ASR Nederland N.V. (AMS:ASRNL)
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Apr 30, 2026, 5:38 PM CET
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AGM 2019
May 22, 2019
Annette Aras, Forseter from the SLEXI and the Numis Committee and from the Remuneracci Committee Hermann Hintzen and Sonja Baerndreft. And Votala Harad from Bristol, Mr. Anders Barthe, CEO and Chris Vighe, CFO. Then our sign is Andreessen from Groote, Dale Hartz, see from the undernamings, right, underlining Fraunforsiten, Nordea Antonis. Welcome.
Okeit Graaf van Hatter, welcome. The senior management for AZR. Vertego Orkers from the media. The Nasdaq Vositter from the shifting, Continuitite from ASR, Hermann Haaservinkle. Our Weserhe's Paul van der Bell, the notaras, the saltusine, the correct envelope from the stemming.
I and Within the Plants by ACHEND Point 3 at Remuneratseebelite, ACHEND Point 3, YAR Rekening and Dividend. Ben Luming from the Exste and Accountant. Achrende. Sphere and webcast by jukun. Ochterfseenlatteroponswebsite and the Balanarax to make it daily.
Of ASR to become as shareholders in order to get quick answers to their questions. I hope everything was clear. And that brings me to item 2 on the agenda. And I'll invite Jos to give a brief explanation on the annual report. Floor is yours.
Thank you, Alrik. Welcome, Alimal here.
Thank you, Thich. Welcome here in the room as well as all interested individuals and shareholders attending this presentation via webcast. It's nice to see that so many people are interested in ASR and would like to discuss the previous year with us. 2018 was once again an intriguing year for us in which we experienced many highs. It was also a year that we managed to wrap up nicely.
And of course, we continue to pursue ongoing improvement, whether in our services or other areas that we consider it to be important. A few of the highlights from 2018 included our campaigns in recent years to highlight our social position. We're convinced that as an insurance company, you have to play a significant social role to retain your raison d'etre. In our investment policy, we demonstrated increasingly that we want to make the Netherlands and the world more sustainable. And we achieved a nice acquisition in 2018.
That was Realis. I'll talk about that in a moment. Our customers were more than satisfied because we do this all for our customers, shareholders and society in general. And we also demonstrated fine financial results. The acquisition was L'Orealis.
And I'm going to speak for a moment about those financial results with you, and I assume that you examined those sections in the annual report particularly diligently and least through the rest. We achieved fine results last year, 742,000,000 operating profit last year. That exceeded the operating profit from the previous year and up to then in 2017 was the highest operating profit ever. And we're particularly happy because this already includes a particularly large claim for non life. We had 30,000,000 in claims due to storms and climate related damages, what we call it now.
And these incidents are increasing despite that serious storm. Our results were excellent. And in non life, our combined ratio, as you know, that conveys the balance between premium income versus non life claims paid and commission fees of 96.5%. Our target was 97, despite that severe storm that impacted the combined ratio by about 1 point. We demonstrated an excellent non life result.
Life insurance derived as well. As you know, that market is under pressure, but premium income is gradually decreasing because the individual section of that portfolio is gradually being depleted due to lack of new output, but that did very well too, especially investment results in that portfolio were solid, so that the profit grew well there too. And there are other segments such as distribution companies and investment companies such as our external asset manager did well as well last year. There too, we achieved a nice increase in operating profit. As a result, our return on equity exceeded our target as disclosed when we were launched on the stock market.
It had been up to 12% and we achieved 14.2%. We demonstrated our excellent performance as a company as well as for our shareholders. We controlled costs. Optically, they seem to increase, but that was because we acquired a large company, which was Generali, disregarding that. Our costs decreased by over 3%.
And increasingly important figure for our shareholders as well is what we call organic capital creation. And you could describe that as free cash flows. So new capital accumulated that you either invest reinvest in the company or return to shareholders at 372,000,000. We felt that we did very well there in the past year. Now revenue, that's where it all starts.
In fact, for several years, we saw our revenue under pressure. Last year, we saw a substantial increase of 17%, part was because we added Generali. At the same time, we also noticed that disregarding Generali, non life grew by 4.7% and life insurance posted fine growth of 8%. If we're disregarding Generali, that is, Those were the financials. And on days like today, they're often the main focus.
But we also think it's very important to focus not only on financials, but also on some non financial criteria. I'm going to review a few of those. First, this company subsists from customers. If there are no more customers, we can talk until the cows come home, but there's not very much to do. That's why we focus on how customers perceive us and how our distribution partners perceive us.
And we're very proud that last year, both our customers improved their rating of our services and products that increased to an NPS of plus 40. And our commercial partners, such as our insurance brokers, also assigned us an excellent score, which was plus 54. As for customers, aside from our day to day business, we also try to see what we can do to help our customers better with our products. There's some social issues that as an insurance company, we believe we can do something about. I'll give you a few examples.
All following the debate about occupations that are difficult to ensure such as the self employed, as Amersports brand introduced a new product last year for occupations that are difficult to ensure and that are heavy occupations where we young people live a healthy lifestyle so that they can continue to be insured until they reach retirement age. Another nice example is that the price of housing is high now in the Netherlands. Many young people complain that they can't afford to buy a home. So we've launched a mortgage with a fixed a 40 year fixed interest rate period. We're the 1st to do this in the Netherlands to enable people to buy their home and to have a certainty of what their costs will be for an extended period.
And finally, another source of pride that we'll just talk about more toward the end of the year. We're all living longer and healthier, so we'll have to work longer. That's a fact of life, at least for those who are not retired yet, it is. And it means that healthy lifestyle matters. We need to remain healthy longer.
And we're proud of our partnership with Vitality, that's a South African company. And in the coming period, we'll introduce various formats to promote a healthy lifestyle and healthier aging among our customers. And later this year, I believe in November, we'll be disclosing this to the market. Another non financial that we care about concerns social sustainability that's increasingly important. And I think that as a financial provider, we can do much to promote this.
So in our investment policy, we focus on how we can help the companies where we invest to operate more sustainably. And it's true that sometimes this gets rise to dilemmas. So we do have an exclusion list. There are certain companies or branches where we know are no longer willing to invest. But that raises the question of how does that influence your daily acceptance policy?
And are you willing to ensure those companies? So to help our staff, we organize department workshops run by an ethicist who tells our staff how to cope with such problems. One important trend is that sometimes if you want to be there, you can tell some companies, if you don't do anything about your operations to be more sustainable, perhaps we can't insure you anymore. There are a few other important points that I'd like to cover here. Last year, we rose the fastest among financial companies on the Dow Jones Sustainability Index.
And by now, we're among the top 15, which means we're not quite on the published list because that only goes to the top 10. So that's another ambition and 100% of our investment portfolio now meets the requirements for sustainability sustainable investments that we have set. Now next slide. As I said in my introduction, we acquired Loyales, that was a fine acquisition. And the year before, we acquired Generali.
Integrating Generali is on target, is proceeding very well. Yesterday afternoon, one of the departments in ASR invited me to come have an Italian ice cream because that department was celebrating having completed the final step in integrating individual life portfolio of Generali. So we've almost completed the integration. We have 2 small steps, not the non life portfolio. We're in the midst of integrating that, but we'll have fully integrated it in ASR by the end of the year.
And the final step is pensions. That's always a bit more labor intensive because of all the legislation and regulations. And the pension company of Generali should have been fully integrated by the Q1 of next year. We will not fully integrate L'Orealis within ASR. This links closely to the GDPR company.
One of the reasons we did this is because it opens the door to large new customer segments in the Netherlands. So the customers of L'Orealis, who account for about about 85% of L'Orealis consists of civil servants and government staff. And we don't want to erode the commercial value. That's why we've decided to leave the disability operations in Heirloom, but we will be integrating the life portfolio because that's also a shrinking portfolio and we expect to complete that by the end of next year. And of course, there is a red or white elephant in the room.
As you know, at present, there's a large Dutch insurance company for sale. We've read all about this in the Dutch press. And the question is, how does ASR feel about that? Our core strategy is that we said we prefer organic growth. We excel at small and medium sized acquisitions.
We've done several and have demonstrated our strength in recent years there. That's the core of our strategy. We have a very rigid financial framework there. We discuss each acquisition with the supervisory board beforehand to indicate the financial and operational hurdles. That's our preference.
At the same time, if there's a huge transforming transaction available in the Dutch market, it merits a serious consideration. But we're not willing to do those transactions at any cost. We take a very serious look at them, but with all financial requirements of acquisitions will apply here as well. And if it doesn't work, we'll forego that. It's not must have for us.
At the same time, we believe that, that company has been offered for sale a few times already. It would be good for the customers of that company to find a safe sanctuary. And we believe that ASR could be one of those safe sanctuaries, especially because we have over 300 years of experience in insurance in the Netherlands. And we'll focus on the interest of the customers from our perspective and serve them as best we can. That's what I had to say about the potential market opportunities.
As I said, we're seriously considering this, but based on a rigid structure. When we were listed on the stock market, we disclosed some financial targets and we said that for the 1st 3 years of our listing on the stock exchange, those will apply and that period ended last year. We're proud to say that all KPIs that we disclosed when we were listed on the stock exchange have been achieved. The last we can report is the cost decrease with respect to ASR when we were launched in 2016 on the stock exchange. We achieved that cutting cost to the tune of 200,000,000.
I'm not going to itemize them, but if you have questions, I'll be happy to elaborate. That takes me with the ASR dividend, which is, of course, important for all of us. And we now have a tradition of distributing dividends from previous years. This is the sheet I would like to show my shareholders. This is as I would like it each year, our dividend rises.
Our proposal today is a 6.7% increase with respect to the previous year, which is a slightly higher increase than that of operating profit that was impacted by the 30,000,000 dollars in non life claims, but this also expresses our confidence in ASR and our confidence in 2019. That means that we're proposing a dividend of €1.74 per share. We've already distributed €0.65 as an term dividend, which means yields a final dividend of €0.0109 That takes our dividend up into the range of 45% to 55%. And this proposal take us to exactly 48% of operating profit after subtracting our costs for issued loans. That's what I had to tell you about the dividend.
Now finally, last year, there was another highlight at Capital Markets Day and we welcomed analysts from all over the world in this same area and disclosed our targets for the next 3 years. That was on October 10. Those were the ASR targets as ASR was on October 10. I'm not going to itemize them. Some have not changed, but I'd like to mention a few of the important ones.
In the preceding period, we had our return our target of return on equity was up to 12%, and we've adapted that to 12% to 14% to convey our confidence in our future. Very important is organic capital creation, which reflects how much capital you generate, which expresses latitude both with respect to dividend and investment in the company. For 2021, we've set that at $430,000,000 You can add $35,000,000 to that because after the capital through the Capital Markets Day, we acquired Ooyalas. And after integration, we expect that to contribute to organic capital creation to the tune of about $35,000,000 I won't discuss the others. They're relatively the same except for the financial leverage, which is slightly higher.
