Results for Q1 2016 Webcast presentation 11 May 2016 G R O U P - - PowerPoint PPT Presentation

Banking | Insurance | Pension

Results for Q1 2016

Webcast presentation 11 May 2016

Financial highlights of Q1 2016 Pre-tax profit: DKK 234m

Forward-looking activities: Pre-tax profit: DKK 228m

Winding-up activities: Pre-tax profit: DKK 6m

• Writedowns: Reversals of DKK 1m

G R O U P

Non-life Insurance

Pre-tax profit: DKK 205m

• CR: 81.9
• Expense ratio: 16.0
• Premium growth: 0.1%

Life and Pension

Pre-tax profit: DKK 29m

• Regular premiums: 3.6%
• Bonus rate: 16.3%

Banking

Pre-tax profit: DKK 8m

• Writedowns: Reversal

DKK 1m

• Growth in lending and in

full-service customers

2

Comments on Q1

The financial figures for Non-life Insurance and Life and Pension have been prepared according to new accounting standards Non-life Insurance favourably impacted by benign winter

• No storms
• No heavy snow

Banking significantly improved

• Profit of DKK 8m from forward-looking activities
• Negatively impacted by financial market turmoil
• Profit from winding-up activities of DKK 6m
• Lifted by reversal of writedowns and improved funding

G R O U P

3

Customers First

Customer satisfaction remains at a high and satisfactory level First part of the new CRM system will be commissioned during autumn 2016 Retention rate is improving

• Customer loyalty

programmes

G R O U P

Group NPS

18 18 22 23 23 26 27 24 29 30 31 30 33 35 36 34 36

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2012 2013 2014 2015 2016

4

Retention rate – Non-life Insurance

86% 87% 88% 89% 90% 91% 92% dec-09 dec-10 dec-11 dec-12 dec-13 dec-14 dec-15 Commercial Private

NON-LIFE INSURANCE Highlights

Pre-tax profit of DKK 205m

• Strong technical result
• Negative investment return
• Losses on equities and wider spread

between mortgage bonds and swap rates

• New accounting principles increase interest
• n technical provisions

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

Pre-tax profit

DKKm

5

133 135 229 226 10

• 3

3

• 21

143 132 232 205

2013 2014 2015 2016 Q1 Technical result Investment return after technical interest

Note: Figures for 2013 and 2014 based on previous accounting principles

Combined ratio

Combined ratio of 81.9

Better than expected + Run-off gains improved CR by 3.9 ppts excl. run-off gains on risk margin

• Gains primarily on accident and private property

insurance + Benign winter without storms or heavy snow

Underlying combined ratio of 78.4

• Decreasing average claim partly offset by higher claims

frequency

• Increased frequency on travel insurance and motor

liability as well as a few private contents coverages Expense ratio down Y/Y

• As expected

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

Combined ratio

6

Underlying combined ratio

72,6 72,4 65,3 65,9 16,8 16,8 16,3 16,0 89,4 89,2 81,6 81,9 2013 2014 2015 2016 Q1 Claims ratio incl. reinsurance Gross expense ratio 82,0 81,1 81,1 78,4 2013 2014 2015 2016 Q1 Note: Figures for 2013 and 2014 based on previous accounting principles

Weather-related and major claims

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

Major claims ratio Major claims up by 1.9 ppts Y/Y Within expected range of 7-8%

• Very few major claims
• But impacted by a single large fire-related claim
• Major claims totalled DKK 87m

Weather-related claims excl. reinstatement down by 2.8 ppts Y/Y Below normal expectation of 3-4%

• Benign winter without storms or heavy snow
• Total claims related to storms in Q4 2015 have

been reduced

• Net expenses totalled DKK 10m

Weather-related claims ratio

7

10,3 5,7 5,1 7,0 2013 2014 2015 2016 Q1 Major claims ratio Average expectation (7-8%) 1,3 1,1 3,6 0,8 3,6

• 0,4

2013 2014 2015 2016 Q1 Weather-related claims ratio Reinstatement Average expectation (3-4%) Note: Figures for 2013 and 2014 based on previous accounting principles

Premiums impacted by intensified competition

Premium income up by 0.1% Y/Y Private up by 0.1%

• Improved retention rate in Q1 2016
• Highly competitive market
• More insurances sold and with higher deductibles
• But at lower average prices
• Price pressure primarily on motor insurances
• Increased use of price differentiation

