Following today's publication of the Group's 2015 financial results and having made good progress on announced management actions and regulatory discussions, DELTA LLOYD now confirms that it is seeking to raise EUR 650 million through the underwritten rights issue previously announced on 30 November 2015. In combination with identified management actions and capital measures, the rights issue will position Delta Lloyd's Solvency II standard formula (SF) ratio within its target range of 140-180%, reduce leverage and lead to an improved net cash and capital position in the Group holding company. Both the Executive Board and the Supervisory Board believe that the rights issue will position Delta Lloyd to return greater value to shareholders going forward through ongoing commitment to capital generation, resulting in an attractive cash dividend, while safeguarding the interests of all stakeholders.

Progress on key steps in Delta Lloyd's capital enhancement plan

• Clear progress since 30 November 2015 announcement:
  • Good commercial and operational performance in 2015, confirming that the business model is sound and offers upside
  • Q4 2015 SF ratio 131% (Q3 2015: 136%)
    • 7%-points addition to solvency ratio (SF) achieved through management actions in Q4 2015
    • Addressed material Solvency II uncertainties, including most notably the treatment of LAC DT (subject to the rights issue)
    • Adverse impact of (14)%-points to the solvency ratio (SF) from revised treatment of longevity hedges
• Updated capital plan:
  • Rights issue of EUR 650 million to deliver c. 25%-point addition to solvency ratio (SF)
  • Tangible management actions targeting c. 20%-point addition to solvency ratio (SF) in 2016, including ALM optimisation and intention to pursue a sale of the shareholding in Van Lanschot by way of a marketed offering
• Ongoing commitment to capital generation:
  • Grow profitable capital light/reduce defined benefit business
  • Reduce operating expenses by 10% by 2018
  • Upgrade risk and capital management infrastructure, including the implementation of a Partial Internal Model by 2018
  • Focus on ALM to drive investment returns and reduce capital requirement
  • Re-fill pipeline of management actions on an ongoing basis
• Expect to pay a targeted cash dividend of EUR 130 million for 2016

Hans van der Noordaa, chairman of the Executive Board: "Following months of analysis, today's announcement brings clarity to the amount of capital that we need to raise to reposition Delta Lloyd under Solvency II. We can see from today's 2015 financial results that the Group is performing strongly and producing good commercial and operational results. Our focus is to further improve our business and capital base in order to drive sustainable capital generation going forward. I am confident that, following the successful completion of the proposed rights issue, in addition to management actions and capital measures, we will be adequately capitalised to operate under Solvency II and better positioned to deliver shareholder value."

Strong progress since 30 November 2015 announcement
In the fourth quarter of 2015, Delta Lloyd made good progress on executing the near-term management actions announced on 30 November 2015, which contributed a 7%-point increase in the solvency ratio (SF). These completed management actions include the sale of the entire commercial real estate portfolio, the unwind of a securitisation transaction and the restructuring of the internal fee structure between the insurance subsidiaries and the asset management business.

Delta Lloyd also addressed regulatory uncertainties during the period, with clarity obtained from DNB for 2016 (excluding year end) on the Loss Absorbing Capacity of Deferred Taxes (LAC DT) (which refers to the level of contingent deferred tax, arising in the case of a 1-in-200 stress event, which is permitted as an offset against the solvency capital requirement (SCR)). This treatment depends on the improved capital position of the holding company post rights issue which will underpin the recovery plans for the Delta Lloyd Leven and Delta Lloyd Schade subsidiaries. The total eligible LAC DT amount of EUR 524 million at 31 December 2015, comprises EUR 437 million for Delta Lloyd Leven and Delta Lloyd Schade, EUR 87 million for ABN AMRO Verzekeringen and zero for Delta Lloyd Life Belgium.

Adjustments were also made to the SF treatment of Delta Lloyd's longevity hedge transactions entered into in 2014 and 2015. Following an onsite review by DNB in December 2015, Delta Lloyd has excluded mitigating effects on the risk margin beyond the current contract duration of 8 years. This resulted in an impact on the solvency ratio (SF) of (14)%-points compared to the solvency ratio (SF) at Q3 2015. Maintaining the risk margin benefit for the period up to 8 years is subject to a restructuring of the hedge to ensure reinsurance treatment - absent this there would be a further adverse impact of (7)%-points. The current SCR benefit is retained, subject to moving to a Partial Internal Model by 2018. Although the outcome of the longevity treatment under Solvency II was disappointing, the Boards believe that it has given a greater clarity on the amount of capital required and now feel comfortable that Delta Lloyd has drawn a line under the major areas of uncertainty specific to the Group. The solvency ratio (SF) at Q4 2015 is 131%.

