Wat ons beweegt What moves us. Annual Report 2010 Cardif Schadeverzekeringen N.V

Wat ons beweegt What moves us Annual Report 2010 Cardif Schadeverzekeringen N.V.

Index

Annual Report Cardif Schade 2010 // Index

Boards, officials and external advisors Supervisory Board G.C. Binet S.L.P.F. Chevalet L.R.L. Barry J.E.D. Faveyrol The Supervisory Board indirectly supervise Cardif Schadeverzekeringen N.V. via BNP Paribas Assurance B.V. Statutory Board of Directors C. de Jong G.R.M.M. Rochigneux A.M.P.J. Heuvelmans Appointed Actuary Towers Watson Netherlands B.V. External Auditors Mazars Paardekooper Hoffman Accountants N.V.

KEY FIGURES 2006 - 2010 In thousands of euro’s

2010

2009

2008

2007

2006

OPERATING EXPENSES

(32,286)

(41,887)

(54,002)

(58,552)

(77,470)

RESULT Technical result 19,832 43,038 31,043 Result after taxes 16,665 35,804 24,107 SOLVENCY Actual 58,812 66,674 58,224 Required 39,208 39,208 38,032

34,816 28,638

18,390 15,673

58,127 39,208

114,459 39,208

TOTAL EQUITY BALANCE SHEET TOTAL

65,867

85,006

73,309

77,839

95,184

656,213

685,698

682,489

688,959

677,446

664,738

656,469

594,470

562,612

110

96

FINANCIAL INVESTMENTS For the risk of the company 614,670 647,241 655,731 TECHNICAL PROVISIONS 570,264 584,153 595,445 NUMBER OF EMPLOYEES*

126

111

111

*combined FTE’s of Cardif Schadeverzekeringen N.V. as well as Cardif Levensverzekeringen N.V. at year end.

Annual Report Cardif Schade 2010 // Key Figures 2006 - 2010

TURNOVER Gross premiums non-life insurance 34,505 51,771 82,819 103,989 144,324 Investment income 28,070 29,554 29,607 27,963 26,445 62,575 81,325 112,426 131,952 170,769

Customer Contact Center

Met betere service bewijzen we ook onze organisatie een grote dienst

Verslag van de Raad van Commissarissen

De Raad van Commissarissen is gelet op een ontheffing van DNB formeel benoemd in BNP Paribas Assurance B.V. (holding). Materieel oefent de Raad van Commissarissen toezicht uit in Cardif Schadeverzekeringen N.V. Samenstelling Raad van Commissarissen De Raad van Commissarissen bestond tot 1 november 2010 uit de volgende leden: • R.F. Dumora (chairman) • O.M. Cortes (secretary) • G.C. Binet • J.I. Orgonasi De Raad van Commissarissen bestond vanaf 1 november 2010 uit de volgende leden: • S.L.P.F. Chevalet (chairman) • L.R.L. Barry (secretary) • J.E.D. Faveyrol • G.C. Binet De Raad van Commissarissen heeft een tweetal comités waarin specifieke aspecten van het toezicht tot uiting komen. De subcomités zijn: • Management Committee • Internal Control Committee Toezicht en advies Raad van Commissarissen De Directie van Cardif Schadeverzekeringen N.V. heeft de jaarrekening opgemaakt. De Raad van Commissarissen heeft de opgestelde jaarrekening over het boekjaar 2010 goedgekeurd en adviseert de Algemene vergadering van aandeelhouders van Cardif Schadeverzekeringen N.V. om de jaarrekening over het boekjaar 2010 vast te stellen, waarna de Raad van Commissarissen gedechargeerd is voor haar functioneren over het boekjaar 2010.

Introduction In this report, the Supervisory Board of BNP Paribas Assurance B.V. will report on its performance and supervision methods used in Cardif Schadeverzekeringen N.V. (full subsidiary of BNP Paribas Assurance B.V.) in the 2010 financial year. In view of a dispensation issued by DNB, the Supervisory Board has been formally appointed as part of BNP Paribas Assurance B.V. (holding). In practical terms, the Supervisory Board supervises Cardif Schadeverzekeringen N.V. Composition of the Supervisory Board Until 1 November 2010, the Supervisory Board consisted of the following members: • R.F. Dumora (chairman) • O.M. Cortes (secretary) • G.C. Binet • J.I. Orgonasi From 1 November 2010 onwards, the Supervisory Board consisted of the following members: • S.L.P.F. Chevalet (chairman) • L.R.L. Barry (secretary) • J.E.D. Faveyrol • G.C. Binet The Supervisory Board has two committees in which specific aspects of its supervisory activities are discussed: The sub-committees are: • Management Committee • Internal Control Committee Supervisory activities and recommendations of the Supervisory Board The Board of Cardif Schadeverzekeringen N.V. prepared the annual accounts. The Supervisory Board approved the annual accounts that had been drawn up for the 2010 financial year and recommended for the General Shareholders’ Meeting of Cardif Schadeverzekeringen N.V. to adopt the annual accounts for the 2010 financial year, after which the Supervisory Board was discharged of liability for the 2010 financial year.

Annual Report Cardif Schade 2010 // Supervisory Board’s report

Inleiding De Raad van Commissarissen van BNP Paribas Assurance B.V. legt in dit verslag verantwoording af over haar functioneren en wijze van toezicht houden in Cardif Schadeverzekeringen N.V. (100% dochtermaatschappij van BNP Paribas Assurance B.V) over het boekjaar 2010.

Supervisory Board’s report

De in dit verslag opgenomen jaarrekening 2010 is gecontroleerd door Mazars Paardekooper Hoffman Accountants N.V. te Rotterdam. De goedgekeurde controleverklaring is opgenomen in dit verslag bij het ‘Independent Auditor’s report’.

The annual accounts for 2010 that form part of this report have been audited by Mazars Paardekooper Hoffman Accountants N.V. of Rotterdam. The approved auditor’s report is included in this report under the ‘Independent Auditor’s Report’.

Towers Watson Netherlands B.V. heeft de juistheid van de voorziening voor verzekeringsverplichtingen gecontroleerd en adequaat bevonden over het boekjaar 2010.

Towers Watson Netherlands B.V. has verified the adequacy of the provisions for insurance obligations and has found the provisions adequate for the 2010 financial year.

Conform het bepaalde in art. 33 en 34 van de statuten van Cardif Schadeverzekeringen N.V. heeft de Raad van Commissarissen ingestemd met het besluit van de Directie om het resultaat van de bedrijfsvoering, alsmede een deel van de overige reserves voor een totaalbedrag van 23,8 miljoen euro, uit te keren als dividend.

In accordance with the stipulations of Articles 33 and 34 of the Articles of Association of Cardif Schadeverzekeringen N.V. the Supervisory Board has agreed with the decision of the Board to pay out the profits of business activities, as well as a portion of the other reserves totalling 23.8 million euros, in the form of a dividend.

Vergaderingen en werkzaamheden Raad van Commissarissen Het Management Committee is in het afgelopen jaar geborgd in de matrixorganisatie onder het kanaal ‘Direct & Brokers’ (D&B). In deze structuur is er sprake van een wekelijks kanaaloverleg. Daarnaast heeft er op regelmatige basis en op gerichte onderwerpen individueel overleg plaatsgevonden.

Meetings and activities of the Supervisory Board The Management Committee has been included in the organisational matrix during the past year and has been allocated to the channel ‘Direct & Brokers’ (D&B). A weekly channel consultation takes place as part of this structure and individual consultations have also been held on a regular basis in relation to specific topics.

Tijdens de vergaderingen is onder meer uitgebreid gesproken over het Strategisch plan voor de periode 2011 tot en met 2013. Ze omvatten de strategische projecten die hieruit voortvloeien, stuurinformatie en strategische keuzes in relatie tot de recessie, dalend consumentenvertrouwen en stijgende onrust binnen de financiële markten. In juni 2010 heeft er een Internal Control Committee plaatsgevonden. Daarnaast hebben er op regelmatige basis telefonische conferenties plaatsgevonden tussen de interne controleorganisatie en het hoofdkantoor en is er fysiek bezoek geweest van Risk & Control vanuit het hoofdkantoor aan lokaal operational risk management in mei 2010. Corporate governance Met ingang van 1 april 2010 is de heer C.J. van Heugten vertrokken als financieel directeur binnen Cardif Schadeverzekeringen N.V. In 2010 heeft DNB toestemming gegeven voor de benoeming van de heer G. Rochigneux en de heer M. Heuvelmans als

During the meetings, topics including the Strategic plan for the period 2011 to 2013 inclusive were discussed. These consisted of the strategic projects that arise from this plan, control information and strategic choices in relation to the recession, diminishing consumer confidence and the increasing unease within the financial markets. An internal Control Committee meeting was held in June 2010. In addition, conference calls were held on a regular basis between the internal auditing body and the head office, whilst a team from Risk & Control based at the head office carried out an on-site visit of local operational risk management in May 2010. Corporate governance With effect from 1 April 2010, Mr. C.J. van Heugten departed as Director of Finance within Cardif Schadeverzekeringen N.V. In 2010, DNB approved the appointment of Mr. G. Rochigneux and Mr. M. Heuvelmans as Chief Strategy Officer (CSO) and Chief Finance & Risk Officer (CFRO) respectively within BNP Paribas Assurance B.V. and Cardif Schadeverzekeringen

respectievelijk Chief Strategy Officer (CSO) en Chief Finance & Risk Officer (CFRO) binnen BNP Paribas Assurance B.V. en Cardif Schadeverzekeringen N.V. De Raad van Commissarissen heeft haar toestemming verleend voor het benoemen van de directeuren, waarna zij met ingang van 1 januari 2011 zijn benoemd.

De Raad van Commissarissen heeft haar instemming verleend aan de benoeming van Towers Watson Netherlands B.V. als nieuwe externe actuaris met ingang van 1 augustus 2010. Strategie Cardif 2014 Er is een lange termijn groeistrategie gevraagd van de Raad van Bestuur. Deze is intensief besproken en wordt gevolgd door een delegatie van de Raad van Commissarissen. Het voorgestelde strategische programma wordt gesteund door de Raad van Commissarissen. Daarnaast wordt vanuit de matrix het programma gemonitord. Vooruitblik jaar 2011 Het Verbond van Verzekeraars heeft op 15 december 2010 de Governanceprincipes aangenomen. Deze bindende regeling bestaat uit uitgangspunten die gaan over de samenstelling, deskundigheid, taak en werkwijze van de Raad van Commissarissen en de Raad van Bestuur, over risicomanagement, product approval proces, audit en het beloningsbeleid. De principes zijn vanaf 1 januari 2011 van kracht geworden. De Raad van Commissarissen zal nauw bij de implementatie van deze principes in 2011 binnen Cardif betrokken zijn. De meeste aanpassingen zullen hun beslag krijgen in een integraal reglement van de Raad van Commissarissen. Oosterhout, 5 april 2011 S.L.P.F. Chevalet (chairman) L.R.L. Barry (secretary) J.E.D. Faveyrol G.C. Binet

DNB has indicated that it wishes to see the distribution of voting rights of 2:1:1 that apply of the Directors within BNP Paribas Assurance B.V. and Cardif Schadeverzekeringen N.V. equalised so that they become 1:1:1. The Supervisory Board has approved this. The Supervisory Board also approved the appointment of Towers Watson Netherlands B.V. as the new external actuary with effect from 1 August 2010. Strategy for Cardif 2014 The Supervisory Board has been asked to produce a long-term growth strategy. This has been the subject of intensive discussion and will be monitored by a delegation from the Supervisory Board. The proposed strategic programme is supported by the Supervisory Board and The programme will also be monitored on the basis of the matrix. Outlook for the year 2011 The Dutch Association of Insurers adopted the Principles of Governance on 15 December 2010. This binding regulation consists of basic principles relating to the composition, expertise, duties and method of working of the Supervisory Board and the Board of Directors, risk management, the product approval process, audits and the remuneration policy. The principles entered into force on 1 January 2011. The Supervisory Board will be closely involved in implementing these principles within Cardif during 2011. The majority of the changes will be implemented within a comprehensive set of regulations issued by the Supervisory Board. Oosterhout, 5 April 2011 S.L.P.F. Chevalet (chairman) L.R.L. Barry (secretary) J.E.D. Faveyrol G.C. Binet

Annual Report Cardif Schade 2010 // Supervisory Board’s report

DNB heeft aangegeven dat zij de stemverhouding van 2:1:1 voor de bestuurders binnen BNP Paribas Assurance B.V. en Cardif Schadeverzekeringen N.V. gelijk getrokken wil zien naar een stemverhouding van 1:1:1. De Raad van Commissarissen heeft hiervoor haar toestemming verleend.

N.V. The Supervisory Board approved the nomination of the directors, after which they were appointed with effect from 1 January 2011.

Na enkele turbulente jaren markeerde 2010 zich voor Cardif als een jaar waarin we onze rol als toekomstgerichte marktleider zichtbaar wisten te bestendigen. After several turbulent years, 2010 stood out as far as Cardif was concerned as a year in which we were demonstrably able to consolidate our role as a future-oriented market leader.

Customer insight

De nieuwe structuur voor stimulerende klantrelaties

board of directors’ report

Inleiding Dankzij de focus die we in de afgelopen jaren al hadden op veranderingen in consumentenbehoeften en de distributieketen, stond 2010 in het teken van herdefinitie en het verstevigen van onze concurrentiepositie. Het proactief aanpakken van verbeterpunten en innoveren vanuit een lange termijnvisie stonden daarbij centraal.

Introduction Thanks to our focus on changes in consumer requirements and the distribution chain over the past few years, 2010 was devoted to redefining and strengthening our competitive position. The proactive approach towards areas for improvement and innovation with the long-term perspective in mind were of central importance in this.

De omvangrijke wijzigingen in de wetgeving vormden de ultieme kans om onze flexibiliteit en innovatiekracht te laten zien, door het innemen van een voortrekkersrol. Met de implementatie van het Besluit Gedragstoezicht Financiële Ondernemingen (BGFO) voor betalingsbescherming bewezen we opnieuw onze rol als marktleider. Vanaf de eerste dag hebben we de nieuwe dynamiek omarmd en onze business partners intensief begeleid in hun verandertraject.

The extensive amendments to legislation provided the ultimate opportunity to demonstrate our flexibility and strength in innovation by adopting the role of a pioneer. With the implementation of the Market Conduct Supervision (Financial Institutions) Decree [Besluit Gedragstoezicht Financiële Ondernemingen (BGFO)] for payment protection, we have once again proven our position as a market leader. From the outset, we embraced a new dynamism and assisted our business partners closely in their change process.

De bestendiging van ons marktleiderschap uitte zich eveneens in de definitie van een nieuwe generatie betalingsbescherming. Met de introductie van de nieuwe Hypotheek Opvang Polis (HOP) markeerden we, na vijftien jaar aanwezigheid op de Nederlandse markt, het begin van een nieuwe norm binnen ons specialisme. Aantoonbaar ontwikkeld op basis van echte consumentervaringen en jarenlange ervaring, zette de HOP 2010 de standaard voor wat verzekerden vandaag mogen verwachten van een betalingsbeschermer.

We also consolidated our position as a market leader by defining a new generation of payment protection insurance. The launch of the new Hypotheek Opvang Polis (HOP) [Mortgage Protection Policy] marks the beginning of a new standard within our specialist field after fifteen years in the Dutch market. Having been demonstrably based upon genuine customer experiences and many years of experience, the HOP 2010 set the standard for what today’s policyholders can expect from a provider of payment protection insurance.

Ook ten aanzien van onze systemen en processen vertegenwoordigde 2010 een belangrijke mijlpaal voor de organisatie; een volledige datamigratie naar ons nieuwe systeem voor polis management verliep uitermate snel en succesvol en bereidt ons voor op verdere innovatie. Bovendien versterkten we ons innovatief vermogen door het aantrekken van enkele zeer ervaren professionals met specialismen als customer insight en project & programma management.

The year 2010 also marked an important milestone for the organisation with regard to our systems and processes: the complete data migration to our new policy management system was completed rapidly and successfully and has paved the way for further innovation. What is more, we also increased our innovative ability, by successfully attracting a number of very experienced professionals who specialise in areas such as customer insight and project & programme management.

De keuzes die we in 2010 gemaakt hebben onderstrepen ons vertrouwen in de mogelijkheden die er op de Nederlandse markt zijn voor partijen die willen veranderen door te vernieuwen en samen te

The choices that we made in 2010 emphasised our confidence in the opportunities that exist on the Dutch market for parties that want to change by innovating and collaborating. Our customers and business

Annual Report Cardif Schade 2010 // Board of Directors’ report

DIRECTIEVERSLAG

werken. Onze klanten en business partners zijn daarbij ons belangrijkste referentiekader. De manier waarop ons team zich heeft ontwikkeld, de nieuwe dynamiek vol enthousiasme heeft omarmd en een absolute focus heeft gehad op vernieuwing vanuit klantperspectief, geeft ons alle vertrouwen. 2010 verstevigde de basis van ons leiderschap voor nu en in de toekomst.

partners are our most important frame of reference in that regard. We can all take confidence from the way in which our team has developed, has wholeheartedly embraced the new dynamism and has focused fully on innovation from the perspective of the client and 2010 strengthened the foundation of our position as a leader, both now and in the future.

