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

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  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 2

N O N - L I F E I N S U R A N C E Non-life Insurance - Financial highlights in brief Key figures/ratios (DKKm) Q4 FY Results FY 2012 2012 2011 2012 2011  Profit of DKK 853m Gross premiums 1,236 1,205 4,866 4,772  Premiums up by 2% Investment income 2 5 13 40 Claims expenses -710 -947 -3,180 -3,851  CR improved: Expenses -220 -196 -790 -757 Reinsurance -86 60 -86 207 Premiums Underlying business Technical result 222 127 823 411 Investments return after Weather-related and major claims technical interest 25 50 30 49 Run-off gains (4.9ppts of CR) Profit before tax 247 177 853 460 Combined Ratio 82.1 89.9 83.3 92.3 ÷ Discounting effect Underlying Combined Ratio 81.5 77.0 79.7 80.2 Results Q4  Profit of DKK 247m  Premiums up by 2.6% DKK  CR improved: 4.8bn Premiums 66.2% Weather-related and major claims Run-off gains (6.2ppts of CR) ÷ Expenses 3

N O N - L I F E I N S U R A N C E Trend in premium income Premium income  Premiums FY 2012 up by 2.0% y/y 4,866 4,772 4,762  Private premiums up by 1.5% (2.5% adjusted for non-recurring income in 2011) 2,287  Commercial premiums up by 2.5% 2,232 2,258 Gross premiums (DKKm)  Premiums up by 2.6% in Q4  Private premiums up by 2.5%  Commercial premiums up by 2.7% 1,236 1,205 2,579  Premium growth 2,540 2,504 579 564  Customer defection rate declined 657 641 2010 2011 2012 Q4 2011 Q4 2012 Private Commercial 4

N O N - L I F E I N S U R A N C E Positive trend in underlying business  Underlying CR continues to develop 88.8 favourably 85.5 84.8  Limited snowfall caused motor claims to decline  Fewer burglaries 80.2 79.7  Good development in private property insurances ÷ Commercial property insurances 2008 2009 2010 2011 2012 still underperforming 115 110  Fewer claims 105  Development with fewer claims 100 continued in 2012 95 90  Average claims decreased for the 85 year 80  Higher average claims in Q4 2008 2009 2010 2011 2012 2011 2012 primarily related to property Q4 Number (index) Avg. claim (index) Claims (index) Note: Excluding workers’ compensation 5

N O N - L I F E I N S U R A N C E Positive trend in major claims 9.1 8.0  Major claims lower than 7.8 7.1 7.1 6.8 6.6 6.5 6.2 expected 4.7  Major claims have remained low in all quarters of 2012 FY FY FY FY FY Q1 Q2 Q3 Q4 2008 2009 2010 2011 2012 2012 Major claims ratio Average expectation  Fewer claims but higher average 160 claims in 2012 140  Average claims impacted 120 by a few major events 100  Preventive measures 80 60  Risk reduction team 40  Fixed-sum insurance 20 0 2009 2010 2011 2012 Q4 2011 Q4 2012  Always a matter of chance Number (index) Avg. claim (index) Claims (index) Note: Major claims are defined as claims in excess of DKK 1m 6

N O N - L I F E I N S U R A N C E Weather-related claims  Weather-related claims below expected level 8.5 4.0 6.9  Significantly lower than in 2010 and 2011 3.1 2.9 2.9 2.1 2.1 1.9 0.5 FY FY FY FY FY Q1 Q2 Q3 Q4 2008 2009 2010 2011 2012 2012 Weather-related claims ratio Average expectation Note: Figures stated net of reinsurance recoveries Weather related claims  Very few weather-related claims 950  Mild winter 400  No significant storms 300  Very few water damage claims in 200 spite of wet summer  Claims in Q4 significantly below 2011 100  2011 impacted by storms in 0 2008 2009 2010 2011 2012 Q4 2011 Q4 2012 November and adjusted estimate Number (index) Avg. claim (index) Claims (index) of July cloudburst 7

