Results for Q3 2015 Webcast presentation 11 November 2015 G R O U - - PowerPoint PPT Presentation

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Results for Q3 2015 Webcast presentation 11 November 2015 G R O U - - PowerPoint PPT Presentation

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Alm Brand Results for Q3 2015 Webcast presentation 11 November 2015 G R O U P Financial highlights of Q3 2015 Pre-tax profit: DKK 230m Outlook raised Forward-looking activities: Pre-tax profit: DKK 312m Non-life Insurance Life and Pension

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SLIDE 1

Alm Brand

Results for Q3 2015

Webcast presentation 11 November 2015

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SLIDE 2

Financial highlights of Q3 2015 Pre-tax profit: DKK 230m

Outlook raised Forward-looking activities: Pre-tax profit: DKK 312m

Winding-up activities: Loss: DKK 82m

  • Writedowns: DKK 74m

G R O U P

Non-life Insurance

Pre-tax profit: DKK 312m

  • CR: 72.4
  • Expense ratio: 15.5
  • Premium growth: 0.0%

Life and Pension

Pre-tax profit: DKK 9m

  • Risk result: DKK 11m
  • Bonus potential: DKK 0.8bn
  • Bonus rate: 8.2%

Banking

Pre-tax profit: DKK 3m

  • Writedowns: DKK 5m
  • Growth in lending
  • Growth in full-service

customers

2

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SLIDE 3

Comments on Q3

Negative impact from turbulent financial markets More customers and increased lending in the bank Initiation of a share buyback programme of up to DKK 300m Pre-tax profit outlook FY2015

  • DKK 600-650m (from DKK 450-550m)

G R O U P

Financial highlights, 9M Group Pre-tax profit: DKK 536m

Non-life Insurance Pre-tax profit: DKK 763m

  • CR: 78.6
  • Expense ratio: 15.9

Life and Pension Pre-tax profit: DKK 49m Banking Pre-tax profit: DKK 1m Winding-up activities Pre-tax loss: DKK 234m

3

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SLIDE 4

Customers First

New CRM system will improve customer service across business segments substantially Retention rate declining due to competition

  • but remains high and

satisfactory

G R O U P

Group NPS

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

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 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

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SLIDE 5

NON-LIFE INSURANCE Highlights

Q3 pre-tax profit of DKK 312m

  • Technical result exceptionally good
  • Negative investment return due to losses on

equities and wider spread between mortgage bonds and government bonds

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

Pre-tax profit

DKKm

5

245 237 130 352 487 807

  • 17

29

  • 25
  • 40
  • 38
  • 44

228 266 105 312 449 763 2012 2013 2014 2015 2014 2015 Q3 9M

Technical result Investment return after technical interest

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SLIDE 6

Combined ratio exceptionally good

Combined ratio of 81.1 excl. run-off

  • Better than expected
  • Run-off gains improved CR by 8.7 ppts to 72.4

– Gains on workers’ compensation and motor liability

  • Very few major claims

Underlying combined ratio of 75.0

  • Discounting increased CR by 0.2 ppt
  • More claims but lower average claims
  • Negatively impacted by lower average premium
  • Positively affected by an adjustment of provisioning

models for claims relating to 2015 Expense ratio up slightly Y/Y

  • 2014 positively impacted by cost phasing
  • Level as expected

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

Combined ratio

6

65.1 66.2 75.5 56.9 71.5 62.7 15.1 15.5 14.4 15.5 15.7 15.9 80.2 81.7 89.9 72.4 87.2 78.6 2012 2013 2014 2015 2014 2015 Q3 9M Claims ratio incl. reinsurance Gross expense ratio 76.9 74.1 77.2 75.0 78.3 78.9 2012 2013 2014 2015 2014 2015 Q3 9M

Underlying combined ratio

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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 3.7 ppts Y/Y Below expected range of 7-8%

  • Very few major claims

Weather-related claims excl. reinstatement down by 3.8 ppts Y/Y Within normal expectation of 3-4%

