Performance Figures from TM for 2006

Transcription

1 Earnings release Reykjavík, 15 February 2007 Performance Figures from TM for 2006 Principal figures for the year The Norwegian insurance company Nemi became part of the consolidation as of 1 September 2006; this makes affects comparison of Income Statement and Balance Sheet figures with those of the previous year. Profit for the year came to ISK 696 m, against ISK 7,199 m for Written premiums in Iceland grew by 21% to reach ISK 7,282 m. There was a 61% increase in written premiums, which amounted to ISK 9,682 m. Losses on the year s insurance operations came to ISK 358 m, compared with a loss of ISK 481 m in Losses on domestic insurance operations came to ISK 48 m. Profit per share for the year came to ISK Investment income came to ISK 4,808 m, compared with ISK 7,707 the previous year. Shares in associates yielded a loss of ISK 1,254 m, against a profit of ISK 2,679 the previous year. TM s total assets grew by 125%, from ISK 30,777 m on 31 December 2005 to ISK 69,379 m on 31 December Principal figures for Q Profit at TM came to ISK 232 m. Losses on insurance operations amounted to ISK 183 m. One-off costs amounting to NOK 10 m in connection with Nemi were recorded during the quarter. Comments Óskar Magnússon, President & CEO of TM, says 2006 was a year of firm growth in the company s operations, both in terms of operations and assets. Insurance operations are now divided into two parts; those of the parent company, on the one hand, and those of Nemi, the Norwegian subsidiary, on the other, which was included in the consolidated accounts of TM for the last four months of Nemi declared a profit of just over NOK 20 m for the year as a whole, but a loss of nearly NOK 6 m during the four months in which it was owned by TM. Written insurance premium in Iceland rose by 21% as compared with the previous year to reach ISK 7,282 m in Including Nemi s premiums, the increase in written premiums for the consolidation came to 61%, these premiums totalling ISK 9,682 m in The trend in claims in two insurance classes in Iceland gives cause for concern. Non-mandatory motor insurance yielded a substantial loss, and measures were taken near the end of the year to counter this development. Seamen s accident insurance continued to produce losses, as a result of which a two-part strategy was adopted last year, consisting of a high-profile safety campaign and an increase in premiums. Two claims following marine losses in Norway in Q4, had a heavy impact on Nemi s insurance operations during the period. The company s asset portfolio is now far more diversified than before. Changes in the value of shares in one company accounted for most of the change in the fair value of the asset portfolio value in 2005; in 2006, however, share prices in many companies contributed to the change in the portfolio value, a third of which was due to rises in the share prices of listed companies abroad. Losses occurred, however, on associated companies, due mainly to the loss on ISP, the largest asset of which is Icelandic Group. The company s Balance Sheet more than doubled in 2006, says Óskar. The acquisition of the Norwegian insurance company Nemi was finalised in September, so it is now a wholly-owned subsidiary of TM. To cover this acquisition, TM s equity was raised by ISK 6 billion in Q4. For further information, please contact Ágúst H. Leósson, VP of Finance, tel

2 Key figures from the operations of Tryggingamiðstöðin hf. In ISK thousands Q Q Q Q Q Net insurance premium revenue Investment income ( ) Net Income Net insurance claims ( ) ( ) ( ) ( ) ( ) Other operating expenses ( ) ( ) ( ) ( ) ( ) Expenses ( ) ( ) ( ) ( ) ( ) Results of operating activities ( ) Finance costs ( ) ( ) (71.320) (6.594) (3.143) Share of profit of associates ( ) ( ) ( ) Profit (loss) before tax ( ) Income tax expense (17.469) ( ) ( ) ( ) Profit (loss) for the period ( ) Equity holders of the Company ( ) Minority interest (937) ( ) Principal ratios and information Ratios from insurance operations % % 1. Net claims from net insurance premiums... 95,9 98,4 2. Other operating expenses from net insurance premiums... 27,5 29,8 3. Investment income from net insurance premiums... 18,0 18,3 4. Ratios ,4 109,8 5. Parent Company s solvency of minimum solvency Parent Company s adjusted solvency of minimum solvency Other ratios 7. Return on equity... 4,4 74,8 8. Equity ratio... 31,7 52,3 Isk. Isk. 9. Profit (loss) per ISK of share capital s face value... 0,75 7, Dividend per ISK of share capital s face value... 2,00 1, Average number of shares outstanding (Ikr '000)

