Dames en heren, hierbij open ik de algemene vergadering van aandeelhouders van ASR. U allen een hartelijk welkom. Ook een hartelijk welkom aan onze aandeelhouders die ons via de webcast volgen. De verbondenheid van aandeelhouders, zowel hier als via de webcast, stellen wij buitengewoon op prijs. Het is een goede gewoonte om met enkele formaliteiten te beginnen. Om te beginnen is de voltallige raad van commissarissen hier aanwezig. Cor van den Bos, de vicevoorzitter en tevens voorzitter van de Auditcommissie. Annet Aris, voorzitter van de Selectie- en Benoemingscommissie en van de Remuneratiecommissie. Herman Hintzen en Sonja Barendregt. En de voltallige raad van bestuur, bestaande uit Jos Baeten, CEO, en Chris Figee, CFO. Daarnaast is aanwezig een grote delegatie van de ondernemingsraad onder leiding van voorzitter Noortje Antonis. Welkom. Ook heet ik graag van harte welkom het senior management van ASR, vertegenwoordigers van de media.
Daarnaast de voorzitter van de Stichting Continuïteit van ASR, Herman Hazewinkel. Aanwezig is een delegatie van de accountant EY onder leiding van Maarten Koning. Hij zal straks bij agendapunt vier u enige informatie geven. Als secretaris van de vergadering treedt op, daar ver in de donkerte, Diane de Groot. Het is weliswaar donker, maar er wordt een opname gemaakt van de vergadering ten behoeve van het verslag dat zal worden getekend door de voorzitter en de secretaris. Omdat het ook een stream is, vraag ik u bij dezen al om voor het verslag, als u straks vragen heeft, dat A: in de microfoon te doen, zodat het over de hele wereld te horen is en B: uw naam te vermelden en eventuele vertegenwoordiging. Aanwezig is Paul van der Bijl, de notaris die zal toezien op het correct verloop van de stemmingen.
Hij is gezeten naast Diane, ook daar in de donkerte. Dat neemt niet weg dat hij zeer nauwkeurig op onze stemming toeziet. Die vinden plaats bij agendapunt drie: het remuneratiebeleid. Agendapunt vier: jaarrekening en dividend. Agendapunt vijf: de benoeming van de externe accountant. Agendapunt zes: de decharge. Agendapunt zeven: de verlenging van bevoegdheden van de raad van bestuur. Agendapunt acht: de samenstelling van de raad van commissarissen. De stemming geschiedt elektronisch en daar kom ik straks nog op terug. Ik stel vast dat de oproeping van de vergadering is geschied in overeenstemming met de statuten. Ik stel ook vast dat de vergadering rechtsgeldige beslissingen kan nemen, dat er geen voorstellen zijn gedaan om onderwerpen te behandelen anders dan die op de agenda staan en derhalve zal de agenda leidend zijn. Voor zover u nog wordt gebeld, verzoek ik u de telefoon uit te schakelen.
De vergadering is te volgen in het Engels en het Nederlands via een webcast, maar u kunt het ook later terugzien op onze website. De belangrijkste mededeling: na afloop van de vergadering is er een lunch in de ruimte hier buiten. Mocht u vragen hebben, niet als aandeelhouder, maar wat ook wel gebeurt als klant van ASR, dan kunt u dat tijdens de lunch aan de hostess bekendmaken en dan zullen we zorgen dat uw vraag nog tijdens de lunch wordt beantwoord.
Of ASR to become as shareholders in order to get quick answers to their questions. I hope everything was clear. That brings me to item two on the agenda. I'll invite Jos to give a brief explanation on the annual report. The floor is yours.
Dank je wel, Kick . Welkom allemaal hier.
Thank you, Kick. 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. Of course, we continued to pursue ongoing improvement, whether in our services or other areas that we consider 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'être. In our investment policy, we demonstrated increasingly that we want to make the Netherlands and the world more sustainable.
We achieved a nice acquisition in 2018. That was Loyalis. 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. We also demonstrated fine financial results. The acquisition was Loyalis. I'm going to speak for a moment about the financial results with you. I assume that you examined those sections in the annual report particularly diligently and leafed through the rest. We achieved fine results last year, EUR 742 million 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. We're particularly happy because this already includes a particularly large claim for non-life. We had EUR 30 million in claims due to storms and climate related damages, what we call it now. These incidents are increasing.
Despite that serious storm, our results were excellent. 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 one 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 on that portfolio were solid so that the profit grew well there too. Our 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%. An increasingly important figure for our shareholders as well is what we call organic capital creation, and you could describe that as free cash flow. So new capital accumulated that you either reinvest in the company or return to shareholders at EUR 372 million. 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 +40. Our commercial partners, such as our insurance brokers, also assigned us an excellent score, which was +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 insure, such as the self-employed. As far as our sports brand introduced a new product last year for occupations that are difficult to insure and that are heavy occupations where we help 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. We've launched a mortgage with a 40-year fixed interest rate period. We're the first to do this in the Netherlands to enable people to buy their home and to have the certainty of what their cost will be for an extended period. Finally, another source of pride that we'll 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. 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.
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. I think that as a financial provider, we can do much to promote this. In our investment policy, we focus on how we can help the companies where we invest to operate more sustainably. It's true that sometimes this gives rise to dilemmas. We do have an exclusion list. There are certain companies or branches where we are no longer willing to invest. That raises the question of how does that influence your daily acceptance policy. Are you willing to insure those companies? To help our staff, we organize department workshops that are 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 fair, 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. That's another ambition. 100% of our investment portfolio now meets the requirements for sustainable investments that we have set. Next slide. As I said in my introduction, we acquired Loyalis. That was a fine acquisition. 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. We've almost completed the integration. We have two small steps. 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. The final step is pensions. That's always a bit more labor-intensive because of all the legislation and regulations. The pension company of Generali should have been fully integrated by the first quarter of next year. We will not fully integrate Loyalis within ASR. This links closely to the GDPR company. One of the reason we did this is because it opens the door to large new customer segments in the Netherlands.