That's mainly because of the way we calculate that at 35%, that's roughly equivalent to 30% with the most other insurance companies. Now business targets, that's what keeps the company going. At the end of the day, life insurance has a huge portfolio that's shrinking nonetheless. We've stated that we expect to have stable operating profit from life insurance in the coming years, at least stable. But because the portfolio is shrinking, we need to curtail costs and whereas the costs were 56 basis points of the reserves last year, our target is to reduce them in the years ahead to 45 basis points to 55 basis points.
In non life, we assume that the combined ratio will be 94 to 96 in its combined ratio. The time ahead, 96% in years with some setbacks, such as severe storms and non life claims, 94% in a very favorable year as 2017 was connected to, as we've said, organic growth. So our growth target is 3% to 5%. And that's quite challenging on a market that is currently shrinking with a gross national product that's hardly growing at 1% to 1.5%. So our ambition is to grow faster than what the market would naturally be expected to do.
And our final business target concerns our distribution company and asset manager that we want to contribute in 2021 to the tune of at least RMB40 1,000,000 and should be growing from that point onward by at least 5%. And we also have some non financial targets. We also focus on non financial metrics. Customers are very important. Last year, our net promoter score was at 40, and that's quite high.
Nonetheless, we've raised the bar and aim to grow to 44 in a few years. We're a major investor, and enables us to focus on being more sustainable. If you want to rely on that, you have to measure your investment portfolio CO2 footprint. So our first target is to quantify that portfolio so that by 2021, at least 95% of our entire investment portfolio is reflects a clear CO2 footprint and then our targets will be focused on reducing that footprint. Wherever we can do that, we already are and you see that the footprint in our investment portfolio is about 30% lower where it's quantifiable than in other portfolios.
Another very important target concerns investing in social impact funds such as the dark green bond that the government issued yesterday should satisfy an investment in this category. We partner with Triodos Bank to deal with some long term financing that's often very challenging. Our target there is $1,200,000,000 And finally, we think it's important for our staff to go that extra mile in making Dutch society more sustainable as well. And we've said, we're a financial institution. We can help people and families in trouble not to do endless financing and money but by educating them.
And many of our staff invest their personal and work time to help families in trouble, balance their finances and to try to teach children how to handle money. And our objective is to increase this effort by 5% year after year. That was my brief explanation of 2018. We're proud that we had a good year, and I'm proud on behalf of the executive board on the dedication of our staff because Chris and I often tell each other we talk about it a lot, but our 3,800 employees who serve our customers day after day are actually doing the work. Thank you.
And I'll hand you back to Kit now. Bertrand?
Thank you very much for this very clear story. We have a set of microphones in the room. If you'd like to ask a question, please speak into the microphone, making sure that those following the meeting through the web screen can hear the questions. And also for the sake of the minutes, please indicate your name and possibly the organization we present. You were the first.
You can speak first. Thank you very much. Good morning. The members of the Executive Board, Finn is my name is Vicky van Heek. I work for the Association of Shareholders for Sustainable Development, Vividio.
I have 3 questions I'd like to raise about sustainability. The first question concerns the climate. ESS contributed actively to the carbon counting financials platform last year. This is a very positive step. At last year's AGM, we also asked about science based CO2 reduction targets.
Jos referred to it himself a moment ago. And our question about the 95% that can be measured now is the following. Can you share the results at this point in time? And can you tell us at what point in time you think to publish these CO2 reduction targets for the portfolios for the scopes 1, 2 and 3 in line with the Paris Climate Agreement? My second question concerns the effects of climate change.
This can be drought or floods or other extreme weather events. VIBELIO considers this as a risk for both the insurance companies and shareholders, investors. The task force for climate related financial disclosures, another nice term, advises financial institutions, among other things, to investigate these quantitative risks of climate change and to apply a scenario analysis to this. And my question is this. Has ASR investigated the risks and possible opportunities, both as an insurance company and for shareholders.
Can you share the outcomes? And when do you think you could be reporting according to the guidelines of the TRFD? And then the last question, this is about the sustainable development goals. ASR obviously mentions the sustainable development goals in the annual report, and we are very glad that life on land and life on water, 2014 and 2015 are taken on board. Many parties forget about these targets, goals.
But my question is how you measure your impact on these development goals in a positive or a negative sense? And whether you can formulate some targets that contributed to achieving development goals in the light of the UN guidelines and targets in this field? Yes, Kees and myself will split the questions fairly. Chris is, among other things, responsible for shareholders. So he will cover the questions related to shareholder issues.
And let me, therefore, select the second part of your second question and the first part of the next question. What we are doing from the insurance point of view, what we are doing about the insurance portfolios in this light. Maybe you read this morning's newspaper, Volkskrant. It happened to carry a large article on this issue mentioning ASR among other parties. Well, first of all, we have a pretty clear picture of the major climate risks in our portfolio, and this is a double risk.
First of all, we have increased damage from weather events, rain or also hail. We saw an example of this. And we can't prevent this, but what we can and do is inform our clients about risks and help them take measures. And with increased data available about whether developments, this is going better and better. We can, for instance, warn our customers that hail is coming, that they might either cover or park their cars inside.
And then the major the largest non live damage events are floods. And we, as industry, have been talking for several years about this with government. We think that part of the risk can be ensured under certain conditions, but hand in hand with government, we haven't come to a solution yet because it is a complicated and difficult issue. One of the conditions, for instance, would have to be that everyone in the Netherlands should contribute a slight amount in the insurance premium to cover the damage of people who live in risk areas. When you live in the East of the Netherlands in Venter on higher lying ground, the risk is lower than people living in the plains near the coast.
So we look at the contribution we can make to this, and we're certainly trying to cover our customers. We have set up a climate committee to offer maximum support, pre warnings, trying to prevent damages and to keep premiums low. If that doesn't work in the Netherlands, we have also calculated that premiums would have to increase by 15% to 20% in order to continuously cover the increasing risks of climate claim. Now case, you would say something about the investment case. Yes.
As an answer to your question, in the Spitsbergen Group, we are working on science based targets and making it even more science based in order to meet the requirements of the Paris Accord. In 2022, we will make them public at the latest, but I can lift the tip of the veil. If we measure the carbon footprint of our investment portfolio, then we see that we have a near 100 percent coverage. Some portfolios take slightly longer to focus on. This is particularly assets on the 3rd party assets under management.
Here, we have come to only 25% of an analysis. We're working on this, And we're also working particularly on real property and mortgages to measure the corporate footprint of the mortgages that we provide and our property portfolio. And the first conclusions are that for the measurable segments, the carbon footprint of our portfolio has gone down with 30%, 40% over the past years. And that way, we can compare ourselves to a benchmark on credits or shares. We are more or less 30%, 40% below the average benchmark.
And we think that by 2020, we can formulate tough targets, hard targets in line with our commitments. Now when talking about mapping the impact of climate change on our investments, We have an initiative launched by Coritec Otech. This is a liability management study carried out by some universities, pension funds and consultancy firms, which are very and analyze our investment portfolios in line with the climate scenarios, we came out pretty resilient. Our portfolio has also viewed in European large investment portfolios because the assumption there is that we would be vulnerable for climate scenarios. So that we were checked, And we see that this is becoming a more and more important element of our asset allocation.
Now it's a back test that we carry out in order to verify and control. But I think that climate scenarios will play a more and more prominent role in our investment policies. We already test the scenarios, and we come up pretty favorably. When looking at our property portfolio, for instance, we see that geographic top down analyses looking at regions try and reveal risks or sensibilities, risk of floods, for instance, or other water damage scenarios of our assets. So to be brief, we do analyze our portfolio together with universities and other parties, and we prove to be pretty resilient.
And this is something that will be more and more important going forward. A follow-up question. Do you expect to report on this in line with the requirements? Yes. I think that at some point in the annual reports, we will report on our performance on the different climate scenarios.
Thank you very much. Now the SDGs, the impact we have on SDGs. Unfortunately, we don't have worldwide metrics saying that this A, B or C can be the exact metrics for measuring the impact. But we select leaving out and having positive action. And for each SDG in the annual report, you see what we have done, what positive contribution has been made to the SDG.
Is it uniform metrics? No. But I haven't formulated yet a KPI for each of the SDJs. We don't have such KPIs, unfortunately. We're waiting for the rest of the world.
We want to follow-up on existing developments, and we will follow them when they exist. But we want to exclude certain investments and want to emphasize positive action for each single SEG. Thank you very much for that answer. Thanks for these very clear questions. You had a second to stand up and then the next speaker.
My name is Jasp Jenssen. I'm here on behalf of the VEB Association of Shareholders. I read the annual report, and I read many annual reports during the season of AGMs. And in the first part, we usually read about value creations, returns on equity, value over volume and these kind of terms. And then you come to the second part, the financial statements, and it's not always present there.
And in your annual report, it is, as we see by your MTO targets that have been met. This is positive news. Now I have a few questions about the level of ambition of the new targets. But first of all, I would like to turn to the elephant in the room, which is obviously Vivat. We receive all kinds of news, but really striking is the fact that private equity seems to play a prominent role in the bids for Vivat.
And private equity has a higher level of risk capital, so they can take higher risks, have a more aggressive investment policy, which leads to the risk. They can pay much more than the well established companies such as ASR. So my question is the following. I have 2 questions actually. One, can ASR commit it will abide by the minimum return investment ratios up to 12%, including an acquisition of Vivat.
And secondly, it would be fair to require an even higher return on capital employed given the risks that such an acquisition would bring? That's the first question. Then a second question, this is an opportunistic question. If it might transpire that ASR is not going to carry out this acquisition, this means that private equity funds are willing to pay a lot for Vivat. And that, in turn, would mean that there's a lot of value in the life portfolio that Vivat still holds.
So therefore, my question is this. In a scenario of a high bid by private equity for the life portfolio of Vivat, would ASR be willing to divest this to a third party? Where are you in this match, in this race? Then a few questions about the new strategy and the strategy targets. My first question concerns the tension in non life between 3% to 5% growth combined with a combined ratio.
Mr. Barton said that we want to outgrow the natural possibilities. That leads to suspicion usually on my side because the risk may then be that it's growth above value creation. So at a higher level of abstraction, my question is this. How worthwhile is it formulating a quantifiable growth target there when value is actually much more important than growth?
That was the first question. The second question is about the Life book. The expectation for the coming 3 years is that the revenues will be stable. Still, I would like to have a better understanding of your long term expectation of this portfolio giving you shrinkage. What is your long term outlook for this portfolio?
Then a question on the return on equity expectations, obviously increased. But if you look at performance over the past 2 years, ASR always performed way above the 14%. So my question is, is this under promise and over deliver? Or has something changed in insurance markets, meaning that the return on equity employed is lower than in the past? And then a last question about the banking activities.
They have been defined as noncore. And I wondered whether this can be set aside of the remaining part of the organization easily, whether you have any strategic or other reasons to keep the banking activities or whether you can divest them without effects for the further operations? Thank you. Let us start with the elephant in the room, Jos. Yes, the elephant in the room.
