The solvency position of DELA Group is determined based on the standard model under Solvency II.

The core capital remained largely unchanged in 2024 and its composition is presented in the graph below (amounts in € million).

DELA Group is exposed to a wide range of risks. The ‘Our governance’ section of the Executive Board Report indicates the main risk areas in the risk profile. It also describes the key developments in 2024 regarding the main risks.

The various risks are discussed below. To enhance readability not all risks are discussed in detail and some are combined.

Sustainability-related risks are part of the risk categories discussed in the following sections.

Financial risks include market risks, underwriting risks, credit risk and liquidity risk.

The market risk is the risk of possible losses due to adverse developments in the financial markets. The value of the investments and obligations depend on developments in these markets, the composition of the investment portfolio and the characteristics of the insurance obligations.

DELA Group has mitigated the market risk to a significant extent through its profit distribution scheme and premium measure, as well as via derivatives that mitigate part of the currency risk. DELA Group also applies the ‘prudent person’ principle to its investment policy, and full and/or partial ALM studies are performed periodically to assess whether the investment policy is still suitable.

The table below shows the development of the market risk, quantified based on the presented standard model (amounts in € million).

The underwriting risk is the risk that the size and timing of pay-outs are not aligned to the expectations as included in the premium determination. DELA Group mitigates the underwriting risk in various ways, including via its profit distribution and premium measure, but also via reinsurance, (medical) acceptance and a continuous focus on costs.

Credit risk (or: counterparty credit risk) is the risk of losses due to an unexpected default or unexpected worsening of the credit rating of the counterparties and debtors of the insurance company. This mainly involves receivables related to mortgages, reinsurers, derivatives or other debtor receivables. The extent of credit risk increased in 2024. Credit risk is not a material risk for DELA Group.

This is the risk that DELA Group is unable to fulfil its financial obligations to its policyholders or other creditors at any time because assets cannot be traded fast enough. The liquidity risk is not expressed as a capital requirement (SCR) in Solvency II. DELA Group must have sufficient cash and cash equivalents to pay claims resulting from the existing insurance agreements and to pay for its annual expenses. DELA Group has credit facilities with the custodian of the shares and bonds. DELA has fulfilled its financial obligations to policyholders and other creditors in 2024.

In addition to financial risks, DELA Group also faces operational risks. These are risks resulting from external influences related to the failing of people, processes or systems. The main operational risk areas are further detailed below.

Operational risks occur at all levels of the organisation. The control measures are therefore embedded in various specific policy documents, protocols and process descriptions.

This risk domain in DELA Group is built up of the following sub-risks:

DELA Group distinguishes between internal and external fraud. Internal fraud is that committed by DELA Group employees who undertake unauthorised activities to enrich themselves and by doing so harm DELA Group. Examples are malversations, unjustified indemnities, purposefully declaring incorrect working hours, etc. External fraud is committed by someone from outside of DELA Group (third parties, suppliers, customers, etc.) whose unauthorised activities impact DELA Group. DELA Group does not accept any type of internal or external fraud in its risk appetite. Due to the presence of various control measures – such as segregation of duties and the four-eyes principle, which are documented in policy documents (e.g., fraud policy) and process descriptions – internal fraud risks are assessed as low, while external fraud risks are assessed as moderate.

One or more incidents occurred related to this sub-risk in 2024. Although none of these incidents had a significant impact on DELA’s operations, they were evaluated and additional measures were taken where necessary, including more detailed work instructions and/or protocols. 

The risks included here involve losses due to actions which are out of step with legislation in the field of working conditions, health or safety, or as a result of events related to inequality or discrimination. DELA Group does not accept higher risks with regard to the health and safety of its employees in its risk appetite. The presence of various control measures as defined in policy documents (e.g., the health and safety policy) and protocols means these risks are considered low for DELA Group.

One or more incidents occurred related to this sub-risk in 2024. Although none of these incidents had a significant impact on DELA’s operations, they were evaluated and additional measures were taken where necessary, including more detailed work instructions and/or protocols. 

This involves risks of loss of or damage to the head office, funeral centres and crematoriums due to natural disasters or other events. DELA Group does not accept risks related to the availability of its funeral facilities. The presence of various control measures as defined in policy documents and procedures means these risks are considered medium.

One or more incidents occurred related to this sub-risk in 2024. Although none of these incidents had a significant impact on DELA’s operations, they were evaluated and additional measures were taken where necessary, including more detailed work instructions and/or protocols. 

This involves the risk of disruptions of operations due to system failure, and includes themes such as cyber threats and information security. The risk of losses due to failing transaction processing or process management or relationships with suppliers are also included. The latter also includes the reporting risk. DELA Group has formulated a number of statements in its risk appetite:

• DELA Group does not accept risks related to disruptions of IT/telecom systems that lead to a substantial disruption of business-critical operational processes;
• DELA Group does not accept risks that fundamentally affect DELA’s reputation; DELA Group does not accept risks related to controlled business operations.

The presence of various control measures as defined in policy documents (such as an information security protocol and process management policy), process descriptions and protocols partially mitigate risks related to process management and system failure. DELA assessed these risks as medium.

One or more incidents occurred related to this sub-risk in 2024. Although none of these incidents had a significant impact on DELA’s operations, they were evaluated and additional measures were taken where necessary, including more detailed work instructions and/or protocols. 

As mentioned, the risk of transaction processing or process management failures also includes reporting risk. This is the risk that the company's financial and non-financial reports may contain materially incorrect or incomplete information. It also includes the risk that internal and external stakeholders may not receive the reports in a timely manner. This risk is managed within DELA Group through measures and procedures outlined in various policy documents and implemented in practice. These include the external reporting policy in accordance with the Dutch Accounting Standards (RJ) and the policy on disclosure of the SFCR and reports to the regulator.

Integrity risks are paired with the threat of damage to DELA’s reputation or existing or future threats to the capital or results as a result of insufficient compliance with the law. In principle, DELA Group monitors this issue from its compliance function based on the themes in the systematic integrity risk analysis (SIRA). The remaining risk is therefore considered very limited, and DELA believes that no additional capital has to be reserved.

This involves uncertainties that may impede implementation of the long-term strategy. These risks may hinder expansion abroad or restrict the ability to keep to the business model and its essential profit sharing concept. These risks can largely be minimised via a proper strategy process, supervised by external consultants, and monitored by the Supervisory Board. The implementation involves business cases to assess the required investments and keep them manageable. In addition, the annual Own Risk and Solvency Assessment checks which risks are a potential threat to the continuity of the DELA Group. Stress tests show that the solvency position is robust, although DELA Group is sensitive to scenarios with low interest rates and low inflation. Preparatory measures are taken or different choices made where necessary. The main preconditions and measures are developed in the capital policy, which is evaluated annually. The risks are therefore considered limited and no additional capital has to be set aside.

External developments that may impact the strategy are constantly monitored and included in the ongoing strategy process.

The reputation risk is the threat of any damage caused by a loss of reputation. It is controlled by the active development of reputation management, with incident management being a major spearhead. This involves the timely identification of possible reputation risks and any associated spill-over effects, and taking timely management actions where necessary. The company culture and desired tone at the top are other important factors in mitigating this risk. They are supported by training programmes, the administrative organisation and internal controls. The risk is therefore considered limited and no reason to reserve additional capital.