Alm Brand Results for FY2015 Webcast presentation 2 March 2016
G R O U P Financial highlights of FY2015 Pre-tax profit: DKK 652m Forward-looking activities: Pre-tax profit: DKK 1,001m Non-life Insurance Life and Pension Banking Pre-tax profit: DKK 959m Pre-tax profit: DKK 79m Pre-tax profit: DKK 18m • CR: 80.8 • Growth in regular premiums: • Writedowns: DKK 21m • Expense ratio: 16.0 3.8% • Growth in lending • Premium growth: -0.3% • Bonus potential: DKK 942m • Growth in full-service • Bonus rate: 9.7% customers Winding-up activities: Loss: DKK 349m • Writedowns: DKK 306m 2
G R O U P Comments on Q4 Financial highlights, Q4 Group Pre-tax profit: DKK 116m Non-life Insurance Negative impact from several weather-related events Pre-tax profit: DKK 196m • Three storms, snowload and cloudbursts • CR: 87.6 • Impacted CR negatively by 11.3 ppts including • Expense ratio: 16.1 reinstatement – Alm. Brand has a large property exposure Life and Pension Pre-tax profit: DKK 30m Positively affected by run-off gains • Impacted CR by 10.4ppts Banking Pre-tax profit: DKK 17m Better investment results in all three business segments Winding-up activities More customers and increased lending in the bank Pre-tax loss: DKK 115m 3
G R O U P Customers Group NPS First strategy 36 35 34 33 31 29 30 30 27 26 24 23 23 Customer satisfaction continued 22 to improve in 2015 18 18 New CRM system will Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 substantially improve customer 2012 2013 2014 2015 service across business segments Retention rate – Non-life Insurance 92% Retention rate declining due to 91% competition 90% • but remains high and 89% satisfactory 88% Very few insurance complaints 87% filed 86% Dec/08 Dec/09 Dec/10 Dec/11 Dec/12 Dec/13 Dec/14 Dec/15 4
N O N - L I F E I N S U R A N C E Pre-tax profit N ON - LIFE I NSURANCE DKKm Highlights Technical result Investment return after technical interest 959 853 30 763 651 121 964 823 744 642 202 196 39 257 157 Pre-tax profit of DKK 959m -5 -55 -93 • Technical result exceptionally good • Negative investment return due to losses on equities and wider spread between mortgage 2012 2013 2014 2015 2014 2015 FY Q4 bonds and swap rates 5
N O N - L I F E I N S U R A N C E Combined ratio Combined ratio Claims ratio incl. reinsurance Gross expense ratio 87.4 87.6 85.5 83.3 80.8 79.9 Combined ratio of 80.8 16.0 16.1 15.6 16.2 16.0 15.1 - Better than expected + Run-off gains improved CR by 8.6 ppts 71.4 71.5 69.9 67.1 64.8 64.8 – 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 2012 2013 2014 2015 2014 2015 Q4 Underlying combined ratio Underlying combined ratio of 79.4 81.2 79.7 • Discounting increased CR by 0.6 ppt 79.4 78.8 • Higher claims frequency partly offset by slight decline 77.0 in average claim 72.8 • Negatively impacted by lower average premium Expense ratio up Y/Y 2012 2013 2014 2015 2014 2015 • Expenses impacted by investment in new CRM Q4 system 6
N O N - L I F E I N S U R A N C E Weather-related Major claims ratio and major claims 7.2 6.2 5.8 Major claims down by 0.5 ppt Y/Y 5.5 5.3 Below expected range of 7-8% • Very few major claims • Major claims totalled DKK 269m 2012 2013 2014 2015 2015 • DKK 23m below 2014 FY Q4 Major claims ratio Average expectation (7-8%) Weather-related claims ratio Weather-related claims excl. reinstatement up by 0.2 ppt Y/Y 1.5 Above normal expectation of 3-4% 0.3 9.8 1.1 1.8 • The year impacted by 8 major weather-related 0.2 4.4 4.2 3.7 events 2.1 • Storms, snow, cloudbursts 2012 2013 2014 2015 2015 • Gross expenses for these events were FY Q4 DKK 250m Weather-related claims ratio Reinstatement • Net expenses totalled DKK 221m Average expectation (3-4%) 7
N O N - L I F E I N S U R A N C E Premiums impacted by Premium income intensified competition DKKm Private Commercial 5,058 5,043 5,031 4,866 2,416 2,405 2,438 2,287 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 2,626 2,642 2,579 2,605 still at a satisfactory level • Commercial up by 0.9% – Customer retention remained at a stable high 2012 2013 2014 2015 level throughout 2015 FY – Average prices still impacted by competition 8