Well, we also read the news about possible competitors in the bid. And time will show how aggressive the process will get. We know the process the procedure is pending as we speak. Your question is whether we can commit to our discipline. We're very proud of our capital discipline.
And certainly, we would not give up the discipline for such a case. So therefore, without any hesitation or any reservation, the answer is yes. And when talking to investors about this matter, we also addressed the 12%, which is our hurdle rate for an acquisition. And we add to this how we see the risk of an acquisition. And when we think there is a risk, a financial or an operational risk involved, we will also think twice about raising that threshold.
And it's not unthinkable that we would gratify such a transaction as at a higher risk than previous acquisitions. And if we would be the buyers, then we would make clear how we have valued the risks and how this will be expressed in our requirements for the transaction. But you may be comfortable that it will be high and even higher than we are usually accustomed to do? Then a second question, whether we are willing to divest. Well, I hinted at this during my introductory remarks.
We think that being an insurance company in a shrinking market in the Netherlands, where life portfolios are gradually decreasing, it's important also to live up to the obligations for the very last policyholder. And therefore, we first look at our obligations and that we attune our portfolios to the levels obligations in terms of amounts, in terms of time. And then in the investment structure and the risk management, we cover this. Some additional margin, obviously, is nice. Otherwise, you can't survive as a company.
So we wouldn't say we're getting a few 1,000,000,000 of premium. We're trying to generate the highest returns because we all know that the higher the risk. And we have the obligation to live up to the expectations of policyholders. So if we would consider a divestment of a policy or a portfolio, that would be the leading principle for us because we have taken an obligation vis a vis our customers. We have to stand by these obligations.
So the likelihood of ending up in a transaction is clear. It's close to nil in my view. But I have always learned that we must keep the back door open, but I think it's hardly likely we'd end up with such a transaction, such a divestment. And in addition, on the Capital Markets Day, we said that we view ourselves as a national consolidator of the life market. We're a Dutch company.
We know the Dutch market. Dutch market. We are in the Dutch situation. We know the Dutch regulator. We have a number of Life portfolios in the Netherlands that would meet our profile, but that are smaller.
So we see ourselves as one of the consolidating parties on the Dutch market or at least potentially in this role. And from that point of view, it would be logical to sell off our life book. That covers your questions about the elephant in the room. One question about the further procedure. When we may believe the press, private equity plays a very prominent role, and this is an important issue.
What is your take on the take of the regulator? I think the regulator should best answer that question. I don't think it's my vocation to speak here on behalf of the regulator. We speak from our perspective. We mentioned the way we think a digital insurance company should be run, and I don't think I should be voicing all kinds of positions on behalf of the Dutch National Bank on this case.
I assume they're taking a very wise view. Do you think you make a fair chance of the success of this acquisition? Well, insurance business is probability guessing, but I also learned you shouldn't be too outspoken. We have a very strict discipline on go, no go decisions. So for such an acquisition, if we are within the go scenario, we'll take an even closer look.
But if it falls outside the bandwidth of our financial discipline guidelines, then so be it. I already said that it's not a strategic must have for us. Things should really add up. We're not going to put ASR risk for such a transaction. Then you had a question about our targets.
Well, first of all, growth combined with a combined ratio, well, the general principle of ASR is value over volume. So if no value is being created, we will not go ahead. On the Capital Markets Day, we said that there is a certain order in our targets. The prime target is a healthy return. Otherwise, you can't continue operations.
And within this framework, we have shown our belief that we can have healthy growth by providing good service to customers, by providing good products. And if this can go hand in hand, we will follow the growth targets. But as of the moment, when we see that the growth would be at the expense of return on investments, we would immediately slow down the process. Then a second question you raised about the return on equity. Chris will address this in a moment.
Sorry, that was your third question. Yes, and that was a Lifebook question. Well, during the IPO, we showed you some aspects of the Life book, and we said that counting from the IPO, the book would diminish by 50% over 5 years. Well, we are 3, 4 years down the road, we see that mortgage products are diminishing faster because government and banks have a policy of repaying high mortgages than was planned. So we see more people buying out their life or policies and paying down on the mortgages.
So we assume for them being that this process of decreasing policies will come to the 50% threshold, maybe already in the 90% or the 10%, not the 5%. Why do we think that still results will maintain at the previous level in the upcoming year? Well, in the Life book, you have an all part of portfolio with a 4% guarantee. This is the part that naturally will decrease fast as of all. That means that the discontinuing of the 4% guarantee portfolios will compensate profitability to certain extent because the younger LifeBook has only a 3% guarantee level.
So normally speaking, you have a lower amount. You can keep the same profitability levels by and large. And then Chris, you are the master of ROI ROE. Yes. You also had a question about investments, and I'm in charge of them, so let me address this.
We start with our obligations and then find the matching investments. You are not looking for the most profitable investments, and then you add a policy. So this is the take we have on investments and in any transaction we would conduct. Now other parties can carry a higher risk, therefore, on returns. Well, I think we are at a closing part of an economic cycle.
The end is closer than the beginning. So is this the stage where you should take risks? And then a follow-up on your previous question. We want to have a sustainable investment policy. We have seen scenarios on what you could do with the life investment portfolios.
You could buy loyalties. You could start planting avocados in the U. K. Or you should have other products in the U. K.
With a wonderful return. But if I look at the water use of avocado plantations in the U. S, this is well, when we talk about the profits of the pharmaceutical industry, but the same and then distressed mortgages are not really, what I would call, a sustainable investment. So we look at the obligations that we have. We look at our understanding of responsible investments.
And in that, we say what is honest, last the longest. Then ROE. Yes, our ROE is a bit lower or at par with our previous efforts. It's earnings over equity. It's a simple sum.
And if the equity increases, then we will withhold. We have dividends, so the equity will go up. And if you keep profits at this high level, if you perform at the same level, well, then the equity gradually increases. So if there would be pressure on the ROE, then that would only be the result not of performance, but of gradually increasing equity if you withhold part of the profit. So you could pay it out is the question.
Yes, we could invest it. We could pay out dividends. We are aware of this. And you have to look at the solvency, your equity from a counter point of view. And then it's not surprising that equity may slightly increase over the past years.
Then the last question about the banking activities. Yes, by now, we have announced that we have divested a large part of ASR Bank to our colleagues with ACMEA. How easy or difficult is it to divest such activities? Well, the bank was already a separate entity under supervision because the requirements of the central bank to a bank are different from the requirements for an insurance company. We had some back office integration in the accounting processes, but it was a stand alone legal entity.
And therefore, we do not expect or anticipate any large disintegration problems when the Savings Bank, because this is the divested part, has to be handed over to the buyer, ACMEA. We think that if everything goes the way anticipated by the end of this year, we will close this transaction nearly neatly. Thank you, Jos. That brings me to the next question.
Thank you, Mr. Chairman. I'm Mr. Stavinson from the Foundation For Legal Protection of Investors. First, my compliments on the results you've accomplished.
Yes. Can you explain why you were converting shares into property? Because asset location is carefully divided. And that gets you to the CO2 footprint and the investment I'd like you to explain those to me. We also have a question about that pink elephant.
I'm glad you assigned a color to that. Yes, we hear and read all kinds of things. And what we're also hearing is that it's not really the executive board, but others are not crazy about being acquired by ASR and would prefer a private equity operation. Can you tell us about that? Now that financing mix, let's say that moves forward, how do you envisage that?
Will you have to raise capital? What about dilution? And how do you aim to mitigate this effect? Next, at Finance. We note that the IFRS risk of a net result is low.
We've considered this perhaps we overlooked something, but we couldn't find the reason. Perhaps you could explain that to us. There's also that new IFRS 17 maybe. That's the reason the net result is low. We'd like to know more about that.
I think that takes me to my three questions. Yes, your count is accurate, and this is a good point to start answering them. Chris will elaborate on the main reason why we switched our investment portfolio from shares to property. And Chris' passion is IFRS, so he'll be delighted to elaborate on that. Now about the pink elephant, those rumors that you mentioned, they reach us too.
And I've always learned about treating rumors cautiously, especially when you haven't verified them in all cases. When we make an acquisition, works councils of both companies are involved. And if ASR reaches that stage, then we will certainly consult the work council of the party we are considering acquiring. And I understand all the noises about it being a so called specific type of acquisition. I don't think that it's known that when you merge to employers, it's not only at the expense of jobs, but it also impacts us.
And I think if you consider that there might even be fewer risks about job losses at ASR than if others acquire you, I can't tell you any more about that now. Your second question is to how ASR will be financing this. We've been very open about that from the get go. If we move forward with this acquisition, shareholders should have the opportunity to express their views on that. That means that if we announce it, we will also announce it and we will also convene an extraordinary general meeting to present this matter.
And at that same shareholders meeting, the price of the acquisition will be known as well and we'll detail the financing structure. We assume at present that it will consist entirely of shares so that we will issue additional shares for full financing, which means that we'll need to make a strong case to get shareholders on board in that additional share issue. Because if all we tell them is about dilution and deterioration, then we won't be very convincing. And the question is whether that will be possible. So if such a transaction is off excuse me, when such transaction enters the picture, we understand that we need to convince our shareholders.
So if we do agree to this, then it will be because we're convinced that we can convince you as well. Now Chris, our investment portfolio, yes, in the previous year, we modified the asset mix and allocation asset categories from shares to properties, especially housing in our investment portfolio because for investors, the Dutch housing market is robust. As a buyer or a tenant, it may be more challenging. But we're for us, it's robust. And we're talking about investing in homes with rents between 71100 and 12 100 euros a month.
There's very little vacancy. Value is rising. You can see that based on the return in our investment portfolio. So we've decided to shift our investment portfolio from shares to property and then to housing. Rental homes are an attractive investment for an insurance company, especially given the long term commitments.
I'm not going to speak until the cows come home about IFRS. I already do this very often, but trust me, I enjoy the figures do not yet reflect IFRS-seventeen because that won't really be launched until 2020 or 2021. Our IFRS figures do reflect increases and decreases in share prices, 2 difference with respect to last year's as we had some more impairments reflected in a share price decrease in the second half of year. You have to show that in your figures. And last year, there was a one off profit considering preference shares in Unilever that we sold.
There was a one off increase in share price in this year. We don't have that. That explains much of the difference. And there were also some more social plan costs considering the integration of Generali and redundancies. The main factors were that in 2017, there was a huge increase in share price based on the interest in Unilever that did not recur in 2018.
That's clear. Thank you for being so brief, Chris, because I've heard you speak at greater length about that subject. Onto the next question. Good morning. I'm Robert Freieke from WeConnect U Public Affairs and Investor Relations.
I advise government and private industry concerning financial sustainability, finance and good causes, especially to upscale sustainable innovations in the Netherlands. I'm delighted at these figures, and I was pleasantly surprised by the hospitality here. My impression is that the executives are sincerely communicative and are here as hosts. It was really special that the chair of the executive board and the supervisory board were very approachable, my compliments. If I consider Hans Weyers, who dashes out at the moment a meeting ends, and he does that very consistently.
