CMD Agenda, 30 May 2013

Transcription

1 CMD Agenda, 30 May Welcome - Kari Stadigh, Group CEO and President, Sampo Group Torbjörn Magnusson, Head of P&C Insurance, Sampo Group Christian Sagild, CEO of Topdanmark Break Torsten Hagen Jørgensen, Group CFO of Nordea Bank Closing Remarks Björn Wahlroos, Chairman of the Board, Sampo Group Q&A 1

2 Welcome Sampo Group, Capital Market Day 2013 Kari Stadigh, Group CEO and President

3 Internal dividends EURm P&C insurance (total 2,159) Nordea (total 888) Life insurance (total 300) Dividend payout ratio for (average): P&C insurance: 83.2% Nordea: 40.6% Life insurance: 56.8% 2

4 Welcome Sampo Group, Capital Market Day 2013 Kari Stadigh, Group CEO and President

5 If P&C Sampo Capital Market Day May 30, 2013 TORBJÖRN MAGNUSSON, CEO

6 If at a glance The leading Nordic P&C insurer GWP EUR 4.7bn Nordic market share of 19%* Solvency of 77% and S&P A rating 6,225 employees Industrial; 14% Baltic; 2% Commercial; 29% Private; 55% * Including share of associated companies 2

7 Performance over time Combined ratio (%) ROE (%) and ROI (%) 53,2% 12,4% 90,6% 91,8% 92,1% 92,8% 92,0% 88,9% 88,7% Q1 (R12) 39,8% 36,9% 39,7% 7,4% 6,1% 19,2% 12,4% 2,6% 1,8% 1,4% -0,8% ,1% Q1 Average ROE of 25.1% Average dividend EUR 495m 3

8 Performance update Q (EURm) Q1-13 Q1-12 Change (%) GWP 1,775 1, % Technical result % Investment result % Operating result % Result for the period % Risk ratio 67.7% 69.0% -1.3%-p Cost ratio 23.2% 22.7% 0.5%-p Combined ratio 90.9% 91.7% -0.8%-p Return on equity 39.7% 52.1% -12.4%-p 4

9 Results by Business Area - Q Combined ratio and GWP growth Private Commercial 91,5% 4,1% 88,1% 3,3% 90,6% 2,7% 4,1% 94,8% 89,0% 2,6% 92,0% 3,2% Q Q1-13 Q Q1-13 Industrial Baltic 92,5% 5,7% 95,8% 3,7% 92,0% 1,3% 89,0% 87,1% 94,6% 0,8% 0,6% Q Q ,3% Q Q1-13 5

10 Nordic P&C market size of EUR 24bn Nordic market shares (%) If ; 18% Other; 35% Tryg; 11% Topdanmark; 5% RSA Scandinavia; 9% Pohjola; 4% Gjensidige; 9% LF; 9% Note: If market share including holding in Topdanmark 19% 6

11 Nordic market mix GWP 2012 (EURbn) If market share Sweden 7,7 19% 25% 26% Nordic 19% Denmark* 6,7 10% Norway 6,5 Finland 3,9 Sweden Norway Denmark* Finland Note: Including holding in Topdanmark *2011 figures 7

12 Market profitability Combined ratio (%) Share of total market 56% 98,8 92,8 93,3 90,9 90,3 88,9 88,2 88,0 86,6 85,4 95,3 85,3 92,3 96,6 97,1 94,2 If Tryg Topdanmark RSA Scandinavia Gjensidige Pohjola Share of total market 96,5 102,0 102,0 100,0 99,0 99,0 97,0 18% LähiTapiola Länsförsäkringar Folksam Q1 8

13 Market development Sweden Developments Market share (%) 5th biggest company (Tryg) only 3% market share New bancassurance agreement 2013 Nordea/If Volkswagen/Audi-If agreement renewed 2013 Price increases in excess of inflation in private lines Aggregator market share <2% 19% 21% 20% 14% 15% 15% 17% 16% 16% 31% 29% 30% 19% 19% 19% If LF Trygg-Hansa Folksam Other 9

14 Market development Norway Developments Market share (%) Growing economy and insurance market Several new entrants , stable market since 2011 Period of high inflation, since 2012 replaced by period of low claims frequency No aggregators, low internet sales 17% 20% 25% 10% 10% 10% 18% 17% 15% 29% 28% 25% 28% 25% 25% If Gjensidige Tryg SpareBank 1 Other 10

