Athora Holding Ltd. publishes its interim 2021 results

8th September 2021

Pembroke, Bermuda, 8 September 2021 – Athora Holding Ltd. (Athora or the group), an insurance and reinsurance group focused on the European market, today announces its unaudited consolidated results for the six months to 30 June 2021. During the period, Athora’s financial results remained robust despite ongoing economic uncertainty, validated by Credit Rating upgrades. Athora continues to integrate acquired businesses and build its growth pipeline.

Performance Highlights

  • Group IFRS profit before tax (from continuing operations) for H1 2021 of €204m reflecting a full six month contribution from Athora Netherlands, a positive impact from a change in reserving parameters, partially offset by adverse accounting investment variances arising from hedging activity
  • Assets under Administration1 of €79bn (FY 2020: €83bn) slightly decreased as a result of rising interest rates with a corresponding reduction in insurance provisions
  • IFRS total equity increased in the first six months of 2021 to €4.4bn (FY 2020 €4.3bn)

Financial Strength Highlights

  • Fitch upgraded the ratings of Athora’s subsidiaries (Athora Ireland plc, Athora Life Re Ltd. and SRLEV N.V.) from BBB+ to A-. The ratings of Athora Holding Ltd. and Athora Netherlands N.V. were upgraded from BBB to BBB+. The rating Outlook of Athora and its subsidiaries is Positive. Additionally, AM Best upgraded the ratings of Athora Life Re Ltd. and Athora Ireland plc to A- (Stable) from B++ (Stable)
  • Athora signed a €500m unsecured revolving credit facility with a group of leading credit institutions providing material additional liquidity resources; the facility has not been drawn
  • SRLEV N.V. refinanced a 9% €250m Tier 2 at favourable terms with a new Athora Netherlands N.V. issuance of a 2.25% €300m Tier 2
  • Group financial leverage ratio2 remained stable at 26% (FY 2020: 26%)

Strategic Progress

  • Continued focus by Athora Netherlands in the first six months of 2021 to reposition its investment portfolio to support increased risk-adjusted returns and drive higher capital generation
  • Athora has continued to integrate and streamline its business units to achieve operational efficiencies including the outsourcing of technical administration of its life insurance business to Syncier GmbH in Germany in the first half of 2021
  • Announced the sale of Athora Ireland’s variable annuity portfolio in March 2021 (approximately €1bn of AuA), which has been in run-off since 2017. The sale is expected to complete by year end and allows Athora Ireland to focus on further developing its growing reinsurance business
  • Development of our sustainability strategy including the launch of “The Responsible Finance Club” by Athora Belgium to raise awareness among insurance brokers and their clients of the societal importance of responsible investment. Additionally, Athora Netherlands was awarded first place by VBDO3 as the most sustainable insurance company in the Netherlands

Management Changes

  • In May 2021, the Athora Board of Directors appointed Anders Malmström as Group Chief Financial Officer and a member of our Management Executive Committee
  • In July 2021, Athora Netherlands appointed Jan de Pooter as member and chair of the Executive Board and CEO of Athora Netherlands and its insurance subsidiaries

Group Chief Executive Officer Statement

Michele Bareggi, Group Chief Executive Officer of Athora, said:

"During the first half, we continued to make progress on our strategic objectives of sustainable growth; proactive capital and risk management; strong and stable investment returns; and competitive cost and service levels. Following the transformational acquisition of Athora Netherlands, our focus has been on repositioning asset portfolios supported by our strategic relationship with Apollo, increasing operational efficiency and selective growth. Collectively, these actions will enable us to provide more value to our customers and increase cash generation.

Our core focus on financial stability and resilience is central to our business model. Credit Rating improvements by our two rating agencies to A- also validates the sustainability and growing track-record of Athora. The ratings upgrades are key to Athora’s reinsurance business plan, future financing and commitment to being a long-term provider to the European insurance sector. Our financial leverage ratio remains stable at 26%.

As I look to the remainder of 2021, we will continue to support our business units in the delivery of their strategic plans as we build our focused and integrated group. In addition, we will further develop and selectively pursue a growing pipeline of reinsurance, pension buy outs and M&A opportunities we see across our target markets.

Finally, we remain conscious of our responsibilities to employees and local communities as we mature as a group. We have been able to donate over €650k so far this year to our communities to assist with education and flood relief efforts. Additionally, supporting our employees during the pandemic has been a key focus for us through continuous communication, wellbeing initiatives and fit-for-purpose technologies. The vast majority have been working remotely and, thanks to their resilience, we continue to deliver on our mission to bring more value to our customers in fulfilling their long-term insurance needs.”

Unaudited interim consolidated income statement for the half-year ended 30 June 2021

€m

Half year ended 30 June 2021

Full Year ended 31 December 20204

Continuing operations

Net earned premium

929

1,549

- Gross earned premiums

1,120

1,801

- Earned premiums ceded

    (191)

(252)

Fee and commission income

55

92

Investment income

(1,392)

2,224

Investment income attributable to policyholders and third parties

1,100

2,456

Gain recognised on acquisition of subsidiary

-

213

Other income

4

39

Total income

696

6,573

Net insurance benefits and claims

1,032

(2,790)

- Claims paid and change in the insurance provisions

838

(2,822)

- Reinsurer's share

194

32

Expense attributable to policyholders and third parties

 (1,209)

(2,230)

Acquisition costs

(24)

(41)

Other expenses

    (234)

(707)

Interest expense

(57)

