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ANNUAL REPORT
Report of the Board of Directors
Annual Report
Achmea Zorgverzekeringen N.V.
2013
KvK (Chamber of Commerce) number: 28080300
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ANNUAL REPORT
Annual Report
Annual report
REPORT OF THE BOARD OF DIRECTORS
3
REPORT OF THE SUPERVISORY BOARD
30
CONSOLIDATED FINANCIAL STATEMENTS
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
39
COMPANY FINANCIAL STATEMENTS
112
NOTES TO THE COMPANY FINANCIAL STATEMENTS
115
OTHER INFORMATION
127
SUBSEQUENT EVENTS
127
PROVISIONS IN THE ARTICLES OF ASSOCIATION REGARDING PROFIT APPROPRIATION
127
PROFIT APPOPRIATION AT YEAR END 2012
128
PROPOSAL PROFIT APPROPRIATION AT YEAR END 2013
128
INDEPENDENT AUDITOR’S REPORT
129
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ANNUAL REPORT
1
GENERAL
The goal of Achmea Zorgverzekeringen N.V. is to carry on the health insurance business. Since the introduction of the current
national health system as of 1 January 2006, Achmea Zorgverzekeringen N.V. offers supplemental insurance for both individual and
collective policyholders. This supplemental insurance is offered by Achmea Zorgverzekeringen N.V. The basic health insurance is
offered by its 100% insurance subsidiaries. In addition, pursuant to their responsibility as health insurers, Achmea Zorgverzekeringen
N.V. and its subsidiaries offer services that focus on prevention, mediation and treatment (e.g. waiting list mediation and guaranteed
care), monitoring, post-treatment care and emergency care. These services are part of the health insurance package.
The product range focuses increasingly on prevention and encouraging a healthy lifestyle. This is reflected by the collaboration with
the prevention and reintegration services of Achmea, such as Pim Mulier, Leefstijl Training & Coaching and Winnock. There is also
a collaboration with Eurocross.
Achmea Zorgkantoor N.V, a subsidiary of Achmea Zorgverzekeringen N.V., and Agis Zorgkantoor, part of Agis Zorgverzekeringen
N.V., carry on the AWBZ (Exceptional Medical Expenses Act).
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ORGANISATIONAL STRUCTURE
Legal structure
Achmea Zorgverzekeringen N.V. is part of the Achmea Group. Achmea B.V. (Achmea) owns 100% of the shares of Achmea
Zorgverzekeringen N.V. Achmea Zorgverzekeringen N.V.'s registered office is located in Zeist. Both the subsidiaries of Achmea
Zorgverzekeringen N.V. and the funds in which it holds a major direct or indirect interest at 31 December 2013 are included below.
Company name
Agis Zorgverzekeringen N.V.
Agis Ziektekostenverzekeringen N.V.
OZF Achmea Zorgverzekeringen N.V.
Interpolis Zorgverzekeringen N.V.
Avéro Achmea Zorgverzekeringen N.V.
Zilveren Kruis Achmea Zorgverzekeringen N.V.
Achmea Zorgkantoor N.V.
Achmea fixed income health Fund
Achmea variable securities health Fund
Direct interest
Total (direct
+ indirect)
interest
Registered
office
100%
0%
100%
100%
100%
100%
100%
1.6%
20.79%
100%
100%
100%
100%
100%
100%
100%
96.62%
99.98%
Amersfoort
Amersfoort
Utrecht
Utrecht
Utrecht
Utrecht
Utrecht
Utrecht
Utrecht
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ANNUAL REPORT
Organisational structure
Organisation
The following organisation chart gives an overview of how the Achmea Group's activities are organised. These include the activities
for Achmea Zorgverzekeringen N.V.
The primary activities for Achmea Zorgverzekeringen N.V. and its subsidiaries are performed in the Care and Health division
(dZ&G) of Achmea B.V. The companies use all Achmea distribution channels for their product sales: the direct distribution channel
(e.g. Zilveren Kruis), distribution through the banking channel (Interpolis), the broker channel through insurance brokers (e.g. Avéro)
and direct distribution aimed at the large corporate market. Distribution via the direct channel largely takes place within the Care and
Health division itself. Distribution for the Interpolis brand takes place within the Banking Distribution division, distribution for the
Avéro Achmea brand via the Intermediary Distribution division. Distribution for the FBTO brand takes place via De Friesland
Zorgverzekeraar, also a 100% subsidiary of Achmea B.V.
Employees are employed by Achmea Interne Diensten N.V. Only OZF Achmea Zorgverzekeringen N.V. employs staff. Support
services such as office accommodation , ICT, accounting and facility services are provided by executive staff and shared service
departments of the Achmea Group.
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Brands
Achmea Zorgverzekeringen N.V. and its subsidiaries market health insurance under a range of different brand names. The most
important brand names are listed below, along with each brand's characteristic features.
Zilveren Kruis Achmea has been more than simply a health insurer for many years: we help our policyholders to live a healthier and
more active life. For example, customers can benefit from our vitality programme. Zilveren Kruis Achmea collaborates with partners,
including hospitals, in order to improve healthcare.
Agis is a health insurer that is active throughout the Netherlands but with a strong focus on Amsterdam, Utrecht/Amersfoort and
Apeldoorn as core business areas. As is the case with all Achmea companies, the customer comes first and Agis works continuously
to find ways of improving customer health and care. Quality is a key issue and Agis uses validated patient experiences to help
healthcare providers improve their services. The integration of the label Agis with the label Zilveren Kruis Achmea effective 1
January 2015, as announced at the beginning of this year, will allow us to improve our effectiveness and efficiency, as well as keep
our services affordable to our customers and keep premiums low. The integration of the activities has already taken place. Agis has
roots as a provider of health insurance and other health services in various regions of the Netherlands. Care and personal attention are
key values of Agis, and we will integrate these values with the values of Zilveren Kruis Achmea. Agis’s regional initiatives will
remain in place, while we will also find other ways to incorporate Agis’s values into that of Zilveren Kruis Achmea.
Avéro Achmea offers a range of insurance and financial solutions. Avéro Achmea provides non-life and income protection insurance
to corporate and private customers as well as health insurance and mortgage and banking products. Avéro Achmea works with and
through independent brokers and advisors.
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ANNUAL REPORT
Achmea Zorgverzekeringen N.V. offers supplemental health insurance products under the FBTO label.
Interpolis, through the Rabobank branch network, offers customers and entrepreneurs transparent and relevant insurance solutions for
the risks they run. All Interpolis products are as accessible and as simple as we can make them. We call that: crystal clear.
OZF Achmea is a small insurance company, which operates within the Achmea Group under its own name. In addition to individual
policyholders, OZF Achmea has entered into collective health insurance contracts with a large number of companies. The
organisation is located in Hengelo and operates nationally.
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STRATEGY
Achmea: Acceleration and Innovation - putting the customer's interests first
Division Care and Health, with her health insurers, contributes significantly to the Achmea Group's goal of becoming the most
trusted insurer. Customers must be able to rely on Achmea always being available to help via a broad range of brands and
distribution channels. Achmea sees it as its duty to act responsibly and in a future-oriented way, including by developing sustainable
products and services, by investing responsibly and by making customer interests its core focus.
At the end of 2013, Achmea launched the large-scale ‘Acceleration and Innovation’ programme. Achmea is going to accelerate its
customer focus and cost-cutting programme as well as modernise and digitise its processes and services. Achmea operates in a sector
that is undergoing change, and is now taking action to ensure that in the future it continues to be what it is today: a cooperative
insurance provider with cast-iron brands that stays in contact with its customers in a modern manner. Our customers want to be able
to reach us – and arrange their insurance cover with us – 24 hours a day, 7 days a week. They naturally want to have understandable
and affordable products and services too. Achmea wants to achieve a sustainable and responsible result - and a more competitive cost
level - by increasing its commercial strength. In doing so, we are holding fast to our objective of becoming ‘the most trusted insurer’.
Achmea's strong market position is based on the recognition it receives for its products and services, in combination with strong
brands. Achmea is the market leader in insurance and holds at least a top-four position in all sub-segments of the Dutch market.
Although its capital position is robust, Achmea is not yet where it wants to be. Consumers, regulators and politicians are continuing
to monitor the financial sector closely, the focal point being how the customers’ interests are served and how insurers fulfil their role
in society. People increasingly expect companies and, in particular, financial institutions to demonstrate the value they add to society.
More than ever, transparency in all aspects of business operations is essential if confidence is to be restored further. Especially in the
care sector.
Achmea’s strategic compass is geared towards becoming the 'most trusted insurer’. The world is changing rapidly and the customers'
needs are changing at the same pace. This requires the organisation to have greater adaptability and operational effectiveness.
Achmea is aware of its opportunities and future challenges. On the one hand there is optimism about its point of departure. On the
other hand there is realism with regard to the many challenges that lie ahead. Changing customer needs, changes to legislation and
regulations, and shifting economic conditions create a climate that requires a flexible organisation that develops innovative and
sustainable solutions and that is totally and easily accessible to the customer.
Care and Health division
To become the ‘most trusted insurer’ in Care and Health the following ambitious target was set in 2011: ‘everyone will be able to
rely on the best possible healthcare by 2020’. This means that the Care and Health division (dZ&G) is committed to ensuring that the
best quality care is and remains available and accessible to everyone. In the strategy this takes further shape in processes and targets
at various levels: for customers, society, partners, financial stakeholders and employees.
In the past year, several changes have been made to the Board of the Care and Health division. The position of Chairman of the
Board and that of Director of Finance & Risk were both filled from within the Board. This provides continuity with respect to
carrying out the strategy in the Care and Health domain. The internal organisation has developed well in recent years. It is now time
to convert the investments even more into tangible results for the customer. In that regard Achmea’s Care and Health division faces a
number of challenges in the years ahead. These stem not only from Achmea’s ambitions but also from the changes in market
conditions, healthcare, legislation and regulations.
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ANNUAL REPORT
Challenges in health insurance
When the basic healthcare insurance plan was introduced in 2006 the insurance providers acquired the specific role within the
healthcare system of guaranteeing the quality, affordability and accessibility of healthcare for their policyholders. Healthcare
insurance providers are achieving this with ever increasing success and that success is increasingly being recognised by the care
sector and by stakeholders such as politicians and patients’ associations. This emerges from, for example, the reputation survey that
is carried out annually on behalf of Achmea dZ&G among external stakeholders. The respondents are of the opinion that the identity
of Achmea dZ&G is taking shape more and more and that Achmea , as market leader, is increasingly taking responsibility for getting
developments off the ground in the care sector and for its customers.
The reputation survey also shows a slight improvement from last year on the topics of collaboration with healthcare providers and
partners in the care sector, market leadership, affordability, quality, solidarity and trust. Additionally, the respondents have identified
a more active attitude by Achmea dZ&G towards ensuring that healthcare remains affordable for its policyholders. There is
appreciation in the care sector for the Healthcare Quality programme, in which work is going ahead, with the cooperation of the care
sector, to clearly define and assess the quality of treatment and make it more transparent. It is suggested that the ambition ought to be
to make more information on quality available to patients. Consequently, providing customers with information on quality in a clear
form and carrying out health care procurement on an active basis are among the main objectives of Achmea dZ&G in the year ahead.
The challenge here is to maintain a balance between making the quality and cost of healthcare and healthcare insurance transparent
and the consequent inevitable pressure on the healthcare providers’ and healthcare insurance providers’ administration and accounts.
Transparency in healthcare costs and fraud by healthcare providers
Important topics for customers and the organisation alike are transparency, acting efficiently with regard to healthcare costs, fraud
and keeping good control of healthcare providers. The introduction of a policy excess has made it much clearer to the customer that
healthcare costs are high, especially with respect to specialist medical care at hospitals. More attention is now being paid to the costs
charged. It is also important to provide a clearer understanding of what these costs comprise and how they are calculated, in advance
and frequently also in retrospect. The challenge is to improve control and reduce fraud without increasing the distrust. Trust has to be
the starting point. The aim is for continual improvement, preferably with control being carried out as close as possible to the source
and, wherever possible, at the point of input by the healthcare providers themselves. Subsequent random checks must be carried out,
possibly followed by further investigations and corrections. The challenge here is to make the definitions and perceptions of fraud
and the scale of it clear and transparent. Where necessary a study will have to be made of how the method should be improved if it is
not geared logically to healthcare treatments. Actions with regard to control and fraud relate in part to incorrect and inept use of
administrative systems by healthcare providers but not specifically to deliberate misuse. At the same time, fraud investigation and
material and formal controls must also become more streamlined and professional. This was taken up in 2013 and will be further
implemented in 2014.
Healthcare cost control and healthcare contracting
The results in the domain of healthcare cost control are the main reason why the policyholders’ premium remained unchanged in
2013 and has actually been reduced across the market in 2014 for the first time since 2005. Customers have noticed that the premium
has been reduced. They don’t always make a connection between healthcare costs and the efforts made by healthcare insurance
providers to keep healthcare affordable. This is because access to the best healthcare for everybody is taken for granted. People who
grow up in the Netherlands are unaware that only 5% of the world’s population live in a country in which everyone can make use of
the same good healthcare providers. Likewise, it is not generally realised that guaranteeing everyone access to healthcare at equal
cost is possible only by paying attention to cost control. Achmea dZ&G’s task in the years ahead is to continue stressing the
importance of healthcare cost control and to show that this contributes to keeping the premium affordable and to protecting the
solidarity.
Controlling healthcare costs and paying attention to the quality of healthcare does not mean that a contract is concluded automatically
with every healthcare provider. In recent years several cases involving whether or not healthcare providers are contracted have
attracted media and political attention. It is therefore very important that customers know, at the time they choose their healthcare
insurance provider, which healthcare providers are contracted. Achmea has taken this on board. In 2013 healthcare contracting for
2014 was virtually completed by mid-November, roughly six months earlier than what was considered the norm a couple of years
ago. Furthermore, customers could check via internet which healthcare providers had been contracted.
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ANNUAL REPORT
Achmea is convinced that better healthcare quality leads not only to better healthcare for customers but also to more effective
healthcare. The better-quality healthcare providers generally work more effectively, mainly because they have more experience.
Consequently, the intention is to procure healthcare increasingly on the basis of quality as well as price, so the results of the
Healthcare Quality programme will be used in 2014 to procure healthcare for 2015. Investments will also be made in healthcare
innovations that are both profitable and economical. We will aim to make a quicker improvement in the healthcare infrastructure in
the core regions in which most of our customers live. This will enable us to keep healthcare costs under control on a permanent basis
– something that is especially essential in the current flat economy if we are to ensure that healthcare remains affordable and
accessible for our policyholders in the long term and that everyone can count on getting the best healthcare.
Changes in legislation and regulations relating to the AWBZ will necessitate major modifications to the system in the coming years.
This means that healthcare insurance providers will have to keep watching their solvency as rising capital requirements put premiums
under pressure.
A shift in the market
Almost 95% of customers remain with the same insurance provider at the end of the year. When customers switch it is generally
because of the premium but they also want to be free to choose their healthcare provider. As in other markets in which Achmea
operates – private non-life insurance for example – it is becoming more transparent, so consumers can compare products more easily.
The demand for an affordable premium despite the rise in healthcare costs is an additional challenge for healthcare insurance
providers. Keeping premiums affordable and yet generating sufficient yield for healthy business operations and solvency requires
cost control, both now and in the future. This applies to Achmea as a whole and in healthcare. For the Care & Health division it
means reimbursing approximately 95% of policyholders’ healthcare costs. It also requires us to accelerate cost control within our
own organisation. The Acceleration and Innovation programme is logically geared to the priorities of Care & Health.
The pressure on household budgets is not visible only in the tendency of customers to switch, which is driven primarily by premium
comparisons. It is visible also in payment problems and the broader social problems of customers that are generally involved here.
We make arrangements, often in collaboration with municipal councils, for debt limitation and reduction.
In broad terms there is slow but steady growth in the number of customers not taking out supplementary insurance or opting for less
comprehensive insurance and/or a higher policy excess. A socially responsible and affordable premium is essential but will not be
sufficient in the future. There is a growing demand for products that reimburse that which is really necessary and for services that
make a tangible improvement to care and health. The challenge is to create clearer added value for the customer in products, service
and convenience. In the short term this requires speeding up the innovations that have already been introduced in propositions and
changes to the product line. In the medium to long term it requires new methods and value models that enable us, independently and
with existing and new partners, to help customers improve their own care and health. This can be achieved by instruments in selfmanagement and by stimulating healthy living and eating and making this more attractive. Only in this way can yield, customer
retention and healthcare cost control be safeguarded in the long term.
Another element is that customers are increasingly demanding multi-channel contact and/or self-service in the regular insurance
processes. They take it for granted that they can get in contact with the Care & Health division or take out an insurance policy
directly 24/7, choosing the channel that suits them best at that moment. Not infrequently this involves the use of one of the channels
offered by online and social media. These have been improved, so customers can now make many arrangements themselves via
‘Mijn domein’ and can submit claims online. This may be further facilitated by rapid improvements to the (digital) service and by
innovation with respect to the use of online and social media for customer contact. To that end there are increasing opportunities for
customer to chat with employees and to get better information about their claims, healthcare use and policy excess.
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Significance of these challenges
Although the challenges set by the wishes of the customer, legislation, the system and social developments as a whole are not new,
the speed at which the changes are taking place is increasing. Besides this, we are living more and more in a society in which
everything is visible and parties are asked more often to explain what they do and why. Where the trust of our partners and
stakeholders in the reputation survey mentioned above is showing an upward trend, the challenge is to make a demonstrable and
recognisable difference for our customers on a permanent basis. Trust can only be earned by demonstrating more clearly what is
being done and why, and by showing that this makes a positive difference for customers.
Instituting acceleration and innovation for customers makes greater demands of the organisation. Legal measures, social
developments and the Company’s ambitions make demands on its capacity to change and they require focus. Strategy is the
paramount element in this. Achmea dZ&G has decided on the concrete results we aim to achieve in 2014 as short-term steps towards
realising the long-term strategy. These goals are in line with the priorities in the Acceleration and Innovation programme, which was
initiated as a communal change and development path within the Achmea Group as a whole, and therefore contributes to its
realisation. In that way the Care & Health division is helping to realise Achmea’s strategy. Conversely, the Acceleration and
Innovation programme helps towards the realisation of the care and health goals because of the support base and collective energy
that are brought to bear within the Achmea Group as a whole.
Acceleration and innovation: In brief, what are the goals of the Care & Health division?
In terms of process optimisation and rationalisation of the IT systems, good results have been achieved in the last few years,
following the integration of Agis and the Care and Health division of Achmea. This has created more time and space for innovation
and improvement. The customers’ interests have now replaced customer orientation as the focal point of Achmea dZ&G. We try to
do whatever, to the best of our knowledge, is genuinely beneficial for the customer. For example, it may not be sensible at all for
certain customers to give up supplementary insurance or to increase their policy excess, because they cannot bear the risks. On the
other hand, for other customers who have a greater buffer this could be the smart and logical choice. Higher demands are being set
for scores achieved on the transactional Net Promoter Score (NPS). This means focusing on improving our customer contact by
letter, by e-mail and by phone. In 2013 we also started making long-term choices for our product range. This will become visible in
2014 in our revamped propositions.
Tangible cost control results were achieved in 2013 when procuring healthcare for policyholders in 2014. Improved quality was
secured, for example through the procurement of chain healthcare by orthopaedists from physiotherapists so as to diagnose back
complaints. Moreover, contracts were finalised earlier than ever before so that, in line with agreements with VWS and healthcare
providers, policyholders had clear information about contracts with healthcare providers before choosing their policy. The
investments in quality we have made in the last few years will be reflected in our healthcare procurement in the year ahead. In 2014,
making the quality even more transparent and ensuring that better results are rewarded – and vice versa – will form an integral part of
the contract negotiations with healthcare providers for 2015. These insights will also be used to give customers more opportunity of
choosing healthcare on the basis of quality. In the first few years this will affect only a small part of our overall procurement, but we
regard it as an important step. Getting the customer to be pro-active involves more than just quality. We want to enable customers to
make informed choices in terms of selecting not only a healthcare provider but also their own treatment. We will therefore provide
customers with information, or enable them to find it for themselves, and encourage them to practise self-management and a healthy
lifestyle. This has two benefits. Firstly, more attention will be given to the quality of healthcare and the effectiveness of the
treatment. This may vary from one person to another and waste is thereby avoided. Secondly, paying attention to one’s own health
and care stimulates greater interest in applying or investigating other forms of preventive measures.
A greater understanding of health and care is also needed in order to get a better picture of the desired healthcare infrastructure and
capacity in each region. Essentially this means procuring care in line with demand and continuing to develop the care provision and
the infrastructure accordingly so as respond more closely to that demand. For this purpose good regional and portfolio analyses are
needed so that specific changes can be made to the infrastructure and thereby improve the financial and health-related benefits in
selected regions. Speeding up the improvements in these areas should ensure that in the years to come policyholders’ healthcare costs
rise by no more than the inflation rate, corrected for any changes in the long-term care system.
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ANNUAL REPORT
In recent years Agis and the Care and Health division of Achmea have been successfully integrated in terms of organisation and
systems. Both healthcare cost control and further control of the costs of the organisation are essential in order to keep premiums
affordable and the yield up to the mark. This is necessary straight away because the management costs are reflected in the premium,
but it is logically also a responsibility we have to customers and the care sector. The aim is to gradually reduce the management costs
per policyholder by a quarter in the coming years through Continuous Improvement. Preparations have already been made and the
initial results will become visible in 2014. The first steps will be taken in 2014 in staff departments and commercial departments. The
customer contact and operational costs will be reduced annually in stages, through digitisation, provision of service and self-service
via internet. Online service will be provided wherever possible so that in a number of cases telephone contact is no longer needed.
That is also what customers want. Policyholders can choose the form of contact that suits them. Customers will be given the
opportunity to receive most of their communications digitally. The benefit of this is that it can be done at a time that suits the
individual customer. Of course, this also means that we will have to be available for questions and support at those times. The
targeted use of Continuous Improvement (our Lean programme) will ensure that quality and productivity improve, through means
such as improving our processes based on analysing customer questions (e.g. about the payment process).
By bringing about greater efficiency internally and improving care externally with the cooperation of the care sector we will ensure
that by 2020 customers will be able to count on the best care!
Investments
Our investment policy
The investment policy for Achmea Zorgverzekeringen N.V. comes under the Achmea Group’s general sphere of action and is
primarily drawn up and managed by the group department Asset Management. Achmea receives funds such as premiums from the
various insurance activities. The investment policy endeavours to achieve optimal and stable returns without losing sight of the
accompanying risks and the commitments vis-à-vis the policyholders.
We invest the funds from our insurance activities for our own account. For the long term, money of the health insurance entities is
invested in the two closed-end common funds (Fiscal Investment Institutions, FBI’s). The day-to-day implementation of the policy
has been largely outsourced to asset managers. In recent years, the investment policy has been tightened up. The investments have
been placed in what is known as the ‘return portfolio’. For this portfolio, we endeavour to achieve the highest possible return, given
the market risk budget available. Achmea’s risk appetite principles - which relate to such factors as our rating, the liquidity position
and the degree of earnings volatility - are taken into account when setting this budget. Our investment policy focuses primarily on the
long term, our background as a cooperative meaning that we pursue the policy as prudently as possible. This has resulted in a
relatively conservative investment portfolio. In addition, we have a strict policy on counterparties, something that is an important
aspect of both our risk policy and our risk monitoring.
Responsible investment
As an institutional investor, Achmea is willing and able to invest the capital responsibly at its own risk, and to do so in such a way
that it will influence the behaviour of the companies in which investments are made. This policy is known as ‘responsible financial
chain management’. We exercise influence by such means as exclusions, by integrating ESG (Environment, Social and Governance)
into our asset managers’ portfolio construction and portfolio management processes, and by exercising our voting rights at the
AGMs.
Achmea is also a signatory to the UN Principles for Responsible Investment and the UN Principles for Inclusive Finance, and also
participates in the Carbon and Water Disclosure Projects.
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ANNUAL REPORT
Portfolio composition in 2013
In the case of Achmea Zorgverzekeringen N.V., the investments related to the insurance liabilities and related items are primarily
investments in bonds, through the FBI’s. In addition amongst others, part of the portfolio is invested in the ‘return portfolio’. The
investments in the return portfolio consist mainly of equities and, to a limited extent, commodities and hedge funds.
Performance in 2013
In 2013, the financial markets were calmer and had a greater risk appetite, this trend being supported by increasing optimism about
economic developments. The accommodating monetary policy pursued by the central banks in Europe and the US was enough to
counteract the negative impact on economic growth caused by governments and consumers alike reducing their debt levels. The
structural reforms being carried out in the peripheral countries of the Eurozone appear to be enough to improve these countries’
competitive positions somewhat. The euro interest rate rose as a result, but was also boosted by the tapering announced by the Fed.
The relatively calm state of the financial markets and the rising levels of economic growth in America led to rising interest rates for
the debts of strong and healthy governments. In Europe, the spreads between the various government debt interest rates and the
German government debt interest rate declined. The interest rate spread between Dutch government debt and German government
debt was not affected by S&P’s decision at the close of the year to downgrade the Netherlands. Credit spreads decreased (which
benefited corporate bonds), and equities – especially those in developed countries – posted very good returns.
Portfolio mix
The return portfolio’s strategic mix is reviewed annually in the light of any adjustments to the economic input and any changes in
market outlooks. This has not led to a major adjustment in the strategy for 2014. The investment mix will be adjusted somewhat in
order to further improve the risk-return profile.
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ANNUAL REPORT
4.
DEVELOPMENTS DURING THE FINANCIAL YEAR AND RESULTS
Results
Income statement
2013
2012
11,505.6
11,443.5
-320.2
-302.9
Amounts x € million
Gross written premiums
Reinsurance premiums
Change in provision for unearned premiums
-15.7
-4.4
11,169.7
11,136.2
35.9
49.5
5,8
7.6
Total technical income
11, 211.4
11,193.3
Gross claims
-11,301.5
-9,995.3
Gross change in provision for outstanding claims/benefits
672.9
-739.2
Reinsurers’ share
341.8
340.5
-10,286.8
-10,394.0
-422.5
-464.5
Premiums earned at own risk
Allocated return on investments
Other technical income at own risk
Claims and movements in technical provisions
Operating expenses
Other technical expenses at own risk
47.3
-25.9
-10,662.0
-10,884.4
Result on technical account
549.6
308.9
Return on investments
108.1
119.3
Total technical expenses
Investment expenses
-6.8
-24.9
Unrealised loss on investments
-26.2
-15.7
Return on investments allocated to technical account
-35.9
-49.5
Net other income and expenses
-95.3
-123.4
Total non-technical result
-56.1
-94.2
Result on ordinary activities
493.5
214.7
492.3
213.5
1.2
1.2
493.5
214.7
Profit attributable to:
- Shareholders
- Third-party non-controlling interest in participations
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ANNUAL REPORT
The result for 2013 shows a significant improvement compared to the 2012 figures. This is primarily due to the relatively greater
increase in premium income compared to the change in the claim level. This is caused by changes in the composition of the portfolio
of insured parties and changes in the funding by CVZ (Care Insurance Board). Additionally, the other technical income increased by
€ 65 million and the operating expenses decreased by € 42 million.
Gross written premiums
The total figure for gross written premiums increased by € 62 million of which € 58 million state contribution. This increase is due to
a lower budget contribution of € 376 million, despite of the addition of the geriatric rehabilitation to the basic health insurance, and a
€ 434 million increase in the contribution from equalisation. Without taking into consideration the state contribution, there is a
decrease of € 4 million in the nominal premiums as a result of a decrease of insured parties, a stable premium level and a downgrade
of supplementary insurance packages sold. The outgoing insurance premiums item relates to premiums under the high cost
compensation scheme.
The result is influenced by the settlements of CVZ. In 2013, the final settlement of the contribution of the Health Insurance Act
(Zvw) 2009, the 2nd provisional settlement Zvw 2010 and the 1st provisional settlement Zvw 2012 were received. The most recent
settlement for each claims year is used when determining the CvZ (Care Insurance Board) budget. The results for 2013 are
determined by extrapolating the results for the provisional settlement Zvw 2012.
Change in provision for unearned premiums
As a result of the relatively low commercial premiums 2014, at the close of 2013 a provision for premium deficiency has been made
of € 21 million compared to € 5 million at year end 2012.
Claims and movements in technical provisions
The gross claims booked increased by € 1,306 million compared to 2012. Conversely, the change in the technical provision decreased
by € 1,412 million compared to 2012.
The increase in the gross claims booked is largely due to the costs of specialist medical assistance provided by or on account of the
hospital. This relates to the making up of the claims arrears that arose in 2012 as the result of the introduction of the DOT (DBC Op
weg naar Transparantie / Making the DBC casemix system more transparent) scheme. The addition of geriatric rehabilitation leads
also to a higher amount of claims.
These developments have an opposite effect on the technical provisions item. Additionally, there are lower claims estimates, in
particular pharmacy and dental care.
Other technical expenses
The other technical expenses item primarily relates to the release of the provision for doubtful debts in the amount of € 46 million
and the release of other provisions in the amount of € 26 million.
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Investment results
The development in investment income, results and impairments can be itemised as follows:
2013
2012
Return on investments
52.8
69.9
Realised gains on investments
54.9
34.3
Unrealised gains on investments
0.4
15.1
Investment expenses
-4.3
-7.8
Impairments on investments
-2.4
-1.5
Realised loss on investments
0.0
-15.7
-26.3
-15.6
75.1
78.7
Unrealised loss on investments
Total investment results
Other income and expenses
The amount of net other income and expenses consists primarily of the charged holding costs. The decrease of € 28 million is related
to the in 2012 additional charged on holdingcosts based on the closing of an agreement with the Dutch Tax Authority.
Statement of Financial Position
2013
2012
0.0
15.9
4,276.6
3,969.0
45.7
70.2
Intangibles
Total investments
Amounts ceded in reinsurance
Contribution from Health Insurance Fund
881.5
780.9
1,789.1
2,441.6
195.9
323.8
80.7
0.0
Total assets
7,269.6
7,601.4
Total equity
2,288.5
1,805.4
Minority interests
57.5
50.3
Technical provision for unearned premiums
21.2
5.5
4,269.1
4,942.0
16.9
25.1
Other receivables
Cash and cash equivalents
Other prepayments and accrued income
Technical provisions for outstanding claims/benefits
Other provisions
Other liabilities and deferred liabilities
Total liabilities
616,4
773.1
7,269.6
7,601.4
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Intangibles
The intangibles are goodwill. Pressure on profitability and solvency margins on health insurers is expected to increase further as a
consequence of social and political developments. The Dutch government is shifting more activities and risks towards health
insurers. The combination of lower premium levels for 2014 and continuous pressure hereon, expected future profits and expected
higher capital requirements do not leave much room in terms of value creation for the shareholders. As a consequence the
recoverable amount is below carrying amount leading to an impairment of the goodwill in 2013.
Investments
The total value of the investment portfolio has increased by € 308 million to € 4,277 million. The composition of the investments is:
Receivables from Group companies
Equities and similar investments
Bonds and other fixed income investments
Loans and mortgages
Deposits
Derivatives
Total
2013
2012
25.0
0.0
186.6
107.0
2,826.6
2.470.5
9.4
10.5
1,223.5
1.375.2
5.5
5.8
4,276.6
3,969.0
Surplus of liquidity is invested in short-term investment such as deposits, commercial paper and tails of deposits. The last two
mentioned are recognizes as bonds. The temporary liquidity surpluses relate largely to the advances of the CvZ received.
The composition of the fixed-income investments can be represented as follows:
2013
2012
Government bonds and other bonds AAA
799.3
886.8
Other bonds
2,027.3
1,583.7
Total bonds
2,826.6
2,470.5
25.0
0.0
1,223.5
1,375.2
9.4
10.5
Total other fixed income securities
1,257.9
1,385.7
Total fixed income investments
4,084.5
3,856.2
Receivables from Group companies
Deposits with credit institutions
Other loans
Using ALM-techniques on Achmea Group-level with a translation to a mix on legal entity level, for Achmea Zorgverzekeringen
N.V. the aim is to optimize the durations of the FBI fixed income investments and the technical provisions.
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ANNUAL REPORT
Amounts ceded in reinsurance
This relates to the receivables and liabilities relating to the high cost compensation scheme.