Profiel

Profile

Cardif gaat verder in verzekeren Cardif, het verzekeringsonderdeel van de Groep BNP Paribas, heeft zich in Nederland in de afgelopen vijftien jaar ontwikkeld tot een innovatieve marktleider met branchespecifieke verzekeringsproducten. Omdat behoeften van consumenten en business partners dikwijls uniek zijn, gaat Cardif verder in verzekeren. Met maatwerk en veelomvattende service onderstreept de maatschappij persoonlijke betrokkenheid bij haar klanten en de business van haar partners.

Cardif goes the extra mile in insurance Over the past fifteen years, Cardif, the insurance division of the BNP Paribas Group, has developed into an innovative market leader in the Netherlands as a provider of sector-specific insurance products. As the needs of consumers and business partners are largely unique, Cardif goes the extra mile where insurance is concerned. By providing tailored solutions and comprehensive service, the company places an emphasis on personal commitment to its clients and to the business needs of its partners.

Groepsstructuur (nationaal)

Group structure (national)

BNP Paribas Assurance B.V.

Cardif Schadeverzekeringen N.V.

Cardif Levensverzekeringen N.V.

BNP Paribas Assurance B.V.

Cardif Services B.V.

Retailis B.V.

Cardif Schadeverzekeringen N.V.

Cardif Levensverzekeringen N.V.

Cardif Services B.V.

Retailis B.V.

Mission statement

Mission statement

Missie

Mission

Bestaansgrond De missie van Cardif is om mensen te helpen hun doelen te realiseren door hen te beschermen tegen de financiële gevolgen van risico’s rondom lijf en leven.

Company Objective Cardif’s mission is to assist people in achieving their goals by offering them protection from the financial consequences of the risks associated with everyday life.

Rol In onze rol als risicodrager richt Cardif zich op het aangaan en beheren of overdragen van risico’s rondom lijf en leven. De maatschappij ontwikkelt, distribueert, en administreert verzekeringen en handelt claims af voor consumenten die in Nederland wonen en/of werken.

Role In our role as a risk-bearing organisation, Cardif aims to tackle and manage or take over the risks associated with everyday life. The company develops, dispenses and administrates insurance policies and settles claims for consumers living and/or working in the Netherlands.

Vision

In Cardifs organisatiefilosofie vormen verzekerden (consumenten) en business partners de kern van het handelen. Cardif heeft oog voor de belangen van alle partijen en streeft er voortdurend naar daarin een gezonde balans te realiseren.

Policyholders (consumers) and business partners form the core of the activities that form part of Cardif’s organisational philosophy. Cardif focuses on the interests of all parties and continuously endeavours to achieve a healthy balance.

Cardif vindt dat elke consument zich moet kunnen verzekeren en dat zijn behoefte daarbij centraal moet staan: inhoudelijk en in begeleiding. Dat betekent dat Cardif het als haar verantwoordelijkheid beschouwt om begrijpelijke producten te bieden die in de behoefte voorzien.

Cardif believes that every consumer must be able to insure themselves and that their needs, namely information and support, must form the focus in this regard. That means that Cardif deems it its responsibility to offer comprehensible products that serve those needs.

Ook van business partners verwacht Cardif dat zij in hun ondernemerschap de specifieke behoefte van elke (potentiële) verzekerde centraal stellen. Business partners houden feeling met de markt en delen signalen met Cardif als aanbieder, die vervolgens de vertaalslag maakt naar een actueel aanbod van producten en diensten.

Cardif also expects its business partners to place the specific needs of every (potential) policyholder at the centre of its business activities. Business partners keep a finger on the pulse of the market and share information with Cardif as a provider, which subsequently applies this to produce an up-to-date range of products and services.

Cardif ziet het feit dat de verzekeringsmaatschappij onderdeel uitmaakt van een grote, solide internationale financiële groep als een belangrijke asset voor de organisatie en draagt dat waar mogelijk altijd actief uit.

Cardif understands the fact that the insurance company forms part of a large, sound international financial group and that it constitutes an important asset for the organisation. In addition, it actively conveys that message at all times where possible.

Strategie

Strategy

Markt- en consumentenontwikkelingen, in combinatie met de ambities van Cardif Nederland en de aandeelhouders, hebben in 2010 een noodzaak tot een strategische heroriëntatie met zich meegebracht. Gedurende de eerste helft van het jaar is stilgestaan bij de bestaande en potentiële positie van Cardif binnen de aan haar kernactiviteiten gerelateerde deelmarkten. Op basis hiervan is een groeistrategie geformuleerd voor de komende jaren, die is geconcretiseerd in een strategieprogramma. Een basis voor duurzame groei is hierbij het centrale uitgangspunt.

Market and consumer-related developments combined with the ambitions of Cardif Nederland and the shareholders required a strategic reorientation to take place in 2010. During the first half of the year, the focus lay on the existing and potential position of Cardif within the sub-markets related to its core activities. Based upon that, a growth strategy has been formulated for the coming years, which has received specific implementation in the form of a strategy programme. The central basic principle of this is to create a basis for sustainable growth.


Visie

De Organisatie

The Organisation

Organisatiestructuur

Organisation structure

Vereenvoudiging van de managementstructuur Ter vergroting van de slagkracht en verbetering van de aansluiting met de internationale governance, is het aantal operationele divisies in 2010 teruggebracht van vijf naar vier, door het samenbrengen van Administraties en ICT in de divisie ETO (Efficiency, Technology & Operations). Naast de vier divisies, Financiën, ETO, Marketing en Commercie is het aantal gespecialiseerde stafafdelingen die de Raad van Bestuur op dagelijkse basis adviseert, teruggebracht naar drie: Personeel & Organisatie, Corporate Communicatie & CSR en Juridisch.

Simplification of the management structure In order to increase the impact of the management structure and bring it more closely into line with international governance, the number of operational divisions has been reduced from five to four in 2010 by merging the Administration and ICT departments into an ETO division (Efficiency, Technology & Operations). In addition to the four divisions, Finance, ETO, Marketing and Commerce, the number of specialised staff departments that advise the Board of Directors on a daily basis has been reduced to three, namely Personnel & Organisation, Corporate Communication & CSR and Legal.

Toevoeging van specialisaties in lijn met ambitieniveau De strategische ambities van de organisatie brachten een additionele behoefte aan gespecialiseerde afdelingen met zich mee. Een sterk klantgeoriënteerde structuur en operationele slagkracht waren hierbij de voornaamste doelstellingen.

The addition of specialisations in line with the level of ambition The organisation’s strategic ambitions resulted in an additional need for specialised departments and a strong client-oriented structure and operational strength formed the primary objectives in this regard.

Alle klantcontacten zijn in het afgelopen jaar samengebracht binnen een daarvoor ingericht en opgeleid Customer Contact Center, dat deel uitmaakt van de divisie Commercie. Een andere toevoeging in het kader van klantoriëntatie was de afdeling Customer Insight, als onderdeel van de totale Marketingdivisie. Deze gespecialiseerde afdeling heeft als doelstelling om de klant (consument en business partner) op doelgerichte en efficiënte wijze te betrekken in alle relevante verzekeringsprocessen.

All client contacts have been brought together over the past year into a dedicated and trained Customer Contact Centre that forms part of the Commerce division. A further addition in the context of customer focus was the Customer Insight department, which formed part of the overall Marketing division. The aim of this specialised department is to involve the client (consumer and business partner) in all relevant processes of insurance in a purposeful and efficient manner.

In het kader van verdere professionalisering van de bedrijfsvoering is in 2010 tevens gekozen voor de oprichting van een Project Office binnen de divisie ETO (Efficiency, Technology & Operations). Dit projectenbureau heeft als opdracht om het totaal aan projecten binnen de organisatie inzichtelijk te maken, de voortgang te bewaken en gerelateerde stuurinformatie te verschaffen aan de directie.

Within the context of ongoing professionalisation of business operations, the decision was made in 2010 to set up a Project Office within the ETO division (Efficiency, Technology & Operations). This project office is responsible for providing an insight into the total number of projects within the organisation, monitoring progress and supplying related control information to the Board.

Bestuurlijke portefeuilleverdeling In aansluiting op de behoeften vanuit de organisatie en de toenemende focus op risico’s op operationeel en bestuursniveau heeft Cardif in de loop van 2010 een nieuwe Chief Finance & Risk Officer aangetrokken.

Redistribution of management portfolios In response to the needs of the organisation and the increasing focus on risks at operational and managerial levels, Cardif has recruited a new Chief Finance & Risk Officer over the course of 2010, who

started at Cardif on 1 December 2010 and was appointed as a Director with effect from 1 January 2011. In addition, in view of the ambitions of the organisation and the shareholders, a vacancy arose for a Chief Strategy Officer within the Board of Directors. Following approval by DNB on 27 May 2010, Guillaume Rochigneux was officially appointed as Chief Strategy Officer on 1 January 2011. As a result of these appointments, Board portfolios have been redistributed.

Project Office divisie ETO

Resultaatgerichter door inzicht en overzicht


Deze is op 1 december 2010 gestart bij Cardif en is met ingang van 1 januari 2011 tot bestuurder benoemd. Daarnaast is er gezien de ambities van de organisatie en de aandeelhouders ruimte ontstaan binnen de Raad van Bestuur voor een Chief Strategy Officer. Na goedkeuring door DNB op 27 mei 2010, is Guillaume Rochigneux per 1 januari 2011 officieel benoemd als Chief Strategy Officer. Als gevolg van deze benoemingen heeft een herverdeling van directieportefeuilles plaatsgevonden.

WFT-Modules

Slimmer en betrokken door kennis delen van nu In lijn met marktontwikkelingen en ambities kende Cardif in 2010 een groei van het personeelsbestand van 109 FTE op 1 januari 2010 naar 126 op 31 december 2010. In line with market developments and objectives, Cardif saw an increase in its workforce in 2010 from 109 FTE on 1 January 2010 to 126 FTE on 31 December 2010.

Personnel

Personele bezetting Het team bestond op 31 december 2010 uit 73 vrouwelijke en 66 mannelijke medewerkers. Het verzuimcijfer bleef laag (1,8%) en droeg dan ook bij aan de productiviteit.

Staffing The team consisted of 73 female and 66 male employees on 31 December 2010. The absence rate remained low (1.8%) and therefore contributed towards productivity.

Training en opleiding De toezichthouder en wetgever verwachten steeds meer kennis rondom sociale wetgeving en verzekeringen. Daarom is Cardif eind 2009 gestart met het aanbieden van de WFT-modules (basis, schade, leven) voor de gehele organisatie. In de loop van 2010 heeft zo’n 30 procent van de medewerkers (delen van) dit programma gevolgd en de diploma’s zijn voor enkelen van hen in het afgelopen jaar al aangevuld met PE-punten. Daarnaast zijn er onder meer opleidingen gestart op het gebied van projectmanagement.

Training and education The regulatory bodies and legislators expect that companies are demanding a more detailed knowledge of social legislation and insurance, and for that reason Cardif began offering WFT-modules (courses for employees in the financial sector under the Financial Supervision Act) (in basic insurance, non-life insurance and life insurance) for the entire organisation. Over the course of 2010, around 30 percent of employees have taken (parts of) this programme and a number of individuals have topped up their certificates in the form of CPD (Continuous Professional Development ) points during the past year. Amongst other initiatives, courses have also begun in the area of project management.

Professionalisering van de HRM-functie Gezien de strategische groeiambitie is het belang van waardevol human capital voor Cardif in de komende jaren zeer groot. Het accent ligt daarbij op het ontwikkelen van talent binnen de organisatie en het geven van duidelijk afgesproken verantwoordelijkheden op medewerkerniveau. Cardif heeft de wens om de HRM-functie een sterkere rol te geven in het ondersteunen van deze ontwikkeling, door een transparant beleid. De samenstelling van een helder, toegankelijk beoordelings- en beloningsbeleid vormde hierin de eerste fase, wat in 2010 geïnitieerd is. Medewerkersonderzoek Om medewerkers optimaal te betrekken bij het inzetten van de strategische groeiambitie koos Cardif medio 2010 voor een uitvoerig medewerkersonderzoek. Alle medewerkers werden uitgenodigd hun ervaringen te delen op diverse onderwerpen, door middel van een kwantitatieve enquête. Vervolgens vond er een uitdieping plaats in een serie workshops met afgevaardigden van verschillende afdelingen. Verbeterpunten zijn al in 2010 geagendeerd en de eerste realisatietrajecten zijn ingezet.

Professionalisation of the HRM role In view of the ambition for strategic growth, valuable human capital will be of great importance over the next few years as far as Cardif is concerned. In this regard, the focus lies on developing talent within the organisation and assigning clearly agreed responsibilities to individual employees. Cardif wishes to assign the HRM role a more important part to play in supporting this development by means of a transparent policy. The development of a clear, accessible assessment and remuneration policy formed the first stage of this, and was initiated in 2010. Staff survey In order to involve staff as much as possible in implementing the ambition for strategic growth, Cardif decided to conduct an extensive staff survey in mid2010. All staff were invited to share their experiences in a variety of topics by means of a quantitative questionnaire. Topics were subsequently explored in greater depth in a series of workshops held with representatives from different departments. Areas for improvement have already been placed on the agenda in 2010 and the first processes towards achieving these improvements have begun.


Personeel

Maatschappelijk verantwoord ondernemen (MVO) Een actief MVO-beleid is één van de belangrijkste strategische aandachtspunten binnen de groep BNP Paribas. De reikwijdte van de nationale en internationale duurzaamheidsprogramma’s is in het afgelopen jaar verder verruimd. Communicatie rondom de initiatieven wordt steeds actiever, onder meer door middel van de speciaal ontwikkelde wereldwijde weblog www.forachangingworld.com.

Corporate Social Responsibility (CSR) An active CSR policy forms on of the most important strategic areas for attention within the BNP Paribas Group. Over the past year, the scope of the national and international sustainability programmes has once again been extended over the past year and increasingly active efforts are being made to communicate these initiatives, such as via the specially-developed internet blog www.forachangingworld.com.

Binnen Cardif Nederland is in 2010 het MVObeleid voornamelijk gericht op betrokkenheid bij de samenleving, één van de pijlers van BNP Paribas’ MVO-filosofie. Financiële educatie vormde het speerpunt van Cardifs activiteiten. Een opvallende activiteit was Cardifs ‘Financiële Educatie 2.0’-initiatief, waarbij social media werden ingezet om de Nederlander bewuster te maken van de betekenis van financiële begrippen. Het initiatief koppelde de organisatie zichtbaar aan het thema en werd bovendien internationaal erkend als communicatieproject met een European Excellence Award van het pan-Europese magazine Communication Director.

Within Cardif Nederland, the CSR policy in 2010 was primarily focused on involvement in society, one of the pillars of BNP Paribas’ CSR philosophy. Financial education formed the spearhead of Cardif’s activities and one stand-out activity was Cardif’s ‘Financial Education 2.0’ initiative, in which social media were used to increase awareness amongst the Dutch population of the meanings of financial terms. The initiative created a clear association between the organisation and this topic and in addition it was recognised internationally as a communication project, having been honoured with a European Excellence Award from the pan-European magazine Communication Director.


Buiten het streven om de algemene bewustwording ten aanzien van financiële kennis te vergoten, omarmde Cardif als één van de eerste partijen in Nederland het LEF-programma (zie kader).

Apart from its endeavours to increase public awareness with regard to financial knowledge, Cardif was one of the first parties in the Netherlands to welcome the LEF programme (see box).

Leven en Financiën (LEF)

Bijdragen aan financiële bewustwording van jongeren

LEF is een jeugdeducatieproject dat geïnitieerd is door de financiële branche om de ervaringen van praktijkmensen over te dragen aan jongeren. Op vrijwillige basis geven adviseurs les op scholen met het motto: ‘Werken aan een meer financieel betrokken consument in de toekomst begint bij de jongere van vandaag’.

LEF is a youth education project initiated by the financial sector that aims to pass on the experiences of those who have practical experience to young people. Consultants deliver lessons in schools on a voluntary basis under the banner: ‘Working towards involving consumers in financial matters in the future begins with today’s youth.’

LEF staat voor Leven En Financiën en heeft als doel om het financieel bewustzijn van jongeren tussen 16 en 18 jaar te vergroten. LEF wil jongeren helpen begrijpen wat geld kan betekenen en meer inzicht geven in geld en persoonlijk gedrag. Zaken als inzicht in het eigen gedrag ten aanzien van geld, rood staan, BKR-toetsing, lenen bij vrienden of ouders en kopen op afbetaling passeren de revue tijdens de lessen die op ROC’s worden gegeven. In het schooljaar 20092010 is LEF gestart als pilot op vijf scholen. Cardif was één van de eerste sponsors van het initiatief. Het is de bedoeling om dit project binnen een aantal jaren landelijk uit te rollen.

The name LEF stands for Leven En Financiën [Life and Finance] and the project aims to increase awareness of financial matters amongst young people between the ages of 16 and 18. The intention behind LEF is to help young people understand what money can mean and to provide a greater understanding of money and people’s actions. Topics such as understanding one’s own actions with regard to money, being overdrawn, credit checks, borrowing from friends or parents and hire purchase are covered during the lessons that are delivered at ROCs (Regional Training Centres). The LEF initiative began as a pilot project in five schools during the 2009-2010 school year and Cardif was among the first to sponsor the initiative. The intention is for this project to be rolled-out nationally within several years.