Commercial up by 0.1%

• Customer retention still at a high level
• Commercial market very competitive
• Lower average premiums on liability and motor

insurances in particular

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

Premium income

DKKm

8

638 649 641 642 587 590 602 603 1.225 1.239 1.243 1.245 2013 2014 2015 2016 Q1 Private Commercial Note: Figures for 2013 and 2014 based on previous accounting principles

Private

• Very satisfactory results

Combined ratio of 77.6

Improved by 8.4 ppts Y/Y

Lower weather-related and major claims

• Impacted CR positively by 2.5 ppts (down by 4.4 ppts Y/Y)

Run-off gains on level with 2015

• Improved CR by 6.9 ppts of which 1.6 ppts relates to risk

margin

Underlying business still satisfactory

• Better Y/Y due to lower average claims
• But claims frequency on travel insurance and some

content insurances has increased

• Expense ratio down by 0.3 ppt

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

Combined ratio

9

69,6 72,0 68,9 60,8 18,2 18,0 17,2 16,9 87,8 90,0 86,0 77,6 2013 2014 2015 2016 Q1 Claims ratio incl. reinsurance Gross expense ratio Note: Figures for 2013 and 2014 based on previous accounting principles

Commercial

• Very satisfactory results

Combined ratio of 86.4

Worsened by 9.5 ppts Y/Y Run-off gains in Q1 2016 down DKK 52m Y/Y

• 2015 was impacted by extraordinary run-off gains
• Run-off improved CR in Q1 2016 by 3.9 ppts of which 1.5

ptts relates to risk margin Weather-related and major claims up by 2.8 ppts Y/Y

• Very few weather-related claims
• Major claims impacted by one large fire incident

Underlying business

• Underlying business improved Y/Y
• Expenses slightly better than last year

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

Combined ratio

10

75,7 72,9 61,6 71,2 15,3 15,6 15,4 15,2 91,0 88,5 76,9 86,4 2013 2014 2015 2016 Q1 Claims ratio incl. reinsurance Gross expense ratio Note: Figures for 2013 and 2014 based on previous accounting principles

LIFE AND PENSION Highlights

Pre-tax profit of DKK 29m Up by DKK 3m Y/Y

• Satisfactory underwriting profit
• Up by DKK 7m Y/Y
• Return on investments allocated to equity

favourably impacted by lower interest rate level

Bonus rate

• Bonus rate is now calculated based on both

collective and individual bonus potentials

• Bonus rate of 16.3%

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

Pre-tax profit

DKKm

11

26 22 19 26 1 1 7 3 27 23 26 29 2013 2014 2015 2016 Q1 Underwriting profit/loss Return on investments allocated to equity

Pension contributions

Pension contributions down by 23.3%

• From a very high level

Pension premiums down by 20.3% Y/Y

• Single premiums down by 38.1%
• Increased fee when making single payments
• Regular premiums up by 3.6%
• Target of 5% growth for FY2016

Unguaranteed investment schemes in the bank down by 35.3%

• Typically negatively impacted by financial market

turmoil

• Development not satisfactory

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

Total pension contributions

DKKm

12

185 178 181 188 89 212 243 150 56 75 105 68 330 465 529 406 2013 2014 2015 2016 Q1 Regular premiums Single premiums Investment schemes

Profit impacted by financial market turmoil

Expense, risk and group life results

• Very satisfactory risk result up by DKK 8m
• Includes part of group life results in 2016
• Negative expense result as expected

Interest result up by DKK 1m Y/Y

• Principles for estimating interest result adjusted in

2016

• Lifted by 5 bps to 20 bps

Return on investments allocated to equity

• Favourably impacted by lower interest rate level in

Q1 2016

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

Profit split*

DKKm

13

* Profit before tax of Life and Pension, which includes post-tax return on investment in the EMD Local Currency investment fund

23 16 15 21 3 4 4 5 1

• 1

1 1 1 7 3

• 1

3

• 1

27 23 26 29 2013 2014 2015 2016 Q1 Expense, risk and group life results Interest result Result of portfolios without bonus entitlement Return on investments allocated to equity Change to shadow account

BANKING Highlights

Pre-tax profit of DKK 8m

Up by DKK 2m Y/Y

• Continued growth in full-service customers and

lending

• Profit lower than expected due to wider spread

between mortgage bonds and swap rates

• Reversal of writedowns in Q1 2016

– Normal underlying loss ratio of 0.7% p.a.

