Investor Presentation 6M - 2020 August 21 st 2020 / Hi High lights A - - PowerPoint PPT Presentation

SLIDE 1

Investor Presentation

6M - 2020

August 21st 2020

SLIDE 2

/ Hi Highlights

A breakthrough innovation Large losses but positive development in loss frequency

• Large losses impacted the quarter.
• Foreign reinsurance had a negative

impact of 5.1% on the combined ratio.

• We are seeing a positive development

in the frequency of losses.

• Highest investment income and

returns since the Company’s listing.

• All asset classes performed well,

with the exception of unlisted equities.

• We are developing a breakthrough new

product: Ökuvísir (Driving Indicator)

• Customers can influence what they pay

– always.

• Our goal is for our customers to have

fewer losses.

Good results in investments

SLIDE 3

/ Highlights– Q2 2020

Premiums

5.641 m.kr.

Q2 2019 || 5.655 m.kr Profit

916 m.kr.

Q2 2019 || 1.256 m.kr Combined Ratio

103,5%

Q2 2019 || 93,8% ROI

4,4%

Q2 2019 || 4,2% ROE

6,7%

Q2 2019 || 6,5% Solvency Ratio

1,57

Q2 2019 || 1,56

SLIDE 4

/ Highlights – 6M 2020

Premiums

11.198 m.kr.

6M 2019 || 11.190 m.kr Loss

• 1.047 m.kr.

6M 2019 || 2.192 m.kr Combined Ratio

114,9%

6M 2019 || 96,3% ROI

4,0%

6M 2019 || 8,2% ROE

• 7,4%

6M 2019 || 15,0% Solvency Ratio

1,57

6M 2019 || 1,56

SLIDE 5

/ Income Statement

Q2 2020 Q2 2019 Br.

• Br. %

6M 2020 6M 2019 Var Var % Premiums earned 5.641 5.655

• 14
• 0,3%

11.198 11.190 9 0,1% Premiums earned, reinsurers' share

• 211
• 207
• 4

1,8%

• 398
• 391
• 7

1,7% Premiums earned, net of reinsurance 5.430 5.448

• 18
• 0,3%

10.800 10.798 2 0,0% Investment income 1.612 1.434 178 12,4% 1.450 2.800

• 1.350
• 48,2%

Other income 12 19

• 8
• 39,9%

27 39

• 13
• 31,9%

Total income 7.054 6.902 153 2,2% 12.278 13.638

• 1.360
• 10,0%

Claims incurred

• 4.407
• 3.916
• 491

12,5%

• 10.038
• 7.967
• 2.071

26,0% Claims incurred, reinsurers' share 90 79 12 14,8% 145 129 16 12,1% Claims incurred, net of reinsurance

• 4.316
• 3.837
• 479

12,5%

• 9.893
• 7.838
• 2.055

26,2% Technical interest rates and exchange rate changes of technical provisions

• 227
• 124
• 103

82,8%

• 649
• 263
• 387

147,3% Operating expenses

• 1.417
• 1.405
• 12

0,9%

• 2.791
• 2.835

44

• 1,5%

Interest expences & impairment of acc. receivables

• 98
• 104

6

• 5,8%
• 183
• 195

12

• 6,2%

Total expenses

• 6.057
• 5.469
• 588

10,8%

• 13.517
• 11.131
• 2.386

21,4% Profit (loss) before income taxes 997 1.432

• 436
• 30,4%
• 1.239

2.507

• 3.746
• 149,4%

Income taxes

• 81
• 176

95

• 54,1%

192

• 315

507

• 161,0%

Profit (loss) for the period 916 1.256

• 340
• 27,1%
• 1.047

2.192

• 3.239
• 147,8%

Claims & reinsurance cost ratio 80,2% 71,5% 91,8% 73,5% Expense ratio 23,3% 22,3% 23,1% 22,8% Combined ratio 103,5% 93,8% 114,9% 96,3% Return on equity 6,7% 6,5%

• 7,4%

15,0% Return on investments 4,4% 4,2% 4,0% 8,2%

SLIDE 6

/ Changes in Premiums

Q2 20 Q2 19 Q2 20 vs 19 Q2 19 vs 18

Non-life insurance 5.029 5.019 0,2% 1,6% Life insurance 369 352 4,8% 6,1% Foreign reinsurance 243 285

• 14,5%

28,1% Total 5.641 5.655

• 0,3%

2,9%

Premiums 12 months rolling premium De Developme ment nt – In millions

5.029

• 67

5.019 39 37 Premiums Q2 19 Motor Property Other Premiums Q2 20

Non-Life Premium Development

5.000 10.000 15.000 20.000 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

SLIDE 7

/ Changes in Claims

Claims incurred Development in claims ratio

Q2 20 Q2 19 Q2 20 vs 19 Q2 19 vs 18

Non-life insurance 3.774 3.556 6,1%

• 22,7%

Life insurance 170 253

• 32,7%

81,4% Foreign reinsurance 463 107 332,4%

• 46,5%

Total 4.407 3.916 12,5%

• 20,7%

Claims provisions

19.495 17.677 30.06.2020 31.12.2019 Claims provision, net of reins. Claims provision, reins.' share

