Investor Presentation 6M - 2020 August 21 st 2020
/ Hi High lights A breakthrough Large losses but positive Good results in investments innovation development in loss frequency Highest investment income and Large losses impacted the quarter. • • We are developing a breakthrough new • returns since the Company’s listing. product: Ökuvísir (Driving Indicator) Foreign reinsurance had a negative • All asset classes performed well , impact of 5.1% on the combined ratio. • Customers can influence what they pay • with the exception of unlisted – always. We are seeing a positive development • equities. in the frequency of losses. Our goal is for our customers to have • fewer losses.
/ Highlights – Q2 2020 Premiums Profit Combined Ratio 5.641 m.kr. 916 m.kr. 103,5% Q2 2019 || 5.655 m.kr Q2 2019 || 1.256 m.kr Q2 2019 || 93,8% ROI ROE Solvency Ratio 4,4% 6,7% 1,57 Q2 2019 || 4,2% Q2 2019 || 6,5% Q2 2019 || 1,56
/ Highlights – 6M 2020 Premiums Loss Combined Ratio 11.198 m.kr. -1.047 m.kr. 114,9% 6M 2019 || 11.190 m.kr 6M 2019 || 2.192 m.kr 6M 2019 || 96,3% ROI ROE Solvency Ratio 4,0% -7,4% 1,57 6M 2019 || 8,2% 6M 2019 || 15,0% 6M 2019 || 1,56
/ Income Statement Q2 2020 Q2 2019 Br. Br. % 6M 2020 6M 2019 Var Var % Premiums earned 5.641 5.655 -14 -0,3% 11.198 11.190 9 0,1% Premiums earned, reinsurers' share -211 -207 -4 1,8% -398 -391 -7 1,7% Premiums earned, net of reinsurance 5.430 5.448 -18 -0,3% 10.800 10.798 2 0,0% Investment income 1.612 1.434 178 12,4% 1.450 2.800 -1.350 -48,2% Other income 12 19 -8 -39,9% 27 39 -13 -31,9% Total income 7.054 6.902 153 2,2% 12.278 13.638 -1.360 -10,0% Claims incurred -4.407 -3.916 -491 12,5% -10.038 -7.967 -2.071 26,0% Claims incurred, reinsurers' share 90 79 12 14,8% 145 129 16 12,1% Claims incurred, net of reinsurance -4.316 -3.837 -479 12,5% -9.893 -7.838 -2.055 26,2% Technical interest rates and exchange rate changes of technical provisions -227 -124 -103 82,8% -649 -263 -387 147,3% Operating expenses -1.417 -1.405 -12 0,9% -2.791 -2.835 44 -1,5% Interest expences & impairment of acc. receivables -98 -104 6 -5,8% -183 -195 12 -6,2% Total expenses -6.057 -5.469 -588 10,8% -13.517 -11.131 -2.386 21,4% Profit (loss) before income taxes 997 1.432 -436 -30,4% -1.239 2.507 -3.746 -149,4% Income taxes -81 -176 95 -54,1% 192 -315 507 -161,0% Profit (loss) for the period 916 1.256 -340 -27,1% -1.047 2.192 -3.239 -147,8% Claims & reinsurance cost ratio 80,2% 71,5% 91,8% 73,5% Expense ratio 23,3% 22,3% 23,1% 22,8% Combined ratio 103,5% 93,8% 114,9% 96,3% Return on equity 6,7% 6,5% -7,4% 15,0% Return on investments 4,4% 4,2% 4,0% 8,2%
/ Changes in Premiums Premiums Non-Life Premium Development 5.029 37 5.019 39 Q2 20 Q2 19 Q2 20 vs 19 Q2 19 vs 18 -67 Non-life insurance 5.029 5.019 0,2% 1,6% Life insurance 369 352 4,8% 6,1% Foreign reinsurance 243 285 -14,5% 28,1% Total 5.641 5.655 -0,3% 2,9% Premiums Q2 19 Motor Property Other Premiums Q2 20 12 months rolling premium De Developme ment nt – In millions 20.000 15.000 10.000 5.000 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
/ Changes in Claims Claims incurred Claims provisions 20.166 18.603 Q2 20 Q2 19 Q2 20 vs 19 Q2 19 vs 18 Non-life insurance 3.774 3.556 6,1% -22,7% 19.495 17.677 Life insurance 170 253 -32,7% 81,4% Foreign reinsurance 463 107 332,4% -46,5% Total 4.407 3.916 12,5% -20,7% 30.06.2020 31.12.2019 Claims provision, net of reins. Claims provision, reins.' share Development in claims ratio 90% 5,1% 78,1% 80% 72,9% 1,7% 73,1% 0,7% 4,4% 70% -6,6% 60% 50% 40% 30% 20% 10% 0% Regular operations Claims frequency Claims > 50 mkr. Weather claims Run-off Icelandic operations Foreign reinsurance Q2 2020
/ Pre-tax Profit 1.432 72 274 997 -269 -410 -103 Q2 2019 Non-life insurance Life insurance Foreign reinsurance Techn. interest & curr. adjm. Investment op. Q2 2020 Operating segments 984 1.500 1.171 1.155 9 500 902 1.000 574 704 460 550 500 228 119 -710 -211 0 1.089 435 224 -53 -53 172 448 240 -91 -158 -500 -113 -539 -735 -1.000 -700 -1.500 -2.000 -2.500 -826 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Insurance operations Financial operations