Uniek is dat de lessen door financieel adviseurs uit de praktijk worden ingevuld. De thema’s worden ingepast in de bestaande onderwijsmodule ‘De Kritische Consument’, die op ROC’s een vast onderdeel uitmaakt van het lespakket. De initiatiefnemers van LEF denken dat LEF zal bijdragen aan een beter begrip van jongeren van financiële zaken en leidt tot een beter begrip en meer ‘feeling’ van de adviseur met jongeren. Cardif levert een financiële bijdrage om het programma mogelijk te maken en de kwaliteit voortdurend verder te verbeteren. Andere sponsors van LEF zijn onder meer de Hypotheker, Avero Achmea, Delta Lloyd Foundation, Generali, Florius, Nationale Waarborg, Obvion, Welten en Woontrust.

What makes this project unique is that the lessons are delivered by financial advisors who work in the industry. The topics are incorporated into the existing education module ‘De Kritische Consument’ [The Critical Consumer] which forms a core component of the curriculum at Regional Training Centres. The initiators of the LEF project believe that it will contribute towards improving young people’s understanding of financial matters and will result in better understanding of and greater empathy for young people on the part of the advisors. Cardif is making a financial contribution in order to make the programme possible and to continue improving quality. Other sponsors of the LEF project include De Hypotheker, Avero Achmea, Delta Lloyd Foundation, Generali, Florius, Nationale Waarborg, Obvion, Welten and Woontrust.

The environment

Economische situatie

The economic situation

Licht herstel Na een groot aantal maanden van recessie begon in 2010 een voorzichtig economisch herstel. In de loop van het jaar stegen de consumptieve bestedingen licht. Het ging dan vooral om duurzame consumptiegoederen, zoals auto’s, maar ook kleding. Aan vakanties en in de horeca werd minder uitgegeven. Voor 2011 wordt verder herstel van het conjunctuurbeeld verwacht.

Slight recovery After many months spent in recession, the economy gradually began to recover in 2010. Over the course of the year, consumer spending grew slightly, primarily on durable consumer goods such as cars but also clothing. Less was spent on holidays and in hotels, restaurants and on catering, however. Further recovery of the economic climate is expected in 2011.

Trendbreuk werkloosheid De ontwikkelingen op het gebied van werkloosheid kenden in 2010 een kentering; na enkele jaren van stijgende werkloosheid, stabiliseerde de situatie in 2010 en ontstond er in de tweede helft van het jaar een lichte toename van het aantal banen en groeide de uitzenduren. Ondertussen zet de vergrijzing in, waardoor er in toenemende mate druk op de beroepsbevolking komt te liggen. De relatief hoge werkloosheid in de afgelopen jaren uitte zich voor Cardif in 2010 in een hoger aantal claims.

Breaking the unemployment trend The year 2010 witnessed a change in developments in the area of unemployment. After several years of increasing unemployment, the situation stabilised in 2010 and the number of jobs began to increase slightly in the second half of the year, whilst hours worked by agency staff grew. In the meantime, the population is beginning to age and as a result increasing pressure will be placed on the working population. The relatively high level of unemployment over the past few years manifested itself in a higher number of claims to Cardif in 2010.

Markt

Market

Herstel hypotheekmarkt blijft uit Het verwachte herstel van de hypotheekmarkt bleef uit in 2010 onder invloed van verschillende beperkende maatregelen ten aanzien van krediet verlening. Pas in december stabiliseerde de vraag naar hypothecaire leningen, na enkele jaren van dalingen. Volgens DNB is er sprake van herstel van consumentenvertrouwen en iets betere vooruitzichten voor de woningmarkt. Hypotheektarieven zijn echter gestegen, waardoor er nog altijd geen sprake is van een “oversluitmarkt”.

Recovery in the mortgage market has yet to occur The predicted recovery of the mortgage market failed to materialise in 2010 due to the effects of various restrictive measures with regard to lending. It was not until December that demand for mortgages stabilised following several years of falls. According to DNB, consumer confidence is being restored and prospects for the housing market are somewhat more positive. Mortgage rates have risen, however, as a result of which there is still no market demand for switching from one mortgage provider to another.

Tegelijkertijd toonde de ontwikkelingen de relevantie van Cardifs verzekeringsproducten aan; het aantal mensen met een NHG-hypotheek dat in 2010 hun huis gedwongen met verlies moest verkopen liep op tot 1341, een stijging van maar liefst 76 procent ten opzichte van 2009 (Bron: Stichting Waarborgfonds Eigen Woningen).

At the same time, the developments demonstrated the relevance of Cardif’s insurance products. The number of people with an NHG (National Mortgage Guarantee Scheme) mortgage who were forced to sell their house at a loss increased to 1341, an increase of as much as 76 percent compared with 2009 (Source: Home Ownership Guarantee Fund [Stichting Waarborgfonds Eigen Woningen]).


De omgeving

In 2010 werd het lenen voor consumptieve doeleinden minder populair; het aantal overeenkomsten daalde en het totaal uitstaand saldo nam eveneens af. In 2010 loans for consumer purchases were less popular: the number of credit agreements fell and the total outstanding balance likewise decreased.

Hypotheek Opvang Polis (HOP)

Een voorbeeld van de nieuwe weg

Concurrentie Onder invloed van de verscherpte wetgeving, zag Cardif het concurrentielandschap in 2010 verschralen. Concurrenten met een breed productenportfolio legden minder nadruk op hun activiteiten in het segment van betalingsbescherming of namen producten uit het assortiment. Cardifs zichtbare inspanningen gericht

Cardif verlegt koers woonlastenverzekeringen Ruimere dekking - Langere uitkeringsduur Lagere premie In 2010 heeft Cardif haar woonlastenverzekering grondig op de schop genomen. In plaats van de reguliere productupdate heeft Cardif ervoor gekozen de Hypotheek Opvang Polis (HOP) opnieuw op te bouwen vanaf het te verzekeren risico. Uitgangspunt is de behoefte van de klant. Het resultaat is een woonlastenverzekering met een ruimere dekking tegen een lagere premie, die vanaf vandaag beschikbaar is. In de afgelopen vijftien jaar heeft Cardif een schat aan ervaring opgedaan met woonlasten bescherming als verzekeringsproduct bij een hypotheek. In het verleden zijn af en toe onduidelijkheden ontstaan over de precieze dekking, wat de reputatie van de productcategorie niet ten goede kwam. Om ervoor te zorgen dat de HOP anno 2010 precies aansluit op de verwachting van de verzekerde, heeft Cardif het product radicaal herzien, op basis van de ervaringen tot nu toe.

From borrowing to saving Over the course of the year, funds in savings accounts increased gradually. People in the Netherlands indicated that they save primarily in order to have a financial buffer for when times are hard, whilst the purchase of luxury goods is given lower priority (source: survey by Friesland Bank). Taking out payment protection insurance in order to provide cover in the event of unexpected loss of income may therefore be of relevance for the purpose of protecting these savings. Competition In 2010 Cardif saw the competitors’ market shrink due to the effects of tightened legislation. Competitors with a broad product portfolio reduced the emphasis on their activities in the payment protection sector or removed products from their range. Cardif’s

Cardif changes course of mortgage payment protection insurance Greater coverage – Longer payment period – Lower premium In 2010, Cardif conducted a thorough review of its mortgage payment protection insurance. In place of the usual product update, Cardif decided to re-compile the Hypotheek Opvang Polis (HOP) [Mortgage Protection Policy] on the basis of the risk to be insured. The needs of the client form the starting point for this product and the result is a mortgage payment protection insurance policy with greater coverage for a lower premium that is available from today. Over the past fifteen years, Cardif has gained a wealth of experience in mortgage payment protection insurance as an insurance product in conjunction with a mortgage. In the past, there has been a lack of clarity from time to time regarding the exact coverage, which caused this product category to acquire an unfavourable reputation. In order to ensure that the HOP in 2010 corresponds exactly with the expectations of the policyholder, Cardif has radically revised the product on the basis of its experiences to date.


Van lenen naar sparen In de loop van het jaar stegen tegelijkertijd de spaartegoeden. Nederlanders geven daarbij aan vooral te sparen om een financiële buffer te hebben voor slechtere tijden. Vakantie en de aanschaf van luxe goederen komen op een lagere plaats (bron: onderzoek Friesland Bank). Het opvangen van onverwacht inkomensverlies door middel van betalingsbescherming kan dan ook relevant zijn ter bescherming van dit spaartegoed.

op een wezenlijke verandering in productkwaliteit en de advies- en beloningspraktijk, versterken de positionering en het huidige en toekomstige leiderschap verder. De introductie van de nieuwe Hypotheek Opvang Polis, die door radicale wijzigingen een ‘nieuwe generatie woonlastenbeschermer’ genoemd kan worden, markeerde opnieuw een cruciaal moment in Cardifs positionering als marktleider. Wetgeving Toepassing van BGFO2 Het medio 2009 aangekondigde Besluit Gedrags toezicht Financiële Ondernemingen (BGFO) kreeg op 1 januari 2010 gestalte. Beloning die het intermediair ontvangt voor het adviseren van een betalings beschermer of uitvaartverzekering moest vanaf dat moment volledig transparant gemaakt worden voor de consument. De bemiddelaar heeft hierbij de keuze uit het provisiemodel met inachtneming van transparantieregels en de inducementnorm, of een verdienmodel op basis van Customer Agreed Remuneration (CAR), waarbij de consument zijn diensten rechtstreeks beloont. Deze wetswijziging markeert het begin van een volledig nieuw tijdperk in het segment van verzekeringen die gekoppeld zijn aan het hypotheekof kredietmoment. Concreet betekent dit voor Cardif een hernieuwde relatie met de distributie; de hoogte van de beloning en de argumentatie daarvan is de verantwoordelijkheid van de bemiddelaar van het product. Provisieverbod Onder druk van marktontwikkelingen vond al in de loop van 2010 een evaluatie plaats van het beloningsstelsel, waarna het Ministerie van Financiën verdergaande hervormingen aankondigde. Vanaf 2013 zullen alle producten die nu onderhevig zijn aan BGFO-richtlijnen te maken krijgen met een totaal provisieverbod. Het is dan niet meer toegestaan om vanuit een aanbieder een vergoeding te betalen aan een intermediair voor het afsluiten van een product.

demonstrable efforts that were aimed at achieving actual change in product quality and in the provision of advice and the remuneration in return for that service provided a further boost to the positioning and the current and future management. The introduction of the new Hypotheek Opvang Polis [Mortgage Protection Policy], which can be regarded as a ‘new generation of mortgage payment protection’, once again marked a crucial moment for Cardif, establishing its position as a market leader. Legislation Application of the Market Conduct Supervision (Financial Institutions) Decree [BGFO2] The Market Conduct Supervision (Financial Institutions) Decree [Besluit Gedragstoezicht Financiële Ondernemingen (BGFO)] that was announced in mid-2009 entered into force on 1 January 2010. From that point onwards, the remuneration that the broker receives for recommending a payment protection policy or funeral insurance must be made fully transparent for consumers. In doing so, the broker may choose the commission model whilst observing transparency regulations and the standards governing incentives, or a revenue model based on Customer Agreed Remuneration (CAR), in which case the consumer pays for his or her services straight away. This legislative amendment marks the beginning of a completely new era in the sector of insurance policies that are purchased at the point when a mortgage or loan is taken out. In concrete terms, as far as Cardif is concerned, this creates a renewed relationship with distribution, where the amount of remuneration and the arguments for this are the responsibility of the broker of the product. Commission ban Under pressure from market conditions, an evaluation of the remuneration system already took place during the course of 2010, after which the Ministry of Finance announced far-reaching reforms. From 2012, all products that are currently subject to guidelines pursuant to the Market Conduct Supervision (Financial Institutions) Decree will be affected by a full commission ban. A provider will therefore no longer be permitted to pay a fee to a broker when a consumer takes out a product.

“Het is natuurlijk volledig terecht dat de gevolgen van nieuwe wetgeving op korte én lange termijn voor de consument zorgvuldig overwogen worden. Onze overtuiging is echter dat het voor de toekomstige relatie tussen de verzekeringssector en de consument van cruciaal belang is om het heft in eigen hand te nemen. Open normen zijn niet altijd eenvoudig in hun toepassing en vergen een zeker aanpassingsvermogen, maar we moeten gezamenlijk het einddoel in zicht houden en daarop nu al zoveel mogelijk anticiperen. Iedere ingreep die nodig is om een open norm alsnog te dichten heeft immers afbreukrisico voor de reputatie van onze branche.” “Ik ervaar een grote veranderingsbereidheid in onze branche en ik denk dat 2011 het jaar is om door te pakken. Als we gezamenlijk streven naar een toepassing van regels die gericht is op de langere termijn, dan tonen we als branche ons vermogen om constructief invulling te geven aan noodzakelijke verandering. Wachten op gesloten normen is geen optie als het vertrouwen in de sector onze lange termijndoelstelling is.”

Implement change ourselves Cees de Jong urged the sector not to wait for the ever-increasing legislation, but to opt for radical fulfilment of an open standard. His message was based on the positive experiences gained by Cardif in 2010 in applying the transparency legislation arising from the Market Conduct Supervision (Financial Institutions) Decree 2 in a pure and radical way. De Jong explains: “In view of the fact that in the past the rules began to be abused in an unregulated market, we have expressly welcomed additional legislation and regulations with regard to payment protection. At the beginning of 2010, we therefore opted to fully set up our organisation and processes in line with the new situation and since then we have gained one year’s practical experience with this way of working. Our most important observation is that the system is feasible and that the situation is improving as far as consumers are concerned. In practice, the transparency generally translates into a more attractively-priced and clearer range of products.” “It is, of course, only right that the consequences of new legislation for consumers in both the short and long term are carefully considered. It is our belief, however, that it is of crucial importance for the future relationship between the insurance sector and consumers that we take control ourselves. Open standards are not always easy to apply and require a certain degree of adaptability, but we must all keep the ultimate objective in sight and for now anticipate the developments in that regard as much as possible. Every intervention that is necessary to ‘close’ gaps in an open standard carries the risk of damaging the reputation of our sector, after all.” “I perceive considerable willingness to change in our sector and I believe that 2011 is the year to get on and do it. If we all endeavour to apply the regulations in a way that focuses on the longer term, then we as a sector will demonstrate our ability to implement the necessary change in a constructive way. Waiting for closed standards to be introduced is not an option if trust in the sector is our long-term objective.”


Zelf invulling geven aan verandering Cees de Jong riep de branche op om niet te wachten op steeds meer wetgeving, maar te kiezen voor radicale invulling van open norm. Zijn boodschap was gebaseerd op de positieve ervaringen die Cardif in 2010 heeft opgedaan met het zuiver en radicaal toepassen van transparantiewetgeving die voortkomt uit BGFO2. De Jong: “Gezien het feit dat er in het verleden misstanden zijn ontstaan in een ongereguleerde markt hebben wij aanvullende wet- en regelgeving ten aanzien van betalingsbescherming expliciet toegejuicht. Wij kozen er begin 2010 dan ook voor om onze organisatie en processen volledig in te richten op de nieuwe situatie en we hebben inmiddels een jaar praktijkervaring opgedaan met deze manier van werken. Onze belangrijkste constatering is dat het regime werkbaar is en dat de situatie voor de consument verbetert; de transparantie vertaalt zich in de praktijk over het algemeen in een aantrekkelijker geprijsd en helder aanbod.”

Besluit Gedragstoezicht Financiën Ondernemingen (BGFO2)

Transparant over diensten en verdiensten

Discussion and dialogue This revolution created a great deal of unease and division in the market in 2010, both on the side of suppliers and amongst distribution parties and consumer organisations. However, Cardif is enthusiastic about the reforms that are underway in order to allow the distribution of financial products to be better attuned to the current climate and to create clear relationships within the chain. But whilst the enquiries of the Ministry were ongoing and in the run-up to the General Consultation, Cardif brought a number of points to the attention of policymakers that it deems important. First of all, Cardif foresees problems in an ambiguous management of insurance products if non-life insurance continues to fall outside the scope of these reforms. In addition, Cardif advocated that attention be paid to the funding issue, the potential problems that arise when consumers are faced with advisory costs and do not possess the means to pay them immediately. The dialogue with other parties including the Netherlands Authority for the Financial Markets with regard to the application of the new legislation and regulations is still ongoing.

Voortrekkersrol voortgezet In navolging van de voortrekkersrol die Cardif in de loop van 2009 al innam in de voorbereiding van beloningstransparantie, zette de organisatie deze verder kracht bij in 2010. De themasite www.opwegnaarbgfo2.nl werd omgezet naar www.bgfo2indepraktijk.nl en bracht praktische ondersteuning bij de invoering van werkwijzen. De nadruk lag daarbij op de toepassing van het wettelijke adviestraject ten aanzien van betalingsbeschermers, in lijn met de definitie die de AFM in BGFO2 formuleerde voor deze verzekeringscategorie.