  • A few minor cloudbursts
  • Q3 2014 was impacted by cloudburst

Weather-related claims ratio

7

6.6 7.4 6.7 3.0 5.3 2012 2013 2014 2015 2015 Q3 9M Major claims ratio Average expectation (7-8%) 2.9 0.7 6.9 3.1 2.5 0.3

  • 0.1

2012 2013 2014 2015 2015 Q3 9M Weather-related claims ratio Reinstatement Average expectation (3-4%)

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SLIDE 8

Premiums impacted by intensified competition

Premium income unchanged Y/Y

  • Private down by 1.6%

– Lower prices due to continued price competition – Retention rate declining due to competition but stilll at a satisfactory level

  • Commercial up by 1.8%

– Growth primarily on workers’ compensation and property – 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

651 668 668 657 578 613 609 620 1,229 1,281 1,277 1,277 2012 2013 2014 2015 Q3 Private Commercial

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SLIDE 9

Private

  • Very satisfactory results

Combined ratio of 78.8

  • Improved by 7.2 ppts Y/Y

Very few weather-related claims

  • Weather-related and major claims below expected level
  • Run-off gains higher Y/Y

– Improved CR by 7.3 ppts (up by 9.7 ppts Y/Y)

Underlying business still satisfactory

  • Deteriorated Y/Y
  • Higher claims frequency on accident, travel and motor

insurance

  • Lower average premium, especially on motor insurance,

had a negative effect

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

Combined ratio

9

64.4 70.3 69.4 60.9 16.6 17.1 16.6 17.9 81.0 87.4 86.0 78.8 2012 2013 2014 2015 Q3 Claims ratio incl. reinsurance Gross expense ratio

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SLIDE 10

Commercial

  • Very satisfactory results

Combined ratio of 65.6

  • Improved by 28.6 ppts Y/Y

Weather-related and major claims 13.5 ppts lower Y/Y

  • Weather-related claims in line with expectations
  • Major claims below expectations
  • Run-off gains improved CR by 10.2 ppts (up by 4.9 ppts Y/Y)

– Primarily related to workers’ compensation Deteriorating underlying business

  • Underlying claims ratio below expected level
  • Positively affected by an adjustment of provisioning models
  • n current-year claims
  • Higher claims frequency but lower average claims

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

Combined ratio

10

65.9 61.6 82.1 52.6 13.5 13.9 12.1 13.0 79.4 75.5 94.2 65.6 2012 2013 2014 2015 Q3 Claims ratio incl. reinsurance Gross expense ratio

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SLIDE 11

LIFE AND PENSION Highlights

Pre-tax profit of DKK 9m

  • Down by DKK 11m Y/Y
  • Results impacted by financial market turmoil
  • DKK 10m transferred to shadow account
  • Expected to be reversed in Q4

Bonus potential remains attractive

  • Collective bonus potential down by DKK 214m
  • Bonus rate reduced to 8.2%

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

Pre-tax profit

DKKm

11

19 22 18 10 66 48 2 2

  • 1

4 1 21 22 20 9 70 49 2012 2013 2014 2015 2014 2015 Q3 9M Underwriting profit/loss Return on investments allocated to equity

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SLIDE 12

Pension contributions

Total pension contributions up by 15.3%

Pension premiums up by 17.0% Y/Y

  • Single premiums up by 37.7%
  • Regular premiums unchanged
  • Growth of 2.3% YTD

Unguaranteed investment schemes in the bank up by 11.5% Growth expected from new corporate concept offering pension schemes to small companies

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

Total pension contributions

DKKm

12

123 118 114 114 431 441 85 72 97 134 448 529 75 77 89 99 281 318 283 267 300 347 1,160 1,288 2012 2013 2014 2015 2014 2015 Q3 9M Regular premiums Single premiums Investment schemes

