Good morning, ladies and gentlemen, dear shareholders. A warm welcome to this unusual edition of the NN Group Annual General Meeting. Today we connect with you only in a virtual way, via video connection through the Internet. We cannot shake hands, talk to you in person, or have the sort of interaction that we normally have during the General Annual Meeting, and we regret that very much. However, we're glad that the Temporary Act COVID-19 Justice and Safety, Tijdelijke wet COVID-19 Justitie en Veiligheid, allows us to hold our Annual General Meeting in a fully virtual way. These are extraordinary times. The coronavirus pandemic is impacting the world in an unprecedented way. It's causing direct harm to people's health and is severely impacting the healthcare services. Measures taken to slow the spread of the virus are changing our way of living and have enormous repercussions for the global economy.
It's clear it will take a long time before things are back to what they were like before the outbreak, if that's even possible. Myself and my colleagues in Supervisory Board and the Management Board hope that you are safe and healthy wherever you are. I'm reaching out to you from our studios, headquartered in The Hague. With me here are Mr. Dick Harryvan on my far right, and today it's extreme far right, Vice Chair of Supervisory Board. on my immediate left is Hélène Vletter-van Dort, Member of Supervisory Board and Chair of Supervisory Board's Remuneration Committee. To my right, NN Group CEO David Knibbe, and to my far left, NN Group CFO Delfin Rueda. Welcome. I'd also like to introduce you to Ms. Janet Stuijt, Company Secretary and Member of the Management Board as General Counsel, who's participating in this meeting via video connection.
The other members of Supervisory Board and Management Board are either in the room or following the meeting via the webcast. In addition to you as shareholders, I'm pleased to welcome and introduce to you some other guests. First, our External Auditor, Mr. de Wit, representing KPMG, who participates in this meeting via video connection, and our Notary, Ms. Kramers of Stibbe, who also joins the meeting online and will cast all votes on the basis of the electronic proxies with voting instructions granted to her. As you may have noticed, I'll chair this meeting in English, but some of the members of the Management Board Supervisory Board will be speaking Dutch. The webcast, however, is available in both English and Dutch, so you'll be able to listen to the meeting entirely in your preferred language.
The presentation which will be projected is in English, and this is due to the fact we have international stakeholders. I'll start with a few announcements, formal announcements first. The shareholders have been convened in accordance with the applicable law and the company's articles of association. The General Meeting is thus able to validly adopt resolutions. No shareholders have submitted proposals to be included on the agenda. At the record date, the 30th of April 2020, the issued share capital consisted of 343,556,121 ordinary shares. 31,802,814 ordinary shares were held by NN Group N.V. itself, so no votes can be cast on these shares. Altogether, 311,753,307 votes are eligible for casting. The represented share capital amounts to 74.99%, which means 233,772,731 votes will be cast during today's meeting by Ms. M. I. J. Kramers, Civil Law Notary in Amsterdam, by means of proxy via the electronic voting platform.
The entire meeting will be recorded in order to be able to minute the meeting. A few other announcements. I'd like to briefly elaborate on the procedure and the order of the meeting. Shareholders have been given the opportunity to submit questions on agenda items in advance of the meeting. I'd like to thank all shareholders who've made use of this option. The questions we receive will be answered during this meeting, and the answers will be available on the company's website via the webcast, which will continue to be available for replay. The answers will also be included in the minutes of this meeting. Those shareholders who've asked questions on agenda items in advance of the meeting may ask follow-up questions during the meeting. Questions must relate to the respective agenda item.
Please note that if you ask a question, your name and the name of the organization you represent will be mentioned and included in the minutes of the meeting. Some voting items will be briefly summarized. An extensive explanation of these items is included in the convening notice. The proposals that will be put to a vote regard the full proposals as included in the convening notice. So let me now turn to the first matter on the agenda, which is agenda item two. Here, I'd like to refer to the 2019 Annual Review, part one of the 2019 Annual Report, as well as the 2019 Financial Report, part two of the 2019 Annual Report, specifically pages one through 31, as well as page 39. For this agenda item, I'd like to give the floor to David Knibbe, CEO of NN Group.
David will give an explanation of the annual report and will look back on the financial year 2019, including the financial results. The adoption of the annual accounts for the financial year 2019 will be addressed in agenda item 3.A. David.
Yes. Thank you, Dave, and good morning, everybody. I hope you're doing well in these current circumstances. So who could have imagined that a few months ago that our AGM would take place virtually? The world has changed significantly since the beginning of this year, and only gradually we're starting to see the impact of the coronavirus on the way we live, on our societies, and our economies going forward. Today, in this different setting, I would like to welcome you in this virtual annual meeting with the wish that we soon be able to meet and speak in person again. For now, we are glad that technology allows this meeting to go ahead as planned. So let me start with the current state of affairs. This is a time in which we also cherish the traditional value of insurance, which is solidarity.
An opportunity for us and the sector to show that we support people, businesses, and communities in the moments that really matter. In the end, we are putting the well-being of our colleagues, customers, and the wider communities in which we live and work first and focus on how we can best support them. We have taken steps to ensure an uninterrupted service to our customers and partners with many tailor-made solutions, such as extending payment terms, temporary extensions, inspections, and preventive measures, payment breaks during which customers that temporarily do not pay interest or repayment on their mortgages. We support our own people with tools and platforms so that they can work from home. Only a very small part of the staff works at the NN premises, and we are supporting our partners in society.
For example, donation for ventilators in Romania, respirators in Slovakia, to the food bank in the Netherlands, education in Greece, Czech Republic, and Spain, and our different partners in the arts. Without doubt, the total economic impact of the pandemic will be considerable. Equity markets have suffered losses. Interest rates have been volatile and credit spreads have widened, and we cannot yet say how quickly the recovery will come. COVID-19 also has an impact on NN too, yet overall we are doing well. So far, the most relevant impact for us would be the macroeconomic with an effect on our asset portfolio. However, our capital position remains strong with a Solvency II position of 225% at the end of April. The impact on our business is mixed. For example, the impact on claims experience has been limited.
We see more claims in disability, in health, in travel, and events, but also lower claims at motor. At the same time, sales will likely be hit by the worsening economic outlook. Aside from the coronavirus, there are other factors influencing the financial sector at the moment. One of the characteristics of this era is that change happens at a fast pace, whether they are economic or political developments, changing regulations, the increase of use of digital technologies, or the transition towards a more sustainable economy. To start with changing regulations. In some markets, these present both challenges and opportunities. Some examples. In Poland, the pension legislation changed, requiring companies with over 250 employees to choose a pension provider. We engage in constructive dialogues to better understand the existing needs and support companies through this transition.
In Romania, we engage with the insurance association and the government on capital requirements for the Pillar Two Pension System. In Japan, where we focus on the SME market, the tax rules have changed, requiring us to quickly adapt our product offering. And of course, we continue to see technology evolving rapidly, with consumers demanding access to products and services anywhere, anytime. And we work hard to meet these customer needs by innovating and working with new technologies and by using artificial intelligence and big data. This enables us to act faster, deliver products and services that meet customer needs more adequately and precisely, and thereby improving the customer experience. In the Netherlands, we use artificial intelligence and advanced data analytics to classify, process, and automatically route around 60% of all emails. Of course, with all the applicable ethics and moral codes in place. But there's more.
Our NN Data Science Hub delivers various commercial use cases. For example, we are working on the next best offer models to identify which product suits best a customer. The engine suggests multiple propositions for cross-sell and retention propositions for each customer. It has been tested in Romania and Turkey, with Hungary and Spain to follow. Next to new technology and further digitalization, we continue to prepare our company for the future in other ways as well. For instance, by optimizing our business and introducing new ways of working, and creating new capabilities, strategic partnerships, and looking at opportunities for growth. In the Netherlands, we finalized the integration of Delta Lloyd in 2019 as scheduled. Through the acquisition of VIVAT Non-Life in June and the subsequent closing in April this year, we have further increased our scale in our home market.
We are now a leading player in both Dutch Non-Life and life insurance market. Internationally, we acquired the Aegon life and pension business in the Czech Republic and Slovakia. We have a strong distribution network with some 60 banca ssurance relations in Japan and 28 partner banks in 10 European countries. In Spain, for example, our reciprocal distribution partnership with ING Bank allows our 2,000 tied agents to distribute mortgages for the bank. The boundaries of insurance continue to expand to include non-traditional partners, such as retailers, car manufacturers, smart home devices, as insurance is redefining their role in the value chain. In 2019, we also further developed our innovation approach. We are exploring the potential of customer engagement platforms around the themes such as vitality and carefree retirement. In all our markets, we are using Agile ways of working.
In Hungary and Spain, in particular, we introduced Scaled Agile as a disruptive operating model with some promising results already visible. In Hungary, we optimized risk assessment process, shortening it in some cases from 13 days to a few minutes. In Spain, the employee benefits team, which processed group life insurance contracts, saw a 30% reduction in pending tasks compared to before the introduction of Agile. All of our transformation, optimization, and acquisition processes are being carried out alongside our existing services, and we're very pleased to see that the overall customer satisfaction and employee engagement scores increased. We increased our Net Promoter Score with five points in 2019, and internally, our employee engagement increased from 7.1 in 2018 to 7.4 in 2019, and this is something to be really proud of. In 2019, our financial performance was solid, with all businesses reporting sound results.
