Alm Brand. Results for Q2 2014

Transcription

1 Alm Brand Results for Q Morning presentation, Carnegie 22 August 2014

2 G R O U P Financial highlights of Q Pre-tax profit: DKK 173m Outlook raised by DKK 100m Forward-looking activities: Pre-tax profit: DKK 248m Non-life Insurance Pre-tax profit: DKK 212m CR: 82.6 Expense ratio: 15.9% Premium growth: 0.6% Life and Pension Pre-tax profit: DKK 27m Risk result: DKK 26m Bonus potential: DKK 1.0bn Bonus rate: 11.0% Banking Pre-tax profit: DKK 22m Writedowns: DKK 7m Lending stabilised Higher trading income Winding-up activities: Loss: DKK 75m Writedowns: DKK 60m 2

3 Several non-recurring events lifted the profit in Q2 Financial highlights, H1 G R O U P Few major claims Gain in Life and Pension related to disability insurances Trading activity lifted fee income in the bank Positive value adjustments of assets taken over Outlook for 2014 Improved based on strong H1 performance H2 expectations are unchanged Group Pre-tax profit: DKK 249m Non-life Insurance Pre-tax profit: DKK 344m CR: 85.9 Expense ratio: 16.4 Life and Pension Pre-tax profit: DKK 50m Banking Pre-tax profit: DKK 44m Winding-up activities Pre-tax loss: DKK 160m 3

4 N O N - L I F E I N S U R A N C E Pre-tax profit DKKm Technical result Investment return after technical interest NON-LIFE INSURANCE Highlights Q2 pre-tax profit of DKK 212m Strong technical result Negative investment return due to lower interest rates Q2 H1 Combined ratio of 82.6 in Q2 Few underlying claims Major claims lower than expected Weather-related claims hit by cloudburst Positive impact from run-offs Underlying CR improved Y/Y to

5 Premiums impacted by intensified competition N O N - L I F E I N S U R A N C E Premium income DKKm Private Commercial 1,186 1,170 1,206 1,258 1, Premium income up by 0.6% Private up by 0.3% Lower prices due to smaller and lower-priced cars And intensified competition Commercial up by 1.0% Higher average premiums due to ongoing rewriting of building insurances Defection among customers receiving the highest premium increases Q Q Q Q Q

6 Retention rate remains high N O N - L I F E I N S U R A N C E Retention rate 2008 = index Intensified competition impacted the retention rate negatively Competition is still most pronounced on motor insurance Customer satisfaction continued to increase Dec/08 Dec/09 Dec/10 Dec/11 Dec/12 Dec/13 6

7 Combined ratio still strong - and underlying results improved N O N - L I F E I N S U R A N C E Combined ratio Claims ratio incl. reinsurance Gross expense ratio Underlying combined ratio Combined ratio of Strong and better-than-expected quarter Underlying combined ratio of Improved by 6.8 ppts Y/Y Claims ratio incl. reinsurance Weather-related and major claims totalled 10.3% of CR Worsened by 2.6 ppts Y/Y Positive run-offs improved CR by 4.5 ppts But 2.3 ppts lower Y/Y Underlying claims reduced Positive claims development on commercial fire and property Traffic accidents down by 13% Y/Y Expense ratio stable Y/Y Expenses lower than expected Costs related to investments in digitalisation Q2 7

8 N O N - L I F E I N S U R A N C E Weather-related and major claims closer to normal Major claims ratio Major claims down by 2.3 ppts Y/Y Below average annual expectation of 8% Unusually few claims in Q2 Positively impacted by improvement in both Private and Commercial Q2 H1 Major claims ratio Average expectation (8%) Weather-related claims excl. reinstatement up by 4.9 ppts Y/Y Above-average annual expectation of 4% Cloudburst in May Crops damaged by hail Claims in H1 in line with normal expectation Adjusted for reinstatement related to storms in Q Weather-related claims ratio Q2 H1 Weather-related claims ratio Reinstatement Average expectation (4%) 8

9 Combined ratio Expense ratio Peer group comparison N O N - L I F E I N S U R A N C E H1 Note: Combined ratio and expense ratio are stated at group level. Codan figures include Danish business only. 9

10 L I F E A N D P E N S I O N Pre-tax profit DKKm Calculated return on equity Change to shadow account LIFE AND PENSION Highlights Pre-tax profit of DKK 27m - Up by DKK 5m Y/Y Satisfactory risk results Strong growth in total pension premiums Growth in regular premiums still negatively impacted by tax reform Q Q Q Q Satisfactory return on policyholders savings Collective bonus potential up by DKK 87m Bonus rate improved to 11.0% 10

11 L I F E A N D P E N S I O N Pension contributions - Growth in single premiums Total pension contributions DKKm Regular premiums Single premiums Investment schemes Total pension contributions up by 31% Pension premiums up by 45% Y/Y Single premiums up by 150% Regular premiums up by 2.0% Still negative impact from tax reform Inflow of new policyholders secured overall growth in premiums Unguaranteed investment schemes in the bank up by 6.8% Q2 11

12 L I F E A N D P E N S I O N Profit lifted by higher risk result Profit split DKKm Expense and risk results Risk premium Return on investments allocated to equity Result of portfolios without bonus entitlement Change to shadow account Risk premium Satisfactory risk result Lifted by a one-off income related to disability Risk premium increase + Return on equity investments Lower interest rates lifted the return Shadow account in Q2 Unchanged in H H1 Q