The customers of Loyalis, about 85% of Loyalis consists of civil servants and government staff. We don't want to erode the commercial value. That's why we've decided to leave the disability operations in Heerlen. 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. Of course, there's a red or white elephant in the room. As you know, at present, there's a large Dutch insurance company for sale. We 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 serious consideration. We're not willing to do those transactions at any cost. We take a very serious look at them, but with all the financial requirements of acquisitions will apply here as well. 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. 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.
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 first three 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 costs to the tune of EUR 200 million.
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 EUR 30 million in non-life claims. This also expresses our confidence in ASR and our confidence in 2019. That means that we're proposing a dividend of EUR 1.74 per share. We've already distributed EUR 0.65 as an interim dividend, which yields a final dividend of EUR 1.09.
That takes our dividend up into the range of 45%-55%. This proposal will 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. Finally, last year, there was another highlight, our Capital Markets Day. We welcomed analysts from all over the world in this same area and disclosed our targets for the next three years. That was on October 10th. Those were the ASR targets as ASR was on October 10th. 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, our target of return on equity was up to 12%, and we've adapted that to 12%-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 EUR 430 million. You can add EUR 35 million to that because after the Capital Markets Day, we acquired Loyalis, and after integration, we expect that to contribute to organic capital creation to the tune of about EUR 35 million. 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 most other insurance companies. 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. Because the portfolio is shrinking, we need to curtail costs. Whereas the costs were 56 basis points at the reserves last year, our target is to reduce them in the years ahead to 45-55 basis points. In non-life, we assume that the combined ratio will be 94%-96% in its combined ratio. In 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. Our growth target is 3%-5%, and that's quite challenging on a market that is currently shrinking with a gross national product that's hardly growing at 1%-1.5%. Our ambition is to grow faster than what the market would naturally be expected to do.
Our final business target concerns our distribution company and asset manager that need to contribute in 2021 to the tune of at least EUR 40 million and should be growing from that point onward by at least 5%. 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. Our investment portfolio enables us to focus on being more sustainable. If you want to rely on that, you have to measure your investment portfolio's CO2 footprint. Our first target is to quantify that portfolio so that by 2021, at least 95% of our entire investment portfolio reflects a clear CO2 footprint.
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 EUR 1.2 billion. Finally, we think it's important for our staff to go that extra mile in making Dutch society more sustainable as well. We've said we're a financial institution, we can help people and families in trouble, not through endless financing and money, but by educating them.
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. 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. I'll hand you back to Kick now.
Mevrouw De Haal. 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 stream can hear the questions, and also for the sake of the minutes, please indicate your name and possibly the organization you present. You were the first. You can speak first.
Thank you very much. Good morning. The members of the executive board. My name is Vicky van Heck. I work for the Dutch Association of Investors for Sustainable Development, VBDO. I have three questions I'd like to raise about sustainability. The first question concerns the climate. ASR contributed actively to the Carbon Accounting 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. Our question about the 95% that can be measured now is the following: Can you share the results at this point in time? 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 Agreement? My second question concerns the effects of climate change. This can be droughts or floods or other extreme weather events. VBDO considers this as a risk for both the insurance companies and shareholders investors. The Task Force on Climate-related Financial Disclosures, another nice term, advises financial institutions, among other things, to investigate these quantitative risks of climate change and to apply scenario analyses to this.
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? When do you think you could be reporting according to the guidelines of the TCFD? 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, 14 and 15, are taken on board. Many parties forget about these targets and goals. 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 contribute to achieving development goals in the light of the UN guidelines and targets in this field. Thank you.
Thank you very much for these clear questions.
Yes, Chris 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. 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. 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. We can't prevent this, but what we can and do is inform our clients about risks and help them take measures. With increased data available about weather 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. The major, the largest non-life damage events are floods. We, as an industry, have been talking for several years about this with government. We think that part of the risk can be insured 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 Drenthe on higher lying ground, the risk is lower than people living in the plains near the coast. We look at the contribution we can make to this. 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%-20% in order to continuously cover the increasing risks of climate claim. Now, Chris, you would say something about the investment case? Yes.
As an answer to your question, in the Spitsbergen group, we are working on the science-based targets and making it even more science-based in order to meet the requirements of the Paris Agreement. In 2022, we will make them public at a later, but I can lift the tip of the veil. If we measure the carbon footprint of our investment portfolio, we see that we have a near 100% coverage. Some portfolios take slightly longer to focus on this. It's particularly the third-party assets under management. Here we have come to only 25% of an analysis. We're working on this, we're also working particularly on real property and mortgages to measure the carbon footprint of the mortgages that we provide and our property portfolio.
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, there where we can compare ourselves to a benchmark on credits or shares, we are more or less 30%-40% below the average benchmark, we think that by 2020 we can formulate tough targets, hard targets in line with our commitments. When talking about mapping the impact of climate change on our investments, we have an initiative, launched by Grootek/Ootek. This is a liability management study carried out by some universities, pension funds, and consultancy firms, which analyzes 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.
There we were checked, we see that this is becoming a more and more important element of our asset allocation. It's a back test that we carry out in order to verify and control. I think that climate scenarios will play a more and more prominent role in our investment policies. We already test the scenarios, 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. To be brief, we do analyze our portfolio together with universities and other parties, we prove to be pretty resilient, 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.
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. We select leaving out and having positive action, 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. I haven't formulated yet a KPI for each of the SDGs. We don't have such KPIs unfortunately. We're waiting for the rest of the world. We want to follow up on existing developments, we will follow them when they exist.
We want to exclude certain investments, and we want to emphasize positive action for each and single SDG.
Thank you very much for that answer.
Thanks for these very clear questions. You were the second to stand up, and then the next speaker.
