[PPT] - Results for FY2015 Webcast presentation 2 March 2016 G R O U P PowerPoint Presentation

SLIDE 1

Alm Brand

Results for FY2015

Webcast presentation 2 March 2016

SLIDE 2

Financial highlights of FY2015 Pre-tax profit: DKK 652m

Forward-looking activities: Pre-tax profit: DKK 1,001m

Winding-up activities: Loss: DKK 349m

Writedowns: DKK 306m

G R O U P

Non-life Insurance

Pre-tax profit: DKK 959m

CR: 80.8
Expense ratio: 16.0
Premium growth: -0.3%

Life and Pension

Pre-tax profit: DKK 79m

Growth in regular premiums:

3.8%

Bonus potential: DKK 942m
Bonus rate: 9.7%

Banking

Pre-tax profit: DKK 18m

Writedowns: DKK 21m
Growth in lending
Growth in full-service

customers

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SLIDE 3

Comments on Q4

Negative impact from several weather-related events

Three storms, snowload and cloudbursts
Impacted CR negatively by 11.3 ppts including

reinstatement – Alm. Brand has a large property exposure Positively affected by run-off gains

Impacted CR by 10.4ppts

Better investment results in all three business segments More customers and increased lending in the bank

G R O U P

Financial highlights, Q4 Group Pre-tax profit: DKK 116m

Non-life Insurance Pre-tax profit: DKK 196m

CR: 87.6
Expense ratio: 16.1

Life and Pension Pre-tax profit: DKK 30m Banking Pre-tax profit: DKK 17m Winding-up activities Pre-tax loss: DKK 115m

3

SLIDE 4

Customers First strategy

Customer satisfaction continued to improve in 2015 New CRM system will substantially improve customer service across business segments Retention rate declining due to competition

but remains high and

satisfactory Very few insurance complaints filed

G R O U P

Group NPS

18 18 22 23 23 26 27 24 29 30 31 30 33 35 36 34

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2014 2015

4

Retention rate – Non-life Insurance

86% 87% 88% 89% 90% 91% 92% Dec/08 Dec/09 Dec/10 Dec/11 Dec/12 Dec/13 Dec/14 Dec/15

SLIDE 5

NON-LIFE INSURANCE Highlights

Pre-tax profit of DKK 959m

Technical result exceptionally good
Negative investment return due to losses on

equities and wider spread between mortgage bonds and swap rates

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

Pre-tax profit

DKKm

5

823 642 744 964 257 157 30 121

93
5
55

39 853 763 651 959 202 196 2012 2013 2014 2015 2014 2015 FY Q4 Technical result Investment return after technical interest

SLIDE 6

Combined ratio

Combined ratio of 80.8

Better than expected

+ Run-off gains improved CR by 8.6 ppts – Gains on workers’ compensation, motor liability and health and accident + Very few major claims expenses ÷ More weather-related claims due to many events in Q4

Underlying combined ratio of 79.4

Discounting increased CR by 0.6 ppt
Higher claims frequency partly offset by slight decline

in average claim

Negatively impacted by lower average premium

Expense ratio up Y/Y

Expenses impacted by investment in new CRM

system

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

Combined ratio

6

Underlying combined ratio

67.1 71.4 69.9 64.8 64.8 71.5 16.2 16.0 15.6 16.0 15.1 16.1 83.3 87.4 85.5 80.8 79.9 87.6 2012 2013 2014 2015 2014 2015 Q4 Claims ratio incl. reinsurance Gross expense ratio 79.7 78.8 77.0 79.4 72.8 81.2 2012 2013 2014 2015 2014 2015 Q4

SLIDE 7

Weather-related and major claims

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

Major claims ratio Major claims down by 0.5 ppt Y/Y Below expected range of 7-8%

Very few major claims
Major claims totalled DKK 269m
DKK 23m below 2014

Weather-related claims excl. reinstatement up by 0.2 ppt Y/Y Above normal expectation of 3-4%

The year impacted by 8 major weather-related

events

Storms, snow, cloudbursts
Gross expenses for these events were

DKK 250m

Net expenses totalled DKK 221m

Weather-related claims ratio

7

6.2 7.2 5.8 5.3 5.5 2012 2013 2014 2015 2015 FY Q4 Major claims ratio Average expectation (7-8%) 2.1 3.7 4.2 4.4 9.8 0.2 1.8 1.1 0.3 1.5 2012 2013 2014 2015 2015 FY Q4 Weather-related claims ratio Reinstatement Average expectation (3-4%)

SLIDE 8

Premiums impacted by intensified competition

Premium income down by 0.3% Y/Y

Private down by 1.4%

– Intensified competion resulted in higher customer churn and lower prices – Price pressure primarily on motor insurances – Retention rate declining due to competition but still at a satisfactory level

Commercial up by 0.9%

– Customer retention remained at a stable high level throughout 2015 – Average prices still impacted by competition