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SLIDE 13

Profit impacted by financial market turmoil

+ Expense, risk and group life results

  • Expense result positively affected by recognition
  • f reinsurance commission

÷ Interest result

  • DKK 10m transferred to shadow account due to

financial market turmoil

  • Profit of DKK 4m before transfer to shadow

account

+ 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

28 21 12 15 2 2 5 4

  • 5
  • 1

1 1 2

  • 1
  • 2
  • 10

24 22 19 9 2012 2013 2014 2015 Q3 Expense, risk and group life results Interest result Result of portfolios without bonus entitlement Return on investments allocated to equity Change to shadow account

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SLIDE 14

Investment return impacted by financial turmoil

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

Bonus potential

  • Average bonus rate of 8.2%
  • Bonus rate down by 2.3 ppts

– Primarily due to losses on equities – Still strong

  • Attractive bonus rate for new

policyholders of 8.8%

Rate on policyholders’ savings

  • Remains high for 2016
  • Supporting growth

14

U74* Interest rate group Total 1 2 3 Technical interest rate

0.5-1.5 1.5-2.5 2.5-3.5 3.5-4.5

Rate on policyholders’ savings, 2015

4.00 5.00 5.00 6.00

Rate on policyholders’ savings, 2016

4.00 5.00 5.00 6.00

Investment assets (DKKbn)

0.1 5.5 1.7 1.2 3.5 12.0

Bonus rate (%)

8.8 17.0 5.6 2.7 8.2

Return (% YTD)

1.8

  • 0.9
  • 1.0
  • 1.3
  • 0.7

Bonds

100% 62% 62% 78% 81% 69%

Equities

0% 24% 22% 8% 3% 16%

Property

0% 14% 13% 11% 9% 12%

Fixed-income derivatives

0% 0% 3% 3% 7% 3%

*Portfolios without bonus entitlement

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SLIDE 15

BANKING Highlights

Pre-tax profit of DKK 3m

Up by DKK 11m Q/Q

  • Turbulent financial markets

– Negative value adjustments on bond portfolio

  • Writedowns in line with expectations
  • Growth in full-service customers and lending

B A N K I N G

Pre-tax profit

DKKm

15

34

  • 14

12

  • 8

8

  • 3
  • 6
  • 5

31

  • 14

6

  • 8

3 Q3 Q4 Q1 Q2 Q3 2014 2015 Profit before writedowns Writedowns

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SLIDE 16

Forward-looking activities

Private

  • Lending up by DKK 76m in Q3 (DKK 140m YTD)
  • Positively affected by cheaper funding and higher

lending

  • Increased fees related to mortgage bond conversions
  • Number of full-service customers increased

Financial Markets

  • Loss on investment portfolio
  • More customers

Leasing

  • Increased competition has reduced the growth rate

– Portfolio up by DKK 26m Q/Q (DKK 185m Y/Y) Other

  • Result negatively impacted by low/negative interest

rates in combination with excess liquidity

  • Loss on bond portfolio and related hedging

arrangements

B A N K I N G

Profit before writedowns

DKKm

16

  • 4
  • 6

4

  • 1

4 7 4 18 1 11

  • 2

2 3 2 4 33

  • 14
  • 13
  • 10
  • 11

34

  • 14

12

  • 8

8 Q3 Q4 Q1 Q2 Q3 2014 2015 Private Financial Markets Leasing Other

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SLIDE 17

Targeted reduction in liquidity

Liquidity surplus

  • DKK 3.0bn at end-Q3 2015
  • Reduced by DKK 0.7bn in Q3
  • Liquidity Coverage Ratio (LCR) implemented on

1 October 2015 – LCR of 192% at end-September 2015 Reducing surplus

  • Surplus expected to be reduced by DKK 0.3bn in Q4

2015

  • Expiry of fixed-term deposits totalling DKK 1bn in

the period up to early 2016

B A N K I N G

Deposits

DKKbn

17

3.4 4.0 4.5 5.5 5.4 6.5 5.6 5.4 2.6 2.2 1.4 1.3 1.2 0.9 1.0 11.3 10.9 11.1 9.0 8.6 2012 2013 2014 H1 2015 9M 2015 Deposits at call At notice Other deposits

