If P&C developmentsIf P&C developments

Torbjörn Magnusson, CEONordic Insurance Seminar, October 2011

Agenda

If P&C’s performancep

Nordic marketNordic market

UW excellence

2

Performance over time

24.3%24.0%

23.7% 23.7%24.1%

23.7%

Cost ratio

23.4%Combined ratio

90 5% 90 6%91.8% 92.1% 92.8% 92.7%

2005 2006 2007 2008* 2009 2010 6M-2011

G W itt P i (MEUR)

90.5% 89.9% 90.6%

3962 4019 4085 4057 38884189 4326

Gross Written Premiums (MEUR)

2005 2006 2007 2008 2009 2010 6M 20112005 2006 2007 2008 2009 2010 6M-2011

2005 2006 2007 2008 2009 2010 R12 Q2-2011

* Cost ratio affected by the acquisition of Region, Russia 3

Highlights 6M 2011

MSEK 6M-11 6M-10 % changeGWP 23 709 24 719 -4.1%Technical result 2 037 2 056 -0.9%Technical result 2 037 2 056 0.9%Investment result 2 745 2 607 5.3%Operating result 3 762 3 288 14.4%Result for the period 2 780 2 431 14.4%

Risk ratio 69.4% 70.6% -1.3%-pCost ratio 23.4% 23.5% -0.1%-pCombined ratio 92.7% 94.1% -1.4%-pInsurance margin 11.1% 10.9% 0.2%-p

RoE full tax 14.8% 24.8% -10.0%

FTE net 6 352 6 381

Inv result, marked to market 1 737 3 271Reversal of fair value changes *) -803 0

•Strong financial performance well in line with long-term targets•Associated company Topdanmark had EUR 3 million positive effect on profitSt bl lt

4

Reversal of fair value changes ) -803 0Inv result, marked to market, net 934 3 271

*) Related to reclassified holdings as an effect of extended holdings in Topdanmark

•Stable results vs. peers•Continued focus on business initiatives

Results by Business Area

93.5% 94.6%92.1%

93.0%

88 4%

91.4%93.0%

88 4%

91.4%

Private Commercial

88.4%88.4%

2010 Q2-2010 Q2-20112010 Q2-2010 Q2-20112010 Q2-2010 Q2-2011

90.6%

87.0%

90.8%93.4%

90.6%

87.0%

90.8%93.4%

Industrial Baltic & Russia

84.0%

80.8%

84.0%

80.8%

2010 Q2-2010 Q2-2011 2010 Q2-2010 Q2-20112010 Q2-2010 Q2-2011 2010 Q2-2010 Q2-2011

5

Business Initiatives

Personal risk and health

Digitalization Partnerships

6

Digitalization in focus

Di it l ki i t O I t t

If’s internal processes Customer view on digital If

Digital working environment• Nordic production systems

• Nordic internet systems

Di it l i ti

Open Internet• Find information

• Buy an insurance

R t l i• Digital communication

with partners/customers

• Modern technology

• Report a claim

• Learn about If

• Network with If

Digital processes• Automated claims

• E-health declaration

If Login• See, manage & buy

insurancesE health declaration

• Automatic renewals

• Payment handling

• Partner access to databases

insurances

• Report a claim

• Update personal

information

7

• Customer communication • Communicate with If

E-Customership

Agenda

If P&C’s performancep

Nordic marketNordic market

UW excellence

8

Market growth

Growth Nordic P&C markets 2005-2010 Total Nordic P&C market growth

115

125 Norway CAGR: 4.1%

Growth Nordic P&C markets 2005 2010 Total Nordic P&C market growthIndex (2005 = 100) Index (2005 = 100)

105

110

110

115

120

Denmark CAGR*: 2.9%

Finland CAGR: 2.5%

95

100

95

100

105 Sweden CAGR: 1.6%

95

2005 2006 2007 2008 20092005 2006 2007 2008 2009 2010

Sweden Norway Finland Denmark

9

Source: National insurance associations. Danish market figures available until 2009 *Note: CAGR 2005-2010 for all countries except Denmark where CAGR 2005-2009 is shown. Growth based on total premium indexed with base year 2005 Total Nordic premium has been calculated using constant 2005 exchange rates to eliminate currency effects

Nordic P&C market 21B EUR

10Source: National insurance associations statisticsGWP, average exchange rates for 2010 applied; Danish market statistics from 2009

Nordic market developments

Changes in competition Consolidation

17% 21%7%

17% 17% 18%

40% 37%

83% 79%93%

83% 83% 82%

60% 63%

2002 2002 2002 20022010 2010 2010 2009

Total market share – top four Market share – smaller pcompanies companies

Solvency ratio

Solvency ratio for selected Nordic P&C companies(Calculated according to If’s solvency ratio principles)