Contribution from Health Insurance Fund
The receivables item at the close of 2013 increased by € 101 million compared to 2012. The amount of the receivables item is
primarily determined by settlements for previous years and by adjustments to estimates for the CvZ settlements received in 2013
regarding equalisation and subsequent settlement, as well as by the adjusted estimate based on these settlements.
Other receivables
The Other receivables item decreased by € 689 million at the close of 2013 compared to 2012. This is primarily due to a decrease in
the permanent advance payments in connection with the introduction of the above-mentioned DOT scheme of € 543 million. A single
permanent advance payment is provided in the amount of the ‘work in progress’ position of a hospital or mental healthcare
institution. A periodic review is carried out to see whether the size of the ‘work in progress’ position corresponds to the amount of
the advance payment provided. The advance payment is then adjusted if necessary.
Additionally, receivables from direct insurance increased by € 38 million, receivables from revenue settlement related to hospitals
decreased by € 93 million and receivables from and prepaments to group companies decreased by € 60 million.
Total equity
In 2013, total equity increased to € 2,289 million as a result of the net profit of € 492 million. In addition, the revaluation reserve
decreased by € 8 million.
Technical provisions
The technical provisions for outstanding claims/benefits decreased by € 673 million. When determining the claims provision item at
the close of 2013, the Achmea policy for purchasing care, the market developments and the most recent information on both the
national and internal developments in the claim levels were taken into account.
For notes on these developments, please refer to the item Claims and movements in technical provisions.
The receipt of the CvZ settlements for the claims years 2009, 2010 and 2012 means that some of the uncertainty has been eliminated.
However, since the funding of care is undergoing change and because both the market forces and risk are increasing for health
insurers, health insurers are still having to deal with uncertainty. The level of uncertainty is greater for recent claims years than for
claims years before then, because over time more information has been provided for the latter.
As a result of the relatively low commercial premiums 2014, at the close of 2013 a provision for premium deficiency has been made
of € 21 million compared to € 5 million at the close of 2012.
A sufficiency test known as a ‘Toereikendheidstoets’ (TRT) has been carried out for the provision formed as at the close of 2013.
The TRT has revealed that the provision is sufficient.
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Other provisions
In 2013, the Other provisions item decreased by € 8 million to € 17 million. This decrease relates primarily to Stichting Achmea
Gezondheidszorg in respect of repayable subsidies for care innovation projects.
Liabilities
Due to the nature of the business there will always be fluctuation in the liabilities at year end.
At the close of 2013, liabilities with credit institutions totalled € 75 million (2012: € 280 million). This relates to an overnight money
market loan.
The increase in the deferred liabilities item relates to a € 43 million increase in the pre-received premium 2014.
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ANNUAL REPORT
5
CAPITAL MANAGEMENT
Solvency position (company)
Development in solvency
The development in the Company's capital according to the current requirements (Solvency I) of the Dutch Central Bank (DNB) can
be summarised as follows:
(x € 1 million)
Total equity (including third-party interest)
2013
2012
2,346.0
1,855,7
-57.5
-50.3
2,288.5
1,805.4
-73.8
-15.9
AVAILABLE CAPITAL IN ACCORDANCE WITH THE WFT*
2,214.7
1,789.5
Required capital in accordance with the WFT
1,227.4
1,221.6
SURPLUS OVER THE REQUIRED CAPITAL
987.3
567.9
AVAILABLE CAPITAL RATIO IN ACCORDANCE WITH THE WFT
180%
146%
Third-party non-controlling interest in participations
Total equity attributable to shareholders
Prudential adjustments
* WFT = the financial supervision act (Wet Financieel Toezicht)
The prudential adjustment for 2012 relates to the balance of the intangible fixed assets. The prudential adjustment for 2013 relates to
the prepaid amount for pension expenses.
Achmea Zorgverzekeringen N.V.'s solvency ratio increased from 146% at the end of 2012 to 180% at the end of 2013. The main
reason for this increase in solvency is the favourable result for 2013. The method used to calculate the solvency of Achmea
Zorgverzekeringen was changed to the consolidated method at the end of 2013. This method takes the required and actual capital of
the subsidiaries fully into account. In our opinion, the calculation method used at present provides a more accurate picture of the
solvency position than the method that was used previously.
The minimum internal solvency standard for Achmea Zorgverzekeringen N.V. is set at 130%.
Pressure on profitability and solvency margins on health insurers is expected to increase further as a consequence of social and
political developments. The Dutch government is shifting more activities and risks towards health insurers. The combination of lower
premium levels for 2014 and continuous pressure hereon and expected higher capital requirements will have a negative effect on the
solvency margin.
Solvency policy and targets
Since early 2012, a new solvency policy has been applied to the capital management of the insurance entities that are part of the
Achmea Group. Achmea Zorgverzekeringen N.V., in its capacity as independent licence holder, must comply with this. The
objectives of the new solvency policy are on the one hand to guarantee an appropriate level of capital even in high-stress scenarios,
and on the other to ensure that the capital management policy is implemented consistently and in line with our risk appetite. A
number of metrics have been laid down both for the legal entities and for Achmea Group. Requirements are still based on the current
Solvency I regime, although they have been recalibrated taking into account the outcomes of Solvency II and the rating ambition
according to Standard & Poor’s (S&P). We have drawn up measures that will be implemented if the levels of capital fall below the
prescribed levels.
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ANNUAL REPORT
Risk appetite: basic principles
The introduction of the Solvency II capital requirements – which ensure that insurers in the European Union maintain a sufficient
capital level to reduce their solvency risk – is expected to have a major impact on the sector. Solvency II is expected to apply from 1
January 2016.
Level of capital as of 31 December 2012 in line with Solvency II
In 2013, Achmea Zorgverzekeringen N.V. carried out an extrapolation for Solvency II. It related to the calculation of the capital
requirements as at 31 December 2012 using the standard formula. The earnings according to the partially internal model are also
reported. The results show that Achmea Zorgverzekeringen N.V. also complies with the Solvency II capital requirements.
Liquidity position
The liquidity position of Achmea Zorgverzekeringen N.V. is sound, as we maintain a high level of liquid investments in the
investment portfolio, such as government bonds, deposits and listed equities.
Credit rating
Achmea Zorgverzekeringen N.V.’s strong capital position has been awarded by Standard & Poor's through the following rating:
December 2013
December 2012
Counterparty Credit Rating
A+ (stable)
2012
A+ (stable)
Insurer Financial Strength Rating
A+ (stable)
A+ (stable)
6
RISKMANAGEMENT
Effective risk management is fundamental to the sustainability of Achmea and for maintaining the continuity of our customers and
our other stakeholders. Achmea Zorgverzekeringen N.V. is a 100% subsidiary of Achmea B.V. and as such falls under the general
scope of risk management of Achmea B.V. as a Group.
Achmea is exposed to a variety of risks including insurance risk, market risk, counterparty default risk, operational risk, liquidity risk
and strategic risks. An integrated risk management framework is implemented which contributes effectively in the realisation of our
strategy and the business objectives. Our risk profile is relatively stable over time the last few years, given our Risk Appetite
Statements and the close monitoring of the risk tolerances and risk limits.
Risk management framework
As a starting point for effective risk management a risk strategy has been set with principles regarding (1) strategic objectives, (2)
risk culture and (3) risk governance. Culture plays an essential role in effective risk management. Several principles have been
defined in which the Executive Board and management of Achmea encourage among others an open culture where risks can be
openly discussed and where decision making is based on an appropriate balance between risk, capital and expected return. Our risk
strategy has been further elaborated in the risk appetite framework, the ‘three lines of defence’ governance model and the Integrated
Risk Management Framework (IRMF) which outlines the risk management system.
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ANNUAL REPORT
Risk appetite framework
Achmea's Risk Appetite Statements at Group level include the attitude towards risk and are an indication of not only the willingness
to accept either a high or a low level of risk, but also the ability to take risks. Our risk appetite is set with the necessary prudency.
Risk appetite statements for Achmea B.V.can be summarised as follows:
Capital position / Liquidity
Risk management
Available capital is at least equal to economic capital at a
99.95% confidence level at group level. A precondition is
that the minimum retained capital is adequate for:
Risk management framework safeguards the execution,
implementation and monitoring of prudent risk policy.
A S&P A rating. Achmea monitors capital based on S&P
requirements (capital required for an AA rating) and
tolerates termporary deviations to a capital level for an A
rating.
Achmea meets capital requirements of the regulator.
Achmea pursues an adequate counterparty policy (including
collateral management) and actively monitors counterparty
default risk.
Achmea has adequate policies for underwriting, reinsurance
and reserving and ensures responsible choices are made for
fundamental assumptions like e.g. mortality tables and yield
curves.
Achmea retains adequate liquidity based on moderate stress
scenarios at both holding and business unit level so that at
all times it can meet liquidity obligations.
Achmea has an adequate and prudent policy on investments,
based on the profile of the liabilities.
Retention of adequate liquidity/flexibility in Achmea’s risk
profile to reduce Achmea’s market/counterparty risk by
turning €1 billion into cash within three months.
Achmea monitors the risks of inadequate or failing
processes, people, systems and of external events. Achmea
ensures adequate internal control.
Retention of adequate liquidity/flexibility in Achmea’s risk
profile to reduce economic capital at 99.95% confidence
level by at least €350 million within three months.
Responsible Profit
Product quality / compliance / CSR
Achmea will not accept risk that does not generate structural
profit.
Achmea optimises its risk profile so that it contributes to a
pricing strategy that is at least around the market median.
Profit is not the only goal. Profit is necessary to ensure the
continuity of cooperative goals.
The policy of Acceptance is driven primarily by solidarity
and secondarily by profitability. Achmea only automatically
excludes customers/groups of customers based on moral or
explicit (irresponsible) risks (except for the basic health
insurance activities).
Achmea strives for a structural targeted return that matches
risk profile, cooperative background and dividend
requirements of shareholders.
Compared to the market and due to high volume and
efficiency, Achmea products and services have a low cost
structure and an adequate quality level.
Achmea provides customers with products and services that
offer security and are predictable, consistent,
understandable, transparent and have integrity.
In terms of operational return (VNB, COR), Achmea aims to
outperform the market.
Relevant legislation and regulation are combined into
themes related to business processes to ensure that all
legislation and regulations are fully implemented.
Decision-making takes place based on economic
considerations. Shifts in IFRS results must not be leading.
Achmea is pro-actively involved into the relevant social
debates and social developments.
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The Risk Appetite Statements are reviewed at least once per year by the Executive Board and by the Supervisory Board for approval.
The Risk Appetite Statements are translated through Key Risk Indicators, risk tolerances and risk limits. Risk tolerances are
restrictions that give a clear direction to management of the risk levels Achmea is willing to be exposed to. Risk limits are used in
daily business practices to indicate how much risk we are willing to take.
Integrated approach (IRMF)
Achmea B.V. has implemented an Integrated Risk Management Framework (IRMF) to support us in maintaining a consistent and
efficient Enterprise Risk Management system. To ensure an integrated approach all second line of defence functions (risk, actuarial
and compliance) use the same risk classification, are covered by the risk appetite and use tools and techniques which are
complementary to each other.
The IRMF is an integral part of our business planning process. Several risk assessments are carried out throughout the year including
an economic capital model study to quantify the risks per risk category, a Strategic Risk Assessment with management and the
Executive Board in which all potential risks are analysed and scenarios and stress tests which provide insight into what happens
under extreme circumstances or in the event of the simultaneous occurrence of a combination of factors.
The risk profile of Achmea B.V. is periodically monitored and quarterly reports are prepared for the Executive Board and the Audit
& Risk Committee. For the main risk types line management periodically verifies whether the risk is still within the set risk limits.
Furthermore, an Internal Control Framework is implemented which is used to systematically monitor key risks and key controls
throughout the whole organisation. On an annual basis an Internal Control Statement is reported which provides a qualitative
description of risks and internal control of both operational risk and other risk types as per Achmea risk classification. Finally, the
internal audit function reports on the basis of audit reports and the management letter. Remuneration is both performance and risk
related and is aligned with regulations (DNB, AFM, Insurers Code).
The focus on Compliance has increased within and outside Achmea. Failing to comply with applicable laws, regulations, rules,
organisational standards, and codes of conduct may result in legal- or regulatory sanctions, material financial loss, or reputational
damage. It is important for Achmea to regain consumer’s trust, not only by an increase of regulations but also as an important part of
its internal drive and strategy. The regulator will also increase its focus on customer care and will create new legislation with regards
to this topic. Subsequently the extra supervisory investigations, for example by the Dutch Care authority (NZa), will have a huge
impact on the business. Continuous monitoring will be an important instrument in providing assurance that compliance with legal
provisions is guaranteed.
Risk overview
Achmea Zorgverzekeringen N.V. and the 100% subsidiaries of Achmea Zorgverzekeringen N.V. are exposed to a variety of risks
through its core insurance activities which include insurance risk, market risk, counterparty default risk, operational risk and liquidity
risk. In this section a brief overview is given of our overall risk profile and the main control measures which have been taken. We
refer to the Risk Management Section in our Annual Report for more information.
Insurance risk
Achmea Zorgverzekeringen N.V. and the 100% subsidiaries of Achmea Zorgverzekeringen N.V. are exposed to health risk. Health
risk at Achmea is split in the sub risk types premium risk, reserve risk, catastrophe risk and lapse risk. Achmea Zorgverzekeringen
N.V. manages the insurance risk position primarily through product development and premium setting. Furthermore, the status of the
liabilities is monitored by liability adequacy testing and claims and procurement management.
Market risk
As a financial services company Achmea Zorgverzekeringen N.V. and the 100% subsidiaries of Achmea Zorgverzekeringen N.V. are
exposed to market risk because of its large investment portfolio. Market risk positions are managed at the level of Achmea
Zorgverzekeringen N.V. within an Asset & Liability Management (ALM) framework. A matching portfolio is developed to achieve
long-term investment returns that meet the obligations from the insurance contracts. Interest rate risk of these investments and
liabilities are managed on an economic basis. Furthermore, a return portfolio is developed to profit from risk premia existing in the
markets by taking investment risks. We have however a conservative investment profile.
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Counterparty default risk
Achmea Zorgverzekeringen N.V. and the 100% subsidiaries of Achmea Zorgverzekeringen N.V. are exposed to many counterparties
in the area of investments, treasury, healthcare providers, intermediaries, and policyholders. The main ‘prevention’ objective in
managing counterparty risk is to prevent concentrations, ensure that portfolios are well diversified and ensure that risks are
sufficiently reduced or mitigated. Alternatively, the main contingency objective in managing counterparty risk is to ensure that
recovery processes are well organised and capital surplus is sufficient to withstand credit events.
Operational risk
Like other companies, Achmea Zorgverzekeringen N.V. and the 100% subsidiaries of Achmea Zorgverzekeringen N.V. are exposed
to the risk of a loss arising from inadequate or failed internal processes, personnel or systems, or from external events. Achmea
distinguishes the following 7 categories of risk events: internal fraud, external fraud, execution, delivery and process-management,
clients, products and business practice, business disruption and system failure, damage to physical assets and employment practices
and workplace safety. Management pays attention to the management of operational risks because they can have a serious impact on
our business performance and the realisation of our strategy and business objectives.
More specific, internal or external fraud can lead to financial losses and reputational damage. Achmea has processes in place for
fraud prevention and detection to mitigate these risks. As an insurer Achmea Zorgverzekeringen N.V. is the subject of much
regulation. Legal and arbitration proceedings regarding liability may affect the business, the return and the financial position of
Achmea Zorgverzekeringen N.V. Achmea takes mitigating measures as formulating own standards with respect to products that go
beyond compliancy with laws and regulations. Cybercrime can disrupt business operations and customer service when information is
not adequately safe or ends up with the wrong people. As a financial institution Achmea Zorgverzekeringen N.V. has confidential
information from policyholders available. Achmea adopts measures in ICT in order to protect the information and ensure
confidentiality. Failure or lag of ICT systems may hinder the business or the realization of defined change ambitions. Computer
systems are essential for storing, retrieving and using customer and company data. Achmea focuses on the implementation of being
an e-insurer qua business model and technology.
Liquidity risk
Generally liquidity risk is the risk that actual and potential payments and collateral obligations cannot be met when due. Liquidity
risk within Achmea Zorgverzekeringen N.V.’s insurance operations is mitigated through the availability of cash and cash equivalents
and investments in liquid assets.
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ANNUAL REPORT
7
CORPORATE SOCIAL RESPONSIBILITY
Achmea B.V. has drafted and shaped a general policy regarding social responsibility that extends over Achmea B.V. and its group
entities. Achmea Zorgverzekeringen N.V. is a 100% subsidiary of Achmea B.V. and in this relationship is subject to the general
group policy on Corporate Social Responsibility which has been set up for Achmea B.V. as a group. A short account of the CSR of
Achmea B.V. is presented below. For further details reference is made to the Achmea B.V. annual report, published on
www.achmea.nl
It is Achmea’s ambition to have customers see us as the most trusted insurer. Customers need to trust the fact that we will be there for
support when they need us. We want to be accessible to them through a wide range of brands and distribution channels. We see it as
our duty to act responsibly and future-oriented. We want to achieve this by offering products and services that have an added social
value, by investing responsibly and by putting the customers first.
Our products should have an evident added value for society. Therefore, we connect the social interest to our products. It is our aim
to be more than just a provider of financial services. We contribute to the improvement of the society with our products and services,
by solving, reducing or preventing social problems and by together thinking about and starting the dialogue. In addition, we also
facilitate in the by our customers desired mutual solidarity in order to realise the highest added value for them.
The social impact of our business is high because of our daily work, with the insurance, investment and other financial products
Achmea daily demonstrates its social responsibility by providing solutions for the risks that the world now faces. Additionally,
Achmea uses its knowledge and experience in order to contribute to the solving of social and economic problems, both in the
Netherlands and abroad. Thus Achmea implements the principle of solidarity on which our insurance tradition has been founded.
Insuring with a social added value
Our products must demonstrate an added value for the society. We want to be more than just a provider of financial services, by also
contributing to the solutions of social problems. With this in mind we have signed the United Nations Principles for Sustainable
Insurance (PSI) in 2012 The PSI promotes the essence and relevance of insurance. Insuring is eminently about sustainability and the
securing a future for everyone. Solidarity forms the foundation for this; we share the risks that we cannot carry ourselves. To be able
to continue your life or your business if you are affected by illness or injury. As risk managers and risk carriers, insurers use their
influence in order to secure a future-proof life. We do this by ensuring risks, but also by preventing risks. Examples of this are seat
belts, helmets, airbags, sprinklers, fire alarms and safety in the workplace, but also income protection and other social safety nets.
The insurance business has always had a positive influence on the general well-being and prosperity. The world will be faced now
and in the future with new issues to which insurers can contribute their risk knowledge and expertise. These are major issues, which
the world is facing, such as global warming, switching to renewable energy, resource scarcity, poverty, food security, aging and
accessible and good health care for all.
Investments in the society through our funded foundations
Within Achmea there are several active foundations. The Achmea Foundation and Stichting Achmea Slachtoffer en Samenleving
focus on the strengthening of the resilience of vulnerable groups in our society. Additionally three foundations, co-financed by
Achmea, are focusing on the improvement of the Dutch health care efficiency: Stichting Gezondheidszorg Spaarneland, Stichting
Theia en Stichting Achmea Gezondheidszorg.
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ANNUAL REPORT
8
CORPORATE GOVERNANCE
Introduction
Achmea Zorgverzekeringen N.V. is part of the Achmea Group, of which Achmea B.V. (‘Achmea’) is the ultimate parent company.
Achmea B.V. is a private company with limited liability. Its statutory seat and head office are located in Zeist, the Netherlands.
Achmea adheres to a number of relevant governance codes: the Dutch Insurers’ Code and the Dutch Corporate Governance Code.
Main developments in 2013
A change was made to the directors of the companies that offer health insurance, including Achmea Zorgverzekeringen N.V., in
2013. The chairman and financial director of the Care and Health division were made responsible for all legal entities that offer
health insurance as of 10 December 2013. The members of the Executive Board of Achmea, who were the directors prior to this date,
resigned their positions on this date, following which the shareholder appointed the chairman and financial director of the Care and
Health division to the position of directors.
Compliance with the Insurers’ Code and the Corporate Governance Code
Insurers’ Code
At the end of 2010, the Dutch Association of Insurers adopted Governance Principles (the Insurers’ Code) to which all Dutchlicensed insurers must adhere from 1 January 2011. Insurers governed by the Insurers’ Code and that are part of a group can apply
parts of the Code at the level of the group or insurance group. Achmea has elected to report on the application of the Insurers’ Code
at Group level because of the structure of its organisation and the Group’s governance. The Executive Board of Achmea manages the
Group based on uniformity in management, policy and supervision. The Supervisory Board monitors the Group as a whole in order
to ensure that management and policy are synchronised across the organisation. With the current governance of the insurance entities
and current policies that apply across the Achmea Group, we feel that the principles of the Insurers’ Code are implemented
sufficiently.
Achmea is largely in compliance with the Insurers’ Code. To the extent relevant to Achmea Zorgverzekeringen N.V., in 2013,
Achmea did not yet fully comply with the following principles of the Code:
1.
Customer Centricity (principle 3.2.2)
2.
Assuring the product approval process (principle 4.5)
For more details on Achmea’s compliance with the Insurers’ Code we refer to the Achmea Annual Report 2013 and the
Remuneration Report, which reports have been published on the Achmea website at www.achmea.nl.
In addition to the reporting at Group level, we note that for Achmea Zorgverzekeringen N.V. in 2013 the following principles were
not fully complied with;
1.
The Supervisory Board has an adequate number of members, that is three (principle 2.1.2).
During several months of 2013, the Supervisory Board actually consisted of two members (since 28 March 2013) and there
was a vacancy. The vacancy is expected to be completed by mid 2014.
2.
Permanent Education Programme for the directors (principle 3.1.3)
There is as yet no formal PE programme for the directors. However, the directors do give significant attention to education
and development. The members of the Executive Board attended the 'Samen Deskundig' (Expert Together) masterclasses in
2013. In addition, &Samhoud organises a PE session for the entire team of directors of the Care and Health division four
times a year. This session focuses on current issues which directly affect the duties of the division's directors. In addition,
the members of the Executive Board also attend national and international seminars, etc. on relevant topics, in which they
also regularly participate as a speaker. In addition, they also regularly go on study tours.
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ANNUAL REPORT
Corporate Governance Code
Since 1 January 2004, listed companies in the Netherlands have been required to report on compliance with the Dutch Corporate
Governance Code on a ‘comply and explain’ basis. Although Achmea and its insurance subsidiaries are not listed companies,
Achmea has voluntarily adopted and embedded the majority of the Code’s principles in our governance structure. Where applicable,
Achmea is largely in compliance with the principles and best practices.
Corporate governance is primarily determined at group level and is organised by setting up and organising a group-wide governance
structure and by the formulation of group-wide policy. For further details reference is made to the Achmea Annual Report 2013 on
the Achmea website at www.achmea.nl.
Achmea Zorgverzekeringen N.V.’s corporate governance is, to a significant degree, subject to the scope of operations of Achmea’s
corporate governance. Where relevant, specific points that are of importance in implementing the Corporate Governance for Achmea
Zorgverzekeringen N.V. will be explained in more detail in the next section.
Corporate Governance at the level of Achmea Zorgverzekeringen N.V.
Board of Directors and Supervisory Board
Responsibilities and role in corporate governance
Achmea Zorgverzekeringen N.V. Board of Directors consists of Messrs N.F.J. Hoogers en J.E.P. Tanis, both since 10 December
2013. On the basis of the Articles of Association these directors are directly charged with and responsible for the day-to-day
management of Achmea Zorgverzekeringen N.V. In carrying out their duties for Achmea Zorgverzekeringen N.V., the directors use
the Achmea Group's Board Rules which set out their tasks and activities and the decision-making process within the Achmea Group.
Up to 10 December 2013 the Board of Directors under the Articles of Association consisted of the members of the Executive Board
of the Achmea Group, namely Messrs. J.A.S. van Breda Vriesman and D. van der Eijk. Mr. G. van Olphen has stepped down as
director under the Articles of Association with effect from 1 February 2013.
Achmea Zorgverzekeringen N.V. also has a Supervisory Board. The Supervisory Board is responsible for supervising, advising and
approving the actions of the Board of Directors of Achmea Zorgverzekeringen N.V. The rules of the Supervisory Board apply to the
performance of its duties.
Composition and diversity
The Dutch Corporate Governance and Supervision Act came into force on 1 January 2013 and applies to Achmea Zorgverzekeringen
N.V. reporting. Achmea Zorgverzekeringen N.V. currently has two directors and two Supervisory Board members.
The members of the Supervisory Board of Achmea Zorgverzekeringen N.V. are members of the Executive Board of Achmea B.V. or
chairman of the board of one of Achmea’s divisions. In 2013, the composition of the Supervisory Board of Achmea
Zorgverzekeringen N.V. has changed. Mr. H. Slijkhuis stepped down as a member of the Supervisory Board with effect from 28
March 2013. The Supervisory Board consisted of Mr P.F.M. Overmars (chairman) and Ms S.T.van Lonkhuijzen-Hoekstra.
The number of members of the Board of Directors and the Supervisory Boards is too small to be able to responsibly have equal
numbers of men and women sitting on these boards. The financial sector in general and the insurance sector in particular are by their
nature complex. This is why the criteria of suitability, knowledge and expertise take precedence over having equal numbers of men
and women on these boards.
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ANNUAL REPORT
Supervisory Board Committees
There are no sub-committees on the Supervisory Board of Achmea Zorgverzekeringen N.V. because of the size of the Supervisory
Board. The Board Members have adequately provided for the safeguarding of the required knowledge.
The three sub-committees on the Supervisory Board at the level of Achmea, being the Audit & Risk Committee, the Remuneration
Committee and the Selection & Appointment Committee also fulfil a preparatory function in the decision-making process of the
Supervisory Board of Achmea Zorgverzekeringen N.V. The members of the Supervisory Board of Achmea Zorgverzekeringen N.V.
sit on one or more of the sub-committees at Achmea level.
Continuing education
In 2013 the members of the Board of Directors of Achmea Zorgverzekeringen N.V. joined the Achmea Education Programme
‘Becoming Experts together’. There is no specific continuing education programme for 2014 and further. The members of the Board
of Directors keep their knowledge level up to date by tailor made programmes or workshops in the areas financial, corporate
governance, risk management, compliance and audit.
In 2013, the members of the Supervisory Board participated in a continuing education workshop organised by Achmea
Zorgverzekeringen N.V. The aim is to hold a workshop once a year.
Code of Conduct
Achmea aims to be a leader in terms of its own rules of conduct and in terms of anticipating current and new regulations. Active
control exercised to foster integrity and prevent integrity violations and fraud reduces any negative impact on trust and returns, as
well as limiting the cost of claims. Achmea therefore drew up a company Code of Conduct to ensure ethical conduct in accordance
with Achmea’s values and standards.
The recording of duties and responsibilities in the area of fraud, risk management and checks guarantees the control and limitation of
fraud. Should an integrity violation or incident of fraud occur nevertheless, it can be reported confidentially. A whistleblower policy
described at www.achmea.nl is in place for this purpose.
The Achmea Ethics Committee advises the Executive Board and group entities including Achmea Zorgverzekeringen N.V. on ethical
dilemmas. It does so by assessing ethical and societal issues, as well as practical situations, against our company’s values and
standards. This makes it possible to develop ‘moral case law’ and formulate ethical and moral guidelines specifically for Achmea.
The Ethics Committee is chaired by Danny van der Eijk (member of the Executive Board of Achmea B.V.) and consists of
employees of different business units. Subjects handled by the Ethics Committee in 2013 included the following:
•
Responsible investment
•
Guaranteeing and communicating about ethics within Achmea
•
The role of ethics in Achmea’s procurement policy
•
Various practical situations
As Achmea Zorgverzekeringen N.V. is part of the Achmea Group, it fully complies to the general code of conduct drawn up at
Achmea Group level. The Achmea Code of Conduct is available at www.achmea.nl.
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ANNUAL REPORT
Standing data of Achmea Zorgverzekeringen N.V.
Achmea Zorgverzekeringen N.V. is a public limited company with its registered office in Zeist and its principal place of business at
Dellaertweg 1 in Leiden. The goal of the company is to conduct health insurance business within the meaning of the Dutch Financial
Supervision Act. The company's share capital amounts to €250,000,000 and consists of shares with a nominal value of €1, of which
59,620,822 are issued and fully paid-up shares (the issued share capital is €59,620,822). The shares are registered. No share
certificates are issued. Achmea Zorgverzekeringen N.V. is part of the Achmea Group. Achmea B.V. owns 100% of the shares of
9
SUBSEQUENT EVENTS
Fraudulent invoices submitted by St. Antonius Hospital
In 2013, the Dutch Care Authority (NZa) made an unannounced visit to the St. Antonius Hospital to audit the accuracy of invoices
for care provided by the hospital. The results of the audit were published by the NZa on 11 February 2014.
The amount that had been fraudulently invoiced to all of the health insurers in the Netherlands came to €24.6 million. The loss
suffered due to fraudulent invoices issued by the St. Antonius Hospital will be financially set off by the Dutch Health Insurance Fund
(Verzekeringsfonds) during the course of 2014. Pending the outcome of these discussions, health insurers cannot yet book the above
in their financial statements.
Fine imposed by the NZa
The Dutch Care Authority (NZa) has imposed a fine of € 3.6 million in total for the Achmea health insurers. This fine has been
imposed by the NZa in relation to the annual statements under the Dutch Health Insurance Act 2011 submitted by:
- Zilveren Kruis Achmea Zorgverzekeringen N.V.
- Interpolis Zorgverzekeringen N.V.
- OZF Achmea Zorgverzekeringen N.V.
- Avéro Achmea Zorgverzekeringen N.V.
- Agis Zorgverzekeringen N.V.
In an investigation into the accuracy and completeness of the accountability information relating to execution of the equalisation,
submitted for the reporting year of 2011 (with years or annual layers for 2011, 2010 and 2009), the NZa has discovered a number of
inaccuracies with regard to the annual statements referred to above. The inaccuracies found by the NZa relate in particular to the
Spec A level. At the request of the NZa, the Achmea health insurers submitted revised annual statements in the autumn of 2011
accompanied by an unqualified audit report drawn up by the external accountant. All of the inaccuracies discovered by the NZa have
been corrected in these revised statements.
The fine of € 3.6 million has been incorporated in the financial statements of Achmea Zorgverzekeringen N.V.
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ANNUAL REPORT
10
OUTLOOK
Healthcare costs are a central issue in the debate on the current healthcare system in the Netherlands and will remain so for some
time to come. Although the total costs will continue to rise on a national scale, we believe that measures such as quality of the care,
collaboration within the healthcare value chain and healthcare quality checks can limit the effects of this upward trend. Our focus lies
on reducing costs and looking for ways of improving the quality of the care. In 2014, we will continue the existing cost reduction
programme by introducing process improvements and making operational management more efficient. Due to changing customer
requirements, i.e. less personal contact but more contact via the internet and telephone, we will close 50 service points in the
Netherlands. At the same time, we will invest in our contact centres and focus on customer contact via the different distribution
channels.
Achmea is engaged in the program “Acceleration and Innovation”. This program will ask a lot of all employees the next years and
may have implications on staffing.
The Dutch government intents to radical improve the Exceptional Medical Expenses Act (AWBZ). Only the most severe, long-term
care will be funded based on the new Act Long-term Care (Wet Langdurige Zorg). The local governments (Social Development Act,
WMO) and health insurers (Health Insurance Act) will be responsible for the milder forms of the current AWBZ-care. This results in
substantial changes for Achmea. The changes in the health care system are scheduled for 2015, but not all are final. Various laws
must still be approved by the Dutch Second and First Chamber. Additionally, on national level decisions should be taken to
implement the changes in a responsible manner.
No major investments are expected to be made in 2014.
Zeist, 7 May 2014
The Directors of Achmea Zorgverzekeringen N.V.,
N.F.J. Hoogers
(Chairman)
J.E.P. Tanis
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ANNUAL REPORT
Report of the Supervisory Board
1.