Let me touch on a few highlights. Our full-year operating result was EUR 1.8 billion, up more than 10% compared with 2018, with an increase of 25% in the fourth quarter compared to the fourth quarter of 2018. The full-year net result of NN Group was close to EUR 2 billion. During the year, we realized additional efficiency gains, bringing the total cost savings to EUR 360 million at the end of 2019 compared to the 2016 expense base. The profitability of our Dutch Non-Life business further improved, as was reflected in the combined ratio of 95.4% for 2019. New sales at Netherlands Life and Insurance Europe were up in 2019, while sales in Japan were impacted by the already mentioned new tax rules for corporate-owned life insurance products.
As a result, the total value of new business in 2019 was down 8% versus 2018, partly offset by a 21% growth in Europe. The origination of new mortgages by NN Bank hit an all-time high with EUR 7.9 billion. Looking back at NN's performance over the past years, we have made good progress in meeting our overall financial targets as set in 2017. We are well on our way to achieve the planned EUR 400 million of cost savings by the end of this year. Our operating result before tax has grown by an average of 6% per annum since 2017, and we generated EUR 1.2 billion of free cash flow available for shareholders in 2019. NN has a robust balance sheet, and we are well positioned to weather the turbulence in the financial markets. Our solvency ratio remains strong.
Please note that the ratio at the end of 2019, as shown in the graph, has been adjusted to reverse the deduction of the proposed 2019 final dividend, and therefore deviates from the ratio disclosed in the annual report. Last week, we announced that our Dutch Life company, NN Life, had completed three longevity reinsurance transactions to transfer the full longevity risk associated with, in total, approximately EUR 13.5 billion of pension liabilities in the Netherlands. These transactions are expected to increase the NN Group solvency ratio by approximately 17%. At that moment, we also gave an update of our capital position. Our estimated solvency ratio was approximately 225% at the end of April, excluding the impact of the longevity transaction, but including the impact of the VIVAT transaction.
We have a conservative asset portfolio with a relatively large exposure to high-quality government bonds and a relatively low exposure to corporate and low-rated bonds. The impact from markets on our solvency ratio, therefore, has been relatively small. The cash capital position at the holding stood at almost EUR 2 billion at the end of 2019, and we are comfortable with our leverage position and good interest cover. Our company has a track record of distributing excess capital to shareholders. We decided to provide clearer guidance on what shareholders can expect in terms of capital return on an annual basis. We did this by announcing an update to our dividend policy with our fourth quarter 2019 results on February 13. Going forward, we will pay a progressive ordinary dividend per share. This means that we aim to grow the dividend per share over time.
Also, we announced the intention to execute a recurring annual share buyback of at least EUR 250 million. Additional excess capital will be returned to shareholders unless it can be used for value-creating opportunities. A new share buyback program of EUR 250 million started on the 2nd of March, which was to be completed in 12 months. However, on April 2, the European and Dutch regulators, EIOPA and DNB, urged insurers to temporarily suspend their dividend distribution and share buyback programs in view of the coronavirus pandemic. After careful consideration and given the extraordinary situation, we decided to act in accordance with this recommendation, which we announced on April 6. Therefore, the proposal to pay a 2019 final dividend of EUR 1.40 per ordinary share is not included on the agenda of this meeting.
We also suspended the current share buyback program, noting that we had already completed 73% of this at that time. We consider this to be a postponement. It is our intention to distribute the amount of the original proposed final dividend and to buy back shares for the remaining amount of the suspended buyback in the second half of this year. The decision on when to do this and the form of distribution will be taken at an appropriate time and depends on how the coronavirus situation continues to develop. Since the IPO, we have returned a total of EUR 4.2 billion to shareholders, comprising total dividends of EUR 2.6 billion and EUR 1.6 billion in share buybacks. The impact of the corona pandemic on the stock markets from late February onwards is evident from the graph, and the share price of NN Group has not been immune to this.
But since the start of this year, the NN share price has outperformed the EURO STOXX Insurance Index. In April, we marked the 175th anniversary of our company, an important milestone. Since the start in 1845, NN and its predecessors have faced many challenges. But whatever happened, we've always been dedicated to supporting our customers and to meet and exceed their expectations. By doing so, we have become the strong international financial services company that we are today. We aim to create long-term value for our stakeholders, for our customers, for you, our shareholders, but also for our employees and society at large. In 2019, we continued to invest in being a trusted corporate citizen, one that does business with the future in mind and guided by our vales: Care, Clear, Commit. During the year, we further strengthened our responsible investment policy by adopting a statement on coal.
By placing investment restrictions on thermal coal mining companies, intensifying our dialogue with power generation companies, we aim to help to accelerate the transition to a low-carbon economy. The statement also includes a phase-out strategy for our proprietary assets, meaning that NN will reduce its investments in thermal coal mining and power close to zero by 2030. Our asset manager, NN Investment Partners, has strengthened its responsible investing approach by including a stringent definition of ESG integration. At the end of 2019, environmental, social, and governance criteria were consistently integrated for roughly two-thirds of NNIP's total assets under management. Seeking positive change through dialogue remains an important element of our investment approach. Therefore, our asset manager held 662 ESG dialogue sessions in 2019 to stimulate companies to adapt their business strategies to improve their ESG performance.
To give more insight into our tax contribution as a company, we published our first Total Tax Contribution Report over 2018 in May 2019. I'm very proud to see that all of these efforts in these fields resulted in our inclusion in the Dow Jones Sustainability Indices for the third year in a row and in receiving the highest score for the Dutch VBDO tax transparency benchmark in 2019. We also continue to support the communities in which we live and work. Our overarching community investment program called NN Future Matters aims to help improve people's financial well-being with a particular focus on the 10- to 25-year-olds in underserved groups. In 2019, we supported 25,000 young people and 12,500 volunteering hours of our employees and a total of EUR 3.2 million in charitable donations.
Internally, we believe all of our colleagues should feel respected and valued for who they are, regardless of gender, age, sexual orientation, or background. To give this even more attention, we are updating our NN Group diversity policy and are developing new leadership programs with this focus area as one of the components. In the beginning of 2020, a group of colleagues in the Netherlands launched the NN LGBT+ Network in order to further promote diversity and inclusion and a sense of belonging at NN. After all, these kinds of human aspects form an essential part of a company's culture, and this is something we want to cherish. Recently, we announced a number of changes in our management boards, which will take effect as of June 1. Bernhard Kaufmann, coming from Munich Re, will join NN Group next week as our Chief Risk Officer.
He brings extensive knowledge and experience in the international insurance sector, and we look forward to working with him. After Jan-Hendrik Erasmus left the company last December, Delfin Rueda temporarily assumed the responsibility of the CRO portfolio, for which I would like to thank him. As part of our transformation process of our company and following the growth of our activities in the Netherlands after the recent acquisitions, we decided to divide the responsibility for the Dutch businesses into two portfolios. This split will help us to create focus in managing our existing businesses, continue to improve operational efficiency, and further strengthen our customer relationships. Tjeerd Bosklopper, already a member of the Management Board, will assume the role of CEO of the Netherlands Non-Life Banking and Technology.
Leon van Riet, currently CEO of the Netherlands Non-Life, will be appointed to the Management Board as CEO of the Netherlands Life and Pensions. During our Capital Markets Day on June 24, we will update the market on our strategic and financial developments of NN Group and its business units. This will also be a virtual event, which you will be able to join via a live webcast. To sum up, NN is a solid and resilient company, a company that customers and shareholders can count on and which colleagues can be proud of, a company that is well positioned to continue to build the business of tomorrow. We thank you for your trust and your continued support for NN.
Without a doubt, 2020 will continue to be a challenging year, but we will remain steadfast in our commitment to realize our strategic priorities and continue to create value for our shareholders and other stakeholder groups. Thank you very much and stay safe.
Thank you, David. We will now answer the questions that were submitted by shareholders in advance of the meeting. If these same shareholders wish to ask further questions on this agenda item, they can submit these questions via the chat system immediately after their initial question has been answered. Please allow me to start with a statement that PGGM and APG have asked us to read out. We appreciate NN Group's clear and informative annual report. NN Group has a solid financial position with a conservative balance sheet and robust solvency ratio.
However, it remains to be seen what the exact impact will be of the COVID-19 pandemic, even for NN Group. Its capital position is strong, and therefore we assume that the transaction to insure part of its longevity risk was a considered decision based on economic reasons. NN Group can be proud of its employees who are committed to continuing their work even from home and given the practical challenges that that can bring. We encourage NN Group to stay committed to its role in society and to continue to support customers through the COVID-19 period. As long-term investors, PGGM and APG support NN Group's decision to report half-year results instead of quarterly results going forward.
We also appreciate that NN Group continues to pursue its strategy both in financial and non-financial terms, focusing on long-term value creation for all stakeholders and that it will provide a strategic update at its Capital Markets Day in June. So thank you for that feedback. Let's continue with some questions from the Vereniging van Effectenbezitters, VEB. The VEB asks, what is NN's biggest challenge in the coming 10 years as it aims to optimize its profitability? And in connection with this, how does NN distinguish itself from its competitors? And will it be able to realize a higher level of profitability and growth than the market? David, can you please address these questions?
Sure. Yeah, thank you for this question. I think if you take a look at NN, we are a diverse portfolio of businesses, some in very mature markets like the Netherlands and others in growth markets.
