Alm. Brand Financial results FY 2012 Webcast presentation 26 - - PowerPoint PPT Presentation

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Alm. Brand Financial results FY 2012 Webcast presentation 26 - - PowerPoint PPT Presentation

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Alm. Brand Financial results FY 2012 Webcast presentation 26 February 2013 1 G R O U P Highlights of FY 2012 Pre-tax profit of DKK 860m before and DKK 380m after losses and writedowns Non-life Insurance: Strong underlying business

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  • Alm. Brand

Financial results FY 2012

Webcast presentation

26 February 2013

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Highlights of FY 2012

Pre-tax profit of DKK 860m before and DKK 380m after losses and writedowns

  • Non-life Insurance:
  • Strong underlying business
  • Strong CR of 83.3 and 82.1 in Q4
  • Few weather-related and major claims
  • Positive run-off result
  • Banking:
  • Lower net interest and fee income; Reduced loan book and lower interest rate level
  • Losses and writedowns; Down to DKK 480m from DKK 994m in 2011
  • Loan book reduced by DKK 1.3bn net of losses and writedowns
  • Life and Pension:
  • 25% growth in pension premiums
  • Good investment results - collective bonus potential of 5.8% up by 1.3ppts
  • Outlook for 2013
  • Profit of DKK 440m before losses and writedowns
  • Losses and writedowns estimated at DKK 300-400m given the current economic

environment

  • DKK 700m injected into Alm. Brand Bank to repay DKK 430m of hybrid capital

G R O U P

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Non-life Insurance

  • Financial highlights in brief

Results FY 2012

  • Profit of DKK 853m
  • Premiums up by 2%
  • CR improved:

Premiums Underlying business Weather-related and major claims Run-off gains (4.9ppts of CR) ÷ Discounting effect

Results Q4

  • Profit of DKK 247m
  • Premiums up by 2.6%
  • CR improved:

Premiums Weather-related and major claims Run-off gains (6.2ppts of CR) ÷ Expenses

N O N - L I F E I N S U R A N C E

Key figures/ratios (DKKm) Q4 FY 2012 2011 2012 2011 Gross premiums 1,236 1,205 4,866 4,772 Investment income 2 5 13 40 Claims expenses

  • 710
  • 947
  • 3,180
  • 3,851

Expenses

  • 220
  • 196
  • 790
  • 757

Reinsurance

  • 86

60

  • 86

207 Technical result 222 127 823 411 Investments return after technical interest 25 50 30 49 Profit before tax 247 177 853 460 Combined Ratio 82.1 89.9 83.3 92.3 Underlying Combined Ratio 81.5 77.0 79.7 80.2 66.2%

DKK 4.8bn

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Premium income

N O N - L I F E I N S U R A N C E

Trend in premium income

  • Premiums FY 2012 up by 2.0% y/y
  • Private premiums up by 1.5%

(2.5% adjusted for non-recurring income in 2011)

  • Commercial premiums up by 2.5%
  • Premiums up by 2.6% in Q4
  • Private premiums up by 2.5%
  • Commercial premiums up by 2.7%
  • Premium growth
  • Customer defection rate declined

2,504 2,540 2,579 641 657 2,258 2,232 2,287 564 579 4,762 4,772 4,866 1,205 1,236 2010 2011 2012 Q4 2011 Q4 2012 Gross premiums (DKKm) Private Commercial

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Positive trend in underlying business

N O N - L I F E I N S U R A N C E

  • Underlying CR continues to develop

favourably Limited snowfall caused motor claims to decline Fewer burglaries Good development in private property insurances ÷ Commercial property insurances still underperforming

  • Fewer claims
  • Development with fewer claims

continued in 2012

  • Average claims decreased for the

year

  • Higher average claims in Q4

primarily related to property

Note: Excluding workers’ compensation 80 85 90 95 100 105 110 115 2008 2009 2010 2011 2012 2011 2012 Q4 Number (index)

  • Avg. claim (index)

Claims (index) 84.8 88.8 85.5 80.2 79.7 2008 2009 2010 2011 2012

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Positive trend in major claims