My name is Jasper Jansen. I am 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. In the first part, we usually read about value creations, returns on equity, value over volume, and these kind of terms. Then you come to the second part, the financial statements, and it is not always present there. In your annual report, it is, as we see by your NDO, the targets that have been met. This is positive news.
I have a few questions about the level of ambition of the new targets. 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, 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. My question is the following. I have two questions, actually. One, can ASR commit it will abide by the minimum return on investment ratios up to 12%, including an acquisition of Vivat?
Secondly, it would be fair to require an even higher return on capital employed, given the risks that such an acquisition would bring. That is the first question. The 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. That in turn would mean that there is a lot of value in the life portfolio that Vivat still holds. 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? A few questions about the new strategy and the strategy targets.
My first question concerns the tension in non-life between 3%-5% growth, combined with a combined ratio. Mr. Baeten just said that we want to outgrow the natural possibilities. That leads to suspicion, usually on my side. The risk may then be that it is growth above value creation. 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 three 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 given this shrinkage. What is your long-term outlook for this portfolio? A question on the return on equity expectations, obviously increased.
If you look at performance over the past two years, ASR always performed way above the 14%. My question is this underpromise and overdeliver, or has something changed in insurance markets, meaning that return on equity employed is lower than in the past? A last question about the banking activities. They have been defined as non-core, 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. We also read the news about possible competitors in the bid. Time will show how aggressive the process will get.
We know 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. Therefore, without any hesitation or any reservation, the answer is yes. When talking to investors about this matter, we also address the 12%, which is our holder rate for an acquisition. We add to this how we see the risk of an acquisition. When we think there is a risk, a financial or an operational risk involved, we will also think twice about raising that threshold. It's not unthinkable that we would qualify such a transaction as at a higher risk than previous acquisitions.
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. You may be comfortable that it will be high and even higher than we are usually accustomed to do. A second question, whether we are willing to divest. 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 policy holder. Therefore, we first look at our obligations and that we attune our portfolios to the levels of obligations in terms of amounts, in terms of time. 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. We wouldn't say we're getting a few billions of EUR premium. We would try and generate the highest returns because we all know that the higher the return on investment, the higher the risk. We have the obligation to live up to the expectations of policy holders. 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 this obligation. The likelihood of ending up in a transaction is close to nil, in my view. I have always learned that we must keep the back door open. I think it's hardly likely we would end up with such a transaction, such a divestment.
In addition, on the Capital Markets Day, we said that we view ourselves as a national consolidator of the life market. We are a Dutch company. We know the 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. We see ourselves as one of the consolidating parties on the Dutch market, or at least potentially in this role. From that point of view, it would be illogical 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. 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 Dutch insurance company should be run, 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 a success of this acquisition?
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. For such an acquisition, if we are within the go scenario, we'll take an even closer look. 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 at risk with such a transaction. You had a question about our targets. First of all, growth combined with a combined ratio. The general principle of ASR is value over volume. 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. Within this framework, we have shown our belief that we can have healthy growth by providing good service to customers, by providing good products. If this can go hand in hand, we will follow the growth targets.
As of the moment, when we see that growth would be at the expense of return on investments, we would immediately slow down the process. A second question you raised about the return on equity. Chris will address this in a moment. Sorry, that was your third question. Yes, that was a life book question.
During the IPO, we showed you some aspects of the life book. We said that counting from the IPO, the book would diminish by 50% over 5 years. We are three, four 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. We see more people buying out their life policies and paying down on the mortgages.
We assume for the time being that this process of decreasing policies will come to the 50% threshold, maybe already in the 9th year. After 10, not the 5. Why do we think that still results will maintain at the previous level in the coming year? In the life book, you have an old part of portfolio with a 4% guarantee. This is the part that naturally will decrease fastest of all. That means that the discontinuing of the 4% guarantee portfolios will compensate profitability to a certain extent because the younger life book has only a 3% guarantee level. Normally speaking, you have a lower amount. You can keep the same profitability levels by and large.
Chris, you are the master of ROI. ROE. 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. This is the take we have on investments and in any transaction we would conduct. Other parties can carry a higher risk, therefore, on returns. I think we are at a closing part of an economic cycle. The end is closer than the beginning. Is this the stage where you should take risks? A follow-up on your previous question. We want to have a sustainable investment policy. We have seen scenarios in which you could do with the life investment portfolios. You could buy Loyalis, you could start planting avocados in the U.K., or you should have other products in the U.K. with a wonderful return.
If I look at the water use of avocado plantations in the U.S., this is huge. When we talk about the profits of the pharmaceutical industry, we have the same problems. Distressed mortgages are not really what I would call a sustainable investment. We look at the obligations that we have. We look at our understanding of responsible investments, and in that, we say what is honest lasts longest. ROE. Our ROE is a bit lower or at par with our previous earnings. 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, then the equity gradually increases.
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. You could pay it out, is the question. We could invest it. We could pay out dividend. We are aware of this, and you have to look at the solvency, your equity from accounting point of view, and then it's not surprising that equity may slightly increase over the past years. The last question about the banking activities. By now we have announced that we have divested the large part of ASR Bank to our colleagues with Achmea. 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 standalone legal entity. Therefore, we do not expect or anticipate any large disintegration problems when the savings bank, because this is the divested part that has to be handed over to the buyer, Achmea. We think that if everything goes the way anticipated by the end of this year, we will close this transaction neatly.
Thank you, Jos. That brings me to the next question.
Thank you, Mr. Chairman. I'm Mr. Stevens from the Foundation for Legal Protection of Investors. First, my compliments on the results you've accomplished. Yes. Can you explain why you are converting shares into property? Because asset location is carefully divided, and that gets you to the CO2 footprint and the investment obligations. 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. Others are not crazy about being acquired by ASR and would prefer a private equity operation. Can you tell us about that? That financing mix, let's say that moves forward. How do you envisage that? Will you have to raise capital? What about dilution?
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. Chris's passion is IFRS, so he'll be delighted to elaborate on that. About the pink elephant.
