Alm Brand Results for Q1 2015 Webcast presentation 12 May 2015
G R O U P Financial highlights of Q1 2015 Pre-tax profit: DKK 202m Forward-looking activities: Pre-tax profit: DKK 276m Non-life Insurance Life and Pension Banking Pre-tax profit: DKK 257m Pre-tax profit: DKK 26m Pre-tax profit: DKK 6m • CR: 80.1 • Risk result: DKK 13m • Writedowns: DKK 6m • Run-off gain: 10.1 • Bonus potential: DKK 1.1bn • Growth in lending • Expense ratio: 16.3% • Bonus rate: 11.5% • Growth in full-service • Premium growth: 0.2% customers Winding-up activities: Loss: DKK 74m • Writedowns: DKK 63m 2
G R O U P Comments on Q1 Weather-related expenses in line with expectations despite two storms in January Satisfactory underlying combined ratio supported by benign winter New model for provisions on workers’ compensation insurances Increased activity in the bank • But results negatively impacted by low/negative interest rates and excess liquidity High writedowns on agricultural customers 3
G R O U P Customers First Group NPS 33 31 30 30 29 27 26 24 23 23 22 18 18 Group NPS reached a new high in Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2012 2013 2014 2015 Dedicated customer focus since 2012 Retention rate – Non-life Insurance 92% More than 400 employees have 91% attended the internal customer 90% service training programme 89% Retention rate declining due to 88% competition 87% • but remains satisfactory 86% Dec/11 May/12 Oct/12 Mar/13 Aug/13 Jan/14 Jun/14 Nov/14 Apr/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 257 12 164 143 25 Pre-tax profit of DKK 257m 132 10 245 • Technical result better than expected – Combined ratio of 80.1 139 135 133 – Combined ratio excl. run-offs of 90.2 • Positive investment return -3 – Satisfactory returns on mortgage deeds 2012 2013 2014 2015 and equities Q1 5
N O N - L I F E I N S U R A N C E Combined ratio better than Combined ratio expected Claims ratio incl. reinsurance Gross expense ratio Underlying combined ratio Combined ratio of 80.1 89.4 89.2 88.9 - Better than expected 80.1 82.0 81.8 81.5 81.1 • Run-off gains improved CR by 10.1 ppts 15.7 16.8 16.8 – Approx. half was related to the new model on workers’ compensation insurances 16.3 • Weather-related and major claims better than expected Underlying combined ratio of 81.5 73.2 72.6 72.4 63.8 • Discounting increased CR by 0.7 ppt • Number of claims down by 3.7% – Very few theft claims – Benign winter resulted in few motor claims • Higher average claims 2012 2013 2014 2015 Expense ratio down Y/Y Q1 • Lower than expected 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 10.3 Major claims down by 0.6 ppt Y/Y 7.1 Below average annual expectation of 7-8% 5.7 5.1 • Especially commercial insurances have developed favourably 2012 2013 2014 2015 Q1 Major claims ratio Average expectation (7-8%) Weather-related claims ratio Weather-related claims excl. reinstatement up by 2.5 ppts Y/Y In line with normal expectation of 3-4% 0.9 3.6 3.6 2.9 • Impacted by two storms in January 1.3 1.1 • Otherwise benign winter 2012 2013 2014 2015 Q1 Weather-related claims ratio Reinstatement Average expectation (3-4%) 7
N O N - L I F E I N S U R A N C E Premiums still impacted by Premium income stronger competition DKKm Private Commercial 1,239 1,241 1,225 1,195 590 599 587 564 Premium income up by 0.2% Y/Y • Private down by 1.0% – Negatively impacted by lower average premiums especially on motor insurances – Retention rate has been falling due to competition but has remained at a satisfactory 649 638 642 631 level (just under 90%) • Commercial up by 1.6% – Positively impacted by higher average premiums due to ongoing rewriting of building insurances 2012 2013 2014 2015 – Slight growth in several other segments Q1 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 90.0 87.8 86.3 85.0 18.0 18.2 17.1 15.6 Combined ratio of 86.3 - Improved by 3.7 ppts Y/Y Higher weather-related and major claims • Storms in January • Higher