13 L I F E A N D P E N S I O N Investment return - Very satisfactory return and improved bonus rate U74* Interest rate group Total Technical interest rate Rate on policyholders savings, Investment assets (DKKbn) Bonus rate (%) Return (% YTD) Bonds 100% 58% 55% 76% 80% 68% Equities 0% 25% 21% 8% 3% 14% Property 0% 17% 15% 12% 10% 14% Fixed-income derivatives 0% 0% 9% 4% 7% 4% *Portfolios without bonus entitlement Strong bonus potential Average bonus rate of 11.0% Up by 0.8 ppt Q/Q Attractive bonus rate for new policyholders of 13.8% Bonus rate on interest rate group 3 improved by 0.8 ppt Rate on policyholders savings Highest rate on private policyholders savings in Denmark 13

14 B A N K I N G Pre-tax profit DKKm Forward looking activities Winding-up activities BANKING Highlights Pre-tax loss of DKK 53m Improved by DKK 10m Q/Q Forward-looking activities Profit of DKK 22m Better than expected Writedowns in line with expectations Higher trading income Growth in full-service customers 14 Q2 Q3 Q4 Q1 Q Winding-up activities Loss of DKK 75m Better than expected Writedowns of DKK 60m

15 B A N K I N G Forward-looking activities - Core earnings improved Income distribution DKKm Net interest and fee income, Private Trading income (excl. value adjustments) Other income Core earnings of DKK 32m (up by DKK 9m Q/Q) Income up by DKK 12m Q/Q Net interest and fee income, Private Increase in fee income (lifted by one-offs) Increase in full-service customers Trading income (excl. value adjustments) Up by DKK 5m Q/Q Higher fee income (lifted by one-offs) Other income Up by DKK 2m Q/Q Increased activity in Leasing Leasing assets of DKK 363m in total Costs lower than expected Q2 Q3 Q4 Q1 Q

16 B A N K I N G Lending stabilised and writedowns back to normal Losses and writedowns DKKm 44 Writedowns maintained at the expected level Level from Q1 sustained Q2 writedowns in line with expectations Lending DKKm Q2 Q3 Q4 Q1 Q Lending has stabilised Slight increase in lending to private customers However, market still characterised by weak demand for loans and repayment of debt 2,583 2,465 2,568 2,510 2, ,328 2,315 2,293 2,288 2,300 Q2 Q3 Q4 Q1 Q Lending to private customers Other loans and advances 16

17 B A N K I N G Winding-up activities Winding-up portfolio Total DKK 4,414m Q Q ,497 2,366 Loss of DKK 75m in Q2 Writedowns of DKK 60m 1,455 Result before writedowns: Loss of DKK 15m 1,262 Positive value adjustments of assets taken over H Writedowns of DKK 123m Result before writedowns: Loss of DKK 37m Agriculture Commercial lending Mortgage deeds 17

18 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '13 Q4 '13 Q1 '14 Q2 '14 B A N K I N G Writedowns as expected Losses and writedowns Writedowns of DKK 60m (H1: DKK 123m) Still challenging conditions for agriculture Primarily affecting pig farmers Writedowns on mortgage deeds remain high But lower than in Loan reductions Loans reduced by DKK 99m (H1: DKK 235m) Commercial lending and mortgage deeds reduced as expected Slight increase in agricultural lending as expected -4 Agriculture Commercial lending Mortgage deeds 18

19 B A N K I N G Solvency unchanged Development in capital need and solvency need DKKm Credit risk Market risk Operational and other risks Excess solvency Excess solvency in line with Q1 level Credit risk increased in Q2 Winding-up activities have increased the concentration risk on some sectors 1, ,131 1, ,083 1,243 1,255 1, ,004 Inspection by Danish FSA Inspection commenced in May 2014 Has progressed satisfactorily The conclusions on the inspection are not expected to change the outlook or the solvency need of the bank 4.9% 5.1% 6.1% 6.1% 6.0% Q Q Q Q Q

20 G R O U P CAPITAL TARGET 30 June 2014 DKKm Target Q Target Q Non-life Insurance (40% of premiums) 2,027 2,027 Life and Pension (8.50% of provisions for insurance contracts) Banking (17.2% of risk-weighted assets)* 1,523 1,521 Buffer related to winding-up portfolio Diversification effects Total capital target 4,133 4,721 *Calculated as the individual solvency requirement as at 30 June 2014 plus 3 ppts New internal capital target Inclusion of buffer related to risk on the winding-up portfolio Calculated as 13% of the book value of the winding-up loans 20

21 G R O U P CAPITAL MODEL DKKm Total capital Q Total capital Q Equity 4,581 4,701 Tax assets Tier 2 capital Total capital for the group 4,566 4,705 Statutory capital requirement for the group, end of period 2,949 2,910 Excess relative to statutory capital requirement 1,617 1,795 Internal capital target 4,133 4,721 Excess relative to internal capital target Excess coverage negative in Q2 New capital target for the group Buffer relating to winding-up portfolio included 21

22 G R O U P Full-year outlook for Up by DKK 100m DKK m Pre-tax profit Forward-looking activities: Pre-tax profit of DKK m Non-life Insurance Pre-tax profit: DKK 575m - Up by DKK 50m CR at the level of 89 Expense ratio at the level of 16% Premium growth below 1% Life and Pension Pre-tax profit: DKK 80m - Up by DKK 5m Return on investments allocated to equity of approx. DKK 3m Banking Pre-tax profit: DKK 50m - Up by DKK 10m Writedowns of around DKK 35m 22 Winding-up activities: Loss of DKK m (improved by DKK 50m)

23 Highlights G R O U P Non-life Insurance: Strong performance of underlying business Life and Pension: Growth in pension payments, but still negative impact from tax reform Banking: Earnings in the bank improved and were better than expected Winding-up activities: Writedowns in line with expectations, but result lifted by one-offs in H Outlook raised after a satisfactory first half year 23

24 24 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.

25 Alm Brand Results for Q Morning presentation, Carnegie 22 August 2014