Those rumors that you mentioned, they reach us, too. 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. If ASR reaches that stage, then we will certainly consult the works council of the party we are considering acquiring. 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 two employers, it's not only at the expense of jobs, but it also impacts us. 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 as 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 convene an extraordinary general meeting to present this matter. 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. If all we tell them is about dilution and deterioration, then we won't be very convincing. The question is whether that will be possible.
If such a transaction is off, excuse me, when such transaction enters the picture, we understand that we need to convince our shareholders. If we do agree to this, then it will be because we're convinced that we can convince you as well. 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. For investors, the Dutch housing market is robust. As a buyer or a tenant, it may be more challenging, but for us, it's robust, and we're talking about investing in homes with rents between EUR 700 and EUR 1,200 a month. There's very little vacancy. Value is rising. You can see that based on the return in our investment portfolio. 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. Trust me, I enjoy it. The figures do not yet reflect IFRS 17 that won't really be launched until 2020 or 2021. Our IFRS figures do reflect increases and decreases in share prices. The difference with respect to last year is we had some more impairments reflected in a share price decrease in the second half of last year. You have to show that in your figures. Last year, there was a one-off profit considering the preference shares in Unilever that we sold. There was a one-off increase in share price, this year we don't have that. That explains much of the difference.
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, I've heard you speak at greater length about that subject. On to the next question.
Good morning. I'm Robert Vreeken from We Connect You, Public Affairs & 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, 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 chairs of the executive board and the supervisory board were very approachable. My compliments.
If I consider Hans Wiers, who dashes out the moment a meeting ends, and he does that very consistently. 1 million 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 that Randstad might acquire that. Mrs. Aris does have some leverage there. They haven't reached that stage yet there. Over there, they want everybody to be young, dynamic, and relatively low wage. That Taxi Electric has Teslas with a 600-kilogram battery, and the battery is the strongest polluter among all the parts.
I would like you to scale over to light electric vehicles, because in Amsterdam, ASR was the first to pioneer the Urbee, Amsterdam Electric share bicycles at the Bibob Strat plan. The benefit of the Urbee is that the battery weighs only five 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. Parking space will easily cost EUR 20,000 to EUR 40,000. Insurance companies are wonderful at figuring out the numbers. I've already spoken about the WakaWaka. It's thriving here, but it can also be used as a box, and the people all over the world who don't have lights could get lighting through the WakaWaka.
The circular shower saves 80% on water and gas, which in the Netherlands would reduce the CO2 emission by 10%-20%. What I truly care about, and I was talking about that yesterday with Van Beurden, the top 10 most polluting ships in the world pollute more than all cars in the world together. 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. Practically, the OECD is predicting a new economic crisis together with the climate crisis, a 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 five good years.
How does ASR feel about the long term?
That's clear. I was trying to figure out the question. Okay, that one was clear. Jos.
Yeah.
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's 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, we'll take forward. You mentioned 1 million plants and animals on the verge of extinction. The ASR building is a mini ecosystem. We have a large garden behind this building, and Teth brought about a separate ecosystem.
There are greenhouses, and we plant wildflowers, and anything we can do to help nature 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. 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. We do have a lot of commuters who still come by car. We're making progress there, too.
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. 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 as pollutant, 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. 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. 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.
Your situation has been adopted. On to the next question. Go ahead.
Good morning. I'm Mr. Sei from Amsterdam. You had a few questions.
If ASR acquires Vivat, there will be an omission. 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. Everybody is purchasing online, it's bricks versus clicks, 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.
The ultimate decision will be once we almost have the Vivat 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. Chris 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 EUR 1.7 billion. It's a very focused shop portfolio. We aim for the main shopping streets in the largest 15 or 17 cities in the Netherlands. If you click on it, that's about 10% of the shops where you could invest. Our pond is about 10% of the retail pond in the Netherlands. We're focusing on the large cities and the main shopping streets, they're still doing fine.
The problem in retail is mainly along the periphery, so 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 a hard risk. 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. The location challenge persists also in our retail portfolio and our fund. The ASR's interest is about 45% in the EUR 1.7 billion portfolio. That's the investment in the high street shopping locations.
Are there any other questions about the annual report on the executive board section? Mr. Stevens.
Thank you, Mr. Chairman. I'm Mr. Stevens 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? Have you commissioned a South African company? Wasn't there any company closer? They do say a lot about the environment, but if you involve a South African company, that's really far away. With banks, fraud is an issue. We've got our own ideas about that. We'd like to know whether you're protecting yourself and hedging any risks of banks and related divestments. I have another question that concerns the investment portfolio. We understood about the shops. We also understand about the office. 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.
Warehouses.
Perfect. Jos.
[inaudible]
Your first question about older staff. You can count me in on that, and I receive plenty of IT support there. 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. 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. We even have staff that cannot be beat out. There are some people who retire but like ASR so much that they apply anyway and return.
By now, we have somebody who has been with ASR for 52.5 years, and that person doesn't work five days anymore, only three days a week, but still enjoys working here enormously. We do everything we possibly can to keep employees who have been with us for a long time active here. Your second question, can we find a 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 the carrot rather than stick. You need international partners for that and systems to arrange it and to be able to offer it to your customers via apps. That company has all of that on tap, 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. In 17 countries all over the world, they've already launched the system. 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 describe 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 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. 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. In those cases, we have a zero-tolerance policy and 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.
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 your search. The number of hits we achieve for potentially suspect transactions is relatively low, but we still go about this zealously. The final question concerned the investment portfolio. Chris, we don't invest in logistics centers in the Netherlands. We invest in homes, shops, and offices and property. We recently set up a fund to invest in science parks. So offices and science parks near universities because new starters often want to live close to the university. We don't invest in logistic distribution centers.
Question off mic. 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. You said that if the numerator can go down, the return will go up. I understand that that means that at 200% solvency 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 Vivat issue, but that could take a year. My question is as follows. In the past, the ASR buybacks did very well. We were able to buy them back from the government for a pittance. 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, there's a point when 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. Once you do, it's gone. It's at approximately 200% of Solvency II at that point. 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. 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.