1,000,000 plant and animal species are on the verge of extinction. That means that there is no climate transformation but a climate crisis because the entire equilibrium will be completely disrupted. The strength of ASR is that they have invested in Taxi Electric. It's a wonderful company with many older employees. Randstad might acquire that.
Mrs. Aris does have some leverage there. They haven't reached that stage yet there because over there, they want everybody to be young, dynamic and relatively low wage. And but that taxi electric has Tesla's with a 600 kilogram battery, and the battery is the strongest polluter among all the parts. Would like you to scale over to light electric vehicles because in Amsterdam ASR was the first to pioneer the Urbis, Amsterdam Electric share bicycles at the Vybalserat plant.
The benefit of the Urbi is that the battery weighs only 5 kilograms. So a Tesla is 100 times pollutant, and you get a quick win there. In addition, 10 electric bicycles can be stored in the same space as one Tesla. So it saves some tar and space and parking space will easily cost €20,000 to €40,000 And insurance companies are wonderful at figuring out the numbers. Now I've already spoken about the Waka Waka.
It's thriving here, but it can also be used as a box and the people who all over the world who don't have the lights could get lighting through the Waka Waka. And the circular shower saves 80% on water and gas, which in the Netherlands would reduce the CO2 emission by 10% to 20%. What I truly care about, and I was talking about that yesterday with the Van Buren, the top 10 most polluting ships in the world pollute more than all cars in the world together. And you receive many supplies from China, which are brought on highly polluting ships with polluting fuel. If you and other large companies in the Netherlands could ask them to replace this with LNG or green gas, I'm sure the climate would improve enormously, the prospects would improve.
Now practically, the OSO is predicting a new economic crisis together with the climate crisis, the trade war between China and the U. S. And the terrible crisis in airplanes at Boeing, I believe that things are having a downward turn after 5 good years. How does ASR feel about the long term? Now that's clear.
I was trying to figure out the question. Okay, that one was clear. Yes. Some of what you say reflects how you feel about various trends. I'd like to respond to a few of those reflections.
First, in our investment policy, we explicitly consider sustainability. And there are some companies that, in our view, following a prior dialogue, we decide if the dialogue doesn't get us anywhere we say we're not going to invest in those companies. At the same time, transition is ongoing. You can't change the world overnight. Everything that we can do and that we have in control, will take forward.
You mentioned 1,000,000 plants and animals on the verge of extinction. The ASR building is a mini ecosystem. We have a large garden behind this building and Tifada brought about a separate ecosystem. There are greenhouses and we plant wildflowers and anything we can do to help nature and in the middle of the city is given every opportunity to thrive. That's one second.
If you're talking about our building, I believe this is one of the most sustainable buildings in the Netherlands despite having been constructed in 1974. You wouldn't expect that from walking around there. Later on in this quarter, we're going to discard gas, so we won't use gas for heating anymore. We'll become entirely self sufficient and our electricity is already entirely green, either through procurement of green wind or the abundance of solar panels on the roof. So we're certainly forging ahead there.
We're not satisfied with the commuting yet because we've merged so many companies and brought them here to you. We do have a lot of commuters who still come by car. We're making progress there, too. And you've heard the beginning of the announcement of a new plan to our staff in which we will certainly encourage them to come by bicycle, and we'll try to contribute to that. And we'll also encourage them to use public transportation.
And our policy will be that any leasing cars we purchase will gradually become more sustainable when the supply allows. We're also aware that many batteries are seriously polluting. At present, that's the only available option if you have to travel further afield and no public transport is available. If there were a solution in the near future that wasn't disciplined, we would certainly embrace that. As for your question about how ASR feels about that, we share your concern, and we're fairly vocal in our efforts to contribute either via our investment portfolio or through different means.
At the same time, we're a modest company and understand that we cannot make this happen on our own. So I'm delighted that many other companies are explicitly trying to help reduce CO2 emissions so that we leave the earth in good shape for the descendants that we bear. I have another suggestion. 80% of those rides are shorter than 20 kilometers. And when it's dry, you can easily cover that distance on electric bikes.
So with those small batteries, you'll save a lot of CO2 emission and a lot of space on the road and in parking lots, and people are refreshed when they reach the office. I'm sure you've read the plan that we're about to present to our staff. So your situation has been adopted. On to the next question. Go ahead.
Good morning. I'm Mr. Tse from Amsterdam. You had a few questions. If ASR requires FIFA, there will be an emission.
Have you thought of the format? Will it be a rights issue or one with a preferential right for existing shareholders? If you haven't thought of that, then I'd like to share this with you. And my own position would be to support a preferential right for existing shareholders. I have some other questions about property.
How large is your portfolio for ASR Retail Property? Because the retail sector is not exactly thriving. Every body is purchasing online, so it's bricks versus clicks, so there might be more vacant shops. Can you say anything about that? Well, there's the old adage that you shouldn't count your chickens before they hatch and you shouldn't finance the elephant before you've got it in your stable.
Perhaps Jos will elaborate. Yes. Of course, we've given that some serious thought. And the ultimate decision will be once we almost have KIK's elephant in the stable. Our current vision is that we will not give any preferential right, but that the rights issue it will be a rights issue will be offered explicitly to current shareholders.
And Chris will say a bit about your will briefly answer your question about retail space. We have a SHOP fund. It's called the Dutch Prime Retail Fund, which amounts to about €1,700,000,000 It's a very focused SHOP portfolio. We aim for the main shopping streets in the largest 15 or 17 cities in the Netherlands. And if you click on it, that's about 10% of the shops where you could invest.
So our pond is about 10% of the retail plant in the Netherlands. We're focusing on the large cities and the main shopping streets, and they're still doing fine. The problem in retail is mainly along the periphery. So at the outskirts and small regional shopping centers, it's not so serious in large cities. And we are also investing in well known supermarket brands, which don't seem to be very high risk.
So we've got a profitable and stable retail portfolio. And if one chain goes bankrupt, there are often people standing in line for that location. But that location challenge persists also in our retail portfolio and our fund. The ASM's interest is about 45% in the €1,700,000,000 portfolio. So that's the investment in high street shopping locations.
Are there any other questions about the annual report on of the Executive Board Thank you, Mr. Chairman. I'm Mr. Stephens from the SRB. This is about older staff.
You already said something about it. There is some turnover in insurance and banks, everything that grows becomes automated. How do the older staff deal with that? Can they remain on board? Are you providing sufficient training?
Next. Have you commissioned a South African company? Wasn't there any company closer? Because they do say a lot about the environment. But if you involve a South African company, that's really far away.
And with banks, fraud is an issue. Now we've got our own ideas about that. We'd like to know whether you're protecting yourself and hedging any risks that are banks and related divestments. I have another question that concerns the investment portfolio. We understood about the shops.
We also understand about the office. But what about warehouses? Do you invest there? Will you be investing in warehouses? We're not clear on that yet.
Those were our questions, Mr. Chairman. Thank you. Would you please repeat what was unclear because we couldn't understand that? Warehouse is perfect.
Okay. Your first question about older staff, well, you can count me in on that. And I received plenty of IT support there. Well, all jokes aside, we invest extensively not only in our coworkers with a more extended track record, but also in the younger coworkers and the intermediate group. Our program is about sustainable deployment where we help people not only to think about their own future, but also to provide them with retraining.
And as a result, sometimes people switch to a different job within the company that they enjoy as much or more. And sometimes they also discover that they have a different calling, and we always help them follow that calling. And we even have staff that cannot be beat out. There are some people who retire, but like ASR so much that they apply anyway in return. So by now we have somebody who has been with ASR for 52.5 years and that person doesn't work 5 days anymore, only 3 days a week, but still enjoys working here enormously.
So we do everything we possibly can to keep employees who have been with us for a long time active here. And your second question, can we find the company closer than South Africa? We would have preferred to do that. Of course, we examined the type of service and product that we'll be introducing on the Dutch market together with them. We did not find another company that had such extensive experience in that field.
They've been doing this for over 25 years. It's a mature concept that requires a lot of partners. I'll tell you a bit about that concept. The idea is that rather than punishing people for misbehaving, you reward them for a healthy lifestyle and good behavior. So they carrot rather than stick and you need international partners for that and systems to arrange it and to be able to offer it to your customers via apps.
And that company has all of that untapped. So we don't have to travel back and forth to South Africa every week. There are many different ways of doing that, but we couldn't find a better one. And they were by far the most convincing. And in 17 countries all over the world, they've already launched the system.
And if you want to do something right, you have to find the best partner for that. Your last question, but one was about what you described as bank fraud. I imagine that you're referring to the recent publications about money laundering and the corresponding fines. Before this was disclosed in the media, we were very active on that about that. It's harder to launder insurance products than in bank accounts.
Nonetheless, we also face legislation. We've invested heavily in that in recent years. So each customer that does business with ASR has to be examined to see who the ultimate beneficial owner is, so that you can demonstrate that it's not somebody who's on the wrong track. We invest a lot of energy and time in that. Sometimes you cannot trace customers.
And in those cases, we have a 0 tolerance policy. And to part with that customers, we've had to abandon some customers in recent years because they were not willing to present us with a UBO or they did not respond to our request. So I believe that we're doing a lot. It's very energy intensive, especially imagine if you have 20 hits every day, you feel like continuing to search. But the number of hits we achieve for potentially transactions is relatively low, but we still go about this zealously.
And the final question concerned the investment portfolio, Chris. We don't invest in logistics centers in Navi. We invest in homes, shops and offices and property. And we recently set up a fund to invest in science parks. So offices and science parks, in universities because new starters often went to live close to the university, but we don't invest in logistic distribution centers.
Question off, Mike. It's a simple risk return consideration. We have investors in a different category. I think that oh, I was wrong. One final question.
We just spoke about return on equity and you said that if the denominator can if the numerator can go down, the return will go up. And I understand that, that means that at 200% solvency 2 or slightly above that, there's some latitude for distribution to shareholders if there are no particularly attractive investors and if you're done with the FIFA issue, but that could take a year. My question is as follows. In the past, the ASR buybacks did very well. So we were able to buy them back from the government for a pittance.
So that created value. To what extent does ASR include evaluation to see whether return is sufficiently interesting for a buyback? And is that compared with organic and inorganic growth opportunities? Chris, I'll provide the context on our Capital Markets Day. Our shareholders said, yes, there's a point when if ASR has a lot of capital, it's best to return that to shareholders.
You base that on solvency. There's no exact figure. It's like concepts in physics. You know it exists, but you cannot visualize it. But once you do, it's gone.
So it's approximately 200% of Solvency II at that point. So you could say we have so much capital that in our organic situation, we no longer need capital inorganically. You can use that for acquisitions. But organically, you may have enough capital to return it to your shareholders and the ratio is slightly over 200% depending on how that 200% came about to see what the quality is of Solvency II and the world trends. But when the debate starts about returning capital to shareholders And as the Board, we don't care whether it's a special dividend or a share buyback.
