Non- Life│ Life │ Banking January 30, 2020 Results 2019 Results 2020│Q1 Full year ended December 31, 2019 3 months ended March 31, 2020
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 ALM. BRAND 2020-Q1 2
Covid-19 direct implications at a glance Non-Life Life Banking Changes in insurance claims after Investment return -2.3% Lower trading income ▪ ▪ ▪ lockdown of Denmark ∆ Bonus rate -3.3%-points Investment loss ▪ ▪ Write-downs on loans ▪ Development in average daily insurance claims in March, before and after lock-down (%) 150 125 100 75 132 50 25 - -12 -15 -18 -25 -25 Motor Commercial Private Travel Total accident accident Investment loss of DKK 106m None Investment loss & reduced trading ▪ ▪ ▪ income of approx. DKK 15m Travel insurance claims at DKK 10m ▪ Write-downs of DKK 30m ▪ Total P/L effect > DKK -150m ALM. BRAND 2020-Q1 3
Non-Life Insurance ALM. BRAND 2020-Q1 4
Financial performance Profit before tax DKKm ✓ Technical result at a satisfactory level, but lower than last year’s exceptional strong first quarter 195 200 ✓ Developments throughout most of the quarter in line 151 139 150 122 25 with expectations 7 53 205 100 ✓ Lockdown of society in the latter part of the quarter 135 132 131 50 98 resulted in fewer personal accidents and burglary incidents as well as motor claims 0 -13 -10 ✓ Travel insurance claims more than doubled due to travel -50 -106 restrictions, but only limited economic impact so far, -100 2019 2019 2019 2019 2020 with total expenses being curbed by reinsurance Q1 Q2 Q3 Q4 Q1 programme Technical result Investment return after interest on provisions ✓ Sharp decline in investment return as global financial markets fell sharply ALM. BRAND 2020-Q1 5
Premium income Premium income growth Percentage, y/y ✓ Total premium income on an upward trajectory following modest development in previous quarters 5% 4,4% ✓ Commercial customer segment up by 2.8% after 4% price adjustments within commercial motor 3,3% 3% insurance, building insurance, etc. 2,9% 2,5% 2,5% 1,8% 2% ✓ Private customer segment up by 4.5%, fuelled by 3,7% 1,3% initiatives to strengthen product characteristics to 2,2% 1% 0,8% 1,0% 1,6% 1,5% 1,6% better match individual customer preferences and 0,6% 0% price adjustments 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Total Commercial Private ALM. BRAND 2020-Q1 6
Combined ratio Combined ratio and run-off result Percentage ✓ Claims ratio excl. run-off gains was 74.7 and thus higher than exceptional strong Q1/19 93 -5 92.9 -4 -3.4 ✓ Expense ratio was 17.6; slightly below Q1/19 level -2.9 91 -3 -2.6 and reflecting cost savings from restructuring -2 90.4 90.2 -1.9 89.9 programme 89 -1 0 ✓ Combined ratio excl. run-off gains was 92.3 87 1 2 2.9 85 3 ✓ Run-off gains at 1.9% with positive contributions 4 84.4 from building, accident and motor insurance, but 83 5 2019 2019 2019 2019 2020 continued negative impact from workers’ Q1 Q2 Q3 Q4 Q1 compensation insurance Combined ratio Run-off, claims (rhs) ✓ Combined ratio was 90.4 ALM. BRAND 2020-Q1 7
Major and weather-related claims Major and weather-related claims ratio Percentage ✓ Weather-related claims in high end of the normal range 12% 11,2% due to wet and windy weather during the quarter 10% 9,5% ✓ Major claims at a low level compared to normal, but still 8% 7,2% 6,8% 8,0% 7,8% 6,5% higher than the very low level in Q1/19 6% 4,0% 4,0% 4% ✓ Major and weather-related claims amounted to DKK 4,6% 3,8% 2,7% 2,4% 105m in total against DKK 60m in Q1/19, corresponding 2% 2,2% 1,5% to 7.8% in Q1/20 against 4.6% in Q1/19 0% 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Total Major claims Weather related claims ALM. BRAND 2020-Q1 8
Private customers Combined ratio Percentage ✓ Combined ratio at 87.8 (unchanged) ✓ Claims ratio, net of reinsurance at 69.1 (+100 bps) 100 89.5 87.8 87.8 85.2 86.2 ▪ Travel insurance claims (+140 bps) 80 20.2 18.7 19.7 18.4 18.3 ▪ Lower claims ratio on some insurance products at the 60 end of the quarter as effects of lockdown gradually materialized 40 69.3 69.1 68.1 67.7 66.9 ✓ Run-off gains of 4.3%, primarily from motor insurance 20 and personal accident insurance 0 2019 2019 2019 2019 2020 ✓ Expense ratio at 18.7 (-100 bps) reflecting reduction in Q1 Q2 Q3 Q4 Q1 Claims experience Gross expense ratio overheads ALM. BRAND 2020-Q1 9