When the debate starts about returning capital to shareholders, and as the board, we don't care whether it's a special dividend or share buyback. What matters is what our shareholders want, and then we try to see what the return on a share buyback could be. We assume that a special dividend will deliver the cost of equity, and we've set that at 10% for the sake of convenience. We assume that it will yield a 10% return. As for the return on the share buyback, I'll share the operating profit on the company by increasing the market value. You've got the return on equity of a share buyback and the most return on investment, rather. We talk to shareholders to find out what they want. Mechanically, 10% versus estimated return on investment.
Whether you accomplish that depends on the situation, because it starts with solvency above 200%. 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. Thank you very much for considering that.
The joy almost made you topple, and that's great. It didn't happen, although these are interesting things for an insurance company. I'll conclude we have no further questions concerning the discussion of the annual report of the executive board. That brings me to the report of the supervisory board. You find the detailed text in chapter two. A few points. We had 13 formal meetings, and we particularly looked at the acquisition of Generali and also were disconcerted to the decision-making about the Loyalis 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, and that Jos and Chris have already addressed.
We spoke a lot also about the structure, the framework for M&As, 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 of the Supervisory Board, but I'll come back to that under item 3. A lot of the work of the supervisory directors took place in the committees of the Supervisory Board. You've seen that the Remuneration Committee, the Audit Committee, and the Nomination Committee have given very detailed reports under item or chapter 6 of the Annual Report. Any questions about the Supervisory Board work? Yes, please.
Jasper Jansen, on behalf of the 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. The Supervisory Board report mentions this. The essential message is that internal controls for non-life in Generali isn't operating adequately yet. Can you say a few more words about what's happening there exactly? 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 of 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. This is one issue where the auditor indeed made a remark about, the Audit Committee followed this matter very closely, has been working, is working on the solution of the issue. 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 one of the acquisition. 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 Generali, you'll see that most issues dating back from 2018 will be behind us. 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 remuneration, leads to the possibility of acquiring, by and large, very good people. 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 advantage 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 4 members of the Executive Board to see whether the management structure that we had would work 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? The reason was very simple. In the past, and rather distant past, we had quite some operational issues, some issues around the implementation or 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.
Mr. Wels and Mr. van den Bos 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. We, as 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. Therefore, more and more, the operational management has been placed below the level of the Executive Board.
Based on this conclusion, in a very positive consultation with the Executive Board, we decided to amend the management structure with the expression of great gratitude to Karin 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 Verwoest, who was sitting at this side of the table last year, is now in the room as a shareholder. The room is pretty dark, but still I'm very happy to see him among us as a shareholder. As a result, the organizational model, the structural model, has been amended. I think we have a sheet here. Yeah. First, the key issues on this slide. 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 upon itself. This was the complicated chart I saw because it gives you the distribution of tasks between the CEO, CFO, and a new member of the Executive Board. Then in very small print, but it will give us in the next slide with pictures, gives you a nice impression of the members of the Business Executive Committee. You see that CEO, CFO, our representative CRO, and 5 business managers. Based on this model, operations started as of January 1st or February 1st. You may forgive me for mixing up the month. We are now in the concluding phase of hiring a third member of the Executive Board.
As soon as we have a final decision, as soon as white smoke comes out of the chimney, we will inform you. 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 of November, and a month before, we had a Capital Markets Day where Bergstein and Verwoest gave detailed presentations on their plans for the coming three years within their field of responsibility within ASR. When you inform me that a 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 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. This is absolutely not about any issues of strategy. Simply when the rough outline was ready, De Nederlandsche 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 three, we will discuss the new remuneration policy that will come into force as of 2020.
The 2018 annual report shows us that the amendments of the remuneration have taken place in line with what was decided in 2016 and 2017 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 three, which is remuneration. This is the first voting item. 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. Currently 140 million votes can be cast as a maximum.
At this meeting, 754 shareholders are either present or represented, which represents 100,257,515 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. First of all, I want to check whether the 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. We are now going to have a test round. The result was always revealed in the presentation of CEO, so still we should have a test run. The slogan or the statement is this: The ASR head office will be completely carbon neutral by June 2019.
The really challenging bit is reaching June. Let us see what happens. You can now cast your vote for or against, or you can abstain. The vote is now open. You have 10 seconds. The vote is now closed. 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 Jos' words because 99.95% of the votes cast believe that we will be completely carbon neutral by June 2019, which indeed is the case. Any other issues? Are the issues solved by now? Excellent. In the first row, I think we have a question. No? Still not working. Let's imagine the next AGM with all phones supplied by China. It shouldn't happen now.
Now we come to more serious matters, the remuneration policy. When we became a fully privatized company, we amended, we maintained rather, the existing remuneration policy and at the same time announced that in 2018 there would 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. This has been led by the chair of this Remuneration Committee of Supervisory Board. We have taken four 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 insurance 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 third angle, the third 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 does this relate to what we want to happen? 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? In this way, we try to reconcile, to connect the various perspectives on remuneration. 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 and the central bargaining agreements as well, it didn't seem appropriate to have variable remuneration for the members of the executive board. Based on the way we increase 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 arranged for all employees that they will receive the CLA increase, as long as they are not at the highest level of their salary scale, they will have a 3% increase every year until they come to the top of their CLA. 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 an Executive Board to have an annual wage increase. What if you perform very badly?
Some shareholders said that we should review this commitment to 3% that has been committed in CLA and to make it more variable, meaning that in very bad years, it can be under 3% and in very good years above. The aim is to follow the same kind of increase 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. We have the indexation that already was part of the central bargaining agreement. When looking at the external labor market, we took a new critical view on the way we compare to other Dutch companies. 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.