15 Market development Finland Developments Market share (%) Acquisition of Tryg branch New bancassurance agreement 2013 Nordea/If Further consolidation LähiTapiola No significant new entrants No aggregators, however internet sales significant 9% 9% 8% 11% 10% 10% 27% 28% 27% 28% 28% 29% 26% 25% 26% If Pohjola Tapiola+Lähivakuutus Fennia Other 11

16 UW focus 12

17 UW focus in practice UW policy with very clear and enforced limitations UW committee with real power as an active challenger Models cannot replace experience and risk aversion in top management Gross underwriting principle Explicit accountability for each underwriting decision Willingness to underwrite only business that is clearly understood Focus on making tariffs effective in distribution 13

18 Pricing: Unrivalled pricing skills Example of price build-up and pricing criteria Objective criteria Customer product choices Customer behavior Price Car Make Objective criteria Age Deductible Customer product choice Young driver Claims Customer behavior Correct customer pricing strongly supports sales and customer retention 14

19 Performance & underwriting culture Incentivised organisation Skills in focus Incentive systems including all employees linked to performance Accountability of results Continuity in management Annual If Pen Award 15

20 Strong pricing and underwriting control Implementation of low interest rate environment Financial discipline 4,1% 3,8% 93% 92% 92% 3,0% 92% 2,4% 89% 89% 2,0% 1,9% 2,4% 2,4% 2,9% 3,3% 2,8% 1,2% R Q1 CR Technical interest Q1 Prior year gains (% of CR) 16

21 Standard deviation, % Average Combined Ratio & Standard Deviation 2007-E Sub-group 2 Sub-group 3 Munich Re Swiss Re Gjensidige Tryg SCOR Topdanmark Hannover Re AVERAGE Aviva Zig Allianz AXA Sampo Generali Sub-group 1 Sub-group Combined ratio, % Source: Macquarie, European Insurance,

22 Creating shareholder value Stable return through underwriting excellence and scale advantage Financial discipline Management commitment to continuous improvement 18

23

24 SAMPO CMD 2013 PRESENTATION OF TOPDANMARK BY CHRISTIAN SAGILD, CEO 30 MAY

25 Agenda The Danish non-life market Profitable growth in that order How to grow profitably Highlights in Q Share buy-back 2 2

26 The Danish non-life market All of the 6 largest players representing a market share of 73% are quoted on the stock exchange Efficient players Operating with an expense ratio of ~ 17% Expense ratio for EU peers around 25-30% Low interest rates increase focus on technical result Provisions for outstanding claims discounted by a zero coupon rate structure Direct market Large Non-Nordic except for RSA do not operate in the personal and SME segments 3 3

27 Entry barriers Disciplined market efficient players Already direct market Low expense ratio Relatively small market Micro rating Takes time to build a profitable portfolio The best way to penetrate the Danish market is to make an acquisition 4 4

28 Entry barriers Example based on experience from Topdanmark: - Premium volume DKK 1,000m portfolio in personal market - CR = 90 or a profit of DKK 100m - Expense ratio 18%, of which 10% new business Premium profile (%) Combined ratio Age of policies number of years Age of policies number of years Total = 100% Weighted CR Total =

29 Entry barriers Example based on experience from Topdanmark: - Premium volume DKK 1,000m portfolio in personal market - CR = 90 or a profit of DKK 100m - Expense ratio 18%, of which 10% new business Accumulated profit shows result of new business after x years Profit (DKKm) kr. Accumulated profit (DKKm) (20) (40) (60) (80) 0 (50) (100) Age of policies number of years (100) Age of policies number of years Total = DKK 100m Profit 20+ = DKK 100m Milestones 6 6

30 Agenda The Danish non-life market Profitable growth in that order How to grow profitably Highlights in Q Share buy-back 7 7