/ Combined Ratio Combined Ratio 12 months rolling Operating expenses 1.600 Acc. to new FSA guidelines 1.400 110% 1.200 1.000 105% 800 600 100% 400 200 95% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 90% 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 Financial op. exp. Insurance op. exp. Four quarters average Quarterly Development Expense ratio Claims & reinsurance ratio Reassessment of older claims 140,0% 120,0% 100,0% 80,0% 60,0% 40,0% 20,0% 0,0% Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q2 2017 Q2 2018 Q2 2019 Q2 2020 Q3 2017 Q3 2018 Q3 2019 Q4 2017 Q4 2018 Q4 2019
/ Balance Sheet Assets 30.6.2020 31.12.2019 Technical Provision Operating assets 606 670 Goodwill and other intangible assets 1.464 1.360 965 906 Risk premium Risk premium Right-of-use assets 848 899 Tax assets 57 0 Unearned Unearned Financial assets at fair value through profit or loss 35.410 32.338 10.694 11.051 premiums premiums Bonds and other long-term receivables 1.596 1.843 Investments where investment risk is borne by life-ins. policy holders 1.602 1.530 Accounts receivables 9.234 7.424 Reinsurance assets 1.045 1.074 Other receivables 998 1.286 Cash and cash equivalents 1.311 1.930 20.166 Claim resrves 17.723 Claim resrves Total assets 54.172 50.354 Equity Share capital 1.894 1.894 Statutory reserve 626 626 30.6.2020 30.6.2019 Restricted reserve 3.781 2.793 Retained earnings 7.846 9.881 Equity Ratio Total equity 14.147 15.194 Liabilities 29,2% Subordinated bonds 2.831 2.788 27,3% Tax liability 0 136 Lease liability 875 917 28,7% 26,1% Technical provision 31.825 27.577 Technical provision for life-insurance policies where investment risk is borne 1.602 1.530 by the policy holders Accounts payable and other liabilities 2.892 2.212 30.6.2020 30.6.2019 Total liabilities 40.025 35.160 Equity Ratio Subordinated Debt Equity Ratio TTM Total equity and liabilities 54.172 50.354
/ Investments – Income and Return Investment Income Q2 2020 in ISK m. 784 43 1.612 - Highest investment income and return since listing -93 - Highest resturn from Listed equities – good return also other bonds and government bonds - Foreign credit funds have positive effect on 552 investment income from other bonds - Income from other equities negative due to lower value on unlisted equities and private equity funds 327 - Duration 4,2 years og 34% of the fixed income 0 portfolio is index linked at end of Q2 2020 Cash Gov Bonds Other Bonds Listed Equities Other Equities Other Inv. Income TOTAL Investment Assets - Breakdown Return on Investments 8,2% 40,1% 30.6.2020 301.3.2020 37,2% 28,5% 27,2% 4,4% 4,2% 4,0% 20,4% 18,9% 11,1% 10,0% 4,3% 2,4% Cash Gov Bonds Other Bonds Listed Equities Other Equities Q2 2019 6M 2020 6M 2019 Q2 2020
/ Investment Assets Investment Assets 38 ISK BN. Matching Portfolio – Largest investments in ISK m. Cash Matching Portfolio 2.086 LSS150434 4% 1.930 RIKB 25 0612 ISK 21 bn. 1.270 RIKB 28 1115 1.254 RIKB 31 0124 937 ARION CB 24 892 ARION CB 22 Gov Bonds 45% 866 Other Bonds ISLA CB 23 51% 847 LBANK CB 23 784 RVKN 35 1 30.06.2020 774 RIKB 22 1026 31.03.2020 Free Portfolio – Largest Investments in ISK m. Free Portfolio 936 FESTI ISK 17 bn. 935 KVIKA Other 919 HAGA Bonds 813 SIMINN 25% Listed 698 ICESEA Equities 682 47% ARION 664 CORIPHARMA 30.06.2020 652 Other Equities JÚPÍTER IFIF 28% 582 EIK 31.03.2020 572 AKTA HS1
/ Solvency Solvency Ratio - Own funds increases due to the quarter‘s profit 1,8 1,7 - Market risk increases due to the increase of the 1,6 equity portfolio as well as the increase of the 1,57 1,5 symmetric adjustment 1,4 - Solvency capital requirements decreases due to 1,3 seasonal decreases of risks and in addition 1,2 changes in the loss absorbing capacity of 1,1 deferred taxes . 1,0 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 Solvency Ratio Lower Limit Upper Limit Eligible Own Funds Changes in SCR 12.000 78 755 18.000 10.042 975 9.920 -46 16.000 14.666 10.000 -954 14.000 8.000 12.000 10.000 6.000 8.000 4.000 6.000 4.000 2.000 2.000 0 0 30.03.2020 Profit Other 30.06.2020 30.03.2020 Market Risk Insurance Risk Other 30.06.2020
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