Alm. Brand Financial results H1 2013 Webcast presentation 22 - - PowerPoint PPT Presentation

1

• Alm. Brand

Financial results H1 2013

Webcast presentation

22 August 2013

2

Highlights of Q2 2013

G R O U P

• Strong CR of 84.5
• Few weather-related and major claims
• Positive run-off result
• Strong premium growth
• Weakened underlying business
• Net interest and fee income improved by lower funding costs and higher fee income
• Lower return on bond portfolio due to rising interest rates
• Losses and writedowns at DKK 91m
• Regular premiums up by 5.0% Y/Y
• Investment return negatively impacted by higher interest rates
• Strong collective bonus rate of 6.6%
• Profit of DKK 550m before losses and writedowns (unchanged)
• Non-life Insurance up by DKK 55m, Banking down by DKK 55m
• Estimated losses and writedowns maintained at DKK 300-400m
• DKK 200m injected into Alm. Brand Bank to repay DKK 200m of hybrid capital

Non-life Insurance Banking Life and Pension Outlook

H1: Pre-tax profit of DKK 319m before and DKK 136m after losses and writedowns Q2: Pre-tax profit of DKK 198m before and DKK 107m after losses and writedowns

3

Non-life Insurance

• Financial highlights in brief

Results Q2 2013

• Profit of DKK 229m
• Higher Investment return
• Premiums up by 4.3%
• CR better than expected due to:

Run-off gains (6.8ppts of CR) Weather-related claims Major claims ÷ Claims frequency ÷ Discounting effect

Results H1 2013

• Profit of DKK 372m
• High investment return
• Premiums up by 3.4%

N O N - L I F E I N S U R A N C E

Key figures/ratios (DKKm) Q2 H1 2012 2013 2012 2013 Gross premiums 1.206 1.258 2.401 2.483 Investment income 4 2 9 5 Claims expenses

• 744
• 789
• 1.715
• 1.620

Expenses

• 202
• 207
• 389
• 413

Reinsurance

• 47
• 66

50

• 124

Technical result 217 198 356 331 Investments return after technical interest

• 3

31 22 41 Profit before tax 214 229 378 372 Combined Ratio 82.3 84.5 85.5 86.8 Underlying Combined Ratio 78.6 83.6 80.2 82.7 67.5%

DKK 2,483m

4

93 94 95 96 97 98 99 100 101 dec-08 jun-09 dec-09 jun-10 dec-10 jun-11 dec-11 jun-12 dec-12 jun-13

Index

N O N - L I F E I N S U R A N C E

Trend in premium income

• Q2 premiums up by 4.3% y/y
• Private premiums up by 2.8%
• Commercial premiums up by 6.0%
• Retention rate improved since 2011
• Restored after notifications of

premium increases initiated in 2009/2010

631 640 651 657 638 658 564 566 578 579 587 600 1,195 1,206 1,229 1,236 1,225 1,258 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Gross premiums (DKKm) Private Commercial

Retention rate - Private

5

Underlying business

N O N - L I F E I N S U R A N C E

• Higher underlying CR Y/Y

+ Higher premiums ÷ More claims ÷ Discounting effect ÷ Higher reinsurance costs More claims in Q2

• Increase in especially in April and May
• Approx. half related to delayed

claims relating to Q1

• Glass claims on motor

insurances up by 32% Y/Y

• First half of 2013 on level with 2011

Note: Excluding workers’ compensation 86.9 88.4 82.5 78.6 83.6 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 80 85 90 95 100 105 110 115 2011 2012 2013 2011 2012 2013 Q2 H1 Number (index)

• Avg. claim (index)

Claims (index)

6

Major claims

Note: Major claims are defined as claims in excess of DKK 1m

N O N - L I F E I N S U R A N C E

• Major claims lower than

expected in Q2

• As expected for H1 since Q1

performance was impacted by fire claims

• Major claims up Y/Y
• Number of major claims

higher …

• …but average claims lower

20 40 60 80 100 120 140 160 Q2 2011 Q2 2012 Q2 2013 Number (index)

• Avg. claim (index)

Claims (index) 8.7 8.9 6.7 4.7 6.0 8.1 Q2 Q2 Q2 Q2 Q2 H1 2009 2010 2011 2012 2013 2013 Major claims ratio Average expectation (8%)

7

Weather-related claims

N O N - L I F E I N S U R A N C E

Note: Figures stated net of reinsurance recoveries

• Weather-related claims still below

normal

• All segments
• Weather-related claims still low
• Average claims dropped

significantly compared to 2012

• Mild weather
• No cloudbursts
• Few lightning claims

100 200 Q2 2011 Q2 2012 Q2 2013 Number (index)