31 Profitable growth in that order In non-life nothing is easier than top line growth What is difficult is growing without diluting CR Topdanmark is primarily exposed to personal, agricultural and SME segments Segments with high claims frequency and low average claims Relatively low volatility in CR due to this strategy combined with riskbased prices (micro rating) and a comprehensive reinsurance programme Reduced exposure to large industrial customers as their profitability does not meet Topdanmark s return requirements E.g. exposure to workers comp reduced by 41% since 2007 Continued limited top line growth expected Expected premium growth of 1-2% in 2013 >1-2% in personal, agricultural and SME segments <1-2% in industrial segment Improved quality in profitability Focus on growth in EPS 8 8

32 Agenda The Danish non-life market Profitable growth in that order How to grow profitably Highlights in Q Share buy-back 9 9

33 Our criteria of success Distribution power Customer satisfaction Pricing Efficiency 10 10

34 Risk-based prices Micro rating How it works! Risk premium Basis for pricing 0 A B C D E F G H 0 A B C D E F G H Company without price differentiation Company with price differentiation 11 11

35 MICRO RATING How it works! 180 Premium increase 180 Lower turnover A B B E E F G H A C C D D F G H Company without segmentation Company with segmentation 12 12

36 Distribution power Strong distribution power in mass market Topdanmark has a multi-distribution strategy Improved distribution agreement with Danske Bank Previously Danske Bank was responsible for the sale of Topdanmark s non-life insurance products to its customers Now Danske Bank only refers potential customers to Topdanmark Topdanmark is responsible for sales Works well and more sales representatives employed to attend to referrals from Danske Bank High correlation between being a good bank customer and a good non-life customer Topdanmark s own sales force strengthened by employment of more sales representatives Strong competitive position in personal, agricultural and SME segments 13 13

37 Customer satisfaction Survival function mono = Total group 9 Annual churn 4% Share of customers 39% Annual churn 7% Share of customers 34% Annual churn 10% Share of customers 22% 1 and 2 Annual churn 14% Share of customers 2% Annual churn 24% Share of customers 3% Days Ambassador B high C Medium D Low E very low TEST GROUP 14 14

38 Improved customer measurements 10% 45% 9% 8% 8.1% 7.7% 39% 42% 40% 7% 37% 6.8% 6% 35% 34% 5.6% 5% 4% YTD 30 April % Unsatisfied customers Ambassadors Source: ASMA telephone measurements 30 April

39 Topdanmark s CR excl. run-off is relatively stable ) Topdanmark Tryg Codan Alm Brand Combined ratio E 1) Scandinavian business 16 16

40 Agenda The Danish non-life market Profitable growth in that order How to grow profitably Highlights in Q Share buy-back 17 17

41 Highlights Q Q profit of DKK 505m (Q1 2012: DKK 561m) Profit per share declined from DKK 4.3 to DKK 4.1 CR improved to 89.6 (Q1 2012: 90.2) CR excl. run-off increased to 93.9 (Q1 2012: 92.2) Premiums increased by 0.8% in non-life insurance and 3.1% in life insurance Investment return declined to DKK 251m (Q1 2012: DKK 505m) Result of life insurance increased to DKK 209m (Q1 2012: DKK 51m) Profit forecast model for 2013 Assumed growth in premiums unchanged at 1-2% for 2013 Assumed CR adjusted from to for the full year 2013, excl. run-off profits / losses in Q2-Q Profit forecast model for 2013 upgraded by DKK 150m to DKK 1,200-1,300m, excl. run-off profits / losses in Q2-Q Buy-back programme for 2013 increased by DKK 150m to DKK 2,150m Buy-back yield of 12.2% 18 18

42 Agenda The Danish non-life market Profitable growth in that order How to grow profitably Highlights in Q Share buy-back 19 19

43 BUY-BACK FOR 2013 Increase from DKK 2,000m to DKK 2,150m Buy-back yield of 12.2 % To date in 2013 shares of DKK 704m bought back Leaving a balance of DKK 1,446m of buy-back for 2013 Since 1998 Topdanmark has cancelled 69.7% of outstanding shares Average price per share: DKK 41 From 2000 to 2012 average buy-back yield has been 9.3% 20 20