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

Premium income

DKKm

8

2,579 2,626 2,642 2,605 2,287 2,405 2,416 2,438 4,866 5,031 5,058 5,043 2012 2013 2014 2015 FY Private Commercial

SLIDE 9

Private

Very satisfactory results

Combined ratio of 86.0

Up by 1.2 ppts Y/Y

Higher weather-related and major claims

Up by 2 ppts Y/Y

– Major claims higher in the first months of the year

Run-off gains higher Y/Y

Improved CR by 5.5 ppts (up by 3.3 ppts Y/Y)

Underlying business still satisfactory despite

Higher claims frequency on travel insurance
Lower average premium, especially on motor insurance
Expense ratio up by 0.3 ppt

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

Combined ratio

9

67.5 68.7 67.4 68.3 17.7 17.8 17.4 17.7 85.2 86.5 84.8 86.0 2012 2013 2014 2015 FY Claims ratio incl. reinsurance Gross expense ratio

SLIDE 10

Commercial

Very satisfactory results

Combined ratio of 75.4

Improved by 10.6 ppts Y/Y

Significant impact from run-off gains

Run-off improved CR by 11.9 ppts

– primarily related to a new model on workers’ compensation

Weather-related and major claims lower than in 2014

Underlying business

Fire and property insurance still not satisfactory

– New system in place which will improve individual assessment of customer risk

Expenses were slightly better than expected

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

Combined ratio

10

66.7 74.4 72.4 61.2 14.6 14.0 13.6 14.2 81.3 88.4 86.0 75.4 2012 2013 2014 2015 FY Claims ratio incl. reinsurance Gross expense ratio

SLIDE 11

LIFE AND PENSION Highlights

Pre-tax profit of DKK 79m

Up by DKK 1m Y/Y
Satisfactory underwriting profit

– Up by DKK 4m Y/Y

Return on investments allocated to equity impacted

by financial market turmoil

Bonus potential remains attractive

Collective bonus potential up by DKK 30m
Bonus rate reduced to 9.7%

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

Pre-tax profit

DKKm

11

78 83 76 80 12 3 2

1

90 86 78 79 2012 2013 2014 2015 Underwriting profit/loss Return on investments allocated to equity

SLIDE 12

Pension contributions

Total pension contributions up by 5.8%

Pension premiums up by 5.5% Y/Y

Single premiums up by 7.3%

– Increased from an already high level

Regular premiums up by 3.8%

– Target for 2015 reached – New corporate concept expected to support further growth Unguaranteed investment schemes in the bank up by 6.9%

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

Total pension contributions

DKKm

12

618 626 632 656 285 302 611 655 332 345 402 430 1,235 1,273 1,645 1,741 2012 2013 2014 2015 Regular premiums Single premiums Investment schemes

SLIDE 13

Profit impacted by financial market turmoil

Expense, risk and group life results

Down by DKK 6m Y/Y
Negative expense result
As expected and related to growth strategy

Interest result up by DKK 1m Y/Y

Stable results despite financial market turmoil

Improved results from portfolios without bonus entitlement

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

Profit split*

DKKm

13

* Profit before tax of the parent company Alm. Brand Liv og Pension A/S, which includes post-tax return on investment in the EMD Local Currency investment fund

81 74 62 56 11 11 16 17

9
3

6 12 3 2

1
5
2

90 86 77 78 2012 2013 2014 2015 Expense, risk and group life results Interest result Result of portfolios without bonus entitlement Return on investments allocated to equity Change to shadow account

SLIDE 14

Strong development despite financial market turmoil

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

Bonus potential

Bonus potential up by DKK 30m
Attractive bonus rate

– Average bonus rate of 9.7% – Bonus rate down by 0.1 ppt Y/Y – Bonus rate for new policyholders of 10.3%

Rate on policyholders’ savings

Remains high for 2016
Supporting growth

14

454 587 827 912 942 3.65% 3.65% 3.00% 4.00% 4.00% 4.00% 2011 2012 2013 2014 2015 2016 Bonus potential Rate on policyholders' funds (new agreements)

SLIDE 15

BANKING Highlights

Pre-tax profit of DKK 18m

Down by DKK 43m Y/Y

2014 impacted by one-off items
Turbulent financial markets deteriorated results in

2015 – Negative interest rates – Adversely impacted by increased spread between mortgage bonds and swap rates

Writedowns slightly higher than expected

– Includes reservation for expiry of interest-only periods on customers’ mortgages

Growth in full-service customers and lending

B A N K I N G

Pre-tax profit

DKKm

15

59

10 28 78 39

105
57
118
17
21
164
47
90

61 18 2011 2012 2013 2014 2015 Profit before writedowns Writedowns

SLIDE 16

Results impacted by financial markets

B A N K I N G

Profit before writedowns

DKKm

16

Private

Results improved by DKK 31m Y/Y

– Positive effect from transfer of lending from Treasury to Leasing – Average return per customer up by 7%