General
In 2013, the consultation process between Achmea Zorgverzekeringen N.V.’s Supervisory Board, hereinafter referred to as ‘the SB’, and the
Board of Directors under the Articles of Association of Achmea Zorgverzekeringen N.V. stabilised in terms of both role and form. Powers
and responsibilities, especially in relation to the Achmea Group’s Supervisory Board, have been clearly defined and are applied in a way that
meets the wishes of the SB. The rules that include these frameworks were evaluated at the August meeting, with the SB establishing that the
rules were working well and were being applied correctly.
2.
Composition of the Supervisory Board
Mr. H. Slijkhuis stepped down as a member of the Supervisory Board with effect from 28 March 2013 and was released, with thanks, from
liability. For the rest of 2013, the Supervisory Board operated with 2 members. This vacancy is expected to be filled in Mid 2014.
3.
Changes to the Board of Directors under the Articles of Association
The structure of the management of Achmea Zorgverzekeringen N.V. under the Articles of Association was amended with effect from 10
December 2013. Up to that date, the Board of Directors under the Articles of Association consisted of the members of the Executive Board
of the Achmea Group, namely Messrs. J.A.S. van Breda Vriesman and D. van der Eijk. They stepped down and were released from liability
with effect from the above-mentioned date, with the board chairman and financial director of the Care & Health division (‘dZ&G’) being
appointed as the director under the Articles of Association. In the meantime, Mr. G. van Olphen has stepped down as director under the
Articles of Association with effect from 1 February 2013. At the close of 2013, this means that the Board of Directors under the Articles of
Association consists of Messrs. N.F.J. Hoogers and J.E.P. Tanis.
4.
Meetings and other sessions
In 2013, the Supervisory Board met on four occasions. In addition to the information on and discussion of relevant topics such as the setting
of premiums and care contracting, the subjects on the agenda were primarily financial reports, review reports on the state of the provisions,
strategic planning, and risk and compliance issues. There was also extensive discussion of potential risks to reputation and of dilemmas in the
areas of accessibility, quality and affordability of healthcare. In addition, matters discussed included changes to the management under the
Articles of Association and the methodology for and choice of standards when determining solvency, and the SB was informed about
developments in the field of legal matters and Management Development in the Care and Health Division (dZ&G).
The Supervisory Board meetings were held in the presence of at least two directors of Achmea Zorgverzekeringen N.V. who are also
members of Achmea’s Executive Board until 10 December 2013, or their authorised representatives, along with the divisional chairman and
the financial director of dZ&G. The vice-chairman of the division was present on several occasions too. Although the SB asked many tough
questions, there was a pleasant atmosphere to the meetings. This was certainly also aided by the good information provision. The SB was
also kept informed in the interim period, especially about developments that had already attracted or would later attract the media’s attention.
5.
Continuing education
Members of the Achmea Zorgverzekeringen N.V. Supervisory Board also sit on the Achmea SB. The chairman of Achmea’s SB supervises
the organisation of the programme of continuing education for the members of the SB, the aim here being to maintain - and where necessary
broaden - the expertise possessed by the Supervisory Board members. Each member participates in the programme drawn up by Achmea’s
SB and accordingly complies with the requirements of continuing education.
In 2013, a session of the Continuing Education (CE) programme was held prior to the SB meeting on three occasions. The topics covered
were ‘Contracting with care providers’, ‘Commercial strategy’, and ‘Developments in long-term care’. The SB found these sessions, which
were organised by members of the Board of Directors and senior managers of dZ&G, to be especially informative, making an important
contribution to the members’ knowledge about the subjects in question and thus to the quality of their regulatory roles. The members of the
SB of the Achmea Group were invited to attend the CE sessions too, starting from the November meeting. Three of them attended the
November session.
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ANNUAL REPORT
Report of the Supervisory Board
6.
Financial Statements
At its meeting on 7 May 2014, the SB discussed the Board of Directors and the 2013 Financial Statements. The SB made a positive
recommendation to the shareholders to adopt the 2013 Financial Statements.
7.
Acknowledgements
All in all, the SB is of the opinion that it has been able to properly fulfil its role as supervisor and advisor of the Board of Directors under the
Articles of Association and that it received sufficient assistance from the Board of Directors under the Articles of Association and the
management of dZ&G in this regard. The SB is confident that this new management structure will be continued in 2014, especially once the
SB has appointed a new member to bring it up to full strength again. Looking back on 2013, the SB would like to thank the employees and
management of Achmea Zorgverzekeringen N.V. We have seen that in the reporting year they again made great efforts, thereby giving
substance to Achmea’s qualities and values.
Zeist, 7 May 2014
The Supervisory Board of Achmea Zorgverzekeringen N.V.,
P.F.M. Overmars
S.T. van Lonkhuijzen-Hoekstra
(Chairman)
(Vice Chairman)
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ANNUAL REPORT
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (BEFORE PROFIT APPROPRIATION)
(X € 1,000)
NOTE
32
31 DECEMBER
2013
31 DECEMBER
2012
1 JANUARY
2012
ANNUAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (BEFORE PROFIT APPROPRIATION)
31 DECEMBER
2013
31 DECEMBER
2012
1 JANUARY
2012
33
ANNUAL REPORT
CONSOLIDATED INCOME STATEMENT
TECHNICAL ACCOUNT NON-LIFE
(X € 1,000)
NOTE
2013
−
2012
−
−
−
−
−
−
34
ANNUAL REPORT
CONSOLIDATED INCOME STATEMENT
NON-TECHNICAL ACCOUNT NON-LIFE
(X € 1,000)
NOTE
2013
2012
35
ANNUAL REPORT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(X € 1,000)
2013
2012
−
CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY
2013
SHARE
CAPITAL
(X € 1,000)
SHARE
PREMIUM
REVALUATION
RESERVE
RETAINED
EARNINGS
PROFIT FOR
THE YEAR
EQUITY
ATTRIBUTABLE TO
HOLDERS
OF EQUITY
INSTRUMENTS
OF THE
COMPANY
NON-CONTROLLING
INTEREST
TOTAL
EQUITY
*Purchase FBTO Zorgverzekeringen N.V. in Fiscal Investment Entity (FBI)
Reference is made to Note 11.
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ANNUAL REPORT
CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY
2012
SHARE
CAPITAL
(X € 1,000)
SHARE
PREMIUM
REVALUATION
RESERVE
−
RETAINED
EARNINGS
PROFIT FOR
THE YEAR
EQUITY
ATTRIBUTABLE TO
HOLDERS
OF EQUITY
INSTRUMENTS
OF THE
COMPANY
−
NON-CONTROLLING
INTEREST
TOTAL
EQUITY
−
37
ANNUAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
(X € 1,000)
NOTES
38
2013
2012
ANNUAL REPORT
Notes to the Consolidated Financial Statements
GENERAL INFORMATION
Activities
Achmea Zorgverzekeringen N.V. is incorporated in the Netherlands and seated in Zeist. The head office is located at Dellaertweg 1 in
Leiden. The activities of Achmea Zorgverzekeringen N.V consist primarily of the exercise of the health insurance business. The company
has no profit objective and is exempted for the corporation tax.
Group relationships
Achmea Zorgverzekeringen N.V is part of the Achmea Group. Achmea B.V. owns 100% of the shares of Achmea Zorgverzekeringen N.V.
Relationships with companies of the Achmea Group are included in the investments, the receivables and liabilities. Please refer to the
“Related Party Transactions” section.
1. ACCOUNTING POLICIES
A
AUTHORISATION FINANCIAL STATEMENTS
The Achmea Zorgverzekeringen N.V. Consolidated Financial Statements for the year ended 31 December 2013 were authorised for issue in
accordance with a resolution of the Board of Directors on 7 May 2014. At the same date, the Supervisory Board gave its advice to the
General Meeting of Shareholders on adoption of the Financial Statements. The Board of Directors may decide to amend the Financial
Statements as long as these have not been adopted by the General Meeting of Shareholders. The General Meeting of Shareholders may
decide not to adopt the Financial Statements, but may not amend these.
B
BASIS OF PRESENTATION
The Achmea Zorgverzekeringen N.V. Consolidated Financial Statements, including the 2012 comparative figures, have been prepared in
accordance with the International Financial Reporting Standards - including International Accounting Standards (IAS) and Interpretations as at 31 December 2013 and as adopted by the European Union (hereafter EU and EU-IFRS). Furthermore, the Achmea Zorgverzekeringen
N.V. Consolidated Financial Statements comply with the requirements of Article 362 (9) Book 2, part 9 of the Dutch Civil Code. The
exemption pursuant to Article 402 Book 2, part 9 of the Dutch Civil Code, applies to the Company Income Statement of Achmea
Zorgverzekeringen N.V. All amounts in the Consolidated Financial Statements are in thousands of euros unless stated otherwise
C
CHANGES IN REPORTING
Initial application of accounting policies
The following amendments and revisions to Standards have been adopted by Achmea Zorgverzekeringen N.V. as of 1 January 2013.
IFRS 7 FINANCIAL INSTRUMENTS: DISCLOSURE (AMENDMENT)
On 16 December 2011, the IASB issued an amendment to IFRS 7 relating to disclosure requirements that are intended to help investors and
other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company's financial position.
These amendments have no impact on Profit for the year and Total equity.
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ANNUAL REPORT
IFRS 13 FAIR VALUE MEASUREMENT
On 12 May 2011, the IASB issued IFRS 13 which defines fair value and sets out a single framework for measuring fair value. Furthermore,
the standard describes disclosure requirements. The standard applies to all standards that require or permit fair value measurements or
disclosures about fair value (except in specified circumstances). The standard has no material impact on Profit for the year and Total equity.
IAS 1 PRESENTATION OF FINANCIAL STATEMENTS (AMENDMENT)
On 16 June 2011, the IASB issued an amendment that changes and aligns the presentation of items of Other Comprehensive Income. The
amendment requires presentation of items of Net Other Comprehensive Income that may be recycled through Profit for the year as a single
item. The amendment does not change which items have to be recycled through Profit for the year. The amendment has no impact on Profit
for the year and Total equity.
IAS 19 EMPLOYEE BENEFITS (AMENDMENT)
On 16 June 2011, the IASB issued an amended version of IAS 19. The revised standard no longer allows the use of the corridor approach. It
requires that changes in measurement of plan assets and liabilities of the defined benefit schemes are presented as 'Other Comprehensive
Income' and it requires more extensive disclosures for these schemes.
The main effects from adopting IAS19R arise from:
- The elimination of the corridor method and recognition of all actuarial gains and losses in Other comprehensive income as they occur.
- Replacement of the rate of expected returns on plan assets with the same interest rate used to measure the defined benefit obligation, which
influences the interest costs to be included in the Income Statement.
Furthermore, the inclusion of the future employee contributions in calculating the defined benefit obligation has a limited lowering effect on
the defined benefit obligation.
The change in the calculation of the employee benefits was applied retrospectively.
IAS 19 Employee Benefits is applicable to Achmea Zorgverzekeringen N.V. based on the situation that the defined benefit plans share risks
between entities under common control. For the detailed analysis of the IAS 19 Employee Benefits implementation reference is made to the
Amendments as included in Note 1 (Accounting policies: C – Changes in Reporting - Initial application of accounting policies) of the 2013
financial statements of Achmea B.V. (www.achmea.com).
The pension scheme for all employees of Achmea, including the employees of OZF Achmea Zorgverzekeringen N.V, 100% subsidiary of
Achmea Zorgverzekeringen N.V., is executed by Achmea Interne Diensten N.V. Achmea Interne Diensten N.V. is 100% subsidiary of
Achmea B.V. and charges the pension costs related to OZF Achmea Zorgverzekeringen N.V. fully on to OZF Achmea Zorgverzekeringen
N.V. OZF Achmea Zorgverzekeringen N.V. accounts for the pension costs via a related short term liability with Achmea Interne Diensten
N.V.
40
ANNUAL REPORT
The following table summarises the impact of the implementation of the revised IAS 19 Employee Benefits for OZF Achmea
Zorgverzekeringen N.V. which is accounted for by Achmea B.V. (via legal entity Achmea Interne Diensten N.V.)
(X € MILLION)
AS AT 1
JANUARY 2012
TOTAL EQUITY 1)
PROFIT FOR THE
YEAR 3)
AS AT 31
DECEMBER
DURING 2012
2012
OTHER
COMPREHENPROFIT FOR THE
SIVE INCOME 4) TOTAL EQUITY 1)
YEAR 3)
DURING 2013
OTHER
COMPREHENSIVE INCOME 4)
AS AT 31
DECEMBER
2013
TOTAL EQUITY
1)
1) Included in Total equity, Remeasurement of defined benefit plans
2) Included in Employee benefits
3) Impact included in Operating expenses
4) Impact included in Remeasurement of defined benefit plans
ANNUAL IMPROVEMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS: 2009-2011 CYCLE
On 17 May 2012, the IASB issued Annual Improvements 2009-2011 Cycle, a collection of amendments to IFRSs in response to six issues
addressed during the 2009-2011 cycle. The IASB uses the Annual Improvements process to make necessary, but non-urgent, amendments to
IFRSs that will not be included as part of any other project. These amendments have no impact on Profit for the year and Total equity.
IAS 36: IMPAIRMENT OF ASSETS (AMENDMENT)
On 29 May 2013, the IASB published Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36). These narrowscope amendments to IAS 36 Impairment of Assets, address the disclosure of information about the recoverable amount of impaired assets,
clarifying that the scope of those disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs of
disposal. The amendments will be applicable for reporting periods beginning on or after 1 January 2014 and should be applied
retrospectively. Earlier application is permitted for periods when the entity has already applied IFRS 13. Achmea Zorgverzekeringen N.V.
decided to early adopt these amendments as of 1 January 2013. These amendments have no impact on Profit for the year and Total equity.
OTHER
On 19 October 2011, the IASB issued IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine. IFRIC 20 clarifies when
production stripping should lead to the recognition of an asset and how that asset should be measured, both initially and in subsequent
periods. This interpretation is not applicable to Achmea Zorgverzekeringen N.V. and will have no impact on Profit for the year and Total
equity. Furthermore, on 13 March 2012, the IASB issued Government Loans (Amendments to IFRS 1). The amendment adds an exception
to the retrospective 'application of IFRSs to require that first-time adopters apply the requirements in IFRS 9 Financial Instruments and IAS
20 Accounting for Government Grants and Disclosure of Government Assistance prospectively to government loans existing at the date of
transition to IFRS’s. As Achmea Zorgverzekeringen N.V. already applies EU-IFRS, the amendments are not applicable for Achmea
Zorgverzekeringen N.V. and, hence, have no effect on its Financial Statements.
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ANNUAL REPORT
Accounting policies not applied
A number of new Standards, amendments to Standards and Interpretations were published by the International Accounting Standard Board
(IASB) in 2013 or prior years but are not applicable for the year ended 31 December 2013, and have not been applied when preparing these
Consolidated Financial Statements. These are:
IFRS 9 FINANCIAL INSTRUMENTS
The IASB issued a new standard on the accounting for financial instruments. The standard issued on 12 November 2009 covers the
recognition and measurement of financial assets. On 28 October 2010, the IASB issued guidance on the recognition and measurement of
financial liabilities. On 16 December 2011, the IASB issued an amendment that defers the mandatory effective date from 1 January 2013 to 1
January 2015 and therefore entities are required to apply the new standard for reporting periods beginning on or after 1 January 2015. In
November 2013 this mandatory effective date was removed, because the IASB decided that it would be necessary to have a later mandatory
effective date and that the new date should be determined when IFRS 9 is closer to completion.
According to the current version of IFRS 9, financial assets must be measured at amortised cost depending on the specific features of the
financial instrument and the business model used. All other financial assets are to be measured 'At fair value through profit or loss'.
Currently, the IASB has reopened its discussion on the classification and measurement of financial instruments, introducing a third category
for the measurement of financial assets. This new category implies a material deviation from the original framework presented in IFRS 9. For
most financial liabilities the existing amortised cost measurement will be maintained in IFRS 9. IFRS 9 states that an entity choosing to
measure a liability at fair value will present the portion of the change in its fair value due to changes in the entity's own credit risk in other
comprehensive income. In November 2013 an amendment was issued that makes the improvements to the reporting of changes in the fair
value of an entity’s own debt contained in IFRS 9 more readily available.
In November 2013 guidance on hedge accounting was added to IFRS 9. This new guidance represents a major overhaul of hedge accounting
and puts in place a new model that introduces significant improvements principally by aligning the accounting more closely with risk
management. There are also improvements to the disclosures about hedge accounting and risk management. The EU has postponed the
endorsement of IFRS 9. Therefore, Achmea Zorgverzekeringen N.V. can not adopt this accounting standard for the current reporting period.
Due to this fact and the interaction with the future standard for the accounting of insurance contracts, no reasonable estimate can be made of
the impact of IFRS 9.
IFRS 10 CONSOLIDATED FINANCIAL STATEMENTS
The IASB issued IFRS 10 on 12 May 2011. The standard was developed as part of the IASB improvement process on the accounting for offbalance sheet activities and joint arrangements. IFRS 10 defines the principle of control and establishes control as the sole basis for
determining which entities are to be consolidated in the Financial Statements. The standard also sets out requirements on how to apply the
control principle. IFRS 10 supersedes IAS 27, 'Consolidated and Separate Financial Statements', and SIC-12, 'Consolidation- Special
Purpose Entities', and will be applicable for reporting periods beginning on or after 1 January 2013. On 28 June 2012, the IASB issued
amendments to clarify the transition guidance in IFRS 10 Consolidated Financial Statements. The amendments also provide additional
transition relief in IFRS 10, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, limiting the requirement to
provide adjusted comparative information to only the preceding comparative period. Furthermore, for disclosures related to unconsolidated
structured entities, the amendments will remove the requirement to present comparative information for periods before IFRS 12 is first
applied. The amendments are effective for reporting periods beginning on or after 1 January 2013, which is aligned with the effective date of
IFRS 10, 11 and 12. The EU endorsed this standard including the amendment related to transition guidance, but set the effective date for this
standard for financial periods beginning on or after 1 January 2014 at the latest. Although early adoption is permitted, Achmea
Zorgverzekeringen N.V. decided not to adopt this standard as of 1 January 2013.
On 31 October 2012, the IASB issued Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27). The amendments apply to a
particular class of business that qualifies as investment entities. The IASB uses the term 'investment entity' to refer to an entity whose
business purpose is to invest in funds solely for returns from capital appreciation, investment income or both and that evaluates the
performance of its investments on a fair value basis. Under IFRS 10 Consolidated Financial Statements, reporting entities were required to
consolidate all investees that they control (i.e. all subsidiaries). The Investment Entities amendments provide an exception to the
consolidation requirements in IFRS 10 and require investment entities to measure these particular subsidiaries 'At fair value through profit or
loss' rather than consolidate them. The amendments also set out disclosure requirements for investment entities. The amendments are
effective from 1 January 2014 with early adoption permitted. To date, these amendments have not been endorsed by the EU and therefore
Achmea Zorgverzekeringen N.V. cannot apply these amendments. Furthermore, Achmea Zorgverzekeringen N.V. is not an investment entity
as defined in the amendments and therefore the exemption is not applicable to the Consolidated Financial Statements.
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ANNUAL REPORT
Achmea Zorgverzekeringen N.V. performed an investigation to assess the impact of these new standards. The preliminary findings of this
investigation are that the implementation of IFRS 10 will not materially change the group of entities that have to be consolidated. Total
equity and Profit for the year will not be materially affected by the implementation of IFRS 10.
IFRS 11 JOINT ARRANGEMENTS
IASB issued IFRS 11 on 12 May 2011. The standard was developed as part of the IASB improvement process on the accounting for offbalance sheet activities and joint arrangements. IFRS 11 supersedes IAS 31, 'Interest in Joint Ventures', and SIC-13, 'Jointly Controlled
Entities-Non-Monetary Contributions by Venturers', and will be applicable from 1 January 2013. The EU endorsed this standard, but set the
effective date for this standard for financial periods beginning on or after 1 January 2014 at the latest. Although early adoption is permitted,
Achmea Zorgverzekeringen N.V. decided not to adopt this standard as of 1 January 2013. Furthermore, on 28 June 2012 amendments on
transition guidance were issued by the IASB (refer to IFRS 10 for brief summary of the amendments). IFRS 11 focuses on the rights and
obligations of arrangements rather than their legal form (as is currently the case). Furthermore, the standard limits the accounting method for
interests in jointly controlled entities to a single method: the equity method as described in the reissued IAS 28 (rather than the proportionate
consolidation method).
Achmea Zorgverzekeringen N.V. performed an investigation to assess the impact of these new standards. Achmea Zorgverzekeringen N.V.
has no joint arrangements. Therefore, Total equity, Total assets, Total liabilities and Profit for the year will not be affected by the
implementation of IFRS 11.
IFRS 12 DISCLOSURE OF INTERESTS IN OTHER ENTITIES
The IASB issued IFRS 12 on 12 May 2011. The standard was developed as part of the IASB improvement process on the accounting for offbalance sheet activities and joint arrangements. IFRS 12 will be applicable for reporting periods beginning on or after 1 January 2013. The
EU has endorsed this standard, but set the effective date for this standard for financial periods beginning on or after 1 January 2014 at the
latest. Although early adoption is permitted, Achmea Zorgverzekeringen N.V. decided not to adopt this standard as of 1 January 2013.
Furthermore, on 28 June 2012 and 31 October 2012 amendments on transition guidance were issued by the IASB (refer to IFRS 10 for brief
summary of the amendments).
IFRS 12 is applicable to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity.
The standard establishes disclosure objectives according to which an entity has to disclose information. This standard will have limited
impact on the disclosures related to Achmea Zorgverzekeringen N.V.’s interests in subsidiaries, and unconsolidated entities. The standard
will have no impact on Profit for the year and Total equity.
IAS 19 EMPLOYEE BENEFITS (AMENDMENT)
On 21 November 2013, the IASB issued narrow scope amendments that apply to contributions from employees or third parties to defined
benefit plans. The objective of the amendment is to simplify the accounting for contributions that are independent of the number of years of
employee service, for example employee contributions that are calculated according to a fixed percentage of salary. The amendments are
effective from 1 July 2014 with earlier application permitted. As at 31 December 2013, these amendments have not been endorsed by the EU
and therefore these amendments cannot be applied. These amendments have no impact on Profit for the year and Total equity.
IAS 27 REISSUED AS IAS 27 SEPARATE FINANCIAL STATEMENTS
On 12 May 2011, the IASB reissued IAS 27. The revised IAS 27 contains accounting and disclosure requirements only for investments in
subsidiaries, joint ventures and associates in company Financial Statements. The standard applies to reporting periods beginning on or after
1 January 2013. Furthermore, on 31 October 2012 amendments were issued by the IASB (refer to IFRS 10 for brief summary of the
amendments). The EU endorsed this standard, but set the effective date for financial periods beginning on or after 1 January 2014 at the
latest. The standard will have no impact on Achmea Zorgverzekeringen N.V.’s Company Financial Statements as Achmea
Zorgverzekeringen N.V. makes use of the option provided in section 362 (8) Book 2, part 9 of the Dutch Civil Code for accounting for
subsidiaries, joint ventures and associates in separate Financial Statements. The revised standard will have no impact on Profit for the year
and Total equity of Achmea Zorgverzekeringen N.V.
IAS 28 REISSUED AS IAS 28 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
On 12 May 2011, the IASB reissued IAS 28. The revised IAS 28 prescribes the accounting for investments in associates and sets out
requirements for the application of the equity method when accounting for investments in associates and joint ventures. The standard applies
to reporting periods beginning on or after 1 January 2013. The EU endorsed this standard but set the effective date for this standard for
financial periods beginning on or after 1 January 2014 at the latest. Although early adoption is permitted, Achmea Zorgverzekeringen N.V.
decided not to adopt this standard as of 1 January 2013. Achmea Zorgverzekeringen N.V. has no investments in associates and joint ventures.
The revised standard will have no impact on Profit for the year and Total equity of Achmea Zorgverzekeringen N.V.
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ANNUAL REPORT
IAS 32 OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES (AMENDMENTS)
On 16 December 2011, the IASB issued amendments to IAS 32 that clarify the requirements for offsetting financial instruments. The
amendments address inconsistencies in current practice when applying the offsetting criteria in IAS 32 Financial Instruments: Presentation.
The amendments clarify the meaning of ‘currently has a legally enforceable right to offset’ and that some gross settlement systems may be
considered equivalent to net settlement. The amendments are applicable to reporting periods beginning on or after 1 January 2014. These
amendments are expected to have a limited impact on Achmea Zorgverzekeringen N.V. as no different offsetting decisions are expected. The
amendments will have no impact on Profit for the year and Total equity of Achmea Zorgverzekeringen N.V.
IAS 39: FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT (AMENDMENT)
On 27 June 2013, the IASB published narrow-scope amendments to IAS 39 Financial Instruments: Recognition and Measurement entitled
Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39). The narrow-scope amendments will allow hedge
accounting to continue in a situation where a derivative, which has been designated as a hedging instrument, is novated to effect clearing
with a central counterparty as a result of laws or regulation, if specific conditions are met. The amendments will be applicable for reporting
periods beginning on or after 1 January 2014 and should be applied retrospectively. These amendments have no impact on Profit for the year
and Total equity of Achmea Zorgverzekeringen N.V.
ANNUAL IMPROVEMENTS TO IFRSS 2010–2012 CYCLE
On 12 December 2013, the IASB issued Annual Improvements to IFRSs 2010–2012 Cycle. The IASB uses the Annual Improvements
process to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of any other project. Annual
Improvements to IFRSs 2010–2012 Cycle is a collection of amendments to IFRSs in response to eight issues addressed during the 2010–
2012 cycle for annual improvements to IFRSs. The effective date of each amendment is included in the IFRSs affected, mainly 1 July 2014.
As at 31 December 2013, these amendments have not been endorsed by the EU and therefore Achmea Zorgverzekeringen N.V. cannot apply
these amendments. These amendments have no impact on Profit for the year and Total equity.
ANNUAL IMPROVEMENTS TO IFRSS 2011–2013 CYCLE
On 12 December 2013, the IASB issued Annual Improvements to IFRSs 2011–2013 Cycle. The IASB uses the Annual Improvements
process to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of any other project. Annual
Improvements to IFRSs 2011–2013 Cycle is a collection of amendments to IFRSs in response to four issues addressed during the 2011–2013
cycle. The effective date of each amendment is included in the IFRSs affected, mainly 1 July 2014. As at 31 December 2013, these
amendments have not been endorsed by the EU and therefore Achmea Zorgverzekeringen N.V. cannot apply these amendments. These
amendments have no impact on Profit for the year and Total equity.
IFRIC 21: LEVIES
On 20 May 2013, the IASB issued IFRIC Interpretation 21: Levies, an Interpretation on the accounting for levies imposed by governments.
IFRIC 21 is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The Interpretation clarifies that the
obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the
levy. IFRIC 21 is effective for reporting periods beginning on or after 1 January 2014. As at 31 December 2013, the Interpretation has not
been endorsed by the EU and therefore Achmea Zorgverzekeringen N.V. cannot apply this Interpretation. The Interpretation is expected to
have no impact on Profit for the year and Total equity of Achmea Zorgverzekeringen N.V.
Amendments related to accounting policies, prior period corrections and changes in presentation
GROSS WRITTEN PREMIUMS
As from 2013, Achmea Zorgverzekeringen N.V. presents the Gross written premiums Health and the related Change in provision for
unearned premiums (net of reinsurance), both part of the Premiums earned at own risk, based on the contractual annual premium for these
contracts for the health insurance contracts (both premiums due from the policyholder and compensation from the equalisation fund). In the
past, these accounts were based on the monthly amounts to be earned and not on the annual premiums. To provide more insight in the
contractual commitments and economic nature of these contracts, including the mandatory term of one year without possibility to cancel the
contract for both the insurer and policyholder, Achmea Zorgverzekeringen N.V. decided to change the presentation for both the profit and
loss and related balance sheet items. As the inception date of these insurance contracts is the first of January and these contracts have a
mandatory term of one year, the amendment will have no impact on year-end reporting. (Only interim reporting impacted ).
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ANNUAL REPORT
RECEIVABLES AND PREPAYMENTS AND ACCRUED INCOME
Receivables and Prepayments and accrued income are measured as the difference between the face value and accumulated impairment
losses. In the Consolidated Financial Statements 2012 this was defined as the fair value. As part of the implementation of IFRS 13, the
methods used to determine the fair value of assets and liabilities were re-evaluated. As a result of this re-evaluation the accounting policy of
Receivables and Prepayments and accrued income, e.g. the difference between the face value and accumulated impairment losses, was more
precisely defined as being the amortised cost. This change in definition has no impact on the measurement of Receivables and Prepayments
and accrued income , Profit for the year and Total equity.
CHANGE IN PRESENTATION FOR HIGH COST COMPENSATION
High Cost Compensation (HKC) is part of the Dutch Health Insurance system and is accounted for as a reinsurance contract. Based on our
current interpretation of IAS 1 combined with IAS 32, the presentation in the Financial Statements was improved to provide the user with
more insights with the actual features of the High Cost Compensation. As of 2013 the amounts related to HKC in the Statement of Financial
Position are presented as a single line-item at the net amount. Until 2012, the Amounts ceded to reinsurers amounting to € 1,806,347 (2012: €
2,294,231) and the Reinsurance liabilities amounting to € 1,760,618 (2012: €2,224,037) were presented separately in the Balance Sheet. In
both 2012 and 2013 Reinsurance premiums amounting to € 320,164 (2012: € 302,905) and Claims and movements in Technical provisions
ceded to reinsurers amounting to € 341,783 (2012: € 340,603) are presented separately in the Income Statement. Comparative figures have
been adjusted accordingly. The change in presentation has no impact on Profit for the year or Total Equity.
Changes in accounting estimates
In preparing these Consolidated Financial Statements, the significant judgements made by management in applying Achmea
Zorgverzekeringen N.V.'s accounting policies and the key sources of estimation uncertainties were the same as those that were applied to the
Consolidated Financial Statements 2012, with the exception of the discount rate to measure the defined benefit obligation. As from 2013,
Achmea Zorgverzekeringen N.V. applies the Towers Watson Rate:Link curve without any adjustments for determining the defined benefit
obligation of OZF Achmea Zorgverzekeringen N.V. Before 2013 Achmea Zorgverzekeringen N.V. used the Rate:Link curve with the
constant forward rate as extrapolation method and set additional criteria related to the liquidity of the last liquid point. The constant forward
extrapolation technique and the method used within the Rate:Link curve to cluster the market observations led to volatility in the Defined
Benefit Obligation that could not be justified from market developments during 2013. Analyses of these developments led to the conclusion
that the adjustments Achmea Zorgverzekeringen N.V. made to the Rate: Link curve did not fit in well with the methodology used to
determine this curve. Therefore, Achmea decided to use the Rate:Link curve without any adjustments.
D
CONSOLIDATION FRAMEWORK
Basis for consolidation
The following principles apply to Achmea Zorgverzekeringen N.V.'s Consolidated Financial Statements:
Entities (including special purpose vehicles) over which Achmea Zorgverzekeringen N.V. exercises control (directly or indirectly) are
considered subsidiaries and are fully consolidated in Achmea Zorgverzekeringen N.V.'s Financial Statements. Generally, control is
presumed to exist when the interest in the entity's ordinary share capital or voting rights (including potential voting rights) represents
more than 50%. Third-party interests in these entities are presented as Non-controlling interest within Total equity.
Entities over which Achmea Zorgverzekeringen N.V. exercises significant influence are accounted for using the equity method.
Generally, significant influence is presumed to exist when the participation in ordinary share capital or voting rights (including potential
voting rights) is between 20 and 50%. These entities are presented as Associates.
Entities over which Achmea Zorgverzekeringen N.V. and other Entities share joint control by means of contractual arrangements are
considered to be joint ventures. Achmea Zorgverzekeringen N.V. accounts for joint ventures using the proportionate consolidation
method.
All of Achmea Zorgverzekeringen N.V.'s subsidiaries are included in the Consolidated Financial Statements based on Achmea
Zorgverzekeringen N.V.'s accounting framework.
For the accounting of business combinations of entities or businesses under common control Achmea Zorgverzekeringen N.V. uses the
pooling of interest method in case of a (legal) merger and carry over accounting (transfer based on the carrying amount) in case of an
acquisition. Such transactions do not have an impact on Profit for the year and Total equity of Achmea Zorgverzekeringen N.V.