What matters is what our shareholders want. And then we try to see what the return on a share buyback could be. And we assume that a special dividend will deliver the cost of equity, and we've set that at 10% for the sake of convenience. So we assume that it will yield a 10% return. And then as for the return on the share buyback, I'll share the operating profit on the company by increasing the market value.
So you've got the return on equity of a share buyback and the most return on investment rather. And then we talk to shareholders to find out what they want. So mechanically, 10% versus estimated return on investment. And whether you accomplish that depends on the situation because it starts with solvency above 200%, then you can engage in that discussion. Thank you for the answer, because at many companies, you see that they distribute when the share price is too high, so it erodes value.
So thank you very much for considering that.
The joy almost make you topple, and that's great. It didn't happen, although these are interesting things for an insurance company. And I'll conclude we have no further questions concerning the discussion of the annual report of the Executive Board. And that brings me to the report of the Supervisory Board. You find the detailed text in Chapter 2 and a few points.
We had 13 formal meetings, and we particularly looked at the acquisition of Generali and also this concerned the decision making about the L'Orealis acquisition. We discussed at length about the amendment of the management structure, something I will cover under 2C. We also discussed a lot about strategy, the strategy of the company, about our portfolio, about the solvency, the capital structure, some issues that have already been covered Under the questions that Joss and Chris have already addressed, we spoke a lot also about the structure, the framework for M and A, making it clear what we want to do and what we don't want to do. We spoke a lot about IT, innovation, also education of employees, trying to see what's happening in the field of innovations. It will come as no surprise to you that also the remuneration policy of the executive board demanded quite a lot of time off the supervisory board, but I'll come back to that under item 3.
Then a lot of the work of the supervisory directors took place in the committees of the Supervisory Board. And you've seen that the remuneration committee, the Auditorisk Committee and the nomination committee have given very detailed reports on the annual report. Any questions about the Supervisory Board work? Yes, please. Jasbjanssen, on behalf of VEB, thank you for the clear and very detailed report of the supervisory board.
We had a real insight into events, but that leads to follow-up questions as well because when the auditor says that there are some additional points of interest, you need to be cautious. And the supervisory board report mentions this. The essential message is that internal controls for nonlife and generale isn't operating adequately yet. Can you say a few more words about what's happening there exactly? And then a second question.
The way I interpret things, the statement, is that in some part of the organization, you have understaffing and that it's difficult to cope with the amount of work. What part of the organization are we talking about? Is this a structural problem? Or will it be solved next year? Some more information, please.
Both questions obviously lie in the table the executive board in terms of execution and operation. We have been informed about Generali a lot. We, as supervisory board, were informed permanently about the progress of the integration. And this is one issue where the auditor indeed made a remark about. And then the audit committee followed this matter very closely, has been working is working on the solution of the issue.
Now obviously, when you acquire a company, you can always safely assume that the high standards that we have in respect of internal controls and related issues will automatically also apply to the acquired company as of day 1 of the acquisition. And in the integration plan, we gave a lot of attention to this. And also, the speed of bringing things in line was very high. If you read the 2019 annual report on Integrali, you'll see that most issues waiting back from 2018 will be behind us. Then the other issue is the labor market.
This is a multifaceted issue. First of all, a positive element. The way we deal with issues in society, issues of sustainability and also the reputation we have in the field of regeneration leads to the possibility of acquiring, by and large, very, very good people. And I have to inform you that we have acquired lots of people who have ambitions in the financial field that were attracted by the DNA of our organization. Nevertheless, we face the same labor market as our competitors.
And when you're talking about data analysts or people with expertise in the field of climate modeling, we're all looking at a very limited group of people. Nevertheless, I am confident that we, as employers will always have an advance on our competitors by who we are. Any other questions? If not, that brings me to item C of the agenda, which is corporate governance. In 2018 And even in late 2017, we had lengthy discussions with the then foreman of the executive board to see whether the management structure that we had would work for the com adequately for the coming 4 to 5 years.
Where did that question come from? And why did the question arise among the members of the supervisory board? Well, the reason was very simple. In the past and rather distant past, we had quite some operational issues, some issues around the implementation, the execution of policies. And as a result, we amended the management system to the extent of focusing more on the execution side of the Executive Board.
And Mr. Welsen, Mr. Van der Boost were very heavily focusing within the Executive Board on operational and executional issues. The ambition always was to place these issues lower in the organization, lower than the executive board. And we, a supervisory board, stimulated the executive board to do this.
We invested a lot in renewing the management layers below the executive board. Lots of developments took place. There has been a lot of renewal. And as I said before, we are very proud of the high number of talented people we could attract from outside the organization. And therefore, more and more the operational management has been placed below the level of the executive board.
And based on this conclusion, in very positive consultation with the executive board, we decided to amend the management structure with the expression of great gratitude to Karen and Michel for their roles, for aligning our operations and also for selecting and training the people that basically made them superfluous. The good news is that Michel Faboost, who was sitting at that side of this side of level last year, is now in the room as a shareholder. The room is dark, but still I'm very happy to see him among us as a shareholder. And as a result, the organizational model, the structural model has been amended. I think we have a sheet here.
Yes, first, the key issues on this slide. So the management structure has been amended. We moved from 4 members to 3 members in the Executive Board, and we have set up a business executive committee, a committee that will take a large extent of the operational control of the company Board. And then a very small print that will give us in the next slide with pictures gives you an impression, a nice impression of the members of the Business Executive Committee. You see that CEOs, CFO are represent the CRO and 5 business managers.
And based on this model, operations started as of January 1 or February 1. You may forgive me for mixing up the month, and we are now in the concluding phase of hiring a 3rd member of the Executive Board. And as soon as we have a final decision, as soon as white smoke comes out of the chimney, we will inform you. And that concludes the discussion of the major amendments to the governance, the management structure of the company. Any questions?
Yes, please go ahead. Thank you for the very clear explanation. I have a question about the rather striking timing of the announcement. It was made on the 20th November And a month before, we had a Capital Markets Day where WEXA and Infobus gave detailed presentations on their plans for the coming 3 years within their field of responsibility within ASR. When you informed me that the process has been ongoing since 2017, I wondered why you didn't present it at the Capital Markets Day and whether you can commit it to that.
It really wasn't connected to any different insights or other issues. Yes, timing to a high extent was determined by the fact that when we had concluded our reflection on the new management structure in a rough sketch, we still had to start consultations with the regulator and obviously with the Works Council. And particularly, consultations with the regulator took longer than the timing of the Capital Day made possible. So this is absolutely not about any issues of strategy. Simply when the rough outline was ready, the Dutch Central Bank took ample time to discuss our management model.
Any other questions? If that's not the case, that brings me to item 2d, which is the implementation or the execution of the remuneration policy in 2018. Here, we report on what we call internally the old remuneration policy because under item 3, we will discuss the new remuneration policy that will come into force as of 2020. And the 2018 annual report shows us that the amendments of the remuneration have taken place in line with what was decided in 2016 'seventeen and made public. I think the annual report is very clear about this, and therefore, I wonder whether we need any further explanations or have to answer questions.
If that's not the case, we now turn to item 3, which is remuneration. And this is the first voting item. So in a moment, after my explanatory remarks, we will have our vote. And therefore, it's worthwhile to see whether all devices work. It's always unpleasant when after introductions, you start voting and your device doesn't work.
All of you have installed the app. And currently, 140,000,000 votes can be cast as a maximum. At this meeting, 754 shareholders are either present or represented, which represents 1,255,515 shares, which is 71.1% of the total number of votes. These votes will be cast in a moment. You'll be voting.
And also, some votes were cast electronically. They will be merged. But first of all, I want to check whether this system actually works. You can cast your vote for, against or abstain If you play a musical instrument and you are used to pressing several buttons at the same time. That won't work.
You have to press only one key. So and we are now going to have a test round. Well, the result is always revealed in the presentation of CEO, so still we should have a a test run. So the slogan or the statement is this, the ASR head office will be completely carbon neutral by June 2019. Well, the really challenging bit is reaching June.
So let's see what happens. You can now cast your vote for, against or you can abstain. The vote is now open. You have 10 seconds. The vote is now closed.
And let us see what's not happening. Please raise your hand if you have some issues. I saw one person over there. As we are still fixing the issues with a number of telephones, we can conclude that most people trust Joswares because 99.90 5% of the Voskars believe that we will be completely carbon neutral by June 2019, which indeed is the case. So any other issues?
Are the issues solved by now? Excellent. In the first row, I think we have a question. No? Still not working.
Well, let's imagine the next AGM with all phones supplied by China. It shouldn't happen now. Okay. Now we come to more serious matters, the remuneration policy. When we became a fully privatized company, we amended or we maintained rather the existing remuneration policy and at the same time announced that in 2018, there will be intensive consultations with various stakeholders in order to allow us to present to today's AGM a report on the way we wish to deal with the amendment or not of the remuneration policy of the Executive Board.
We have carried out a very detailed and very ample consultation. And this has been led by the Chair of this remuneration committee of supervisory board. We have taken 4 different perspectives on the remuneration policy. First of all, we have taken an organizational perspective trying to understand what is suitable for an insurance company, the kind of insurance company we want to be in the marketplace, a useful company, which responsibly and sustainably uses the assets entrusted to us by customers, we took this perspective on the remuneration policy. The second perspective was to see to which extent the logic, the rationale we use in central bargaining agreements with employees in the way we remunerate the members of the Executive Board.
The 3rd angle, the 3rd perspective was the labor markets. In other words, what's happening outside ASR, what is happening on the labor market that we operate in and how this is related to what we want to happen. And finally, the philosophy, the rationale we developed was viewed from the perspective of various stakeholders. What does it mean for the shareholders? What does it mean for the appreciation by our customers?
What does it mean for our employees? So in this way, we try remuneration. And this led to a situation where we present an amended remuneration policy with the following elements. Based on the position we want to occupy as an organization, based on the internal, the in house salary system for the members of the executive board. Based on the way we increased salaries in house, it made sense to use what we use for everybody else, which are salary scales as well for the members of the executive board.
We have a range for all employees that they will receive the CLA increase, And as long as they are not at the highest level of the salary scale, they'll have a 3% increase every year until they come to the top of their CLO. We have concluded a completely different CLA or central bargaining agreement in which we have disconnected salary scales and salaries, meaning that we pay much more attention to the content of evaluation conversations, something we want to do with the members of the executive board as well. At the same time, we received some critical remarks saying that this is very unusual for a supervisor for an executive board to have an annual age increase. What if you perform very badly? And some shareholders said that we should review this commitment to 3% that has been committed in CLO and to make it more variable, meaning that in very bad years, it can be under 3% and in very good years above.
So the aim is to follow the same kind of increased logic as we have for the other employees, having a 3% bandwidth. But at the same time, we must be answerable for the performance that took place. Then we have the indexation that already was part of the central bargaining agreement. And when looking at the external labor market, we took a new critical view on the way we compare to other Dutch companies. And in the notice convening this AGM, you will see the transparency we want to show in terms of selecting the peer group and results of this.
