Alm. Brand Financial results H1 2013 Webcast presentation 22 August 2013 1
G R O U P Highlights of Q2 2013 H1: Pre-tax profit of DKK 319m before and DKK 136m after losses and writedowns Q2: Pre-tax profit of DKK 198m before and DKK 107m after losses and writedowns Strong CR of 84.5 Insurance Non-life Few weather-related and major claims Positive run-off result Strong premium growth Weakened underlying business Banking Net interest and fee income improved by lower funding costs and higher fee income Lower return on bond portfolio due to rising interest rates Losses and writedowns at DKK 91m Life and Pension Regular premiums up by 5.0% Y/Y Investment return negatively impacted by higher interest rates Strong collective bonus rate of 6.6% Outlook Profit of DKK 550m before losses and writedowns (unchanged) Non-life Insurance up by DKK 55m, Banking down by DKK 55m Estimated losses and writedowns maintained at DKK 300-400m DKK 200m injected into Alm. Brand Bank to repay DKK 200m 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 Results Q2 2013 Key figures/ratios (DKKm) Q2 H1 2012 2013 2012 2013 Profit of DKK 229m Gross premiums 1.206 1.258 2.401 2.483 Higher Investment return Investment income 4 2 9 5 Premiums up by 4.3% Claims expenses -744 -789 -1.715 -1.620 CR better than expected due to: Expenses -202 -207 -389 -413 Reinsurance -47 -66 50 -124 Run-off gains (6.8ppts of CR) Technical result 217 198 356 331 Weather-related claims Investments return after Major claims technical interest -3 31 22 41 ÷ Claims frequency Profit before tax 214 229 378 372 Combined Ratio 82.3 84.5 85.5 86.8 ÷ Discounting effect Underlying Combined Ratio 78.6 83.6 80.2 82.7 Results H1 2013 Profit of DKK 372m DKK High investment return 2,483m Premiums up by 3.4% 67.5% 3
N O N - L I F E I N S U R A N C E Trend in premium income 1,258 1,236 1,229 1,225 1,206 1,195 Gross premiums (DKKm) Q2 premiums up by 4.3% y/y 600 579 578 587 566 564 Private premiums up by 2.8% Commercial premiums up by 6.0% 657 658 640 651 638 631 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Private Commercial Retention rate - Private Retention rate improved since 2011 101 100 Restored after notifications of 99 premium increases initiated in 98 Index 2009/2010 97 96 95 94 93 dec-08 jun-09 dec-09 jun-10 dec-10 jun-11 dec-11 jun-12 dec-12 jun-13 4
N O N - L I F E I N S U R A N C E Underlying business 88.4 Higher underlying CR Y/Y 86.9 + Higher premiums 83.6 82.5 ÷ More claims ÷ Discounting effect 78.6 ÷ Higher reinsurance costs Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 More claims in Q2 115 Increase in especially in April and May 110 Approx. half related to delayed 105 100 claims relating to Q1 95 Glass claims on motor 90 insurances up by 32% Y/Y 85 80 First half of 2013 on level with 2011 2011 2012 2013 2011 2012 2013 Q2 H1 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 Major claims 8.9 8.1 8.7 Major claims lower than 6.7 6.0 expected in Q2 4.7 As expected for H1 since Q1 performance was impacted by fire claims Q2 Q2 Q2 Q2 Q2 H1 2009 2010 2011 2012 2013 2013 Major claims ratio Average expectation (8%) 160 140 Major claims up Y/Y 120 Number of major claims 100 higher … 80 60 …but average claims lower 40 20 0 Q2 2011 Q2 2012 Q2 2013 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 still below normal 2.4 2.1 2.1 1.7 1.5 All segments -3.6 Q2 Q2 Q2 Q2 Q2 H1 2009 2010 2011 2012 2013 2013 Weather-related claims ratio Average expectation (4%) Note: Figures stated net of reinsurance recoveries 200 Weather-related claims still low Average claims dropped significantly compared to 2012 100 Mild weather No cloudbursts Few lightning claims 0 Q2 2011 Q2 2012 Q2 2013 Number (index) Avg. claim (index) Claims (index) 7
N O N - L I F E I N S U R A N C E Expense ratio 20% 19.5% 18.9% 18.3% 18% 17.6% 16.8% 16.6% Expenses higher 16.3% 16.2% 16.2% than 2012 15.7% 15.9% 15.7% 15.7% 16% Investments in 15.6% digitalisation 14% 12% Q1 H1 Q1-Q3 FY Q1 H1 Q1-Q3 FY Q1 H1 Q1-Q3 FY Q1 H1 2010 2011 2012 2013 Target 2016 (15%) 8