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SLIDE 18

WINDING-UP ACTIVITIES Highlights

Pre-tax loss of DKK 82m

In line with expectations Writedowns of DKK 74m

  • Impacted by agricultural exposures

Results before writedowns: Loss of DKK 8m

  • Q2 was negatively impacted by shares taken over

Loan portfolio reduced by DKK 132m adjusted for writedowns (DKK 336m YTD)

  • Expected reduction in 2015 raised by DKK 100m to

DKK 400m

B A N K I N G

Pre-tax profit

DKKm

18

  • 21
  • 18
  • 11
  • 16
  • 8
  • 56
  • 81
  • 63
  • 62
  • 74
  • 77
  • 99
  • 74
  • 78
  • 82

Q3 Q4 Q1 Q2 Q3 2014 2015 Profit before writedowns Writedowns

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SLIDE 19

Deteriorating conditions for agriculture in Q3

Writedowns of DKK 74m

Agriculture

  • Pork and dairy settlement prices remain low
  • Lending down by DKK 12m adjusted for writedowns

– Related to sale of a farm

  • Loss ratio significantly increased in Q3

Commercial lending

  • Reversal of writedowns again in Q3 2015
  • Lending reduced by DKK 104m adjusted for

writedowns Mortgage deeds

  • Writedowns remain at a satisfactory level
  • Credit exposure reduced by DKK 61m adjusted for

writedowns

B A N K I N G

Writedowns

DKKm

19

Mortgage deeds include credit exposure from option agreement 71 57 60 68

  • 27
  • 12
  • 4 -6

37 18 6 12 9.9 9.0 10.5 13.5

  • 2.4 -1.1
  • 0.4 -0.7

1.7 0.8 0.3 0.6 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Agriculture Commercial lending Mortgage deeds Losses and writedowns Loss ratio

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SLIDE 20

CAPITAL MODEL

Excess capital higher than expected

  • Capital target reduced by DKK 64m

primarily related to Banking

  • The group has decided to initiate a share

buyback programme of up to DKK 300m

G R O U P

20

Development in excess capital

DKKm

Other includes reduction in tier 2 capital and change in treasury shares

667 936 636 177 32 64

  • 4
  • 300

Excess capital Q2 '15 Q3 profit Change in tax asset Change in capital target Other Excess capital Q3 '15 Share buyback Excess capital adjusted for share buyback

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SLIDE 21

Full-year outlook for 2015 DKK 600-650m

Pre-tax profit

Forward-looking activities: Pre-tax profit of DKK 950-1,000m

Winding-up activities: Loss at the level of DKK 350m

G R O U P

Non-life Insurance

Pre-tax profit: DKK 925m

Lifted by DKK 150m

  • CR at the level of 82
  • Expense ratio at the level of 16
  • Premiums in line with 2014

Life and Pension

Pre-tax profit: DKK 75m

Unchanged

  • Expects to book risk

allowance for all contribution groups

Banking

Pre-tax profit: DKK 20m

Unchanged

  • Writedowns of around

DKK 20m

  • Negative impact from low

interest rate level

21

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SLIDE 22

Outlook for 2016 Pre-tax profit of

DKK 450-550m

Forward-looking activities Pre-tax profit of DKK 550-650m at a combined ratio of 91-92 Winding-up activities Pre-tax loss at the level of DKK 100m

G R O U P

22

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SLIDE 23

Non-life Insurance: Technical results exceptionally good, but investment result negatively impacted by turbulent financial markets Life and Pension: Financial market turmoil impacted results negatively in Q3 Banking: Increase in lending to private customers and continued growth in full-service customers Negatively impacted by turbulent financial markets Winding-up activities: Overall performance in line with expectations, but deteriorating conditions for agriculture Outlook FY 2015 outlook raised to DKK 600-650m FY 2016 outlook of DKK 450-550m

G R O U P

23

Highlights

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SLIDE 24

“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.”

24

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SLIDE 25

Alm Brand

Results for Q3 2015

Webcast presentation 11 November 2015