Note: Major claims are defined as claims in excess of DKK 1m

N O N - L I F E I N S U R A N C E

  • Major claims lower than

expected

  • Major claims have remained low

in all quarters of 2012

  • Fewer claims but higher average

claims in 2012

  • Average claims impacted

by a few major events

  • Preventive measures
  • Risk reduction team
  • Fixed-sum insurance
  • Always a matter of chance

9.1 7.8 7.1 6.8 6.2 7.1 4.7 6.6 6.5 8.0 FY FY FY FY FY Q1 Q2 Q3 Q4 2008 2009 2010 2011 2012 2012 Major claims ratio Average expectation 20 40 60 80 100 120 140 160 2009 2010 2011 2012 Q4 2011 Q4 2012 Number (index)

  • Avg. claim (index)

Claims (index)

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Weather-related claims

N O N - L I F E I N S U R A N C E

Note: Figures stated net of reinsurance recoveries

  • Weather-related claims below expected

level

  • Significantly lower than in 2010 and 2011
  • Very few weather-related claims
  • Mild winter
  • No significant storms
  • Very few water damage claims in

spite of wet summer

  • Claims in Q4 significantly below 2011
  • 2011 impacted by storms in

November and adjusted estimate

  • f July cloudburst

Weather related claims

100 200 300 400 2008 2009 2010 2011 2012 Q4 2011 Q4 2012 Number (index)

  • Avg. claim (index)

Claims (index) 950

1.9 3.1 8.5 6.9 2.1 2.9 2.1 2.9 0.5 4.0 FY FY FY FY FY Q1 Q2 Q3 Q4 2008 2009 2010 2011 2012 2012 Weather-related claims ratio Average expectation

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Expense ratio target for 2012 reached

N O N - L I F E I N S U R A N C E

  • Expense ratio at the lower end of

the targeted range

  • 16.2 in 2012
  • Higher expenses in Q4 due to
  • Acquisition costs
  • Expenses for system

development due to the non- life insurance tax

  • Bonuses

19.0% 18.5% 17.6% 15.9% 16.2% 12% 14% 16% 18% 20% 2008 2009 2010 2011 2012 Target 2009 to 2012

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A very favourable year

  • but not a new normal

N O N - L I F E I N S U R A N C E

Normal expectation

  • Zero in run-offs
  • 4ppts in weather-related claims
  • 8ppts in major claims

83.3 91.9 4.9 1.9 1.8 Combined Ratio FY 2012 Run-offs compared to expectations Weather-related claims compared to expectations Major claims compared to expectations Normalised Combined Ratio

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2009

Note: Combined and Expense Ratios are stated at group level. Codan figures include Danish business only

N O N - L I F E I N S U R A N C E

  • Alm. Brand among top performers
  • Peer group comparison

Expense Ratio Combined Ratio

2010 2011 2012

98.0 91.1 92.2 99.5 98.2 93.3 98.8 101.4 92.3 90.3 93.5 102.3 83.3 88.2 18.5 14.9 17.2 20.4 17.6 15.4 17.0 20.3 15.9 15.7 16.8 21.3 16.2 16.4

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  • Alm. Brand Bank
  • Financial highlights

B A N K I N G

Results 2012

  • Loss of DKK 39m before losses and writedowns

Lower funding Value adjustments of bonds and shares ÷ Lower interest rate level ÷ Reduction of loan book Loan book 2012

  • Loan reductions of DKK 1.3bn adjusted for

losses and writedowns

  • Losses and writedowns still high, mainly due to
  • Agriculture – deteriorated economic

conditions for dairy farmers

  • Mortgage deeds and commercial lending

due to commercial property vacancies

Key figures/ratios (DKKm) Q1 Q2 Q3 Q4 FY FY 2012 2012 2012 2012 2011 2012 Interest receivable 200 179 177 164 867 720 Net interest and fee income 104 92 105 92 493 393 Value adjustments* 10 24

  • 11

14

  • 173

37 Losses and writedowns*

  • 85
  • 81
  • 166
  • 148
  • 994
  • 480

Profit/loss before tax

  • 90
  • 107
  • 176
  • 146 -1,154
  • 519

Profit/loss before tax and

  • excl. losses and

writedowns

  • 5
  • 26
  • 10

2

  • 160
  • 39

Interest margin 1.4% 1.3% 1.6% 1.4% 1.6% 1.4%

*Credit related value adjustments included under losses and writedowns

11.6%

DKK 852m

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Deposits and lending

B A N K I N G

  • Reduction of loans and advances
  • Increased deposits
  • Deposit surplus of DKK 2.6bn, up

from a deficit of DKK 2.4bn

Deposit surplus

12.1 11.6 11.2 10.4 10.2 9.6 9.2 8.7 8.0 7.9 7.7 8.0 10.1 10.5 10.6 11.3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 DKKbn Loans and advances Deposits