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ANNUAL REPORT
Intra-group adjustments
Intra-group transactions have been eliminated in the Consolidated Financial Statements.
E
ACCOUNTING FRAMEWORK
Consolidated statement of cash flows
The Consolidated Statement of Cash Flows has been set up according to the indirect method with a breakdown into cash flows from
operating, investing and financing activities. Cash and cash equivalents comprise cash, bank balances and call deposits. Bank overdrafts that
are repayable on demand and form an integral part of Achmea Zorgverzekeringen N.V.’s cash management processes are recognised as a
component of Cash and cash equivalents.
In Total cash flow from operating activities, Profit is adjusted for those items in the income statements, and changes in operating assets and
liabilities, which do not result in actual cash flows during the year. Due to the nature of Achmea Zorgverzekeringen N.V.’s cash flows
related to Investments and the Technical provisions are presented as part of Total cash flows from operating activities.
Foreign currency differences
The Consolidated Financial Statements are presented in Euros, which is Achmea Zorgverzekeringen N.V.'s functional and presentation
currency. Items included in the Company Financial Statements of Achmea Zorgverzekeringen N.V.'s subsidiaries are measured using the
currency of the primary economic environment in which the subsidiary operates (the functional currency).
Transactions in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
reporting date exchange rates of monetary assets and liabilities denominated in currencies other than the functional currency are recognised
in Profit for the year, except when deferred in Total equity as part of qualifying cash flow hedges or qualifying net investment hedges.
THE PRINCIPAL EURO EXCHANGE RATES ARE SUMMARISED IN THE FOLLOWING TABLE:
CLOSING RATES
31-12-2013
CLOSING RATES
31-12-2012
AVERAGE RATES
2013
AVERAGE RATES
2012
Recognition financial instruments
When Achmea Zorgverzekeringen N.V. becomes a party to the contractual provision of a financial instrument (i.e. at trade date), Achmea
Zorgverzekeringen N.V. recognises the instrument at fair value including transaction cost (unless it is classified as 'at fair value through
profit or loss').
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ANNUAL REPORT
Derecognition financial instruments
A financial asset (or part of a financial asset) is derecognised when the contractual rights to receive cash flows from the financial asset have
expired or when Achmea Zorgverzekeringen N.V. has transferred substantially all risks and rewards of ownership. If Achmea
Zorgverzekeringen N.V. neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, it is
derecognised if Achmea Zorgverzekeringen N.V. no longer has control over the asset. In transfers where control over the asset is retained,
Achmea Zorgverzekeringen N.V. continues to recognise the asset to the extent of its continuing involvement. The extent of continuing
involvement is determined by the extent to which Achmea Zorgverzekeringen N.V. is exposed to changes in the value of the asset.
A financial liability (or a part of a financial liability) is derecognised when it is extinguished (i.e. when the obligation specified in the
contract is discharged, cancelled or expired).
Upon derecognition, the difference between the disposal proceeds and the carrying amount is recognised in the Income Statement as a
realised gain or loss. Any cumulative unrealised gains or losses previously recognised in Total equity are transferred from Total equity to the
Income Statement.
Achmea Zorgverzekeringen N.V. uses the average cost method when derecognising financial assets and liabilities.
Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and reported at the net amount when Achmea Zorgverzekeringen N.V.:
Has a legally enforceable right to offset the recognised amounts; and
Intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Hedge accounting
Achmea Zorgverzekeringen N.V. applies fair value hedge accounting for certain investment portfolios. When Achmea Zorgverzekeringen
N.V. applies fair value hedge accounting, a fair value adjustment is recognised in the Income Statement to reflect the changes in the fair
value of the hedged items attributable to the hedged risk. Achmea Zorgverzekeringen N.V. assesses the effectiveness of the hedge
relationship at each reporting date. The hedge relationship is discontinued when the effectiveness is not within the 80%-125% range or when
the hedge is terminated or revoked. Achmea Zorgverzekeringen N.V. starts amortising the related fair value adjustment over the remaining
duration of the hedged item when the hedge relationship is discontinued.
Impairment
In general, an impairment of an asset exists when its carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset's fair value less costs to sell and value in use. At each reporting date, Achmea Zorgverzekeringen N.V. assesses whether there is
an indication that an asset could be impaired and whether it is necessary to recognise an impairment loss.
Irrespective of whether there is any indication of an event requiring an impairment test, every year, Achmea Zorgverzekeringen N.V. tests
goodwill from business combinations for impairment.
Impairments on Investments are recognised as Gains and Losses on Investments in the Income Statement. All other impairments are
recognised as Other (technical) expenses at own risk in the Income Statement.
Impairment losses recognised in prior years are reversed if the reversal can be objectively attributed to the disappearance or removal of the
impairment event since the impairment loss was recognised. If this is the case, the carrying amount of the asset is increased to its recoverable
amount. An increase in the carrying amount due to the reversal of the impairment loss will not exceed the carrying amount if no impairment
loss would have been recognised in prior periods. The increase due to a reversal of an impairment loss is recognised in the Income Statement
(Gains and Losses on Investments and in Other (technical) expenses at own risk for other reversals). Impairment losses on equity instruments
classified as 'Available for sale' are not reversed through the Income Statement. Subsequent fair value changes are recognised in the
Revaluation reserve, part of Total equity. An impairment loss regarding goodwill is not subject to reversal.
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ANNUAL REPORT
Held for sale classification
Assets or components of assets and related liabilities are classified as 'Held for sale' when it is highly probable that the carrying amount will
be recovered principally through a sale transaction rather than through continuing use.
A sale of an asset or a group of assets is highly probable if:
Achmea Zorgverzekeringen N.V. is committed to a plan to sell these assets and has an active programme to locate a buyer;
The assets are actively marketed for sale at a price that is reasonable in relation to its current fair value; and
The sale is expected to qualify for recognition as a completed sale within one year from the date of classification as 'Held for sale'.
Assets and liabilities classified as 'Held for sale' are measured at the lower of their carrying amount or fair value less costs to sell and are
presented separately in the Consolidated Statement of Financial Position. If a loss occurs when classifying assets and liabilities as 'Held for
sale', this loss is recognised in Other expenses in the Consolidated Income Statement.
Leasing
Leases entered into by Achmea Zorgverzekeringen N.V. are primarily operating leases. The total payments made under operating leases are
recognised in the Income Statement on a straight-line basis over the period of the lease. A property interest that is held by Achmea
Zorgverzekeringen N.V. under an operating lease and rented out to a third party is not classified as Investment property.
F
ASSETS AND LIABILITIES
All assets and liabilities are measured at fair value unless a different measurement is stated in the accounting policies.
Intangible assets
Goodwill
Goodwill arising on a business combination represents the excess of the consideration transferred to acquire the business over the fair value
of the net identifiable assets (including separately identified intangible assets), liabilities and contingent liabilities acquired at acquisition
date. Goodwill is stated at cost less accumulated impairment losses.
Recognised goodwill is subject to an annual impairment test as it is perceived to have an indefinite useful economic life. Achmea
Zorgverzekeringen N.V. has allocated the acquired goodwill due to business combinations to cash generating units (CGUs) that are expected
to benefit from the business combination. This is done on the basis of synergies expected to be realised by the combination. Goodwill is
monitored at business domain level, being an aggregation of products or group of products with the same risk characteristics and at which
level risks are managed and capital is allocated. Any excess of the carrying amount of the domain over its recoverable amount will firstly be
allocated to goodwill. Impairment tests at CGU level are performed at a fixed time every year and more frequently if triggering events occur.
If an impairment loss occurs, it will be allocated to the relevant CGU. An impairment loss recognised for goodwill is not subject to reversal
in a subsequent period.
Investments
Investments classified as 'Available for sale'
Investments backing Technical provisions are classified as ‘Available for sale’. Furthermore, all investments not backing insurance are
classified as 'Available for sale'.
Investments classified as 'Available for sale' are measured at fair value. Unrealised fair value changes are transferred to the Revaluation
reserve, part of Total equity. Upon derecognition of the investment any cumulative unrealised gains or losses, previously recognised in Total
equity, are transferred from Total equity to the Income Statement. Foreign currency results on fixed-income investments are recognised as
Realised gains and losses in the Income Statement as if they were carried at amortised cost in foreign currency. Interest income on fixedincome investments is determined by using the effective interest rate method.
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ANNUAL REPORT
At each reporting date, Achmea Zorgverzekeringen N.V. assesses whether there is objective evidence that an asset is impaired. If any such
evidence exists the decline in the fair value below the (amortised) cost that has been recognised in Total equity is transferred to the Income
Statement. In the case of investments in equities classified as 'Available for sale', objective evidence that the cost may not be recovered, can
be demonstrated through a significant (20% or more) or prolonged (12 consecutive months or longer) decline in the fair value below its cost.
Fixed-income investments are impaired if there is objective evidence that, as a result of one or more loss events (e.g. financial difficulty at
the issuer or breach of contract), estimated future cash flows are impacted negatively.
Investments classified as 'At fair value through profit or loss'
The classification 'At fair value through profit or loss' is used for investments that are either designated at initial recognition to be measured
at fair value with changes in fair value recognised in the Income Statement, or as 'Held for trading'.
Achmea Zorgverzekeringen N.V. designates an investment as 'At fair value through profit or loss' whenever:
this designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from
measuring assets or liabilities or recognising the gains and losses on them on different bases (also referred to as an 'accounting
mismatch');
financial assets, financial liabilities or both are managed as a group, and their performance is evaluated by management on a fair value
basis in accordance with a documented risk management or investment strategy; or
financial instruments contain one or more embedded derivatives, except if the embedded derivative does not modify significantly the
associated cash flows.
Achmea Zorgverzekeringen N.V. usually does not invest in financial instruments principally for the purpose of selling or repurchasing them
in the near term (i.e. for trading purposes).
Equity and similar investments
Equity investments and similar investments are classified as either 'Available for sale' or 'At fair value through profit or loss'. When optional
dividends are taken up as shares, an amount equal to the cash dividend is recognised in the Income Statement. Part of the portfolio of Equity
and similar investments consists of Private equity and alternative investments. Private equity and alternative investments are classified in
accordance with the framework as described above either 'At fair value through profit or loss' or 'Available for sale' depending on the
measurement basis of the related Technical provisions. The fair value of Private equity and alternative investments that are not listed on a
stock exchange is based on models as recommended in the International Private Equity and Venture Capital Valuation Guidelines.
Fixed-income investments (including Bonds and other fixed income securities, Other loans and Deposits with credit
institutions)
Fixed-income investments are classified as 'Available for sale' or ‘At fair value through profit and loss’. The investments are measured at fair
value. Unrealised fair value changes are transferred to the Revaluation Reserve, part of Total Equity.
Derivatives
All derivatives are defined as 'Held for trading'. Achmea Zorgverzekeringen N.V. uses derivatives to manage its exposure to market risks
arising from operating, investing and/or financing activities. Derivatives embedded in other financial instruments are separated and measured
separately if they are not closely related to the host instrument.
A convertible bond is separated into a bond part classified as 'Available for sale' and an equity conversion option classified as a derivative.
The bond part is measured according to the valuation of a similar bond with the same characteristics. The fair value of interest rate swaps is
the estimated amount that would be received or paid to terminate the swap at reporting date, taking into account current interest rates and
creditworthiness of the swap counterparties.
Depending on their value, derivatives are either presented as Investments (assets) or as Derivatives (liabilities).
Amounts ceded to reinsurers
This item contains the receivables on the Health Care Insurance Board (CVZ) under the legislation of the High Cost Compensation. This
item is stated at nominal value.
Receivables and Prepayments and accrued income
Receivables are measured at amortised cost, which usually equals the face value, adjusted for accumulated impairment losses to reflect
identified incurred losses.
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ANNUAL REPORT
Contribution from Dutch Health Insurance Fund
The receivables on Health Insurance Fund are receivables which are to be settled with the General Fund Exceptional Medical Expenses
(AFBZ) and the Health Insurance Fund. The receivables on the Health Insurance Fund are determined based on the relevant financial year
risk equalisation model, rates of settlement and costing and management estimates.
Cash and cash equivalents
Cash and cash equivalents comprise cash, bank balances and call deposits and are measured at fair value.
Total equity
Any Non-controlling interest related to subsidiaries is presented as a separate component within Total equity and is equal to the third-party
share in the subsidiary's equity based on Achmea Zorgverzekeringen N.V.'s accounting principles.
Insurance contracts are defined as contracts that transfer significant insurance risk. Insurance risk exists if a scenario exists under which,
based on an insured event, additional payments have to be made. Insurance risk is considered significant if the payment on occurrence of an
insured event differs at least 10% from the payment if the event does not occur.
General measurement principles
Earned premiums for Health insurance contracts are generally recognised in proportion to the period of insurance coverage provided.
A loading for expenses is included in premiums. When premiums are recognised, the loadings emerge and are included in Technical
provisions and subsequently released in future periods to offset actual expenses, including operating expenses and non-deferrable acquisition
costs.
When premiums are recognised, liabilities for future contract benefits are recorded, resulting in benefits and expenses being matched with the
revenues and profits being recognised over the lifetime of the contracts. The assumptions used in the calculation of the provisions are based
on objective externally published data or, when not available, internal data.
Achmea Zorgverzekeringen N.V. tests the adequacy of the recognised Technical provisions and related assets at each reporting date and
more often if deemed necessary. The test considers current estimates of all contractual cash flows of the Technical provisions, including
expected cost for claim handling. If the test shows that the Technical provisions are inadequate, Achmea Zorgverzekeringen N.V. will
recognise a loss by increasing the related Technical provisions.
Provision for unearned premiums
Gross written premiums attributable to income of future periods are accrued in the Provision for unearned premiums. The Provision for
unearned premiums is determined in proportion to the duration of the contract.
Provision for premium deficiency and unexpired risks
The Provision for premium deficiency is calculated for each insurance portfolio or label on the basis of estimates of future claims, costs,
premium earned and proportionate investment income.
Outstanding claims provision including incurred but not reported claims
The Outstanding claims provision relates to insurance claims that have not been settled at reporting date. These claims are determined either
case-by-case or statistically. The provision also includes amounts for incurred but not reported claims at reporting date. In determining the
provisions, costs for claim handling are taken into account.
The Outstanding claims provision is based on estimates of expected losses and unexpired risks for all lines of business. This takes into
consideration management's judgement on the anticipated level of inflation, regulatory risks and trends in claims and claim handling.
Estimates of expected losses are developed using historical claims experience, other known trends and developments, and local regulatory
requirements.
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ANNUAL REPORT
Post-employment benefits
The net obligation in respect of defined benefit pension plans is calculated separately for each plan using the 'projected unit credit method'. In
accordance with this method, the future benefits that employees have earned in return for their service in the current period and prior periods
are estimated. The rates used for salary developments, discounting and other adjustments reflect the specific country conditions. The liability
is discounted to determine the present value. Subsequently the fair value of plan assets is deducted in order to calculate the Net defined
benefit liability (asset). Current service cost and net interest on the Net defined benefit liability (asset) based on assumptions at the beginning
of the reporting period are included in the Consolidated Income Statement. Remeasurements of the net defined benefit liability are included
in the Consolidated statement of comprehensive income. In calculating the Net defined benefit liability future employee contributions are
included.
Past service cost are recognised as an expense at the earlier of:
- plan amendment or occurrence of the curtailment; and
- when it recognises related service cost or termination benefits.
A gain or loss on settlement of a defined benefit plan is recognised when the settlement occurs.
The present value of defined benefit assets at reporting date is recognised to the amount of the economic benefit that will be available to
Achmea Zorgverzekeringen N.V. in the form of refund from the plan or reductions in future contributions.
Other provisions
Other provisions are recognised when a legal or constructive obligation, which can be reliably estimated, exists as a result of a past event and
it is probable that an outflow of economic benefits will be required to settle the obligation. If the provision is to be used over a period longer
than one year, expected cash flows are discounted.
G
KEY ACCOUNTING ESTIMATES
For the measurement of certain items of the Consolidated Statement of Financial Position, Achmea Zorgverzekeringen N.V. uses
assumptions and estimates concerning future results or other developments, including the likelihood, timing or amounts of future transactions
or events. Inherent to estimates is that the actual results may differ materially. Specific estimates regarding the healthcare industry are
presented in the Risk Management Paragraph. The accounting estimates that are most critical to Achmea Zorgverzekeringen N.V.'s business
operations and to the understanding of its results and which involve complex or subjective decisions or assessments are presented below.
Impairment testing of intangible assets
In testing for impairment of intangible assets, the carrying amount is compared with the recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in use. Determining the value in use is an area involving management judgement,
requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from
such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future
cash flows, assumptions are required to be made in respect of uncertain matters like timing and amount in projecting cash flows and
development of future discount rates.
Assumptions regarding goodwill impairment testing are further disclosed in Note 4 Intangible assets.
Impairment testing of financial assets
There are a number of significant risks and uncertainties inherent in the process of monitoring financial assets and determining if an
impairment loss exists. For example, Achmea Zorgverzekeringen N.V.'s assessment of an issuer's ability to meet all of its contractual
obligations when the creditworthiness of that issuer or the economic outlook of the issuer changes.
Achmea Zorgverzekeringen N.V. applies judgement to establish whether a loss event has occurred resulting in an impairment loss for a
fixed-income investment. Specifically, Achmea Zorgverzekeringen N.V. assesses an issuer's ability to meet both principal and interest
payments when the financial condition of the issuer changes.
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ANNUAL REPORT
Objective evidence of impairment of an equity investment classified as 'Available for sale' includes information about significant changes
with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and
indicates that the cost of the investment in the equity investment may not be recovered. A significant or prolonged decline in the fair value of
an equity investment below its cost is also objective evidence for impairment. Equity investments held in an unrealised loss position that are
below cost for over twelve consecutive months or significantly below cost (20%) at reporting date are impaired. When determining the
impairment loss, qualitative factors are also used to determine if impairment is required before these thresholds are met.
Fair value of financial assets determined using valuation techniques
In the absence of an (active) market, the fair value of non-quoted financial assets is estimated by using present value or other valuation
techniques. For example, the fair value of non-quoted fixed-interest debt instruments is estimated by discounting expected future cash flows
using a current market interest rate applicable to financial instruments with similar yield, credit quality and maturity characteristics.
Valuation techniques are subjective in nature and significant judgement is involved in establishing fair values for certain financial assets and
liabilities. Valuation techniques involve various assumptions on the pricing factors. The use of different valuation techniques and
assumptions could have an effect on fair value.
Contributions from Health insurance fund
Settlement of medical care costs between Dutch health insurers and hospitals, mental health institutions (‘GGZ-Instellingen’) and
rehabilitation centres is based on so-called ‘DBC op weg naar Transparantie’ (DOT) that cover the whole duration of a medical treatment.
DOTs are based on a pre-arranged budget. Before 2012 this settlement was based on so-called ‘Diagnose Behandel Combinaties’ (DBC)
with an upfront funding which is included in Other receivables and accruals. The private health insurance system in force in the Netherlands
consists of two parts: basic health insurance and supplementary health insurance. Coverage within basic health insurance is heavily
determined by law and influenced by political processes. The basic health system (inherently) comprises uncertainties due to the calculation
methods applied. A system of risk mitigating features is in force in the Netherlands to reduce the uncertainties raised by the system. The
measurement of receivables regarding the Health Insurance Fund is an inherently uncertain process, involving assumptions for national
healthcare costs and allocation of healthcare costs to budget parameters. For more details regarding the uncertainties and the risk mitigating
factors in health insurance, a reference is made to the Risk management section. Any change in the assumptions could have an impact on the
settlement with the Dutch government (Health Insurance Fund).
The measurement of Technical provisions is an inherently uncertain process, involving assumptions for changes in legislation, social,
economic and demographic trends, inflation, investment returns, policyholder behaviour, and other factors.
The data used to calibrate the Insurance liability outstanding claims related to Dutch health-insurance contracts is based on historical
information. The results on the equalisation fund (including standard nominal premium) and claims level are preliminary and will probably
change and shift between insurers for some years. Achmea Zorgverzekeringen N.V. reassesses provisions for the underwriting year on an
annual basis based on the latest information on claims level, macro-neutrality and settlements with the Dutch government (equalisation fund
allocation for the related underwriting year). When appropriate, Achmea Zorgverzekeringen N.V. has made additional provisions.
Valuation Other provisions - Post-employment benefits
The liability recognised in the Statement of Financial Position in respect of the defined benefit pension plans is the present value of the
defined benefit obligation at reporting date less the fair value of the plan assets. The determination of the defined benefit plan liability is
based on actuarial models and calculations using the projected unit credit method. Inherent in these actuarial models are assumptions for
discount rates, rates of increase in future salary and benefit levels, mortality rates, healthcare costs trend rates and consumer price index. The
assumptions are based on available market data and are updated annually. Reference is made to Note 14 Post-employment benefits for the
assumptions used in connection with pension and other post-employment benefits. The actuarial assumptions may differ significantly from
the actual results due to changes in market conditions, economic and mortality trends, and other assumptions. Any changes in these
assumptions could have an impact on the valuation of defined benefit plans.
Valuation of Other provisions
A provision involves a present obligation arising from past events, the settlement of which is expected to result in an outflow from Achmea
Zorgverzekeringen N.V. of resources embodying economic benefits, however the timing or the amount is uncertain. Provisions are
discounted when the effect of the time value of money is material using a pre-tax discount rate. The determination of provisions is an
inherently uncertain process involving estimates regarding amounts and timing of cash flows.
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ANNUAL REPORT
Total premiums earned at own risk
Total premiums earned at own risk includes equalisation fund contributions. These contributions also include all estimated amounts to be
settled by virtue of ex-post compensation mechanisms. A provisional settlement for 2013 cannot be carried out before the summer of 2016.
Accordingly, when preparing the financial statements, estimates of the contributions relating in particular to the costs of hospital care and
mental healthcare have to be used, including the breakdown into fixed costs, variable costs and the effects of high cost compensation and
subsequent settlement.
The equalisation fund contributions item also includes the adjustment of the estimates for previous years.
Claims at own risk
The DBC system used leads to uncertainty regarding the figure for the item Medical care in hospitals and mental healthcare institutions. The
change to DBC healthcare products means that empirical figures are less helpful. However, the arrangements with the hospitals have
eliminated most of this uncertainty. Estimates have been used to help prepare the financial statements, because part of the total annual
1
expense has not been claimed yet. The ‘grouper’ system has been certified, so in this respect there is no reason why the hospital costs
claimed cannot be deemed to be legitimate. Ultimately, the DBCs might still not be lawful, if for instance the basic registration is not in
order.
The financial risk is then substantially mitigated by the contractual provisions and the risk equalisation system.
2. EXCEPTIONAL EVENTS
During 2013, the following exceptional event had a major impact on Achmea Zorgverzekeringen N.V.’s financial position and the 2013
Financial Statements. This event is described below and an analyses is given on how this event is incorporated in the 2013 Financial
Statements.
Impairment goodwill
In 2013, an impairment loss on goodwill had a negative impact of € 16 million on Profit for the year. The combination of lower premium
levels for 2014 and continuous pressure hereon and our assessment that future profit contributions will be structural lower than previously
assumed by us, led to an impairment on the goodwill of € 16 million.
1
The grouper is a central national computer that can be accessed via the internet from the ZIS hospital information system. This computer derives DBC
health products and add-ons (the claimable services) from the information that the healthcare institution enters in the system.
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ANNUAL REPORT
3. FAIR VALUE HIERARCHY
3.1 Assets and liabilities measured at fair value
This note provides an analysis of assets and liabilities that are measured subsequently to initial recognition at fair value, grouped into three
levels (fair value hierarchy) based on the significance of the inputs used in making the fair value measurements. The levels are defined as
follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This
category includes assets and liabilities valued using quoted prices in active markets for similar assets and liabilities, quoted prices for
identical or similar assets and liabilities in markets that are considered less than active or valuation techniques where all significant
inputs are directly or indirectly observable from market data.
Level 3: Valuation techniques using significant non-observable inputs. This category includes all assets and liabilities where the
valuation technique includes inputs not based on observable data and the non-observable inputs have a significant effect on the
valuation of the assets or liability.
Cash and cash equivalents are classified as level 1 when not subject to restrictions. Commercial paper, included within Deposits with credit
institutions, is classified as level 1 due to fact that these are traded in money markets. Other deposits with credit institutions are in general
classified as level 2 due to the facts that these are not traded and subject to restrictions.
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING AND NON-RECURRING BASIS
(X € 1,000)
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
2013
Main changes in the fair value hierarchy in 2013
At each reporting date Achmea Zorgverzekeringen N.V. assesses the classification of assets and liabilities measured at fair value. The
assessment of the classification in the fair value hierarchy requires judgement, for example the importance of (un)observable inputs used in
determining the fair value or with respect to activity of the market. In case of inactive markets, judgement is required on the valuation
techniques to be used in order to determine the fair value as well as the interpretation of the level of using market data. As a result, the
outcome of the classification process may differ between reporting periods. Achmea Zorgverzekeringen N.V.’s policy is to determine the
level of the fair value hierarchy each reporting period and to recognise transfers into and out of fair value hierarchy levels as of the beginning
of the reporting period.
Due to the introduction of IFRS 13 in 2013, further refinements have been made in the process of classification of assets and liabilities into
the relevant level within the fair value hierarchy. These refinements have no impact on the classification in the current reporting period.
Valuation techniques used and valuation process within Achmea Zorgverzekeringen N.V. for Level 2 and 3
measurements
Depending on the specific assets and liabilities Achmea Zorgverzekeringen N.V. has set valuation policies and procedures for determining
the fair value. Below, for each type of assets or liability a summary is provided of the valuation process, a description of the technique used
and the relevant inputs.
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ANNUAL REPORT
Equity and similar investments
When available, Achmea Zorgverzekeringen N.V. uses quoted market prices in active markets to determine the fair value of its equities and
similar investments. The fair values of investments held in non-quoted investment funds are determined by management after taking into
consideration information provided by the fund managers. If no market prices are available, internal models are used to determine fair value.
The level 2 classified Equities and similar investments comprise Commodities and Real estate funds. The fair value of Commodities,
classified as 'At fair value through profit or loss’, represents amounts estimated to be received from or paid to a third party in settlement of
these instruments. These instruments are valued by the broker based upon quoted prices in active markets. The fair value of Real estate
funds, classified as ‘Available for Sale’ investments, represents the Net Asset Value of funds managed by Achmea Zorgverzekeringen N.V.
Achmea Zorgverzekeringen N.V. reviews these fair values and performs analytical procedures and trend analysis to ensure the fair values are
appropriate.
The level 3 classified Equities and similar investments comprise private equity which is classified as ‘Available for Sale’ investment. The
private equity investment portfolio mainly consists of investments with a highly diversified nature in terms of sector, geographical region and
type of investment. The fair value of this portfolio is determined using the Net Asset Value as reported by the fund manager or general
partner, which is considered to be the best proxy of fair value of the investment. If an adjustment needs to be recorded in the reported Net
Asset Value, this is reflected in the fair value. The pricing models are based on models as recommended in the International Private Equity
and Venture Capital Valuation Guidelines. Achmea Zorgverzekeringen N.V. reviews the valuations and performs analytical procedures to
ensure the fair values are appropriate.
Other Loans and Deposits with credit institutions
In general, the fair value of these fixed-income investments is determined by means of a net present value methodology using estimated
future cash flows, taking into account current interest rates applicable to financial instruments with similar yield, credit quality and maturity
characteristics.
The level 2 classified Other Loans comprise mainly of investment loans. The fair value of these financial instruments is determined by means
of a net present value methodology using an internally calculated yield taking into account current interest rates applicable to financial
instruments with similar yield, credit quality and maturity characteristics.
Derivatives (assets and liabilities)
The level 2 classified derivatives comprise currency derivatives.
Where quoted market prices are not available, other valuation techniques, such as option pricing or stochastic modelling, are applied. The
valuation is performed by a data vendor. The valuation techniques incorporate all factors that a typical market participant would consider and
are based on observable market data when available.
Fair values of currency derivatives represent amounts estimated to be received from or paid to a third party in settlement of these
instruments. These derivates are valued using directly observed prices from exchange-traded derivatives or external pricing services or if not
available using pricing models based on the net present value of estimated future cash flows. The pricing models which are used are standard
industry standard valuation models (like Black and Scholes-model) and make use of current market data.
Achmea Zorgverzekeringen N.V. normally mitigates counterparty credit risk in derivative contracts by entering collateral agreements into
the contracts where practical.
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ANNUAL REPORT
Movement table of Level 3 assets and liabilities measured at fair value on a recurring basis
(X € 1,000)
EQUITIES AND SIMILAR
INVESTMENTS
TOTAL
Significant unobservable inputs for Level 3 asset and liabilities measured at fair value
DESCRIPTION
FAIR VALUE AS AT
31 DECEMBER 2013
(X € 1,000)
VALUATION
TECHNIQUE USED
UNOBSERVABLE
INPUT
RANGE (WEIGHTED
AVERAGE)
RELATIONSHIP OF
UNOBSERVABLE
INPUTS TO FAIR
VALUE
Equities and similar investments mainly consist of investments with a highly diversified nature in terms of sector, geographical region and
type of investment. There is no significant unobservable input or combination of inputs that can be used to perform a reasonable possible
sensitivity analysis for this portfolio.
3.2 Asset and liabilities not measured at fair value for which the fair value is disclosed
The table below provides an overview of all assets and liabilities that are not measured at fair value, but for which the fair value is disclosed
in the notes.
CARRYING AMOUNT
AS AT 31 DECEMBER
2013
(X € 1,000)
FAIR VALUE AS AT 31
DECEMBER 2013
QUOTED PRICES IN
ACTIVE MARKETS
FOR SIGNIFICANT OTHER
IDENTICAL ASSETS OBSERVABLE INPUTS
LEVEL 1
LEVEL 2
SIGNIFICANT
UNOBSERVABLE
INPUTS
LEVEL 3
TOTAL
Receivables are in general classified as level 2, due to the fact that the amount deducted for counterparty default risk is insignificant as
compared to the fair value of the nominal cash flows of these receivables. Other liabilities, except for Cash liabilities, are classified as level 2
due to the fact that there is not active market for these financial instruments. Cash liabilities are classified as level 1.
Valuation techniques used and valuation process within Achmea Zorgverzekeringen N.V. for Level 2 and 3
measurements
Depending on the specific assets and liabilities Achmea Zorgverzekeringen N.V. has set valuation policies and procedures for determining
the fair value. Below, for each type of assets or liability a summary is provided of the valuation process, a description of the technique used
and the relevant inputs.
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ANNUAL REPORT
Receivables
The Level 2 classified Receivables and Prepayment and accruals comprise mainly short-term amounts due related to the ordinary operating
activities of Achmea. These receivables are measured at amortised cost less accumulated impairment losses. The fair value of these
receivables is determined based on discounted value of the expected cash flows, taking into accounted expected credit losses. For receivables
expected to be recovered within twelve months after reporting date the carrying amount is a reasonable approximation of the fair value.
Other Liabilities and Accruals and deferred income
The Level 2 classified Liabilities and Accruals and deferred income comprise mainly short-term amounts payable related to the ordinary
operating activities of Achmea. These liabilities are measured at amortised cost. The fair value of these liabilities is determined based on
discounted value of the expected cash flows. For liabilities expected to be settled within twelve months after reporting date the carrying
amount is a reasonable approximation of the fair value.
4. INTANGIBLE ASSETS
INTANGIBLE ASSETS
(X € 1,000)
GOODWILL
TOTAL
2013
TOTAL
2012
Goodwill is related to the acquisition of OZF Zorgverzekeringen N.V. and a portfolio of AXA Zorg N.V.
After the impairment no amount of the Intangible assets is expected to be recovered more than twelve months after the reporting date.
Irrespective of whether there is any indication of an event requiring an impairment test, every year, Achmea tests goodwill from business
combinations. An impairment loss is recognised when the recoverable amount of a cash generating unit is lower than the carrying amount of
the cash generating unit. The recoverable amount is the higher of the 'fair value less cost to sell' and the 'value-in-use'. The assumptions are
assessed at each reporting date and adjusted when appropriate.