Now, if you zoom in on the Netherlands, already there we have a very unique position. We are close to having 7 million customers, which means that in a way we can almost touch every household in the Netherlands. It creates a lot of opportunity for scale, for efficiency that we have, but also some selected growth opportunities, for example, in Non-Life and in bank. Another element that makes us unique in our positioning in the Netherlands is that we have three out of the four top banks exclusively tied to us. Now, if you combine that with our strong position in mandated agents and in the broker portfolio, it means that we have a very strong distribution power that we have in the Netherlands.
Now, with the addition of VIVAT, which should bring additional scale and benefits, it means that we can also further strengthen our Non-Life platform, making it the leading player in the Netherlands. So the Netherlands by itself makes it a very strong platform that we have. Now, in international, we focus on profitable growth. Where we really distinguish ourselves is in the protection space. So we are primarily focusing on protection in combination with a very strong customer service. We put here value over volume. Typically, we see also that protection has attractive margins, a high value for customers. So we'll continue to operate in that space. And also in the international space, we have strong distribution capabilities. We have a unique capability in managing tied agents. We have strong broker networks and, as I already mentioned in my opening speech, very strong bancassurance relationships across our markets.
So if you then take a step back, what we see is that the Dutch operation is strong. We have the international markets by itself that are self-supportive and can grow and generate cash. Of course, we have our asset manager that continues to create attractive returns. So by itself, these businesses are attractive, but then if you put them together, there is a very good diversification effect as well. Diversification effect in terms of financial metrics, but also on other items, whether it's talent, brand, some of the IT synergies that we have. So the combination of strong individual businesses with synergies across these businesses makes us uniquely positioned. It still means we have a big transformation as any company to go, but we are very well positioned at the start with this.
Thank you, David.
The VEB also asked what it would mean for NN if the interest rate remains low in the longer term and equities are also volatile.
So Delfin, may I ask you to address these questions?
Sorry, the mic was off. So thank you very much, Dave. This is a question that I've been asked often since I joined NN Group eight years ago. There is no doubt that low interest rates have an adverse impact on our operating result, not immediately, but over time. This is because with low rates, our new investment yields less, and it is more difficult to manufacture attractive saving products for our customers. Despite this, we have managed very well over the last years as we decided to gradually move from savings products with guaranteed returns to protection products in the different markets that we operate.
On the investment front, we have gradually increased our exposure to mortgages, which offer attractive margins and match our loan duration capabilities relatively well. This has compensated to a large extent the decrease in the return of other fixed income securities like government bonds. In 2019, we invested EUR 6 billion in mortgages. Going forward, to mitigate the pressure from lower interest rates, we will continue with our approach to gradually shift to higher yielding assets. Changes in interest rates do also have an immediate impact on the solvency of insurance companies. Also, in this front, we have managed well because we've maintained a strict policy to cash flow match our pension and insurance liabilities, and we've maintained a low tolerance for interest rate and market risk. We do publish our sensitivities to changes in interest rates and other market factors periodically.
For example, at year-end, a parallel downward move of 50 basis points of the risk-free rate yield curve would have reduced our solvency ratio by just six points. We will continue to actively manage the sensitivity of the group solvency ratio to interest rate changes within a set tolerance of 10 percentage points. Regarding the comment about volatile equity returns, I must point out that we are a long-term investor and believe that apart from investing in fixed income, securities, and loans, we like to have some exposure to equities and real estate as we believe that is beneficial to our stakeholders in the long term. From this perspective, short-term volatility in the equity markets is less relevant.
Thank you, Delfin. Another question from the VEB, and this one regarding the longevity transaction that was announced last week.
The VEB would like to know how this deal will be beneficial for NN's long-term shareholders and if you can indicate how and when the released capital will be returned to the shareholders. So Delfin, could you also please take this question?
Thanks, Dave. It is true that the longevity reinsurance transaction that we announced last week has reduced NN's solvency capital requirements and as a result, increased the level of surplus capital. Although this is indeed beneficial, that was not the most important reason for us to enter into this agreement. Dutch longevity is the single largest risk exposure for NN Life, our Dutch life subsidiary, and has increased over the past years, especially as a result of the acquisition of Delta Lloyd three years ago.
From a risk management perspective, we wanted to reduce exposure to such a large single risk, which, due to its relative size, does diversify poorly with other risks. We had been looking at the cost and benefits of potentially transferring the longevity risk associated with part of our pension liabilities for some time and found an economically attractive opportunity to do so. Last week, we transferred the full longevity risk associated with EUR 13.5 billion of pension liabilities in the Netherlands to three leading reinsurance companies. This reduced our exposure to longevity risk and lowered the amount of capital we need to hold. As a result, our group solvency ratio improved, as David mentioned before, by approximately 17 percentage points.
That means from approximately 225% at the end of April to 242%, while future operating result will decrease, reflecting the reinsurance premiums to be paid to the three reinsurers. In addition, the upfront large capital benefit will, of course, also lower the release of capital in the future, as you cannot get the same benefit twice. The surplus capital released at NN Life will be used to increase its regular dividends to the parent company as from this quarter, which will ultimately result in higher dividends and share buybacks distributions from the group to its shareholders. In addition, the increased solvency ratio will allow NN Life to improve its capital generation profile over time by shifting its investment portfolio to higher yielding assets and by selectively pursuing further growth opportunities like, for example, pension buyouts.
Thank you, Delfin. The following questions from the VEB are perhaps for you, David.
Did NN consider buying VIVAT's life business, and is NN interested in potentially increasing the scale of its life business in the Netherlands through more acquisitions?
Yeah, thank you, Dave. Well, the simple answer is no. We looked from the beginning immediately only at the Non-Life company of VIVAT, and that's why we also partnered in order to do this acquisition, and we're very pleased that it worked out. Of course, the background is that we already have around 40% market share in the group pension business and over 20% in the individual life business, so we don't need additional scale. Now, the broader question, are we open for more acquisitions in the Dutch market? We are open to other acquisitions in the Dutch market, for example, in the form of pension buyouts that Delfin already mentioned.
But to be very clear, there are very strict criteria and thresholds that need to be met in order for us to do this. So we don't rule it out, but our base case is the organic development of our life business in the Netherlands.
Thank you. And the VEB also asked about NN's geographical footprint and whether it's considering exiting any markets or entering new markets for its life, Non-Life, or asset management businesses.
Yeah, I guess if the question is, are we actively looking at portfolio management, the answer is yes. I mean, we constantly assess our portfolio and the quality of our businesses. So we look at the size of the markets, the scale that we have, the potential of that market, the regulatory situation, and ask ourselves then, are we the right owner for businesses?
Now, if we would conclude that we're not the right owner, then of course we would take action. In cases, we've also seen that there's actually opportunities instead of divesting, doing acquisitions. And the Aegon example in the Czech Republic and in Slovakia is a good example where we felt that we're well positioned in the Czech and Slovakian market, but that the combination with the Aegon business would further strengthen our profile. Now, we apply, again, very strict criteria when we're looking at these acquisitions. Our base case will always be organic growth, but when there are possibilities, we will, of course, look at it.
Thank you very much. The VEB notes that NN has managed to increase the profitability of the Non-Life business, with the combined ratio improving from 99.4% to 95.4%. Does this mean that NN will more actively look to acquire portfolios from competitors? Yeah.
I mean, we just completed the VIVAT transaction. In fact, we closed it in April. We now have a market share of 32% in Non-Life and 26% in the property and casualty business. So we have a task ahead to integrate the VIVAT business, to onboard the customers from VIVAT in the NN environment, to onboard our new colleagues from VIVAT. So our focus for the Non-Life business in the Netherlands is really to make a successful integration for customers, for employees, and of course also for shareholders. And we've also announced the benefits that we see of EUR 40 million of expense synergies and EUR 50 million of free cash flow benefits on the back of this deal. So our focus on the Non-Life in the Netherlands is now on doing a successful integration of the NN and VIVAT business together.
Thank you. Another question from the VEB.
Netherlands Life represents almost half of the total operating result, almost as much as the other five segments taken together. So does NN consider this to be a healthy balance, and what do you think the ideal split would be in five to 10 years' time? David?
Yeah, so there is not a preset number, but it's obviously clear that NN Life and the pension business is in a very mature market and a very big market also. Now, the markets in Europe and Japan clearly have more growth potential, so it is very logical that over time we will see a shift in results from Netherlands Life to the other segments in Europe and Japan. I already talked about the strengthening of the Non-Life business. Our bank has been developing well.
It's also reflected in the current targets that we have, where we show that Insurance Europe and Japan have a higher growth target than Netherlands Life. So I do expect that over time the business mix will shift and be more balanced, and that's, I think, also a positive development.
Thank you. On another subject, the VEB would like to know the reason for the decrease in the customer satisfaction and loyalty score from 67% to 36% in 2019, as reported in the annual review. And on the same subject, what is the NN Group doing to measure and improve customer satisfaction compared with its competitors?
Yeah, I think, in all honesty, I think the numbers are not comparable, and we should have been more clear about this in the annual report.
So what this measures is actually how our relationship NPS compares to the market and in which markets we are better than the markets and in which markets we are not. Overall, there is a positive development on the NPS. As I mentioned, the overall relationship NPS increased with five points, so that is a good development. What we have seen is that the scores in Czech and Slovakia have not improved. In a way, this is logical because when you're dealing with a relationship NPS, in a way, you ask customers, would you recommend NN? Now, in the sample, of course, there's a lot of Aegon customers who used to be part of Aegon and now have just recently become part of NN. These customers, we still need to welcome and onboard within NN.