Capital plan including EUR 650 million rights issue
Notwithstanding the additional management actions and greater regulatory clarity outlined above, Delta Lloyd still requires additional capital to ensure that it is sufficiently capitalised under Solvency II, and is in a position to operate with appropriate leverage, capital and liquidity at the holding company level. However, the Boards have determined that this capital raising should be in an amount EUR 650 million. This amount reflects the impact of positive business performance, planned and executed management actions and is further enhanced by Solvency II clarity. The rights issue is expected to add c. 25%-points to the solvency ratio (SF), with the year-end solvency ratio (SF) pro forma for the rights issue expected to be c. 155%. 

Management has identified additional management actions targeted to deliver a c. 20%-point addition to the solvency ratio (SF) in 2016. Delta Lloyd has informed Van Lanschot of its intention to pursue a sale of its shareholding in Van Lanschot by way of a marketed offering in the course of 2016. Van Lanschot has agreed to facilitate this process and to cooperate. This approach is expected to lead to a significant increase in the liquidity of the Van Lanschot stock and high quality execution by Delta Lloyd. Further specific management actions are in place for Asset & Liability Management optimisation and reducing volatility by addressing inefficiencies in the investment portfolio. These actions are expected to deliver a further 10-15%-points to the solvency ratio (SF) in 2016, in addition to the Van Lanschot related improvement of c. 8%-points.

Future capital generation and delivery of shareholder value
Delta Lloyd's is targeting a run-rate of Solvency II capital generation of EUR 200-250 million per annum. The Boards expect that this will enable the Group to pay a targeted cash dividend of EUR 130 million for 2016, subject to internal Solvency II thresholds, with a goal to increase cash generation and dividends over time.

Delta Lloyd has an agenda of ongoing improvements to generate enhanced shareholder returns. Delta Lloyd continues to grow in profitable, capital light business, focusing on disciplined thresholds for new business and reducing the back-book. There is an ongoing commitment to operational cost discipline, especially in relation to managing the DB back-book in the most efficient way possible. Delta Lloyd is committed to reducing operational costs below EUR 560 million in 2018. The Group will strengthen its risk and capital management infrastructure by investing in necessary resources. By 2018, it plans to move to a Partial Internal Model for Solvency II reporting. The Group will focus on ALM to drive investment returns and reduce capital requirements. Finally, management will continue to identify management actions on an ongoing basis to become more capital efficient and thereby free up capital.

Transaction Information
The rights issue will be effected by granting transferable subscription rights to shareholders of Delta Lloyd. Subject to applicable securities laws, such rights will entitle Delta Lloyd shareholders to subscribe for ordinary shares. The terms (including price per new ordinary share) will be announced in due course and set forth in a prospectus for the rights issue.

Delta Lloyd is party to a standby underwriting commitment with Goldman Sachs International (Global Coordinator), BofA Merrill Lynch and Barclays, acting as Joint Bookrunners, pursuant to which they undertake to underwrite the rights issue amount, subject to customary conditions. The rights issue has been submitted for the approval of our shareholders at an Extraordinary General Meeting (EGM) on 16 March 2016.