major claims 72.0 69.4 69.6 69.2 • Run-off gains primarily on property and fire – Improved CR by 5.5 ppts (up by 2.7 ppts Y/Y) Underlying business developing positively • Very satisfactory development in motor and property insurances • Increased frequency on travel insurance after introduction 2012 2013 2014 2015 of extended coverage Q1 – Up by 30% in line with expectations 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 93.2 91.0 88.5 15.7 15.3 15.6 73.5 15.4 Combined ratio of 73.5 - Improved by 15.0 ppts Y/Y • Run-off gains improved CR by 15.0 ppts (up by 13.1 ppts 77.5 75.7 72.9 Y/Y) 58.1 – Primarily related to new model on workers’ compensation insurances • Weather-related and major claims in line with Q1 2014 – Lower major claims – Weather-related claims impacted by storms in January 2012 2013 2014 2015 Premiums positively affected by rewriting of fire and property Q1 insurances 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 27 26 1 23 1 7 21 2 Pre-tax profit of DKK 26m - Up by DKK 3m Y/Y 26 22 • Satisfactory risk result 19 19 • Growth in total pension contributions • Return on investments allocated to equity positively affected by falling interest rates Satisfactory return on policyholders’ funds 2012 2013 2014 2015 • Collective bonus potential up by DKK 174m Q1 • Bonus rate improved to 11.5% in Q1 2015 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 529 Investment schemes 465 105 75 330 304 Total pension contributions up by 13.7% 56 243 212 75 89 Pension premiums up by 8.6% Y/Y 53 • Single premiums up by 14.8% • Regular premiums up by 1.7% – Most of the company’s capital pension schemes 185 181 176 178 have now been converted into other pension products 2012 2013 2014 2015 Unguaranteed investment schemes in the bank Q1 up by 40.1% 12
L I F E A N D P E N S I O N Profit better than expected Profit split* DKKm Expense and risk results Group life Interest result Result of portfolios without bonus entitlement Return on investments allocated to equity Change to shadow account 27 26 1 1 19 23 3 7 2 3 3 1 1 4 4 Return on equity investments 4 23 • Better than expected and supported by falling 19 16 interest rates 11 Expense and risk results incl. group life -1 -1 -1 -1 • Risk result slightly below Q1 2014 -4 – Due to result of group life insurance business, which was previously partly recognised as risk result • Negative but satisfactory expense result – Down by DKK 3m Y/Y 2012 2013 2014 2015 – Offering some of the industry’s lowest costs to customers Q1 * 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 Investment return - Very satisfactory return and improved bonus rate Interest rate group U74* Total 0 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’ 4.00 5.00 5.00 6.00 savings, 2015 Investment assets 0.1 5.9 1.9 1.4 3.8 13,1 (DKKbn) Strong bonus potential 13.8 18.6 6.8 4.6 11.5 Bonus rate (%) • Average bonus rate of 11.5% 4.6 5.2 3.0 3.4 4.3 Return (% YTD) • Attractive bonus rate for new policyholders of 13.8% 100% 58% 51% 74% 78% 65% Bonds 0% 26% 21% 9% 4% 16% Equities 0% 16% 13% 10% 8% 12% Property Rate on policyholders’ savings 0% 0% 15% 7% 10% 7% Fixed-income derivatives • Highest rate on private *Portfolios without bonus entitlement policyholders’ savings in Denmark 14
B A N K I N G Pre-tax profit B ANKING DKKm Highlights Forward-looking activities Winding-up activities 31 Pre-tax loss of DKK 68m 22 22 6 Improved by DKK 45m Q/Q -14 Forward-looking activities • Profit of DKK 6m -74 -75 -77 • Normalised writedowns for the period -85 • Results positively affected by customers’ conversion of mortgage loans and increased lending -99 • Growth in full-service customers and lending -68 -53 • Adversely affected by the very low or even negative -46 -63 interest rates -113 Winding-up activities Q1 Q2 Q3 Q4 Q1 • Loss of DKK 74m 2014 2015 • Writedowns of DKK 63m – Primarily related to agriculture 15
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