So that is also an explanation on why the number has come down a bit, even though they are not completely comparable. We measure, of course, a lot more. We also measure brand consideration and other items. It's clear that we're making progress, but in all honesty, it is a very important topic for us going forward. I do think we can do better here on our NPS scores, whether it's transaction or a relationship, and this is an important aspect in terms of our targets and our efforts that we're putting forward. And this is a part of our ambition for 2020 and forward to improve these performances.
Thank you. Thank you, David. And now some questions from the VEB on the asset manager, NN Investment Partners, or NNIP. So taking these questions together, the VEB asks how NNIP is coping with the ongoing pressure on fees.
Even if clients benefit from the decrease in average fees from 19 to 70 basis points, this is still quite expensive compared with low-cost ETFs. How does NNIP plan to deliver an investment outperformance that allows it to charge higher fees to clients? And how can NNIP compete with the likes of Vanguard and BlackRock that have the benefit of scale to be able to remain profitable in this low-fee environment? Would you like to take this one as well, David?
Yeah, sure. No, I think it's a very good question. I mean, obviously, the environment for asset managers is indeed challenging. I think there are a few elements that are very important in NNIP's strategy to navigate through this challenging environment. First of all, NNIP is really focusing on some distinctive investment capabilities where we have a potential and a proven experience.
A lot is in the space of specialized fixed income, specialized equity, multi-asset, and alternative credit. Typically, these are strategies with higher margins. Second, we are embedding ESG, environmental, social, and governance factors as an integral part in our investment process. Already, two-thirds of our assets under management already have these elements incorporated, and we see more and more appetite also from customers that they feel that this is an important element where NNIP can distinguish themselves. Now, another element where NNIP distinguishes themselves is by implementing man and machine, meaning that we are adding extra tools, behavioral analysis, but also artificial intelligence techniques and data analytics to incorporate in our investment process. Finally, NNIP also has a strong track record on reducing the cost base. In fact, the cost base has been reduced with 13% since the 2016 cost base.
So continuing to be very efficient is also part of the plan for NNIP. So all in all, challenging environment, very good plans for NNIP to navigate through this. At the same time, let's also acknowledge that NNIP, despite the challenging environment, still makes a very attractive return on equity of above 20%. So overall, it remains a very attractive business for us.
Thank you. So at this point, one last topic from the VEB. How is the current crisis impacting your objectives in the area of climate change? So David, could you please elaborate on this?
Yes, sure. Well, the short answer is it doesn't. It doesn't change our ambition or our timing from what we have seen from the impact of corona. If you take a step back, there are several elements that are very important for us. One, of course, is reporting.
We already mentioned that we are now reporting on 80% of our proprietary assets. We're doing scenario analysis, and we report on our carbon footprint. Of course, the overall goal being that the carbon footprint will be close to zero by 2030. So one part is reporting. Another part, of course, is exclusions. We also exclude certain investments, for example, in oil sands, in controversial pipelines. And this is something that will continue to actively monitor what exclusions we need. More importantly, I would say, as a third element, is engaging. So we are actively engaging with customers to try and improve the situation. I mean, obviously, exclusions can help, but it doesn't move the needle in the sense of the impact on the climate if just we are not investing in this. So active engagement is, for us, very important. We've engaged in many AGMs over 2,000.
We had more than 600 ESG interactions with companies, and we'll continue to do that. Now, the last element that is very important, of course, is that we also engage with partners. We cannot do this alone. Therefore, we joined the Klimaatakkoord, where we also committed to coming up with an action plan. So in 2021, we will come with additional actions that we can take in order to meet the Paris criteria. So all in all, it's a bit of a long answer, but importantly, we'll continue to raise this topic. It is very important for us, and we'll continue to step our ambition also in this field.
Thank you, David. Important indeed.
This is perhaps a good point to move to the questions received from the Vereniging van Beleggers voor Duurzame Ontwikkeling, or the VBDO, with excuses for my pronunciation if I didn't quite hit the Dutch tones correctly. First, the VBDO has complimented the NN Group on the execution of its climate-related risk analysis. It notes that the annual report mentions that NN wants to contribute to society's resilience to climate change and describes this as an opportunity. In this respect, how will NN support the least resilient customers who have a Non-Life insurance policy or a mortgage where they're affected by the effects of climate change? And can NN Group provide more clarity about the company's strategy to use the potential impacts of climate change as an opportunity and to make society more resilient? David, can you please answer these questions?
Sure.
There's obviously a lot happening in the P&C space around climate. So we are adapting our products. Obviously, we're raising awareness on this. The biggest topic, of course, is prevention. So we are actively looking at measures that we can take either ourselves or help and support our customers so that they can minimize either claims or the potential impact of climate change, whether it's through storm, fire, or other events that we've seen. And examples of that is that we actively reach out to customers to try to give them practical tips on if a storm is upcoming or other risks that we are aware of, and we share that with customers and try to create awareness for them.
Similar also for our mortgage customers, we're creating awareness also to try and support our customers so that they make their homes more sustainable, for example, by measures to optimize the energy efficiency. Now, of course, this is in the interest of our clients, but it's also in the interest of everybody. We also use some other tooling for that. We have, for example, Powerly, which is an initiative where customers can make a scan, fill it in, and then the tool will help them to see where they can make the biggest improvements in terms of energy efficiency. We also partner with BNG on some financing initiatives for real estate, for municipalities, and in the public sector.
So to the question of opportunities, yes, Powerly is supporting our customers, but also financing initiatives are also opportunities that we see where we can actively engage, support customers, certainly also the least resilient one related to climate change, and play a positive role in this in society.
Thank you, David. The VBDO also mentions it is very pleased with the extensive responsible investing report published by NN Investment Partners. Working conditions in the supply chains of companies are addressed by NNIP, for example, in its engagement policy. NNIP focuses on two issues: living wages and child labor. The VBDO applauds these initiatives, but emphasizes that in addition to these two themes, there are also other working conditions and human rights violations that can occur in the supply chains of companies.
On this subject, the VBDO asks whether NN Group or NNIP can commit to including working conditions and human rights in the supply chains of companies in its ESG integration policies, and have set objectives for companies to make these improvements. David.
Yes. Well, the short answer is yes. This is part of our ESG policy and also part of the dialogues that we have. I mean, if you take a step back, then NNIP has developed a materiality framework in which we identify and interpret a lot of these ESG factors for different sectors related to both risk and opportunities. And of course, per sector, you see that different elements play a role. And we try to identify what are the key issues in certain sectors which are truly material and that our analysts and portfolio managers can use the approach for that.
Indeed, a material ESG issue can be related to labor. It can be related to consumer-related elements and human rights. Now, our initial assessment of this is based on public information, but it's also clear, and the question is also on the full supply chain, that not every company fully discloses all the information on the full value chain that they operate in. And that's why we also actively have dialogues with companies where we can ask questions and we can try to get the information that gives us an insight into the full supply chain of companies and therefore helps us to incorporate it in our materiality framework that we have. So in short, we look at all of these elements and we'll continue to do that partially based on public information and partially as part of our engagement program.
Thank you. Another question from the VBDO.
In the annual report, a reference is made to equal pay for men and women, which is monitored by Supervisory Board and the Executive Board of NN Group. According to the VBDO, women in the Netherlands earn an average of 16% less than men. Can NN Group commit to evaluating and reporting the mean and corrected gender pay gap for three employee levels: the total workforce, senior management, and executives? David.
Yes. Well, I mean, every year we now include equal pay also in our decision-making process. We validate that during our compensation review, salary increases, but also allocation of variable remuneration compared to target. We reported in 2019 on it based on the analysis we've done in 2018, so there was a lot of data collected from the countries and tried to uniform definitions so we can get a good insight in the situation.
Now, what we experience in that is that we see some differences, but they're often also explained by other factors. For example, we see on average that men have a longer tenure that could lead to a relatively higher position on the salary scales. Now, the good news is also that women are on the rise. We've seen, for example, in our senior levels, that the percentage of women grew from 33% to 36%. So that's a trend that we're very pleased with. So we'll continue to monitor this. We'll do, obviously, another analysis this year in 2020 and report also the main findings on it. Now, it's a bit too early to exactly commit to what disclosure that will be, but you can count on that this is an important topic for us, and we'll continue to actively monitor it and report on it also going forward.
Thank you.
Now the last question received from the VBDO. In its 2019 Annual Report, NN Group indicates that it is developing a group-wide diversity policy. Gender seems to be the only indicator that NN currently reports on. Can NN Group indicate to what extent it intends to include other diversity themes and underrepresented groups like people with a distance to the labor market? Is this diversity policy in its diversity policy and to set objectives if p ossible? David.
Yes. Well, also here the short version is that yes, we are looking at a broader scope around diversity and inclusion. So I expect, and we're working on a new policy that in 2021 we will come out with that, and it should incorporate broader themes than today. That is effectively in the company not new.
I mean, already it is an important part of our NN statement, living our values, our human rights statements, and already in the KPIs that we set. So we already foster a culture that welcomes and respects everyone and creates room for full engagement and stimulates innovation. So we are effectively trying to create an environment where diversity can really prosper. Now, it is not always that easy because sometimes for privacy and other requirements, it's not possible to measure other indicators, for example, religion or sexual orientation. So that's why we're now also redefining our overall strategic framework, but we do want to update our human resource statements to broaden this. At the end of the day, we are an international company, and we want to weigh all these different perspectives.