• Avg. claim (index)

Claims (index)

2.1

• 3.6

2.4 2.1 1.7 1.5 Q2 Q2 Q2 Q2 Q2 H1 2009 2010 2011 2012 2013 2013 Weather-related claims ratio Average expectation (4%)

8

Expense ratio

N O N - L I F E I N S U R A N C E

• Expenses higher

than 2012

• Investments in

digitalisation

19.5% 18.9% 18.3% 17.6% 15.6% 16.3% 15.7% 15.9% 15.7% 16.2% 15.7% 16.2% 16.8% 16.6% 12% 14% 16% 18% 20% Q1 H1 Q1-Q3 FY Q1 H1 Q1-Q3 FY Q1 H1 Q1-Q3 FY Q1 H1 2010 2011 2012 2013 Target 2016 (15%)

9

2010

Note: Combined and expense ratios are stated at group level. Codan figures include Danish business only

N O N - L I F E I N S U R A N C E

• Alm. Brand among top performers
• Peer group comparison

Expense Ratio Combined Ratio

2011 2012 H1 2013

17.6 15.4 17.0 20.3 15.9 15.7 16.8 21.3 16.2 15.8 16.4 22.3 16.6 16.6 15.8 98.2 93.3 98.8 101.4 92.3 90.3 93.5 102.3 83.3 88.0 88.2 93.8 86.8 88.2 88.6

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• Alm. Brand Bank
• Financial highlights

B A N K I N G

Results Q2 2013

• Loss of DKK 44m before losses and writedowns

Operating profit before value adjustments up by DKK 18m

 Lower funding costs  Higher fee income

÷ Negative value adjustments on bonds, shares and derivatives ÷ Expenses related to properties taken over temporarily Loan book

• Winding-up portfolio down by DKK 153m

excluding losses and writedowns

• Losses and writedowns in line with Q1 2013 and

within expectations Results H1 2013

• Loss of DKK 79m before losses and writedowns
• Continuing activities: Loss of DKK 18m
• Discontinued activities: Loss of DKK 61m

Key figures/ratios (DKKm) Q2 Q3 Q4 Q1 Q2 H1 2012 2012 2012 2013 2013 2013 Interest receivable 179 177 164 152 145 297 Net interest and fee income 92 105 92 86 108 194 Value adjustments* 24

• 11

14

• 9
• 36
• 45

Losses and writedowns*

• 81
• 166
• 148
• 92
• 91
• 183

Profit/loss before tax

• 107
• 176
• 146
• 127
• 135
• 262

Profit/loss before tax and

• excl. losses and writedowns
• 26
• 10

2

• 35
• 44
• 79

Interest margin 1.3% 1.6% 1.4% 1.3% 1.7% 1.5%

*Credit related value adjustments included under losses and writedowns

10.2%

DKK 379m

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B A N K I N G

Income

• Interest income declined
• Reduction of loan book
• Higher net fees in Financial

Markets

• Inflow of new customers
• More business per

customer

• Return on bond portfolio

negatively impacted by higher interest rate and lower portefolio

• Negative value adjustments on

shares and derivatives

* Value adjustments of shares, mortgage deeds and derivatives

140 139 126 118 107 105 32 31 30 32 32 43 32 45 43 55 36 13 38 19

• 3

5

• 9

242 234 196 210 175 152 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 DKKm Interest on loans Net fees Return on bonds Other value adjustments*

12

B A N K I N G

Funding and interest margin

• Funding costs down by

DKK 18m Q/Q

• Repayment of bonds and

hybrid capital: DKK 14m

• Deposits: DKK 4m
• DKK 200m of hybrid capital to

be repaid in Q3 Improved interest margin in Q2

• Reduction of funding costs has

improved margin

1.9% 1.7% 1.7% 1.3% 1.4% 1.3% 1.6% 1.4% 1.3% 1.7% 0,0% 0,5% 1,0% 1,5% 2,0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013

Interest margin

128 118 102 104 98 80 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 DKKm Deposits and other payables Total subordinated debt Bonds issued Credit institutions and central banks

Interest expenses

13

Deposits and loan book

B A N K I N G

• Reduction of loans and

advances

• Deposit surplus reduced to

DKK 2.8bn

• Discontinued loan portfolio of

DKK 5.3bn

• Now mainly composed of
• Mortgage deeds
• Agriculture
• Commercial lending

Loan book

1.0 0.2 1.1 0.3 2.8 2.4 5.3 Continuing portfolio Agriculture Car finance Commercial lending Property development projects Mortgage deeds Discontinued loan portfolio DKKbn 10.2 9.6 9.2 8.7 8.5 8.3 10.1 10.5 10.6 11.3 11.4 11.1 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 DKKbn Loans and advances Deposits