Continuing the role of pioneer Following on from the pioneering role that Cardif already took on over the course of 2009 in preparation for providing transparency in remuneration, the organisation pursued this approach with greater vigour in 2010. The dedicated website www.opwegnaarbgfo2. nl was changed to www.bgfo2indepraktijk.nl and provided practical support in the introduction of methods of working. The emphasis in this area lay on the application of the statutory advisory process with regard to payment protection policies, in line with the definition formulated for this category of insurance by the Netherlands Authority for the Financial Markets (AFM) in the Market Conduct Supervision (Financial Institutions) Decree.


Discussie en dialoog Deze revolutie zorgde in 2010 voor grote onrust en verdeeldheid in de markt, zowel aan leverancierszijde als onder distributiepartijen en consumentenorganisaties. Cardif is enthousiast over de hervorming die is ingezet om de distributie van financiële producten beter te laten aansluiten op de tijdsgeest en voor zuivere verhoudingen in de keten te zorgen. Gedurende de verkenning door het Ministerie en in aanloop naar een Algemeen Overleg heeft Cardif echter een aantal in haar ogen belangrijke punten onder de aandacht van beleidsmakers gebracht. Op de eerste plaats ziet Cardif problemen in een nieteenduidige behandeling van verzekeringsproducten als schadeverzekeringen buiten beschouwing blijven. Daarnaast vroeg Cardif aandacht voor het financieringsvraagstuk; de mogelijke problemen die ontstaan wanneer consumenten geconfronteerd worden met advieskosten en niet over de middelen beschikken om die direct te voldoen. De dialoog met onder andere de AFM over de toepassing van de nieuwe wet- en regelgeving in de praktijk, is nog gaande.

Handleiding betalingsbeschermer

Goed advies wordt passend beloond Cardif introduceerde in januari 2010 de handleiding ‘de Betalingsbeschermer passend geadviseerd’. In January 2010, Cardif introduced the guide entitled ‘De Betalingsbeschermer passend geadviseerd’ [Appropriate advice regarding payment protection insurance].

Guide entitled ‘De betalingsbeschermer passend geadviseerd’ The guide provides a practical description of the role of payment protection insurance within financial advice, in line with the statutory requirements.

Dat de risico’s van overlijden, arbeidsongeschiktheid en werkloosheid een vaste plaats hebben binnen ieder hypotheek- en kredietadvies is bekend. Ook de AFM erkent het belang van een zorgvuldige inventarisatie en afdekking van deze risico’s. Nu betalingbescherming per 1 januari 2010 onder het BGFO is komen te vallen, rijst bovendien de vraag; wat is een passende beloning voor het adviseren van betalingsbescherming?

It is accepted that the risks of death, incapacity for work and unemployment all form a fixed part in every case in which advice is provided with regard to mortgages and loans. The AFM also recognises the importance of carefully listing and covering these risks. Now that payment protection has become subject to the Market Conduct Supervision (Financial Institutions) Decree as of 1 January 2010, the question arises as to what is appropriate remuneration for advising consumers with regard to payment protection.

Om die vraag te beantwoorden is een gedetailleerde omschrijving nodig van het adviestraject en alles wat komt kijken bij een zorgvuldig, compleet en passend advies van dit product. In haar streven om de markt en het intermediair in het bijzonder hierbij zo goed mogelijk te begeleiden, is Cardif een samenwerking aangegaan met Bureau D&O voor de totstandkoming van de handleiding ‘De betalingsbeschermer passend geadviseerd’. De handleiding beschrijft een stappenplan dat zorgt voor een complete behandeling van de risico’s, waarbij alle aspecten van de zorgplicht op de juiste manier zijn afgedekt. De handleiding geeft tenslotte een beeld van een passende tijdsbesteding voor dit totale adviestraject en gaat in op gangbare uurtarieven in de markt.

In order to answer that question, a detailed description is required of the advisory process and all that is involved in providing responsible, complete and appropriate advice regarding this product. In its aims to supervise the market and brokers in particular as effectively as possible, Cardif has entered into a collaboration with Bureau D&O to produce the guide ‘De betalingsbeschermer passend geadviseerd’. The guide describes a step-by-step plan that ensures that the risks are fully considered, in which all aspects of a broker’s duty to customer care are covered in the proper way. The guide finally provides an impression of an appropriate amount of time to spend on this entire advisory process and examines the common hourly rates in the market.


Handleiding ‘de Betalingsbeschermer passend geadviseerd’ De handleiding beschrijft op praktische wijze wat de plaats is van betalingsbescherming binnen het financiële advies, in lijn met de wettelijke vereisten.

Distributie

Distribution

In het kader van het strategisch plan voor de komende jaren, formuleerde Cardif in 2010 een visie op de distributie. De positie van de (potentiële) verzekerde vormt daarin het uitgangspunt. Cardif vindt dat elke consument zich moet kunnen verzekeren en dat zijn behoefte daarbij centraal moet staan: inhoudelijk en in begeleiding. Dat betekent dat Cardif het als haar verantwoordelijkheid beschouwt om begrijpelijke producten te bieden die in de behoefte voorzien. Het betekent ook dat Cardif van (potentiële) verzekerden verwacht dat zij zelf het verkooppunt kiezen, en daarmee het kanaal bepalen, dat voor hen de juiste mate van begeleiding biedt om een afgewogen keuze te kunnen maken.

Cardif formulated a vision of distribution in 2010 within the scope of the strategic plan for the coming years in which the position of the (potential) policyholder forms the starting point. Cardif believes that every consumer must be able to insure themselves and that their needs, namely information and support, must form the focus in this regard. That means that Cardif deems it its responsibility to offer comprehensible products that serve those needs. It also means that Cardif expects (potential) policyholders to choose the point of sale themselves and in doing so to determine the channel that offers them the appropriate degree of guidance to enable them to make a considered choice.

In het indirecte kanaal heeft de business partner de regie in de relatie met de (potentiële) verzekerde. Ook van de partner verwacht Cardif dat hij in zijn ondernemerschap de specifieke behoefte van elke (potentiële) verzekerde centraal stelt. Cardif blijft daarbij op afstand en heeft het vertrouwen dat de partner zijn werk goed doet. Daar heeft Cardif hem op geselecteerd en daar maakt de maatschappij heldere afspraken over. Daarnaast verwacht Cardif van de business partner dat hij feeling houdt met de markt en signalen deelt. Cardif vindt het vervolgens haar verantwoordelijkheid om dit te vertalen naar een actueel aanbod van producten en diensten voor het indirecte kanaal. Op basis van deze uitgangspunten initieerde de organisatie in 2010 enkele nieuwe programma’s op het gebied van distributie en segmentatie.

In the indirect channel, the business partner has control in the relationship with the (potential) policyholder. Cardif also expects the business partner to place the specific needs of every (potential) policyholder at the centre of its business activities. Cardif keeps its distance in this regard and trusts that the business partner will act appropriately. That ability formed the basis for Cardif’s decision to select it and the company makes clear agreements in this matter. In addition, Cardif expects its business partner to monitor the market and to share information. Cardif deems it its responsibility to subsequently apply this in order to provide an up-to-date range of products and services for the indirect channel. On the basis of these basic principles, the organisation initiated a number of new programmes in 2010 in the area of distribution and segmentation.

De huidige risicobeheersstructuur wordt vormgegeven volgens onderstaande weergave.

The present risk management structure is designed as shown below.

Level-2 controls

b2) Controls carried out by operational risk management, compliance, it security, actuary and management accounting.

Level-3 controls

c1) Controls carried out by General Inspection.

Functions

c1) Controles uitgevoerd door General Inspection van BNP Paribas.

Functies Level-3 controls

Level-1 controls

a1) Controls carried out by operational staff on their operations and transactions. a2) Controls carried out by other operational staff (mid office, back office, crosschecks etc.). a3) Controls carried out by line managers.

Risk management valt direct onder de verantwoor delijkheid van de Raad van Bestuur. Het risicobeheer bij Cardif is verankerd bij de afdelingen en in de processen binnen de organisatie. De afdelingen Operational Risk Management, Compliance, IT security, Actuariaat en Management Accounting zijn verantwoordelijk voor de identificatie, het meten en de monitoring van de risico’s.

Risk management falls under the direct responsibility of the Board of Directors. Risk management at Cardif is embedded in the activities of the departments and in the processes within the organisation. The Operational Risk Management, Compliance, IT Security, Actuaries and Management Accounting departments are responsible for the identification, assessment and monitoring of risks.

Verder adviseren deze afdelingen actief over de beheersing van de risico’s. Belangrijk onderdeel van de governance-structuur is het Operational Risk Committee en binnen BNP Paribas Assurance, waarvan Cardif onderdeel uitmaakt, het Asset Management Committee.

These departments also play an active role in advising with regard to the management of risks. The Operational Risk Committee forms an important part of the governance structure, as does the Asset Management Committee within BNP Paribas Assurance, of which Cardif is a sub-division.

De komende jaren is risicomanagement gericht op de implementatie van Solvency II. Deze wetgeving heeft als doel de risico’s waar verzekeraars aan onderhevig zijn, zoveel mogelijk te kwantificeren en tot uitdrukking te laten komen in een aan te houden solvabiliteitsbeslag. Om aan de Solvency II wet- en regelgeving te voldoen, zal Cardif in 2011 het financial risk committee binnen de organisatie implementeren. Bovendien is de periodiciteit van de huidige audit werkzaamheden van Inspection Generale onder Solvency II wet- en regelgeving ontoereikend; Cardif gaat hierover proactief in gesprek met het hoofdkantoor om een passende oplossing te vinden.

In the coming years, risk management will focus on the implementation of Solvency II. The purpose of this legislation is to quantify as far as possible the risks that insurers are exposed to and to reflect this in the form of a capital ratio that must be maintained. In order to comply with the Solvency II legislation and regulations, Cardif will implement the financial risk committee within the organisation. Furthermore, the periodicity of the current audit activities of the General Inspection department under Solvency II legislation and regulations is insufficient and Cardif will take a proactive approach and consult with the head office in order to find a suitable solution.


b2) Controles uitgevoerd door operational risk management, compliance, IT security, actuariaat en management accounting.

Periodic control

Periodic control

Level-2 controls

Permanent control

Permanent control

Level-1 controls

a1) Controles uitgevoerd door operationele medewerkers op de operationele processen. a2) Controles uitgevoerd door andere operationele medewerkers (mid office, back office, crosschecks etc.). a3) Controles uitgevoerd door lijn managers.

Operational entities

Risk management

Operationele afdelingen

Risicomanagement

Operational Risk Committee In het Operational Risk Committee (ORC) participeren de controlerende afdelingen Operational Risk Management, Compliance en IT security. De doelstelling van het ORC is het monitoren van de evolutie in het operationele risicoprofiel van de organisatie. De controlerende afdelingen hebben afgelopen jaar de lijn van 2009 voortgezet in het inbedden van risicomanagement binnen de operationele afdelingen. Onderstaand wordt per controlerende afdeling een weergave gegeven van de kernactiviteiten. Operational Risk Management Het operationele risico is het risico dat bedrijfs processen niet ongestoord kunnen verlopen als gevolg van het handelen of nalaten van medewerkers, van derden of van systemen, dan wel door toevallige gebeurtenissen of omstandigheden. De operationele risico’s zijn geïdentificeerd, gewaardeerd en samen met de beheersingsmaatregelen vastgelegd in het risk register. De afdeling operational risk management bewaakt de evolutie in het operationele risicoprofiel door een strikte monitoring van de operationele risico’s. Het operationele risicomanagement wordt periodiek geëvalueerd in het operational risk committee. Compliance Het compliancerisico is het risico dat wet- en regelgeving en interne normen op het gebied van integriteit niet of onvoldoende worden nageleefd, hetgeen (onder meer) reputatieschade voor Cardif en BNP Paribas tot gevolg kan hebben. Om dit risico te mitigeren, beschikt Cardif onder meer over een afdeling Compliance. Deze bestaat uit twee Compliance Officers, waarvan één tevens als fraudecoördinator is aangesteld. De afdeling Compliance maakt deel uit van de afdeling Legal. De afgelopen jaren laten een hoog tempo van ontwikkelingen in wet- en regelgeving zien, ook met betrekking tot integriteits- en reputatievraagstukken. Zo vervulde de afdeling Compliance een belangrijke adviesrol ten aanzien van de invoering van de provisieregels voor betalingsbeschermers per 1 januari 2010 (BGFO2). Verder is in 2010 de adviserende rol van de afdeling Compliance expliciet vastgelegd in het nieuwe productontwikkelingsproces.

Operational Risk Committee The monitoring departments Operational Risk Management, Compliance and IT Security participate in the Operational Risk Committee (ORC). The objective of the ORC is to monitor the evolution in the organisation’s operational risk profile. Last year, the monitoring departments continued what was begun in 2009 to embed risk management within the operational departments. An outline of each of the monitoring departments’ core activities is given below. Operational Risk Management Operational risk is the risk that company processes may be disrupted as a result of the actions or neglect on the part of employees, third parties or systems, or due to accidental occurrences or circumstances. The operational risks are identified, evaluated and recorded together with the control measures in the risk register. The operational risk management department monitors the evolution in the operational risk profile by stringently monitoring the operational risks. Operational risk management is also evaluated periodically in the operational risk committee. Compliance The compliance risk is the risk that legislation, regulations and internal standards in the area of integrity are insufficiently or not at all complied with, which as a result may damage the reputation of Cardif and BNP Paribas (amongst other consequences). In order to mitigate this risk, Cardif possesses a Compliance department, amongst other measures. This consists of two Compliance Officers, one of which is also appointed as a fraud coordinator. The Compliance department forms part of the Legal department. During the past few years, we have seen a high rate of developments in legislation and regulations, including in relation to issues of integrity and reputation. For example, the Compliance department fulfilled an important advisory role with regard to the introduction of the commission rules that apply to payment protection policies since 1 January 2010 (BGFO2). In addition, the advisory role of the Compliance department was expressly laid down in the new product development process in 2010.

Fraudedesk De Fraudedesk vormt een onderdeel van de subafdeling Compliance van de stafafdeling Legal en ondersteunt Cardif bij de bestrijding van verzekeringsfraude, die zowel intern als extern kan zijn.

IT Security De binnen IT onderkende risico’s hebben betrekking op integriteit, continuïteit en de borging van de vertrouwelijkheid van de informatievoorziening van de verzekeringsmaatschappij. Cardif onderkent dat de digitale interactie met klanten en partners de komende jaren zal toenemen door inzet van web services, social media, en operationele uitbesteding. Dit impliceert dat een grote hoeveelheid systemen, die niet onder beheer van Cardif vallen, verbinding maken met Cardifs systemen en netwerken en bedrijfsinformatie buiten deze eigen systemen wordt opgeslagen. Bij alle nieuwe bedrijfsinitiatieven gelieerd aan deze gebieden wordt de IT Security Officer betrokken om de verbonden IT-risico’s te mitigeren. IT Security legt daarom haar focus op informatiemanagement, waarbij beheersing van gedrag en processen evenveel belang genieten als beheersing van de technologie. Dit resulteert in heldere overeenkomsten met externe partijen aangaande informatiedeling, strakke interne procedures voor de behandeling van informatie en verscherpte aandacht voor security awareness. Financieel risico management Asset management committee In het asset management committe participeren de Asset Manager BNP Paribas Assurance, de Chief Finance & Risk Officer, Manager Actuariaat en Manager Management Accounting. In het Asset Management Committee wordt onder andere het beleggingsbeleid vastgesteld en vindt monitoring van de solvabiliteitspositie plaats. Deze monitoring is gebaseerd op het hiervoor geldende toezichtregime. Volgens eigen normen bedraagt de aanwezige

In 2010, the company continued to professionalise the fraud desk, including on the basis of the Delta Plan that is defined by the Dutch Association of Insurers. The fraud control coordinator has also been accepted onto the Register of Fraud Control Coordinators of the Dutch Institute of Loss Adjusters (NIVRE). In this way, expertise is continuously guaranteed. IT Security The risks that have been recognised within the IT domain concern integrity, continuity and the guarantee of confidentiality of the insurance company’s information provision. Cardif recognises that electronic communication with clients and partners will increase over the next few years due to the use of web services, social media and operational outsourcing. This implies that a large number of systems that are not managed by Cardif will connect to Cardif’s systems and networks and company information will be stored outside of the company’s own systems. The IT Security Officer will be involved in all new company initiatives that are related to these areas in order to mitigate the associated IT risks. For that reason, IT Security will focus on information management, in which management of conduct and processes will be afforded as much importance as management of technology. This will give rise to clear agreements with external parties with regard to sharing of information, stringent internal procedures for handling information and intensified focus on security awareness. Financial risk management Asset management committee The Asset Management Committee is made up of the Asset Manager of BNP Paribas Assurance, the Chief Finance & Risk Officer, Actuarial Manager and the Manager of Management Accounting. The committee’s activities include laying down the investment policy and monitoring the solvency position. These monitoring activities are based on the applicable


In 2010 is verder gegaan met het professionaliseren van de fraudedesk, onder meer op basis van het Deltaplan dat is gedefinieerd door het Verbond van Verzekeraars. Tevens is de coördinator fraudebeheersing toegelaten tot het Register coördinator fraudebeheersing bij het NIVRE. Op deze wijze wordt blijvend de deskundigheid gewaarborgd.