A Discounted Dividend Model (DDM) is used to determine the recoverable amounts for the Cash Generating Units Health Netherlands. Cash
flow projections for the first three years are based on budgeting and forecasting models endorsed by Achmea's Executive Board. Achmea
Zorgverzekeringen N.V. extrapolates the cash flows up to five years. To reflect the business-specific circumstances a forecast period is
sometimes extended. Achmea Zorgverzekeringen N.V. uses the leveraged cost of capital as the basis for the applied discount rate. Within the
DDM techniques the terminal value is determined by applying a perpetual growth rate to the perpetual dividend.
Pressure on profitability and solvency margins on health insurers is expected to increase further as a consequence of social and political
developments. The Dutch government is shifting more activities and risks towards health insurers. The combination of lower premium levels
for 2014 and continuous pressure hereon, expected future profits and expected higher capital requirements do not leave much room in terms
of value creation for the shareholders. As a consequence the recoverable amount is below carrying amount leading to an impairment of the
goodwill.
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ANNUAL REPORT
5. INVESTMENTS IN GROUP COMPANIES AND PARTICIPATIONS
BONDS ISSUED BY AND LOANS TO GROUP COMPANIES
(X € 1,000)
2013
2012
−
Reference is made to section ‘Related party transactions’.
6. OTHER FINANCIAL INVESTMENTS
INVESTMENTS CLASSIFIED BY NATURE
(X € 1,000)
AVAILABLE
FOR SALE
31 DECEMBER 2013
AVAILABLE
FOR SALE
31 DECEMBER 2012
Legal ownership of the majority of the company’s investment portfolio has been transferred to Stichting Achmea Zorgverzekeringen
Beleggingen, which manages the relevant investments, with the company bearing the full economic risks and rewards of these investments.
The assets in question are recognised in continuity under investments in the company’s Statement of Financial Position.
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ANNUAL REPORT
INVESTMENTS MEASURED AT FAIR VALUE
(X € 1,000)
BONDS AND
EQUITIES AND OTHER FIXEDSIMILAR
INCOME
INVESTMENTS
SECURITIES OTHER LOANS
−
−
−
DEPOSITS
WITH CREDIT
INSTITUTIONS
TOTAL
2013
TOTAL
2012
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
EQUITIES AND SIMILAR INVESTMENTS
(X € 1,000)
31 DECEMBER
2013
31 DECEMBER
2012
31 DECEMBER
2013
31 DECEMBER
2012
The investment funds invest only in listed ordinary shares.
BONDS AND OTHER FIXED-INCOME SECURITIES
(X € 1,000)
Government and government related or guaranteed bonds include bonds issued by supranationals and (local) governments as well as
sovereign bonds denominated in currencies other than the domestic currencies. Furthermore it includes government owned or sponsored
entities and government guaranteed (corporate) bond issues.
Corporate bonds include investment grade bonds, that are relatively safe, having a high bond rating. Furthermore, corporate bonds include
high yield bonds, having a lower rating than investment grade bonds. These corporate bonds are not guaranteed by governments.
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ANNUAL REPORT
GOVERNMENT AND GOVERNMENT RELATED OR GUARANTEED BONDS
AVAILABLE FOR SALE
(X € 1,000)
31 DECEMBER
2013
31 DECEMBER
2012
Financial markets remained volatile during 2013 due to ongoing uncertainty regarding the sovereign debt situation of some eurozone
countries. Due to the earlier adopted measures to reduce exposure in GIIPS countries, Achmea Zorgverzekeringen N.V.'s exposure remained
limited. For more details regarding Achmea Zorgverzekeringen N.V.’s risk management policies reference is made to the Risk management
section.
OTHER LOANS
(X € 1,000)
2013
DEPOSITS WITH CREDIT INSTITUTIONS
2012
(X € 1,000)
2013
2012
Deposits are not subject to restrictions.
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ANNUAL REPORT
ANALYSIS OF FIXED-INCOME INVESTMENTS CARRIED AT FAIR VALUE BY EXPECTED REMAINING TIME TO MATURITY
(X € 1,000)
2013
BONDS AND OTHER
FIXED-INCOME
INVESTMENTS
2012
BONDS AND OTHER
FIXED-INCOME
INVESTMENTS
OTHER LOANS
DEPOSITS
WITH CREDIT
INSTITUTIONS
TOTAL
OTHER LOANS
DEPOSITS
WITH CREDIT
INSTITUTIONS
TOTAL
IMPAIRMENTS
(X € 1,000)
EQUITIES AND
SIMILAR
INVESTMENTS
−
BONDS AND OTHER
FIXED-INCOME
INVESTMENTS
−
2013
−
2012
−
Impairment losses in 2013 have occurred, despite of a rise in the equity markets during 2013, due to significant or prolonged decline of
specific stock prices.
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ANNUAL REPORT
7. DERIVATIVES
DERIVATIVES
(X € 1,000)
2013
ASSETS
LIABILITIES
2012
TOTAL
ASSETS
LIABILITIES
TOTAL
ANALYSES OF THE EXPECTED TIME TO MATURITY OF UNDISCOUNTED CASH FLOWS OF THE DERIVATIVES (LIABILITIES)
(X € 1,000)
2013
<1 YEAR
1-3 YEAR
3-5 YEAR
TOTAL
2012
<1 YEAR
1-3 YEAR
3-5 YEAR
TOTAL
8. RECEIVABLES
(X € 1,000)
2013
2012
The receivables, except Contribution from Dutch Health insurance fund, are expected to be recovered within twelve months after reporting
date. For all receivables the carrying amount is a reasonable approximation of the fair value.
Impairment losses recognised in 2013 related to Receivables amounted to € 6.451 million (2012: nil) and are included in Other technical
expenses.
The receivables from hospitals and mental healthcare institutions are advance payments that health insurers provide as compensation for
liquidity shortfalls at these institutions. This is the result of the DOT/DBC system, under which a claim can only be submitted once the
treatment period has ended.
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ANNUAL REPORT
The law on structural measures relating to health insurance defaulters (‘Wet Structurele maatregelen wanbetalers zorgverzekering’) includes
measures to tackle those insured parties who decline to pay their nominal premium. Defaulters are not allowed to terminate their insurance
policy. The consequences of this law have been taken into account when determining the size of the provision for doubtful contribution
debts.
With regard to the items ‘Advances to hospitals’ and ‘Advances to mental healthcare institutions and other healthcare providers’, Zilveren
Kruis Achmea Zorgverzekeringen N.V. is the party that enters into the contracts with the hospitals, mental healthcare institutions and other
healthcare providers concerned, and sets off all payments from and to these parties with the other four Achmea ‘basic insurance’ companies.
For a further clarification of the receivables on group companies, please refer to the section ´Transaction with related parties.
9. CASH AND CASH EQUIVALENTS
(X € 1,000)
2013
2012
Cash and bank balances are at free disposal of Achmea Zorgverzekeringen N.V.
10. PREPAYMENTS AND ACCRUED INCOME
(X € 1,000)
2013
2012
For an overview of the Liabilities to Group companies, please refer to the section “Transactions with related parties”.
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ANNUAL REPORT
11. EQUITY ATTRIBUTABLE TO HOLDERS OF EQUITY INSTRUMENTS OF THE COMPANY
Solvency
Achmea Zorgverzekeringen N.V.'s internal solvency standard is determined by the Executive Board of Achmea B.V. being the ultimate
mother company, in conjunction with Achmea's Group Capital and Liquidity Committee. These calculations are based on the outcomes of
regular risk analyses as well as on the quantitative findings of the economic capital model. This leads to a quantitative substantiation of the
required solvency ratio to be maintained above the statutory solvency ratio. There is, moreover, a correlation between the solvency standard
maintained at the level of Achmea Zorgverzekeringen N.V. and the solvency present at the Achmea Group level.
The table below shows the company solvency margins present and required, taking any prudential filters into account.
The solvency calculation has been adjusted in 2013. Achmea Zorgverzekeringen N.V. now uses the consolidated method which is more
common in the health insurance branch. Due to the adjustment to the consolidated method, the required solvency ratio for Achmea
Zorgverzekeringen N.V. has increased by the solvency which is required for the subsidiaries. As a result the solvency surplus is reduced.
Comparative figures have been adjusted accordingly.
For Achmea Zorgverzekeringen N.V. the internal solvency requirement is currently set at 130%. By implementing this change Achmea
Zorgverzekeringen N.V. is in line with the Dutch Insurance sector, by which comparability within the sector of information has improved.
Own shares
The authorised capital consists of 250,000,000 ordinary shares each of a nominal value of € 1. of these shares 59,620,822 have been issued
and fully paid-up. +
Revaluation reserve
Based on the accounting principles used by Achmea Zorgverzekeringen N.V., a revaluation reserve is formed when appropriate.
Furthermore, based on Dutch regulations, Achmea should form a legal reserve for all positive unrealised fair value changes for assets that are
not quoted on active markets and for which the unrealised fair value changes are included in the income statement (e.g. investment property
and certain other financial instrument with level 3 fair value measurements). This part of the reserve may not be negative. This reserve is
formed by transferring the required amounts from Retained earnings to the Revaluation reserve.
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ANNUAL REPORT
Retained earnings
For details of the movements in Retained Earnings, please see the Statement of changes in Total equity.
The reserve for the health insurance fund business has been transferred under universal title to the other reserves of Zilveren Kruis Achmea
Zorgverzekeringen N.V. (€ 295.4 million) and Agis Zorgverzekeringen N.V. (€ 242.0 million). These reserves include a net item of € 537.4
million that the regulator has designated as earmarked reserve (previously statutory reserve). Pursuant to the Zvw (Health Insurance Act),
these reserves will be credited to Achmea Zorgverzekeringen N.V. basic-insurance entities as at 31 December 2015.
With regard to the administration of the AWBZ (Exceptional Medical Expenses Act), a sum of € 9.3 million (2012: € 9.7 million) has been
designated as earmarked reserve, as this act is financed from public funds.
This sum consists of the budget differences for past years in respect of the organisational costs of the care administration offices.
Should the positive sum earmarked for the AWBZ become greater than 20% of the organisational cost budget for the current financial year
then the surplus will be creamed off by the CVZ (Health Insurance Fund).
Restrictions apply to the free distribution of the Retained earnings, because the company is exempt from corporation tax. A precondition for
this exemption is that the company is only permitted to distribute profit to institutions that benefit public health.
Profit for the year
For details of the Profit for the year, please refer to the section Other Information.
Restrictions apply to the free distribution of the profit for the year. Please refer to the notes as stated under the retained earnings.
12. NON-CONTROLLING INTEREST
(X € 1,000)
2013
2012
The non-controlling interest is the share of investments held by FBTO Zorgverzekeringen N.V. in the closed-end mutual investment funds in
which also Achmea Zorgverzekeringen N.V. and her subsidiaries participate. The share of FBTO Zorgverzekeringen N.V. fluctuates due to
payments, withdrawals and changes in values of investments.
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ANNUAL REPORT
13. TECHNICAL PROVISIONS
This balance sheet item must be read in conjunction with the ‘Amounts ceded to reinsurers’ balance sheet item. The Statement of Financial
Position features the gross picture taken from the statements of movements set out below in respect of the separate elements of the technical
provisions.
(X € 1,000)
2013
GROSS
2012
GROSS
The technical provisions include a sum for claim handling costs of € 26,545 (2012: € 32,186).
An adequacy test is performed each quarter in order to ensure that sufficient provisions have been formed. The technical provision for
unearned premiums, provision for premium deficiency and unexpired risks and the technical provision for outstanding claims including
IBNR have been subject to quantitative testing. The outcome of the quantitative adequacy test is an expected value (excluding prudence) of
the provision at reporting date of € 21,214 (2012: € 5,537) in respect of the unearned premiums and Provision for premium deficiency and
unexpired risks and the technical provision for outstanding claims including IBNR € 4,218,902 (2012: € 4,899,627) in respect of outstanding
claims including IBNR.
ANALYSIS BY ESTIMATED TIME TO MATURITY OF INSURANCE LIABILITY
2013
WITHIN 1 YEAR
(X € 1,000)
1-5 YEARS
5-15 YEARS
OVER 15 YEARS
TOTAL
2012
PROVISION FOR UNEARNED PREMIUMS
(X € 1,000)
2013
GROSS
PROVISION FOR PREMIUM DEFICIENCY AND UNEXPIRED RISKS
2012
GROSS
(X € 1,000)
2013
GROSS
66
TOTAL
2012
GROSS
ANNUAL REPORT
MOVEMENT TABLE OF OUTSTANDING CLAIMS (INCLUDING IBNR)
(X € 1,000)
2013
GROSS
2013
REINSURANCE
2012
GROSS
2012
REINSURANCE
The composition of the receivable and liability is based on premiums, claims and other movements by underwriting year.
(BEFORE REINSURANCE)
2013
2012
2011
2010
2009
2008
2007
2006
TOTAL
(X € 1,000)
The claims development table for Health is presented before reinsurance only, as a claims development table after reinsurance would be in
line with the table presented above.
The data used for drawing up this overview is based on historical information. Each year, Achmea Zorgverzekeringen N.V. recalculates the
claims provisions for each claims year based on the most recent information for claims, macro-neutrality and settlements by the CVZ. If
necessary the provisions have been increased or released.
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ANNUAL REPORT
14. POST-EMPLOYMENT BENEFITS
(X € 1,000)
2013
2012
-3,740
-4,050
Achmea Zorgverzekeringen N.V. maintains a defined benefit retirement plan for the employees of OZF Achmea Zorgverzekeringen N.V.
This plan generally covers all employees and provides benefits that are related to the average remuneration and service of employees upon
retirement. Benefits related to medical costs are not included.
Annual contributions related to the defined benefit plans are paid to adequately finance the accrued liabilities during year of the plans
calculated in accordance with local legal requirements. Furthermore, if applicable, additional contributions are paid so that defined benefit
plans comply with applicable local regulations concerning investments and funding levels.
The pension plan is executed by Stichting Bedrijfstakpensioenfonds Zorgverzekeraars (SBZ).
Post-employment benefits are essentially of a long-term nature.
MOVEMENT TABLE POST-EMPLOYMENT BENEFITS
(X € 1,000)
DEFINED
BENEFIT
OBLIGATION
FAIR VALUE OF
INVESTMENTS
BACKING
DEFINED
BENEFIT
OBLIGATION
EFFECT OF
ASSET CEILING
NET DEFINED
BENEFIT
LIABILITY
-
-160
-20
-20
-610
-610
-10
-180
-30
-180
0
3,740
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ANNUAL REPORT
MOVEMENT TABLE POST-EMPLOYMENT BENEFITS
(X € 1,000)
DEFINED
BENEFIT
OBLIGATION
FAIR VALUE OF
INVESTMENTS
BACKING
DEFINED
BENEFIT
OBLIGATION
EFFECT OF
ASSET CEILING
NET DEFINED
BENEFIT
LIABILITY
-3,370
-190
-300
-300
-60
-60
0
-90
-220
-220
4,050
The future contributions from employees to the pension plan are taken into account in determining the defined benefit obligation and current
service costs.
SIGNIFICANT ACTUARIAL ASSUMPTIONS AT REPORTING DATE (EXPRESSED AS WEIGHTED AVERAGE ASSUMPTIONS)
2013
2012
The rate used to discount the defined benefit obligation is determined by reference to market yields on high quality corporate bonds. As from
2013 Achmea Zorgverzekeringen N.V. applies the Towers Watson Rate:Link curve without any adjustments. Before 2013 Achmea
Zorgverzekeringen N.V. used the Rate:Link curve with the constant forward rate as extrapolation method and set additional criteria related to
the liquidity of the last liquid point. The constant forward extrapolation technique and the method used within the Rate:Link curve to cluster
the market observations led to volatility in the Defined Benefit Obligation that could not be justified from market developments during the
first half of 2013. Analyses of these developments led to the conclusion that the adjustments Achmea Zorgverzekeringen N.V. made to the
Rate: Link curve did not fit in well with the methodology used to determine this curve. Therefore, Achmea Zorgverzekeringen N.V. decided
to use the Rate:Link curve without any adjustments. By applying this changed discount rate the Net Defined Benefit Liability declined with €
20 million and Total equity increased with € 20 million at 31 December 2013.
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ANNUAL REPORT
Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in each
territory. As from 2012 ‘the AG prognosetafel 2012-2062’ has been applied in determining defined benefit obligation. These assumptions
translate into an average life expectancy in years for a pensioner retiring at the age as defined in the pension plan:
31 DECEMBER 2013
31 DECEMBER 2012
The weighted average duration of the Defined Benefit Obligation is 23 years (2012: 23 years).
MATURITY ANALYSIS OF EXPECTED UNDISCOUNTED CASH FLOWS RELATED TO DEFINED BENEFIT
OBLIGATION
(X € 1,000)
31 DECEMBER 2013 31 DECEMBER 2012
-7,090
70
-8,200
ANNUAL REPORT
Plan assets are comprised as follows:
(X € 1,000)
31 DECEMBER
2013
-102
-102
-13
-13
31 DECEMBER
2012
-4
-4
The impact of changes in the most significant actuarial assumptions used on the defined benefit obligation is shown in the table below.
IMPACT ON DEFINED BENEFIT OBLIGATION
(X € 1,000)
CHANGE IN
ASSUMPTION
INCREASE IN
ASSUMPTION
31 DECEMBER
2013
DECREASE IN
ASSUMPTION
−
−2
−
−
−
1) The change in percentage of the assumptions listed in the table above are in absolute amounts. This means that the assumption changes with
100 bp.
2) The change in the mortality rate of 1 year means that the life expectancy of the participants will increase or decrease with 1 year.
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ANNUAL REPORT
The sensitivity analyses are based on a change in an assumption while holding all other assumptions unchanged. In practice, this is unlikely
to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the Defined Benefit Obligation to
significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit
method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the Consolidated
Statement of Financial Position. Furthermore, the mitigating impact of any changes in the value of the plan assets is not taken into account.
Achmea Zorgverzekeringen N.V. expects to pay € 0.2 million in contributions to the defined benefit plan for employees of OZF Achmea
Zorgverzekeringen N.V. in 2014.
15. OTHER PROVISIONS
(X € 1,000)
2013
2012
The Other provisions item primarily relates to the Agis Innovation Fund (Agis Innovatie Fonds/AIF). The AIF (formerly the RVVZ) is a
provision that relates to the commitment to deploy funds for care innovation activities, measures to prevent illness, research aimed at
promoting public health, and measures to promote the quality and effectiveness of the service provided to insured persons under the Care
Insurance Act (Zvw). The decision-making process regarding the AIF deployment objectives is a collective matter for which
Zorgverzekeraars Nederland is responsible. It is AIF’s internal committee that decides on the nature, scope and timing of the AIF
expenditure within Achmea Zorgverzekeringen N.V.’s subsidiary Agis Zorgverzekeringen N.V.
The Other provisions item in the amount of € 2,760 million (2012: € 8,650 million) primarily relates to Stichting Achmea Gezondheidszorg
in respect of repayable subsidies for care innovation projects.
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ANNUAL REPORT
16. LIABILITIES
(X € 1,000)
2013
2012
Other liabilities are expected to be settled within twelve months after reporting date. For these other liabilities the carrying amount is a
reasonable approximation of the fair value.
The item ‘Other’ contains the NZA fine concerning financial year 2011 amounting € 3,6 million.
17. ACCRUALS AND DEFFERRED INCOME
(X € 1,000)
2013
2012
18. OPERATING LEASES
The future rental commitments linked to operational lease contracts are as follows:
OPERATING LEASES AND RENTAL CONTRACTS
(X € 1,000)
2013
2012
In 2013, € 0,1 million is recognised as an expense in the Income Statement in respect of operating leases (2012: € 0,1 million).
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ANNUAL REPORT
19. CONTINGENCIES
Legal procedures
Achmea Zorgverzekeringen N.V.is involved in lawsuits and arbitration proceedings. These actions relate to claims instituted by and against
these companies arising from ordinary operations and mergers, including the activities carried out in their capacity as insurers, credit
providers, service providers, employers, investors and tax payers. Although it is not possible to predict or define the outcome of pending or
imminent legal proceedings, the Board of directors believes that it is unlikely that the outcome of the actions will have a material, negative
impact on the financial position of Achmea Zorgverzekeringen N.V.
CONTINGENT LIABILITIES
(X € 1,000)
2013
2012
Achmea Zorgverzekeringen N.V. has given guarantees to the Nederlandse Herverzekeringsmaatschappij voor Terrorismeschaden N.V. up to
a maximum of € 36,4 million (2012: € 37,5 million). Nederlandse Herverzekeringsmaatschappij voor Terrorismeschaden N.V. is a company
in which the participating insurance companies pool the claims and risks related to terrorism.
The commitments consist primarily of a not deposited part of a commitment to LSP Health Economics Fund C.V., a care innovation Fund.
Fiscal entity
The company is part of a fiscal unity with Achmea B.V. for the Value-Added Tax (VAT) and, in that capacity, is jointly and severally liable
for the tax debts of the fiscal unity as a whole.
The company is exempt from corporation tax, therefore it may not distribute profit unless to institutions for the benefit of public health.
20. RELATED PARTY TRANSACTIES
Identity of related party transactions
Parties are considered to be related if one party has the ability to control (e.g. subsidiaries) or exercise significant influence over the other
party in making financial or operating decisions. Since Achmea B.V. as head of the Group exercises direct or indirect control over all legal
entities that form part of the Achmea Group, Achmea Zorgverzekeringen N.V. deems these entities to be related parties too. Achmea also
considers its defined benefit plan (Stichting Pensioenfonds Achmea) as a related party. Members of the Executive and Supervisory Board
and their close family members are also considered related parties to Achmea Zorgverzekeringen N.V. Achmea Zorgverzekeringen N.V.
maintains business relationships with related parties as part of the company’s ordinary activities (particularly in the area of insurance). Such
transactions with related parties have a cost price-plus basis. Both individually and collectively, these transactions are not considered
material to Achmea Zorgverzekeringen N.V.
Costs for shared service centres and holding costs are allocated to entities on the basis of fixed amounts mainly based on past experience with
regard to time spent by employees, work carried out and transactions processed. This cost allocation is shown under Other expenses.
Shareholders
The shareholder of Achmea Zorgverzekeringen N.V. is Achmea B.V., which as at 31 December 2013 held 100% of the shares (100% of the
voting rights).
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ANNUAL REPORT
Consolidated participations in subsidiaries
Overview of entities in which Achmea Zorgverzekeringen N.V. helds directly or indirectly a majority interest as per 31 December 2013:
NAME OF THE ENTITY
NATURE
CONSOLIDATED
INTEREST %
TOTAL
INTEREST %
REGISTERED OFFICE
Remuneration
Scope
The Dutch Act called Wet Normering Topinkomens, commonly abbreviated to WNT, which limits the maximum remuneration of topranking (semi-) public officials may earn, designates a number of publicly funded organisations that are required to disclose remuneration
details of top-ranking officials in an explanatory note in their financial statements. Health insurers which provide basic health insurance are
designated organisations in this sense. The purpose of the WNT is to enforce a socially responsible ceiling for the salaries earned by topranking officials in the (semi) public sector. For Health insurers a separate ceiling for the salaries earned by top-ranking officials is
determined. Achmea subscribes to the transparency objective of the WNT in respect of its basic health insurance activities. The WNT applies
to the Achmea basic health insurance companies.
The WNT regulations were not drawn up for large groups, such as Achmea, that have an organisational structure where the directors are
involved in multiple entities which fall outside the scope of the WNT. Consequently, when applying the regulations, it is necessary to use an
appropriate interpretation of the term top-ranking official as defined in the WNT. The members of the Board of Directors of the Care and
Health division (dZ&G) fulfil all of the managerial activities and assume all of the responsibilities stated in the WNT for Achmea
Zorgverzekeringen N.V. as a whole, which includes the Achmea basic health insurance entities. In view of the nature and organisational
structure of Achmea B.V., the members of the Board of Directors of dZ&G also perform Group-wide activities on behalf of Achmea B.V. as
a financial conglomerate. Their range of duties is therefore broader than the scope defined by the WNT (which applies only to basic health
insurance).
Even though the members of the Board of Directors of dZ&G undertake more activities than solely those focusing on the basic health
insurance entities, these officials are the closest match to the WNT's definition of top-ranking official. Since these officials undertake
activities that are broader than solely managing the basic health insurance entities, the explanatory note required by the WNT is included in
the financial statements of Achmea Zorgverzekeringen N.V., the parent company of the basic health insurance entities (wholly owned
subsidiaries). Achmea Zorgverzekeringen N.V. offers supplementary health insurance.
Up to 10 December 2013, some members of the Executive Board of Achmea B.V., pursuant to their responsibility as members of the
Executive board of Achmea B.V., were also appointed to the position of statutory directors of Achmea Zorgverzekeringen N.V. and its
respective insurance subsidiaries (the basic health insurance entities). These members are also considered as top-ranking officials.
The members of the highest supervisory body (the Supervisory Board) also qualify as top-ranking officials. The basic health insurance
entities do not have a supervisory body in 2013, because the supervisory body is appointed at the level of Achmea Zorgverzekeringen N.V.
The two members of the Supervisory Board of Achmea Zorgverzekeringen N.V., who are also members of the Supervisory Board of
Achmea B.V., are considered to be top-ranking officials.
Based on the definition the top-ranking officials of Achmea Zorgverzekeringen N.V. and its subsidiaries in respect of the WNT are
considered to be:
the directors of the basic health insurance entities;
the members of the Board of Directors of dZ&G, who are responsible for the administration and day-to-day management of
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ANNUAL REPORT
Achmea Zorgverzekeringen N.V. and the different basic insurance entities as a whole;
the members of the Supervisory Board of Achmea Zorgverzekeringen N.V.
Policy
The content and associated responsibilities of the position of member of the Board of Directors of dZ&G determine the importance of the
position. The importance of the position is assessed based on aspects such as its impact and responsibility and the complexity of the
managerial context in which the person must operate. The total remuneration, determined in accordance with the requirements of the WNT,
consists of the following components:
Fixed remuneration and other short-term employee benefits
Fixed remuneration and other short-term employee benefits consists of compensations such as salaries, social security contributions and
awards of variable remunerations. The granting of awards of variable remuneration is subject to a recommendation of the Remuneration
Committee in the year after the performance. Awards of variable remuneration in any specific year therefore apply to performance in the
previous year. Part of the variable remuneration is subject to deferral and is payable more than 5 years after the bonus is granted. No new
variable remunerations will be awarded related to the performance in 2013. According to the WNT the remuneration for the Board of
Directors is based on cash outflows that were paid during the financial year 2013.
Taxable fixed and variable expense compensation.
This includes fixed expense compensation, which is subject to taxation and covers expenses incurred by employees based on their position.
No taxable variable expense compensation is paid.
Deferred payments to staff
In accordance with the provisions of the WNT, pensions are included in this category. In addition to their salaries, in 2013 Achmea makes
contributions to defined benefit plans that provide pension benefits for Directors of Achmea. Upon announcement by the end of 2012 that the
defined benefit plans for the (Board of ) Directors would be changed as per January 1st 2014, in 2013 these plans were still based on final
pay. As per January 1st 2014 these plans were harmonised for all employees of Achmea: contributions are based on an average salary
ambition and is accounted as a collectively defined contribution plan and executed by the Achmea Pension Fund. According to the WNT,
remuneration related to Post-employment benefits should be based on the contributions by the employer during the financial year. The
amounts included in the table below are therefore based on these contributions paid and not on the actual defined benefit costs for Achmea
B.V. as a whole.
Based on ‘Wet uitwerking fiscale maatregelen Begrotingsakkoord 2013’, concerning fiscal measures related to the government budget of
2013, Achmea as an employer has to pay a one-time crisis levy in 2013 that is calculated as 16% of the wages earned in 2012 to the extent
that wage was higher than € 150,000. This one-time crisis levy was extended to 2014 over the wages earned in 2013 above the threshold. The
total amount of crisis levy was € 0,1 million (2012: € 0,1 million) for all members of the Board of Directors. The amount of crisis levy is not
included in the total remuneration.
No additional remuneration is paid for the position of director of Achmea Zorgverzekeringen N.V. and its subsidiaries to the members of the
Executive Board of Achmea that were appointed as statutory director of the basic health insurance entities. Obviously, they did receive salary
for their activities as members of the Executive Board of Achmea BV. Within Achmea group expenses that relate to the executive board are
(partly) allocated to the several operations. This allocation is done based on estimated time spent by the board on the divisions as a whole.
On this basis, also amounts are allocated to dZ&G where the activities in respect of the basic health insurance activities are executed. The
disclosure in respect of the WNT relates to the salary components of the Executive Board as a whole that are allocated to dZ&G.
The two members of the Supervisory Board of Achmea Zorgverzekeringen N.V., who are also members of the Supervisory Board of
Achmea B.V., do not receive any separate remuneration for their role as Supervisory Board members for Achmea Zorgverzekeringen.N.V.
The expenses related to the Supervisory Board members are not allocated to the separate operations of Achmea Group. Hence, the
compensation included in the disclosure is nil.
Implementation
The table below presents the remuneration of the Board of Directors of dZ&G. All board members have a full time employment contract.
The following table includes the remuneration that was paid to active and former board members in financial year 2013.
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ANNUAL REPORT
WNT-REMUNERATION OF BOARD OF DIRECTORS IN 2013
START - END DATE
FIXED
REMUNERATION
AND OTHER
SHORT-TERM
EMPLOYEE
BENEFITS
(X € 1)
TAXABLE FIXED
AND VARIABLE
EXPENSE
COMPENSATION
TOTAL EXCLUDING
POST
EMPLOYMENT
BENEFITS
POSTEMPLOYMENT
BENEFITS**
TERMINATION
BENEFITS
* appointed Statutory Director as per 10 December 2013
** contributions to defined benefit plans that provide pension benefits (current cost and back service)
The performance related remuneration as included under “Fixed remuneration and other short-term employee benefits” is calculated based on
the requirements of the WNT implying that cash payments are included. Under IFRS these performance related remunerations are appointed
to the year granted. Awards of variable remuneration apply to performance in the previous year and amount to € 236,887 for the Board of
Directors of dZ&G in total.
No termination benefits were paid during 2013.
The remuneration of the members of the Board of Directors of dZ&G is determined based on their overall tasks and responsibilities. The
remuneration has changed in 2012. The performance related remuneration was reduced and was compensated by a partly increase in the
fixed remuneration. This change has been done in accordance with the requirements of ‘Wet Bonusverbod Staatsgesteunde Ondernemingen’
and as such is in spirit of the WNT including the ‘Overgangsregeling’ . The benefits paid to Mrs. M.I. Verstappen are higher than the
maximum of € 300.000 as set by the minister of Health, Welfare and Sport for 2013. This salary had already been agreed before the
implementation of the WNT and is therefore part of the ‘Overgangsregeling’ as described in the WNT. The salary is paid for all activities of
the staff member involved which are broader than the activities for the basic health entities that are publicly funded.
After terminating their relationship with the health insurance company, Messrs R. Konterman and H. Hendriks both moved to different
positions within the Achmea Group, which are respectively member of the Executive Board of Achmea B.V. and director for the 'direct
distribution' division.
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ANNUAL REPORT
WNT REMUNERATION OTHER TOP RANKING OFFICIALS
(€
1)
POSITION START - END DATE
REMUNERATION
CHARGED
The allocation of remuneration expenses of other top ranking officials to the operations of Achmea Zorgverzekeringen N.V. is not performed
on a person by person level. Total remuneration expenses of Achmea Executive Board allocated to dZ&G amount to € 1 mln (12.7%).
For an explanation of the remuneration of the members of the Executive Board, please refer to the explanatory note in the Group Financial
Statements of Achmea B.V. and the remuneration report that is published on Achmea.nl. For a more detailed explanation of the remuneration
of the members of the Supervisory Board, please refer to the Group Financial Statements of Achmea B.V.
All mentioned members of the Board of Directors worked for Achmea Zorgverzekeringen N.V., Agis Zorgverzekeringen N.V., Avéro
Achmea Zorgverzekeringen N.V., Zilveren Kruis Achmea Zorgverzekeringen N.V., OZF Achmea Zorgverzekeringen N.V. and Interpolis
Zorgverzekeringen N.V. Supervisory Board members only worked for Achmea Zorgverzekeringen N.V.
