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Achmea remains wary of 'unsustainable' defined benefit products

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NETHERLANDS – Insurer Achmea remains wary of defined benefit pension (DB) products, which it considers to be "unsustainable" for both employers and insurers, according to its annual report.

The Dutch company said it continued to withdraw from guaranteed products, "where customers were unprepared to pay the increasing market-consistent costs of guarantees".

Following its new focus on defined contribution products, Achmea rolled out a portal for employers and a portal for workers, providing access to investment information and pensions performance.

The company also launched a new pensions product that provides customers with a guaranteed return linked to the market interest rate, rather than a fixed percentage guarantee.

Achmea also confirmed that it completed a five-year merger between its Centraal Beheer Achmea and Avéro Achmea brands into a single platform for DB administration last year, adding that a similar programme for its DB products had started at its subsidiary Interpolis.

The insurer, which reported an 8% return on investments, stressed that it maintained a "prudent" investment policy, with only 5% of its  €43bn in assets invested in equity and alternatives, and 78% in fixed income, predominantly government paper and low-risk corporate bonds.

The remaining assets have been invested in deposits (7%), derivatives (6%) and property (4%).

Equity and fixed income generated 17% and 7.8%, respectively, while commodities and infrastructure returned 5% and 6%, respectively.

The company said it had to write off €76m from its €1.7bn property holdings, mainly due to a revaluation of its offices portfolio.

Achmea added that the profitability of its Dutch pensions and life business rose significantly to €381m, in the wake of higher returns on investments and the introduction of the ultimate forward rate for measuring liabilities of insurance portfolios.

However, it noted that premiums were 4% lower at its pensions insurance business, mainly due to the challenging Dutch housing and mortgage market and competition from bank savings products.

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    Asset region: Europe.
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    Closing date: 2019-06-28.

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