Fraud desk The Fraud Desk forms part of the Compliance subdepartment of the in-house Legal department and provides support to Cardif in tackling insurance fraud, which can be committed internally as well as externally.

solvabiliteit minimaal 150% van wat wettelijk (Solvency I) is voorgeschreven. In 2011 zal op meer gedetailleerd niveau monitoring van de risicopositie met het gedeeltelijk interne model plaatsvinden waarin economisch kapitaal (EC) de gebruikte maatstaf is. Van de onderscheiden risico’s wordt de feitelijke exposure gemeten en bewaakt.

supervisory system. In accordance with the company’s own standards, the minimum level of solvency is at least 150% of what is prescribed by law (Solvency I). In 2011 the risk position will be monitored at a more detailed level with the partly internal model, in which economic capital (EC) is the usual criterion. The actual exposure to the different risks is assessed and monitored.

Verzekeringstechnische risico’s Risks associated with insurance De bepaling van de technische voorzieningen is een proces dat vanuit nature omgeven is door onzekerheden. De werkelijke voordelen zijn gerelateerd aan factoren zoals sociale, economische en demografische trends, inflatie, beleggingsresultaten, gedrag van polishouders en overige factoren. In de waarderingsgrondslagen zijn diverse assumpties opgenomen die gebaseerd zijn op ervaringen in de markt en op eigen ervaringen. Deze kunnen een materieel effect op de technische voorzieningen hebben. De lange looptijd van de portefeuille verhoogt de gevoeligheid van deze factoren op de technische voorzieningen.

Determining technical provisions is a process that by its very nature is surrounded by uncertainty. The actual profits are related to factors such as social, economic and demographic trends, inflation, investment profits or losses, conduct of policyholders and other factors. Various assumptions form part of the valuation principles that are based on experiences in the market and the company’s own experiences. These may have a material effect on the technical provisions. The long term of the portfolio increases the likelihood that the technical provisions will be affected by these factors.

Het verzekeringstechnische risico wordt door Cardif op kwartaalbasis geanalyseerd, onder meer met behulp van de toereikendheidstoets op de technische voorzieningen. De toetsvoorzieningen zijn vastgesteld op basis van marktconforme grondslagen gecombineerd met Cardifs eigen schade-ervaring. De schade-ervaring wordt op continue basis bewaakt.

The insurance risk is analysed by Cardif on a quarterly basis, including with the aid of an adequacy test on the technical provisions. The adequacy tests are determined on the basis of principles in line with the market in combination with Cardif’s own experience of losses. The experience of losses is monitored on a continuous basis.

In 2010 hebben wijzigingen in de gehanteerde modellen en aannames geresulteerd in een lager verzekeringstechnisch resultaat dan in 2009. Deze daling wordt hoofdzakelijk veroorzaakt door een negatief “Result on cost”, een hogere risicopremie en een hogere schadelast.

In 2010, amendments to the models and assumptions used resulted in lower insurance profits than in 2009. This decrease was primarily caused by a negative “Result on cost”, a higher risk premium and a higher claims ratio. Exchange risk

Valutarisico Het valutarisico is het risico dat de waarde van de beleggingen afneemt als gevolg van wijzigende valutakoersen. Binnen Cardif Schadeverzekeringen N.V. zijn er geen posities in vreemde valuta waardoor valutarisico’s zich niet voordoen. Marktrisico Het risico van prijsvolatiliteit wordt beheerst door het hanteren van beperkingen in de soort waardepapieren

The exchange risk is the risk of the value of investments decreasing as a result of changing exchange rates. Within Cardif Schadeverzekeringen N.V. there are no holdings in foreign currencies and consequently no exchange risks arise. Market risk The risk of price volatility is managed by restricting the type of securities in which funds may be invested. Cardif predominantly invests in fixed-rate securities

waarin belegd mag worden. Cardif belegt in overwegende mate in vastrentende waardepapieren. Investeringen vinden plaats in waardepapieren met een frequente prijsnotering, waardoor het risico van illiquiditeit grotendeels wordt ondervangen.

De ontwikkeling in de achtergestelde leningen in de beleggingsportefeuille wordt nauwlettend gevolgd in samenwerking met de asset manager. In het mandaat met de vermogensbeheerder zijn beperkingen opgenomen voor deze beleggingen. Renterisico Het renterisico is het risico dat de renteopbrengsten die gegenereerd worden op de beleggingen niet toereikend zijn ten aanzien van de indexering van de verplichtingen. Dit risico wordt ondervangen door in overwegende mate te beleggen in vastrentende beleggingen, rekening houdend met beperkingen ten aanzien van de kredietwaardigheid. Daarnaast vindt er periodiek een analyse van het resultaat op rente plaats. Kredietrisico Het kredietrisico is het risico dat de tegenpartij niet aan haar financiële verplichtingen kan voldoen. Ten aanzien van de beleggingsportefeuille beheerst Cardif dit risico door middel van het hanteren van een conservatieve beleggingsstrategie, waarbij rekening wordt gehouden met beperkingen in de kredietwaardigheid van beleggingen. Momenteel zijn er geen beperkingen met betrekking tot de mate van beleggen in sectoren. Liquiditeitsrisico Het liquiditeitsrisico is het risico dat de organisatie door een gebrek aan liquide middelen niet in staat is om op korte termijn aan haar financiële verplichtingen te voldoen. Cardif beheerst dit risico door het nauwlettend volgen van geldstromen op korte en middellange termijn. Met een cyclus van een maand worden op dagbasis verwachte inkomende en uitgaande geldstromen in een cash flow-model uiteengezet om tijdig een liquiditeitsbehoefte te

The concentration risk is managed by employing restrictions in the value portfolio: the share of investment in companies rated BBB+ or lower must not represent more than 1.5% of the total investment portfolio. The development in subordinate loans in the investment portfolio is closely monitored in conjunction with the asset manager and restrictions are observed with regard to these investments under the mandate of the asset manager. Interest rate risk The interest rate risk is the risk that the interest rate returns that are generated on investments are insufficient compared with the index-linked commitments. This risk is overcome by predominantly investing in fixed-rate investments, whilst taking account of the restrictions concerning creditworthiness. An analysis of the profit on interest is also performed periodically. Credit risk The credit risk is the risk that the opposing party is unable to fulfil its financial obligations. With regard to the investment portfolio, Cardif manages this risk by employing a conservative investment strategy, in which limitations in the creditworthiness of investments are taken into account. At present there are no restrictions in place in relation to the amount that is invested in sectors. Liquidity risk The liquidity risk is the risk that the organisation is unable to meet its financial obligations in the short term due to a shortage of liquid assets. Cardif manages this risk by closely monitoring flows of funds in the short and mid-term. Expected income and expenditure are set out in a cash-flow model using a cycle of one month in order that any liquidity requirements can be highlighted in good time. The actual cash flows are also incorporated in this model, which allows differences between the expected and actual flow of funds to be analysed in greater detail. As Cardif’s products were often taken out on the basis of single premiums in previous years, internal financing facilities are available.


Het concentratierisico wordt beheerst door het hanteren van beperkingen in de waardeportefeuille; het aandeel van een belegging in BBB+ of lager mag niet meer vertegenwoordigen dan 1,5% van de totale beleggingsportefeuille.

and funds are invested in securities whose prices are frequently quoted, which means the risk of illiquidity is removed for the most part.

signaleren. De werkelijke geldstromen worden tevens in dit model verwerkt, waarbij afwijkingen tussen de verwachte en werkelijke geldstromen nader worden geanalyseerd. Doordat Cardifs producten in voorgaande jaren vaak op basis van koopsompremies werden afgesloten, zijn er interne financieringsfaciliteiten. Kasstroomrisico Het kasstroomrisico wordt gedefinieerd als het risico van een mismatch tussen inkomende toekomstige kasstromen en uitgaande toekomstige kasstromen. Dit risico wordt beheerst door middel van het uitvoeren van een ALM-study. De uitkomst van de ALM-study leidt tot een advies ten aanzien van de looptijd van beleggingen. Dit advies wordt vertaald in een benchmark die opgenomen wordt in het mandaat met de vermogensbeheerder.

Analyse Bruto premie Het Schadebedrijf heeft in 2010 een premieomzet gerealiseerd van 34,5 miljoen euro ten opzichte van 51,8 miljoen euro in 2009. Deze daling van 17,3 miljoen euro wordt voornamelijk veroorzaakt door een daling van de koopsompremies voor hypotheek- en consumptief kredietbeschermingsproducten. Door de recessie is de productie op de hypotheek- en kredietmarkt laag. Tegenover deze daling van de koopsompremies staat een stijging van de periodieke premies. Mede als gevolg van de invoering van BGFO2 heeft er een verschuiving plaatsgevonden van koopsompremies naar periodieke premies. Resultaat op beleggingen Het beleggingsresultaat voor het Schadebedrijf bedraagt 24,0 miljoen euro positief (2009: 38,3 miljoen euro positief). Cardif investeert in vaste en niet vastrentende waardepapieren en hanteert hierbij een conservatieve beleggingsstrategie. De daling van de financiële markten heeft voor de niet vastrentende waardepapieren geresulteerd in een ongerealiseerde waardedaling van 3,6 miljoen euro (2009: waardestijging van 8,9 miljoen euro) en een gerealiseerde waardedaling van 0,4 miljoen euro.

Cash flow risk The cash flow risk is defined as the risk of a mismatch between future incoming cash flows and future outgoing cashflows. This risk is managed by means of conducting an ALM study and the outcome of the ALM study results in a recommendation regarding the term of investments. This recommendation is then translated into a benchmark that forms part of the mandate of the asset manager.

Analysis Gross premium The non-life insurance arm of Cardif achieved a premium turnover of 34.5 million euros in 2010 compared with 51.8 million euros in 2009. This fall of 17.3 million euros was primarily caused by a decrease in single premiums for mortgage and consumer payment protection products. The number of mortgages and loans being taken out are low due to the recession. In contrast to this fall in single premiums, periodic premiums have risen and a shift from single premiums to periodic premiums has occurred, partly as a result of the introduction of the Market Conduct Supervision (Financial Institutions) Decree 2. Returns on investments The profit on investments for Cardif Schadeverzekering N.V. was 24.0 million euros (2009: 38.3 million euros profit). Cardif invests in fixed and variable-rate securities and employs a conservative investment strategy in that regard. The decline on the financial markets has caused a decrease in value on paper of 3.6 million euros in variable-rate securities (2009: increase in value of 8.9 million euros) and an actual loss in value of 0.4 million euros. The fixed-rate securities are valued against amortisation value, taking account of long-term decreases in value. The market value of the fixed-rate securities was 1.0 million euros higher at the end of 2010 (2009: 5.5 million euros higher) than the book value.

De vastrentende waardepapieren zijn gewaardeerd tegen amortisatiewaarde, rekening houdend met duurzame waardeverminderingen. De marktwaarde van de vastrentende waardepapieren is ultimo 2010 1,0 miljoen hoger (2009: 5,5 miljoen euro hoger) dan de boekwaarde.

De acquisitiekosten zijn in 2010 gedaald als gevolg van een daling in de productie die groter is dan de stijging door wijziging in de toerekening van de kosten. De daling in de overige bedrijfskosten wordt veroorzaakt door een wijziging in de toerekening (daling van 1,8 miljoen euro) en een stijging van de totale kosten (stijging van 0,5 miljoen euro) als gevolg van gestegen kosten voor de systeemmigratie voor polismanagement en strategieontwikkeling. Kasstromen en solvabiliteit In 2010 is een daling van de inkomende kasstroom ontstaan als gevolg van een daling van de premieomzet, in het bijzonder van de koopsomproductie. In 2010 is de winst van 2009 als dividend uitgekeerd, de dividenduitkering in 2010 is 35,8 miljoen euro ten opzichte van 24,1 miljoen euro in 2009. Door de lagere kasstromen uit operationele activiteiten alsmede de dividendbetaling zijn er per saldo in 2010 onvoldoende liquiditeiten geweest om te investeren. Voor komende jaren wordt een toename in de inkomende kasstroom verwacht als gevolg van de groeistrategie. Nauwlettende monitoring van de kasstromen vindt plaats binnen de afdeling Financiën. Een cash management model met een cyclus van een maand wordt gehanteerd om tijdig liquiditeitsbehoeften in kaart te brengen. Op dagbasis worden de werkelijke kasstromen afgestemd met te verwachten kasstromen en verschillen geanalyseerd. Resultaat naar bronnen Het resultaat op risico in 2010 is 23,2 miljoen euro positief. Dit resultaat komt voort uit de vrijval van de

The acquisition costs in 2010 fell as a result of a decrease in output that was greater than the increase as a result of changes to cost allocation. The decrease in the other operating costs was due to a change in the allocation (decrease of 1.8 million euros) and an increase of the total costs (increase of 0.5 million euros) as a result of increased costs of system migration for policy management and strategy development. Cash flows and solvency A decrease in the incoming cash flow occurred in 2010 as a result of a fall in premium turnover, particularly in single premium output. In 2010, the profits from 2009 were paid out in the form of a dividend and the dividends paid in 2010 were 35.8 million euros, compared to 24.1 million euros in 2009. Due to the lower cash flow from operating activities and the dividend payments, the company did not have sufficient liquidities per balance in 2010 to be able to invest. Over the coming years, an increase in incoming cash flow is predicted as a result of the growth strategy. Cash flows are closely monitored by the Finance department. A cash management model with a cycle of one month is used in order to chart liquidity requirements in good time. The actual cash flows are reconciled against the expected cash flows on a daily basis and any differences are analysed. Profits according to sources The profits on risks in 2010 were 23.2 million euros. These results were due to the release of the unearned premium reserve for an amount of 75.1 million euros and a claims charge of 51.9 million euros. The provision for outstanding claims in 2010 increased by 34 million euros as a result of developments in the cycle of claims for incapacity. In 2010, 17.9 million euros was paid for claims. The losses on costs in 2010 were 11.0 million euros. A change in assumptions had a particularly adverse


Operationele kosten De daling van de bedrijfskosten ten opzichte van 2009 van 9,6 miljoen euro wordt veroorzaakt door een afname van de acquisitiekosten met 8,3 miljoen euro en een afname van de overige bedrijfskosten met 1,3 miljoen euro.

Operating costs The decrease in operating costs of 9.6 million euros compared with 2009 was due to a decrease in the acquisition costs of 8.3 million euros and a decrease of 1.3 million for the other operating costs.

niet verdiende premiereserve voor een bedrag van 75,1 miljoen euro en de schadelast van 51,9 miljoen euro. In 2010 is de schadereserve toegenomen met 34 miljoen euro als gevolg van ontwikkelingen in de schadecyclus van arbeidsongeschiktheid. Een bedrag van 17,9 miljoen euro is betaald aan schades in 2010. Het resultaat op kosten is in 2010 11,0 miljoen euro negatief. Een wijziging in aannames heeft een sterk negatief effect gehad op de kostenopslagen. De effecten van deze wijziging in aannames is eenmalig; in 2011 zijn de kostenopslagen naar verwachting weer voldoende om de kosten te dekken. Het resultaat op interest, het verschil tussen het aan de voorzieningen toegekende beleggingsrendement verminderd met het in de voorzieningen ingecalculeerde rendement, is 9,0 miljoen euro positief. Dit is een daling ten opzichte van 2009, veroorzaakt door de dalende financiële markten. DSB Bank DSB heeft uitsluitend via koopsombetaling producten voor betalingsbescherming verkocht. Deze producten kunnen bestaan uit de dekkingen voor overlijden, arbeidsongeschiktheid en werkloosheid. De producten zijn hypotheekgerelateerd en zijn verkocht in de periode 2001 tot en met 2005 voor wat betreft de schadeproducten. De DSB Bank is failliet verklaard in oktober 2009. De ontwikkeling van de betrokken verzekeringsportefeuille is onvoorspelbaar. Om de impact op het resultaat van Cardif te bepalen zijn voor het boekjaar 2009 diverse scenario’s opgesteld. Gedurende 2010 is de situatie niet veranderd en heeft de portefeuille zich normaal ontwikkeld zonder plotselinge veranderingen. We verwachten in 2011 een regeling met DSB te kunnen treffen om risico’s bij een eventuele overdracht aan een derde partij te beperken. In 2009 heeft Cardif in totaal 14,0 miljoen toegevoegd aan de technische voorzieningen door de aannamewijzigingen die destijds zijn doorgevoerd. Eind 2010 is van deze toevoeging nog 6,0 miljoen over door de ontwikkeling van het afkooprisico.

effect on the loading fees. The effects of this change in assumptions were one-off and in 2011 the loading fees are predicted to be sufficient once again to cover the costs. The profits on interest, the difference between the investment return allocated to the provisions minus the return factored into the provisions were 9.0 million euros. This formed a decrease compared with 2009, caused by the falling financial markets. DSB Bank DSB Bank sold payment protection solely via products for which single premiums were paid. These products may take the form of policies that provide cover in the event of death, incapacity for work or unemployment. The products were linked to the mortgage and during the period 2001 to 2005 inclusive they were sold in relation to non-life insurance products. The DSB Bank was declared insolvent in October 2009 and it is not possible to predict the development of the insurance portfolio concerned. A range of scenarios were drawn up in order to ascertain the impact on Cardif’s results for the 2009 financial year. The situation has not changed during 2010 and the portfolio has developed normally without any sudden changes occurring. In 2011 we expect to be able to reach an arrangement with DSB in order to limit the risks in the event of transfer to a third party. In 2009 Cardif added a total of 14.0 million to the technical provisions due to the changes to assumptions that were made at the time. At the end of 2010, there is still 6.0 million euros remaining from this addition as a result of how the surrender risk has developed.

