Banking | Insurance | Pension Results for Q2 2016 Webcast presentation 25 August 2016
G R O U P Financial highlights of Q2 2016 Pre-tax profit: DKK 249m Forward-looking activities: Pre-tax profit: DKK 249m Non-life Insurance Life and Pension Banking Pre-tax profit: DKK 221m Pre-tax profit: DKK 26m Pre-tax profit: DKK 15m • CR: 86.2 • Growth in regular • Writedowns: Reversal of • Expense ratio: 17.5 premiums: 4.4% DKK 3m • Premium growth: -1.2% • Bonus rate: 18.4% • Growth in retail lending and in full-service customers Winding-up activities: Pre-tax profit: DKK 0 • Writedowns: DKK 13m 2
G R O U P Comments on Q2 Financial highlights, H1 Group Pre-tax profit: DKK 483m Non-life Insurance Pre-tax profit: DKK 426m • CR: 84.0 • Expense ratio: 16.7 Life and Pension More customers in banking, insurance and Pre-tax profit: DKK 55m pension rug • But prices are under pressure, especially in Banking insurance Pre-tax profit: DKK 23m , Positive investment results in the quarter despite Winding-up activities of financial turmoil and Brexit Pre-tax profit: DKK 6m 3
G R O U P Customers First Group NPS 37 36 36 35 34 33 31 29 30 30 27 26 24 22 23 23 Customer satisfaction measured by NPS reached a 18 18 new high in Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 New CRM system will be fully 2012 2013 2014 2015 2016 commissioned for private customers in H2 Retention rate – Non-life Insurance • First feedback from customers is very positive Commercial Private 92% rug Very satisfactory retention rate 91% 90% • Improving for private 89% customers , 88% • Positive effect from customer 87% loyalty programmes 86% 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 Investment return after technical interest Technical result 420 426 28 229 188 212 221 455 31 e 398 49 eller 226 222 198 172 Pre-tax profit of DKK 221m in Q2 • Positive investment return -10 • Significantly lower interest rates in -35 -38 combination with Danish bond yields falling more than euro yields • Lower technical result but still better than 2013 2014 2015 2016 2015 2016 Q2 H1 expected Note: Figures for 2013 and 2014 based on previous accounting principles 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 86.2 84.5 84.0 82.6 Combined ratio of 86.2 82.2 81.8 17.5 16.4 Better than expected 16.8 15.9 16.0 16.1 + Run-off gains improved CR by 8.5 ppts excl. run-off gains on risk margin 68.8 68.1 66.7 66.2 67.3 65.8 + Weather-related claims lower than expected ÷ Major claims higher than expected ÷ Lower average premiums 2013 2014 2015 2016 2015 2016 Q2 H1 Underlying combined ratio of 83.3 Underlying combined ratio • Significant increase in claims in June 83.6 – The level normalised again in July and is expected 83.3 81.4 to remain at a normal level for the rest of 2016 80.1 rug 79.1 • Lower average claims expenses partly offset increase in 76.8 number of claims , Expense ratio up Y/Y • Higher expenses related to internal projects 2013 2014 2015 2016 2015 2016 • The level is as expected Q2 H1 6 Note: Figures for 2013 and 2014 based on previous accounting principles
N O N - L I F E I N S U R A N C E Weather-related Major claims ratio and major claims 8.5 7.8 7.7 Major claims up by 0.7 ppt Y/Y 6.0 Above expected range of 7-8% 3.7 • More major claims than expected on commercial customers 2013 2014 2015 2016 2016 • Claims impacted by three large fire incidents Q2 H1 • Major claims totalled DKK 106m Major claims ratio Average expectation (7-8%) Weather-related claims ratio Weather-related claims excl. reinstatement up by 1.6 ppts Y/Y Below normal expectation of 3-4% 6.6 0.1 rug • Impacted by a period with heavy rains and minor 0.3 cloudbursts 2.5 1.7 1.6 0.9 • Level still below normal expectation , -0.1 • Net expenses totalled DKK 31m 2013 2014 2015 2016 2016 Q2 H1 Reinstatement Weather-related claims ratio Average expectation (3-4%) 7 Note: Figures for 2013 and 2014 based on previous accounting principles
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 1,266 1,263 1,258 1,247 Premium income down by 1.2% Y/Y 606 609 Private down by 1.2% 600 601 • Highly competitive market • More insurances sold • But at lower average prices • Price pressure primarily on motor insurances • Increased use of price differentiation • Improved retention rate again in Q2 2016 658 660 654 646 Commercial down by 1.2% rug • Commercial market very competitive • Sales higher than expected , • Lower average premiums on agricultural and motor insurances in particular 2013 2014 2015 2016 • Customer retention still at a high level Q2 8 Note: Figures for 2013 and 2014 based on previous accounting principles
