Results 2020Q1 Full year ended December 31, 2019 3 months ended - - PowerPoint PPT Presentation

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Results 2020Q1 Full year ended December 31, 2019 3 months ended - - PowerPoint PPT Presentation

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Non- Life Life Banking January 30, 2020 Results 2019 Results 2020Q1 Full year ended December 31, 2019 3 months ended March 31, 2020 Highlights Q1 2020 business development satisfactory, but not completely shielded from the

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Results 2019

Full year ended December 31, 2019 January 30, 2020

Non-Life│ Life │ Banking

Results 2020│Q1

3 months ended March 31, 2020

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Highlights

✓ Q1 2020 business development satisfactory, but not completely shielded from the effects precipitated by the Covid-19 pandemic ✓ Negative investment return due to adverse financial market developments, primarily in the equity and bond portfolio of Non-life Insurance ✓ Strategic earnings initiatives progressing according to plan ✓ No changes to guidance for FY 2020, but the wide range reflects the large uncertainty due to Covid-19 ✓ Full commitment to meet ambitious financial targets by 2022

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  • 25
  • 18
  • 15

132

  • 12
  • 25
  • 25

50 75 100 125 150 Motor Commercial accident Private accident Travel Total

Non-Life Life Banking

▪ Changes in insurance claims after lockdown of Denmark ▪ Investment return -2.3% ▪ ∆ Bonus rate -3.3%-points ▪ Lower trading income ▪ Investment loss ▪ Write-downs on loans ▪ Investment loss of DKK 106m ▪ Travel insurance claims at DKK 10m ▪ None ▪ Investment loss & reduced trading income of approx. DKK 15m ▪ Write-downs of DKK 30m

Covid-19 direct implications at a glance

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Development in average daily insurance claims in March, before and after lock-down (%)

Total P/L effect > DKK -150m

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Non-Life Insurance

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Financial performance

✓ Technical result at a satisfactory level, but lower than last year’s exceptional strong first quarter ✓ Developments throughout most of the quarter in line with expectations ✓ Lockdown of society in the latter part of the quarter resulted in fewer personal accidents and burglary incidents as well as motor claims ✓ Travel insurance claims more than doubled due to travel restrictions, but only limited economic impact so far, with total expenses being curbed by reinsurance programme ✓ Sharp decline in investment return as global financial markets fell sharply

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Profit before tax

DKKm

205 135 132 98 131

  • 10
  • 13

7 53

  • 106

195 122 139 151 25

  • 100
  • 50

50 100 150 200 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Technical result Investment return after interest on provisions

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Premium income

✓ Total premium income on an upward trajectory following modest development in previous quarters ✓ Commercial customer segment up by 2.8% after price adjustments within commercial motor insurance, building insurance, etc. ✓ Private customer segment up by 4.5%, fuelled by initiatives to strengthen product characteristics to better match individual customer preferences and price adjustments

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1,6% 1,5% 1,6% 2,2% 3,7% 2,5% 2,5% 1,8% 3,3% 2,9% 0,8% 0,6% 1,3% 1,0% 4,4% 0% 1% 2% 3% 4% 5% 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Total Commercial Private

Premium income growth

Percentage, y/y

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Combined ratio

✓ Claims ratio excl. run-off gains was 74.7 and thus higher than exceptional strong Q1/19 ✓ Expense ratio was 17.6; slightly below Q1/19 level and reflecting cost savings from restructuring programme ✓ Combined ratio excl. run-off gains was 92.3 ✓ Run-off gains at 1.9% with positive contributions from building, accident and motor insurance, but continued negative impact from workers’ compensation insurance ✓ Combined ratio was 90.4

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84.4 89.9 90.2 92.9 90.4

  • 2.9
  • 3.4
  • 2.6

2.9

  • 1.9
  • 5
  • 4
  • 3
  • 2
  • 1

1 2 3 4 5 83 85 87 89 91 93 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Combined ratio Run-off, claims (rhs)

Combined ratio and run-off result

Percentage

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Major and weather-related claims

✓ Weather-related claims in high end of the normal range due to wet and windy weather during the quarter ✓ Major claims at a low level compared to normal, but still higher than the very low level in Q1/19 ✓ Major and weather-related claims amounted to DKK 105m in total against DKK 60m in Q1/19, corresponding to 7.8% in Q1/20 against 4.6% in Q1/19