Now if subsequently you look at the various interests of stakeholders, we were perfectly aware that the absence of a variable remuneration scheme for many shareholders would be going too far. Therefore, in addition and not as part of the remuneration policy, we made binding agreements with the members of the executive board about acquiring ordinary shares through the regular sale lease with the obligation not to sell any shares until they have come to the minimum amount and in other cases, not within a period of 5 years. We have had detailed meaning that we had several consultations with some groups of stakeholders, particularly with the political parties present in the House of Representatives at the moment. We've had detailed consultations with the Works Council, which has made valuable suggestions during the process. We also looked at the way customers look at this kind of issues, and we had detailed consultations as well with our shareholders.
We are comfortable that we have found a responsible equilibrium in a field where the perspectives on immigration are different and where the policies you find in that society are under great scrutiny and to create lots of emotions. And also in a period when the financial sector is still recovering confidence. We submit this policy proposal to you. We're convinced that this is the best possible balance we could strike. Every 4 years, we will submit the system to the shareholders.
And if in the process, we would propose amendments of a substantive nature, we will also submit them to the approval of the AGM in an intermediate way. And we will also indicate the implementation in relation report. Who would like to ask questions about this issue? I have no questions, but a number of observations. My name is Mahrij Savas.
I work for PGGM, and I'm speaking and voting on behalf of our customers, including the Venture Fund for Health and Well-being. I'm also speaking on behalf of Mensis and APG Asset Management. First of all, we are very glad with the process. As Kig said, the supervisory board has consulted us in a timely and detailed way about the process. Also, the feedback provided has actually been taken on board in the amended version.
We are very glad to see this. We are of the opinion that the remuneration is suitable both in level and in structure, giving the industry specific, the social and the geographic context and also the size of ASR. ASR has a broad group of shareholders with very diverse views on remuneration. And we know from experience, it's a challenge to strike a balance between all the various groups of shareholders and stakeholders. It is important that ASR takes stock of this function the company has in society.
ASR also bases its assumptions on the intrinsic motivation of employees and managers without the need for an external stimulating factor. Some principles we appreciate are the scope for the long term shareholding by managers, the simplicity of the remuneration structure and transparency about remuneration structure and transparency about the maximum increase,
which is between 0% and 6%.
In conclusion, we consider that ASR managed to create a simple and reliable immigration policy that is the fruit of consultations. And this is why the shareholders whom I represent support the proposal. Thank you for these kind words. Any other speakers? Yes, please.
My name is Jasper Janssen on behalf of VAB. We are also very glad with the process that we were part of as well. And we understand that this is an extremely delicate balancing act to find a suitable remuneration system with all stakeholders. And we think that it's succeeded pretty well with ASR. We think it's also audacious to waive variable remuneration.
We think this is a positive feature because too frequently, we see remunerations being paid out based on meager performance. Last week, we saw this happening at Aegon, where the maximum bonus was paid out with the share price under pressure and a significant decrease in profits. Nevertheless, we still have a number of questions. The first question concerns the long lasting nature of this policy. After 2 years, if I understand correctly, there's a possibility of an amendment and then after 2, 4 years.
Can you commit to your intention to maintain such a policy without any bonuses for the long term? That is my first question. And the second question still is about your competition position. It's a question I should mention. Nationale, the London, Egon and other top level companies pay out significantly higher amounts.
Wouldn't that be a risk for the business model of ASR for the long run? Can you attract or maintain or retain top level managers? And then a more fundamental question. The attempt has been made to create a balance with the shareholders by creating Adelhauters Belang, then we think this is important or this is right, to create a shareholding by management. And we think this is in the interest of the company.
However, this shareholding is small. In other companies, it can be 3 or 5 or even more times this the amount we see here. And this is in order to align the interests. And obviously, when things are not going well, 100% is still a very nice payout, where the variable components can be put to 0. So how did you determine the percentage of shareholder for holding for the CEO and the CFO?
And then a question directly to Mr. Baarten. Is that the maximum or the lowest threshold? Do you think that in 5 years or 7 years, you should accrue even more shareholders to further align the interest? That were my questions.
Annette will explain how we reach those percentages. How enduring is it? You mentioned 2 years and I will also explain what we'll be doing in 2 years, but our intention and we've that's why we've invested so much time and energy in this process. The objective is to, in general, not offer variable compensation for the board and staff in general. And it's not just something that the executive board decides and as soon as they leave things will change.
This is explicitly at the request of the Works Council. That was at their request that we did not opt for such a course. And after the responses from the staff, the response from the staff to our decision not to introduce variable compensation was particularly positive. One issue in this company is that the problems arising from variable remuneration. Often it's a disappointment and it doesn't provide people with an incentive.
We don't want to resume that. And I would advise any company interested to visit us. We also sell excellent pension insurance and disability insurance. So there's always room for improvement. As for our competitive edge, I've already explained that thanks to this policy and also the sustainability of our investments, we've managed to recruit and retain top talent and we believe in intrinsically motivated employees.
What will we be doing in 2 years? And what was the foundation for those percentages? Okay, two questions. So each year, we submit the remuneration report for advice and will account for the increase from 0% to 6% and why we've chosen that bandwidth, then you can provide feedback. Every 2 years, we conduct the benchmark again.
So that concerns the benchmark not only for the executive board, but a slightly different benchmark for staff. And if we see that those benchmarks are diverging too much, we've also arranged a correction system so that the benchmark of the executive board is adjusted. We do that every 2 years. And every 4 years, we have a vote on remuneration policy. That's about the pace as for the share accumulation rate.
Ordinarily, companies have 50% fixed and 50% variable. So the factor of the triple to quintuple you mentioned is only about fixed components. So having 100% fixed would be 50% accrual for executive board members and 75 percent for the CEO, that's the same as the factor of 100% versus 150% at other companies. So optically, it appears lower than it actually is. It's not identical.
It is less. So it's a bit lower, but not so much lower as it might initially appear. And we've also said we're going to increase incrementally in small increments. So each salary increase to the executive board in subsequent years will arise from share accrual. So that's the structure that we've introduced.
So that concerns salary structure and shareholdings. Well, I'm wondering, Biket, there was also a question about private investment policy of Joss Baatzen over the course in 7 years from now. He'll have retired by then, I assume. Nonetheless, you want to know whether he'll continue to invest in ASR? Well, it would reflect confidence if the executive board says that this percentage is a bottom threshold and that they have confidence in the firm and that in the long run, they don't think it's strange that shareholders would expect a bit more.
I regard this as a minimum percentage. That's what my commitment is and what lies ahead time will tell. We have a good policy for the elderly. And if possible, if I'm still able to keep up at that pace, then I might be one of them. That's clear that VEB would like this to be increased if it grows along after 2 or 4 years.
Okay. That was good input for the next round and we'll certainly take that on board. You have the floor. Thank you, Mr. Chairman.
I'm Mr. Stephens from the Foundation for Legal Protection of Investors. We applaud your new remuneration policy. And thank you to Mrs. Ardis for explaining that so clearly as Chairperson of the Remuneration Committee.
And soon we'll have a new Executive Board member. What will happen then? Is that person required at the time of appointment to purchase a set number of shares for a set amount? I remember that in the late 1950s, a new director was brought on board and was expected to purchase shares to the tune of 100,000 guilders. He already owned his home, so he was able to get 100,000 Gilder mortgage and he was used that money to buy the shares.
That was in Neutrout. I'm curious what will happen. Well, we're going to accommodate your pension for having Annette answer this question. Okay. A new executive board member will, over the course of time, accrue shares as the other executive board members have, and we assume that the net salary will be enough will be sufficient for that.
But when he joins, he doesn't have to purchase shares in a lump amount. The accrual starts from the 1st day over time. And as with the other executive board members, they can purchase their shares over time. That bothers us. We would prefer him to have a buy in upon joining.
And that would also provide an incentive for him to remain with ASR for longer. No, it's a one size fits all approach. Well, there's a German expression, but the Dutch adage is equal monks, equal hoods. We're going to introduce the new German expression in the dictionary, in the Dutch dictionary, okay. The entire executive board accrues shares incrementally over time, and we're confident that the any new members will do likewise.
Are there any other questions? If not, we're going to vote. And please use your voting handsets. The vote starts now. You have 10 seconds.
Okay. You votes are still being added in the calculators, and we see it has not settled yet. Okay. We've got a stable result. 83.74 percent of shareholders has voted in favor of this policy and 16.26% has voted against.
As supervisory board, we have ample reason to welcome the support for this proposal. And we also note that a group of shareholders objects to the remuneration policy that we proposed and that's clear, especially from because of the lack of a variable remuneration. And obviously, in the years ahead, we will continue communicating with these shareholders and we'll safeguard against the risks they envisage. So we're not closing the chapter. But as we are today, we're happy with the support we received for this proposal.
Okay. That covers agenda item 3. And that takes us to agenda 4, the financial statements for 2018. And wait a minute, I made a mistake, says the speaker. There you have it.
It's almost a Freudian slip of the tongue. I forgot to cover the remuneration policy for the supervisory board, And that's certainly necessary, but as Freud said, it never sleeps, and the same holds true for this agenda item. We noted that we have not adjusted the remuneration for the supervisory board in the past 9 years. And the code provides for remuneration that aligns with the current practice and the burden of the office. So that's why we're proposing to the shareholders meeting that the remuneration of the supervisory board and the committees be amended and you see the changes reflected and the regular member 35,000, the order and the regular members 35,000, the audit and risk committee the auditing risk committee, the Chairman would receive 15,000 and the regular members 10,000 and on the remuneration and nomination selection committee, the Chairman receives 10,000 and regular members €5,000 Does anybody have any questions or comments about this?
The VEB will agree to this increase. We need good supervision merits, good compensation. We read between the lines in this policy that it seems to be getting harder to find good supervisory board members and that might be part of the reason for increasing the remuneration. Is that the case? And the second question, which we perhaps could have asked previously is what can ASR do outside of offering good remuneration to address the issue of recruiting and retaining good supervisory board members for ASR.
I'm not sure whether that's visible between the lines in finance. It's very difficult to find supervisory board members because it's a huge it's very labor and time intensive. And it's also in the limelight. Not everybody appreciates all that attention. Later on the agenda, I'm sure you can still see that it is a concern for us.
But my impression is definitely not that remuneration is related. The reason we're proposing this is because according to the code, it needs to relate somewhat to the time and the burden of the office, so the time required and the burden of the office. If you want a broader availability, I would review the restraint that supervisory board members can be appointed only if they don't already have 5 points and since good regulators tend to have 5 points, that is certainly an obstacle. And it's a far more important factor than remuneration. If there are no additional questions or comments, let's vote.
You know the drill. You may now cast your vote. You have 10 seconds. Okay. The votes have been counted.
And we call the results North Korean style. Thank you for your support. Thanks for your support in this. That takes us to the agenda item that I almost started on earlier by accident. That's concerns the financial statements for 2018 and the dividend proposal as explained by Jos in his presentation.
