Dutch Insurer NN Eyes Growth Through Acquisitions

By and | November 30, 2015

NN Group NV, the Dutch insurer and asset manager spun out of ING Groep NV, is ready to expand and will consider acquisitions amid speculation that it could seek to acquire Delta Lloyd NV. Delta Lloyd’s shares soared.

“If we feel that we don’t have the scale or that we don’t get there fast enough on our own organic pace, then we would need to look at either bulking up or exiting” some of the company’s businesses, NN Chief Executive Officer Lard Friese said in an interview in London [on Nov. 25]. The company will be “adding where we think it’s opportune,” he said.

Friese declined to comment specifically on Delta Lloyd, the insurer whose shares have jumped almost 10 percent since Rabobank Groep analyst Cor Kluis said that the company would be a good acquisition for NN. He also declined to specify what business segments or geographical regions NN is examining.

“NN will be very selective in their acquisitions,” Joost van Beek, an analyst at Theodoor Gilissen Bankiers NV, said by phone. “They’re building an excellent track record with their current businesses.” Van Beek has a hold rating on NN and Delta Lloyd.

Tougher Regulations

Delta Lloyd could enhance NN’s free cash flow per share “by double digits,” Rabobank’s Kluis said. Shares of Delta Lloyd, which has a market value of about 1.7 billion euros ($1.8 billion), have tumbled this year on concern it needs to bolster capital to comply with stiffer Solvency II regulations.

“We will make our cash available for distribution to shareholders, unless we have a corporate opportunity that presents itself,” Friese said.

NN’s shares have risen more than 60 percent since The Hague-based insurer’s initial public offering in July 2014 and are up more than 30 percent this year. ING, the biggest Dutch financial services company, was forced to divest NN as part of a restructuring imposed by European regulators following the company’s 2008 bailout. ING still owns more than 25 percent of NN.

The company operates in more than 18 countries, with a history dating back 170 years, according to its website. The Netherlands, life insurance in Japan, European general insurance and asset management are NN’s largest business units. The company announced last week that it’s looking to trim costs in the Netherlands by 15 percent through 2018, and will cut jobs as part of that process.

“It will inevitably and unfortunately involve labor costs, but we’ll try to navigate through that thoughtfully in the next three years,” Friese said.

–With assistance from Neil Callanan.


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