Commercial customers Combined ratio Percentage ✓ Combined ratio at 93.1 – significant increase relative to Q1/19 99.4 100 95.3 93.1 90.4 15.6 14.2 ✓ Claims ratio, net of reinsurance at 76.7 (+1200 bps) 80.9 16.4 16.5 80 16.2 ▪ Major and weather-related claims higher than last 60 year’s exceptionally low level (+510 bps) 83.8 40 81.1 76.7 ✓ Run-off loss of 0.6% (+180 bps), primarily on motor 73.9 64.7 insurance and workers’ compensation insurance 20 ✓ Expense ratio at 16.4 (+20 bps) 0 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Claims experience Gross expense ratio ALM. BRAND 2020-Q1 10
Life Insurance ALM. BRAND 2020-Q1 11
Financial performance Profit before tax DKKm ✓ Life Insurance recorded strong quarter with profit before tax increasing to DKK 32m 40 32 ✓ Very satisfactory development in expense and risk result 29 30 25 2 21 21 ✓ Return on investments allocated to equity affected by 20 36 general market turmoil 27 27 23 22 10 ✓ Policyholders’ investment assets yielded a negative return 0 -1 of 2.3% and declined by DKK 0.6bn to DKK 15.8bn -2 -2 -4 -10 ✓ Bonus rate reduced by 3.3 ppts to 12.9%, but still at a 2019 2019 2019 2019 2020 satisfactory level Q1 Q2 Q3 Q4 Q1 Technical result Return on investments allocated to equity ALM. BRAND 2020-Q1 12
Pension contributions Regular premiums Percentage growth, y/y 10% 300 ✓ Premiums totalled DKK 424m in Life Insurance 8% 260 ✓ Growth in regular premiums of 5.8% driven by 8.1% 246 233 225 corporate customer segment, but overall growth 6% 220 5.8% seen to be capped by Covid-19 and lower rate on 5.1% 172 4% 180 4.5% 173 policy holders’ savings 2% 140 2.4% ✓ Single payments declined to half of the level reported for Q1/19 0% 100 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Reg premiums growth Regular Premiums ALM. BRAND 2020-Q1 13
Banking ALM. BRAND 2020-Q1 14
Financial performance Profit before tax DKKm ✓ Improvement of underlying performance, but the 60 economic effects of Covid-19 lead to a pre-tax loss 17 ▪ Write-downs on loan portfolio 40 ▪ Lower trading income, loss on investment portfolio 18 20 22 20 20 16 14 ✓ Core earnings benefitted from introduction of negative 15 37 21 interest rates on deposits and new account fees, but 16 15 11 0 were hit by lower trading income -7 -12 -8 -14 -17 -8 -24 ✓ Write-downs on loan portfolio to strengthen total write- -8 -8 -20 -8 -2 downs ahead of expected hard landing for the -8 economy, but offset by reversal of write-downs on -40 2019 2019 2019 2019 2020 other loans Q1 Q2 Q3 Q4 Q1 ✓ Investment portfolio loss due to turmoil on financial Investment portfolio earnings Amortization, customer relationships Core earnings Writedowns markets and funding costs Result before tax ALM. BRAND 2020-Q1 15
Business volume Business volume DKKbn ✓ Growth in business volume slowed down with mortgage 25 12% 1.0 0.9 lending stabilizing 7-8% higher than in Q1/19 0.9 0.9 0.9 10% 20 10% ✓ Continuous high turnover of bank loan portfolio and 8% 8% 8% 15 only moderate demand for new loans 16.9 16.9 16.5 15.7 16.2 6% 6% 10 ✓ Early signs of customers reacting to economic 4% implications og Covid-19 situation, but no major effects 5 2% seen in numbers so far 5.1 5.1 5.0 5.0 4.8 0 0% 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 Retail Lending Mortgage Leasing Growth total y/y ALM. BRAND 2020-Q1 16
Return on Equity RoE and solvency Percentage 22,0% 10% 22,0% ✓ Return on equity negative as a consequence of 8% 21,5% impact from Covid-19 6% 21,0% ✓ Solvency at a robust level 20,5% 4% 20,5% ✓ In February 2020, the Bank raised an unsecured 20,1% 4,5% 2% 20,0% 20,0% senior loan to cover the phased-in NEP supplement, 3,2% 3,0% 3,0% leading to the NEP-base accounting for 23.5% of the 0% 19,5% -1,8% Bank’s total risk exposure 19,1% -2% 19,0% 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 RoE before tax Solvency (rhs) ALM. BRAND 2020-Q1 17
Outlook & financial targets ALM. BRAND 2020-Q1 18
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 ALM. BRAND 2020-Q1 19
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