20.166 18.603

72,9%

• 6,6%

4,4% 0,7% 1,7% 73,1% 5,1% 78,1% Regular operations Claims frequency Claims > 50 mkr. Weather claims Run-off Icelandic operations Foreign reinsurance Q2 2020 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

SLIDE 8

/ Pre-tax Profit

Operating segments

• 269

72

• 410
• 103

997 1.432 274 Q2 2019 Non-life insurance Life insurance Foreign reinsurance

• Techn. interest & curr. adjm.

Investment op. Q2 2020

• 53

1.089 550 704 435

• 211

1.171 224 172 448 119 240

• 710
• 158
• 700

228 9

• 735
• 53

500

• 113
• 91

460 902 984

• 539

574

• 826

1.155

• 2.500
• 2.000
• 1.500
• 1.000
• 500

500 1.000 1.500 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Insurance operations Financial operations

SLIDE 9

/ Combined Ratio

Combined Ratio 12 months rolling Operating expenses Quarterly Development

200 400 600 800 1.000 1.200 1.400 1.600 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Financial op. exp. Insurance op. exp. Four quarters average

0,0% 20,0% 40,0% 60,0% 80,0% 100,0% 120,0% 140,0% Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q2 2017 Q2 2018 Q2 2019 Q2 2020 Q3 2017 Q3 2018 Q3 2019 Q4 2017 Q4 2018 Q4 2019 Expense ratio Claims & reinsurance ratio Reassessment of older claims

90% 95% 100% 105% 110% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

• Acc. to new FSA guidelines

SLIDE 10

/ Balance Sheet

Technical Provision

Claim resrves Unearned premiums Risk premium

Equity Ratio

Assets 30.6.2020 31.12.2019 Operating assets 606 670 Goodwill and other intangible assets 1.464 1.360 Right-of-use assets 848 899 Tax assets 57 Financial assets at fair value through profit or loss 35.410 32.338 Bonds and other long-term receivables 1.596 1.843 Investments where investment risk is borne by life-ins. policy holders 1.602 1.530 Accounts receivables 9.234 7.424 Reinsurance assets 1.045 1.074 Other receivables 998 1.286 Cash and cash equivalents 1.311 1.930 Total assets 54.172 50.354 Equity Share capital 1.894 1.894 Statutory reserve 626 626 Restricted reserve 3.781 2.793 Retained earnings 7.846 9.881 Total equity 14.147 15.194 Liabilities Subordinated bonds 2.831 2.788 Tax liability 136 Lease liability 875 917 Technical provision 31.825 27.577 Technical provision for life-insurance policies where investment risk is borne by the policy holders 1.602 1.530 Accounts payable and other liabilities 2.892 2.212 Total liabilities 40.025 35.160 Total equity and liabilities 54.172 50.354

Claim resrves Unearned premiums Risk premium

26,1% 28,7% 27,3% 29,2% 30.6.2020 30.6.2019 Equity Ratio Subordinated Debt Equity Ratio TTM 20.166 17.723 10.694 11.051 965 906 30.6.2020 30.6.2019

SLIDE 11

/ Investments – Income and Return

Investment Income Q2 2020 in ISK m. Investment Assets - Breakdown Return on Investments

327 552 784

• 93

43 1.612

Cash Gov Bonds Other Bonds Listed Equities Other Equities Other Inv. Income TOTAL

2,4% 27,2% 40,1% 20,4% 10,0% 4,3% 28,5% 37,2% 18,9% 11,1% Cash Gov Bonds Other Bonds Listed Equities Other Equities 30.6.2020 301.3.2020 4,4% 4,0% 4,2% 8,2% Q2 2020 Q2 2019 6M 2020 6M 2019

• Highest investment income and return since listing
• Highest resturn from Listed equities – good return

also other bonds and government bonds

• Foreign credit funds have positive effect on

investment income from other bonds

• Income from other equities negative due to lower

value on unlisted equities and private equity funds

• Duration 4,2 years og 34% of the fixed income

portfolio is index linked at end of Q2 2020

SLIDE 12

/ Investment Assets

Investment Assets 38 ISK BN.

Matching Portfolio ISK 21 bn. Free Portfolio ISK 17 bn. Matching Portfolio – Largest investments in ISK m. Free Portfolio – Largest Investments in ISK m.