14

Losses and writedowns still high

B A N K I N G

• Reversal of writedowns on commercial

lending again in Q2

• Real estate market continues to impact

private customers and mortgage deeds

• Still high writedowns on agriculture

20 20 29 27 78 19 26 18 27 32

• 18
• 7
• 2

2 2 43 75 53 52

• 25

25 50 75 100 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Continuing portfolio Agriculture Car finance Commercial lending Property development projects Total mortgage deeds DKKm

15

278 203 125 30 53 35 80

• 32
• 13
• 75

Continuing portfolio Agriculture Car finance Commercial lending Property development projects Mortgage deed financing Mortgage deeds Total, loan book Reversals and intra-group transactions Total, group DKKm 426 375 166 60 109 41 133

• 60
• 23
• 51

Continuing portfolio Agriculture Car finance Commercial lending Property development projects Mortgage deed financing Mortgage deeds Total, loan book Reversals and intra-group transactions Total, group DKKm

Loan book reductions

• Excl. losses and writedowns

B A N K I N G H1 2013 Q2 2013

Loan book reduced by DKK 278m in Q2

• Continuing portfolio DKK 125m

lower

• Private lending reduced by

DKK 21m

• Stable repayment in car finance

and commercial lending

• Funding to agriculture and project

development

• Net mortgage deeds declined by

DKK 115m

• Higher repayment Q/Q
• Equal to repayment of
• approx. 7% p.a. in H1

Total loan book reduction in H1: DKK 426m

16

Loan portfolio and credit losses

B A N K I N G

Loans Losses and writedowns 31.12 31.03 30.06 Share of FY Q1 Q2 H1 Loss DKKm 2012 2013 2013 portfolio 2012 2013 2013 2013 ratio Continuing portfolio 2.647 2.577 2.425 29,.4% 57 29 27 56 2.2% Lending to private customers 2.442 2.379 2.328 28.2% 57 28 30 58 2.4% Other loans and advances 205 198 97 1.2% 1

• 3
• 2
• 1.3%

Discontinued activities 5.642 5.472 5.256 63.5% 423 63 64 127 2.3% Agriculture 955 957 971 11.7% 156 26 18 44 4.6% Car finance 230 200 170 2.1%

• 1

0.0% Commercial lending 1.158 1.120 1.074 13.0% 73

• 18
• 7
• 25
• 2.2%

Property development projects 254 262 275 3.3% 1 2 2 0.8% Mortgage deed financing 115 106 66 0.8% 23 3 5 8 8.8% Mortgage deeds 2.930 2.827 2.700 32.6% 155 50 47 97 3.4% Equities 0.0% 16 1 1

• Total - excl. reverse transactions

8.289 8.049 7.681 92.9% 480 92 91 183 2.3% Reverse transactions including intra-group transactions 107 83 158 1.9%

• Total, group lending

8.396 8.132 7.839 94.8% 480 92 91 183 2.3% Minority interests 302 376 427 5.2%

• Total, pro rata

8.698 8.508 8.266 100.0% 480 92 91 183 2.2%

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B A N K I N G

Solvency

• Credit risk reduced by DKK

45m Q/Q and DKK 135m Y/Y

• Excess solvency
• 4.9ppts above bank

parent company solvency need

• Excess solvency lower:
• Result for Q2
• Reduction of

supplementary capital

• Capital injection of DKK 200m

in Q3 to be used to repay state-funded hybrid capital

• No immediate solvency

effects

1,342 1,266 1,226 1,213 1,176 1,131 349 225 297 261 165 180 101 100 97 85 124 122 1,792 1,591 1,620 1,559 1,465 1,433 3.5% 4.3% 3.6% 3.7% 6.4% 4.9% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 DKKm Credit risk Market risk Operational and other risks Excess solvency, Parent

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Life and Pension

• Financial highlights and key ratios

Results Q2 2013

• Satisfactory profit before tax of DKK 22m
• Strong expense and risk results
• Return on policyholders’ funds impacted by

rising interest rates in June

• Compared to the benchmark the return

was satisfactory

• More than half of customers with capital

pension schemes have responded, almost all of whom have decided to continue payments on the new retirement pension (Alderspension) Results H1 2013

• Very satisfactory profit of DKK 49m
• DKK 2m transferred to shadow accounts

L I F E A N D P E N S I O N

DKKm

Q2 H1 2012 2013 2012 2013

Return on investments allocated to equity

6 8 1

Result of portfolios without bonus entitlement

• 2
• 3

1

Risk premium

3 3 6 6

Expense and risk results

18 20 37 43

Calculated return on equity

25 23 48 51

Change to shadow account

2

• 1
• 2
• 2

Profit before tax

27 22 46 49

Shadow account balance

8 12 8 12

12.6%

DKK 465m

19

L I F E A N D P E N S I O N

Premium income

Income Q2 2013 Total pension contributions stable Y/Y

• Regular premiums up by 5.5% Y/Y
• Lower single premiums in Q2
• Large single payments in 2012
• Higher payments to investment schemes

