Alm Brand Results for Q3 2015 Investor presentation December 2015
G R O U P Financial highlights of Q3 2015 Pre-tax profit: DKK 230m Outlook raised Forward-looking activities: Pre-tax profit: DKK 312m Non-life Insurance Life and Pension Banking Pre-tax profit: DKK 312m Pre-tax profit: DKK 9m Pre-tax profit: DKK 3m • CR: 72.4 • Risk result: DKK 11m • Writedowns: DKK 5 m • Expense ratio: 15.5 • Bonus potential: DKK 0.8bn • Growth in lending • Premium growth: 0.0% • Bonus rate: 8.2% • Growth in full-service customers Winding-up activities: Loss: DKK 82m • Writedowns: DKK 74m 2
G R O U P Comments on Q3 Financial highlights, 9M Group Pre-tax profit: DKK 536m Non-life Insurance Negative impact from turbulent financial Pre-tax profit: DKK 763m markets • CR: 78.6 • Expense ratio: 15.9 More customers and increased lending in the Life and Pension bank Pre-tax profit: DKK 49m Initiation of a share buyback programme of up to Banking DKK 300m Pre-tax profit: DKK 1m Pre-tax profit outlook FY2015 Winding-up activities • DKK 600-650m (from DKK 450-550m) Pre-tax loss: DKK 234m 3
G R O U P Customers First Group NPS 36 35 33 31 30 30 29 27 26 24 23 23 22 18 18 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 2014 2015 Retention rate – Non-life Insurance New CRM system will improve 92% customer service across 91% business segments substantially 90% 89% Retention rate declining due to competition 88% • but remains high and 87% satisfactory 86% dec-08 dec-09 dec-10 dec-11 dec-12 dec-13 dec-14 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 763 449 807 312 266 228 29 487 352 105 245 237 130 Q3 pre-tax profit of DKK 312m -17 -25 -40 -38 -44 • Technical result exceptionally good • Negative investment return due to losses on 2012 2013 2014 2015 2014 2015 equities and wider spread between mortgage Q3 9M bonds and government bonds 5
N O N - L I F E I N S U R A N C E Combined ratio exceptionally Combined ratio Claims ratio incl. reinsurance good Gross expense ratio 89,9 87,2 81,7 80,2 78,6 14,4 15,7 72,4 Combined ratio of 81.1 excl. run-off 15,5 15,1 15,9 15,5 - Better than expected • Run-off gains improved CR by 8.7 ppts to 72.4 75,5 71,5 66,2 65,1 62,7 – Gains on workers’ compensation and motor 56,9 liability • Very few major claims 2012 2013 2014 2015 2014 2015 Q3 9M Underlying combined ratio of 75.0 Underlying combined ratio • Discounting increased CR by 0.2 ppt • More claims but lower average claims 78,9 78,3 77,2 76,9 75,0 74,1 • Negatively impacted by lower average premium • Positively affected by an adjustment of provisioning models for claims relating to 2015 Expense ratio up slightly Y/Y 2012 2013 2014 2015 2014 2015 • 2014 positively impacted by cost phasing Q3 9M • Level as 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 7,4 6,7 6,6 Major claims down by 3.7 ppts Y/Y 5,3 Below expected range of 7-8% 3,0 • Very few major claims 2012 2013 2014 2015 2015 Q3 9M Major claims ratio Average expectation (7-8%) Weather-related claims ratio Weather-related claims excl. reinstatement 0,3 down by 3.8 ppts Y/Y Within normal expectation of 3-4% 6,9 • A few minor cloudbursts 3,1 2,9 2,5 • Q3 2014 was impacted by cloudburst 0,7 -0,1 Q3 9M 2012 2013 2014 2015 2015 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 impacted by Premium income intensified competition DKKm Private Commercial 1.281 1.277 1.277 1.229 613 609 620 578 Premium income unchanged Y/Y • Private down by 1.6% – Lower prices due to continued price competition – Retention rate declining due to competition but 668 668 657 651 stilll at a satisfactory level • Commercial up by 1.8% – Growth primarily on workers’ compensation and 2012 2013 2014 2015 property Q3 – 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 87,4 