B A N K I N G

Pre-tax profit

DKKm

14

12

• 8

8 27 7

• 6
• 5
• 10

1 6

• 8

3 17 8 Q1 Q2 Q3 Q4 Q1 2015 2016 Profit before writedowns Writedowns

Results impacted by financial markets

B A N K I N G

Profit before writedowns

DKKm

15

Private

• Results improved by DKK 2m Y/Y

– Higher lending, fee relating to arrangement of mortgage lending and investment activities – Offset by reduced funding requirement to winding- up activities

• Gross lending up by DKK 18m in Q1

Leasing

• Profit doubled Y/Y
• Increased competition in both Private and Commercial

leasing Financial Markets

• Results improved due to lower expenses and successful

launch of Alm. Brand Invest corporate bonds

• More customers and assets under management in Q1

2016 Other

• Results negatively impacted by low/negative interest rates

in combination with excess liquidity

• Loss on bond portfolio and related hedging arrangements

Note: Other excluding effects from Alm. Brand Formue

• 3
• 9

4 6

• 1

2 3 6 11 17 18 19

• 18

19

• 13
• 24

Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Private Leasing Financial Markets Other

WINDING-UP ACTIVITIES Highlights

Pre-tax profit of DKK 6m

Better than expected Reversal of writedowns of DKK 1m

• Commercial lending and mortgage deeds

Profit before writedowns of DKK 5m

• Improved by DKK 13m primarily due to cheaper

funding Loan portfolio reduced by DKK 133m

• DKK 145m adjusted for writedowns

B A N K I N G

Pre-tax profit

DKKm

16

• 11
• 16
• 8
• 8

5

• 63
• 62
• 74
• 107

1

• 74
• 78
• 82
• 115

6 Q1 Q2 Q3 Q4 Q1 2015 2016 Profit before writedowns Writedowns

Significantly lower writedowns

Reversal of writedowns of DKK 1m

Agriculture

• Significant reduction in writedowns in Q1
• Conditions still stressed
• Settlement prices on dairy dropped again in Q1 and prices
• n pork has remained unchanged
• Lending reduced by DKK 21m adjusted for writedowns

Commercial lending

• Reversal of writedowns in 2015
• Lending reduced by DKK 113m adjusted for writedowns
• Related to a few large loans

Mortgage deeds

• Writedowns dropped significantly in 2015
• Reversal on the bank’s portfolio of mortgage deeds related

to debtors restarting payments on mortgage deeds

• Lending reduced by DKK 12m adjusted for writedowns
• Credit exposure reduced by DKK 29m

B A N K I N G

Writedowns

DKKm

17

Mortgage deeds include credit exposure from option agreement 60 68 89 9

• 4 -6
• 19
• 13

6 12 37 3 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Agriculture Commercial lending Mortgage deeds

CAPITAL MODEL

Profit in Q1 contributed significantly to capital development Excess capital increased by utilisation of tax asset and lower capital target

• Lower in Non-life Insurance and Life

and Pension

• Increase in bank related to earnings

risk

New accounting policies trigger a DKK 63m reduction of provisions

• The capital model will be reviewed

during 2016

G R O U P

18

Development in excess capital

DKKm

Excess capital FY2015 adjusted for dividends paid and full share buyback programme Other includes reduction in tier 2 capital and change in treasury shares

162 326 185 24 19

• 1
• 63

Excess capital FY '15 Profit after tax Q1'16 Change in tax asset Change in capital target Other New accounting policies Excess capital Q1'16

Outlook for FY2016

Raised by DKK 100m

DKK 600-700m

Pre-tax profit

Forward-looking activities: Pre-tax profit of DKK 675-750m

Winding-up activities: Loss at the level of DKK 50-75m

G R O U P

Non-life Insurance

Pre-tax profit: DKK 600m Raised by DKK 75m

• CR at the level of 88-89
• Expense ratio at the level of 16.5
• Premiums down by 1%

Life and Pension

Pre-tax profit: DKK 75m Unchanged

• 5% increase in regular

premiums

Banking

Pre-tax profit: DKK 70m Unchanged

• Negative impact from low

interest rate level

• Lending expected to increase

by 5%

19

Non-life Insurance: Good technical result lifted by benign weather and improved underlying

• performance. Premiums increased despite intense competition

Life and Pension: Very satisfactory results and growth in regular premiums in line with expectations Banking: Increase in lending and continued growth in full-service customers Adversely impacted by low/negative interest rates and turbulent financial markets Winding-up activities: Overall performance better than expected Outlook FY2016 profit of DKK 600-700m

G R O U P

20

Highlights

“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

• bligation to update these statements, whether as a result of new information,

future events, or otherwise.”

21

Banking | Insurance | Pension Webcast presentation 11 May 2016