The remuneration of the members of the Executive Board of Achmea is determined based on their overall tasks and responsibilities as
members of the board of Achmea. No person by person allocation of expenses to dZ&G is done and the percentage of time that is spent by
the individual persons on the publicly funded activities as such is not known. The remuneration report of Achmea B.V. as published on the
website Achmea.nl discloses the remuneration of the Executive Board of Achmea B.V. The remuneration of the members of the Executive
Board of Achmea is higher than the maximum set by the minister of Health Welfare and Sport. In 2012, the performance related
remuneration was reduced which was compensated by a partly increase in the fixed remuneration. This change has been done in accordance
with the requirements of ‘Wet Bonusverbod Staatsgesteunde Ondernemingen’ and as such is in spirit of the WNT including the
‘Overgangsregeling’.
The remuneration of non-top ranking officials of the basic Health insurance companies must be disclosed not only insofar as they exceed the
maximum as set by the minister of Health, Welfare and Sports but as soon as they exceed the general WNT maximum amounting to
€ 228,599. Internal non-top ranking officials with a remuneration that exceeds the general WNT maximum amount of € 228,599 and who
perform activities for the basic health insurance companies, are disclosed in the following table. For the non top-ranking officials concerned
the remuneration is based on contractual agreements from before the WNT came into force. The post employment benefits relate to
contributions to defined benefit plans that provide pension benefits (current cost and back service).
WNT-Remuneration of non top-ranking officials in 2013
(x € 1)
Position
start - end Fixed remuneration and other shortdate
term employee benefits
Taxable fixed and variable expense
Post-employment benefits
compensation
Senior manager
1-1/31-12
193,377
14,805
45,877
Senior manager
1-1/31-12
197,456
7,942
84,746
Senior manager
1-1/31/12
218,206
2,144
40,649
Senior manager
1-1/1-7
114,452
1,007
24,443
Senior manager
1-1/1-9
135,488
7,646
25,481
Termination benefits that were paid to non-top ranking officials that exceeded the maximum amount of € 228,599 are agreed on between
Achmea and the employee and are based on the ‘kanton-rechtersformule’:
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ANNUAL REPORT
(€ 1)
TERMINATION BENEFITS
POSITION
END DATE
TERMINATION
BENEFIT PAID
In conformity with paragraph 6 of the ‘guideline implementing WNT’ (Beleidsregels toepassing WNT) no additional information is provided
in relation to external non-top ranking officials by Achmea Zorgverzekeringen N.V. and its subsidiaries.
Related party transactions
Unless stated otherwise below, when it comes to the outstanding balances with related parties, no guarantees have been given or received,
loan loss provisions included in relation to the amount of outstanding balances or charges relating to uncollectable or doubtful debts included
in the Income Statement.
Transactions with shareholder and ultimate parent company
Transactions with Subsidiaries and Affiliated Companies
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ANNUAL REPORT
Other operating costs and personnel costs
All personnel with the exception of the directors of Achmea B.V. and the employees of OZF Achmea Zorgverzekeringen N.V. are employed
by Achmea Interne Diensten N.V., an entity of Achmea B.V. The Achmea Group’s pension commitments have been placed with Stichting
Pensioenfonds Achmea, which has insured the liabilities with Achmea Pensioen- en Levensverzekeringen N.V. The personnel costs and
other operating expenses associated with the activities are charged to Achmea Zorgverzekeringen N.V. The associated pension expenses are
allocated on the basis of the pensionable salary of current employees.
Achmea Zorgverzekeringen N.V. as part of the Achmea Group undertakes many transactions with other Group companies, in particular
related to internal service provision such as facilities services and IT. The operating expenses associated with these activities are charged to
Achmea Zorgverzekeringen N.V. as far as possible.
The receivables and liabilities arising from these transactions relate to current account balances.
Transactions, receivables and liabilities with other related parties
Pension liabilities
Achmea Interne Diensten N.V. has placed the pension commitments (based on index-linked average pay) for employees of Achmea
Zorgverzekeringen N.V. with Stichting Pensioenfonds Achmea (SPA). The related pension expenses are allocated by Achmea Interne
Diensten N.V. to Achmea Zorgverzekeringen N.V. on the basis of the pensionable salary of current employees. Achmea Interne Diensten
N.V. calculates the pension commitments based on the ‘projected unit-credit method’. Under this method, the allocated pension rights per
year of service are considered to be and are measured as individual elements (annual layers) of the ultimate liability under the pension
commitments. The allocation to the individual financial years is based on the pension rights awarded or to be awarded per full year of
service. The provision is determined on the basis of the number of active years of service until the balance sheet date, the estimated level of
salary as at the expected retirement date and the market interest rate on the high-quality bonds issued by the entities. These liabilities will be
reduced by any assets related to this scheme.
IAS 19 Employee Benefits is applicable to Achmea Zorgverzekeringen N.V. based on the situation that the defined benefit plans share risks
between entities under common control. For the disclosures on the IAS 19 Employee Benefits (based on IAS 19.150) reference is made to
Note 23 of the 2013 financial statements of Achmea B.V. (www.achmea.com).
Pension costs charged Achmea Zorgverzekeringen N.V. amount to € 47.7 million (2012 € 35.1 million) and are based on the (average) cost
allocation from the operational holding by which personnel is employed to the operational divisions, distribution channels and the shared
service centers. Pension costs charged relate to the personnel employed on behalf of division Care & Health – basic and supplementary
health’ as a whole.
Rabobank
Rabobank is shareholder of Achmea since Achmea issued shares Achmea B.V. to Rabobank in respect to the acquisition of Interpolis by
Achmea.
For its operations, Achmea Zorgverzekeringen N.V. uses various regular banking services of the Rabobank Group. All services and
transactions with Rabobank are in an orderly transaction and based on regular market rates.
Insurance services delivered to Rabobank
Rabobank has insured several risks with Achmea, including a group Health insurance contract with Zilveren Kruis Achmea. The premiums
related to this insurance coverage over 2013 are €82 million (2012: € 82 million).
Distribution channel
Local Rabobank offices are a major distribution channel for Achmea's Dutch insurance products. Affiliated members ('aangesloten leden') of
the Rabobank are granted a 10% discount on the basic health insurance premiums and a discount between a scale from 10% till 25% for
premiums for the supplementary health insurance.
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Independer
Independer is part Achmea B.V. Due to the self-governing structure of Independer in relation to the other entities of the Achmea Group,
transactions are strictly on arm’s length basis.
The total amount of commissions paid to group companies in 2013 is € 3.3 million.
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21. TECHNICAL ACCOUNT BY REPORTING GROUP
TECHNICAL ACCOUNT BY REPORTING GROUP
(X € 1,000)
BASIC HEALTH
INSURANCE
SUPPLEMENTARY
HEALTH INSURANCE
TECHNICAL ACCOUNT BY REPORTING GROUP
TOTAL 2013
(X € 1,000)
BASIC HEALTH
INSURANCE
SUPPLEMENTARY
HEALTH INSURANCE
TOTAL 2012
22. GROSS WRITTEN PREMIUMS
(X € 1,000)
2013
2012
Premiums earned are defined as sums charged to third parties after the deduction of legal contributions and after the change in technical
provisions for unearned premiums and unexpired risks. This item also includes contribution from Central Funds of the “Algemeen Fonds
Bijzondere Ziektekosten (AFBZ)” and the “Zorgverzekeringsfonds (Health Insurance Fund)” for provision costs and administrative
expenses. The gross contribution from the Health Insurance Fund is derived from the most recently received CVZ provisional budget
calculation. The equalisation, subsequent costing, high cost compensation and safety net scheme have been determined on the basis of the
relevant text of the section ‘Uncertainties in the health care industry’ in the Risk Management Paragraph. The recognised gross written
premiums are entirely earned inside the Netherlands.
The high cost compensation (HKC) premium paid amounts to € 320,164 and was deducted as reinsurers’ share.
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23. INVESTMENT INCOME ALLOCATED FROM NON-TECHNICAL ACCOUNT TO TECHNICAL ACCOUNT
The allocation of the return on investments to the technical account is based on a normative rate of return related to technical provisions
based on ALM-studies. The so determined results on investments from insurance activities are accounted for in the technical account.
Results on investments with no relation to the technical provisions will be accounted for in the non-technical account.
24. OTHER TECHNICAL INCOME AT OWN ACCOUNT
(X € 1,000)
2013
2012
25. CLAIMS AND MOVEMENTS IN TECHNICAL PROVISIONS
(X € 1,000)
2013
2012
The amounts included in this item relate to all the claims and benefits to be allocated to the financial year, including the claims handling costs, and
increased or decreased by the movement in the technical provisions. In addition, the high cost compensation contribution received was deducted as
reinsurers' share. The expected settlement amounts arising from overstatement and understatement of funding of hospitals for the years 2011 to 2013
inclusive have been accounted for in the income statement.
26. OPERATING EXPENSES
(X € 1,000)
2013
2012
For further clarification of the transactions with group companies regarding operating expenses, refer to section ´Transaction with related
parties’.
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Administrative expenses
All personnel with the exception of the personnel of OZF Achmea Zorgverzekeringen N.V. are employed by Achmea Interne Diensten N.V.
The personnel costs and other operating expenses associated with the activities of Achmea Zorgverzekeringen N.V. are charged from
Achmea Interne Diensten N.V. to Achmea Zorgverzekeringen N.V. Achmea Interne Diensten N.V. allocates the pension expenses to the
various Achmea Group entities. Allocation is effected on the basis of the pensionable salary of the current employees. For more information,
see the section headed Related parties.
All personnel of OZF Achmea Zorgverzekeringen N.V. are employed by OZF Achmea Zorgverzekeringen N.V. The personnel costs of the
current personnel amount to € 1,367 (2012: € 1,625). These costs are reported under the operational expenses.
Acquisition costs
Acquisition costs are costs related to the entering into policies (including commissions paid to third parties). These costs are charged directly
to the result of the financial year.
Auditor’s fees
By virtue of Book 2 Title 9 Article 382a paragraph 3 Dutch Civil Code, no breakdown of the fees of our external auditor is given.
27. OTHER TECHNICAL EXPENSES AT OWN ACCOUNT
(X € 1,000)
2013
2012
28. INVESTMENT INCOME
INCOME FROM INVESTMENTS BASED ON THE ACCOUNTING TREATMENT OF INVESTMENTS
(X € 1,000)
2013
INCOME FROM INVESTMENTS BASED ON THE NATURE OF INVESTMENTS
(X € 1,000)
2013
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2012
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INCOME FROM INVESTMENTS BASED ON THE NATURE OF THE INCOME
(X € 1,000)
2013
2012
29. UNREALISED GAINS ON INVESTMENTS
UNREALISED GAINS BASED ON THE ACCOUNTING TREATMENT OF INVESTMENTS
(X 1,000)
2013
UNREALISED GAINS BASED ON THE NATURE OF INVESTMENTS
2012
(X 1,000)
2013
2012
30. INVESTMENT EXPENSES
ADMINISTRATIVE EXPENSES
(X € 1,000)
2013
2012
GAINS AND LOSSES ON INVESTMENTS
VALUE ADJUSTMENTS ON INVESTMENTS BASED ON THE NATURE OF INVESTMENTS
(X € 1,000)
2013
2012
REALISED LOSSES ON INVESTMENTS
REALISED LOSSES BASED ON THE ACCOUNTING TREATMENT OF INVESTMENTS
(X € 1,000)
2013
2012
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REALISED LOSSES ON INVESTMENTS
REALISED LOSSES BASED ON THE NATURE OF INVESTMENTS
(X € 1,000)
2013
2012
31. UNREALISED LOSSES ON INVESTMENTS
UNREALISED LOSSES ON INVESTMENTS
UNREALISED LOSSES BASED ON THE ACCOUNTING TREATMENT OF INVESTMENTS
(X € 1,000)
2013
2012
UNREALISED LOSSES ON INVESTMENTS
UNREALISED LOSSES BASED ON THE NATURE OF INVESTMENTS
(X € 1,000)
2013
2012
32. OTHER INCOME
OTHER INCOME
(X € 1,000)
2013
2012
33. OTHER EXPENSES
OTHER EXPENSES
(X € 1,000)
2013
2012
The item ‘Other’is the NZA fine concerning financial year 2011.
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34. RISK MANAGEMENT
INTRODUCTION
Taking and managing risks is Achmea’s basis for generating sustainable business. Risk management implies the ability to identify, assess,
mitigate and control risks. The focus of risk management is not solely on the risks as such, but also on value creation by optimising the
balance between risk and return and the active selection of profitable risks. In the long term, sound risk management secures Achmea’s
continuity and solvency.
In this risk management paragraph, the risk management structure, the risks and developments therein as well as the risk control measures
are described. Achmea Zorgverzekeringen N.V. is part of Achmea and falls within the scope of the overall risk management structure within
Achmea. Achmea Zorgverzekeringen N.V. offers supplementary health and via its 100% subsidiaries basic health insurance.
In the following sections we outline Achmea’s approach to risk management, starting with the main developments in 2013 and followed by a
description of Achmea’s risk governance framework and risk categories. Each risk category consists of a description of the risk and risk
management approach towards that risk. The risk categories, from Achmea’s perspective, are insurance risk, market risk, counterparty
default risk, liquidity risk and operational risk. Where applicable, specific information regarding risks and risk control measures for Achmea
Zorgverzekeringen N.V. (including its 100% subsidiaries) is included.
Achmea adheres closely and consistently to its strategy of keeping a prudent low-risk profile as described in our risk appetite. Risk
management, underpinned by Achmea’s risk appetite and integrated risk management framework, covers the full range of risk categories
applicable to our business.
MAIN DEVELOPMENTS RISK MANAGEMENT
During 2013 the financial markets have relatively calmed down compared to the years directly following the beginning of the financial crisis
since 2007. In August 2013 the euro zone came out of its longest recession since the single currency was launched in 1999. In general, credit
ratings of financial institutions and governments have declined in recent years, but now at least it appears rating outlooks have stabilised. On
the other hand many officials and economists warn that the crisis is not over yet.
There are still major challenges in the world economy such as the high debt level of Japan and the US and potential risk from their
Quantitative Easing programs. Also in EU there are still major unsolved problems, such as increasing unemployment rates and continuing
recession in the southern region. Furthermore, in response to the financial crisis of recent years, more EU policies are underway meant to
stabilise the financial system. An important aspect is the European Commission (EC) commitment to form a European Banking Union.
Current EC and EU leader consensus is that shareholders, bondholders and depositors with more than € 100 will share the financial strain for
bank bailouts at least as of 2018. This is a fundamental shift in Europe’s banking system and will most likely have consequences in the
longer run for bank ratings and Achmea’s risk attitude toward banks. These topics are monitored closely to safeguard the appropriateness of
Achmea’s Counterparty Risk Policy.
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A
RISK MANAGEMENT FRAMEWORK
RISK STRATEGY
At Achmea, the realisation of sustainable value creation in financial management is key. Adequate risk management is an integral part of this
financial management.
As a starting point for effective risk management within the company a risk strategy is defined with principles regarding (1) strategic
objectives, (2) risk culture and (3) risk governance. These principles apply to all levels within the organisation and across all business units.
Culture plays an essential role in effective risk management. Several principles have been defined in which the Executive Board and
management of Achmea encourage among others an open culture where risks can be openly discussed and where decision making is based
on an appropriate balance between risk, capital and expected return.
Our risk strategy has been further elaborated in our ‘three lines of defence’ governance model and our Integrated Risk Management
Framework (IRMF) which outlines our risk management system.
THREE LINES OF DEFENCE
Achmea's risk governance structure is based on the ‘Three Lines of Defence’ model. This model specifies three lines of defence for
managing risks.
LINE OF DEFENCE (LOD)
FUNCTION / DEPARTMENT
1st LoD
Line organisation:
Execution and Control
Executive Board, Line organisation
management business units,
Finance, and Risk committees
2nd LoD
Risk management function: Group Risk & Compliance,
Support, monitoring and reporting
Operational Risk & Compliance departments,
Actuarial and Insurance risk teams
3rd LoD
Internal Audit function:
Testing and judgement
Internal Audit
Achmea has both risk committees at Group level and within the business units.
On Group level, the Supervisory Board supervises the Executive Board on the effectuated policy and associated risks. The Audit & Risk
Committee advises the Supervisory Board on financial, administrative and organisational compliance matters, as well as the risk profile and
risk management.
The Finance & Risk Committee (FRC) is an executive committee of the Executive Board. It is the platform for the Executive Board and for
management of (financial and risk) staff departments and finance directors of several business units to discuss and decide on the issues
related to finance and risk management at Group level.
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A subcommittee of the FRC is the Model Approval Committee (MGC), with delegated responsibility for approving risk models. The Product
Assessment Committee (PBC) has an important assessment role in the product approval and review process.
Aligned with the FRC at Group level, there are committees within the business units that determine risks within the organisation.
INTEGRATED APPROACH
Achmea’s Integrated Risk Management Framework (IRMF) outlines Achmea’s risk management system. The IRMF ensures an integrated
approach where all second line of defence functions (risk, actuarial and compliance) use the same risk classification, are covered by the risk
appetite and use tools and techniques which are complementary to each other.
The IRMF consists of seven components which are a precondition for an effective risk management process. The risk management process
itself is integrated in our operational processes and consists of risk identification, risk assessment, risk response, implementation of
mitigating measures and monitoring and reporting.
Several risk assessments are carried out throughout the year including an economic capital model study to quantify the risks per risk
category, a Strategic Risk Assessment (SRA) with management and the Executive Board in which all potential risks are analysed and
scenarios and stress tests which provide insight into what happens under extreme circumstances or in the event of the simultaneous
occurrence of a combination of factors. The assessments mentioned together are input for the ORSA (Own Risk and Solvency Assessment)
Report which provides an overview of and conclusions about whether or not the current and projected future available capital are deemed to
be sufficient under regular and stressed circumstances, given the risk profile and our risk appetite.
IRMF COMPONENTS
DESCRIPTION
A
Organisational structure
The risk governance, together with the risk strategy is defined in the Risk Charter of Achmea. This
charter is reviewed at least annually and more often if considered necessary by the Executive Board.
B
Risk Classification
Achmea recognises the risk classification of the mutually exclusive main types of risk: insurance
(consisting of life, non-life, disability and health), market, counterparty default, liquidity and operational
risk. Compliance risk, though to be classified as operational risk, is treated separately because of its
specific nature.
C
Risk Appetite
Risk appetite is defined as the maximum risk that Achmea is willing to accept in performing its chosen
business strategy. A risk appetite framework is defined for embedding the risk appetite statements in our
operational processes.
D
Policies and Procedures
Group-wide policies and procedures ensure that for each risk type the risk management throughout the
organisation is consistently implemented. For the development and maintenance of the policies, a
management cycle is developed to monitor the quality and consistency. Part of this cycle is an annual
review.
E
Tools and Techniques
Achmea uses multiple tools and techniques, such as qualitative risk assessments, control testing,
modelling, stress testing and sensitivity analyses, that for each risk type give concrete and practical
support to execute the risk management process. For economic capital modelling Achmea uses a partial
internal model.
F
Systems and Data
Systems support the capture, storage and analysis of quantitative and qualitative risk data. The Achmea
Data Governance Framework consists of six layers including measures to demonstrate the quality of data.
This involves successively: data ownership, data management, data definitions, process control, data
supply chain and data monitoring.
G
People, culture and
awareness
People, culture and consciousness relate to the aspects that people have and benefit to adequate risk
management. The required knowledge and skills are described in competency profiles. Training programs
ensure among others that the correct levels are achieved.
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The risk profile of Achmea is periodically monitored and quarterly reports are prepared for the Executive Board and the Audit & Risk
Committee. For the main risk types line management periodically verifies whether the risk is still within the set risk limits. Furthermore, an
Internal Control Framework is implemented which is used to systematically monitor key risks and key controls throughout the whole
organisation. On an annual basis an Internal Control Statement is reported which provides a qualitative description of risks and internal
control of both operational risk and other risk types as per Achmea risk classification. Finally, the internal audit function reports on the basis
of audit reports and the management letter. Remuneration is both performance and risk related and is aligned with regulations (DNB, AFM,
Insurers Code).
Achmea's Risk Appetite Statements at Group level are derived from the assumptions regarding the strategic objectives as described in the
risk strategy. They include the attitude towards risk and are an indication of not only the willingness to accept either a high or a low level of
risk, but also the ability to take risks. Achmea Risk Appetite Statements are comprehensive and include among others statements on capital,
liquidity, risk management, responsible profit, product quality, compliance and corporate social responsibility. Risk Appetite Statements are
reviewed at least once per year by the Executive Board and then submitted to the Supervisory Board for approval. Any material changes to
the risk appetite will also be submitted to the Supervisory Board for approval.
The Risk Appetite Statements are translated through Key Risk Indicators (KRIs), risk tolerances and risk limits. Risk tolerances are
restrictions that give a clear direction to management of the risk levels Achmea is willing to be exposed to. Risk limits are used in daily
business practices to indicate how much risk we are willing to take.
Achmea maintains sufficient liquidity in moderate stress scenarios at both Group and business unit level to always meet its liquidity
requirement. Achmea aims for a structural target return that matches the risk profile and its cooperative background and dividend wishes of
its shareholders.
RISK MANAGEMENT FRAMEWORK ACHMEA ZORGVERZEKERINGEN N.V.
General
The risk profile of Achmea Zorgverzekeringen N.V. is monitored by the Finance & Risk Committee in the business unit, attended by the
complete Board of directors and the quarterly Operational Risk and Compliance reports. Furthermore the ControlFrameWork (CFW) is used
to monitor the status of the Key controls.
The Risk Appetite Statements are designed at the level of the legal entities of Achmea, e.g. Achmea Zorgverzekeringen N.V. and its 100%
subsidiaries. They are based on the Risk Appetite statements at group level.
The available capital is at least equal to an economic capital level at 99.95% confidence level at group level. These involve preconditions for
the minimum capital that needs to be held. Preconditions are that the minimum amount of capital is sufficient for a S&P A rating and that
Achmea Zorgverzekeringen N.V. and its 100% subsidiaries meets the capital requirements of the regulator. Such capital position is in line
with Achmea’s prudent risk policy which is developed, implemented and monitored as part of the Risk Management Framework in general.
The profitability by product group, related to risk, is assessed based on the metric Return on Profit At Risk (RoPAR).
Partial internal model
For economic capital modelling Achmea Zorgverzekeringen N.V. and its 100% subsidiaries uses a partial internal model to make a
quantitative estimate of the risk profile. Economic capital in this respect is the potential loss at a specific confidence level for all risk types
that are statistically quantifiable. In the model all potential losses, including adverse revaluation of assets and liabilities, are assessed. Risks
per business line are determined using the Solvency II standard formula or internal models. The results of this model are used in Asset &
Liability Management (ALM), reinsurance strategy, pricing, performance management and capital management.
The required capital of the partial internal model at Group level is defined as the amount of required capital to ensure fulfillment of the
liabilities. The confidence level for the legal entities of Achmea is 99.5% over a one-year period, without diversification benefits between the
legal entities of Achmea Group. All entities that are part of Achmea Group and are part of the consolidated IFRS financial statements are in
scope. The principles, assumptions and methodologies used by Achmea are based on the last known information and interpretations of
Solvency II. Until the Solvency II legislation and all primary legislation are officially approved, interpretations and assumptions can change.
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Risk identification
Achmea Zorgverzekeringen N.V. and its 100% subsidiaries are exposed to insurance risk, market risk, counterparty default risk, liquidity risk
and operational risk. In terms of required capital, the largest exposures are related to insurance risk and market risk .
The main financial risk types within our investment activities are interest-rate risk, counterparty default risk and liquidity risk, also disclosed
separately within those sections. Operational risk and compliance for the health insurance activities are an integrated part of the Group
operational risk and compliance risk management.
B
INSURANCE RISK
Insurance of policyholders’ healthrisk is the main business activity of Achmea Zorgverzekeringen N.V. and its 100% subsidiaries. Insurance
risk at Achmea is defined as the risk of a change in value of portfolio due to a deviation of the actual claims payments from the expected
claims payments. Catastrophe risk and concentration risk, if present, are included separately in the risk types mentioned.
Insurance risk
Description
Main drivers
Risk control and
mitigation
-
Health rates for our health business
Risk profile insured
Product development / premium setting and underwriting
policy (for additional health insurance)
Claims and procurement management
Liability adequacy testing
Equalisation system
Meerjarige Hoge Kosten (MHK) compensation
Health risk at Achmea is split in the sub risk types: premium risk, reserve risk, catastrophe risk, lapse and expense risk.
In the elaboration of policies for the management of Insurance risk the Product Life Cycle (PLC) is used. The risk management process is
central for each step of the PLC. Principles relating to insurance risk are described below.
General Principles for Insurance Risk
Risk identification
In addition to available reports and analyses, Achmea Zorgverzekeringen N.V. uses Risk Self Assessments (RSA) for all parts of the product
life cycle to identify Insurance risk. This involves business units regularly performing risk self assessments on strategic, tactical and
operational level based on their direct experience.
Instruments for risk assessment
After completion of the business plan all risks are quantified using the partial internal model. When drawing up the business plan, capital
projections derived from the most recent run of the (partial) internal model are used to check whether the risks remain acceptable.
Scenario and stress tests are used to assess the impact of exceptional but realistic events and of negative developments in market
circumstances on the solvency, liquidity and funding positions. Scenario analysis assists management in focussing on the greatest risks and
supports decision-making, especially regarding costs and revenues from measures such as the way in which capital should be held.
Business Planning
The business plan sets out the plans for developing the portfolio over the next three years. When drawing up the business plan, capital
planning is used to calculate the capital required using the (partial) internal year one model. After completion of the business plan, the
amounts of capital required are recalculated using a complete run of the partial internal model as at year-end with the main input being the
new business plan.
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Product Development
For the introduction of new insurance products, Achmea has formulated a product approval and review policy. In the product development
process the target group and the client needs are used to determine the coverage, the conditions, the price and the underwriting criteria. These
are used to calculate the anticipated loss burden which establishes the risk premiums. For the financial expectations and to quantify the risks,
a profit test is performed.
Achmea Zorgverzekeringen N.V. and its 100% subsidiaries aims at a balance between risk, return, required capital and the interests of the
customer. All new products are reported quarterly to the FRC, including the opinions of the staff involved. Major renewals or product
introductions are approved by the Board of Directors of the business unit.
During the product development process the (partial) internal model is, where possible, used to estimate the risks. The required return on
capital is a major element used for determining the rates for new products.
Certain risks can be excluded or displaced by resorting to reinsurance, by setting supplementary conditions and/or by applying coverage
limits and by restricting the options and guarantees provided. Within Health, the basic insurance rates are an exception. Coverage conditions
are imposed by the government and acceptance is mandatory.
Underwriting
The underwriting process consists of assessing, accepting (under possible conditions) and pricing individual risks within existing product
ranges. The underwriting process takes place based on business rules and is mostly automated. It will also assess individuals or companies
based on national registers.
For the Dutch basic health insurance, the Health Insurance Law is followed under which a general obligation to accept is in force. The
underwriting policy for the supplementary insurance is driven by regular evaluation procedures, in which actuarial staff assess actual loss
occurrence. In supplementary health contracts, medical selection is part of the underwriting procedures, with premium levels reflecting the
health status of the prospect.
Insurance Policy Management
The management of individual policies as (parts of) portfolios is essential for the structural guarantee of quality and good returns. To manage
the risk with regard to policy management, the most important mitigating measure Achmea Zorgverzekeringen N.V. uses, is the use of
qualified personnel with the right skills. Additionally, Achmea Zorgverzekeringen N.V. makes use of a support system with the proper
calculations for changes in policies.
Claims Process and Reserving
Achmea Zorgverzekeringen N.V. has an active policy to settle claims. Within health, claims of insured are for the most part settled directly
between the healthcare provider and Achmea Zorgverzekeringen N.V. For Health, best estimates are made of the expected costs of settling
the claims: the health costs are estimated per underwriting year for three consecutive years. The health care purchasing department makes an
estimate of each type of care based on health care purchasing inputs. This estimate is tested 4-6 times per year with an actuarial estimate
based on historical outcome patterns. The basic and supplementary insurance are tested separately taking into account the different types of
care. It takes into account a prudency provision to absorb for adverse deviations from the best estimate provisions.
The Insurance liabilities are tested at least twice a year for adequacy, and more often if deemed necessary. In carrying out this test, estimates
of future contractual cash flows are used, based on current developments regarding future distribution and management costs and, where
relevant, results from investments covering these provisions. Non-economic assumptions are based on a mix of industry standards and own
experiences.
Twice a year (at half year-end and at year-end) internal actuaries provide a consent declaration indicating that the insurance liabilities are
consistently and prudently established and that the valuation of insurance liabilities is reliable.
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Assessment of Assumptions
Assumptions are used in pricing, product development and the liability adequacy test. The assumptions study gives a picture of the
experience (per assumption) within the portfolio. It is carried out at least annually. The study is based on both our own history, portfolio data
in line with the strategy of the Business Plan phase, and on the external publications from, for example, the Association of Insurers, Health
Care Insurance Board (College voor Zorgverzekeringen, CVZ) and ‘Zorgverzekeraars Nederland (ZN)’, the ‘Actuarieel Genootschap (AG)’
and the ‘Uitvoeringsinstituut WerknemersVerzekeringen (UWV)’.
In Health, the following assumptions significantly determine the risk premium for the basic and supplementary insurance: frequencies and
average health care costs (average claims cost per type of care), management costs, margins, discounts (based on collectivity grade) and
result risk adjustment (based on risk insured population), which is limited to 'high cost equalisation' (GGZ), 'generic costing' (mental health
and hospitals) and bandwidth control (hospital, outfitting up to and including 2015).
Reporting and Analyses
In reporting and analysis, the required capital is calculated with the partial internal model. This capital is a measure for the risk. The analysis
looks specifically at whether the relationship between risk and return is in balance.
The reports include stress testing, scenario analyses and analyses of the adequacy of the technical provisions.
Product Review and Portfolio Analysis
Based on a fixed frequency per product, all products, product characteristics, the processes associated with the product and product lines are
reviewed on commercial, insurance, legal, financial and compliance aspects. The criteria leading in this process come from the Standard
Framework Propositions as prepared by Achmea, and additional requirements from the market. From the product review it should be
concluded that the product remains unchanged in the market, that changes are necessary, or even that the product no longer be sold.
In portfolio analysis, the entire portfolio is assessed on the basis of various structural analyses as annual inflow and outflow analysis, claims
and capital analysis. The portfolio analysis is prepared for operational decision making, for commercial, strategic and product management.
C
INSURANCE RISK EXPOSURE
HEALTH RISK
Dutch Health Insurance system
The health insurance system in the Netherlands consists of two components: a basic and a supplementary insurance. Achmea
Zorgverzekeringen N.V. and its 100% subsidiaries offer both basic and supplementary insurance to individual and group policyholders.
Basic health insurance is offered via direct settlement (‘natura’), the refund and the combination policy. For the supplementary insurance a
refund policy is offered.
HEALTH PORTFOLIO ANALYSES
(€ MILLION)
LIABILITIES
GWP
2013
%
LIABILITIES
GWP
2012
%
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Basic Health Insurance
The basic insurance is mandatory for anyone who lives or works in the Netherlands and must be bought with a health insurer in the
Netherlands. Each insurer has a duty to accept. It covers the basic standard of care and Achmea Zorgverzekeringen N.V. offers insurance in
kind, a refund policy or a combination via its 100% subsidiaries. Premiums for the basic health insurance are largely influenced by political
decision-making. The Dutch government determines the extent of coverage under the basic insurance package and the conditions applicable
to the basic insurance package, including enrolment and the maximum discount for group contracts (10% of the gross premium). In addition,
the government determines the payments from the health insurance equalisation fund to insurers and the standard nominal premium.
In addition to the health insurance premiums received from customers, compensation is received from the equalisation fund that is financed
by employers and the Dutch government. Payments by this fund depend on the risk profile of the portfolio of insured customers. In
combination with the standard nominal premium, payments from this fund are expected to equalise the claims level for all insurers.
Therefore, in such a system with risk-compensation measures, the risk of a non-average portfolio of insured customers is supposed to be
limited. These risks cover age, gender, medical status, type of employment, socio-economic status and geographic location, as well as an
increase in the overall cost of health care. In the paragraph “Basic Health risk development” hereafter, the main developments in the basic
health risk have been elaborated.