86,0 81,0 78,8 17,1 16,6 16,6 17,9 Combined ratio of 78.8 - Improved by 7.2 ppts Y/Y Very few weather-related claims • Weather-related and major claims below expected level 70,3 69,4 • Run-off gains higher Y/Y 64,4 60,9 – Improved CR by 7.3 ppts (up by 9.7 ppts Y/Y) Underlying business still satisfactory • Deteriorated Y/Y • Higher claims frequency on accident, travel and motor insurance 2012 2013 2014 2015 • Lower average premium, especially on motor insurance, Q3 had a negative effect 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 94,2 12,1 79,4 75,5 13,5 65,6 13,9 Combined ratio of 65.6 13,0 - Improved by 28.6 ppts Y/Y Weather-related and major claims 13.5 ppts lower Y/Y 82,1 • Weather-related claims in line with expectations • Major claims below expectations 65,9 61,6 • Run-off gains improved CR by 10.2 ppts (up by 4.9 ppts Y/Y) 52,6 – Primarily related to workers’ compensation Deteriorating underlying business • Underlying claims ratio below expected level • Positively affected by an adjustment of provisioning models on current-year claims 2012 2013 2014 2015 • Higher claims frequency but lower average claims Q3 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 70 4 49 1 66 Pre-tax profit of DKK 9m - Down by DKK 11m Y/Y 22 48 21 20 0 2 2 • Results impacted by financial market turmoil 9 22 • DKK 10m transferred to shadow account 19 18 • Expected to be reversed in Q4 10 -1 Bonus potential remains attractive 2012 2013 2014 2015 2014 2015 • Collective bonus potential down by DKK 214m Q3 9M • Bonus rate reduced to 8.2% 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 1.288 1.160 318 281 Total pension contributions up by 15.3% Pension premiums up by 17.0% Y/Y 529 • Single premiums up by 37.7% 448 • Regular premiums unchanged • Growth of 2.3% YTD 347 300 283 267 Unguaranteed investment schemes in the bank 99 89 75 77 441 431 up by 11.5% 134 85 97 72 123 118 114 114 2012 2013 2014 2015 2014 2015 Growth expected from new corporate concept offering Q3 9M pension schemes to small companies 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 24 1 2 22 0 0 2 9 19 1 2 4 + Expense, risk and group life results 5 28 • Expense result positively affected by recognition 21 of reinsurance commission 15 12 ÷ Interest result -1 -1 -5 • DKK 10m transferred to shadow account due to financial market turmoil -2 -10 • Profit of DKK 4m before transfer to shadow account 2012 2013 2014 2015 + Portfolios without bonus entitlement Q3 * 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 impacted by financial turmoil Interest rate group U74* Total Bonus potential 0 1 2 3 Technical interest rate 0.5-1.5 1.5-2.5 2.5-3.5 3.5-4.5 • Average bonus rate of 8.2% Rate on policyholders’ • Bonus rate down by 2.3 ppts 4.00 5.00 5.00 6.00 savings, 2015 Rate on policyholders’ – Primarily due to losses on 4.00 5.00 5.00 6.00 savings, 2016 equities Investment assets 0.1 5.5 1.7 1.2 3.5 12.0 (DKKbn) – Still strong 8.8 17.0 5.6 2.7 8.2 Bonus rate (%) • Attractive bonus rate for new Return (% YTD) 1.8 -0.9 -1.0 -1.3 -0.7 policyholders of 8.8% 100% 62% 62% 78% 81% 69% Bonds 0% 24% 22% 8% 3% 16% Equities Rate on policyholders’ savings 0% 14% 13% 11% 9% 12% Property • Remains high for 2016 0% 0% 3% 3% 7% 3% Fixed-income derivatives *Portfolios without bonus entitlement • Supporting growth 14
B A N K I N G Pre-tax profit B ANKING DKKm Highlights Profit before writedowns Writedowns 31 34 6 3 12 8 0 0 -3 -5 -6 -8 Pre-tax profit of DKK 3m -14 Up by DKK 11m Q/Q -8 -14 • Turbulent financial markets – Negative value adjustments on bond portfolio Q3 Q4 Q1 Q2 Q3 2014 2015 • Writedowns in line with expectations • Growth in full-service customers and lending 15
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