Adequacy test A quantitative adequacy test is performed on a quarterly basis in order to evaluate whether the technical premium and non-life insurance provisions of 2010 are at a sufficient level. The positive difference between the available technical provisions and the adequacy tests is known as the surplus. The outcome of the test is reported to DNB at the end of the year. Compared with the previous year, the quantitative test for the collective portfolio was added and more attention was paid to the development of the surplus during the year.

Voor de toets met betrekking tot de technische voorzieningen is de Cost of Capital-methode gebruikt met 6% kapitaalkosten, in overeenstemming met het Solvency II raamwerk.

With regard to the test relating to technical provisions, the Cost-of-Capital method was used with 6% capital costs, in accordance with the Solvency II framework.

De voorziening voor de toereikendheidstoets bestaat uit een Best Estimate-voorziening verhoogd met een risk margin, ook wel MVM genoemd. De veronderstellingen zijn gebaseerd op de meest recent waargenomen in- en uittreedfrequenties en kosten. De gehanteerde rekenrente is vastgesteld door DNB. Het totale verschil tussen de vastgestelde technische – en toereikendheidstoetsvoorzieningen is positief. Wijzigingen grondslagen technische voorzieningen In 2010 hebben er correcties plaatsgevonden op de berekening van de technische voorzieningen, waaronder het gebruik van de werkelijk ontvangen netto premie in plaats van de veronderstelde netto premie. Hierdoor is ook ruimte ontstaan om de prudentiefactor in de voorziening met 15% te verlagen. Daarnaast zijn de schadedriehoeken die worden gebruikt voor de voorziening voor toekomstige uitkeringen opnieuw vastgesteld. Dit was mogelijk door een verbetering van de informatie in de schadeclaims. De trends uit de nieuwe schadedriehoeken maken het mogelijk een meer stabiele en consistente lijn aan te houden in de vaststelling van de IBNR.

The provision for the adequacy test consists of a BestEstimate provision plus a risk margin, also known as the MVM. The assumptions are based on the most recently-observed figures for people joining and leaving the scheme and costs. The notional interest rate is determined by DNB. The total difference between the determined technical provisions and the available adequacy tests is positive. Changes to the principles of technical provisions In 2010 some adjustments were made to the calculation of the technical provisions, including the use of the net premium actually received instead of the expected net premium. As a result, scope has also been created in order to reduce the prudence factor in the provision by 15%. In addition the run-off triangles that are used for the provision for future payments have been re-determined. This was possible due to an improvement in the information provided in claims for compensation. The trends from the new run-off triangles make it possible to adhere to a more stable and consistent approach in determining ‘IBNR’.


Toereikendheidstoets Op kwartaalbasis wordt een kwantitatieve toereikendheidstoets uitgevoerd om te evalueren of de technische premie- en schadevoorzieningen van 2010 van voldoende niveau zijn. Het positieve verschil tussen de aanwezige technische voorzieningen en de toetsvoorzieningen wordt het surplus genoemd. De uitkomst van de toets aan het einde van het jaar wordt gerapporteerd aan DNB. Ten opzichte van vorig jaar is de kwantitatieve toets voor de collectieve portefeuille toegevoegd en is er meer aandacht besteed aan de ontwikkeling van het surplus gedurende het jaar.

Financiële educatie 2.0

Maakt mensen wegwijs in financiële begrippen

In navolging van de eerste tekenen van herstel in 2010 zal de economie in 2011 een lichte groei kennen. Following the first signs of recovery in 2010, the economy will grow slightly in 2011.

Predictions for 2011

De trendbreuk in de werkloosheid vertaalt zich in het komende jaar in een toename van het aantal arbeidsplaatsen. Het is de verwachting dat dit herstel in het komende jaar ook een daling van het aantal werkloosheidsclaims bij Cardif tot gevolg zal hebben. Tegelijkertijd zorgt aangescherpte regelgeving op het gebied van kredietverstrekking ervoor dat de hypotheekmarkt slechts mondjesmaat aantrekt.

The break in the unemployment trend will be reflected in an increase in the number of jobs over the coming year and it is predicted that this recovery will also result in a fall in the number of unemployment claims filed with Cardif in the coming year. At the same time, the tightened regulations in the area of credit provision will result in a situation in which the mortgage market will scarcely improve.

Ten aanzien van het distributiemodel zal 2011 in het teken staan van keuzes. Verschillende partijen in de keten herdefiniëren hun rol en identificeren het business model waarin zij het beste tot hun recht komen. Hierbij zullen expliciete keuzes gemaakt moeten worden op het gebied van producten, markten en activiteiten, in lijn met wetgeving, consumentenbehoeften en technologische ontwikkelingen. Cardif zal blijven pleiten voor een lange termijnbenadering en proactieve toepassing van regels, zodat de markt vanuit eigen kracht een nieuwe regierol aanneemt.

With regard to the distribution model, 2011 will be a year dominated by choices. Various parties in the chain will redefine their role and identify the business model in which they are able to perform best. In this regard, express choices will need to be made in relation to products, markets and activities, in line with legislation, consumer requirements and technological developments. Cardif will continue to advocate a long-term approach and proactive application of regulations, so that the market takes on a new controlling role of its own accord.

Vanuit het perspectief van het toezicht verwacht Cardif dat er, in aanloop naar het aangekondigde provisieverbod in 2013, gezocht zal worden naar constructieve dialoog. Voor de invulling van de nieuwe wetgeving zullen er samenwerkingsverbanden ontstaan die, met respect voor wederzijdse posities, tot werkbare oplossingen komen vanuit het principe van klantbelang. Cardif ziet de nieuwe werkelijkheid in de branche bovenal als een grote kans om de gerealiseerde voortrekkerspositie te bestendigen en groeiambities in te vullen. In 2011 zijn ontwikkelingen te verwachten op het gebied van nieuwe product-marktcombinaties, in lijn met de gedefinieerde groeiambitie. Daarnaast zal er toenemende aandacht zijn voor het realiseren van de doelstellingen ten aanzien van de klantwaardepropositie. Oosterhout, 5 april 2011 C. de Jong G.R.M.M. Rochigneux A.M.P.J. Heuvelmans

From a future perspective, Cardif expects that it will seek a constructive dialogue in the run-up to the announced commission ban in 2013. With regard to implementing the new legislation, new collaborative agreements will be created that will produce feasible solutions with the interests of the client at their basis, whilst respecting parties’ mutual positions. Above all, Cardif regards the new reality in the sector as a significant opportunity to maintain its position as a pioneer that it has already built up and to fulfil its ambitions of growth. In 2011, developments are predicted in the area of new product-market combinations, in line with the defined ambition of growth. In addition, increasing attention will be focused on achieving the objectives with regard to the client value proposition. Oosterhout, 5 April 2011 C. de Jong G.R.M.M. Rochigneux A.M.P.J. Heuvelmans


Verwachtingen 2011

financial statements BALANCE SHEET (before appropriation of result) in thousands of euro’s

ASSETS

31-12-2010

31-12-2009

Intangible fixed assets (1) Concessions, permissions and intellectual property 2,814 Investments in group companies and participations Bonds and other fixed-interest securities issued by group companies (2) 15,876 Other investments Shares, participations and other non fixed-interest securities (3) 125,222 98,167 Bonds and other fixed-interest securities (4) 488,907 548,073 Mortgage loans (5) 310 602 Other loans (6) 231 399 614,670 Receivables Receivables from re-insurance (7) - - Other receivables (8) 6,289 2,718 6,289 Other assets Tangible fixed assets (9) 887 732 Cash at banks 463 841 1,350 Accrued assets Current interest and rent 13,624 15,349 Other accrued assets 1,590 771 15,214 TOTAL ASSETS 656,213

2,132

15,914

647,241

2,718

1,573

16,120 685,698

Equity and Liabilities

31-12-2010

31-12-2009

Technical provisions For non-earned premiums and current risks: gross (13) 417,808 462,692 For claim payments: gross (14) 143,706 109,690 Other technical provisions: gross (15) 8,750 11,771 570,264 Provision for deferred taxes (16) 525 Other liabilities Re-insurance premiums to be paid 30 32 Other liabilities (17) 18,831 14,641 18,861 Accrued expenses (18) 696

TOTAL EQUITY AND LIABILITIES

656,213

85,006

584,153 1,441

14,673 425

685,698

Annual Report Cardif Schade 2010 // Financial Statements

Equity Issued and paid up capital (10) 39,208 39,208 Other reserves (11) 9,994 9,994 Undistributed result (12) 16,665 35,804 65,867

PROFIT AND LOSS ACCOUNT in thousands of euro’s

TECHNICAL ACCOUNT GENERAL INSURANCE

2010

Earned premiums insurer Production/premiums written 39,011 56,333 Surrenders (4,506) (4,562) Gross premiums (19) 34,505 51,771 Movement technical provisions non-earned premiums and risks: gross (20) 44,884 36,528 79,389 Result on investment allocated to the technical account (35) 21,543 Other technical income insurer (21) 79 Claims for the insurance company Claims gross (22) (17,898) (11,549) Movement technical provision for claims (23) (34,016) (21,608) (51,914) Movement other technical provision insurer (24) 3,021 Operating expenses (25) (32,286) Result technical account general insurance (26) 19,832

2009

88,299

33,338 73

(33,157) (3,628) (41,887) 43,038

NON-TECHNICAL ACCOUNT

2010

2009

OVERVIEW TOTAL RESULT

2010

43,038

32,989 8,908

(3,244)

(381)

(33,338) 47,972 (12,168) 35,804

2009

Equity at the end of the current year 65,867 85,006 Equity at the end of the previous year 85,006 73,309 Subtotal (19,139)

11,697

Dividend payment current year

35,804

24,107

Total result according to the profit and loss account

16,665

35,804


Result technical account general insurance (26) 19,832 Investment income Result from other investments (27) 28,070 29,554 Increase in value investments (28) 510 627 Realized profit on investments (29) 2,765 2,808 31,345 Non-realized profit on investments (30) (1,140) Investment costs Administration and interest costs (31) (922) (877) Decrease in value investments (32) (644) (925) Realized loss on investments (33) (1,716) (1,442) (3,282) Non-realized loss on investments (34) (2,892) Result on investment income allocated to the general insurance technical account (35) (21,543) Result before taxation 22,320 Taxation (36) (5,655) Result after taxes 16,665

CASH FLOW STATEMENT in thousands of euro’s

2010

2009

Cash flow from operating activities Result after taxes 16,665 35,804 Movement technical provisions (13,889) (11,292) Depreciation intangible fixed assets 704 523 Depreciation investments (77) 299 Depreciation tangible fixed assets 282 239 Movement of value (investments) 3,646 (8,527) 7,331 17,046 Receivables (3,571) 2,493 Accrued assets 906 45 Provision for taxes (916) 1,441 Other liabilities 4,188 1,776 Accrued expenses 271 (413) Dividend payment (35,804) (24,107) (27,595) Cash flow from investing activities Investments and purchase Shares (33,385) (34,505) Bonds (17,315) (45,817) Intangible fixed assets (1,386) (1,104) Tangible fixed assets (478) (452) (52,564) (81,878) Disposals, redemptions and sales Shares 2,700 4,580 Bonds 76,636 76,329 Other investments 404 217 Tangible fixed assets 41 20 79,781 81,146 27,217 Movement cash at bank (378)

Cash at bank Opening balance 841 3,292 Closing balance 463 841 Movement cash at bank (378)

(1,719)

(732) (2,451)

(2,451)

NOTES TO THE BALANCE SHEET General in thousands of euro’s

Transactions with related parties Cardif Schadeverzekeringen N.V. has transactions with related parties. Cardif’s head office in France charges the costs for provided services. With BNP Paribas Assurance B.V. there is an agreement for subcontracting personnel. 58.0% of all BNP Paribas Assurance B.V.’s personnel costs are being charged to Cardif Schadeverzekeringen N.V. General costs are recharged from Cardif Schadeverzekeringen N.V. to Cardif Levensverzekeringen N.V. The transactions mentioned below are considered to be at arm’s length. Futhermore premiums, commissions and claims of Cardif Levensverzekeringen N.V. are settled via Cardif Schadeverzekeringen N.V. as a consequence of the integrated products.

Head of Group

The financial data of the legal entity are consolidated in the consolidated financial statements of the parent company BNP Paribas Assurance S.A., with its registered seat in: 5, Avenue Kléber, 75116 Paris, France. The consolidated financial statements are deposited at the commercial register: Greffe du Tribunal de Commerce de Paris, 1 Quai de la Corse, 75004 Paris, France.

Transaction Type

Relation Type

Cardif Asset Management S.A. group company - Investment portfolio management Head Office Expenses group company - Actuary, IT and Financial Back Office BNP Paribas Assurance B.V. group company - Charged Personnel costs Cardif Levensverzekeringen N.V. group company - Recharged costs Retail Insurance Solutions B.V. group company - Recharged costs

Total

Amount (487) (569) (4,108) 4,414 4 (745)


Cardif Schadeverzekeringen N.V., with its registered seat in Oosterhout, is a 100% subsidiary of holding company BNP Paribas Assurance B.V. At December 31, 2010 BNP Paribas Assurance B.V. is a wholly owned subsidiary of BNP Paribas Assurance S.A. in France, which is part of the group BNP Paribas. Cardif Schadeverzekeringen N.V. has taken up the business of general insurance as dictated by “Wet op het Financieel Toezicht” and all activities which are associated with or can support these undertakings.

Accounting principles General The accounting principles for Cardif Schade verzekeringen N.V. are based on Part 9 of Book 2 of the Netherlands Civil Code. Intangible fixed assets The intangible fixed assets are valued at purchase price, decreased with the cumulated depreciations. These assets will be depreciated on a straight line basis over the expected economical life cycle. Investments Shares and non-fixed interest securities are valued at market value. The (non)realized profit and (non) realized loss is recorded in the profit and loss account. Bonds and other fixed-interest securities are valued at amortized cost. The unamortized part (the difference between the bond’s redemption value and the costs price minus the amortization) is presented under the investments. The realized profit and realized loss is recorded in the profit and loss account. On balance sheet date, the company tests whether there are indications of an asset which could be subject to impairment. If there are such indications, the recoverable amount of the asset concerned is estimated. An asset is subject to impairment if its book value is higher than its recoverable value. Impairment is recognised as an expense in the profit and loss account. Receivables Receivables are valued at nominal value Tangible fixed assets. The tangible fixed assets are valued at cost price, decreased with the cumulated depreciations. These assets will be depreciated on a straight line basis over the expected economical life cycle. Technical provisions

Unearned Premium Reserve (UPR- risk and cost) Disability This technical provision is calculated by means of a mathematical model. The entry and exit rates are based upon experience.

Unemployment This technical provision is calculated by means of a mathematical model. The entry and exit rates are also based upon experience. Dread disease The risk premium and cost loading is deferred linearly in time. Surety ship The UPR is calculated by deferring the non-risk part of the gross premium. Collectives/Business development For the partners with a buy sum product the buy sum is written down linearly over the contract duration. For month premiums no supplies are apprehended. Reinsurance (indirect company) The UPR is the linearly deferred (reinsurance premium). DSB As a result of the bankruptcy of DSB Bank assumptions used in the calculation of the unearned premium reserve for DSB contracts have been updated in 2009 in relation to the total portfolio. Although policyholders of DSB Bank can still rely on the coverages of Cardif, we have anticipated on a higher surrender rate due to market emotions. In the current normal situation the usual unearned premium reserve is sufficient at surrender. In case of higher surrender rates, Cardif could face a loss if not all unearned commission can be retrieved from DSB Bank. In 2010 we have not witnessed a significant change in the surrender rates. The additional reserve has decreased from 4.1 million euro in 2009 to 0.4 million euro in 2010 which reflects the change in the risk of not retrieving unearned commission.

Reinsurance (indirect company) The claim provision is calculated with the 100% loss ratio method. Other technical provisions This is a loss-carry forward provision for the Profit Sharing portfolio. Incoming is 70% of the result on risk of this portfolio. Outgoing is the excess layer, which is 50% of the riskpremium. Modification in models used and assumptions:

Unemployment The same models are used as in the disability risk, except for the discounting. The duration of the claim payment is shorter then four years, so no discounting is applied. Dread disease 100% loss ratio is applied, which means that the earned risk premium after subtraction of the paid claims is added to the reserve. Surety ship For the duration that Cardif has a liability the risk premium is added to the reserve. Furthermore the paid guarantee amounts which have a high probability of not being repaid to Cardif are also reserved. Collectives and business development The X-tab method is applied for two brokers, which means that the loss ratio for the current book year is estimated. This estimation is based upon results in prior book years. For the other brokers the 100% loss ratio is applied.