44 AVERAGE YIELD OF 9.3% ( ) Yield Average E 21 21

45 Any questions? 22 22

46 Disclaimer This presentation includes statements relating to the future. Such statements are uncertain and involve both general and specific risks. Many factors may cause a significant deviation from the forecasts and assumptions set out in the presentation. Such factors could be, for example, cyclical movements, changes in the financial markets, the financial effect of non-anticipated events like acts of terror or exceptional weather conditions, changes in Danish and EU rules, competitive factors in the insurance industry and the trends in the reinsurance market. Also see Investor Risk management. The above description of risk factors is not exhaustive. Investors and others, who may base decisions relating to Topdanmark on statements relating to the future, should make their own careful considerations on these and other factors of uncertainty. Topdanmark s statements relating to the future are solely based on information known at the time of the preparation of the interim report for Q This publication is a translation. In case of any divergence, the original Danish text shall prevail

47 Nordea s financial plan Sampo Capital Markets Day 2013 Torsten Hagen Jørgensen, Group CFO

48 Disclaimer This presentation contains forward-looking statements that reflect management s current views with respect to certain future events and potential financial performance. Although Nordea believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors. Important factors that may cause such a difference for Nordea include, but are not limited to: (i) the macroeconomic development, (ii) change in the competitive climate, (iii) change in the regulatory environment and other government actions and (iv) change in interest rate and foreign exchange rate levels. This presentation does not imply that Nordea has undertaken to revise these forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes compared to the date when these statements were provided.

49 The financial plan Q result highlights

50 2015 plan progress against our published goals Nordea market commitments Key initiatives and levers Strong capital generation and return of excess capital to our shareholders Capital initiatives to maintain CT1 ratio >13% ROE target of 15% at a CT1 ratio >13% and with normalised interest rates Initiatives for income generation Flat costs Initiatives for cost savings of ~EUR450m Delivering low volatility results based on a well diversified and resilient business model Low risk profile and low volatility 4

51 Well balanced plan to reach ambitious ROE target Return on equity, % ~2p.p. >15% 11.6% ~(1) p.p. >10% ~1p.p. ~1p.p. ~1p.p. >13% 2012 Regulation, net Capital Equity calibration capital effect 1 1 RoE adjusted Income generation Cost efficiency, lower C/I ratio Lower loan losses 2015 ROE forecast Normalised 2 interest rates ROE at normalised interest rates ¹ Average equity and CT1 management buffer 2 Short term interest rates at ~3% 5

52 Initiatives for supporting NII growth and margin expansion Nordea Group income split Initiatives Blended margin 23% 20% Repricing of lending margins 1,30% 1,25% Normalised interest rates 19% 24% 1,20% More business with existing customers 1,15% 58% 56% 1,10% E NII NCI Other income Other (e.g. deposit margins and new customers) 1,05% 1,00% Current expectations E 2014E 2015E Net interest income growth constituting 40-50% of income growth

53 Ancillary income growth driven by product capabilities Nordea Group income split Initiatives Non NII-Income vs. Nordic peers % 20% Risk products 130 Nordea 19% 24% Asset management Nordic peers 58% 56% Transaction related E NII NCI Other income 70 Q4/07 Q2/08 Q4/08 Q2/09 Q4/09 Q2/10 Q4/10 Q2/11 Q4/11 Q2/12 Q4/12 Net commission and Net gains constituting 50-60% of income growth

54 Cost efficiency to further improve in the 2015 plan Nordea total expenses (Excl. FX and variable pay), EURm Comments Flat costs will be maintained throughout 2014 (excluding effect of FX and variable salaries, including profit sharing) Gross savings of EUR450m, in total for , corresponding to 8.7% of total 2012 cost base C/I ratio expected to improve Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Nordea total expenses, EURm ,186 (350) (100) Reinvestments in prioritised areas e.g. IT infrastructure and investments to meet mandatory regulatory requirements 2012 Gross savings Cost inflation FX and variable salaries 2014E Gross savings Cost inflation Reinvestments Reinvestments 2015E 8

55 Loan losses expected to decrease Actual loan losses, bps Comments (10) (20) (30) (40) (16) Average loan loss ratio approximately 16bps For 2012, Banking Denmark and Shipping constituted more than half of loan losses Loan losses expected to revert to around historical average during , following signs of improved conditions in problem areas (50) (60) (70) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q

56 Expectations in summary Nordea financial plan and expectations Income growth CAGR ~4% Including normalised interest rates, CAGR ~6% Cost growth CAGR ~0% (excl. FX and variable salaries) Some cost growth 2015 if supported by income growth Loan loss ratio RWA Approach 16bps during the period Loan loss ratio nearing historical average CAGR ~0% Mitigations compensating regulation CT1 ratio >13% Lending growth CAGR ~2-3% ROE >13% 2015, given expected interest rate development >15% 2015, with normalised interest rates 10