  • 4.1
  • 3.7
  • 3.5
  • 2.4
  • 0.1

0.9 1.4 2.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 DKKbn

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B A N K I N G

Net interest and fee income

  • Interest income lower due to
  • Low interest rates
  • Reduction of loan book
  • Interest expenses in 2012 down due

to repayment of funding

  • Partly offset by interests on

new deposits

  • Lower customer activity reduced net

fees in Financial Markets Interest margin target

  • Margin to be increased towards

2016 by 1ppt from 2012 level by

  • Repaying of hybrid capital
  • Reducing costs for deposits
  • Improving average loan quality

2.2% 2.5% 2.4% 2.2% 1.9% 1.7% 1.7% 1.3% 1.4% 1.3% 1.6% 1.4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 2012

Interest margin

226 221 222 198 200 179 177 164 120 125 131 130 128 118 102 104 39 35 28 30 32 31 30 32 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 DKKm Interest receivable Interest payable Net fees and commissions etc.

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Losses and writedowns still high

B A N K I N G

  • Large writedowns on agriculture
  • Dairy farmers hit by deteriorated

contribution margins in Q3

  • Commercial lending impacted by large non-

recuring writedowns

  • Commercial property vacancies impacted

commercial lending and mortgage deeds

10 7 20 20 29 30 78 19

  • 1

19

  • 5

27 32 1

  • 2

2 28 32 43 75 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Continuing portfolio Agriculture Car finance Commercial lending Property development projects Total mortgage deeds DKKm

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Loan book reductions

  • Excl. losses and writedowns

B A N K I N G

371 418 27 38 40 176 113 47

  • 7
  • 16

Continuing portfolio Agriculture Car finance Commercial lending Property development projects Mortgage deed financing Mortgage deeds Total, loan book Reversals and intra-group transactions Total, group DKKm 1,289 1,357 279 189 382 176 267 69 68

  • 73

Continuing portfolio Agriculture Car finance Commercial lending Property development projects Mortgage deed financing Mortgage deeds Total, loan book Reversals and intra-group transactions Total, group DKKm

FY 2012 Q4 2012

Total loan book reduction of DKK 1.3bn in 2012

  • Decrease in continuing portfolio

due to savings and loan repayment

  • Funding to agriculture
  • Necessary investments and
  • perations
  • Declined by DKK 38m in Q4
  • Successful winding-up of

commercial loans

  • Net mortgage deeds declined by

DKK 336m (DKK 97m in Q4)

  • Equal to repayment of
  • approx. 9% p.a.
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Loan portfolio and credit losses

B A N K I N G

Loans Losses and writedowns 31.12 30.09 31.12 Share of FY Q1 Q2 Q3 Q4 FY Loss DKKm 2011 2012 2012 portfolio 2011 2012 2012 2012 2012 2012 ratio Continuing portfolio 2,983 2,694 2,647 30.5% 105 10 7 20 20 57 2.0% Lending to private customers 2,848 2,493 2,442 28.1% 104 10 7 19 21 57 2.2% Other loans and advances 135 201 205 2.4% 1 1

  • 1

0.0% Winding-up portfolio 7,059 6,114 5,642 64.8% 888 75 74 146 128 423 6.7% Agriculture 1,038 1,012 955 11.0% 227 29 30 78 19 156 15.7% Car finance 418 270 230 2.6% 2

  • 1
  • 1
  • 0.3%

Commercial lending 1,613 1,366 1,158 13.3% 308 19

  • 5

27 32 73 5.3% Property development projects 431 249 254 2.9% 13 1

  • 2

2 1 0.3% Mortgage deed financing 405 226 115 1.3% 112 8 5 12

  • 2

23 8.8% Mortgage deeds 3,154 2,991 2,930 33.7% 226 20 27 31 77 155 5.1% Equities 0.0% 16 16 0.0% Bank packages etc.

