package software from HR benefits companies, improving administrative efficiency for both customers and NN Life. In addition, NN Life entered into a strategic partnership to outsource business processes and IT for the individual life closed book. Furthermore, in line with the retail strategy in the Netherlands, several new products were made available on the online distribution channel 'My NN' and in the NN app. Also the Dutch Non-life business remains focused on increasing efficiency, for example by sending close to a million documents to the digital mailbox of intermediaries, instead of in hardcopy. Moreover, NN Bank extended digital tooling and self-service processes, providing customers with insight and options to make adjustments to their products. One example is a track and trace system for mortgage applications.

Japan Life is introducing self-compliance and medical self-service tools improving our service and reducing administrative efforts. In Belgium, a Home & Family portal was created, where customers are able to modify their Building, Contents, Theft and Family insurance, request certificates or file a claim online. This reduces manual work and delivery time and increases the self-reliance of the customer. After the introduction of tablets for our sales force in Poland in the third quarter of 2016, 90% of the new business applications were fully automated, resulting in efficiency gains and improving customers' experiences and communications.

Innovation

As part of our ambition to enhance the quality of advice and service to customers, improve staff productivity, and create cross-sell, upsell and retention opportunities, NN Life Japan launched a one-stop intuitive service platform for agents in December 2016, which will help strengthen relationships with distributors. Furthermore, NN's broker in Turkey, Sigorta Cini, is operating from 25 'insurance shops' across the country, and is the second most visited online aggregator in Turkey with more than 1 million unique visits annually. Improvements in website functionality and investments in search marketing has helped NN in Turkey to reach out to more online customers looking for price comparison.

The Non-life business in the Netherlands launched several initiatives to increase safety for retail and SME customers. In November, Sparklab (the innovation lab of NN Non-life) launched the Dutch Cyber Collective. This association is supporting SMEs to reduce cybercrime. Other examples include a safety check for children's bikes in schoolyards in The Hague and the 'Safest Street of the Netherlands' ('Veiligste straat van Nederland').

Other events

In 2016, NN launched a new campaign 'It's different when it's yours', celebrating the uniqueness of our individual customers. In the coming months, the new campaign will be launched in many NN countries. It focuses on those moments in life we all experience, yet we all experience differently. NN is proud to help millions of individuals, families, homes and businesses every day, and we are well aware that the family, home or business of each individual customer matters most to him or her.

As part of our commitment to considering environmental, social and governance aspects in our investment decisions, during 2016 experts from NN and NN Investment Partners contributed to a report called 'Building Highways to SDG Investing'. With this report, a group of 17 financial institutions including NN Group, invited the Dutch government and Central Bank to continue to make a concerted effort in cooperation with the financial sector in support of the Sustainable Development Goals (SDGs). Adopted by the United Nations, these goals relate to climate, poverty, health care, education, and other societal challenges.

NN Group Profile

NN Group is an international insurance and asset management company, active in more than 18 countries, with a strong presence in a number of European countries and Japan. With around 11,500 employees the group offers retirement services, insurance, investments and banking to more than 15 million customers. NN Group includes Nationale-Nederlanden, NN and NN Investment Partners. NN Group is listed on Euronext Amsterdam (NN).

Investor conference call and webcast

Lard Friese and Delfin Rueda will host an analyst and investor conference call to discuss the 4Q16 results at 09.30 am CET on Thursday 16 February 2017. Members of the investment community can join the conference call at +31 20 531 5865 (NL), +44 203 365 3210 (UK), +1 866 349 6093 (US) or follow the webcast on www.nn-group.com .

Press lunch

Lard Friese and Delfin Rueda will host a press lunch to discuss the 4Q16 results, which will be held at 11.30 am CET on Thursday 16 February 2017.

Financial calendar

Contact information

Additional information on www.nn-group.com

• NN Group 4Q16 Financial Supplement, NN Group 4Q16 Analyst Presentation
• Photos of NN Group executives, buildings and events are available for download at Flickr

Important legal information

NN Group's  Consolidated Annual Accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS-EU") and with Part 9 of Book 2 on the Dutch Civil Code.

In preparing the financial information in this document, the same accounting principles are applied as in the NN Group N.V. condensed consolidated interim accounts for the period ended 30 September 2016. The Annual Accounts for 2016 are in progress and may be subject to adjustments from subsequent events.

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 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.

Any forward-looking statements made by or on behalf of NN Group speak only as of the date they are made, and, NN Group assumes 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.

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