Supplementary Health Insurance
Supplementary health insurance offers policyholders an opportunity to expand the cover provided by the basic health insurance. This
insurance is optional and is comparable in nature and method to non-life insurance. The cover provided by these insurances is not tied to
government stipulations and the insurer has the opportunity to differentiate the premium. Achmea Zorgverzekeringen N.V. offers a variety of
general and dedicated supplementary health insurance packages. Premiums for supplementary health insurance are tailored to the cover
offered.
Basic Health risk development
Basic health insurance
The current personal health insurance system consists of two parts.
The first part is the basic health insurance scheme, which is a compulsory insurance scheme for all residents of the Netherlands and for all
non-residents subject to wage tax in respect of work performed in the Netherlands under an employment relationship. It is the government
that lays down the coverage provided as basic health insurance in practice. The health insurer is under an obligation to accept all persons who
qualify as insured persons, irrespective of their age or health risks. What’s more, the nominal premium that the insurer charges the insured
person must be the same for all insured persons.
The second part of the system is the (voluntary) supplementary insurance scheme. The coverage provided by this insurance is not governed
by government regulations. Furthermore, the insurer has the option of applying premium differentiation to this insurance.
Uncertainties regarding the cost of hospital care and mental healthcare
The current funding system for hospital care and mental healthcare is creating a number of uncertainties for health insurers. These will be
discussed briefly below. Please note that this section confines itself to the system in force in 2013.
A. The system of DOT and rules for registration and claims from 2012 onwards
In 2012, the approximately 30,000 DBC ‘casemix system’ items in existence at that time were replaced by about 4,400 DBC healthcare
products. Furthermore, the proportion of freely negotiable DBCs (‘b-DBCs’) in the cost of hospital care was increased from 30% to 70%. At
2
the same time, the hospital budget funding system was replaced by a system of performance-based funding. These three major changes in
the funding of hospitals means that since 2012, hospitals have had to deal with a number of uncertainties. These changes may affect health
insurers to some extent too. However, Achmea has already agreed their arrangements with hospitals to a large extent for the claims year by
means of contract prices, thus limiting the risks to a significant extent.
2
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Specific information on the hospitals' revenue recognition for 2013 can be found in the Guide (‘Handreiking’) of the same name.
ANNUAL REPORT
Health insurers have to estimate the as yet unclaimed health costs, which will still be charged to the claims year. The changes made to the
system in 2012 mean that in the first instance it is more difficult to make this estimate accurately. On the other hand, the type of purchasing
contracts used reduces these uncertainties.
B. Determining the fixed/variable ratio
The ratio between the fixed component of hospital costs (which is 100% based on subsequent settlement) and the variable component (which
is not settled subsequently) is essential to health insurers. From 2012 onwards, a pre-set fixed/variable ratio will apply for each subsegment
of the regulated segment of hospital care. These are not hospital-specific, which means that the health insurer can itself determine the level of
the fixed and variable costs for each claim submitted. Accordingly, in terms of this component health insurers are no longer dependent on
information provided by the CVZ (Dutch Care Insurance Board) or the NZa.
At the same time, there is still uncertainty about the fixed/variable ratio for the claims still to be submitted. In addition, in 2013 a large
proportion of the hospital costs was transferred from the fixed to the variable group of costs. This relates in particular to intensive care and
hemostatics. The method of contracting used also reduces the resulting uncertainties as much as possible.
C. Funding of mental healthcare
In 2013, the mental healthcare institutions changed over to performance-based funding based on a representation model. This means that the
representing insurer determines the DBC budget 2013 once for each provider. In practice, this means that the health insurers’ risk is limited
to the performance arrangement made. Mental healthcare institutions must settle any differences in revenue with the health insurers in line
with the system used in the previous years.
In addition, the insurance-related risk for mental healthcare is limited for the health insurer, thanks to the bandwidth scheme (see below).
D. Other uncertainties and mitigation
Additional uncertainties and inconsistencies in the revenue recognition and financial statements of hospitals and mental healthcare
institutions in 2013 relative to 2012 will result in the accountants being unable to issue an unqualified audit opinion. In addition, individual
hospitals are working on a national scale in order to follow up on the NZa's investigation of the St. Antonius Hospital in Nieuwegein and
quantify the effects. This, together with the outcome of the health insurers' audits, may lead to (partial) crediting of invoices that have already
been submitted by healthcare providers and result in a possible financial correction of the claim costs, or the current account relationship
with the CVZ.
In principle, this is accounted for in the following year in the form of the claim costs for previous years. The view at present is that these
discoveries do not materially affect the 2013 Financial Statements.
E. Uncertainties resulting from the effects of the risk equalisation system
Due to the risk equalisation system used, it takes about three years before the individual health insurers can proceed to a definitive
settlement. Accordingly, uncertainties accumulate during this period. The CVZ has determined the risk equalisation results up to and
3
including 2010.
This gives the health insurer useful information on the outcomes of the initial years of risk equalisation under the Health Insurance Act and
thus also a more accurate picture of the position for the years after 2010. The availability of the results for these years has also reduced the
degree of uncertainty about the effects of allocation errors. On the other hand, measures introduced from 2012 onwards, including the
abolition of ‘macro’ subsequent settlement, have created new uncertainties of their own. Although hospitals are trying harder and harder to
submit accurate claims, the still obtain qualified audit opinions for the revenue recognition statements. This translates itself into
correspondingly greater auditing risks for the health insurers because inaccurate claims are still being entered in the risk equalisation system.
3
The results for the second provisional assessment 2010 are now available. The CVZ has already informed the sector about the nature and composition of the difference
between the definitive assessment and the second provisional assessment. The definitive assessment has become available in March 2014. The Achmea health insurers are evaluating
this assessment.
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ANNUAL REPORT
The uncertainties discussed above could affect both the result for 2013 and the level of the technical provisions item for the basic health
insurance as at the close of 2013. However, the fixed price arrangements with the hospitals have eliminated most of the uncertainties,
regarding the amount of claims to be paid to hospitals for 2012 and 2013. Estimates have been used to prepare the financial statements.
Technical provisions and receivables from the Health Insurance Fund include prudency margins.
Mechanisms available to reduce the uncertainties
Apart from the contractual provisions, the industry has two mechanisms it can use to compensate for the above uncertainties: the risk
equalisation model and an accelerated information system. These two systems are discussed below.
1.
4
The risk equalisation model
From an insurance point of view, it is impossible to combine an obligation to accept all persons with a ban on premium differentiation
unless there is also a system of income settlement that does not involve the insured person. A risk mitigation system is also needed to
mitigate the above-mentioned uncertainties in the funding of hospital care and mental healthcare. This system, the risk equalisation model,
consists of two components: the ex-ante component and the ex-post component.
5
During a particular year (ex-ante), a health insurer receives a contribution from the equalisation fund for each insured person that is
6
calculated using a number of equalisation criteria. A notional premium is deducted from this contribution. This notional premium is the base
used to establish the health insurer's nominal premium. The ex-ante contribution means that the health insurer receives a net contribution per
insured person that corresponds to the forecasted healthcare expense for that insured person. Although this means that at the level of the
individual insurer the expected claims can be largely covered by the expected revenues, the actual claims will deviate from the forecast. This
is why subsequently, the contribution from the equalisation fund is partly brought into line with the actual claims. This also reduces some of
the uncertainty relating to the funding of both hospital care and mental healthcare. This is the ex-post component, which consists of a number
of steps.
Ex-post compensation mechanisms
The precise format and degree of deployment of the ex-post compensation mechanisms is decided on beforehand. This enables health
insurers to take the effects of the ex-post compensation mechanisms into account when calculating their premiums. In 2013, these
mechanisms comprise the following four components:
a. The macro-cost supporting policy
The supporting policy has two components.
The first component deployed each year means that once subsequent settlement has been carried out for an insured person, the costs for that
insured person are mapped out. Next, the equalisation contribution is increased to the level of the macro-costs. After this, the difference
between the macro-costs and the macro-equalisation contribution after the subsequent settlement for the insured person is deducted from the
health insurers’ equalisation contribution, based on an equal amount per premium-paying insured person. This adjustment prevents excess
sums from having a disproportionate knock-on effect on those health insurers with a risk profile that deviates significantly from the norm.
The second component is only deployed if changes to the package to be insured are made between the time when the equalisation
contribution is granted and 1 January of the equalisation year. This happened in respect of 2013: the own payments for secondary mental
healthcare and the personal contribution of € 7.50 per day of care in institutions providing specialist medical care have been scrapped. The
implementation of this part of the supporting policy means the macro performance-related sums for specialist medical care have been
increased by € 55 million and the macro performance-related sum for mental healthcare has been increased by € 146 million. This part of the
supporting policy is being applied to the first provisional assessment of the equalisation contribution 2013 by the CVZ.
4
A detailed description of the risk equalisation model can be found on the website of the Dutch Ministry of Health, Welfare and Sport.
5
The equalisation fund is administered by the CVZ.
6
This is determined by the Ministry of Health, Welfare and Sport.
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ANNUAL REPORT
b. High cost compensation for medicinal mental healthcare
A system of high cost compensation is applied to the costs of medicinal mental healthcare for those insured persons aged 18 years or older.
Costs above the threshold of € 10,000 are equalised to the tune of 90%.
c. Bandwidth scheme for variable hospital costs and medicinal mental healthcare
7
If after the above compensation mechanisms have been applied the resulting variable hospital costs per premium-paying insured person
payable by an insurer vary by more than € 25 from the market average (either positively or negatively), then 90% of this variance will be
subsequently settled with the equalisation fund.
If after all compensation mechanisms have been applied the resulting costs of medicinal mental healthcare payable by an insurer vary by
more than € 7.50 (either positively or negatively) then 90% of this variance will be subsequently settled with the equalisation fund.
d. Integrated subsequent settlement of fixed costs for hospital treatment and costs of medicinal mental healthcare for insured persons less
than 18 years old
The fixed costs of hospital treatment and the costs of medicinal mental healthcare for insured persons less than 18 years old will be
subsequently settled to the tune of 100%.
2.
Accelerated information system
In order to reduce the above uncertainties, arrangements have been made with the relevant parties to make information available at times
other than the CVZ’s official settlement times. In 2011, a start was made to this process of speeding up information provision. There are four
elements to this process:
1. With regard to the revenue settlement, in the autumn the health insurers receive advance information from the NZa on the previous year,
based on the most recent market shares and revenue figures from mental healthcare institutions.
2. The CVZ provides health insurers with updated figures for the equalisation contributions.
3. Vektis estimates the macro-pool size of the high cost compensation for both somatic care and mental healthcare.
4. Zorgverzekeraars Nederland publishes estimates of claims levels.
Sensitivities
A sensitivity analysis and impact analysis is performed around the many uncertainties concerning the basic health insurance. Primarily, these
are the uncertainties surrounding the forecasting of the health care costs and estimating the various budget components from the risk
equalisation.
There are several insurance uncertainties (including macro costing and revenue offsetting the greatest impact) and scenarios are calculated in
terms of the impact on the net result.
For the calculation of the maximum impact (in other words, based on the worst-case scenario) on the net result that may occur over a horizon
of one year a certainty level of 99.5% is assumed for both the budget components and the cost of care.
The table below lists the results of this impact analysis of Basic Health Insurance. They are compared with the available capital including
prudence margin in Insurance liabilities. If the change between budget items and the cost of care can be absorbed with the capital (including
prudence) then the capital with a certainty of 99.5% is sufficient for the worst-case situation.
7
From 2013 onwards, for the purposes of risk equalisation the subcontributions for variable hospital costs and b-DBCs’ costs have been combined to form the
subcontribution ‘variable hospital costs’.
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ANNUAL REPORT
Results impact analysis compared to available solvency:
RESULTS IMPACT ANALYSES COMPARED TO AVAILABLE SOLVENCY
(€ MILLION)
2013
The performed impact analyses at the end of 2013 have shown that the existing capital in conjunction with the prudence margin is more than
sufficient to undergo the Worst Case (with a confidence level of 99.5%) in a one year horizon.
Reinsurance
Based on annual evaluations and based on the risk-absorbing effect of the settlement of health costs it has been decided not to re-insure the
health insurance risks, other than the legal obligations as HKC (high cost compensation, for the years up to 2011) and Nederlandse
Herverzekeringsmaatschappij voor Terrorismeschaden N.V.
The Nederlandse Herverzekeringsmaatschappij voor Terrorismeschaden N.V. (NHT) covers all claims on Dutch policies related to terrorism
attacks of up to €1 billion. Terrorism claims above this maximum are excluded in Achmea’s Dutch policies. Achmea pays premiums in
proportion to its market share, NHT losses are divided the same way. NHT reinsured a large part of the risks on an excess-of-loss basis.
Achmea Zorgverzekeringen N.V. has contributed € 36.4 million (2012: € 37.5 million) to the NHT.
D
MARKET RISK
Market risk is the risk of loss, in other words the decrease in the market value of the net assets (assets minus liabilities), due to unexpected
changes in the financial markets. It encompasses interest rate risk, equity risk, property risk, spread risk and currency risk.
Market Risk
Description
Main drivers
-
Risk control and
mitigation
-
Changes in the value of investments due to unexpected changes in the financial
markets
Unexpected changes can be caused by changes in among others equity prices,
interest-rate levels, credit spreads, real estate prices and exchange rates
Asset and Liability Management Framework which consists of setting the strategic
investment mix and policy setting and periodic monitoring
Interest rate risk of the insurance entities is managed on an economic basis using
different scenarios for shifts in the interest rate curves
The currency-risk of the investment portfolio in general is fully hedged, with a few
exceptions in specific investment mandates.
Policies take into account the impact of adverse developments on profitability and solvency. Specific mitigation policies are in place, such as
for interest rate risk and currency risk exposure. The market risk position and the risk of regulatory insolvency are monitored at least
quarterly or more often when appropriate.
ASSET LIABILITY MANAGEMENT AND OPTIMAL INVESTMENT PORTFOLIO
For its Dutch insurance companies, including Achmea Zorgverzekeringen N.V., Achmea manages market risk positions within an ALM
framework developed to achieve long-term investment returns in excess of its obligations under insurance and investment contracts. The
ALM’s key objective is to maximise the risk versus expected returns within the defined risk appetite. The total investment portfolio of
Achmea can be split in a matching portfolio and a return portfolio for generating investment income by taking market risks. The risk budget
for the latter is determined in the ALM study. The main aspects of the ALM framework are determining policies, hedging the liabilities using
matching portfolios and setting the strategic investment mix for the return portfolio.
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ANNUAL REPORT
The budget for market risk is determined on the basis of Achmea’s risk appetite which sets limits in terms of the relation of available capital
to required capital, the maximum loss accepted, the maximum share of capital allowed for financial risks and a targeted credit rating. In the
ALM study different asset mixes are tested for their effect on expected profit and these limits of the risk appetite. This research is executed at
least annually or more frequently when appropriate.
A risk budget for market risk of the return portfolio is set based on the ALM study. Following this an optimal return portfolio (the strategic
investment mix) is determined that fits the set risk budget and provides the highest return given additional restrictions on, for example,
liquidity and minimum size per asset class. An investment plan, which has to be approved by the FRC, sketches how the strategic investment
portfolio will be reached. Periodic monitoring is in place, focussing on deviations from the strategic mix, and managing the interest rate
exposure. Investment decisions are taken at Group level, but the limits have to be adhered to by each distinct regulated entity for which a
separate portfolio of assets is maintained.
The composition of the matching portfolio is based on the liquidity of the liabilities. Illiquid liabilities are matched using a higher percentage
of credits then liquid liabilities.
PERIODIC MONITORING POLICY
Interest rate risk policy Insurance
Achmea’s interest rate policy for the Dutch insurance entities including Achmea Zorgverzekeringen N.V. is to manage the interest rate risk
of investments and liabilities on an economic basis using different scenarios for parallel shifts in the interest rate curves. The negative change
in the difference between assets and liabilities must remain within an allowed bandwidth; changes in the composition of the investment
portfolio are implemented to correct mismatches. Interest rate derivatives are used to improve matching of insurance liabilities as part of this
process. The interest rate sensitivity of the net position is assessed monthly, both on Achmea Zorgverzekeringen N.V. and Achmea level. For
this assessment, parallel shocks are applied to the replicating portfolios and the related actual investment portfolios. The sensitivity for a
shock of 40 basis points and 100 basis points has to be within certain bandwidths. These are -1% and -3% of available capital.
Currency risk policy
Achmea’s policies on foreign currencies and hedging strategies do not aim to fully hedge foreign currency exposure. Exposure in the
investment portfolio is generally hedged.
Achmea Zorgverzekeringen N.V. is exposed to currency risk, specifically in US dollars, as part of the regular investment portfolio (equities,
fixed-income investments and listed real estate). In 2013, the investment portfolio, denominated in US dollars, was hedged to a large extent.
E
Market risk exposure
The capital of Achmea Zorgverzekeringen N.V. and its 100% subsidiaries is jointly invested in two closed-end common funds:
- Achmea fixed income health Fund;
- Achmea variable securities health Fund.
The Achmea fixed income health Fund invests in fixed income investments and the Achmea variable securities health Fund invests in
equities. These two funds are fully consolidated in the consolidates annual report of Achmea Zorgverzekeringen N.V.
The funds consist of 91% fixed income investments. Of these 46% has an AAA/rating, 35% has an AA-A/rating, 19% has a BBB-BB/rating
and 1% is unrated. The investments can be bought and sold on a day-to-day basis.
Surplus of liquidity is invested in short-term fixed-income investments.
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ANNUAL REPORT
INTEREST RISK WITHIN INSURANCE
Interest rate risk relates to the interest sensitivity of the differences in market value between assets and insurance liabilities. Achmea hedges
interest rate risk that originates from the insurance liabilities including those insurance liabilities of Achmea Zorgverzekeringen N.V., by
means of an overlay management process that makes use of interest rate derivatives (swaps and swaptions). The total value of the interest
rate derivative position ultimo 2013 is nil (2012: nil).
Sensitivities
The actual sensitivities are within the bandwidth of the policy for Achmea Zorgverzekeringen N.V. For internal monitoring and management,
scenarios of interest rate sensitivity shocks with effect presented on economic basis are used. The result of Achmea Zorgverzekeringen N.V.
may be influenced depending on the accounting classification of affected balance posts or recognition of impairments. The impact of an
increase in interest rates of 1% on available capital at year-end 2013 is €-23 million. The impact of a similar size decrease is approximately
€ 25 million. Sensitivities only relate to parallel shifts in the interest rate curves.
SCENARIO INTEREST RATE SHOCKS
(€ MILLION)
AVAILABLE
CAPITAL
EFFECT
INTEREST
RATE
SHOCK -1%
EFFECT
INTEREST
RATE
SHOCK -0.4%
EFFECT
INTEREST
RATE
SHOCK +0.4%
EFFECT
INTEREST
RATE
SHOCK+1%
EQUITY RISK
Equity risk is the risk that originates from changes in value of equity instruments. The exposure of Achmea Zorgverzekeringen N.V. to
equity risk is divided among the following sectors: Energy (€ 17 million), Financials (€ 51 million), Healthcare (€ 16 million), Industries (€
52 million), Information Technology (€ 16 million), Materials and Construction (€ 6 million), Services (€ 5 million) and other sectors (€ 24
million).
Sensitivity of equities and alternative investments for a change in market value of +10% is € 18.7 million (2012: € 10.7 million) and -10% is
€-18.7 million (2012: €-10.7 million). As equity investments are classified as ‘Available for sale’ this will in general only affect total equity
as, besides impairment losses, changes in market values are only reflected in Total equity and not in Net profit. Total equity will be 0.1%
lower if equity investments decline by 10%, and solvency will be 1.7% points lower.
SPREAD RISK
Spread risk is the risk that originates from changes in the level or volatility of credit spreads. The main exposure of Achmea
Zorgverzekeringen N.V. to spread risk is from investment grade credits (€ 1,760 million). Spread risk is mitigated through a conservative
investment strategy that balances the exposure types (corporates, financials, covered bonds, government related bonds and asset backed
securities), the maturity profile and the regional allocation. The credit rating of the fixed income instruments is presented in the counterparty
default risk paragraph.
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ANNUAL REPORT
CURRENCY RISK
The exchange rate risk table below shows the total exposure to the major currencies at year-end.
EXCHANGE RATE RISK
(€ MILLION)
2013
2013 NOTIONAL AMOUNT
TOTAL
OF HEDGING
EXPOSURE
INSTRUMENTS
2013
NET EXPOSURE
2012
2012 NOTIONAL AMOUNT
TOTAL
OF HEDGING
EXPOSURE
INSTRUMENTS
2012
NET EXPOSURE
ASSETS
353.6
358.4
-4.8
8.7
8.9
-0.2
8.0
8.5
-0.5
6.3
6.3
0.0
353.6
358.4
-4.8
8.7
8.9
-0.2
8.0
8.5
-0.5
6.3
6.3
0.0
LIABILITIES
NET POSITION
The table below summarises the notional amounts and fair values of the currency derivatives of Achmea Zorgverzekeringen N.V. and its
100% subsidiaries:
CURRENCY DERIVATIVES
(€ MILLION)
NOTIONAL AMOUNT
FAIR VALUE
ASSETS
FAIR VALUE
LIABILITIES
2013
2012
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ANNUAL REPORT
Scenario analysis
Scenario analysis is used to assess the effect of changes in foreign currency exchange rates against the euro on Total equity and Profit. The
table below shows the impact of a change in foreign exchange rates on total equity and profit based on the situation at year-end.
EURO VERSUS ALL OTHER FOREIGN CURRENCIES + 10 %
(€ MILLION)
2013
TOTAL EQUITY
2013
PROFIT BEFORE
TAX
2012
TOTAL EQUITY
2012
PROFIT BEFORE TAX
On the basis that all other variables remain stable, a 10% decrease of the euro against all other foreign currencies at 31 December 2013
would have had the opposite effect on the amounts shown in the table above. During 2013, Achmea Zorgverzekeringen N.V. applied only
fair value hedge accounting. Fair value hedge accounting implies that the fair value mutations from the hedging instrument and the fair value
movements from the hedged item that are attributable to the hedging risk are recognised in the income statement. Hedge accounting is
applied for the portfolios exposed to foreign currency risk. Foreign exchange contracts are used as hedging instruments. The fair value of a
foreign exchange contract varies identically with the foreign exchange rate and this equals the fair value changes related to foreign currency
differences of an investment in a foreign currency. Therefore, hedge accounting related to foreign exchange can be 100 per cent effective.
These results are presented below:
RESULTS ON HEDGE ACCOUNTING
(€ MILLION)
FOREIGN CURRENCY FAIR VALUE HEDGES
F
2013
2012
COUNTERPARTY RISK
CURRENT POLICY
Counterparty risk is the risk of economic loss due to unexpected default, or deterioration in the credit standing of the counterparties and
debtors of Achmea entities. Achmea Zorgverzekeringen N.V. is exposed to counterparty risk in the area of investments, treasury, healthcare
providers, intermediaries, and policyholders.
Counterparty Risk
Main drivers
Description
-
Risk control and
mitigation
-
102
Counterparty Default Risk (CDR): the risk a counterparty will fail on contractual
obligation, which results in an economic loss. Typical ‘credit events’ are:
o More than 90 days overdue
o Judicial settlement
o Restructuring
o Bankruptcy
Rating Migration: the risk that the credit quality of a counterparty will decrease with
consequent decrease in value of corresponding assets.
Systemic Risk: the risk of systemic events that increase the likelihood of
simultaneous adverse events for counterparties
Settlement Risk: The risk of principal exchange failure. This settlement failure can
be caused by default, liquidity constraints or operational problems
Group level counterparty policy consisting of a rating-based system of exposure
limits per counterparty
Diversification of portfolios and collateralisation is used for mitigating the risk
Recovery process and capital surplus in case of negative credit-events
ANNUAL REPORT
The main ‘prevention’ objective in managing counterparty risk is to prevent concentrations, ensure that portfolios are well diversified and
ensure that risks are sufficiently reduced or mitigated. Alternatively, the main contingency objective in managing counterparty risk is to
ensure that recovery processes are well organised and capital surplus is sufficient to withstand credit events. A comprehensive Group level
Counterparty Risk Policy (CRP) is in place and forms the basis for counterparty risk management within Achmea. At the heart of this policy
is a rating-based system of exposure limits per counterparty as given in the following table:
MAXIMUM GROUP LEVEL EXPOSURE (IN € MILLIONS)
SUPRA
NATIONALS AND
OTHER
GOVERNMENTS
COUNTERPARTIES
(no limit)
500
AA+, AA, AA-
500
350
A+, A, A-
300
225
BBB+
200
150
BBB
150
100
BBB-
75
50
RATING
AAA
The principles of this policy are linked to the Achmea Capital Adequacy Policy. In this way, exposure concentrations are ensured to be
conservatively less than capital surplus on both Group level and the level of Achmea Zorgverzekeringen N.V.
An important element in this policy is to require ratings from multiple agencies and use the second-best rating to offset subjectivity.
Furthermore, Achmea monitors the credit default swap (CDS) spread of financial institutions on a daily basis and lowers the exposure limit if
the CDS spread stays too high for too long. Concentration limits enforce diversification across counterparties. Additionally, investment
management requirements ensure further diversification across counterparties, regions and sectors on investment portfolio level.
Derivative transactions are only initiated with counterparties that meet Achmea’s rating requirements and collateral requirements. ISDA
master agreements (International Swaps and Derivative Association) are in place between Achmea entities and its derivative counterparties.
The policy defines collateral requirements that must be specified in the individually negotiated Credit Support Annexes. Only government
bonds issued by highly rated countries and cash collateral in Euros, US dollars, British pounds and Swiss francs are accepted as collateral.
Independent valuation of derivatives, daily settlement of collateral and increasing haircuts up to approximately 104%, proportional to
remaining maturity, further reduces the counterparty default risk.
With respect to counterparty risk of receivables regarding private persons unable to pay their health premiums, procedures are in place. The
Dutch government has a policy that obliges the insurer to provide all Dutch citizens with health insurance. As a consequence, private persons
who are unable to pay their premium must be provided health care by law. Hence, on the liability side we cannot terminate this risk. To
enable insurers to manage this risk, the Dutch government has put in place regulations through the Health Insurance Fund (CVZ), which
compensates for all unearned premiums due for more than six months. This risk is limited to at most six months of unearned premiums per
private person. In addition to this, Achmea holds capital to buffer for the risk of more private persons failing to make their payments.
Achmea Zorgverzekeringen N.V. gives advances to hospitals and other health care institutions. The counterparty risk of these receivables is
limited because there are strict procedures with respect of the amount of the advance in relation to the work in progress.
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The counterparty risk Group level governance framework is defined in the Counterparty Risk Policy by explicitly describing roles and
responsibilities, the process for initiating transactions with new counterparties, the limit distribution per counterparty within Achmea
departments and legal entities and the limit revision and exposure control process.
Developments in Counterparty Risk Policy
Achmea has further developed its Counterparty Risk Policy (CRP). It increased the applicability in several areas.
In response to European Market Infrastructure Regulation (EMIR), Achmea has now explicit policy in place for both centrally cleared OTC
derivative contracts and non-centrally cleared derivative contracts. There is explicit policy for managing counterparty risk from the portfolio
of government bonds in the ‘core’ of Achmea’s investment portfolio.
G
Counterparty risk exposure
Financial assets as presented in the Consolidated Statement of Financial Position and related Notes, represent the maximum exposure to
credit risk of Achmea Zorgverzekeringen N.V.
The following table provides information on the aggregated counterparty risk exposure for the financial investments with external rating and
assets not rated (bonds, loans and mortgages and deposits).
(€ MILLION)
2013
AAA
AA
A
BBB
BELOW BBB
NOT RATED
TOTAL
AAA
AA
A
BBB
BELOW BBB
NOT RATED
TOTAL
(€ MILLION)
2012
The table below provides an overview of asset and liabilities subject to offsetting, enforceable master netting agreements and similar
agreements.
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FINANCIAL ASSETS SUBJECT TO OFFSETTING, ENFORCABLE MASTER NETTING ARRANGEMENTS AND SIMILAR
AGREEMENTS
GROSS AMOUNTS
OF RECOGNISED
FINANCIAL ASSETS
2013
GROSS AMOUNTS
OF RECOGNISED
FINANCIAL NET AMOUNTS OF
LIABILITIES SET FINANCIAL ASSETS
OFF IN THE PRESENTED IN THE
STATEMENT OF
STATEMENT OF
FINANCIAL
FINANCIAL
POSITION
POSITION
(€ MILLION)
CASH
COLLATERAL
RECEIVED
(EXCLUDING
SURPLUS
COLLATERAL)
FINANCIAL
INSTRUMENTS
NET AMOUNT
The following table provides impairment charges for bonds categorised by external credit ratings.
IMPAIRMENT CHARGES BONDS RECOGNISED IN INCOME STATEMENT
(€ MILLION)
2013
2012
The following table provides an overview of the carrying amounts of financial assets that are past due or have been impaired and the ageing
of financial assets.
FINANCIAL ASSETS, THAT ARE PAST DUE OR IMPAIRED
(€ MILLION)
NEITHER PAST
DUE
NOR IMPAIRED
PAST DUE BUT NOT IMPAIRED
IMPAIRED
ASSETS
TOTAL
CARRYING
AMOUNT
AMOUNTS PAST DUE
2013
CARRYING
AMOUNT
CARRYING
AMOUNT
PRINCIPAL
0–3 MONTHS
3 MONTHS
– 1 YEAR
1 YEAR
MORE THAN
PAST DUE
CARRYING
AMOUNT AFTER
IMPAIRMENT
FINANCIAL ASSETS, THAT ARE PAST DUE OR IMPAIRED
(€ MILLION)
NEITHER PAST
DUE
NOR IMPAIRED
PAST DUE BUT NOT IMPAIRED
IMPAIRED
ASSETS
TOTAL
CARRYING
AMOUNT
AMOUNTS PAST DUE
2012
CARRYING
AMOUNT
CARRYING
AMOUNT
PRINCIPAL
0–3 MONTHS
3 MONTHS
– 1 YEAR
1 YEAR
MORE THAN
PAST DUE
CARRYING
AMOUNT AFTER
IMPAIRMENT
0
0
0
0
0
0
0
0
0
0
0
0
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0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Receivables include € 1,320 million (2012: € 1,802 million), which are payments to hospitals regarding the delayed invoicing caused by the
implementation of the DBCs. Reference is made to Note 8 Receivables.
H
LIQUIDITY RISK
CURRENT POLICY
Liquidity risk is the risk that actual and potential payments and collateral obligations cannot be met when due. Achmea distinguishes
between funding liquidity risk and market liquidity risk. The first type of liquidity risk is defined as the risk that a company will not be able
to meet efficiently both expected and unexpected current and future cash flows and collateral needs without affecting either daily operations
or the financial condition of the company. The latter is defined as the risk that the company cannot easily offset or eliminate a position at the
market price because of inadequate market depth or market disruption.
Liquidity risk
Description
Main drivers
-
Risk control and
mitigation
-
Market liquidity
Funding liquidity
Linked to the business, liquidity planning takes place of both subsidiary and
Holding level
Liquidity barometer
Liquidity contingency plan
Achmea’s funding strategy is based on assuring access to international capital and credit markets at low cost, underpinned by credit ratings in
line with its peers. In general, each operation is responsible for funding its own activities. Access to capital and credit markets are arranged
both at legal entity and at holding level. The holding may be involved in financing the operations of certain subsidiaries, through capital
increases or subordinated loans. Funding at holding level could come from dividends from subsidiaries, issuance of debt and committed and
uncommitted credit lines with a number of national and international banks.
Insurance specific liquidity risk is managed by divisions. In their liquidity planning, cash inflows and outflows from insurance activities are
taken into account. Huge distortions could arise in the case of a catastrophe, when payments have to be made, while payments are not yet
received from health pooling organisations in the Netherlands. Liquidity risk within the insurance operations of Achmea Zorgverzekeringen
N.V. is mitigated through the availability of cash and cash equivalents and investments in liquid assets.
Linked to the business plan, liquidity planning takes place at both subsidiary and holding level. Those plans are updated on a monthly basis
and more often when necessary. Reporting to the FRC on the liquidity position takes place on a quarterly basis.