So it is my expectation, our expectation that the updated diversity and inclusion will be finalized in early 2021 and that gender will not be the only theme here. Now, with regard to people that are having a distance to the labor market, we are already working on that and will continue to do that going forward. And in fact, we are making new arrangements right now to support this. So also in this field, you can expect an active role from NN on this.
Thank you, David. So those were the questions submitted by shareholders prior to this meeting. Mr. Moderator, may I ask if there are any follow-up questions that have been submitted?
Yeah, thank you very much. We have a follow-up question from the VEB, Mr. Keyner. Thank you for all your answers to our questions. Our first question concerned the biggest challenge to generate high returns in the next 10 years. Your answer, however, addressed the opportunities for NN, still in NL, and synergies overall. So again, what is the biggest challenge or risk for NN in the next decade?
Yeah, thank you, Errol. I realize that you're right. I probably did not answer the biggest risk. I think the biggest risk for the coming 10 years is a risk that we always have. I mean, societies change rapidly, customer behaviors change rapidly, and we need to continue to adapt our business, our offering, the way we interact with customers.
So the biggest risk is that we are too slow as a larger company to adapt to whether it's the rise of platforms, the different ways that customers would like to engage with that, to engage with us, and that we continue to operate in the way that we're good at and that we're used to, and we don't quickly adapt when we see society and customer behavior around us change. Now, this is the biggest challenge, and I already talked about that we have a good starting position, but we cannot depend here on the past. We'll continue to have to adapt and transform our business. This is also part of our strategy. Change is only increasing. The pace of change is only increasing more rapidly. So continue to adapt our business model to different needs of customers has been a challenge.
I think in 1845 when we started, it for sure is also a challenge for the coming 10 years.
Thank you. Thank you, David. Moderator, any additional questions? Just
one comment here from the VBDO, Mr. Van Kuijk. Thanks for the elaborate response on all our questions. No follow-up from the VBDO.
Okay, thank you very much. So with that, we will close this agenda item and move to the next agenda item, which is 3.A, the proposal to adopt the annual accounts for the financial year 2019, which is a voting item. So here we refer to the annual accounts for the financial year 2019, specifically pages 40 through 178, as well as, of course, the presentation that has just been given by David Knibbe under agenda item two.
Just as a way of explanation, the annual accounts were drawn up by the Executive Board in English on the 11th of March 2020 and have been available on the website of the NN Group as from the 12th of March 2020. The annual accounts are also available free of charge at NN Group's head office for inspection by shareholders. The annual accounts were audited by the external auditor. He has issued an unqualified auditor's report. You can see that on the financial report, pages 179 through 193. Supervisory Board advises to adopt the annual accounts. Now, before I hand over the floor to our auditor, I'd like to just make a following announcement.
The NN Group has released KPMG from its obligation to maintain confidentiality in order for Peti de Wit to be free to comment on the audit performed and on the auditor's report for the purposes of this meeting. The External Auditor has an obligation to rectify, in Dutch, a herstelplicht. This means that in case of statements in relation to the annual accounts or the auditor's report that might give a materially inaccurate view of the affairs of the company, Peti de Wit may request that corrections be made either during this meeting or prior to the adoption of the minutes of this meeting. So with that, I now give the floor to Peti de Wit of KPMG, the external auditor. Peti.
Thank you, Mr. Chairman. I'm pleased with the opportunity to present on the audit that we have performed.
Dear shareholders, my name is Pete de Wit, and on behalf of KPMG, I am the External Auditor of NN Group. I started in this role in 2016. I signed the independent auditor's report as included in the 2019 financial report, and this was the fourth time that I was ultimately responsible for the external audit of NN Group. As indicated, I'm happy to present to you on the 2019 audit, although I would have preferred to do that in person, so I hope to see you again next year, but for now, I'm thankful that technology helps to share the highlights of our audit with you. As the chairman said, for the duration of this annual general meeting, NN Group released us from client confidentiality restrictions, and therefore, I'm free to talk to you about our audit and the results thereof.
I'd like to start by explaining our audit and auditor's opinion. What did we audit? We audited the 2019 parent company and consolidated annual accounts of NN Group, and we issued an unqualified auditor's opinion on these accounts. We also performed reviews on the quarterly interim accounts of NN Group, and our reviews resulted in unqualified review reports on these interim accounts. In line with prior years, we also reviewed the non-financial information as included in the 2019 annual review. We issued an assurance report concluding that nothing has come to our attention to believe that the information relating to material non-financial topics is not prepared in all material respects in accordance with the reporting criteria applied by NN. Our assurance report can be found on pages 65 to 67 of the annual review.
Now, let me explain a bit more about our independent auditor's report, which you can find on pages 179 to 192 of the financial report. I will summarize the most important elements of the opinion for you. First, our opinion. Based on the audit we performed, we concluded that the annual accounts give a true and fair view of the financial position of NN Group as of 31 December 2019 and of its results and cash flows for the year then ended. Management prepared the annual accounts on the basis of the going concern assumption, and in our audit, we found this assumption to be adequately supported. Next, a word on independence. As from 1 October 2015 onwards, we have been independent of NN Group. In 2019, we confirmed our auditor's independence to the audit committee of Supervisory Board on a quarterly basis. Next is materiality.
Since our first year audit in 2016, we determined materiality on the basis of core equity, being total equity minus the revaluation reserves. For the 2019 audit, we did not see a reason to change this approach. We audited the annual accounts using a materiality of EUR 140 million or 1% of this core equity benchmark, and this is consistent with the 2018 audit. Some parts of the annual accounts we audit with a higher level of precision as a response to the nature of certain disclosures. These so-called qualitative materialities were examples applicable to the audit of the management remuneration disclosures. All identified and unadjusted audit misstatements in excess of EUR 7 million have been reported in writing to the audit committee of Supervisory Board. these misstatements are both individually and in aggregate not material to the annual accounts.
The number of misstatements is low, taking into account the size and complexity of the NN Group annual accounts containing both IFRS and Solvency II financial information. Then a word on the scope of the audit. In order to take full responsibility for the audit of the annual accounts, we instruct local auditors to perform audit procedures on our behalf. We determine which entity and with what level of materiality these local audits need to be performed. All audits have been performed by KPMG audit teams. We review the outcomes of local audits and discuss them with our local audit teams and with NN Group.
In addition, we perform site visits to meet the local audit teams, visit local operations, and meet with local management, and we also review the local audit files to ensure that the audit work performed meets our audit quality standards in compliance with our group audit instructions. This year, we visited Japan, Poland, Hungary, the Czech Republic, and Slovakia. We also interacted frequently with the Dutch component audit teams, including NN Life, NN Non-Life, NN Investment Partners, NN Bank, and NN Reinsurance. Our work resulted in appropriate coverage of our audit work for NN Group as a whole. The next element in our opinion relates to fraud. In the design and execution of the external audit, we considered the risk of fraud. We evaluated management's response to fraud risk and the functioning of the three lines of defense in that regard.
We also evaluated the presumed fraud risk of management's override of controls by performing substantive audit procedures such as journal entry testing. We noted that group operational risk management performed more explicit oversight over the fraud risk assessments performed by the business units, and we encouraged management to continue to perform such assessments with sufficient skepticism and rigor. Our audit work did not result in the identification of a key audit matter in this regard. The next word is on compliance with laws and regulations. In our audit, we identified areas of laws and regulations that could reasonably be expected to have a material effect on the annual accounts based on our general understanding and sector experience and through discussion with group compliance, the management board, and the audit committee of the Supervisory Board.
We made a distinction between laws and regulations with a direct impact on the annual accounts, such as corporate income tax regulation or Solvency II regulation, and laws and regulations with an indirect effect, such as financial and economic crime regulation or data privacy regulation, often called GDPR. Our work did not result in the identification of a key audit matter. The next topic is significant risks and key audit matters. Based on our professional judgment, we identified significant risks. Significant risks have a higher probability of a material misstatement and are often linked to significant non-routine transactions or to matters that require significant management judgment. For each significant risk, we obtained an understanding of the design, existence, and effectiveness of the internal controls that NN Group put in place to mitigate such risks.
In addition, we performed specific substantive audit procedures to obtain sufficient and appropriate audit evidence that these risks did not result in material misstatements in the 2019 annual accounts. Based on our audit of significant risks, we identified four key audit matters. These have been included in our auditor's opinion, and they relate to, first, the valuation of the insurance contract liabilities and the reserve adequacy test. Second, the unit-linked exposure. Third, the Solvency II Disclosure. And fourth, the IT general and Cybersecurity Controls. Compared to 2018, we removed two key audit matters. We removed, first, the integration of Delta Lloyd, key audit matter in line with management's progress on the integration and the results of our audit work in response to that integration risk. The integration of Delta Lloyd is not yet fully completed, but the risk of material misstatement decreased significantly compared to 2018.
We also removed the key audit matter valuation of goodwill related to Delta Lloyd. Last year, it is particularly related to the goodwill impairment of NN Life that was recognized in 2018, and therefore, this has had less significance to the 2019 audit. Our 2019 audit opinion contains one new key audit matter for IT general and cybersecurity controls. Let me give you some further explanation. NN Group is highly dependent on its IT infrastructure for the continuity of the operations. IT General and Cybersecurity Controls are an important cornerstone of NN Group's internal control framework. The effectiveness thereof is fundamental to the group's financial reporting. Taking into account the increased frequency and severity of cyber incidents that are taking place in the environment in which NN Group operates and taking into account societal attention for cybersecurity, we consider this a key audit matter.