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 their regular salaries, 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 five years. We have had detailed consultations with the different stakeholders. This is a sensitive issue in Dutch society, 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 these kind of issues, 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 remuneration are different, where the policies you find in Dutch society are under great scrutiny and to great lots of emotions. 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 four years, we will submit the system to the shareholders, 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, we will also indicate the implementation in a remuneration report.
Who would like to ask questions about this issue?
Good morning. I have no questions, but a number of observations. My name is Margriet Zwarts. I work for PGGM, and I'm speaking and voting on behalf of our customers, including the Pensioenfonds Zorg en Welzijn. I'm also speaking on behalf of Menzis and APG Asset Management. First of all, we are very glad with the process. As Kick 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. 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 a 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 the maximum increase, which is between 0 and 6%. In conclusion, we consider that ASR managed to create a simple and reliable remuneration policy that is the fruit of consultations. 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 Jansen on behalf of VEB. We're also very glad with the process that we were part of as well. We understand that this is an extremely delicate balancing act to find a suitable remuneration system with all stakeholders. 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 two years, if I understand correctly, there's a possibility of an amendment, and then after two, four years.
Can you commit to your intention to maintain such a policy without any bonuses for the long term? That is my first question. The second question still is about your competition position. It's a question I should mention. Nationale-Nederlanden, Aegon, 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? An attempt has been made to create a balance with the shareholders by creating aandeelhoudersbelang. We think this is important. Oh, sorry, to create a shareholding by management. We think this is in the interest of the company. However, the shareholding is small.
In other companies, it can be three or five or even more times the amount we see here, this is in order to align the interests. Obviously, when things are not going well, 100% is still a very nice payout where the variable component can be put to zero. How did you determine the percentage of shareholder holding for the CEO and the CFO? A question directly to Mr. Baeten, is that the maximum or the lowest threshold? Do you think that in five years or seven years, you should accrue even more shareholders to further align the interest? That was my questions.
Annet will explain how we reach those percentages, how enduring is it. You mentioned two years, Annet will also explain what we'll be doing in two years, our intention, 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, it's not just something that the executive board decides, 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. After the responses 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, that often it's a disappointment it doesn't provide people with an incentive.
We don't want to resume that, I would advise any company interested to visit us. We also sell excellent pension insurance and disability insurance, there's always room for improvement. As for our competitive edge, I've already explained that thanks to this policy, also the sustainability of our investments, we've managed to recruit and retain top talent, we believe in intrinsically motivated employees. What will we be doing in two years, what was the foundation for those percentages?
Okay, two questions. Each year, we submit the remuneration report for advice we'll account for the increase from zero to 6% why we've chosen that bandwidth. Then you can provide feedback. Every two years, we conduct the benchmark again, that concerns the benchmark not only for the executive board but a slightly different benchmark for staff. If we see that those benchmarks are diverging too much, we've also arranged a correction system that the benchmark of the executive board is adjusted. We do that every two years, every four 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. The factor of triple to quintuple you mentioned is only about the fixed component. Having 100% fixed would be 50% accrual for executive board members and 75% for the CEO. That the same as the factor of 100 versus 150% at other companies. Optically, it appears lower than it actually is. It's not identical. It is less. It's a bit lower, not so much lower as it might initially appear. We've also said we're going to increase incrementally in small increments.
Each salary increase to the executive board in subsequent years will arise from share accrual. That's the structure that we've introduced. That concerns salary structure and shareholdings. I'm just wondering, because there was also a question about private investment policy of Jos Baeten 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. 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 I'm still able to keep up at that pace, then I might be one of them. That's clear. The VEB would like this to be increased if it grows along after two or four years.
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. Stevens from the Foundation for Legal Protection of Investors. We applaud your new remuneration policy, thank you to Annet Aris for explaining that so clearly as chairperson of the Remuneratiecommissie. 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 EUR 100,000. He already owned his home, so he was able to get a EUR 100,000 mortgage, and he used that money to buy the shares. That was at Utrecht. I'm curious what will happen.
We're going to accommodate your pension for having Annet answer this question.
A new executive board member will, over the course of time, accrue shares as the other executive board members have. We assume that the net salary will be sufficient for that. When he joins, he doesn't have to purchase shares in a lump amount. The accrual starts from the first 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. That would also provide an incentive for him to remain with ASR for longer. It's a one-size-fits-all approach. 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. The entire executive board accrues shares incrementally over time, and we're confident that any new members will do likewise.
Are there any other questions? If not, we're going to vote. Please use your voting handsets. The vote starts now. You have 10 seconds. A few votes are still being added in the calculators, and we see it has not settled yet. We've got a stable result. 83.74% 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. We also note that a group of shareholders objects to the remuneration policy that we proposed, and that is clear, especially because of the lack of a variable remuneration. Obviously, in the years ahead, we will continue communicating with these shareholders, and we will safeguard against the risks they envisage. We are not closing the chapter, but as we are today, we are happy with the support we received for this proposal. Okay. That covers agenda item 3. That takes us to agenda 4, the financial statements for 2018. Wait a minute. I made a mistake, says the speaker. There you have it. It is almost a Freudian slip of the tongue.
I forgot to cover the remuneration policy for the supervisory board, and that is 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 nine years, and the code provides for remuneration that aligns with the current practice and the burden of the office. That is why we are proposing to the shareholders meeting that the remuneration of the supervisory board and the committees be amended, and you see the changes reflected on the sheet, so that the chairman would receive EUR 50,000 and the regular members EUR 35,000. The Audit and Risk Committee, the chairman would receive EUR 15,000 and the regular members EUR 10,000. On the Remuneration and Nomination Selection Committee, the chairman receives EUR 10,000 and regular members EUR 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? 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 am not sure whether that is visible between the lines in finance. It is very difficult to find supervisory board members because it is very labor and time intensive, and it is also in the limelight. Not everybody appreciates all that attention. Later on in the agenda, I am sure you will see that it is a concern for us, but my impression is definitely not that remuneration is related.