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Major and weather-related claims ratio

Percentage

4,6% 9,5% 11,2% 8,0% 7,8% 2,4% 6,8% 7,2% 6,5% 3,8% 2,2% 2,7% 4,0% 1,5% 4,0% 0% 2% 4% 6% 8% 10% 12% 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Total Major claims Weather related claims

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Private customers

✓ Combined ratio at 87.8 (unchanged) ✓ Claims ratio, net of reinsurance at 69.1 (+100 bps) ▪ Travel insurance claims (+140 bps) ▪ Lower claims ratio on some insurance products at the end of the quarter as effects of lockdown gradually materialized ✓ Run-off gains of 4.3%, primarily from motor insurance and personal accident insurance ✓ Expense ratio at 18.7 (-100 bps) reflecting reduction in

  • verheads
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Combined ratio

Percentage

68.1 69.3 66.9 67.7 69.1 19.7 20.2 18.3 18.4 18.7 87.8 89.5 85.2 86.2 87.8 20 40 60 80 100 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Claims experience Gross expense ratio

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Commercial customers

✓ Combined ratio at 93.1 – significant increase relative to Q1/19 ✓ Claims ratio, net of reinsurance at 76.7 (+1200 bps) ▪ Major and weather-related claims higher than last year’s exceptionally low level (+510 bps) ✓ Run-off loss of 0.6% (+180 bps), primarily on motor insurance and workers’ compensation insurance ✓ Expense ratio at 16.4 (+20 bps)

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Combined ratio

Percentage

64.7 73.9 81.1 83.8 76.7 16.2 16.5 14.2 15.6 16.4 80.9 90.4 95.3 99.4 93.1 20 40 60 80 100 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Claims experience Gross expense ratio

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Life Insurance

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Financial performance

✓ Life Insurance recorded strong quarter with profit before tax increasing to DKK 32m ✓ Very satisfactory development in expense and risk result ✓ Return on investments allocated to equity affected by general market turmoil ✓ Policyholders’ investment assets yielded a negative return

  • f 2.3% and declined by DKK 0.6bn to DKK 15.8bn

✓ Bonus rate reduced by 3.3 ppts to 12.9%, but still at a satisfactory level

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27 22 23 27 36 2

  • 1
  • 2
  • 2
  • 4

29 21 21 25 32

  • 10

10 20 30 40 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Technical result Return on investments allocated to equity

Profit before tax

DKKm

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Pension contributions

✓ Premiums totalled DKK 424m in Life Insurance ✓ Growth in regular premiums of 5.8% driven by corporate customer segment, but overall growth seen to be capped by Covid-19 and lower rate on policy holders’ savings ✓ Single payments declined to half of the level reported for Q1/19

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4.5% 2.4% 8.1% 5.1% 5.8% 233 172 173 225 246 100 140 180 220 260 300 0% 2% 4% 6% 8% 10% 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Reg premiums growth Regular Premiums

Regular premiums

Percentage growth, y/y

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Banking

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Financial performance

✓ Improvement of underlying performance, but the economic effects of Covid-19 lead to a pre-tax loss ▪ Write-downs on loan portfolio ▪ Lower trading income, loss on investment portfolio ✓ Core earnings benefitted from introduction of negative interest rates on deposits and new account fees, but were hit by lower trading income ✓ Write-downs on loan portfolio to strengthen total write- downs ahead of expected hard landing for the economy, but offset by reversal of write-downs on

  • ther loans

✓ Investment portfolio loss due to turmoil on financial markets and funding costs

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Profit before tax

DKKm

  • 7
  • 12
  • 17
  • 24
  • 14
  • 8
  • 8
  • 8
  • 8
  • 8

11 15 21 37 16 20 20 18 17

  • 2

16 15 14 22

  • 8
  • 40
  • 20

20 40 60 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Investment portfolio earnings Amortization, customer relationships Core earnings Writedowns Result before tax

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Business volume

✓ Growth in business volume slowed down with mortgage lending stabilizing 7-8% higher than in Q1/19 ✓ Continuous high turnover of bank loan portfolio and

