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On Wednesday, Berenberg analysts reaffirmed their confidence in NN Group NV (AS:NN (NASDAQ:NNBR):NA) (OTC:NNGPF), maintaining a Buy rating and a price target of EUR54.20. The endorsement follows NN Group ’s recent capital markets day held on May 27, where the company unveiled its strategic plan for the years 2025 to 2028. Management highlighted growth across all business segments, with particular attention to the core NN Life unit, which is expected to see an increase in operating capital generation (OCG) from EUR1,049 million in 2024 to approximately EUR1,100 million in 2028.
Berenberg’s analysis suggests that the growth, albeit modest, marks a positive shift from the 2020-2024 period during which NN Life experienced a decline in life and pension reserves at a compound annual growth rate (CAGR) of approximately 4%. This decline was largely attributed to a lack of inflows in its life portfolio. However, the composition of NN Life’s back book has significantly changed, with the life portion now constituting about 20% of the total, down from approximately 50% in 2020. The pension segment has remained relatively stable due to better inflows compared to the life segment.
The analyst’s optimism is also driven by NN Group’s success in capturing market share in traditional pensions from competitors such as Aegon (NYSE:AEG), which is expected to contribute to stable total reserves at NN Life for the 2024-2028 period. Berenberg forecasts that the combination of steady reserves and improved margins from cost savings will result in a 1% CAGR in NN Life’s OCG. This is in line with their projection for the free cash flow CAGR, painting a stable financial outlook for NN Group in the coming years.
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