Unearned premium reserve (UPR) In 2010 several changes were made in the calculation of the UPR, of which a method change for the reserve of products with a combined single and periodic premium payments. Until 2009 we have used a prudency factor of 352% on the reserves mostly to reflect the risk on surrender on single premium contracts. Under the Dutch legislation for Non Life business no surrender value floor is required, but we do pay a surrender value. The surrender value floor decreases more rapidly than the basic UPR for risk and costs. For this reason we were able to reduce the prudency factor for risk to 305% which causes the level of the UPR to be in line with previous year. Other and accrued assets and liabilities All other items in the balance sheet are valued at nominal value.


Claim reserve Disability The claim reserve is divided into three different claim reserves: incurred but not reported (IBNR), notified but not yet accepted (NBNA) and the in course of payment (ICOP) technical provisions. The IBNR is calculated with the Mack method. The NBNA and the ICOP is calculated on individual contract basis using exit rates based upon experience and a discount rate. For the NBNA an additional assumptions is made about the refusal rate.

ASSETS Intangible fixed assets (1)

Concessions, permissions and intellectual property

Balance at January 1, 2010 Intangible at cost 3,114 Cumulative depreciation (982) Book value Movements in the year Investments 1,386 Depreciation (704) Total Movements Balance at December 31, 2010 Intangible at cost 4,500 Cumulative depreciation (1,686) Book value

2,132

682

2,814

Investments 31-12-2010 31-12-2010 31-12-2009 Book value Market value Book value Investments in group companies and participations (2) Bonds and other fixed-interest securities issued by group companies 15,876 15,610 15,914 15,876 15,610 15,914

Shares, participations, and other non-fixed-interest securities (3) Banking and insuring investment funds 125,222 125,222 98,167 125,222 125,222 Bonds and other fixed-interest securities (4) Government or government guaranteed 181,859 181,032 150,784 Financial Institutions 191,765 185,388 260,051 Production, Trading and Industry 70,364 76,729 84,688 Business and other services 40,926 42,619 37,018 Other 3,993 4,409 15,532 488,907 490,177 Mortgage loans (5) Office and shop buildings 310 310 Other loans (6) 231 231 Total investments 630,546 631,550

98,167

548,073

602 399 663,155

The “Tier 1” investment part represents 5.6% (2009: 5.0%) of the market value of the total investments. This increase is due to the decrease of the portfolio as there were no movements in the tier 1 portfolio in 2010. Tier 1 bonds are a specific type of subordinated bonds issued by credit institutions. In the event of liquidation they are subordinate to senior bonds (bonds ranking first), subordinated bonds, participation certificates and silent participations. At the end of 2010 the market value of this category was 1.9 million euro lower (2009: 4.6 million euro lower) than the recorded value.

Movement schedule investments in group companies and participations (2) Book value at the beginning of the year Depreciations

15,914 (38)

Book value at the end of the year

15,876

Movement schedule other Shares Bonds Mortgage Other Total investments (3-6) loans loans 2010 Book value at the beginning of the year 98,167 548,073 602 399 647,241 Acquisitions 33,385 17,315 - - 50,700 Sales and amortizations (2,700) (76,636) (91) (313) (79,740) Depreciations (40) 155 - - 115 Movement in valuation (3,590) - (11) (45) (3,646) Other - - (190) 190 -

642,775 80,322 (81,126) (262) 8,527 (2,995)

Book value at the end of the year

647,241

125,222

488,907

310

231

614,670

Total 2009

The unamortized part of the bonds amounts to 769 (2009: 2,209) thousands of euro’s. Receivables 31-12-2010 31-12-2009

Reveivables from re-insurance (7) - Other receivables (8) Group company - Cardif Levensverzekeringen N.V. - 215 Group company - BNP Paribas Assurance B.V. 1,213 - Group company - Retail Insurance Solutions B.V. 593 594 Deferred tax - - Corporate tax previous years - 34 Other receivables 4,483 1,875 6,289 2,718 Total

6,289

2,718


At the end of 2010 the market value of the bonds and other fixed-interest securities ended approximately 1 million euro higher (2009: 6 million euro higher) than the amortised cost. Securities with a lower market value compared to amortised cost have been analysed individually for impairment purposes. For securities with a market value below amortised cost the difference represents 22.6 million of euro. This includes investments in government bonds of European countries including Greece, Portugal and Spain. Within this portfolio no default occured. Those securities are held in a purpose of a long period of detention, linked to the duration of the liability and are expected to recover.

Tangible fixed assets (9) Hardware Inventory

Company cars

Total 2010

Balance at the beginning of the year Tangible at cost 1,068 893 437 2,398 Cumulative depreciation (668) (740) (258) (1,666) Book value 400 153 179 732 Movements in the year Acquisition 337 34 107 478 Disposal cumulative cost - - (148) (148) Disposal cumulative depreciation - - 107 107 Depreciation (159) (56) (67) (282) Total movements 178 (22) (1) 155 Balance at the end of the year Tangible at cost 1,405 927 396 2,728 Cumulative depreciation (827) (796) (218) (1,841) Book value

578

131

178

887

LIABILITIES Movement schedule equity Issued and paid up capital (10) Balance at January 1, 2010 39,208 Balance at December 31, 2010 Other reserves (11) Balance at January 1, 2010 9,994 Balance at December 31, 2010

Total 2009

2,068 (1,529) 539

452 (122) 102 (239) 193

2,398 (1,666) 732

39,208

9,994

Undistributed result (12) Balance at January 1, 2010 35,804 Withdrawal: - dividend payment (35,804) Addition - result current year according to the profit and loss account 16,665 Balance at December 31, 2010 Total equity

16,665 65,867

The share capital exists of 89,109 ordinary shares with a nominal value of 880 euro’s, of which 39,208 thousands of euro’s have been paid in full.

68,806 (2,814)

(7,180)

Total Actual solvency margin Required solvency margin***

58,812

Surplus

19,604

The actual solvency margin in relation to the required solvency margin is 150% (2009: 170%). As stated in the Financial Agreement with the parent company support by means of additional capital will be provided by the parent company in case the necessary solvency margin exceeds the actual solvency margin. According to the policy set by the Board of Directors the necessary solvency margin is stated at 150%. This percentage is based on the requirements according to article 67 of ‘Besluit Prudentiële Regels WFT’. Taken into consideration risks that result in an excess of the minimum solvency margin: in particular mismatch risk between the duration of the assets and liabilities, operational risks and market risks as well as other risks as mentioned in the risk management paragraph. In addition the necessary solvency margin should not imply an over capitalization. The level of necessary solvency margin will be subject to further investigation in the course of the implementation of Solvency II.

58,812 39,208

* In order to correct the intangible fixed assets a part of the other reserves is allocated to the solvency margin. The other part of this reserve is recognized as reserves with no restriction and therefore taken into account in the calculation of the required solvency margin. ** Obligo is half of the difference between the issued share capital (78.4 million) and the issued and paid up capital (39.2 million) with a maximum of half of the required solvency margin. *** The required solvency margin is the margin that Cardif Schadeverzekeringen N.V. is mandatory to comply with as stated in article 67 of “Besluit Prudentiële regels Wft”.


Solvency margin Issued and paid up capital 39,208 Other reserves (part of)* 9,994 Obligo** 19,604 Withdrawal: - Intangible assets - result current year according to the profit and loss account 16,665 - proposed dividends (23,845)

Technical provisions for non-earned premiums and current risks (13)

Incidents and illness

Other branches

Gross amount Direct company - Accrued premiums 357,666 54,500 Indirect company 4,914 728 Total direct and indirect company 362,580 55,228 Amount for the risk of the insurer Direct company 357,666 54,500 Indirect company 4,914 728 Total entire company 362,580 55,228 Technical provisions for claim payments (14) Incidents Other and illness branches

Total 2010

Total 2009

412,166 5,642 417,808

456,601 6,091 462,692

412,166 5,642 417,808

456,601 6,091 462,692

Total 2010

Total 2009

Gross amount Direct company - Periodic payment 74,329 2,492 76,821 57,672 - Other outstanding claims 62,999 2,777 65,776 51,162 Indirect company - Other outstanding claims 987 122 1,109 856 Total direct and indirect company 138,315 5,391 143,706 109,690 Amount for the risk of the insurer Direct company 137,328 5,269 142,597 108,834 Indirect company 987 122 1,109 856 Total entire company 138,315 5,391 143,706 109,690 LAT the Cost of Capital method is used in accordance Technical provisions for insurances provided by with the Solvency II framework. The capital rate used mortgage products have a long-term character. The is also chosen in accordance with the recent rate used technical provisions for the insurances provided by the in Solvency II, namely 6%. consumer credit products mainly have a short term character. The average duration of the whole portfolio From the total of the recorded technical provisions is 15 years. The remaining duration for single premium (other technical provisions excluded) of 572,382 contracts is 9 years and for periodic premium thousands of euro’s more than 98% (2009: 97,5%) contracts 13 years. The difference is in line with the is quantitatively and the remainder is qualitatively movement towards more periodic premium contracts. tested. The qualitatively tested provisions is collective consumer business. These are profitable, have a short The technical assumptions used for the recorded duration and therefore are recognized as adequate. In technical provisions are the pricing assumptions that relation to last year we have introduced a model for in some cases are changed to fit better with recent two large collective contracts. In the table below we entry and exit rates. Also the same fixed discount rate assumed that the qualitatively recorded provisions are is used for the whole portfolio. The total difference equal to the LAT provisions, therefore the LAT surplus between the recorded technical and LAT provisions for the other technical provisions is set to nil. It can is 57.3 (2009: 58.8) million euro. The evolution in be concluded that the recorded technical provisions difference compared to prior year relates to changes (other technical provisions excluded) are adequate. in the portfolio, a lower prescribed discount rate and some small changes in technical assumptions. In the

2010

Technical provisions (other technical provisions excluded) recognized: Other technical provisions recognized: LAT technical provisions

561,514 572,382 8,750 11,771 (512,176) (525,336)

Surety Business Indirect ship Develop-

Opening balance Written premiums (after reinsurance) Release of first costs out of written premiums Addition interest Claims Release of costs out of provision Other technical income Result on technical assumptions

58,088

ment

Total 2010

58,817

Total 2009

561,597 18,131

1,256 13,345

1,718 2,638

864 381

6,947 10

572,382 34,505

587,302 51,771

(6,422) 12,799 (16,388) 3,604 79 (22,468)

(11,058) - (1,156) (1,234) - (43)

(1,500) - (78) (733) - (95)

(156) - (259) (82) - 24

(21) - (17) (161) - (8)

(19,157) 12,799 (17,898) 1,394 79 (22,590)

(29,678) 14,031 (11,550) (17,644) 73 (21,923)

Closing balance 550,932 1,110 1,950 772 6,750 561,514 572,382 Other technical provisions (15) 31-12-2010 31-12-2009 Conditional obligations to third parties 8,750 11,771 The other technical provisions relates to a loss-carry forward provision for the profit sharing portfolio for partners on the existing portfolio, The release of this provision to the partner and Cardif is based on a cap related to the height of the risk premium earned, As the risk premium earned has decreased compared to 2009, a lower cap decreased this provision with 3,012 thousands of euro’s, Provision for deferred taxes (16) 31-12-2010 31-12-2009 Provision deferred tax liabilities

525

1,441

Other liabilities (17) 31-12-2010 Creditors 310 Group company - Cardif Levensverzekeringen N,V, 7,651 Group company - BNP Paribas Assurance B,V, - Group company - Cardif Asset Management S,A, 120 Group company - Cardif Services B,V, 232 Group company - Hélios GIE 278 VAT 44 Commissions 10,196 Total 18,831

31-12-2009 520 845 123 232 2,517 60 10,344 14,641


Difference Movement schedule Individual Collective technical provisions

2009

Accrued expenses (18) 31-12-2010 Prepaid premiums 16 Other 680 Total

Off balance obligations Fiscal unity for taxes Cardif Schadeverzekeringen N.V. is part of the fiscal unity BNP Paribas Assurance B.V. for corporate income tax and value added tax purposes and for that reason it is jointly and severally liable for the tax liabilities of the whole fiscal unity. Rental and lease obligations The Holding company, BNP Paribas Assurance B.V., has a rental agreement for offices and buildings for multiple years. The rental obligations for 2011 amount to 444 thousands of euro’s. The lease obligations for 2011 regarding company cars amount to 350 thousands of euro’s. For IT the lease obligations for 2011 amount to 58 thousands of euro’s.

Risk management

General Cardif Schadeverzekeringen N.V. is experiencing several risks which are inherent to the insurance business (inherent risks including insurance technical risks) or caused by the way Cardif is organised and processes are managed (operational risks). To control these risks the departments Compliance, IT security and Internal Control are permanently testing internal control procedures in order to realize the strategic and operational objectives. The risks within Cardif Schadeverzekeringen N.V. are analysed and listed in the risk register. These risks are mitigated by sufficient control procedures. The residual risk is of such a level that it complies with the solvency margin recognized, taken into account the adequacy of the technical provisions. Management is aware of the sensitivity of these risks. Insurance technical risks The determination of the technical provisions is a process that due to its nature is surrounded

696

31-12-2009 148 277 425

by uncertainties. The actual benefits depend on factors such as social, economic and demographic trends, inflation, investment returns, policy holder behaviour and other factors. The use of difference assumptions for these factors are applied in the financial statements based on market practices and own experiences and could have a material effect on the insurance provisions. Due to the long duration of the portfolio the technical provision is more sensitive to the above mentioned factors. The insurance technical risk is analysed by Cardif on a quarterly basis. Tests are executed in order to determine if the provisions recorded in the balance sheet are adequate. The technical provisions are calculated based on principles of valuation which are common in the market in combination with the evolution in the contract and claim portfolio experienced so far. Evolution in claims are monitored at a continuous basis. The insurance technical risk is (partly) mitigated by reinsurance contracts with respected reinsurance companies with a high credibility. Cardif is closely monitoring evolutions in the market in general and more in particular related to surrenders and counterparty risk. If these risks result in different expectations in relation to the normal expectations, appropriate measurements are taken by means of updating the assumptions for the calculation of the technical provisions. An important risk that Cardif is facing is the evolution in the DSB portfolio. So far Cardif did not experience a major increase in the number of surrender. The contract portfolio of Cardif exists for a major part of single premiums contracts from the past with an end date in the future. The risk exists that worse economic circumstances cannot be covered by means of an increase in premiums. The policy of Cardif is to calculate the technical provisions in a way that future set-backs can be handled. Acceptation The risk acceptance consists of the risk to accept

inadequate acceptance rules or to accept insurance against the acceptance rules. By setting clear acceptance rules Cardif neutralize a great deal of these risks.

Interest risk Interest risk is the risk that the interest revenues generated from the portfolio are insufficient in relation to the increase of the obligations due to indexing of the contract portfolio. This risk is managed by means of investing in fixed interest securities taking into account asset management restriction related to the duration and rating of the securities. The result on interest is analysed on a periodical basis. Credit risk The credit risk is the risk that the counter party is not able to meet her financial obligations. Credit risk on a portfolio level is also managed in relation to credit rating weighting restrictions. Prior to the

BBB 9%

A 41%

BB 3% AAA 30%

AA 17%

addition of an asset the credit rating criteria must be reassessed. Specifically, at the lower end of the spectrum, the portfolio is limited to 10% for assets with a rating lower than BBB+ and 0% lower than BB+. At the moment there are no limitations with regard to the degree of investing in the different sectors. An overview of the fixed interest securities by rating at the end of the reporting year is presented above. Liquidity Risk Liquidity risk is the risk which arises in case the organisation is not able to fullfill its short term financial obligations due to a deficit in cash at bank. Cardif manages this risk by closely monitoring cash flow on the short and mid term. With a cycle of a month estimated cash receivables and payables are recorded in a cash flow model on a daily basis in order to identify cash needs. Actual cash flow are also recorded in the cash flow model in order to analyse differences between estimations and actuals. Cash flow risk The cash flow risk is defined as the risk of a mismatch between our incoming cash flows and our outgoing cash flows. This risk is monitored by performing ALM studies. The results of the ALM study are translated in a recommendation for the duration of our investments. This recommendation is translated in a benchmark for our asset manager and stated in the mandate. Environmental risk After many months spent in recession, the economy gradually began to recover in 2010. Over the course of the year, consumer spending grew slightly, primarily on durable consumer goods such as cars


Re-insurance The insurance technical risks are mitigated (partially) by re-insurance contracts agreed with wellestablished re-insurers with a high level of credibility. Currency risk The currency risk is the risk that the value of investments is decreasing as a result of changed currency rates. Within Cardif Schadeverzekeringen N.V. there are no positions in foreign currencies which means that risk in currency is excluded Price (market) risk The risk of price volatility is managed by using asset management restrictions in the type of securities. Cardif is mainly investing in fixedinterest securities. As a result of the fact that Cardif is investing in market listed securities with a frequent price quotation, the risk of illiquidity is low. The concentration risk is managed by using asset management restrictions in the portfolio; for example the part of the investments in BBB+ or lower may not exceed 1.5% of the total investment portfolio. Evolutions in subordinated loans within our investment portfolio are closely monitored together with our asset manager. In the mandate with our asset manager restrictions are stated for these kind of investments.