Cash 4% Gov Bonds 45% Other Bonds 51% Listed Equities 47% Other Equities 28% Other Bonds 25% 2.086 1.930 1.270 1.254 937 892 866 847 784 774 LSS150434 RIKB 25 0612 RIKB 28 1115 RIKB 31 0124 ARION CB 24 ARION CB 22 ISLA CB 23 LBANK CB 23 RVKN 35 1 RIKB 22 1026 30.06.2020 31.03.2020 936 935 919 813 698 682 664 652 582 572 FESTI KVIKA HAGA SIMINN ICESEA ARION CORIPHARMA JÚPÍTER IFIF EIK AKTA HS1 30.06.2020 31.03.2020

SLIDE 13

/ Solvency

Solvency Ratio Changes in SCR Eligible Own Funds

1,57 1,0 1,1 1,2 1,3 1,4 1,5 1,6 1,7 1,8

2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2

Solvency Ratio Lower Limit Upper Limit

10.042 755 78

• 954

9.920 2.000 4.000 6.000 8.000 10.000 12.000 30.03.2020 Market Risk Insurance Risk Other 30.06.2020 14.666 975

• 46

2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000 18.000 30.03.2020 Profit Other 30.06.2020

• Own funds increases due to the quarter‘s profit
• Market risk increases due to the increase of the

equity portfolio as well as the increase of the symmetric adjustment

• Solvency capital requirements decreases due to

seasonal decreases of risks and in addition changes in the loss absorbing capacity of deferred taxes.

SLIDE 14

/ Shareholders

Payments to Shareholders Share price since listing 10 largest shareholders 14.8.2020 Shareholders 14.8.2020

5 6 7 8 9 10 11 12 13 14 2013 2014 2015 2016 2017 2018 2019 2020 VÍS OMXI vísitalan Lífeyrissjóður verslunarmanna 9,2% Frjálsi lífeyrissjóðurinn 9,1% Gildi lífeyrissjóður 8,0% Arion banki hf. 7,7% Lífeyrissjóður starfsmanna ríkisins A-deild 7,2% Sjávarsýn ehf. 5,3% Stapi lífeyrissjóður 4,9% Birta lífeyrissjóður 4,4% Brú lífeyrissjóður 3,6% Lífsverk lífeyrissjóður 2,7%

59% 14% 8% 8% 11%

Pension Funds Other Entities Foreign Funds Domestic Funds Individuals Banks Own Shares

8,8% 16,4% 11,9% 5,8% 14,0% 11,6% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 2014 2015 2016 2017 2018 2019 Dividends Share buyback % of mcap

SLIDE 15

/ Updated Earnings Forecast

Our updated earnings forecast for the full year 2020 is for a combined ratio of 105.3%, investment returns of 7.3% and pre-tax earnings of ISK 164 million. Our guidance for the next 12 months is for a combined ratio of 97.3%, investment returns of 5.9% and pre-tax earnings of just over ISK 2.2 billion. The VIS investment strategy aims to maximise returns through asset allocation based on the Company's established risk tolerance. VIS has defined the Company's risk tolerance based on maintaining a solvency ratio between 1.35 - 1.70. The Company will generally issue a special notification if earnings for FY 2020 are expected to deviate from those forecast by more than ISK 300 million. The earnings forecast will be updated on a quarterly basis, published in earnings reports and presented in the Company's investor presentation material.

SLIDE 16

/ Operation

• Challenging first half of 2020.
• We are seeing fewer losses.
• Combined ratio in July was 89.9%
• Decrease in FTEs during the quarter.
• We are there for our customers during COVID-19.
• An experienced actuary will join us on 1 September.
• Our guidance for the next 12 months is for a combined ratio of 97.3%

/Positive signs

/ Digitalization

• We have overhauled our services. We are a digital service company.
• The Ökuvísir (Driving Indicator) represents a breakthrough in the

insurance market.

• This is an exciting new product – and we wish to collaborate with our

customers.

/ Investments

• Investment returns of 0.8% in July and 4.8% for the year so far.

SLIDE 17

Information in this presentation is based on sources that VÍS considers reliable at any given time, but cannot be guaranteed to be infallible. All information in this presentation is the property of VÍS. Information contained therein or the presentation may not be copied, modified or distributed in any way, in whole or in part. This presentation is intended solely for the purpose of information disclosure, but not as part of or the basis

• f the decision making of the parties that receive it. The recipients shall not in any way interpret the content
• f the presentation as a promise or instruction.

VÍS is not obliged in any way to provide the recipients of this presentation with any further information about the company or make changes or adjustments to it if the underlying information changes. The company's future prospects are dependent on a number of risk and uncertainty factors, which may mean that actual performance in the future will be significantly different from what is described in this presentation. External factors such as the availability of capital, law coming into force, the influence of regulators and

• thers can therefore have a significant impact. VÍS reiterates that the recipients of this presentation should

not rely on the presentation‘s assertions going forwad as they apply solely on the date of the release. All statements about the company's future prospects are valid in its entirety with respect to these reservations. Upon receipt of this presentation, the person confirms that he/she is bound by the aforementioned reservations and limitations.

/ Disclaimer

SLIDE 18

Thank You