We tested IT general controls related to logical access, change management, and computer operations, and key application controls that are embedded in the IT systems that are relevant to the group's financial reporting. Our testing considered, among others, data migrations, the implications of the progress of the decommissioning of the ex-Delta Lloyd environment, and vendor management related to the outsourced IT processes. Related to cybersecurity risk, we gained an understanding of the design and effectiveness of preventive and detective cybersecurity controls and responses. We obtained an understanding of the self-assessments performed by the business units, and we performed procedures to test the resilience of the cybersecurity controls in place. We involved our IT auditors that specialized in cyber risk in the performance of these audit procedures. Based on the tests we performed, we obtained sufficient and appropriate audit evidence to support our IT-driven audit approach of the annual accounts.
For an explanation of the other key audit matters, I would like to refer you to the text in the independent auditor's report. Then I would like to say a word about COVID-19 and the 2019 annual accounts. On pages 158 to 166 of the financial report, you will find note 50 on capital and liquidity management. This note contains references to the proposed 2019 final dividend of EUR 448 million. At the date of signing the audit opinion, this amount was considered foreseeable dividend and was therefore deducted from own funds under Solvency II as presented on page 161. The footnote to this table explains that the reported Solvency II ratio of 218% is not final until regulatory findings have been completed.
In the 2019 filing with the regulator, NN Group will report an adjusted Solvency II ratio of 224% to reflect that the 2019 final dividend that was originally proposed in the shareholder meeting is no longer considered foreseeable as defined under the Solvency II framework. We have performed audit procedures over management's adjusted calculation of the Solvency II ratio and yet evaluated management's conclusion that this would not require amendment of the 2019 annual accounts, and we concur with management's conclusion. In summary, ladies and gentlemen, our audit work provided us with sufficient and appropriate audit evidence to support our conclusion that the 2019 annual accounts give you a true and fair view on the basis of which you, as shareholders in NN Group, can form your own conclusions. Mr. Chairman, with that, my presentation comes to a close, and I'm available for any questions related to our audit. Thank you.
Thank you, Peti. Very clear. We'll now address two matters that were submitted by shareholders in advance of the meeting. If these shareholders wish to ask any further questions on this agenda item, they can submit these questions via the chat system immediately after their initial questions have been answered. So let me start. Firstly, at NN, we understand the importance for investors of having insight into the impact of the corona pandemic on a company's operational and financial performance. This is a topic also raised by the VEB, which calls for transparent disclosures in the half-year reporting with a renewed assessment of the company's going concern status and having this information reviewed by the auditor. In August, NN Group will report its first half-year 2020 results, and we will also publish interim accounts in accordance with IFRS and the half-year management report.
The external auditor has been instructed to review the interim accounts, and the related review opinion will also be disclosed. Secondly, let me read out a statement from PGGM and APG. We were pleased to see that the report of Supervisory Board of NN Group provides information on the auditor's management letter. In this respect, NN Group sets an example for other listed companies to follow. It is a sign of confidence that the company is transparent about the auditor's findings. I'd like to thank you for that feedback. Moderator, have there been any additional questions submitted?
There are no further questions, Chairman.
Okay. Thank you very much. In that event, I'd like to put the proposal to adopt the annual accounts for financial 2019 to a vote. So if you'll allow us just to get the technical matters established, the vote will be taking place.
So I can see here that the in favors are in an overwhelming majority. In that case, we will note that the proposal has been adopted, and I will close this agenda item and move to the next item. Thank you. I would now like to go to item 3.B, which is an explanation of the profit retention and distribution policy. This is a discussion item. So here I'm referring to the dividend policy as published on NN Group's website. The company's former dividend policy that applied in 2019 was based on the aim to pay an ordinary dividend in line with its medium-term financial performance and envisioned a payout ratio of between 40% and 50% of the net operating result.
Earlier this year, on the 13th of February 2020, the company announced an update to its dividend policy with the aim of giving clearer guidance on what shareholders can expect in terms of capital returns on an annual basis. NN Group has a track record of distributing excess capital to shareholders, and its approach to this has not changed. Going forward, the company intends to pay a progressive ordinary dividend per share. Under normal circumstances, the company intends to declare an interim dividend, which will be calculated at approximately 40% of the prior year's full-year dividend, with the disclosure of the first half-year result, and to propose a final dividend at the annual general meeting of shareholders.
NN Group also intends to pay dividends either in cash after deduction of withholding taxes if applicable, or in ordinary shares from the share premium reserve at the election of the shareholder, and intends to neutralize the dilutive effect of the stock dividend through repurchase of ordinary shares. NN Group also intends to execute a recurring annual share buyback of at least EUR 250 million. Additional excess capital is to be returned to shareholders unless it can be used for value-creating opportunities. When proposing a dividend or announcing a buyback, NN Group will take into account, among other things, its capital position, leverage, and its liquidity position, regulatory requirements and strategic considerations, as well as the expected developments thereof.
As Dave had previously referred to, on the 13th of February 2020, NN Group announced its intention to propose a final dividend of EUR 1.4 per ordinary share, or approximately EUR 448 million, based on the number of outstanding shares, net of treasury shares, on that date. Subsequently, on the 6th of April 2020, NN Group announced it will act in accordance with the recommendations of EIOPA and the Dutch Central Bank published on the 2nd of April 2020, which urged insurers to temporarily suspend their dividend distributions and their share buyback programs as a consequence of the COVID-19 pandemic. Although NN Group is well capitalized and has a strong liquidity position, it has postponed the payment of dividends on its ordinary shares in line with the EIOPA and DNB recommendations. The proposal to pay a 2019 final dividend has therefore not been included on the agenda of today's meeting.
It is, however, the intention that this distribution to shareholders is made in the second half of 2020, if and at such time that, in the opinion of the Executive Board Supervisory Board, this is appropriate in light of the COVID-19 developments. In addition, the EUR 250 million share buyback program, which commenced on the 2nd of March 2020, has been temporarily suspended. Up to and including the 3rd of April 2020, shares for a total amount of EUR 183 million had been repurchased under this program, representing about 73% of the total share buyback amount. I'd like to note that no questions have been submitted by shareholders in advance of the meeting, and therefore I'll close this discussion item and move to the next item on the agenda.
It is item 4.A, proposal to release the members of the Executive Board from liability for their respective duties performed during the financial year 2019. I know this is a voting item. I'd also like to note that in addition to the current members of the Executive Board, this proposal also includes the release from liability of Mr. Lard Friese, who stepped down as a member of the Executive Board on the 12th of August 2019, so here I refer to the proposal as included in the convocation notice on page 4.
And once again, I note that there have been no questions submitted by shareholders in advance of the meeting, and therefore I'll move to put the proposal to a vote to release the current and former members of the Executive Board from liability for their respective duties performed during the financial year 2019, as included in agenda item 4.A. So may we move to the vote, please? I see here that the proposal has been approved. Thank you very much for the confidence. And with that, I will close this agenda item and move to the next item. Now I'd like to go to item 4.B, proposal to release the members of Supervisory Board from liability for their respective duties performed during the financial year 2019. And again, this is a voting item.
In addition to the current members of Supervisory Board, this proposal also includes the release from liability of Mr. Jan Holsboer, former Chair of Supervisory Board, who stepped down as of the close of the annual general meeting on the 29th of May 2019, and of Mr. Robert Reibestein and Ms. Clara Streit, whose terms of appointment ended on the 12th of April 2020. Once again, I'm referring to the proposal as included in the convocation notice on page four. I'll note that no questions have been submitted by shareholders in advance of the meeting, and therefore I'll move to put the proposal to release the current and former members of Supervisory Board from liability for their respective duties performed during the financial year 2019, as included in agenda item 4.B, to a vote. See here that the proposal has been approved. Thank you very much.
And with that, we'll close this item and move to the next agenda item. Now on item five, the profile of Supervisory Board, which is a discussion item. This profile was made available on the company's website as well as discussed in the convocation letter. Just by way of explanation, Supervisory Board intends to amend its profile and has discussed the intended profile and amendments with the Central Workers' Council of the company. Prior to the adoption of the amended profile, I'd like to explain a few of the intended amendments to you. So Supervisory Board proposes to replace the out-of-date term e-business by transformation in the profile. It's also proposed to include a more concise description of the areas of competence related to human resources.
In addition, it's proposed to delete Clause 2.7 because the governance of Supervisory Board's remuneration policy and remuneration is already comprehensively laid down in Supervisory Board charter, and lastly, the beginning of clause 3.10 will be amended in order to stress that the experience requirements can be collectively met. With that, I'd like to address two matters that were submitted by shareholders in advance of the meeting. If such shareholders would wish to make any further questions, they could submit these questions via the chat system immediately after their initial question has been answered, so please allow me to start with a statement that PGGM and APG have asked us to read out. NN Group is an international company, which is reflected in its diversity of nationalities and culture. We recommend that this diversity is promoted at board level, senior management level, and throughout the organization.