N O N - L I F E I N S U R A N C E Expense ratio target for 2012 reached 20% 19.0%  Expense ratio at the lower end of 18.5% the targeted range  16.2 in 2012 18% 17.6%  Higher expenses in Q4 due to 16.2%  Acquisition costs 15.9% 16%  Expenses for system development due to the non- life insurance tax  Bonuses 14% 12% 2008 2009 2010 2011 2012 Target 2009 to 2012 8

N O N - L I F E I N S U R A N C E A very favourable year - but not a new normal Combined Ratio FY 2012 83.3 Run-offs compared to expectations 4.9 Normal expectation  Zero in run-offs Weather-related claims compared to 1.9 expectations  4ppts in weather-related claims  8ppts in major claims Major claims compared to 1.8 expectations Normalised Combined Ratio 91.9 9

N O N - L I F E I N S U R A N C E Alm. Brand among top performers - Peer group comparison 21.3 20.4 20.3 Expense Ratio 18.5 17.6 17.2 17.0 16.8 16.4 16.2 15.9 15.7 15.4 14.9 2009 2010 2011 2012 Combined Ratio 102.3 101.4 99.5 98.8 98.0 98.2 93.3 93.5 92.3 92.2 91.1 90.3 88.2 8 3.3 Note: Combined and Expense Ratios are stated at group level. Codan figures include Danish business only 10

B A N K I N G Alm. Brand Bank - Financial highlights Key figures/ratios (DKKm) Q1 Q2 Q3 Q4 FY FY Results 2012 2012 2012 2012 2012 2011 2012  Loss of DKK 39m before losses and writedowns Interest receivable 200 179 177 164 867 720 Net interest and fee income 104 92 105 92 493 393  Lower funding Value adjustments* 10 24 -11 14 -173 37  Value adjustments of bonds and shares Losses and writedowns* -85 -81 -166 -148 -994 -480 Profit/loss before tax -90 -107 -176 -146 -1,154 -519 ÷ Lower interest rate level Profit/loss before tax and excl. losses and ÷ Reduction of loan book 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 Loan book 2012 losses and writedowns  Loan reductions of DKK 1.3bn adjusted for losses and writedowns  Losses and writedowns still high, mainly due to  Agriculture – deteriorated economic DKK conditions for dairy farmers 852m 11.6%  Mortgage deeds and commercial lending due to commercial property vacancies 11

B A N K I N G Deposits and lending 12.1 11.6 11.3 11.2 10.6 10.4 10.5 10.2 10.1 9.6 9.2 DKKbn 8.7 8.0 7.9 8.0 7.7  Reduction of loans and advances  Increased deposits Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 Loans and advances Deposits Deposit surplus 2.6 1.4 0.9  Deposit surplus of DKK 2.6bn, up DKKbn -0.1 from a deficit of DKK 2.4bn -2.4 -3.5 -3.7 -4.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 12

B A N K I N G Net interest and fee income 226 222 221  Interest income lower due to 200 198 179 177  Low interest rates 164 DKKm  Reduction of loan book 131 130 128 125 120 118 104 102  Interest expenses in 2012 down due to repayment of funding 39 35 32 32 30 31 30 28  Partly offset by interests on new deposits Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4  Lower customer activity reduced net 2011 2012 fees in Financial Markets Interest receivable Interest payable Net fees and commissions etc. Interest margin Interest margin target 2.5% 2.4%  Margin to be increased towards 2.2% 2.2% 1.9% 2016 by 1ppt from 2012 level by 1.7% 1.7% 1.6% 1.4% 1.4% 1.3% 1.3%  Repaying of hybrid capital  Reducing costs for deposits  Improving average loan quality Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 2012 13

B A N K I N G Losses and writedowns still high DKKm 78 75 43 32 32 30 29 28 27 20 20 19 19 10 7 2 1 0 0 0 0 -1 -2 -5 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 Property Total mortgage lending development deeds projects  Large writedowns on agriculture  Commercial lending impacted by large non- recuring writedowns  Dairy farmers hit by deteriorated  Commercial property vacancies impacted contribution margins in Q3 commercial lending and mortgage deeds 14