Source: Annual reports 12

Agenda

If P&C’s performancep

Nordic marketNordic market

UW excellence

13

Underwriting excellence

If P&C’s long term financial targets Quarterly combined ratios over time

100%

financial targets

Combined ratio

y

90%

95%

< 95 %

80%

85%

Return on EquityQ1 ‐ 05

Q2 ‐ 05

Q3 ‐ 05

Q4 ‐ 05

Q1 ‐ 06

Q2 ‐ 06

Q3 ‐ 06

Q4 ‐ 06

Q1 ‐ 07

Q2 ‐ 07

Q3 ‐ 07

Q4 ‐ 07

Q1 ‐ 08

Q2 ‐ 08

Q3 ‐ 08

Q4 ‐ 08

Q1 ‐ 09

Q2 ‐ 09

Q3 ‐ 09

Q4 ‐ 09

Q1 ‐ 10

Q2 ‐ 10

Q3 ‐ 10

Q4 ‐ 10

Q1 ‐ 11

Q2 ‐ 11> 17.5 %

14

Leveraging on Nordic synergies

Expense ratio improvements

• Economy of scale through unrivalled critical mass on a Nordic basis

• Centralized IT and support functions18 5%

19.0%

19.5%

• Centralized IT and support functions

• Capacity to invest:

• Automation of claims process17.5%

18.0%

18.5%

• Nordic production system

• Nordic payment system

16 0%

16.5%

17.0%

16.0%2004 2005 2006 2007 2008 2009 2010

Expense ratio If

Note: Weighted average of leading P&C companies in the NordicsSource: Company reports

Expense ratio (Nordic average excl. If)

15

Strong diversification benefits

Sources of diversification Standard deviation of combined ratio

2.6%If• Business segments

• Large claims

Standard deviation of quarterly combined ratios* (%-points)

5 6%

5.3%

P hj l

Gjensidige

Large claims

• Weather effects / Events

5.6%

5.6%

TopDK

Pohjola

5.7%

0% 2% 4% 6%

Tryg

* Average combined ratio calculated based on quarterly stand-alone figures for Q1 2005 – Q4 2010 Source: Company reports 16

Solvency capital and ratio

* Solvency ratio, (IFRS) % = + solvency capital+ premiums earned from 12 months

x 100%

17

Investments

Mark-to-Market Investment ReturnsInvestment Allocation of Total EUR 11bn

Duration 1.6 yearsFixed income running yield 3.9%

% H1/11 H1/10M-t-m return 1.7 3.1

18

If is well prepared for Solvency II

• Internal model pre application process is on-going• A Risk Data Storage (DWH) in placeA Risk Data Storage (DWH) in place• A Reporting Tool is being developed• ORSA draft to be presented to boards in 2012

• We aim for an approved partial internal model in 2013

• Issues:• Uncertainties in and late changes of Solvency II Level 2Uncertainties in and late changes of Solvency II Level 2

and 3 requirements • Extremely onerous reporting requirements• Key resources dependency

19

If well positioned for Solvency II

–Capital base in relation to NWP (Q4 2010)

58%

71%

79%

34%

58%

17%

Solvency I Capital requirement -"internal model"

QIS 5 (Solvency II) S&P - diversified target capital

Actual Solvency ratio/ Regulatory

irequirements)

requirementsrequirements requirements

20

Capital ratios If group Q2 2011

80%90% Key ratios:

59%

68%

80%

60%

70%

80% • Solvency I: Solvency requirement/NWP = 20%

35%

30%

40%

50%• Internal model:

Economic capital/NWP = 35%

• QIS 5 as of Q4 2010 (Solvency II) :

20%

10%

20%

30% (Solvency II) : SCR/NWP = 59%

• Actual Solvency ratio: Solvency capital/NWP = 80%

0%

Solvency I Economic Capital ‐

"internal model"

QIS 5 (Solvency II)

S&P Div cap req/NWP

Actual Solvency ratio

21

Strong underwriting and risk control

S&P upgraded If’s Enterprise Risk Management (ERM) grade to “Strong“ in Feb 2011

Some examples of ERM-rating

Excellent No companies

If AXA Hannover Re Munich

The decision was based on If’s

• Strong underwriting control

G d i k lStrong If, AXA, Hannover Re, Munich Re, RSA

Adequate with positive trend Gjensidige, Aviva

Adequate with strong risk

• Good risk control

• Good risk management culture

• Good risk governanceAdequate with strong risk controls Tryg, Storebrand (Liv)

Adequate Länsförsäkringar

Weak Unity Re

• Good risk appetite statement

• Well established planning process

• Handling of deviations in a good wayWeak Unity Re

Not Rated Folksam and TopDanmark

Handling of deviations in a good way

Note: Date for data 22.9.2011 22

– Relax, we’ll help you