Income H1 2013 Total pension contributions up by 4.1%

• Growth in both regular and single

premiums Growth target for regular premiums

• Regular premiums in H1 2013 up

by 5.3% Y/Y

• Target of a 12% increase between

2012 and 2016 on top of inflation

Note: Investment schemes are reported in the banking segment

128 135 304 320 78 56 131 145 96 110 171 166 302 301 606 631 2012 2013 2012 2013 Q2 H1 DKKm Regular premiums Single premiums Investment schemes

20

L I F E A N D P E N S I O N

Results

• Expense and risk results

remain strong

• Stable risk premium
• Return on equity impacted by

low interest rate level

• DKK 1m transferred to

shadow accounts in Q2 2013

• Relating to disability

19 18 28 16 23 20 3 3 2 3 3 3 2 6 1 3 1

• 1
• 2
• 5
• 1

1

• 4

2

• 2
• 1
• 1
• 1

19 27 24 20 27 22 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 DKKm Expense and risk results Risk premium Return on investments allocated to equity Result of portfolios without bonus entitlement Change to shadow account

21

L I F E A N D P E N S I O N

Investment returns

• Competitive rate on policy-

holders’ funds

• Strong bonus potential
• Average bonus rate of 6.6%
• Bonus rate for new policy-

holders of 10%

• Rising interest rates in June

resulted in a negative return of 1.5% in Q2

• Return H1 2013 of -0.2%
• Bonds -1.8% (-3.6% p.a.)
• Shares 8.3% (16.6% p.a.)
• Property 2.7% (6.4% p.a.)

U74* Interest rate group Total 1 2 3 Investment assets (DKKbn)

0.1 3.7 2.0 1.3 4.6 11.7

Rate on policyholders’ funds (%)

3.00 3.00 3.75 4.75

Bonus rate (%)

10.0 11.9 6.4 0.5 6.6

Bonds

100% 55% 55% 77% 83% 74%

Shares

0% 26% 23% 8% 3% 12%

Real estate

0% 19% 17% 12% 10% 12%

Interest derivatives

0% 0% 5% 3% 4% 2%

*Portfolio without bonus entitlement

22

Capital model

DKKm Capital base 31 Dec 2012 Capital base 31 Mar 2013 Capital base 30 Jun 2013 Consolidated equity 4,506 4,538 4,517 Tax assets

• 665
• 657
• 573

Supplementary capital 1,654 1,225 1,175 Total capital base for the group 5,495 5,106 5,119 Statutory capital requirement for the group, end

• f period

3,085 3,089 2,990 Excess relative to statutory capital requirement 2,410 2,017 2,129 Internal capital target 4,609 4,517 4,431 Excess relative to internal capital target 886 589 688 G R O U P

23

Outlook for 2013

G R O U P Profit of DKK 615m

• Lifted by DKK 55m
• CR of 89 (unchanged)
• Expense ratio of approx. 16.5

(unchanged)

• Growth of approx. 3%

(unchanged) Profit of DKK 75m

• Unchanged
• Modest growth in continuing

pension premiums

• Low return on investments

allocated to equity Loss of DKK 100m before losses and writedowns

• Lowered by DKK 55m
• Negative value adjustments
• Loan book reduction net of

losses and writedowns of DKK 0.6bn

• Losses and writedowns of

DKK 300-400m

Non-life Insurance Life and Pension Banking

Full-year pre-tax profit of DKK 550m before losses and writedowns (unchanged)

Other activities

• Expected cost of DKK 40m

24

• Alm. Brand

Highlights

• Non-life Insurance: Still strong profitability and good

investment results

• Life and Pension: Good result and growth in regular

premiums

• Banking: Still weak earnings
• An additional DKK 200m of state-funded hybrid capital to be

repaid

• Unchanged outlook for 2013 of DKK 550m profit before

losses and writedowns

G R O U P

25

Disclaimer

“The statements made in this presentation are based on current expectations, estimates and projections made by management. All statements about future financial performance are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the statements. All statements about future financial performance made in this presentation are solely based on information known at the time

• f the preparation of the last published financial report, and the company assumes no
• bligation to update these statements, whether as a result of new information, future

events, or otherwise.”

G R O U P

26

• Alm. Brand

Financial results H1 2013

Webcast presentation

22 August 2013