The reason we are proposing this is because according to the code, it needs to relate somewhat to the time and the burden of the office for 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 do not already have 5 points, and since good regulators tend to have 5 points, that is certainly an obstacle. It is a far more important factor than remuneration. If there are no additional questions or comments, let us vote. You know the drill. You may now cast your vote. You have 10 seconds.
We see that the votes are.
Okay. The votes have been counted, and we call the results North Korean style. Thank you for your support.
Right. Done.
Thanks for your support in this. That takes us to the agenda item that I almost started on earlier by accident. That 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 Cor van den Bos, the chairman of the audit committee.
Thank you, Kick. You'll see an extensive report of the audit and risk committee in the annual report on pages 126 and 127. 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, Maarten Koning. We discussed finance risk management and audit of the financial statements. They were constructive and open, and that certainly benefits the work we have to do, and I believe 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 about 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, about individual procedures or a specific product. The positive remark of EY in the management letter, which was that ASR generally has a well-functioning internal control, is certainly worth sharing with you. EY's audit for the previous financial year revealed a few discrepancies, which were discussed within the Audit and Risk Committee and obviously on the Supervisory Board as well.
These discrepancies were cumulative but immaterial. Special consideration of the Audit and Risk Committee was also dedicated to the integration of Generali 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. 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 the 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 and IFRS 9, which are important for insurance. With regard to the first two topics, ASR is operating adequately. As far as IFRS 17 and IFRS 9, IFRS is on track. The final point, as I did last year, I'd like to call your attention to page 102 in the annual report, which reflects the risk priorities. The most serious risks that ASR faces, listed as the management has observed. The mitigating measures by ASR to control these risks as well as possible are indicated there as well. Those were my explanatory remarks. Let's move on to the presentation by the auditor. Maarten 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 Maarten Koning, ladies and gentlemen. I'm the EY auditor and responsible for auditing ASR. I prepared a presentation that should not exceed 10 minutes. 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 in our operations, addressing fraud and noncompliance with legislation regulations, as well as privacy. Those are current themes. 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 press releases about the year figures, and we also assessed the half-year figures for 2018. As stated, I'm the responsible auditor. I don't work alone. I have a huge team, very broad, with many 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 use many actuaries in auditing an insurance company, especially to evaluate technical provisions and Solvency II figures. We also assign EY forensic service specialists to do justice to our responsibility concerning fraud and considering 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. 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 9:2 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 ASR is EUR 36 million. 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 EUR 1.8 million are discussed with the supervisory board. Execution of the audit. To that end, we use various audit teams. Checking, for example, ASR Life Insurance, ASR Non-Life, ASR Banks, and we evaluate their duties and results through file 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 De Nederlandsche Bank, we achieve a balance sheet total of 95% in our audit concerning the operating result. The findings and our conclusions. We have issued an unqualified audit opinion for both the consolidated and the corporate financial statements, which mean that they reflect an accurate impression according to IFRS and as allowed by the EU and Dutch Civil Code 9:2. We consider continuity. In our statement, we have a special clause 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. 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 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, first 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. We do a risk assessment at the start of the audit year and update it continuously according to the audit plan, which we discuss with the auditing risk committee. The audit and risk committee agreed to the audit plan. 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 N.V. as held for sale and discontinued operation.
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, at 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 are confident that the disclosure requirements are being met.
Now, Generali was one of the core issues in our audit that was already discussed. 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. We assigned our own actuaries to examine that and checked whether all IFRS 3 disclosures are being made. We ascertained that the management did an accurate valuation 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 non-economic liabilities for life insurance, mortality. 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 about invalidity and 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 540, we asked our actuaries to apply benchmarks and determine bandwidths for estimates. Based on our 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.
I'm going to say a bit about several current themes. First, 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, 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. That's why we discussed this risk at length with the Audit and Risk Committee. About fraud. We adhere to the COS 240 audit standard in fraud. We performed specific procedures to address the required fraud risk management. We also assessed processes and measures taken by ASR to manage internal and external fraud risks.
We also evaluated ASR's compliance and integrity framework based in part on subordinate observations. We discussed quarterly reports for integrity with the compliance and security departments, were supported by our forensic auditor. We discussed the fraud risk with the Audit and Risk Committee. As for compliance with the legislation regulation, we do these duties in keeping with the standard 250. We identified the existence and structure of the measure that ASR has introduced to ensure compliance with reading correspondence with regulators, as well as integrity and legal affairs, quarterly reports and minutes, and interview management. The final current theme is privacy. You're aware that as of May 25, 2018, the General Data Protection Regulation became effective in such organizations. The GDPR provides for an explicit duty of care in processing personal data.
In 2017, ASR introduced a vast program to meet GDPR rules. Monitoring now takes place based on compliance, privacy risks, and incidents reported to the privacy officer and the management. ASR addresses this in detail on page 106 of the annual report. 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 the effectiveness of the internal control measures. We've reviewed this and tested this using the four key functions at ASR: Risk Management Function, Internal Actuarial Function, Internal Audit Function, and Compliance Function. They report. We review the reports. We report any additional findings and observations in our management letter and audit reports. We've already covered this. To wrap up, I would qualify our relationship with management as 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 are 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.
Thanks for your clear explanation. Any questions or remarks about the financial statements for 2018? Yes, please.
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. 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.
I do not think we have any option not to participate, but from point of view of costing, the total costs, post factum, will be EUR 20 million-EUR 30 million easily. My question is, it is difficult in presence of the auditor, but for those using the annual report, the Solvency II is much more relevant, and sometimes you wonder about the relevance of IFRS 17. 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. My impression is we have no option whatsoever. Well, there are different ways of implementing IFRS 17, I hope to get some kind of sentiment, but I think we are 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 are now going to vote on the financial statements. The 10 minutes are running now. I conclude the 10 seconds have passed. The vote is now closed, and we now wait for the moment the results will be published on the screen. But 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 dividends, as already voiced by Jos in his presentation, to have a cash dividend for EUR 1.74 per share, meaning that after the interim dividend, we still have EUR 1.09 in remaining dividend. Any questions about the dividend policy or the dividend proposal? If that is not the case, let us proceed immediately to the vote. The vote is now opened. The vote is now closed. With 99.97% of the votes, the proposal has been adopted, meaning that dividend will be paid out in line with the proposal, which brings me to item point five, the appointment of the external auditor. Cor, the floor is yours. Cor van den Bos.