• This press release contains regulated information (gereglementeerde informatie) within the meaning of the Dutch Financial Supervision Act (Wet op het financieel toezicht) which must be made publicly available pursuant to Dutch law.
• Certain statements contained in this press release that are not historical facts are "forward-looking statements". Forward-looking statements are typically identified by the use of forward looking terminology such as "believes", "expects", "may", "will", "could", "should", "intends", "estimates", "plans", "assumes", "anticipates", "annualised", "goal", "target" or "aim" or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy that involve risk and uncertainties. The forward-looking statements in this press release are based on management's beliefs and projections and on information currently available to them. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Delta Lloyd's control and all of which are based on management's current beliefs and expectations about future events.
• Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. Delta Lloyd undertakes no duty to and will not update any of the forward-looking statements in light of new information or future events, except to the extent required by applicable law. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement as a result of risks and uncertainties facing Delta Lloyd and its subsidiaries. Such risks, uncertainties and other important factors include, among others: (i) changes in the financial markets and general economic conditions, (ii) changes in competition from local, national and international companies, new entrants in the market and self-insurance and changes to the competitive landscape in which Delta Lloyd operates, (iii) the adoption of new, or changes to existing, laws and regulations including Solvency II, (iv) catastrophes and terrorist-related events, (v) default by third parties owing money, securities or other assets on their financial obligations, (vi) equity market losses, (vii) long- and/or short-term interest rate volatility, (viii) illiquidity of certain investment assets, (ix) flaws in underwriting assumptions, pricing and/or claims reserves, (x) the termination of or changes to relationships with principal intermediaries or partnerships, (xi) the unavailability and unaffordability of reinsurance, (xii) flaws in Delta Lloyd's underwriting, operating controls or IT systems, or a failure to prevent fraud, (xiii) a downgrade (or potential downgrade) of Delta Lloyd's credit ratings, and (xiv) the outcome of pending, threatened or future litigation or investigations, or other factors referred to in this press release.
• Should one or more of these risks or uncertainties materialise, or should any underlying assumptions prove to be incorrect, Delta Lloyd's actual financial condition or results of operations could differ materially from those described herein as anticipated, believed, estimated or expected.
• Please see the Annual Report for the year-ended 31 December 2015 for a description of certain important factors, risks and uncertainties that may affect Delta Lloyd's businesses.

Disclaimer

The information contained herein is not for release, publication or distribution, directly or indirectly, in or into the United States, Canada, Australia or Japan or any other jurisdiction in which the distribution or release would be unlawful.

This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase. It is a press release and not a prospectus for the purposes of the Prospectus Directive. Any purchase of securities of Delta Lloyd N.V. (the "Company") pursuant to the proposed offering should only be made on the basis of information that will be contained in the formal prospectus to be issued in due course in connection with the proposed offering (the "Prospectus"), to be approved by the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten), and any supplement or amendment thereto. The Prospectus will contain detailed information about the Company and its management, as well as financial statements and other financial data. When made generally available, copies of the Prospectus may be obtained at no cost through the Company's website (www.deltalloyd.com). It may be unlawful to distribute the Prospectus in certain jurisdictions.

These written materials do not constitute an offer to sell, or a solicitation of offers to purchase or subscribe for, securities in the United States or any other jurisdiction. The securities referred to herein have not been, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered, exercised or sold in the United States absent registration or an applicable exemption from registration requirements. There is no intention to register any portion of the offering in the United States or to conduct a public offering of securities in the United States.

This announcement should not be distributed, published or reproduced in whole or in part or disclosed by recipients and any such action may be restricted by law in certain jurisdictions. Persons receiving this announcement should inform themselves about and observe any such restriction: failure to comply may violate securities laws of any such jurisdiction.

The issue, exercise or sale of securities in the offering are subject to specific legal or regulatory restrictions in certain jurisdictions. The Company and the Banks (as defined below) assumes no responsibility in the event there is a violation by any person of such restrictions.

The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein, in any jurisdiction in which such offer, solicitation or sale would be unlawful. Investors must neither accept any offer for, nor acquire, any securities to which this document refers, unless they do so on the basis of the information contained in the Prospectus.

The Company has not authorized any offer to the public of securities in any Member State of the European Economic Area other than the Netherlands and Belgium. With respect to each Member State of the European Economic Area other than the Netherlands and Belgium and which has implemented the Prospectus Directive (each, a "Relevant Member State"), no action has been undertaken or will be undertaken to make an offer to the public of securities requiring publication of a prospectus in any Relevant Member State. As a result, the securities may only be offered in Relevant Member States (a) to any legal entity which is a qualified investor as defined in Article 2(1)(e) of the Prospectus Directive; or (b) in any other circumstances which do not require the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this paragraph, the expression an "offer of securities to the public" means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to exercise, purchase or subscribe the securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

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All investment is subject to risk. The value of the securities offered may go down as well as up. Past performance is no guarantee of future returns. Potential investors are advised to seek expert financial advice before making any investment decision.

The contents of this announcement have not been verified by Barclays Bank PLC, Goldman Sachs International, Merrill Lynch International or any of their respective affiliates (together, the "Banks").

The Banks, each of which are authorised in the United Kingdom by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, are each acting exclusively for the Company and for no-one else in connection with any transaction mentioned in this announcement and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to any such transaction and will not be responsible to any other person for providing the protections afforded to their respective clients, or for advising any such person on the contents of this announcement or in connection with any transaction referred to in this announcement.

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