November 30, 2017 / 6:41 AM / a year ago

NN Group raises cost reduction target after Delta Lloyd takeover

AMSTERDAM (Reuters) - Dutch insurer NN Group expects its takeover of smaller rival Delta Lloyd to lead to more cost savings than previously estimated, improving its profitability in the coming years, the company said on Thursday.

Ahead of a day of presentations for investors and analysts NN Group said it aims to cut costs by 350 million euros ($415.3 million) by 2020. It had earlier estimated the acquisition of Delta would lead to 150 million euros in synergies, on top of cost reduction plans earlier announced by both companies.

Taking account of existing plans, the new potential savings found since the takeover earlier this year added up to between 60 and 70 million euros, Chief Financial Officer Delfin Rueda said in a call with reporters.

The takeover will lead to job losses but Chief Executive Lard Friese declined to say how many. “Unfortunately we also have to address labor costs, but this process is quite complex and will take a number of years”, he said.

NN Group aims for a leading role in the insurance and pension market in the Netherlands, with “a strong presence” in Belgium and growth in other parts of Europe and Japan.

This should lead to an annual growth of 5 to 7 percent in gross operating profits in the medium term, while paying out 40 to 50 percent of net operational income in dividends.

The company said it aims to improve the profitability of the property, casualty and health business, where profits fell in recent months, and to attract more money to its asset management activities.

NN Group was spun off by former parent company ING in 2014 as a condition set by the European Commission for approving the state aid ING received during the financial crisis.

Delta Lloyd agreed to the 2.4 billion euros takeover by NN late last year, ending a turbulent period in which it struggled to strengthen its capital base and clashed with the Dutch central bank, leading to the departure of top executives.

NN expects to complete the integration of the two companies in 2020.

($1 = 0.8428 euros)

Reporting by Bart MeijerEditing by Greg Mahlich

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