Achmea Zorgverzekeringen N.V. has to meet the specific limit for the liquidity of insurance entities as established in the Risk Appetite. In
this way it is assured that sufficient liquidity is maintained on the level of Achmea Zorgverzekeringen N.V. to meet the liquidity needs in a
moderate stress scenario. In addition, Achmea as a group maintains sufficient liquidity and flexibility in the risk profile in order to reduce the
market and counterparty default risk, and Achmea as a group is able to make €1 billion liquid within 3 months, which may be beneficial to
The consequences of the risk appetite statements on liquidity are further elaborated in the liquidity risk policy.
A liquidity contingency plan is drafted describing the procedures and options to arrange liquidity in times of stress. This plan describes
possible actions and sources of funds taking into account the behaviour of other counterparties.
Achmea has defined relevant metrics for each of its legal entities including Achmea Zorgverzekeringen N.V. as well as the group. The
metrics aim to provide a forward looking view on the liquidity position and liquidity risk exposure for various time horizons under normal
conditions as well as for a range of moderate and extreme stress events. Combined with limits, they support Achmea to satisfy its risk
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appetite statements as defined by the FRC and provide early warning signs when Achmea runs the risk of having insufficient liquidity to
meet its liabilities. Furthermore, they enable Achmea to provide quantitative information about its liquidity position on different levels to
supervisors and market participants. With regard to extreme scenarios, several contingency actions are defined in order to generate liquidity.
I
Liquidity Risk Exposure
Maturity analyses of the insurance liabilities are presented in Note 13 Insurance liabilities.
J
OPERATIONAL RISK
Operational risk is defined as the risk of loss arising from inadequate or failed internal processes, personnel or systems, or from external
events. Operational Risk Management (ORM) is the process that aims to identify the uncertain events that can impede the achievement of the
business objectives and to manage them within the limits of operational risk appetite of the organisation. In this way the ORM process
supports the organisation in achieving its objectives. Achmea Zorgverzekeringen’s management is responsible for managing and monitoring
operational risks (first line). They are supported by a professional ORM function (second line) which provides policy framework, facilitates,
monitors and reports the operational risks and if necessary, escalates.
CURRENT POLICY
Operational Risk includes the following 7 categories of risk events and management actions.
Operational risk
Main drivers
Description
- Internal Fraud
- External Fraud
- Execution, delivery and process-management
- Clients, products and business practice
- Business disruption and system failure
- Damage to physical assets
- Employment practices and workplace safety
Risk control and
mitigation
- Risk Assessment: takes place, using operational risk appetite, loss data, risk self
assessments and operational risk scenario’s
- The Achmea Control Framework: is used to systematically monitor key risks and
key controls throughout the whole organisation
- Internal Control Statement: is compiled providing a fair view of Achmea’s risk
exposure and level of control
- Operational Risk Policies: are in place for specific risks, such as business
disruption and system failure, and are evaluated and tested during the year
The ORM process supports management when compromising between operational risks, commercial interests and efficiency. Operational
risks are mainly identified and assessed in Risk Self Assessments, supported by scenario’s analysis and analysis of internal and external loss
data. The business units identify their risks, on a planned and ad hoc manner. This is with respect to strategic, tactical and operational aspects
of business and projects and programs. Part of the decision making process is that the management assesses the risks against commercial
interests and efficiency and then comes up with a proposal to deal with the risk (risk response). The selection is based on the extent to which
management is willing to accept the risk as part of the strategy of the organisation and the costs of prevention.
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Management reports to internal and external stakeholders in the monthly report and annually with the Internal Control Statement. The
Internal Control Statement is a qualitative description of risks and internal control of both operational risk and other risk types as per Achmea
risk classification. The Internal Control Statement is formed from regular risk management activities and the outcomes of the Achmea
Control Framework. The Control Framework aims to strengthen the level of management in the field of Financial Reporting, Compliance
and Business objectives of Achmea. Additionally efficiency is taken into consideration when determining the level of internal control.
To support the implementation of, and compliance with, the Operational Risk Management Policy, the first and second line, periodically
discuss policy compliance and, where necessary, take action.
To ensure the continuity of our service during (major) crises, critical chains are identified based on business impact analysis. Where
necessary, additional measures are taken. The crisis communication plan ensures clear communication with the stakeholders taking into
account all forms of media. Information risks are managed in cooperation between the business units, information management and ORM
column
DEVELOPMENTS OPERATIONAL RISK FRAMEWORK
For regaining the public’s trust in the sector, Risk and Compliance participated in the drafting, implementation and enforcement of the
controlled remuneration policy. Risk takers were identified, a risk analysis on the remuneration policy was performed and risk adjustment in
the performance management process was taken care of.
In 2013 the Operational Risk departments facilitated the assessment of strategic risks. These Strategic Risk Assessments were performed in
each business unit and on group level in close collaboration with the Achmea Groepsraad. Management kept oversight of the identified risks
and the way to mitigate these as part of the business plans. The results of the Strategic Risk Assessments are also used as input for the
selection of scenarios and stress tests in the context of ORSA and the assessment of the accuracy of the Operational Risk capital. The
performance of risk assessments is an ongoing process during the year enriched with the outcomes of Operational Risk scenario’s which
focus on further quantifying and mitigating the biggest operational risks.
In 2013, the implementation of the Group wide Achmea Control Framework was completed. The Control Framework is transferred to first
line officers. In addition, several risk assessment tools were evaluated, namely the Control Framework, Issue Management, Risk Self
Assessments and Internal Control Statement. These instruments provide added value and parts of these instruments can are tightened when
used. Improvements have already been launched.
OPERATIONAL RISK EXPOSURE
Achmea recognizes from strategic assessment several material operational risks, and for each measures have been taken. It is to say that
when operational risks are not fully and correctly covered by internal control measures this can and will lead to discussions with supervising
bodies and can even lead to fines to be paid.
The realization of the ambition to become the most trusted insurer puts increasing pressure on the organisation. From various programs such
as customers interest central, trusted communication and new customer service concepts further interpretation is given. ICT systems are
essential in realizing the ambition to e-insurer. There is a risk that too little speed in the realization of target architecture is made. With the
development of generic business functions this risk is controlled. The sophistication and frequency of cyber crime are increasing. The risk is
that attacks are not recognized in time and are insufficient decisively handled. Measures have been taken in the form of setting up a Security
Operating Centre, phasing out of outdated infrastructure and streamlining security processes. Changing customer behaviour and (new)
competition necessitate to continuous adjustments. There is a risk that the organisation does not realize these adjustments sufficiently fast.
Operational investment policy has been outsourced to external asset managers. These asset managers operate within the investment mandate
framework drawn up to this end. This document sets out the separate and relative limits for certain investment categories as well as the
benchmark that must be observed and the tracking errors used to check the active management (alpha optimisation) of the investment
portfolio.
Achmea Zorgverzekeringen N.V. uses Vektis’s price information system to settle claims. This means both current and historic price
information is available at all times, and also that automated price checks can be carried out. The quality of services provided is monitored on
the basis of the general policy for the outsourcing of activities.
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Claims processing work is outsourced to DFA, Vecozo and CHA (Clearing House Apothekers). Written agreements have been entered into
with these service providers that regulate such matters as the nature and quality of the service to be provided.
The processing of claims is in fact the main work carried out in Achmea Zorgverzekering N.V.’s claims checking building. The claims
checking building is home to a large number of retrospective checks. A number of these checks relate to the 'Farmacie (Pharmacy)' claims
for which CHA has done the preliminary work. Carrying out these audits retrospectively is a good way of checking on whether CHA is
complying with the quality requirements.
The service that DFA provides is to reclaim the uncovered sums from the insured parties on Achmea Zorgverzekeringen N.V.’s behalf. In all
cases, the care provider continues to bear the bad debt risk. This reclaiming process takes a maximum of 5 months. Sums received are
refunded to Achmea Zorgverzekeringen N.V. Achmea Zorg settles with the care provider the claims that DFA cannot collect. The quality of
the services that DFA provides is also monitored using the complaints from insured parties and care providers about this activity.
K
COMPLIANCE
Achmea defines a compliance risk as a risk one may incur when one fails to comply with applicable laws, regulations, rules, organisational
standards, and codes of conduct. Failing to comply may result in legal- or regulatory sanctions, material financial loss, or reputational
damage. Compliance directly contributes to the ambition of Achmea to become the most trusted insurer. This ambition includes a strong
focus on customer interests. Compliance will enable and supervise management to comply with laws, regulations and internal codes of
conduct. She has translated the most important legal provisions into compliance themes and based on these themes, compliance executes the
supervision.
Compliance is responsible for the identification of compliance issues, creating compliance awareness, providing compliance advice and the
communication and monitoring of the compliance themes. Compliance has incorporated frameworks for policies and procedures. Another
important element of its activities is the communication with regulators. Together with the Board Office Compliance coordinates all contacts
with the regulators.
Within the organisation, the compliance function is identified at the level of Group entities (including Operating Companies) and at the level
of Achmea as a group. Compliance is the responsibility of operational management, supported by the Divisional Compliance Officer. To
support the Executive Board and the coordination group, the central staff department Risk & Compliance is in charge. The Division
Compliance Officer is hierarchically under the direction of the division and is functionally controlled by the Group Compliance Officer
(GCO).
The local Compliance Officers provide all compliance related matters to Group Compliance. Group Compliance consolidates all these items
into a consolidated report to the Executive Board and Audit & Risk Committee of the Supervisory Board.
In 2012 Risk and Compliance was integrated at Group and local level. As a consequence Compliance reported to the CFO of the Group. As
of the 1st of July 2013 this has been changed and the Group Compliance officer reports currently to the CEO of the Group.
Integration with Operational Risk has also been shaped by integration of Operational Risk and Compliance Monitoring Reports. In the past
year good progress has been made to further professionalise these reports.
DEVELOPMENTS IN COMPLIANCE
Achmea considers it is important to restore consumer confidence, not only with new or more strict regulations, but from own conviction to
put the customers interests centrally.
The regulators will have more focus on the general duty of care and will adapt legislation on this.
Furthermore, there will be vast and growing amount of supervisory investigations with a huge impact on business. Not only from local
regulations but also international legislation that becomes applicable such as FATCA, UK Bribery act, European legislation on privacy etc.
From media there is a lot of attention on fraud within health insurance. There is a public debate on the preventive role of health insurers to
control the burden of losses and preventing excessive claims. More monitoring on claims is needed. The supervisor has defined some
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opportunities in the areas of procurement of health services, control on authorisations and control within the value chain. It is important to
incorporate these improvements within regular operational management.
Much effort is required to assist the regulators in their investigations. It will be important to demonstrate that improvements from reported
issues are shown according to plan.
Continuous monitoring will be an important instrument in providing assurance that compliance with legal provisions is guaranteed.
COMPLIANCE & INTEGRITY WITHIN ACHMEA
The Achmea Control Framework (CFW) system ensures that the compliance risks are integrated on an on-going basis through selfassessments by local management. At the moment the CFW enables risk assessments, control testing and reporting with increased focus on
key risks and key effectiveness and efficiency of risk & compliance controls.
The CFW has expanded to obtain enhanced integration with other control objectives such as Financial Reporting, IT, Business and Solvency
II. Cross-references within the CFW are available to other frameworks such as the standard framework for product propositions (NKP),
Solvency II, the program which focuses on customer interests (KBC), the quality standard ‘Customer oriented Insurance’ (KKV) and In
Control Statement (ICS).
A number of initiatives from the integrated cross-divisional change agenda enhanced the focus on customers’ interests. With the assistance of
the compliance department the customer policy information has been clarified, the product development process has been improved and
complaints management has been streamlined.
Achmea values the ’Customer oriented Insurance’ quality standard as an important tool in its ambition to become the most trusted insurer.
Labels within Achmea Zorgverzekeringen N.V. that gained the quality standard as issued by the Dutch Association of Insurers and were able
to keep this quality standard in 2013 are Interpolis, Avéro Achmea, Centraal Beheer Achmea, FBTO, Zilveren Kruis Achmea, DVZ, Prolife
and OZF. Being able to maintain this quality standard requires continuous maintenance. Unfortunately, Agis and TakeCareNow! did not
manage to keep the standard due to exceedence of response time to customers, though significant improvements were noticed by the
supervisor, this was insufficient to keep the quality standard. Achmea will make every effort to meet in short term the requirements for the
standard.
In 2013 the integrity department in joint effort with operational risk introduced a method to align the organisation culture with the desired
behaviour of employees. From measuring 23 behaviour indicators concrete improvements are generated for business management to use.
Besides introducing a new fraud policy, the integrity department performed several integrity due diligence investigations on suppliers of
Achmea and supported the introduction of automated fraud detection tools.
Achmea Zorgverzekeringen N.V. has received the report from the NZa regarding the execution of the Health Insurance Act (ZVW) for the
reporting year 2012 on the 28th of November 2013. This report contains the findings related to the performed audits whether the received
funds were correctly or incorrectly applied in relation to its purpose. These findings resulted in an instruction of the NZa at 30 January,
which stated that Achmea Zorgverzekeringen N.V. should bring the related processes to an adequate level the latest at July, 1 st 2014. Plans of
improvement are already drawn up in 2012 en 2013 and are approved by the NZa. These plans of improvement provide in the realisation of
the necessary improvements not later than 1 July 2014.
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35. SUBSEQUENT EVENTS
In 2013, the Dutch Care Authority (NZa) made an unannounced visit to the St. Antonius Hospital to audit the accuracy of invoices for care
provided by the hospital. The results of the audit were published by the NZa on 11 February 2014.
The amount that had been fraudulently invoiced to all of the health insurers in the Netherlands came to €24.6 million. The loss suffered due
to fraudulent invoices issued by the St. Antonius Hospital will be financially set off by the Dutch Health Insurance Fund (Verzekeringsfonds)
during the course of 2014. Pending the outcome of these discussions, health insurers cannot yet book the above in their financial statements.
The Dutch Care Authority (NZa) has imposed a fine of € 3.6 million in total for the Achmea health insurers. This fine has been imposed by
the NZa in relation to the annual statements under the Dutch Health Insurance Act 2011 submitted by:
In an investigation into the accuracy and completeness of the accountability information relating to execution of the equalisation, submitted
for the reporting year of 2011 (with years or annual layers for 2011, 2010 and 2009), the NZa has discovered a number of inaccuracies with
regard to the annual statements referred to above. The inaccuracies found by the NZa relate in particular to the Spec A level. At the request
of the NZa, the Achmea health insurers submitted revised annual statements in the autumn of 2011 accompanied by an unqualified audit
report drawn up by the external accountant. All of the inaccuracies discovered by the NZa have been corrected in these revised statements.
AUTHORISATION OF CONSOLIDATED FINANCIAL STATEMENTS
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Company Financial Statements
COMPANY BALANCE SHEET (BEFORE PROFIT APPROPRIATION)
(X € 1,000)
NOTE
112
31 DECEMBER
2013
31 DECEMBER
2012
ANNUAL REPORT
COMPANY BALANCE SHEET (BEFORE PROFIT APPROPRIATION)
(X € 1,000)
31 DECEMBER
2013
31 DECEMBER
2012
113
ANNUAL REPORT
COMPANY PROFIT AND LOSS ACCOUNT
(€ 1,000)
NOTES
114
2013
2012
ANNUAL REPORT
Notes to the Company Financial Statements
General
In the Company Income Statement of Achmea Zorgverzekeringen N.V., use has been made of the exemption pursuant to Section 402 Book 2,
part 9 of the Dutch Civil Code.
Concerning the Company cash flow statement of Achmea Zorgverzekeringen N.V., use has been made of the principle according to Section
360.106 of the Dutch Accounting Standards (RJ).
Principles for the measurement of assets and liabilities and the determination of the result
Achmea Zorgverzekeringen N.V. makes use of the option provided in section 362 (8) Book 2, part 9 of the Dutch Civil Code. This means that the
principles for the recognition and measurement of assets and liabilities and determination of Profit for the year of the Company Financial
Statements of Achmea Zorgverzekeringen N.V. are the same as those applied in the Consolidated Financial Statements. Investments in group
companies are recognised at net asset value with goodwill, if any, recorded under intangible assets. The Company Financial Statements have been
prepared in accordance with Book 2, part 9 of the Dutch Civil Code.
Reference is made to the Accounting policies in the Consolidated Financial Statements for a description of the accounting principles used.
All amounts in the Company Financial Statements are in thousands of euros unless stated otherwise.
1. INTANGIBLE ASSETS
INTANGIBLE ASSETS
(X € 1,000)
GOODWILL
TOTAL 2013
TOTAL 2012
2. INVESTMENTS IN GROUP ENTITIES AND PARTICIPATIONS
INVESTMENTS IN GROUP ENTITIES
COMPANY NAME
(X € 1,000)
COUNTRY
CONTROLLING %
2013
CONTROLLING %
2012
BOOK VALUE
31.12.2013
BOOK VALUE
31.12.2012
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The ‘Participations in group companies’ item also includes the participations in the closed-end common funds. In order to determine whether
there is significant influence on a particular entity, the equity interest held by the other Achmea health insurers is considered in each case.
Accordingly, Achmea Zorgverzekeringen N.V. exercises significant influence over the FBI’s (the fiscal investment institutions) because along
with the other Achmea health insurers it is indirectly represented on the FBI’s board, as well as because together with the other Achmea health
insurers it jointly determines the investment policy (including its implementation), under which dividends distributed by the FBI are returned to
the FBI and reinvested. Accordingly, in Achmea Zorgverzekeringen N.V.’s financial statements the FBI’s are recognised as ‘participations in
group companies’.
The abbreviated financial statements for the participations recognised at net asset value are set out in the following table. The figures are based on
the participations’ latest financial statements.
INVESTMENTS IN GROUP ENTITITES
(X € 1,000)
COMPANY NAME
NATURE OF
ACTIVITIES
DATE OF
ACQUISITION
ASSETS
LIABILITIES
TURNOVER
PROFIT/LOSS
2013
2012
INVESTMENTS IN GROUP ENTITIES
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3. OTHER FINANCIAL INVESTMENTS
INVESTMENTS CLASSIFIED BY NATURE
(X € 1,000)
AVAILABLE
FOR SALE
31 DECEMBER 2013
(X € 1,000)
AVAILABLE
FOR SALE
INVESTMENTS MEASURED AT AVAILABLE FOR SALE
31 DECEMBER 2012
(X € 1,000)
EQUITIES AND
SIMILAR
INVESTMENTS
BONDS AND
OTHER FIXEDINCOME
SECURITIES
−
OTHER LOANS
DEPOSITS
WITH CREDIT
INSTITUTIONS
−
TOTAL
2013
TOTAL
2012
−
−
−
−
−
−
−
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EQUITIES AND SIMILAR INVESTMENTS
(X € 1,000)
2013
2012
31 DECEMBER
2013
31 DECEMBER
2012
BONDS
(X € 1,000)
OTHER LOANS
(X € 1,000)
2013
DEPOSITS WITH CREDIT INSTITUTIONS
(X € 1,000)
2013
ANALYSIS OF FIXED-INCOME INVESTMENTS CARRIED AT FAIR VALUE BY EXPECTED REMAINING TIME TO MATURITY
2013
118
2012
BONDS AND
OTHER FIXEDINCOME
INVESTMENTS
OTHER LOANS
DEPOSITS
WITH CREDIT
INSTITUTIONS
2012
(X € 1,000)
TOTAL
ANNUAL REPORT
BONDS AND
OTHER FIXEDINCOME
INVESTMENTS
2012
OTHER LOANS
DEPOSITS
WITH CREDIT
INSTITUTIONS
IMPAIRMENTS
TOTAL
(X € 1,000)
EQUITIES AND
SIMILAR
INVESTMENTS
BONDS
OTHERS
2013
2012
−
The nominal value of the impaired bonds amounts to nil (31 December 2012: €37 million). For 2013, interest income related to the impaired part
of Bonds and Loans and mortgages was nil (31 December 2012: €1 million). Impairment losses are included in Gains and losses on investments.
4. DERIVATIVES
DERIVATIVES
(X € 1,000)
2013
ASSETS
LIABILITIES
TOTAAL
2012
ASSETS
LIABILITIES
TOTAAL
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5. RECEIVABLES
(X € 1,000)
2013
2012
The receivables are expected to be recovered within twelve months after reporting date. For these receivables the carrying amount is a reasonable
approximation of the fair value.
Impairment losses recognised in 2013 related to Receivables amounted to € 0,1 million (2012: nil) and are included in Other expenses.
For a further clarification of the receivables on group companies, please refer to the section ´Transaction with related parties.
6. CASH AND CASH EQUIVALENTS
(X € 1,000)
2013
2012
Cash and bank balances are at free disposal of Achmea Zorgverzekeringen N.V.
7. PREPAYMENTS AND ACCRUED INCOME
(X € 1,000)
2013
2012
For an overview of the Receivables from Group companies, please refer to the section “Transactions with related parties”.
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8. EQUITY ATTRIBUTABLE TO HOLDERS OF EQUITY INSTRUMENTS OF THE COMPANY
Solvency
Achmea Zorgverzekeringen N.V.'s internal solvency standard is determined by the Executive Board of Achmea B.V. being the ultimate mother
company, in conjunction with Achmea's Group Capital and Liquidity Committee. These calculations are based on the outcomes of regular risk
analyses as well as on the quantitative findings of the economic capital model. This leads to a quantitative substantiation of the required solvency
ratio to be maintained above the statutory solvency ratio. There is, moreover, a correlation between the solvency standard maintained at the level
of Achmea Zorgverzekeringen N.V. and the solvency present at the Achmea Group level.
For Achmea Zorgverzekeringen N.V. the internal solvency requirement is currently set at 130%. By implementation of this change Achmea
Zorgverzekeringen N.V. is in line with the Dutch Insurance sector, by which comparability within the sector of information has improved.
The table below shows the company solvency margins present and required, taking any prudential filters into account.
The solvency calculation has been adjusted in 2013. Achmea Zorgverzekeringen N.V. now uses the consolidated method which is more common
in the health insurance branch. The required solvency ratio for Achmea Zorgverzekeringen N.V. has increased by the solvency which is required
for the subsidiaries. As a result the solvency surplus is reduced. Comparative figures have been adjusted accordingly.
Share rights, preferences and restrictions
The authorised capital consists of 250,000,000 ordinary shares each of a nominal value of 1 euro. 59,620,822 of these shares have been issued
and fully paid-up.
Revaluation reserve
Based on the accounting principles used by Achmea, a revaluation reserve is formed when appropriate. Furthermore, based on Dutch regulations,
Achmea should form a legal reserve for all positive unrealised fair value changes for assets that are not quoted on active markets and for which
the unrealised fair value changes are included in the income statement (e.g. investment property and certain other financial instrument with level
3 fair value measurements). This part of the reserve may not be negative.
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Retained earnings
For details of the movements in Retained Earnings, please refer to the Statement of changes in Total equity.
The reserve for the health insurance fund business has been transferred under universal title to the other reserves of Zilveren Kruis Achmea
Zorgverzekeringen N.V. (€ 295.4 million) and Agis Zorgverzekeringen N.V. (€ 242.0 million). These reserves include a net item of € 537.4
million that the regulator has designated as earmarked reserve (previously statutory reserve). Pursuant to the Zvw (Health Insurance Act), these
reserves will be credited to the said Achmea Zorgverzekeringen N.V. basic-insurance entities as at 31 December 2015.
With regard to the administration of the AWBZ (Exceptional Medical Expenses Act), a sum of € 9.3 million (2012: € 9.7 million) has been
designated as earmarked reserve, as this act is financed from public funds.
This sum consists of the budget differences for past years in respect of the organisational costs of the care administration offices.
Should the positive sum earmarked for the AWBZ become greater than 20% of the organisational cost budget for the current financial year then
the surplus will be creamed off by the CVZ.
Restrictions apply to the free distribution of the Retained earnings, because the company is exempt from corporation tax. A precondition for this
exemption is that the company is only permitted to distribute profit to institutions that benefit public health.
9. TECHNICAL PROVISIONS
TECHNICAL PROVISIONS
(X € 1,000)
2013
GROSS
2012
GROSS
The technical provisions include a sum for claim handling costs of € 2,276 millions (2012: € 2,723 millions).
An adequacy test is performed each quarter in order to ensure that sufficient provisions have been formed. The technical provision for unearned
premiums and the technical provision for outstanding claims including IBNR have been subject to qualitative and quantitative testing. The
outcome of the quantitative adequacy test is an expected value (excluding prudence) of the provision at reporting date of € 606 (2012: € 660) in
respect of the unearned premiums and € 103,947 million (2012: 145,564 million) in respect of outstanding claims including IBNR
The table below shows the insurance liabilities analysed by estimated time to maturity. The Health insurance contracts are analysed based on
undiscounted cash flows.
ANALYSIS BY ESTIMATED TIME TO MATURITY OF INSURANCE LIABILITY
(X € 1,000)
2013
WITHIN 1 YEAR
1-5 YEARS
5-15 YEARS
OVER 15 YEARS
TOTAL
2012
WITHIN 1 YEAR
1-5 YEARS
5-15 YEARS
OVER 15 YEARS
TOTAL
122
ANNUAL REPORT
MOVEMENT TABLE PROVISION FOR UNEARNED PREMIUMS HEALTH
(X € 1,000)
2013
2012
−
−
MOVEMENT TABLE OF OUTSTANDING CLAIMS (INCLUDING IBNR) HEALTH
(X € 1,000)
2013
GROSS
2012
GROSS
−
(BEFORE REINSURANCE)
2013
2012
2011
2010
2009
2008
2007
2006
TOTAL
(X € 1,000)
123
ANNUAL REPORT
END-YEAR DATA BY FINANCIAL YEAR, TOTAL, GROSS (X € 1,000)
CLAIMS PROVISION AT
CLOSE OF PREVIOUS
FINANCIAL YEAR
CLAIMS PAID IN FINANCIAL
YEAR
CLAIMS PROVISION AT CLOSE
OF FINANCIAL YEAR
SETTLEMENT INCOME
10. LIABILITIES
(X € 1,000)
2013
2012
(X € 1,000)
2013
2012
The other liabilities are expected to be settled within twelve months after reporting date. For these other liabilities the carrying amount is a
reasonable approximation of the fair value.
124
ANNUAL REPORT
11. ACCRUALS AND DEFERRED INCOME
(X € 1,000)
2013
2012
12. RESULT OF SUBSIDIARIES
RESULT OF SUBSIDIARIES
(X € 1,000)
2013
2012
13. CONTINGENCIES
Legal procedures
Achmea Zorgverzekeringen N.V. is involved in lawsuits and arbitration proceedings. These actions relate to claims instituted by and against these
companies arising from ordinary operations and mergers, including the activities carried out in their capacity as insurers, credit providers, service
providers, employers, investors and tax payers. Although it is not possible to predict or define the outcome of pending or imminent legal
proceedings, the Board of directors believes that it is unlikely that the outcome of the actions will have a material, negative impact on the
financial position of Achmea Zorgverzekeringen N.V.
CONTINGENT LIABILITIES
(X 1,000)
2013
2012
The commitments consist primarily of a not deposited part of a commitment to LSP Health Economics Fund C.V. ,care innovation Fund.
Tax entity
The company is part of a fiscal entity with Achmea B.V. for Value-added Tax (VAT) and, in that capacity, is jointly and severally liable for the
tax debts of the fiscal unity as a whole.
The company is exempt from corporation tax, therefore it may not distribute profit unless to institutions for the benefit of public health.
125
ANNUAL REPORT
AUTHORISATION OF COMPANY FINANCIAL STATEMENTS
126
ANNUAL REPORT
Other Information
Subsequent events
In 2013, the Dutch Care Authority (NZa) made an unannounced visit to the St. Antonius Hospital to audit the accuracy of invoices for care
provided by the hospital. The results of the audit were published by the NZa on 11 February 2014.
The amount that had been fraudulently invoiced to all of the health insurers in the Netherlands came to €24.6 million. The loss suffered due to
fraudulent invoices issued by the St. Antonius Hospital will be financially set off by the Dutch Health Insurance Fund (Verzekeringsfonds) during
the course of 2014. Pending the outcome of these discussions, health insurers cannot yet book the above in their financial statements.
The Dutch Care Authority (NZa) has imposed a fine of € 3.6 million in total for the Achmea health insurers. This fine has been imposed by the
NZa in relation to the annual statements under the Dutch Health Insurance Act 2011 submitted by:
In an investigation into the accuracy and completeness of the accountability information relating to execution of the equalisation, submitted for
the reporting year of 2011 (with years or annual layers for 2011, 2010 and 2009), the NZa has discovered a number of inaccuracies with regard to
the annual statements referred to above. The inaccuracies found by the NZa relate in particular to the Spec A level. At the request of the NZa, the
Achmea health insurers submitted revised annual statements in the autumn of 2011 accompanied by an unqualified audit report drawn up by the
external accountant. All of the inaccuracies discovered by the NZa have been corrected in these revised statements.
Provisions in the articles of association regarding profit appropriation
Article 30 of the company's articles of association contains the following provisions on profit appropriation:
30.1.
Distribution of profit pursuant to this Article will be made after adoption of the financial statements showing that this is permissible.
30.2.
The profit is at the disposal of the General Meeting, on the understanding that the profit can only be used for the benefit of one or more
organisations in the field of public health. The provisions in the previous sentence can be changed, as referred to in article 2:122 of the Dutch
Civil code, also in case such a change is damaging the rights of others than shareholders. If a vote on distribution of profits is tied, the relevant
profits will not be distributed.
30.3.
The company may make distributions to shareholders and others entitled to the distributable profits only insofar as the company's equity
exceeds the amount of the issued capital plus the reserves required to be maintained by law;
30.4.
A deficit may only be offset against the reserves required to be maintained by law to the extent that this is permitted by law.
127
ANNUAL REPORT
Other Information
Profit appropriation at year-end 2012
The 2012 financial statements were adopted in the General Meeting of Shareholders held on 10 June 2013. The General Meeting of Shareholders
appropriated the Profit for the year of € 213.5 million at year-end 2012 to the retained earnings.
Proposal profit appropriation at year-end 2013
The Board of Directors proposes that the General Meeting of Shareholders appropriate the profit at year-end 2013 of € 492.4 million entirely to
the retained earnings. This proposal has not yet been incorporated in the financial statements.
128
ANNUAL REPORT
Other Information
Independent auditor's report
To: the general meeting of Achmea Zorgverzekeringen N.V.
Report on the financial statements
We have audited the accompanying financial statements 2013 as set out on pages 32 to 126 of Achmea
Zorgverzekeringen N.V., Zeist. The financial statements include the consolidated financial statements and the company
financial statements. The consolidated financial statements comprise the consolidated statement of financial position
as at 31 December 2013, the consolidated income statement, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended and
the notes to the consolidated financial statements, comprising a summary of significant accounting policies and other
explanatory information. The company financial statements comprise the company balance sheet as at 31 December
2013, the company profit and loss account for the year then ended and the notes to the company financial statements,
comprising a summary of accounting policies and other explanatory information.
Directors’ responsibility
The directors are responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch
Civil Code, and for the preparation of the directors’ report in accordance with Part 9 of Book 2 of the Dutch Civil Code.
Furthermore, the directors are responsible for such internal control as they determine is necessary to enable the
preparation of the 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 these financial statements based on our audit. We conducted our audit in
accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about 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. 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 the directors, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion with respect to the consolidated financial statements
In our opinion, the consolidated financial statements give a true and fair view of the financial position of Achmea
Zorgverzekeringen N.V. as at 31 December 2013, and of its result and its cash flows for the year then ended in
129
ANNUAL REPORT
Other Information
accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of
Book 2 of the Dutch Civil Code.
Opinion with respect to the company financial statements
In our opinion, the company financial statements give a true and fair view of the financial position of Achmea
Zorgverzekeringen N.V. as at 31 December 2013, 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 and regulatory requirements
Pursuant to the legal requirement under Section 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 directors’ report, to the extent we can assess, has been prepared in
accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2: 392 sub 1 at bh has been annexed. Further we report that the directors’ report, to the extent we can assess, is consistent with the
financial statements as required by Section 2: 391 sub 4 of the Dutch Civil Code.
Amsterdam, 26 May 2014
PricewaterhouseCoopers Accountants N.V.
Original signed by drs. S.Barendregt-Roojers RA
130

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