N O N - L I F E I N S U R A N C E Private Combined ratio - Very satisfactory results Gross expense ratio Claims ratio incl. reinsurance 86.6 85.7 85.5 85.0 82.2 81.7 18.5 17.2 17.4 18.7 18.1 17.8 Combined ratio of 85.7 Worsened by 0.7 ppt Y/Y Lower weather-related and major claims • Impacted CR by 2.8 ppts (down by 1.3 ppts Y/Y) 68.3 68.1 67.6 67.0 64.1 63.9 Higher run-off gains on claims • Improved CR by 6.0 ppts rug Underlying business deteriorated in Q2 • Higher claims frequency in June particularly , – Especially on travel, property and contents insurance 2013 2014 2015 2016 2015 2016 • Trend partly offset by lower average claims expenses Q2 H1 • Expense ratio up by 1.3 ppts Note: Figures for 2013 and 2014 based on previous accounting principles 9
N O N - L I F E I N S U R A N C E Commercial Combined ratio - Very satisfactory results Gross expense ratio Claims ratio incl. reinsurance 86.7 86.5 82.9 82.0 79.2 78.0 16.1 15.6 13.6 14.1 14.5 Combined ratio of 86.7 14.9 Worsened by 7.5 ppts Y/Y Higher run-off gains on claims • Run-off improved CR by 11.2 ppts (up by 2.8 ppts Y/Y) Weather-related and major claims up by 6.1 ppts Y/Y 70.6 70.9 • Heavy rains and higher number of claims 69.3 67.9 64.7 63.1 • More major claims, also impacted by three large fire incidents – Impacted CR by 16.1 ppts (up by 3.2 ppts Y/Y) rug Underlying business • Underlying business deteriorated Y/Y , • Higher claims frequency in June particularly 2013 2014 2015 2016 2015 2016 • Higher average claims expenses on property and contents Q2 H1 insurances Note: Figures for 2013 and 2014 based on previous accounting principles 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 Return on investments allocated to equity Underwriting profit/loss 55 5 40 2 Pre-tax profit of DKK 26m 27 e 26 1 Up by DKK 12m Y/Y 2 50 22 eller 0 14 38 • Satisfactory underwriting profit 26 24 • Up by DKK 5m Y/Y 22 19 • Return on investments allocated to equity favourably impacted by lower interest rate level -5 Bonus rate • Bonus rate is now calculated based on both 2013 2014 2015 2016 2015 2016 collective and individual bonus potentials Q2 H1 • Bonus rate of 18.4% 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 421 412 395 108 114 Pension contributions up by 2.3% 117 301 • From a very high level Pension premiums up by 4.9% Y/Y 110 161 • Single premiums up by 5.4% 152 139 • Increased fee when making single payments • Regular premiums up by 4.4% 56 • Target of 5% growth for FY2016 rug 152 Unguaranteed investment schemes in the bank 146 139 135 down by 4.7% , • Typically negatively impacted by financial market turmoil 2013 2014 2015 2016 • Development not fully satisfactory Q2 12
L I F E A N D P E N S I O N Strong risk result in Q2 Profit split* DKKm 25 20 18 Expense, risk and group life results 10 • Very satisfactory risk result up by DKK 4m • Includes part of group life results in 2016 3 4 4 5 4 • Negative expense result as expected 2 1 0 1 • But improved by DKK 6m Y/Y 0 0 Interest result up by DKK 1m Y/Y -5 • Principles for estimating interest result adjusted in 2016 rug Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2013 Q2 2014 Q2 2015 Q2 2016 • Lifted by 5 bps to 20 bps , Return on investments allocated to equity Expense, Interest Result of Return on risk and result portfolios investments • Favourably impacted by lower interest rate level in group life without allocated to results bonus equity Q2 2016 entitlement * Profit before tax of Life and Pension, which includes post-tax 13 return on investment in the EMD Local Currency investment fund
B A N K I N G Pre-tax profit B ANKING DKKm Highlights Profit before writedowns Writedowns 17 15 Pre-tax profit of DKK 15m 27 3 Up by DKK 23m Y/Y e 3 8 eller • Continued growth in full-service customers and 1 12 lending 8 7 – 13% more full-service customers Y/Y 0 • Profit as expected -5 – Expectations for H2 adjusted due to lower -8 -10 prices on investment products and continued low/negative interest rates -8 Q2 Q3 Q4 Q1 Q2 • Reversal of writedowns again in Q2 2016 2015 2016 – Normal underlying loss ratio of 0.6% p.a. 14
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