  • 1
  • Total - excl. reverse transactions

10,042 8,808 8,289 95.3% 994 85 81 166 148 480 5.2% Reverse transactions including intra-group transactions 175 154 107 1.2%

  • Total, group lending

10,217 8,962 8,396 96.5% 994 85 81 166 148 480 5.2% Minority interests 176 207 302 3.5%

  • Total, pro rata

10,393 9,169 8,698 100.0% 994 85 81 166 148 480 5.0%

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17 CAPITAL RESERVATION 31.12.2012 31.12.2011 DKKm Gross loans Book value Accum. writedowns Required capital Total reservation Reservation/ gross loans Total reservation Reservation/ gross loans Continuing portfolio 2,834 2,647 187 328 515 18% 426 14% Winding-up portfolio 7,727 5,642 2,085 867 2,952 38% 3,439 37% Bank packages etc.

  • 23
  • Total - excl reverse transactions

10,561 8,289 2,272 1,195 3,467 33% 3,888 31% Reverse transactions and intra-group transactions 107 107

  • 11

11 10% 28 16% Total group 10,668 8,396 2,272 1,206 3,478 33% 3,916 31%

Capital reservations

B A N K I N G

  • Continuing portfolio up by 4ppts
  • More conservative approach to exposures
  • Winding-up portfolio up by 1ppt
  • Affected by writedowns in agriculture
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Deposits DKK 11.3bn Other debt DKK 1.1bn Supplementary capital DKK 0.4bn Issued bonds DKK 2.0bn Hybrid capital DKK 1.0bn

DKK 7.7bn repaid in 2012

  • DKK 2.5bn to be repaid in 2013
  • DKK 2.0bn in issued bonds
  • DKK 0.1bn in supplementary

capital

  • DKK 430m in hybrid capital
  • Funding developing according to

plan

  • Excess liquidity of

DKK 4.1bn

B A N K I N G

Funding

  • At 31 December 2012

Note: Hybrid capital of DKK 856m is perpetual. DKK 430m to be repaid in 2013 2,530 100 1,201 175 2013 2014 2015 2016 DKKm Interbank funding Issued bonds Supplementary capital Hybrid capital Other debt

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B A N K I N G

Individual solvency need

  • Credit risk reduced by DKK

220m

  • Total risk reduced by approx.

DKK 250m in 2012

  • Excess solvency
  • 3.7ppts above solvency

need

  • Further strengthened by

DKK 270m in capital injection

1,443 1,342 1,266 1,226 1,213 259 349 225 297 261 101 101 100 97 85 1,803 1,792 1,591 1,620 1,559 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 DKKm Credit risk Market risk Operational and other risks 1.4% 3.5% 4.3% 3.6% 3.7% Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012

Excess solvency

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Life and pension

  • Financial highlights and key ratios
  • Profit before tax of DKK 90m in line with

expectations

  • Investment result generating 8.6% return on

policyholders’ funds

  • Positive impact from value adjustments
  • Positive equity market
  • Collective bonus potential of 5.8%
  • Up 1.3ppts
  • Strong risk and expense results
  • Growth
  • 25% in gross pension premiums
  • 2.5% in regular premiums
  • 14% in total pension contributions*

L I F E A N D P E N S I O N

* Including investment schemes in the bank DKKm Q4 2010 2011 2012 2011 2012 Return on investments allocated to equity 30 21 12 3 3 Result of portfolios without bonus entitlement 13 24

  • 9

4

  • 1

Risk premium 54 11 11 3 3 Share of expense and risk results 27 86 81 25 16 Calculated return on equity 124 142 95 35 21 Reversed from/transferred to shadow account 57

  • 5
  • 5

3

  • 1

Profit before tax 181 137 90 38 20 Shadow account balance 5 10 5 10

12,3%

DKK 903m

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L I F E A N D P E N S I O N

Premium income

  • Total pension contributions up by 14%
  • Premiums in Life and Pension up by

25%

  • Transfer of pension schemes of

new customers

  • Reduction in investment schemes

payments

  • Large single payments in 2011
  • Growth target for regular premiums
  • Lifted by 2.5% in 2012
  • Target of 12% increase on top of

inflation by 2016

Note: Investment schemes are reported in the banking segment

658 652 629 603 618 89 58 90 121 285 237 166 186 358 332 984 876 905 1,082 1,235 2008 2009 2010 2011 2012 DKKm Regular premiums Single premiums Investment schemes

