Has the relationship between the Management Board and the Supervisory Board changed since 2008?
The crisis was certainly a testing time for senior management, but also for the Supervisory Board. We met more intensively during that period, and continue to meet frequently. Our focus has shifted more towards defining the Group's strategy and monitoring its execution. Since the financial crisis, the relationship has developed towards a more challenging role and that dynamic is something I have promoted.
2015 marked the end of the strategy cycle. In your opinion, how did Aegon perform, and did the Supervisory Board advise on the strategy update?
Aegon met a number of important targets – both financial and non-financial – such as getting closer to our customers. We were one of the first insurance companies to transform our business with digital solutions. Others have followed, and we need to accelerate our efforts. We are also continuing to focus on costs. As for the Supervisory Board, five or six years ago we were told what the strategy was. Now we are involved from the start, providing input and monitoring the execution of the strategy.
Low interest rates were a particular headache for the insurance sector in 2015. How did Aegon respond?
Historically low interest rates, especially over a prolonged period, don't help the sector as a whole. Not surprisingly, this came through in our stakeholder engagement survey. But like any business, Aegon intends to succeed no matter what the economic circumstances. If interest rates are low, we adapt. For instance, switching to a capital-light model is a way of navigating low interest rates, as is reducing costs. We addressed our portfolio quite aggressively in 2015 and, looking to the future, will continue to make the company more efficient.
When we talk about capital, the European Union Directive on Solvency II comes to mind. The issue with Solvency II is that we knew it was coming, but we didn't know what was coming. Even at the end of 2015, there were still a number of uncertainties around the application of Solvency II. Solvency II has been a tremendous educational process. The regulator tested our leaders to ensure we fully understand the risks our businesses are exposed to. Our then Chief Risk Officer (CRO) Tom Grondin and his team, for example, did a huge amount of work on this. As a Board, it's part of our job to make sure that we have this kind of talent.
As part of Solvency II, our group supervisor, De Nederlandsche Bank (the Dutch Central Bank) asked some pertinent questions about our role in society and how we deal with risk. That wasn't always an easy process. An international company like ours has many different regulators who react in different ways. But we emerged from Solvency II with a stronger relationship with the Dutch Central Bank.
You mention talent within the company. What are your thoughts on the appointment of an additional female board member?
Yes, Allegra van Hövell-Patrizi joins us as our new Chief Risk Officer. She brings a wealth of experience and expertise; and I'm also glad to say that in 2016 the Management Board will also welcome Carla Mahieu, Global Head of Human Resources, and Sarah Russell, CEO of Aegon Asset Management*. Clearly, none of these appointments are about filling quotas. We hire the best people, period, and to do that we need to draw on the entire pool of talent. Our profile also needs to reflect our customers, and we want to continue to address that.
Can a company as large and established as Aegon be agile enough to react to societal and technological change?
Discontinuity should keep us awake. We are constantly looking at what is happening out there and we build scenarios into our strategy. Sometimes change is dictated by law, such as in the UK and the Netherlands, where our intermediaries are no longer allowed to receive commissions from us on life and pension products. This has had a profound impact on the way we distribute our products. Sometimes change is dictated by technology – for example, apparently it's possible to get an analysis of your DNA for as little as a few hundred dollars in New York today. This is one example of how we need to be alert to any development that could change our business and influence how people live. Is insurance changing? Yes. Can we keep up with these changes? Absolutely, and, after eight years on the Supervisory Board, I've every confidence we can do so.
* Pending appointments, subject to regulatory approval.