  • nly moderate demand for new loans

✓ Early signs of customers reacting to economic implications og Covid-19 situation, but no major effects seen in numbers so far

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Business volume

DKKbn

5.1 4.8 5.1 5.0 5.0 15.7 16.2 16.5 16.9 16.9 0.9 0.9 0.9 0.9 1.0 10% 8% 8% 6% 0% 2% 4% 6% 8% 10% 12% 5 10 15 20 25 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Retail Lending Mortgage Leasing Growth total y/y

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Return on Equity

✓ Return on equity negative as a consequence of impact from Covid-19 ✓ Solvency at a robust level ✓ In February 2020, the Bank raised an unsecured senior loan to cover the phased-in NEP supplement, leading to the NEP-base accounting for 23.5% of the Bank’s total risk exposure

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RoE and solvency

Percentage

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

  • 1,8%

19,1% 20,5% 20,1% 20,0% 22,0% 19,0% 19,5% 20,0% 20,5% 21,0% 21,5% 22,0%

  • 2%

0% 2% 4% 6% 8% 10% 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 RoE before tax Solvency (rhs)

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Outlook & financial targets

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Outlook 2020

✓ Ordinary profit before tax of DKK 550-700m

  • excl. run-off result:

✓ Non-life: DKK 500m (DKK 525m) ✓ Life: DKK 100m (DKK 100m) ✓ Banking: DKK 80m (DKK 100m) ✓ Other: DKK -60m ✓ Uncertainty related to investment returns reflected in wider range of full year profit guidance

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Disclaimer

FORWARD LOOKING STATEMENTS 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 of the preparation of the last published financial report, and the company assumes no obligation to update these statements, whether as a result of new information, future events, or otherwise.

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Appendix

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Financial targets 2022

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2022 targets 2019 actuals NON-LIFE │ Growth in premium income 3 % p.a. 1.7 % NON-LIFE │ Combined ratio excl. run-offs < 90 % 90.8 % NON-LIFE │ Expense ratio 16 % 17.4 % LIFE │ Growth in regular pension contributions 7 % p.a. 4.7 % BANKING │ Return on equity excl. depr. of cust.rel. and tax 10 % 5.1 % Dividend pay-out ratio > 70 % 102%

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3.3% 3.0% 3.5% 2.7% 1.3% 10.0% 0% 2% 4% 6% 8% 10% 2019 2019 2019 2019 2020 TARGET Q1 Q2 Q3 Q4 Q1 2022 4.5% 2.4% 8.1% 5.1% 5.6% 7.0% 0% 2% 4% 6% 8% 10% 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 18.0 18.4 16.3 17.0 17.6 17.0 15 16 17 18 19 2019 2019 2019 2019 2020 TARGET Q1 Q2 Q3 Q4 Q1 2022 90.6 90.6 91.3 90.8 92.0 90.0 84 86 88 90 92 94 2019 2019 2019 2019 2020 TARGET Q1 Q2 Q3 Q4 Q1 2022 1.6% 1.5% 1.6% 2.2% 3.7% 3% 0% 1% 2% 3% 4% 2019 2019 2019 2019 2020 TARGET Q1 Q2 Q3 Q4 Q1 2022

Status on financial targets 2022

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23 NON-LIFE│ Premium income growth NON-LIFE│Combined ratio excl. run-offs, rolling 12 months LIFE│ Regular pension contributions growth BANKING│ RoE pre-tax, ex customer relations, rolling 12 mths NON-LIFE│ Expense rate

79 79 78 78 78 80 64 66 65 66 70 40 50 60 70 80 90 2019 2019 2019 2019 2020 TARGET Q1 Q2 Q3 Q4 Q1 2022

GROUP│ Employee Satisfaction Index, Net Promotor Score

ESI NPS ..

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Financial calendar

Annual General Meeting 2019 Postponed until further notice Release of H1 2020 interim report 20 August 2020 Release of 9M 2020 interim report 4 November 2020

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Investor Relations - contact details

Lars Holm Senior Vice President +45 2510 4717 ablahl@almbrand.dk Mikael Bo Larsen Senior Investor Relations Officer +45 5143 8002 abmela@almbrand.dk