Credit rating (Moody’s) breakdown based on marketvalue - bonds

but also clothing. Less was spent on holidays and in hotels, restaurants and on catering, however. Further recovery of the economic climate is expected in 2011. The Market Conduct Supervision (Financial Institutions) Decree [Besluit Gedragstoezicht Financiële Ondernemingen (BGFO)] that was announced in mid-2009 entered into force on 1 January 2010. From that point onwards, the remuneration that the broker receives for recommending a payment protection policy or funeral insurance must be made fully transparent for consumers. In doing so, the broker may choose the commission model whilst observing transparency regulations and the standards governing incentives, or a revenue model based on Customer Agreed Remuneration (CAR), in which case the consumer pays for his or her services straight away. This legislative amendment marks the beginning of a completely new era in the sector of insurance policies that are purchased at the point when a mortgage or loan is taken out. In concrete terms, as far as Cardif is concerned, this creates a renewed relationship with distribution, where the amount of remuneration and the arguments for this are the responsibility of the broker of the product. Under pressure from market conditions, an evaluation of the remuneration system already took place during the course of 2010, after which the Ministry of Finance announced far-reaching reforms. From 2012, all products that are currently subject to guidelines pursuant to the Market Conduct Supervision (Financial Institutions) Decree will be affected by a full commission ban. A provider will therefore no longer be permitted to pay a fee to a broker when a consumer takes out a product. This revolution created a great deal of unease and division in the market in 2010, both on the side of suppliers and amongst distribution parties and consumer organisations. However, Cardif is enthusiastic about the reforms that are underway in order to allow the distribution of financial products to be better attuned to the current climate and to create clear relationships within the chain. But whilst the enquiries of the Ministry were ongoing and in the run-up to the General Consultation, Cardif brought a number of points to the attention of policymakers that it deems important. First

of all, Cardif foresees problems in an ambiguous management of insurance products if general insurance continues to fall outside the scope of these reforms. In addition, Cardif advocated that attention be paid to the funding issue, the potential problems that arise when consumers are faced with advisory costs and do not possess the means to pay them immediately. The dialogue with other parties including the Netherlands Authority for the Financial Markets with regard to the application of the new legislation and regulations is still ongoing. DSB Bank sold payment protection solely via products for which single premiums were paid. These products may take the form of policies that provide cover in the event of death, incapacity for work or unemployment. The products were linked to the mortgage and during the period 2001 to 2005 inclusive they were sold in relation to general insurance products. The DSB Bank was declared insolvent in October 2009 and it is not possible to predict the development of the insurance portfolio concerned. A range of scenarios were drawn up in order to ascertain the impact on Cardif’s results for the 2009 financial year. The situation has not changed during 2010 and the portfolio has developed normally without any sudden changes occurring. In 2011 we expect to be able to reach an arrangement with DSB in order to limit the risks in the event of transfer to a third party. Operational risk The operational risk is the risk that business processes cannot continue as a consequence of acting of neglecting by employees, third parties or systems either through unforeseen events or circumstances. The operational risks are identified, valued and together with the internal control procedures recorded in the risk register. The Operational Risk Management department is monitoring the evolution in the operational risk profile by means of strict monitoring of operational risks. These risks, including management, is subject for periodical discussion in the Operational Risk Committee. Outsourcing risk Each outsourcing decision is a strategic choice made by the Board of Directors. The vision of the Board is not to outsource our main tasks as much as possible. Each decision is subject to an analysis of

IT risk The IT risks relate to integrity, continuity and to embed to confidentiality of information within Cardif. Cardif discerns that the digital interaction with customers and business partners will increase in the coming years by means of using web services, social media and operational outsourcing. As a result of this multiple systems, which are not managed by Cardif, will be connected with systems and network of Cardif and company information will be stored outside our own systems. In all new initiatives related to these areas the IT Security Officer is involved in order to mitigate IT risks. IT Security is focussed on information management, in which the level of importance of control of behaviour and processes is equal to the control of technology. The results in clear agreements with external parties regarding sharing information, strict procedures for using information and increased attention for security awareness. Legal risk Cardif is in a heavily changing legal context. The last few years can be recognized as major changes in law and rulings which have determined the legal risk in combination with a number of events. The year 2010 makes not exception on this. Important events:

1. Rapid development and implementation in law and legislation. As of 2006 many new law and legislation have been introduced for financial institutions, e.g. BGFO. The reputation of the financial institutions has decreased in the last few years as shown by the consumer monitor of the Union of Insurance Companies. The

lack of confidence is increased as a result of the financial crisis. Media and consumers are very critical towards financial institutions including the added value of them and their products to customers. The government has been very sensitive for this pressure of the media and consumers as experienced in the last years. The consequences of the above is that financial institutions on a regular basis are subject to new legislation which have to be identified, analysed and implemented in their company including all legal risk related.

2. Capacity of legal team Within the legal department 3 FTE have been present in 2010. On a regular basis it is experienced that this capacity has been insufficient to reply to all questions from the organisation in time and to meet the required service level. To identify, analyse and implement new law and legislation is a time consuming task. This in combination with a limited capacity resulted in the following measurement to mititgate the risk: segregation of duties within the legal department, intellectual use of external sources and contracting external professionals. 3. Productportfolio Cardif has a small product portfolio. In case new legislation is applied to a specific product of Cardif, it is very likely that the new legislation is applicable for all the products of Cardif. To put a specific product on hold is in this case no option. This implies a concentration risk which could be mitigated by means of increasing our product portfolio. On the other hand the consistency of the product results in a focus of the scope of the legal department. Intention of changing law and legislation backwards in time. Partly on the same reasons as given under event 2 it is more and more appropriate to implement rules today which were not present yesterday, but apply those rules also on the situation of yesterday. Although the possibilities of the legislator are limited, it is not stopping consumers, consumer organisations as well as (lower) judges to evaluate the situation of the past taking into consideration the current legislation. This makes it very important to look forward and to identify environmental evolutions in time to anticipate. The membership of the Union of Insurance Companies is and important risk mitigating measurement.


possibilities within the BNP Paribas Group which will be benchmarked. The outsourcing policy is based on the ‘Wet Financieel Toezicht’, ‘Wet Bescherming Persoonsgegevens’ and the code of conduct of the Union of Insurance Companies. The scope of this policy relates to the primary and non-primary insurance processes outside the group and the primary insurance processes within the group. The Board of Director identifies the intrinsic risk of outsourcing as a high risk. Included in the outsourcing policy the Board has taken several control measures to minimize the risk; e.g. set up of contracts, mandates, service level agreements based on a risk analysis. Besides this there is a procedure related to outsourcing. The residual risk of outsourcing is low.

NOTES TO THE PROFIT AND LOSS ACCOUNT in thousands of euro’s

Principles of valuation of the profit and loss account The earned premiums are taken into account in the profit and loss account on an annual basis. Periodic premiums are directly taken into account in the profit and loss account. The investment income (income of dividends and coupons) is accounted for at the moment of notification and/or due date.

For the other components of the profit and loss account reference is made to the accounting principle of the balance sheet. Taxes are calculated on the basis of the recorded result, taking into account components which are free of tax and completely (or partially) non-deductible costs.

Specification technical result by branche Direct company Gross premiums (19) Movement technical provisions non-earned premiums and risks: gross (20) Result on investments allocated to the technical account (35) Other technical income insurer (21) Claims gross (22) Movement technical provision for claims (23) Movement other technical provision insurer (24) Operating expenses (25) Result technical account general insurance (26)

Incidents and lines

Indirect Total Total Surety Financial company company company ship losses 2010 2009

25,541

2,732

6,222

10

34,505

51,771

42,462

(9)

1,982

449

44,884

36,528

15,949 59 (12,789)

1,702 6 (78)

3,886 14 (5,014)

6 - (17)

21,543 79 (17,898)

33,338 73 (11,549)

(33,699)

(224)

159

(252)

(34,016)

(21,608)

2,242 - (23,876) (2,387)

779 (6,019)

- 3,021 (4) (32,286)

(3,628) (41,887)

15,889

1,742

2,009

192

19,832

43,038

The result before tax amounts to 22.3 million euro and can be specified in the following result components:

2010

2009 *

Result on risk Result on cost Result on interest Other Total

23,231 (11,019) 9,030 1,078

22,027 9,334 20,092 (3,481)

22,320

47,972

* 2009 figures have been reclassified to make comparison to 2010 possible. In 2010 the result on risk comparative does not contain the profit sharing component which was included in 2009 (8,152). The 2009 figure is now 22,027 instead of 13,875 as reported in 2009. The comparative for profit sharing in 2010 is reported as part of other. Therefore (8,152) was also reclassified in other resulting in a movement from 4,671 to (3,481).

Result on cost The negative result on cost is mainly caused by changes in the assumption regarding the calculation

of the unearned premium reserve causing low cost loadings in 2010. Result on Interest The result on interest decreased with 11.1 million euro from 2009 to 2010. This increase can be mainly explained by the evolution of the financial market. In 2009 the stock markets increased by 21% (EuroStoxx 50) whereas in 2010 there was a decrease of 6%.

Other technical income insurer (21) 2010 2009 Income from co-assurance (11) 3 On-charged administration costs 90 70 Total 79 Operating expenses (25)

73

2010

2009

Acquisition costs Administration and personnel costs; depreciation fixed assets

26,065 6,221

34,338 7,549

Total

32,286

41,887

Acquisition costs The aquisition costs consist of (un)conditional provisions to partners and allocated overhead costs. The insurance premiums are for a considerably part received as single premiums (policies can have a 30 year duration). The acquisition costs involved are not capitalized as usual and deducted from the result by means of the Zilmer or lineair method but completely accounted for in the profit and loss account and reported with the other commercial costs. The effective acquisition costs are an indication of the prepaid acquisition costs that would have been accounted for in the profit and loss account when the payment would have been depreciated

over the duration of the policy. In 2010 the effective acquisition costs amount to 293,085 thousands of euro’s (2009: 56,583 thousands of euro’s). This increase is due to the release in the DAC as a result of a change in the calculation method (from lineair method to a risk basis method). The significant increase in effective acquisition costs visible due to the change in assumption is considered a one off charge. The ongoing effective acquisition costs are expected to be significantly lower on an ongoing basis.


Result on risk The Result on risk can be divided in 21.8 million euro for the disability risk and 1.4 million euro for unemployment. The claim charge has increase in 2010 but is compensated by a higher risk premium due to assumption changes in the Unearned Premium reserve causing low cost loadings.

Result on investments (27-34) Average Interest/ Unrealized Realized investments Dividend change in change in valuation valuation Bonds and other fixed-interest securities issued by group companies 15,895 Shares, participations and other non fixed-interest securites 111,695 Bonds and other fixed-interest securities 518,490 Mortgage loans 456 Other loans 315 Cash at bank 652

Total Total result on result on investment investment 2010 2009

832

(38)

565

1,359

1,314

2,205

(4,007)

376

(1,426)

8,902

24,044 48 40 (21)

(56) (21) (45) -

109 - - -

24,097 27 (5) (21)

28,202 25 (273) 102

Total 647,503 27,148 (4,167)

1,050

24,031

38,272

(35) The total result on investments is initially taken into account in Cardif Schadeverzekeringen N.V.’s nontechnical account. Based upon the technical provision in relation to the equity and technical provision the

result on investment is allocated to the technical account. The allocation percentage applicable for 2010 is 89.7% (2009: 87.3%).

Taxation (36) The taxation can be specified as follows: - taxation based on the fiscal result - deferred taxation - taxation correction previous years Taxation according to the profit and loss account

2010

2009

(6,602) 916 31 (5,655)

(9,955) (2,272) 59 (12,168)

Result before tax according to profit and loss account Temporary differences for unrealized result on investments

22,320 3,590

47,972 (8,908)

Fiscal result Nominal tax rate Effective tax rate

25,910

39,064

25.5% 25.3%

25.5% 25.4%

Auditor’s fee Audit fee Non-audit fee

2010

2009

42 33

37 17

Total

75

54

C. de Jong G.R.M.M. Rochigneux A.M.P.J. Heuvelmans General Director CSO CFRO


Personnel All Cardif personnel is employed by holding company BNP Paribas Assurance B.V. The average number of FTE’s of Cardif employees in 2010 was 114 (2009: 111). Of these employees 58% was allocated to Cardif Schadeverzekeringen N.V. (2009: 61%). The basis of this allocation key is the gross premium income. Taxation on the salary costs is in accordance with the allocation key. The remunerations including social securities and pensions for the Board of Directors amount to 311 thousands of euro’s (2009: 1,123 thousands of euro’s). There are no remunerations for the Supervisory Board. Oosterhout, 5 April 2011 Board of Directors

OTHER INFORMATION Statutory appropriation of the result

Proposal appropriation of the result

Article 33 Profit and loss Appropriation of result as stated in this article will occur after adoption of the annual accounts of which appears that it is permitted. The result is without exception at the disposal of the General Shareholders Meeting.

In anticipation of the decision of the General Shareholders Meeting we propose to appropriate the result of 2010 (16,665 thousands of euro’s) as well as a part of the other reserves (7,180 thousands of euro’s) as dividend. This results in a total proposal for dividend of 23,845 thousands of euro’s.

The company is allowed to pay dividends to shareholders and other authorized participants as far as the equity of the company is higher than the sum of the issued and paid up capital and the legal reserves which should be accounted for as stated in the law. It is allowed to deduct a deficit from the legal reserves as far as it complies with legislation. Article 34 Dividends can be claimed within a four weeks period after adoption, unless the General Shareholders Meeting has accepted the proposal of the Board of Directors for another date. Dividends, which have not been received within a five years period after the start of the second day of the moment when the dividend can be claimed, will be at the disposal of the company. The General Shareholders Meeting can decide to pay dividends fully or partially other than cash. The General Shareholders Meeting can decide to pay out the reserves in full or partially, taken into account article 33, part 3. The General Shareholders Meeting can decide to accept the proposal of the Board of Directors to pay an interim dividend, taking into account article 33, part 3.

Independent Auditor’s report To the shareholder and the Board of Directors of Cardif Schadeverzekeringen N.V. REPORT ON THE FINANCIAL STATEMENTS

Management’s responsibility Management of the company is responsible for the preparation and fair presentation of these financial statements and for the preparation of the Board of Directors´ report, both in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore management is responsible for such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This law requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of Cardif Schadeverzekeringen N.V., as at 31 December 2010 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code. REPORT ON OTHER LEGAL REQUIREMENTS Pursuant to the legal requirement under 2:393 sub 5 at e and f of the Dutch Civil Code, we have no deficiencies to report as a result of our examination whether the Board of Directors´ report, to the extent we can assess, has been prepared in accordance with Part 9 or Book 2 of this Code, and whether the information as required under Section 2:392 sub 1 at b-h has been annexed. Further we report that the Board of Directors´ report, to the extent that we can assess, is consistent with the financial statements as required by Section 2:391 sub 4 of the Dutch Civil Code. Rotterdam, 5 April 2011 Mazars Paardekooper Hoffman Accountants N.V. w.s. drs. C.A. Harteveld RA

Annual Report Cardif Schade 2010 // Other information

We have audited the accompanying financial statements 2010 of Cardif Schadeverzekeringen N.V., having its legal seat in Oosterhout, which comprise the balance sheet as at 31 December 2010, the profit and loss account for the year then ended, the cash flow statement and the notes, comprising a summary of the accounting policies and other explanatory information.

In making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

Actuarial statement Assignment BNP Paribas Assurance B.V. residing at Oosterhout has engaged Towers Watson Netherlands B.V. to issue an actuarial statement for Cardif Schadeverzekeringen N.V. on the accounting year 2010 as required under the Financial Supervision Act (Wft). Data The data used as the basis for my investigations have been prepared and supplied within the responsibility of the board of directors of the insurance company. In accordance with the guideline “Co-operation between auditor and actuary with regard to the audit of annual accounts of insurance institutions” the insurance company’s auditors have shared with me their conclusions regarding the reliability and completeness of the administrative basic data and the other data relevant to arriving at my opinion. Activities In carrying out the assignment I have investigated as required by Article 3:73 of Wft that the technical provisions as in the Wft actuarial report (“Actuarieel Verslag”) have been determined adequately. The administrative basic data provided by the insurance company are such that these data have been accepted by me as basis for the subsequent calculations appreciated by me. My assignment included, amongst other things, appreciating assumptions, bases and methods used for determining the technical provisions and used for testing the adequacy of the technical provisions. In investigating the adequacy test I have also considered the prudence filters as defined by Wft (Article 98:4). My activities to this end have been such that a reasonable level of certainty has been achieved that technical provisions and adequacy test do not contain material errors. The activities described and the performance of these activities comply with the actuarial standards and practices prevailing within the Actuarieel Genootschap and are in my opinion a sound basis for my opinion.

Judgement Technical provisions Considering the above, the total amount of technical provisions as in the Wft actuarial report (“Actuarieel Verslag”) in my opinion has been determined adequately as per the balance-sheet date. Amstelveen, 5 April 2011 Drs. H.J. Kriek AAG Bound to Towers Watson Netherlands B.V.

Annual Report Cardif Schade 2010 // Other information

Cardif Postbus 4006 • 4900 CA Oosterhout Telefoon 0162 - 486 000 • Fax 0162 - 486 001 Internet www.cardif.nl / www.cardifcares.nl • E-mail [email protected]

Wat ons beweegt What moves us. Annual Report 2010 Cardif Schadeverzekeringen N.V

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