N O N - L I F E I N S U R A N C E Alm. Brand among top performers - Peer group comparison 22.3 21.3 Expense Ratio 20.3 17.6 17.0 16.8 16.6 16.6 16.4 16.2 15.9 15.7 15.8 15.8 15.4 2010 2011 2012 H1 2013 102.3 101.4 Combined Ratio 98.8 98.2 93.3 93.5 93.8 92.3 90.3 88.6 88.0 88.2 88.2 86.8 83.3 Note: Combined and expense ratios are stated at group level. Codan figures include Danish business only 9
B A N K I N G Alm. Brand Bank - Financial highlights Results Q2 2013 Key figures/ratios (DKKm) Q2 Q3 Q4 Q1 Q2 H1 Loss of DKK 44m before losses and writedowns 2012 2012 2012 2013 2013 2013 Operating profit before value adjustments Interest receivable 179 177 164 152 145 297 up by DKK 18m Net interest and fee income 92 105 92 86 108 194 Lower funding costs Value adjustments* 24 -11 14 -9 -36 -45 Losses and writedowns* -81 -166 -148 -92 -91 -183 Higher fee income Profit/loss before tax -107 -176 -146 -127 -135 -262 ÷ Negative value adjustments on bonds, Profit/loss before tax and shares and derivatives excl. losses and writedowns -26 -10 2 -35 -44 -79 Interest margin 1.3% 1.6% 1.4% 1.3% 1.7% 1.5% ÷ Expenses related to properties taken over temporarily *Credit related value adjustments included under losses and writedowns Loan book Winding-up portfolio down by DKK 153m excluding losses and writedowns Losses and writedowns in line with Q1 2013 and DKK within expectations 10.2% 379m Results H1 2013 Loss of DKK 79m before losses and writedowns Continuing activities: Loss of DKK 18m Discontinued activities: Loss of DKK 61m 10
B A N K I N G Income Interest income declined Reduction of loan book 242 234 19 38 210 196 Higher net fees in Financial 5 45 32 175 Markets 43 55 0 152 Inflow of new customers 36 32 31 13 DKKm 30 More business per 32 43 32 customer 140 139 Return on bond portfolio 126 118 107 105 negatively impacted by higher interest rate and lower portefolio -3 -9 Negative value adjustments on Q1 Q2 Q3 Q4 Q1 Q2 shares and derivatives 2012 2013 Interest on loans Net fees Return on bonds Other value adjustments* * Value adjustments of shares, mortgage deeds and derivatives 11
B A N K I N G Funding and interest margin Interest expenses Funding costs down by 128 118 DKK 18m Q/Q 102 104 Repayment of bonds and 98 80 hybrid capital: DKK 14m DKKm Deposits: DKK 4m DKK 200m of hybrid capital to be repaid in Q3 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 Deposits and other payables Total subordinated debt Bonds issued Credit institutions and central banks Interest margin 1.9% 2,0% 1.7% 1.7% 1.7% Improved interest margin in Q2 1.6% 1.4% 1.4% 1.3% 1.3% 1.3% 1,5% Reduction of funding costs has improved margin 1,0% 0,5% 0,0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 12
B A N K I N G Deposits and loan book 11.3 11.4 11.1 10.6 10.5 10.2 10.1 9.6 9.2 8.7 8.5 8.3 Reduction of loans and DKKbn advances Deposit surplus reduced to DKK 2.8bn Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 Loans and advances Deposits Loan book Discontinued loan portfolio of DKKbn 5.3 DKK 5.3bn Now mainly composed of 2.8 Mortgage deeds 2.4 Agriculture 0.3 Commercial lending 1.1 0.2 1.0 Continuing Agriculture Car finance Commercial Property Mortgage Discontinued portfolio lending development deeds loan portfolio projects 13
B A N K I N G Losses and writedowns still high 100 78 75 75 53 52 50 43 DKKm 32 29 27 27 26 20 20 25 19 18 2 2 0 0 0 0 0 0 -2 -7 -18 -25 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Continuing Agriculture Car finance Commercial Property Total mortgage portfolio lending development deeds projects Real estate market continues to impact Reversal of writedowns on commercial private customers and mortgage deeds lending again in Q2 Still high writedowns on agriculture 14
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