I'm pleased to give the floor to Corfandel Bos, the Chairman of the Audit Committee. Thank you, Kike. You'll see an extensive report of the Audit and Risk Committee in the annual report on Pages 126127. In addition, I'd like to bring a few items to your consideration here. First, I'll tell you about our conversations with our external auditor, Martin Koning.
We discussed finance risk management and audit, but the financial statements, they were constructive and open and that certainly benefits the work we have to do. And I believe that that's mutual both for the external auditor and to us as a committee. Each year, the external auditor issues a management letter reporting the observations of that to ASR with respect to administrative organization and internal control. We discussed this memo with the ASR management and are adhering to the follow-up of improvements to be made in the previous management letter for the past year, there were no serious issues throughout the organization. They were focused actions, for example, at that individual procedures or a specific product.
And the positive remark of in the management letter,
which was
that ASR generally has well functioning internal control is certainly worth sharing with you. 's audit for the previous financial year revealed a few discrepancies, which were discussed within the auditing risk committee and obviously on the advisory board as well. These discrepancies were cumulative, but immaterial. Special consideration of the auditing risk committee was also dedicated to the integration of Echerenerale Netherlands, which was quite aggressive and ensured that the financial targets of the acquisition were exceeded. In its meetings, the committee regularly exchanged ideas with actuaries and officials about the estimates underlying the biggest item on our balance sheet in addition to investments, which concerns insurance obligations.
And we noted that these estimates and assumptions were devised carefully and prudently. As was mentioned, nowadays, there's a lot of interest in fraud. That's a major concern. For years, the committee receives a report from compliance section every quarter. And as needed, it's discussed with the management with consideration for the nature, frequency and what measures were taken to avert any fraud issues identified.
Special consideration of the committee was also allocated in 2018 to cyber risks, compliance with sanctions and progress toward preparing for IFRS 17/9, which are important for insurance. With regard to the first two topics, ASR is operating adequately. And as far as IFRS 17 and 9, IFRS is on track. And the final point, as I did last year, I'd like you to pull your attention to page 100 and 2 in the annual report, which reflects the risk priorities, the most serious risks that ASR faces listed as the management has observed, which and the mitigating measures by ASR to control these risks as well as possible are indicated there as well. That was those were my explanatory remarks.
Let's move on to the presentation by the auditor. Martin Koning, you have the floor. Thank you very much, Mr. Chairman, for this opportunity to address you and tell you about the audit and results for 2018. I'm Martin Koning.
Ladies and gentlemen, I'm the auditor and responsible for auditing ASR. I prepared a presentation that should not exceed 10 minutes. And I'd like to tell you about the audit and scope of the strategy and its implementation as well as the results and the key audit matters as well as some other current themes such as cyber risks and our operations addressing fraud and noncompliance with legislation regulations as well as privacy. Those are current themes. And I'm going to wrap up with our communication interaction with ASR and the executive and supervisory boards.
First, the scope. We audited the corporate and the consolidated financial statements of ASR and examined whether the annual report meets legal requirements, whether the content corresponds with our impression of the financial statements and whether the annual report aligns with our knowledge of the organization. Those are the legal requirements to audit ASR. In addition, the firm asked us to do some other things, including the CSR report with sustainability information. We assessed that and issued a separate statement about that.
We were also involved in the release of press releases about the year figures, and we also assessed the half year figures for 2018 as stated. I'm specialists, including IT auditors and tech specialists. Please know that we also assign other specialists, especially evaluation experts. That's to audit the investments in companies not listed on the stock exchange, monitoring property investments, goodwill and other intangible fixed assets. We used many actuaries in auditing an insurance company, especially to evaluate technical provisions and solvency II figures, and we also assign forensic service specialists to do justice to our responsibility concerning fraud and concerning legislation and regulations in the audits.
We also work closely with the internal audit service of ASR and coordinate targets in subordinate investigations and share our findings. Now materiality, our audit is intended to yield the high degree of certainty that the financial statements provide an accurate impression. This means that the financial statements need to be drafted according to the applicable standards IFRS as allowed by EU and the Dutch Civil Code 92 to ensure no material errors. The materiality is the designation of the threshold for discrepancies in the figures that we consider acceptable. The materiality that we have applied in the consolidated financial statements of ASRs, 36,000,000 discrepancies above that amount might impact the impression of the annual financial statements.
This materiality is the same as last year and is based on approximately 5% of the operating result. There may be smaller errors in the audit, and any errors above 1,800,000 are discussed with the Supervisory Board now at execution of the audit. To that end, we use various audit teams checking for ASR life insurance, ASR non life ASR banks. And we evaluate their duties and results through final reviews, reviewing the reports in various meetings. As for the scope of the audit, because most of these companies participating in ASR are supervised institutions and require an audit.
Also according to the Dutch National Bank, we achieved a balance sheet total of 95% in our audit concerning the operating result. Now the findings and our conclusions. We have issued an unqualified audit opinion for both the consolidated and the corporate financial statements, which mean they reflect an accurate impression according to IFRS and as allowed by the EU and Dutch Civil Code 92. In addition, we consider continuity. In our statement, we have special flows on continuity.
The ASR management compiled the financial statements based on the principle of continuity. We have evaluated this assumption in part by examining the liquidity planning for the coming year, the profit potential balancing funding plan of the firm and solvency progression. We did not identify any uncertainties of material importance that would lead us to have justified doubts about the application of continuity principle. As for the sustainability information in the annual report, we issued an unqualified audit opinion, meaning that based on our duties, the sustainability information did not prove to be an inaccurate depiction of ASR's policy and operations relating to sustainability and the results achieved in 2018. All this in accordance with the reporting criteria selected by the Global Reporting Initiative.
And we evaluated the reliability of some material customer indicators such as customer satisfaction, customer focus and sustainable investments as well as long term value creation in 2019. We will also consider the succession we will also consider whether ASR follows up on upcoming legislation concerning sustainable finance and climate. Now, key audit matters. On this list, you see our key audit matters. Our audit approach, 1st of all, is top down and risk based.
We identify where the chance of material errors is most likely in the financial statements and do more work in those fields than in others. And we do our risk assessment at the start of the audit year and update it continuously according to the audit plan, which we discussed with the auditing risk committee. The audit and risk committee agreed to the audit plan. So we reported on underlying risks as well as our duties. Now the most important key audit matters or highlights in the audit are on this slide.
I'm not going to cover them individually, but because many are identical to those last year. I'd just like to tell you about the main changes. The main change is a new one, and that's the classification of ASR Bank NV concerning the as held for sale and discontinued operation. And ASR has to meet a specific provision, which is a complex standard that sets specific requirements for evaluating the held for sale assets and liabilities as explained in the annual report. ASR Bank the end of 2018, in keeping with IFRS 5, was evaluated on the balance sheet at the lowest book value and the fair value.
In our audit, we used IFRS specialists to review whether ASR meets the IFRS provisions and check the book value, which consists mainly of mortgages and savings deposits. We validated the fair value determination of management based on offers we received and conducted the audit. Based on our duties, we conclude that the classification of ASR Bank was correct at the end of 2018 corresponds with IFRS 5. We agree with the justified impairment and acquisition balance sheet as well as the We examined the acquisition balance sheet as well as the purchase price allocation or PPA of Generali Netherlands, focusing mainly on the largest estimate in the calculation, which is the fair value of the technical facilities. And we signed our own actuaries to examine that and checked whether all IFRS 3 disclosures are being made.
We ascertains that the management did an accurate evaluation of the acquisition balance sheet of Generali and met the requirements for the PPA as well. As for other highlights that you've been seeing for several years and that are logical for an insurance company, which is the evaluation of technical provisions in the context of evaluating technical provisions and determining adequacy. According to IFRS, according to the provision of solvency to the best estimate liabilities, ASR is required to estimate noneconomic liabilities for life insurance mortality and there's also redemption for cancellation. Those are the most significant estimates in life insurance. As for non life, this includes disability insurance.
Think of assumptions of that, invalidity, rehabilitation, inflow and outflow post reports, major claims and settlement pattern from previous non life years estimated according to the most recent non life year. In keeping with the audit standard of COS 5.40, we asked our actuaries to apply benchmarks and determine bandwidths for estimates. Based on Aaron's assessment, we're convinced that the foundations applied by ASR and the estimates in evaluating and determining technical provisions have been established with equilibrium according to IFRS and Solvency II. Given the internal challenges in the methods and assumptions, we observed a healthy and transparent discussion between the first and second line of ASR. Now I'm going to say a bit about several current themes.
1st, cyber risks. Part of our work with our IT auditors is to gain insight into ASR's risk management with respect to cybersecurity. ASR measures about this assume curtailment of intervention and as well as mitigation of external threats as well as resilience in the event that they actually occur. This risk is continuously present, and it's progressive. So that's why we discuss this risk at length with the auditing risk committee.
Now about fraud. We adhere to the COS240 audit standard in fraud. We performed specific procedures to address the required fraud risk management and we also assess processes and measures taken by ASR to manage internal and external fraud risks. We also evaluate ASR's compliance and integrity framework based in part on subordinate observations, and we discuss quarterly reports for auditing risk auditing risk committee. As for compliance with the legislation regulation, we do these duties in keeping with standard 250.
We identified the existence and structure of the measure that ASR has introduced to ensure compliance reading correspondence with regulators as well in legal affairs quarterly reports and minutes and interview management. Now the final current theme is privacy. You're aware that as of 25 May 2018, the General Data Protection Regulation became effective in such organizations, and the GDPR provides for an explicit duty of care and processing personal data. In 2017, ASR introduced a vast program to meet GDPR rules and monitoring now takes place based on compliance, privacy risks and incidents reported to the privacy officer and the management. And ASR addresses this in detail on Page 106 of the annual report.
Now finally, communication and interaction. It's already been asserted that in our audit, we use internal control measures that ASR has implemented. ASR has three lines of defense and internal control measures to ensure effective the effectiveness of the internal control measures And we've reviewed this and tested this using the 4 key functions at ASR, the risk management function, internal actuarial function, internal audit function and compliance function. They report and we review the reports and we report any additional findings and observations to in our management letter and audit reports. We've already covered this.
Now to wrap up, I would qualify our relationship with management is open. We also have a transparent relationship with the audit and risk committee and the supervisory board and frequently report on our findings both in writing and orally. We have ascertained that management, the audit and risk committee takes our observations seriously and follows up on them adequately. Finally, we depend on the company and adhere to specific EU legislation. Now we're independent of the firm.
We did not do any consulting. We merely provided the audits, including statutory financial statements and QRTs and related audit services to provide the required reports. Thank you very much for listening. Mr. Chairman, you have the floor again.
Oliver, to
Thank you very much for both very clear presentations. Many of my questions were already covered. I have one question left, and this is about IFRS 17. Does ASR know what the total cost will be of the implementation of IFRS 17? The reason for this question is that ASR, as we like to see, is very cost conscious.