Gross lending up by DKK 197m
Number of full-service customers up by 13%

Leasing

Increased portfolio secured higher earnings

– Growth in both Private and Commercial leasing Financial Markets

Strong performance resulted in higher earnings from

asset management

Income up by 10% despite financial market turmoil
Number of private and commercial customers up by 29%

and 6%, respectively Other

Results negatively impacted by low/negative interest rates

in combination with excess liquidity

Loss on bond portfolio and related hedging arrangements

Note: Other excluding effects from Alm. Brand Formue

45
35
22

9

2

1 4 11 58 85 46 59 6

20

33

40

2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 Private Leasing Financial Markets Other

SLIDE 17

WINDING-UP ACTIVITIES Highlights

Pre-tax loss of DKK 349m

In line with expectations Writedowns of DKK 306m

Impacted by agricultural exposures

Loss before writedowns of DKK 43m

Improved by DKK 33m primarily due to cheaper

funding Loan portfolio reduced by DKK 750m

Portfolio reduced by DKK 490m adjusted for

writedowns

B A N K I N G

Pre-tax profit

DKKm

17

101
49
123
76
43
889
423
256
260
306
990
472
379
336
349

2011 2012 2013 2014 2015 Profit before writedowns Writedowns

SLIDE 18

Deteriorating conditions for agriculture in 2015

Writedowns of DKK 306m

Agriculture

Pork and dairy settlement prices remain low
Lending reduced by DKK 86m adjusted for writedowns

– Related to winding up of exposures Commercial lending

Reversal of writedowns in 2015
Lending reduced by DKK 354m adjusted for writedowns

Mortgage deeds

Writedowns dropped significantly in 2015

– Writedowns include a reservation related to expiry of interest-only periods on customers’ mortgages

Lending reduced by DKK 50m adjusted for writedowns
Credit exposure reduced by DKK 242m

B A N K I N G

Writedowns

DKKm

18

Mortgage deeds include credit exposure from option agreement 156 101 115 274 96

23

8

41

155 177 137 73 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 Agriculture Commercial lending Mortgage deeds

SLIDE 19

Significant reduction in funding costs

Lower average funding rate due to reduction in deposits at

notice

The bank’s funding costs more than halved in 2015

Reduction in liquidity surplus

End of year surplus of DKK 3.1bn
Successfully reduced by DKK 1.8bn in 2015

B A N K I N G

Average funding rate

19

65% 19% 10% 4% 2%

Deposits at call Deposits at notice Special categories of deposits Payables to credit institutions and central banks Total subordinated debt

Funding structure DKK 8.6bn

1.9% 2.4% 2.5% 2.2% 1.8% 1.0% 2010 2011 2012 2013 2014 2015

SLIDE 20

CAPITAL MODEL

Excess capital higher than expected

Excess capital increased by utilisation of tax

asset and lower capital target

Proposed dividend

Ordinary dividend: DKK 1.50 per share
Extraordinary dividend: DKK 1.50 per share
Increased and extended share buyback

programme – DKK 400m (up by DKK 100m) – Runs to the end of February 2017 – Subject to approval from the Danish FSA

Total dividend payout of DKK 920m

G R O U P

20

Development in excess capital

DKKm

Excess capital FY2014 adjusted for dividends paid Other includes reduction in tier 2 capital and change in treasury shares

124 1,062 141 529 125 332

48
521
400

Excess capital FY '14 Profit Change in tax asset Change in capital target Other Excess capital FY '15 Proposed dividend Share buyback Excess capital adjusted for share buyback

SLIDE 21

Full-year outlook for 2016

Raised by DKK 50m

DKK 500-600m

Pre-tax profit

Forward-looking activities: Pre-tax profit of DKK 575-650m

Winding-up activities: Loss at the level of DKK 50-75m

G R O U P

Non-life Insurance

Pre-tax profit: DKK 525m

CR at the level of 91
Expense ratio at the level of 16.5
Premiums down by 1-2%

Life and Pension

Pre-tax profit: DKK 75m

5% increase in regular

premiums

Risk allowance on interest

rate groups raised to 0.2%

Banking

Pre-tax profit: DKK 70m

Negative impact from low

interest rate level

Lending expected to increase

by 5%

21

SLIDE 22

Non-life Insurance: Exceptionally good technical result lifted by run-off gains, but competition intensified Life and Pension: Satisfactory results and growth in regular premiums in line with expectations Banking: Increase in lending and continued growth in full-service customers Adversely impacted by low/negative interest rates and turbulent financial markets Winding-up activities: Overall performance in line with expectations, but conditions for agriculture deteriorated Outlook FY 2016 profit of DKK 500-600m Dividend and share buyback totalling DKK 920m

G R O U P

22

Highlights

SLIDE 23

“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 of 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.”

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SLIDE 24

Alm Brand Webcast presentation 2 March 2016