(105)

Total expenses

(492)

(5,873)

Profit before taxes

204

700

Taxation charge

(78)

(93)

Profit from continuing operations

126

607

Discontinued operations

Profit after tax from discontinued operations

-

49

Profit  for the period / year

126

656

Attributable to shareholders of the Company

112

641

 Attributable to Non-Controlling Interest          14                                           15

 
In H1 2021, Athora generated IFRS profit before tax of €204m including the contribution from Athora Netherlands following its acquisition on 1 April 2020, which was partially offset by adverse investment variances arising from hedging positions that are in place to stabilise local solvency ratios. In addition, the H1 2021 result reflects a positive impact from an update to the IFRS reserving parameters to more closely align to the group solvency basis. The profit in H1 2021 does not reflect positive one-off items which occurred in FY2020 relating to the acquisition of Athora Netherlands and the tactical investment grade credit transactions. The FY 2020 result also included positive investment variances due to market conditions at the time.

Net Earned Premiums totalled €929m, reflecting a full six months of Athora Netherlands’ premiums, in contrast to the FY 2020 result (€1,549m) which included premiums from the date of acquisition. 2021 premium income also includes further premiums from the group’s first external reinsurance deal which was signed in late 2020.

The group hedges to ensure that investment assets and policyholder liabilities move largely in step, as economic factors change. This is designed around the local solvency balance sheets, and therefore there is some residual volatility which flows through to the IFRS income statement.

Investment Income, which represents income received and unrealised gains and losses on certain investments and derivative financial instruments, was negative for the six-month period. Within this, the result from derivatives was a loss of €1,786m (FY 2020: profit of €1,206m), mainly reflecting interest rate movements on derivatives used for asset/liability management purposes as noted above.

Similarly, net insurance benefits and claims were positive for the six-month period, offsetting the Investment Income movement shown above. This again reflects the impact of rising interest rates on policyholder liabilities, together with the above-mentioned parameter update to the group reserving provisions.

During the first six months, deployment of the asset portfolio towards our Strategic Asset Allocation (SAA) in the Netherlands showed good progress with increased investments into Mortgages and Private Credit which will increase future asset returns. Athora Belgium and Germany have completed repositioning their asset portfolios to the SAA.

Unaudited interim consolidated other comprehensive income for the half-year ended 30 June 2021

€m

Half year ended 30 June 2021

Full Year ended 31 December 2020

Profit for the period / year

126

656

Other comprehensive income / (expense), net of tax:

Items that may be reclassified to profit or loss in subsequent periods, net of tax:

Impact on other comprehensive income from available-for-sale investments and shadow accounting adjustments

78

46

Impact on other comprehensive income from cash flow hedges

(61)

10

Net change in foreign currency translation reserve

6

(2)

Items that will not be reclassified to profit or loss in subsequent years, net of tax:

Actuarial gains or losses arising from defined benefit plans

22

(103)

Other comprehensive income / (expense) for the period / year, net of tax

45

(49)

Total comprehensive income for the period / year, net of tax

171

607

Attributable to shareholders of the Company

157

  592

 Attributable to Non-Controlling Interest                    14                15

Unaudited interim statement of financial position as at 30 June 2021

€m

As at 30 June 2021

As at 31 December 2020

Intangible assets

101

103

Property and equipment

81

84

Investment properties

1,684

1,331

Financial assets

56,013

61,118

Investments attributable to policyholders and third parties

19,731

18,736

Reinsurance assets

108

158

Deferred taxation assets

656

678

Income tax receivable

1

23

Loans and advances due from banks

424

773

Other receivables

1,469

1,358

Other assets

767

832

Cash and cash equivalents

1,268

1,251

Non-current assets or disposal groups classified as held-for-sale

85

16

Total assets

82,388

86,461

Equity

Share capital and share premium

3,096

3,095

Retained earnings / (deficit)

539

421

Other reserves

123

99

Ordinary shareholders' equity

3,758

3,615

Preference shares

400

384

Shareholders' equity

4,158

3,999

Non-controlling interests

270

255

Total equity

4,428

4,254

Insurance provisions

46,580

49,385

Liabilities attributable to policyholders and third parties

20,456

19,473

Employee benefits and other provisions

822

858

Borrowings

1,564

1,498

Other financial liabilities

6,345

8,846

Deferred taxation liabilities

83

59

Tax payables

19

5

Other payables

1,764

1,715

Other liabilities

327

368

Total liabilities

77,960

82,207

Total equity and liabilities

82,388

86,461

Total Assets at 30 June 2021 stood at €82,388m, a decrease on 31 December 2020 (€86,461m), primarily reflecting increases in interest rates in H1 2021 resulting in lower fixed-income values. It is important to note that these movement are offset by corresponding falls in the value of Insurance Provisions, which are also impacted by the same factors.

As a result, Total Equity has risen from €4,254m at 31 December 2020 to €4,428m at 30 June 2021.


1 Calculated by Athora as the sum of investment properties, financial assets, cash and cash equivalents, loans and advances due from banks and investments attributable to policyholders and third parties in the statement of financial position.

2 Calculated by Athora as total borrowings expressed as a percentage of the sum of total borrowings and total equity. Definitions of borrowings and total equity are aligned with those of Fitch rather than on an accounting basis  

3 Dutch Association of Investors for Sustainable Development

4 FY2020 shown as a comparative given the Athora Netherlands acquisition was only completed in April 2020 making a HY2020 comparative less relevant