Yes, I am happy to comment this item on the agenda. The current auditor, EY, was appointed for a term until the end of the financial year 2019.
In the fall of 2018, the International Accounting Standards Board decided that the date of IFRS 17 entering into force should be postponed with one 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, Maarten Koning, who, based on the independent rules, needs to discontinue for rotation rules in 2021. In order to have the stability and the transition of IFRS to IFRS 17 to be safeguarded, we attach importance to having a stable team. For this reason, we have decided to launch the selection procedure earlier than usual, the selection leading to the nomination of an external auditor for the coming year.
As you have seen in the explanatory 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 Committee and the Risk Committee, the CFO, Chris Figee, sitting here, as well as two directors, a director for internal audit 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 audit 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 auditor, the experience, the availability, and the references of the team, the audit scope and approach, the ways of cooperation, and the fee. The last criterion, 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. Two audit firms participated in the requests for proposals, both have submitted a good proposal and have presented a presentation to the tender committee of the executive of the Supervisory Board.
This is how the Tender Committee has come to recommendation, based on this recommendation of the Tender Committee, based on the ongoing selection procedure, the Supervisory Board now proposes KPMG to be appointed as auditor for the financial years 2020 through 2024. The audit for the current year 2019 will be conducted as contracted by the current auditor, EY. EY, therefore, like this year, will be present at next year's AGM in order to answer any possible questions about its audits and about the annual financial statements. 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.
Stemming.
The vote is now closed. We see that the proposal has been adopted. That brings me to item six, 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 the 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, we can now proceed to the vote. The vote has now been opened.
The vote is now closed.
The vote is now closed. We see on the screen that the discharge has been granted to the members of the executive board. We have a similar request, a similar proposal for the members of the supervisory board for the execution of their duties in the financial year 2018, as reflected in the financial statements, as reflected in the information provided to this meeting or otherwise known. Any remarks or questions about this proposal? That is not the case. That brings us immediately to the vote. The vote, which is opened now.
The stemming is dicht. [Foreign language]
The vote is now closed. We see that once again, discharge has been granted, both to the members of the executive board and to the members of the supervisory board. That brings me to item seven, the extension of authorities of the executive board. We are asking for three authorities, the same authorities we asked for at last year's AGM. 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. 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 is not the case. Therefore, I propose to immediately proceed to the vote. The vote is now opened.
The vote is now closed. We see that this authorization, once again, has been granted for a period of 18 months. We now come to 7B, which is the proposal to extend the authority of the executive board to limit or exclude statutory preemption rights. It is proposed, starting today, to authorize the executive board for a period of 18 months, to limit or exclude the statutory preemption rights in connection with the issue of the authorization granted under 7A. Once again, this is subject to approval of the supervisory board exclusively. Any questions? Any remarks? That is not the case. We now proceed with the vote. The vote is now opened. The vote has now been closed. 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 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, the vote has now been opened.
Dan is de stemming nu dicht.
The vote has now been closed. We conclude that the third authorization has also been granted by the AGM. Thanks for this. Which brings me to item eight, the composition of the Supervisory Board. It's a great pity that we are forced to part with Annet Aris as a member of the Supervisory Board, particularly as a member of the Remuneration and Selection Committee for the past more than eight years, and that 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. 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, we did so last Friday with a good glass of wine. We have no such wine on the table now. I can only share that we will immensely miss Annet for her substantive contribution, but also for the kind of person she is. Let us give her a warm hand. 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 eight, this is a proposal to reappoint Kick van der Pol. In the light of the need for continuity within Supervisory Board, we have made an appeal on Kick van der Pol to be available for an extraordinary reappointment for a maximum term of two 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. van der Pol. They have given such expression of their opinion, and it is positive. They support the nomination. This board has decided not to further comment on this nomination. The supervisory board keeps looking for a successor of Kick van der Pol, somebody with the right profile and experience who embraces the vision or experience of Kick van der Pol. That's what I wanted to say.
Any questions or remarks? I see no questions. We can quickly proceed with the vote. The vote has been now opened. You have 10 seconds to cast your vote. The vote has now been closed, and we see that 93% of the votes were cast in favor, meaning that Kick has now been reappointed as a member and chairman of the supervisory board. Warm congratulations, and I'm giving him back the floor to conduct the last points of this meeting.
Thank you, Cor, for chairing this part of the agenda. Quick and swift. Thank you for this confidence for this coming period. 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 whether ASR will become actively involved in limiting the remuneration or the bonuses in other companies, if not to abolish them. Then a specific question for Ms. Aris. Rabobank has no bonus. ASR recently amended the policy. They do have a bonus system. I have the impression there is a stimulating force by the person of Ms. Aris. 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 Annet, I want to repeat my appeal to Annet in expressing the wish for her to lay down her vision on remuneration in a book. Now I will hand over the question to Annet to provide an answer both to the question about the book and about remuneration.
I just published a book, but it's about something else.
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. 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. I think that the perspective of stakeholders is important.
Over the past six 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. The question about the way we act as investors on the various AGMs. Jos.
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 against variable remuneration. In Europe and the 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.
Certainly, this is an element of our dialogue, and it has been laid down in the ESG policy that we have formulated at ASR for the way we deal with our investments.
Any other questions in the any other business round? That's not the case. Then we're very close to the finish. I wouldn't close the meeting if I wouldn't have thanked 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 the employees of ASR for their immense efforts for our customers, for our shareholders, for the company. With these words of gratitude, I close this meeting, and you're all welcome to have lunch. The meeting is now closed.