3 In ISK thousands Change Total assets ,4% Total equity of the Company's holders ,8% Minority interest ,1% Total liabilities ,8% Income Statement Profit for the year came to ISK 696 m, against ISK 7,199 m in Operating profit for the period, before financial expenses and interest in subsidiaries, came to ISK 2,820 m, compared with ISK 6,059 m in Profit per share in 2006 came to ISK 0.75; in 2005 it was ISK Revenues Written premiums for 2006 amounted to ISK 9,682 m, compared with ISK 6,011 m in 2005; this represents a rise of 61%. If the effect of the acquisition of Nemi is excluded, the increase was 21%. Net insurance premium revenues for 2006 came to ISK 6,652 m, an increase of 36% from the figure of ISK 4,890 m for If Nemi is not included, the increase was 19%. Investment income for the year amounted to ISK 4,808 m, against ISK 7,707 m for Expenses Claims paid by TM in 2006 totalled ISK 7,674 m, compared with ISK 5,697 m in 2005, an increase of 35%. If Nemi is excluded, the increase in claims met comes to 8,5%. TM s net insurance claims for the year amounted to ISK 6,376 m, a 33% increase from the figure of ISK 4,812 m for the previous year. Excluding figures for Nemi, the increase is 16%. No major claims were filed with TM in Iceland, but Nemi received two claims for marine losses in Q4. The main explanations of the increase in claims expenses in Iceland last year are the rise in the number of customers as well as inflation, which was 6.9% last year, compared with 4.4% in Operating expenses amounted to ISK 2,264 m in 2006, against ISK 1,727 m in A one-off expense item of about NOK 20 m was entered in Nemi s accounts to cover estimated end-of-employment agreements with the company s former CEO and other expenses relating to the acquisition of the company. If figures for Nemi are excluded, the increase in the company s operating expenses came to just under 7% compared with the previous year. Financial items The company s share of profit in associates was negative by ISK 1,254 m; in 2005 it was positive by ISK 2,679 m. The main explanation of this was the loss on ISP, which since the end of August 2006 has been a wholly-owned subsidiary of TM. ISP s main holdings are in Icelandic Group and Avion Group. Capital expenses came to ISK 787 m in 2006, compared with ISK 4 m in This is accounted for by changes in the company s financing: borrowed funds came to ISK 11,978 m at the end of 2006, while it had no loans at the end of Balance Sheet Assets TM s total assets as of 31 December 2006 came to ISK 69, 379 m. The figure at the end of 2005 had been ISK 30,777 m; thus, assets had grown by 125% over the year. The inclusion of Nemi and ISP has resulted in major changes in the asset structure. 3

4 Equity and Liabilities TM s equity stands at ISK 21,972 m, and rose by ISK 5,882 m over the year. Dividend of ISK 1,809 m was paid out and the company sold its own shares valued at ISK 777 m during the year. A stock issue was also launched in which equity was raised by ISK 5,731 m. Liabilities stood at ISK 47,407 m on 31 December, having risen by ISK 32,720 over the year, largely due to the inclusion of Nemi and ISP in the accounts. Cash Flow Cash from operations came to ISK m over the year; the corresponding figure for 2005 was ISK 2,448 m. Cash on hand rose by ISK 7,879 m over the year and stood at ISK 8,702 m on 31 December Operational trends Here follows a survey of performance by the individual sectors of the company s operations and the changes that occurred, with a comparison, firstly, of results for 2006 and 2005 and, secondly, of the fourth quarters of both years. Operations are divided into three segments: Non-life insurance, life insurance and financial business. In ISK thousands Non-life insurance Life insurance Financial business Group Net insurance premium revenue Investment income Net income Net insurance claims ( ) ( ) (30.167) (13.426) ( ) ( ) Other operating expenses ( ) ( ) (77.658) (46.448) ( ) ( ) ( ) ( ) Expenses ( ) ( ) ( ) (59.874) ( ) ( ) ( ) ( ) Results of operating activities ( ) ( ) (3.689) (12.689) Finance costs ( ) (4.437) ( ) (4.437) Share of profit (loss) of associates ( ) ( ) Profit (loss) before tax ( ) ( ) (3.689) (12.689) Income tax (82.906) ( ) Profit (loss) for the year Equity holders of the Company Minority interest (1.774)

5 In ISK thousands Non-life insurance Life insurance Financial business Group 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q Net insurance premium revenue Investment income Net income Net insurance claims ( ) ( ) (13.007) (5.261) ( ) ( ) Other operating expenses ( ) ( ) (20.716) (22.620) ( ) ( ) ( ) ( ) Expenses ( ) ( ) (33.724) (27.881) ( ) ( ) ( ) ( ) Results of operating activities ( ) ( ) (3.490) (12.793) Finance costs ( ) (3.143) ( ) (3.143) Share of profit (loss) of associates Profit (loss) before tax ( ) ( ) (3.490) (12.793) Income tax (17.469) ( ) Profit (loss) for the period Equity holders of the Company Minority interest 874 (938) Operational Prospects and Future Vision TM s growth prospects remain good, not least through its close collaboration with Nemi and also its growing foreign customer group. Particular efforts were made to improve performance in the non-life insurance sector last year, and their results have already been partially realised. The measures taken include a campaign for accident-prevention measures and the introduction of higher premiums. It should be remembered, however, that claim levels fluctuate widely and can have a radical effect on operational performance. claims levels can change suddenly, which makes non-life insurance very vulnerable. The acquisition of Nemi has resulted in a greater spread of premiums across insurance sectors. Motor insurance premiums, for example, accounted for over 40% of the total in 2005, but only about 20%, on an annualised basis, last year. The broader spread of the asset portfolio has been mentioned above. This results in a lower of investment risk, which is a natural policy to pursue for a company of this type. The Icelandic stock market underwent considerable cyclical changes last year, which made it all the more important that this diversification had taken place; 1/3 of the changes in the fair value of the asset portfolio in 2006 were due to holdings on overseas markets. In the light of this, the intention is to take further steps in this direction in Approval and Auditing TM s board and President & CEO today approved the Annual Statements for The Financial Statements have been audited. The Annual Financial Statements can be found on the company s website, Forthcoming scheduled statements Q1 Interim Statement Q2 Interim Statement Q3 Interim Statement Earnings Release