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L I F E A N D P E N S I O N

Results

  • Return on investments

impacted by low interest rate level

DKKm Q4 2010 2011 2012 2011 2012 Return on investments allocated to equity 30 21 12 3 3 Result of portfolios without bonus entitlement 13 24

  • 9

4

  • 1

Risk premium 54 11 11 3 3 Share of expense and risk results 27 86 81 25 16 Calculated return on equity 124 142 95 35 21 Reversed from/transferred to shadow account 57

  • 5
  • 5

3

  • 1

Profit before tax 181 137 90 38 20 Shadow account balance 5 10 5 10

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L I F E A N D P E N S I O N

Provisions and bonus potential

  • Successful increase in bonus

potential

  • Competitive rate on policy-

holders’ funds

  • Technical provisions up

primarily due to falling interest rate level

10,758 10,994 10,931 11,332 11,832 225 517 454 586 10,801 11,263 11,493 11,829 12,463 2008 2009 2010 2011 2012 DKKm Life insurance provisions Collective bonus potential Outstanding claims provisions 225 517 454 586 3.00% 3.50% 3.65% 3.00% 2009 2010 2011 2012 Bonus potential Interest group (new agreements)

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Capital target

DKKm Target 31 Dec 2012 Non-life Insurance (40% of premiums) 1,946 Life and Pension (9% of provisions for insurance contracts) 1,065 Banking (18.7% of risk-weighted assets)* 1,858

  • Alm. Brand Bank subsidiaries

40 Diversification effects

  • 300

Total capital target 4,609 G R O U P

*Calculated as the individual solvency requirement as at 31 December 2012 plus 3 percentage points

  • New capital target of Non-life

Insurance

  • Using Alm. Brand's own

partial internal capital model

  • Target reduced from 45%

to 40% of premiums

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Capital model

  • Significant increase in excess capital

DKKm Capital base 31 Dec 2011 Capital base 30 Sep 2012 Capital base 31 Dec 2012 Consolidated equity 4,206 4,426 4,506 Tax assets

  • 758
  • 692
  • 665

Supplementary capital 1,753 1,704 1,654 Total capital base for the group 5,201 5,438 5,495 Statutory capital requirement for the group, end

  • f period

3,376 3,041 3,085 Excess relative to statutory capital requirement 1,825 2,397 2,410 Internal capital target 5,041 4,917 4,609 Excess relative to internal capital target 160 521 886 G R O U P

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Outlook for 2013

G R O U P Profit of DKK 400m Assumptions

  • CR of 92
  • Expense ratio of approx. 16.5
  • Growth of approx. 2%
  • Low return on investments

Profit of DKK 75m Assumptions

  • Modest growth in continuing

pension premiums

  • Low return on investments

allocated to equity Profit of DKK 5m before losses and writedowns Assumptions

  • Repayment of DKK 430m

hybrid capital end Q1 2013

  • Loan reduction net of losses

and writedowns of DKK 0.6bn

  • Losses and writedowns of

DKK 300-400m

  • Equity injection of DKK 700m

Non-life Insurance Life and Pension Banking

Full-year pre-tax profit of DKK 440m before losses and writedowns

Other activities

  • Expected cost of DKK 40m
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  • Alm. Brand

Highlights

  • Very strong year for Non-life Insurance
  • Good result and strong premium growth in Life and Pension
  • Weak core earnings in Banking
  • Repayment of DKK 430m of hybrid capital in 2013
  • Losses and writedowns still high
  • Outlook for 2013 of DKK 440m profit before losses and

writedowns

  • Losses and writedowns in 2013 estimated at DKK 300-400m

G R O U P

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Disclaimer

“The statements made in this presentation are based on current expectations, estimates and projections made by management. All statements about future financial performance are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the statements. All statements about future financial performance made in this presentation are solely based on information known at the time

  • f the preparation of the last published financial report, and the company assumes no
  • bligation to update these statements, whether as a result of new information, future

events, or otherwise.”

G R O U P

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  • Alm. Brand

Financial results FY 2012

Webcast presentation

26 February 2013