The inclusive and innovative culture of NN Group should also reflect gender diversity. There is sufficient female talent within the organization. We therefore expect that the future board vacancies are filled by women candidates so that in the coming years, NN Group will be able to meet the target of 30% women Supervisory Board and in the management board. Thank you for the feedback. Moving on now to a topic raised by the VEB. The current COVID-19 crisis is placing considerable demands on executive Supervisory Board members. In this light, the VEB has made the suggestion that Executive Board members should reduce the number of outside positions that they hold to one, and Supervisory Board members assess which of their outside positions can be given up over time.
On this point, I'd like to confirm that NN Group's executive Supervisory Board members comply with all provisions that limit the number of positions that they may hold under the applicable laws and regulations. In addition, all board members ensure that any outside positions do not create any impediment to the due performance of their duties as NN Group board members. Mr. Moderator, have there been any follow-up questions on this agenda item?
Thank you, Chairman. There are no follow-up questions on this item.
Thank you very much. On that basis, I'll close this agenda item and move to the next item on our agenda, which is item number 6. A, to begin with, proposal to reappoint Clara Streit as member of Supervisory Board. this is a voting item. Proposal was included in the convocation note on pages four and five.
By way of explanation, in accordance with the rotation schedule of Supervisory Board, the term of appointment of Clara Streit ended on the 12th of April 2020, resulting in a vacancy that needs to be filled. Clara Streit has indicated she's available for reappointment. Supervisory Board has nominated Clara Streit for reappointment as member of Supervisory Board for a term of four years. If adopted, the reappointment shall become effective as from the close of this meeting and ends at the close of the annual general meeting in 2024. A short biography of Ms. Streit is included in the convocation notice as well as in the presentation.
Clara Streit has been nominated for reappointment because of her long-standing experience as a consultant, her knowledge about regulatory developments, and her experience as non-executive director, mainly in the financial sector, as well as the professional manner in which she fulfilled her membership of Supervisory Board. more information can be found in the convocation notice, once again, pages four and five. The nomination of Ms. Streit was subject to the general condition that the General Meeting would not have recommended any other person for nomination. We have not received any such recommendation in advance of this meeting, so I now raise the proposal to reappoint Clara Streit as member of the Supervisory Board.
I note that no questions have been submitted by shareholders in advance of the meeting, and therefore put the proposal to reappoint Clara Streit as member of Supervisory Board as included in agenda item 6.A to a vote. I'd like to establish that the proposal has been adopted. Thank you very much for that. Clara, congratulations. We look forward to having you rejoin us on the board. And with that, I will close this item and I'll move to the next agenda item. Item 6.B, proposal to reappoint Robert Jenkins as member of Supervisory Board. again, a voting item. This proposal was included in the convocation notice on page five. By way of explanation, in accordance with the rotation schedule of Supervisory Board, the term of appointment of Robert Jenkins will end at the close of this meeting, resulting in a vacancy that needs to be filled.
Robert Jenkins has indicated he's available for reappointment, and Supervisory Board has nominated Robert Jenkins for appointment as member of Supervisory Board for a term of four years. If adopted, the reappointment shall become effective as from the close of this meeting and ends at the close of the general meeting in 2024. A short biography of Mr. Jenkins is included in the convocation notice as well as the presentation. Robert Jenkins has been nominated for reappointment because of his extensive knowledge in the field of asset management and financial policy-making and his broad experience as board member in executive and non-executive positions in the financial services sector, as well as the professional manner in which he fulfills his membership of Supervisory Board. more information can be found in the convocation notice on page 5. The nomination of Mr.
Jenkins was subject to the condition that the general meeting would not have recommended any other person for nomination. We've not received any such recommendations in advance of this meeting, so I now raise the proposal to reappoint Robert Jenkins as member of Supervisory Board. once again, I note that no questions have been submitted by shareholders in advance of the meeting, and therefore I move to put the proposal to reappoint Robert Jenkins as member of Supervisory Board as included in agenda item 6.B to a vote. Thank you very much. I see that the proposal has been approved with 97.6% in favor, so thank you for the support. And Bob, we look forward to continuing to working with you over the next four years in Supervisory Board. with that, I will close the agenda item.
Before I go to the next item, however, I'd like to note that the term of appointment of Dick Harryvan as member of Supervisory Board will end at the close of this meeting. And as already mentioned, the term of appointment of Robert Reibestein ended on the 12th of April 2020. I'd like to take just a few moments and the opportunity to thank Dick and Robert for their contributions to the company. Dick has been a member of Supervisory Board since February of 2016. And prior to that, Dick was in several roles with the ING Groep for 37 years. At NN, he's been vice chair of Supervisory Board, a member of the audit committee, the remuneration committee, and the nomination and governance committee. Hélène Vletter-van Dort will take over the role of vice chair as of the closing of this AGM.
As former chair of Supervisory Board of Delta Lloyd, Robert played an essential role in the integration of Delta Lloyd into NN. Robert was appointed member of Supervisory Board in June of 2017. He was a member of both the Audit and Remuneration Committee. Robert's term ended on the 12th of April 2020. Both Robert and Dick have been of significant importance to NN Group, and on behalf of the colleagues in the supervisory and management board of NN, I'd like to thank them for their valuable contribution. So thank you. With that, I'd like to move on to the next agenda item, which is remuneration. Several proposals here for voting.
I'd like to refer to the 2019 Remuneration Report, pages 32 through 37 of the 2019 Financial Report, the proposed remuneration policy for the members of the Executive Board, as well as the proposed remuneration policy for the members of Supervisory Board. to introduce this topic, I'd like to give the floor to Héléne Vletter-van Dort, Chair of the Remuneration Committee of the NN Supervisory Board. Hélène will give further explanation of the agenda items 7.A, 7.B, and 7.C. Over to you, Hélène.
Thank you, Dave. Excuse me, the microphone. [Foreign language] . As David Cole indicated, I'm going to discuss these three points together because they are so closely related. I'm going to do this in Dutch because of the topic itself and because there are various Dutch stakeholders who have a specific interest in this topic.
In general, 2019 was a good year and at the same time a special year in which Supervisory Board had a lot of attention for the remuneration policy and its execution. On the 1st of December 2019, new legal requirements were made for the remuneration policy of the members of the Executive Board and Supervisory Board. remuneration policy for the members of the Executive Board had been adopted lastly as of the 1st of January 2015, and the same was true for the members of Supervisory Board that changed dates to January 2017. Now, the remuneration policy of listed companies has been a much-debated topic in recent years. It is important for various reasons to be quite transparent in remuneration policy. Since the financial crisis, measures have been taken to retain and to recover the trust in the sector.
There is additional legal regulation to make the system more stable, and an example of this is the Financial Undertakings Remuneration Policy Act, which aims to limit variable remuneration and then supports and, of course, follows the applicable regulations. We have full understanding for the fact that remuneration policy leads to emotions and questions in society. We have taken this into consideration in drafting the new remuneration policy. Supervisory Board, in the framework of this new remuneration policy for the Executive Board and Supervisory Board, requested feedback from many stakeholders, among others, the shareholders, the bodies representing shareholders, the proxy advisor, the employee representatives, regulators and supervisors, politicians, customers, and the wider public. Furthermore, we had repeated discussions with the Central Works Council. The Central Works Council has issued a positive advice to the presented policy for the Executive Board as well as for the Supervisory Board.
In order to achieve a fair remuneration policy, it is important that we strike the right balance, taking into account the interests of all parties, the international character of the company, and NN's position in society. Important starting points used in structuring the proposed remuneration policy were simplicity and transparency. The remuneration policy will have to enable the organization to attract and retain qualified management and board members. Furthermore, the policy has to support the long-term targets and goals of NN. And these are focusing on the interests of the client, sound business operations, and managing risks with an eye for NN Group's role in society. Now, the conversations we have held with all stakeholders have led to a number of refinements in the proposed policy.
We decided to adopt the reference point of the members of the Executive Board to adjust it from just below the median to below the median. In this way, we will prevent that Supervisory Board sees itself forced to sort of automatically increase the remuneration for the Executive Board if such upward developments in the peer group give rise to it. Supervisory Board, with these adaptations, is enabled to weigh up wider interests. With respect to the peer group, in the proposed policy, we opted for a clearer and simpler approach. Before, we worked with two different reference groups: one Dutch peer group consisting of companies from various sectors and another European peer group with companies in the financial industry where Swiss companies were excluded. Now, in the proposed policy, we're going to work with one European peer group consisting of companies from various sectors.
Supervisory Board paid attention to the fact that this change has no boosting effect. The companies included in the peer group were selected on the basis of comparability with the NN Group, with reference to the number of employees, sales, market capitalization, and total assets. Furthermore, we looked into the scope of the selected companies and their international presence. Within the selected peer group, the position of NN with respect to these aspects is under or below the median. The proposed policy foresees a transparent approach by publishing on a yearly basis the peer group in our annual report. In anticipation of the adoption of the reviewed remuneration policy, the peer group for 2020 has already been included in the remuneration report on 2019. The European peer group consists of 16 organizations in various sectors, including financial organizations in the Netherlands and outside, as reflected in the remuneration report.
Another adjustment of the bandwidth used for the assessment of the performance criteria set prior to a year and those used at the end of the year to determine the variable remuneration is with respect to the members of the Executive Board. The performance criteria that are used are going to be explained in the remuneration report, together with an explanation on the actual performances and the link to variable remuneration. I would like to point out that I'm going to discuss possible effects of the corona crisis on the performance criteria and/or on the variable remuneration. With respect to the remuneration policy for the members of Supervisory Board, the most important change is adaptation of the reimbursement structure. The proposed policy is simpler and easier to understand. Now, the remuneration for additional meetings and international presence have been struck.