When looking at accountants' auditors' costs and the regulator costs. And this is why you still have an internal model for saving costs. So what is your perspective on IFRS 17 from the costing point of view? Chris, can you cover this? Absolutely.
IFRS 17 is a very expensive project, And I don't think we have any option not to participate. But from point of view of costing, well, the total costs post factum will be €20,000,000 to €30,000,000 easily, €1,000,000 And my question is and it's difficult in the presence of the auditor, but for those using the general report, there's obviously, too, is much more relevant. And sometimes you wonder about the relevance of IFRS 17. So what is the cost benefit analysis of implementing such a project? What is your perspective on this?
Well, your question seems to assume that we have a choice. If we had such a choice, we would have made such a cost benefit analysis, but my impression is we have no option whatsoever. Well, there are different ways of implementing IFRS 17, so I hope to get some kind of sentiment, but I think we're on the same page. I can say something. We have no option.
We have to implement. And I think that very few people, except consultants and auditors, are getting happiness out of Annual Report, but we simply have to do it. In our approach, we will select a modest method as a way of spending as little money on this as possible. Thank you. Any other questions on the financial statements?
Then we're now going to vote on the financial statements. The 10 minutes are running now. I conclude the 10 best tankers have passed. The vote is now closed. And we now wait for the moment.
The results will be published on the screen. And as you see that with 100% majority of the votes cast, the annual financial statements have been adopted. That brings me to a happy point for you shareholders. This is the dividend as already voiced by Jos in his presentation to have a cash dividend for SEK1.74 per share, meaning that after interim dividend, we still have €1.09 in remaining dividend. Any questions about the dividend policy or the dividend proposal?
If that's not the case, let us proceed immediately to the vote. The vote is now opened.
Understanding is Neu Decht.
The vote is now
closed.
And with 99.97 percent of the votes, the proposal has been adopted, meaning that dividend will be paid out in line with the proposal, which brings me to I, TIM.5, the appointment of the external auditor. Cor, the floor is yours. Cor, van der Bosch. Yes. I'm happy to comment on this item on the agenda.
The current auditor, E and Y, was appointed for a term until the end of the financial year 2019. In the fall of 2018, the International Accounting Standard Board decided that the date of IFRS 17 entering into force should be postponed with 1 year, starting with the period starting with January 1, 2022. The implementation of IFRS is a very important project. And for ASR, it is of key importance for this to happen well. The current lead partner of EY, Martin Koning, who based on the independent rules, needs to discontinue 4 rotation rules in 321 in order to have the stability and the transition of IFRS to IFRS 17 to be safeguarded, we have importance we're attached importance to having a stable team.
For this reason, we have decided to launch the selection procedure earlier than usual, the selection nomination of an external auditor for the coming year. As you have seen in the Expiratory Notes of the Agenda, a tender committee was set up, which will conduct the selection procedure and that has made a recommendation to the Supervisory Board. This committee, chaired by myself, was made up by members of the Audit and Risk Committee, the CFO, Chris Piguet, sitting here as well as 2 directors, Director for Internal Orders and the Director for Group Accounting control. We carried out a market survey or review rather, leading to the conclusion that in the Netherlands, only a small number of order firms are both qualified and set up for the audit of major listed companies. We have launched a request for proposals, and we have approached several parties to be part of this.
In the request for proposals, we have laid down some criteria in terms of the qualifications of the audit, the experience, the availability and the references of the team, the audit scope and approach, the ways of cooperation and the fee. And the last criteria, the fee wasn't one of the key elements. The seniority of the team experience with auditing listed insurance companies and familiarity with IFRS were the key criteria for selecting firms. 2 audit firms participated in the requests for proposal, and both have submitted a good proposal and have presented a presentation to the tender committee of the executive of the supervisory board. And this is how the tender committee has come to recommendation.
And based on this recommendation of the tender committee, based on the ongoing selection procedure, the supervisory board now proposes KPMG to be appointed as a current auditor for the financial years 2020 through 2024. And the audit for the current year 2019 will be as contracted by the current auditor, ES and Young. Therefore, like this year, will be present at next year's AGM in order to answer any possible questions about its audit and about the annual financial statements. And that concludes my explanation, my comment. Do we have any questions or remarks?
If that's not the case, we will now proceed to the vote on this point on the agenda. We have the vote now. The vote is now closed. And we see that the proposal has been adopted. That brings me to item 6, which is discharge of the members of the Supervisory Board and subsequently, the discharge of the members of the Executive Board.
It is proposed to grant to the current and previous members of the Executive Board discharge for the execution of their functions in the financial year 2018 as reflected in the 2018 annual report or in any other information provided to this meeting or elsewhere known to the Annual General Meeting of Shareholders. Are there any people wishing to ask questions about the discharge? That is not the case. So we can now proceed to the vote. The vote has now been opened.
The vote is now closed. And we see on the screen that the discharge has been granted to the members of the Executive Board. Now we have a similar request, a similar proposal on for the members of the supervisory board for the execution of their duties in the financial year 2018 as reflect in the financial statements, as reflected in the information provided at this meeting or otherwise known. Any remarks
And the standing is Dijkt.
The vote is now closed. And we see that once again this charge has been granted both to the members of the Executive Board and to the members of the Supervisory Board. So that brings me to item 7, the extension of authorities of the Executive Board. We are asking for 3 authorities, the same authorities we asked for at last year's AGM. And the first authority is authority for 18 years, authorizing the executive board to issue ordinary shares and to grant the right to subscribe for shares up to a maximum of 10% of the issued share capital.
And starting at today's date and under the condition that this will be only done with the approval of the supervisory board. Any questions or remarks about this item? That's not the case. And therefore, I propose to immediately proceed to the vote. The vote is now opened.
And we see that this authorization once again has been granted for a period of 18 months. We now come to 7, which is the proposal to the authority of the Executive Board to limit or exclude statutory preempts and rights. It is proposed starting today to authorize the Executive Board for a period of 8 a month to limit or exclude the statutory preemption rights in connection of the with the issue of the authorization granted under 7. Once again, this is subject to approval of the supervisory board exclusively. Any questions?
Any remarks? That's not the case. We now proceed with the vote. The vote is now opened. The vote has now been closed.
And we see that the shareholders have also granted this authorization to the Executive Board. That brings us to 7C, the proposal to extend the authority of the Executive Board to acquire the company's own shares for a period of 18 months on the stock exchange or otherwise, the supervisory board will only authorize this. The executive board will only do this with the approval of the supervisory board. Any questions or remarks? That's not the case.
We now proceed to the vote, and the vote has now been opened. The vote has now been closed. And we conclude that the 3rd authorization has also been granted by the AGM. Thanks for this, which brings me to item 8, the composition of the supervisory board. It's a great pity that we are forced to part with Annette Harris as a member of the supervisory board, particularly as a member of the remuneration and selection committee for the past more than 8 years and has played a major role in the work of the supervisory board.
She had a vast contribution to our discussions on strategy, on digitalization and the remuneration policy, which has been well received, is something she made a crucial contribution to. And I also want to point out that she played a major role in building the excellent relationship that we have established with the Works Council. Plenty of other things can be mentioned, but we did so last Friday with a good glass of wine. We have no such wine in the table now. I can only share that we will immensely miss Annette for her substantive contribution, but also for the kind of person she is, and let us give her a warm hand.
So I think this is a suitable moment for me to hand over the chairmanship of the meeting to the Vice Chair. Thank you. That brings me to item 8, and this is a proposal to reappoint Kik van der Pol In the light of the need for continuity within Supervisory Board, we have made an appeal on Kik van der Pol to be available for an extraordinary reappointment for a maximum term of 2 years as Chairman of the Supervisory Board. Over the past years as Chairman, he made a key contribution to the further development of ASR. We also foresee that he will do the same over the coming years with his vast knowledge of the industry.
His connecting qualities and also his quality to safeguard the interests of all stakeholders and to balance them. As you have read in the documents through this meeting, the supervisory board has been asked to formulate its position on the nomination of Mr. Vanderpool. They have given an expression of their opinion, and it is positive. They support the nomination.
And the board has decided not to further comment on this nomination. The supervisor board keeps looking for a successor of Kig van der Poel, somebody with the right profile and experience who embraces the vision or experience of Wikfontein. That's what I wanted to say. Any questions or remarks? I see no questions.
Then we can quickly proceed with the vote. The vote has been now opened. You have 10 seconds to cast your vote. The valves has now been closed. And we see that 93% of the votes were cast in favor, meaning that Kik has now been reappointed as a member and Chairman of the Supervisory Board.
A warm congratulations, and I'm giving him back the floor to conduct the last points of this meeting. Thank you, Cor, for sharing this part of the agenda. Quick and swift. And thank you for this confidence for this coming period. And we come to any other business.
Who would like to address the AGM? Two little questions still. First of all, the remuneration policy, as it will be we are positive about the policy. But you are a major investor in the Netherlands in particular. And I was wondering therefore to which extent your policy will be reflected in the share portfolios of ASR and where the ASR will become actively involved in limiting the remuneration or the bonuses in other companies, if not to abolish them?
And then a specific question for Ms. Ares. Well, Rabbanck has no bonus. ASL recently amended the policy. They do have a bonus system.
I have the impression there is a stimulating force by the person of Ms. Ares. In the course of your career as a Supervisory Director in other listed companies, is this something we see reflected as well, the idea that a bonus is not a necessity for good performance? Before I hand over this question to Annette, I want to repeat my appeal to Annette in expressing the wish for her to lay down her vision on liberation in a book. And now I will hand over the question to Anat to provide an answer, both to the question about the book and about revision.
Well, I just published a book, but it's about something else. Well, the next book then. Yes, I don't want to be known as the lady kicking out bonuses. That would be a bit simple. I am very much in favor of a balanced perspective on companies, their stakeholders and suitable remuneration.
And if you look at such a high-tech international company as ASML, you're dealing with a different situation than a Dutch financial institution. I think it should be tailor made. But I think that the perspective of stakeholders is important. Over the past 6 months, I myself went through a very instructive process. I learned a lot from the process.
I gained a lot of new insights. And therefore, I hope that what I have learned can be taken on board in the other directorships I hold. Then the question about the way we act as investors on the various AGMs, Joss. We certainly apply our view on remuneration on the discussions we conduct as investors with supervisory boards and executive boards or management boards, not to the extent that we would automatically vote variable remuneration in Europe and Rest of the World. It isn't a common practice yet, But we certainly focus on the rationale of remuneration, the way it has been structured, the way it is easy or not easy to have a variable remuneration.
So certainly, this is an element of our dialogue, and it has been laid down in the ESG policy that we have formulated ASR for the way we deal with our investments. Any other questions in the any other business round? That's not the case. And then we're very close to the finish. But I wouldn't close the meeting if I wouldn't have said to thank you, shareholders, for your presence, for your involvement with the company, I also want to express my gratitude for the members of the Executive Board, the managers and employees of ASR for their immense efforts for our customers, for our shareholders, for the company.
And with these words of gratitude, I close this meeting, and you're all welcome to have lunch. The meeting is now closed.