57 The financial plan Q result highlights

58 Financial results Q1/13 EURm Q1/13 Q4/12 Change % Q1/12 Change % Net interest income (2) (1) Net fee and commission income (9) Net fair value result (5) Total income (3) Staff costs (769) (764) 1 (771) 0 Total expenses (1 299) (1 327) (2) (1 276) 2 Cost Income Ratio 51% 50% 50% Profit before loan losses (3) Net loan losses (199) (244) (18) (218) (9) Operating profit Net profit (5) Risk-adjusted profit (2) Return on equity (%) 11.3% 12.3% -100bps 11.9% -40bps Core Tier 1 capital ratio (%) 13.2% 13.1% 10bps 11.6% 160bps Risk-weighted assets (EURbn) unch % 1 Includes Other income 12

59 Stable Net Interest Margin but lower volumes Blended net interest margin development, % 1,5% 1,2% 0,9% 0,6% 0,3% 0,0% Q3/11 Q1/12 Q3/12 Q1/13 Lending- and deposit volumes, EURbn* 107 bps Comments Largely unchanged margin, up 2 bps to 107 bps in Q1 Lower interest rates put pressure on deposit margins Lending margins up somewhat in quarter Improved in Finland and CIB Sweden Demand for corporate lending remains subdued - Increasing importance of capital markets financing Funding gap under control Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Lending volumes Deposit volumes * Excluding Repos 13

60 Robust credit quality Total net loan losses, EURm Comments Underlying credit quality remains robust Stabilisation in level of impaired loans Provisioning ratio increased to 43% Credit quality remains solid in Finland, Norway, Sweden, Baltics and Poland Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Impaired loans, EURm Non-performing Non-performing Non-performing Losses in Denmark and shipping remain at elevated levels but were down in both areas compared to the previous quarter - Loan loss ratio in Banking Denmark decreased from 55 bps to 47 bps in Q1/13* - Ship values seem to be bottoming out, loan loss ratio in shipping decreased from 185 bps to 123 bps in Q1/13 Performing Performing Performing Q3/12 Q4/12 Q1/13 * Excluding provisions to the Danish Deposit Guarantee Fund 14

61 Risk weighted assets Risk-weighted assets, EURbn* Comments RWA flat on previous quarter Increase due to yearly update of operational risk Higher risk weights for commercial and residential real estate exposures due to expired regulatory transition rules. Interimistic impact until AIRB approval Efficiency gains of EUR 2bn - Roll out of Internal Model Method Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 * Basel 2.5 excluding transition rules 15

62 Core Tier 1 ratio Core Tier 1 capital ratio, %* Comments Improved ratio 10 bps sine Q4/12 due to increased core tier 1 capital driven by strong profit generation and reduced shortfall reduction Compliant with our capital policy of a Core Tier 1 ratio of >13% Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 * Excluding hybrids. Basel II excluding transition rules 16

63 RoE development YoY - challenging macro environment and increased capital offset strong underlying business performance RoE, per cent, Q1/Q1 Return on Equity Q Q Comments Strong re-pricing of lending margins since January 2012, and lower loan losses 0,6 0,3 0,2 0,3 1,4 Lower interest rates, higher state guarantee fees and higher shareholders equity offset the improvement ,7 0,2 1,0 0, Business driven +2.1% External factors 2.6% RoE Q1/12 Re-pricing NCI excl state guarantee fees NFV Lower business volumes Lower loan losses Lower interest rates Higher state guarantee fees Increase in capital Other incl FX RoE Q1/13 17

64 Progress in summary Progress on Nordea financial plan , in Q CT1 ratio RWA Income growth Costs Loan losses RoE Core Tier 1 ratio +10 bps in Q1 to 13.2% RWA development in Q1 approx. flat Income holding up Underlying costs flat for 10 th consecutive quarter Decreasing in line with plan RoE slightly down y/y (-60 bps) ( ) ( ) 18

65 Nordea s financial plan Sampo Capital Markets Day 2013 Torsten Hagen Jørgensen, Group CFO