Furthermore, differentiation in reimbursements between the various committees of Supervisory Board has been changed, and the differentiation in the fixed cost reimbursement between the chair of Supervisory Board and the members is struck as well. With respect to determining the remuneration for the members of Supervisory Board, the same external peer group will be the basis as for the members of the Executive Board. As I indicated earlier, this peer group has been reflected in the remuneration report. I would like to now explain the execution of the remuneration policy for the members of the Executive Board over 2019, in addition to what already was described in the remuneration report.
Now, in establishing the remuneration of the members of the Executive Board, Supervisory Board, we take into account the interests of the various stakeholders at NN Group: customers, shareholders, employees, and the society in which NN is active in the Netherlands and in other countries. With respect to the remuneration policy, Supervisory Board every year assesses the remuneration of the Executive Board in the light of remunerations of peers in the financial and non-financial sectors. And in that respect, we seek advice from external experts. We also look at the situation within the organization where, in the NN Group, we decided that employees which fall under Dutch CLAs are just above the median of the relevant peer group and paid accordingly, and the members of the Executive Board are just below the median of the relevant peer group.
The former CEO, Lard Friese, left NN on the 12th of August 2019. Supervisory Board has not afforded Mr. Friese any variable remuneration because of his voluntary departure. In this framework, we can also inform you that Mr. Friese did not receive any termination payment, and his conditionally awarded deferred variable remuneration from previous years has lapsed. As you all know, we have a new CEO, David Knibbe, appointed per the 1st of October 2019. His base salary is the same as what was agreed with and published on Mr. Friese. During 2019, no changes have been introduced to the base salary of Delfin Rueda, the CFO of the NN Group. The salaries of the members of the Executive Board are below the median of comparable positions in the market.
The variable remuneration of David Knibbe as a member of the Executive Board during 2019 is 16% of the paid base salary and is therefore on target. The variable remuneration of Delfin Rueda is 20% of the base salary. Mr. Rueda, after the departure of the former CEO and before the nomination of David Knibbe, has taken upon himself additional roles and responsibilities as a vice chair of the Executive Board of the NN Group. Supervisory Board is of the opinion that all members of the Executive Board in 2019 made an essential contribution to the implementation of the strategy, including the realization of the financial results, the performance in the area of customer service, the initiatives aimed at the wider society, building sustainable business operations, risk management, and the employees of NN Group. Finally, I'd like to talk to you about current events.
It is quite clear that the coronavirus has a huge impact on worldwide societal situation and the economic situation. Supervisory Board has therefore taken into account the appeals from various stakeholders to deal in a prudent manner with the remuneration and the variable remuneration for board members. Supervisory Board will weigh and consider all relevant information as soon as the variable remuneration for board members for the current financial year is discussed and will report about it. Naturally, we follow developments closely with the health and well-being of our employees, customers, and society as our main priority. That brings me to the end.
I'd like to ask any further questions on this agenda item. They can submit these questions via the chat system immediately after our initial question has been answered. This is a statement from PGGM and APG.
We would like to thank the Remuneration Committee and Hélène Vletter-van Dort in particular for the extensive consultation process on the proposed new remuneration policies, as well as the feedback provided following the consultation. It was also good to note that the general public was consulted as part of this process. In the new remuneration policy, NN Group has made progress in terms of transparency and simplicity. Going forward, we encourage the Remuneration Committee to provide clear disclosures on the performance of the individual targets of the Executive Board members in the remuneration report. We appreciate the balanced and honest opinion given by the workers' council, and we understand that they're concerned that the level of remuneration could be considered excessive by Dutch society and Dutch employees. We therefore advise the Remuneration Committee to consistently observe the below-the-median benchmark when applying this policy.
We trust Supervisory Board will not abuse the flexibility provided in the policy and will consult with other stakeholders in the event of any major increase in the base salary. So thank you for that feedback. The moderator, have there been any additional questions submitted?
Thank you, Chairman. There are no further follow-up questions.
Thank you very much. In that case, I'd like to put the proposal to give a positive advice on the 2019 remuneration report as included in agenda item 7.A to a vote. Wait just a moment. Okay, I see the proposal has been approved with a 93.17% approval level. So I'd like to thank you for that. And we will now move to the following proposal, which is item 7.B. So this is the proposal to adopt the remuneration policy for the members of the Executive Board as included in agenda item 7.B.
I'd like to now put it to a vote. And here I see the proposal has been approved with 94.6% in favor. So thank you very much for that. And now I'd like to go to 7.C, which is the proposal to adopt the remuneration policy and remuneration for members of Supervisory Board as included in agenda item 7.C. We'll move to that vote. So also here, I see the favorable vote is 97.57%. So thank you for your support. And with that, I'd like to move to item 7.D. 7.D is a proposal to amend the articles of association of the company. And again, this is a voting item. This proposal was included in the convocation notice on page six and has also been available on the company's website.
Just by way of explanation, the Executive Board proposes, and which proposal was approved by Supervisory Board, to amend the articles of association of the company in accordance with the proposal as published on the company's website. The proposed amendments are almost all related to the Shareholder Rights Directive II, SRD II Implementation Act, which Hélène Vletter-van Dort already mentioned. The proposal includes an overview of the proposed amendments as well as a clarification of these amendments. I'd like to note that no questions have been submitted by shareholders in advance of the meeting. And therefore, I'd like to move to put the proposal to amend the articles of association of the company as included in agenda item 7.D to a vote. I'd like to establish that the proposal has been approved with a 100% in favor. So thank you very much.
Please note that the articles of association of the company will be amended as of today, the 28th of May 2020. The amended articles of association will be published on the company's website. With that, I'll close this agenda item and move to the next item, item 8, specifically 8.A.I. This is a proposal to designate the Executive Board as the competent body to resolve to issue ordinary shares and to grant rights to subscribe for ordinary shares. This is a voting item. I refer you, related to this agenda item, to the convocation notice page seven. I'd also like to indicate, and I'll do this for the next several items to give you a little bit of a heads-up. You're probably already quite familiar with this agenda item, which was also submitted to you last year.
Given the extensive explanation to this agenda item as included in the convocation notice, I'll assume there's no need to further explain or repeat this explanation. I note that no questions have been submitted by shareholders in advance of the meeting and therefore move to put the item to a vote, item 8.A.I. Here I see that the proposal has been approved with 99.31%. Thank you very much for that. I'll formally close this item and move to the next agenda item. Next agenda item is 8.A.I. Proposal to designate the Executive Board as the competent body to resolve to limit or exclude preemptive rights of existing shareholders in issuing ordinary shares and granting rights to subscribe for ordinary shares pursuant to agenda item 8.A.I. Once again, this is a voting item.
I'll refer to the convocation notice page seven and once again indicate that this item was on the agenda of last year as well. Therefore, I won't go through an extensive explanation. I note that no questions have been submitted by shareholders in advance of the meeting and therefore I'll put the proposal as included in agenda item 8.A.I. to a vote. Here I can establish that the proposal has been approved with 99.22% in favor. Thank you very much for that. I'll close this agenda item and move to the next item. We're now at item 8.B. This is a proposal to designate the Executive Board as the competent body to resolve to issue ordinary shares and to grant rights to subscribe for ordinary shares by way of a rights issue. This is a voting item. Again, I'll refer you to the convocation notice page seven.
As the previous two items, this agenda was also submitted to you last year. Given the extensive explanation, I will not go through and repeat that at this point in time. I note once again that no questions have been submitted by the shareholders in advance of the meeting related to this item. And therefore, I'll put the proposal as included in agenda item 8.B to a vote. I can establish that the proposal has been approved with 94.90% in favor. Thank you very much for that. I'd like to move to the following item. Item number nine, proposal to authorize the Executive Board to acquire ordinary shares in the company's share capital. This is a voting item. This agenda item was included in convocation notice on page eight and similar to the previous three items was also submitted to you last year.
Given the explanation to this agenda item as included in the convocation notice, I'll assume there's no need to further explain or repeat the explanation. I also note that no questions have been submitted by shareholders in advance of the meeting related to this item and therefore move to put the proposal as included in agenda item nine to a vote. I see that the proposal has been approved with 99.15% in favor. Thank you very much for that. Moving now to item 10 on the agenda, proposal to reduce the issued share capital by cancellation of ordinary shares held by the company. This is a voting item. This item was included in the convocation notice on page eight. You're also familiar with this item as it's been included in the agenda for last year as well. And once again, I will not repeat the explanation.
I have noted that no questions have been submitted by shareholders in advance of the meeting related to this item and therefore we'll move to put the proposal as included in agenda item 10 to a vote. I see that the proposal has been approved with 99.37% in favor. Thank you for your continued support. We'll close item 10 and move to item 11, which is any other business. Let me just ask the moderator if any additional questions have been submitted related to any of the earlier agenda items.
No, Chairman. There are no further questions not for this item or for the previous items.
Okay. Thank you very much. I'll note that no questions have been submitted and I will therefore close this item and move to closing announcements.
So I'd like to inform you that the draft minutes of this meeting will be published on the company's website within three months. The final voting results will be published on the company's websites within a few days. To close the meeting, I'd like on behalf of Supervisory Board and the management board to thank our shareholders for joining us for this Virtual Annual General Meeting of the NN Group. Please stay safe and healthy, and we all hope to see you again next year, preferably in person. Have a good day.