UPDATE 1-Insurer NN Group sees 100 mln euro hit from COVID-19 on annual profit

(Updates with details, quote from CEO)

AMSTERDAM, June 24 (Reuters) - Dutch insurer NN Group said on Wednesday it expects an impact of about 100 million euros ($113.14 million) on its operating profit due to the fallout from the COVID-19 outbreak, but solvency remains strong at 227% as of the end of May.

In an update ahead of an investor day, Chief Executive Officer David Knibbe said the company is targeting cash generation of 1.5 billion euros in 2023.

“The impact on claims experience so far is limited, as we have no or limited exposure to business interruption, travel and health insurance,” the company said of the coronavirus impact. “Our sales in Europe and Japan will likely be affected, leading to lower premiums, and we expect market volatility to result in lower fee income in our asset management business.”

NN’s shares closed at 30.13 euros on Tuesday, down 11% so far this year.

Earlier this month, activist shareholder Elliott Advisors, which holds a 3% stake in NN Group, proposed a series of actions the insurer should take to raise its share price, including “operational improvements, reinsurance transactions and outright business sales”.

CEO Knibbe said the company considered Elliott’s advice.

“I don’t have anything exactly to tell you,” Knibbe told reporters on a call.

“We had constructive meetings with them” as part of broader meetings with stakeholders ahead of the update.

He said the company had no plans to sell its Japanese operations, one of Elliott’s proposals, because that business is profitable and provides the group with diversity.

NN Group said it would gradually decrease its exposure to low-yielding investments, which Elliott had recommended. The insurer said it would cut some government bonds holdings in favour of mortgages, loans and real estate.

NN Group, which reports earnings twice every year, had core profit of 1.8 billion euros in 2019.

$1 = 0.8839 euros Reporting by Toby Sterling, Editing by Sherry Jacob-Phillips and Louise Heavens