N O N - L I F E I N S U R A N C E Private Combined ratio - Very satisfactory results Claims ratio incl. reinsurance Gross expense ratio 86.5 86.0 85.2 84.8 17.8 17.7 17.7 17.4 Combined ratio of 86.0 - Up by 1.2 ppts Y/Y Higher weather-related and major claims • Up by 2 ppts Y/Y 68.7 68.3 – Major claims higher in the first months of the year 67.5 67.4 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 2012 2013 2014 2015 • Lower average premium, especially on motor insurance • Expense ratio up by 0.3 ppt FY 9
N O N - L I F E I N S U R A N C E Commercial Combined ratio - Very satisfactory results Claims ratio incl. reinsurance Gross expense ratio 88.4 86.0 81.3 14.0 13.6 75.4 14.6 14.2 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 74.4 72.4 66.7 – primarily related to a new model on workers’ 61.2 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 2012 2013 2014 2015 assessment of customer risk FY • Expenses were slightly better than expected 10
L I F E A N D P E N S I O N Pre-tax profit L IFE AND P ENSION DKKm Highlights Underwriting profit/loss Return on investments allocated to equity 90 86 3 12 79 78 2 Pre-tax profit of DKK 79m - Up by DKK 1m Y/Y 83 80 78 76 • Satisfactory underwriting profit – Up by DKK 4m Y/Y • Return on investments allocated to equity impacted by financial market turmoil Bonus potential remains attractive -1 • Collective bonus potential up by DKK 30m 2012 2013 2014 2015 • Bonus rate reduced to 9.7% 11
L I F E A N D P E N S I O N Pension contributions Total pension contributions DKKm Regular premiums Single premiums Investment schemes 1,741 1,645 430 402 1,273 Total pension contributions up by 5.8% 1,235 345 Pension premiums up by 5.5% Y/Y 332 655 • Single premiums up by 7.3% 611 – Increased from an already high level 302 285 • Regular premiums up by 3.8% – Target for 2015 reached – New corporate concept expected to support further growth 656 626 632 618 Unguaranteed investment schemes in the bank up by 6.9% 2012 2013 2014 2015 12
L I F E A N D P E N S I O N Profit impacted by financial market Profit split* DKKm turmoil Expense, risk and group life results Interest result Result of portfolios without bonus entitlement Return on investments allocated to equity Change to shadow account 90 12 86 11 3 77 78 11 2 6 16 17 Expense, risk and group life results • Down by DKK 6m Y/Y • Negative expense result 81 74 • As expected and related to growth strategy 62 56 Interest result up by DKK 1m Y/Y • Stable results despite financial market turmoil -1 -2 -3 -9 -5 Improved results from portfolios without bonus entitlement 2012 2013 2014 2015 * Profit before tax of the parent company Alm. Brand Liv og 13 Pension A/S, which includes post-tax return on investment in the EMD Local Currency investment fund
L I F E A N D P E N S I O N Strong development despite financial market turmoil 942 912 827 Bonus potential • Bonus potential up by DKK 30m • Attractive bonus rate 587 – Average bonus rate of 9.7% – Bonus rate down by 454 0.1 ppt Y/Y 3.65% – Bonus rate for new policyholders of 10.3% 4.00% 4.00% 4.00% 3.65% 3.00% Rate on policyholders’ savings • Remains high for 2016 • Supporting growth 2011 2012 2013 2014 2015 2016 Bonus potential Rate on policyholders' funds (new agreements) 14
B A N K I N G Pre-tax profit B ANKING DKKm Highlights Profit before writedowns Writedowns 61 18 78 39 28 10 Pre-tax profit of DKK 18m -17 -21 Down by DKK 43m Y/Y -57 -59 • 2014 impacted by one-off items -118 -47 • Turbulent financial markets deteriorated results in 2015 – Negative interest rates -105 – Adversely impacted by increased spread -90 between mortgage bonds and swap rates • Writedowns slightly higher than expected -164 – Includes reservation for expiry of interest-only periods on customers’ mortgages 2011 2012 2013 2014 2015 • Growth in full-service customers and lending 15
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