Results for Q2 2019
WEBCAST 20 AUGUST 2019
2
Financial highlights of Q2 2019
Satisfactory pre-tax profit of DKK 145m
Non-lifePre-tax profit: DKK 122m• Combined ratio: 89.9• Expense ratio: 18.4• Growth in premiums: 1.6%
LifePre-tax profit: DKK 21m• Portfolio growth: 6.5%• Bonus rate: 13.7%
BankingPre-tax profit: DKK 15m• Amortisation of customer relationships:
DKK 8m• Writedowns: DKK 20m reversal• Growth in full-service customers,
Totalkredit loans and Financial MarketsOther activitiesPre-tax loss: DKK 13m
Comments on Q2
3
Consolidated pre-tax profit of DKK 145m• Return on equity of 12,4% p.a.Positive results in all business lines – full-year guidance up DKK 50mNon-life, profit of DKK 122mOutperformed expectations• Few major and minor claims plus positive run-off results• Negative effect from investment result of DKK 12mLife, profit of DKK 21mSatisfactory profit• Portfolio growth driven by corporate customer segmentBanking, profit of DKK 15mProfit as expected• Satisfactory customer growth and increased activity
Financial highlights, H1
Group Pre-tax profit: DKK 370mNon-lifePre-tax profit: DKK 317m• CR: 87.2• Expense ratio: 18.2LifePre-tax profit: DKK 50mBankingPre-tax profit: DKK 31mOther activitiesPre-tax loss: DKK 28m
ALM. BRAND FOR THE CUSTOMER Strategic 2022 goals
* New method
• Digitalisation continues to drive efficiencies and customer service• New products for non-life
customers -> modern, efficient, digital
• RoE YTD reached 15.7%, which waswell above target
• Continued growth in new group-widecustomers• Improved quality
• Positive trend in NPS, increasing from 47 to 64*• Group-wide customers score
significantly higher in NPS
NON-LIFE INSURANCELower level of major and minor claims –
satisfactory results
Pre-tax profit of DKK 122m• Outperformed expectations
Technical result• Lower level of major and minor claims• Positive run-off results• Negative effect from building insurance claims and significant
decline in discount rate
Investment result• Investment loss of 13m
Premium growth of 1.6%• Lower than expected
N O N - L I F E
Pre-tax profitDKKm
5
1 72207
1 52 1 3 5
4922
4
-1 3
221 229
156
122
2016 2017 2018 2019Q2
Investment return after interest on provisionsTechnical result
N O N - L I F E
6
Combined ratio
Combined ratio of 89.9Better than expected – normal level of 91-92
+ Run-off gains improved CR by 3.4 ppts (excl. run-off gains on risk margin)
+ Major and minor claims lower than expectedUnderlying combined ratio of 84.1Improved by 0.7% ppt compared to Q1 when adjusted for decline in discount rate of almost 1% pptExpense ratio of 18.4As expected – anticipated full-year level of 17
Combined ratio
Underlying combined ratio
86.2 83 .8 88.4 89.9
8.53 .7
4.8 3 .494.7
87 .5 93.2 93.3
2016 2017 2018 2019Q2
Run-off, claims Combined ratio
65.8 64.1 66.3 65.7
1 7.5 1 8.4 1 7.6 1 8.4
83.3 82.5 83.9 84.1
2016 2017 2018 2019Q2
Gross expense ratioUnderlying claims ratio incl. reinsurance
Major and weather-relatedclaims
N O N - L I F E
Major claims ratio
Major claims of 6.8% Better than expected range of 7-8%• Number of claims above expectations – but total
expenses lower than expected• Major claims totalled DKK 91m
• Down by DKK 25m Y/YWeather-related claims of 2.7%As expected• Low level of extreme weather conditions, except for a
higher number of lightning claims in June• Weather-related claims totalled DKK 36m
• Up by DKK 22m Y/Y against exceptionally low levelin Q2 2018
Weather-related claims ratio
7
2.5%
1.1% 1.1%
2.7%
0.1%
2016 2017 2018 2019Q2
ReinstatementWeather-related claims ratioAverage expectation (3-4%)
8.5%
3.7%
8.8%6.8%
2016 2017 2018 2019Q2
Major claims ratioAverage expectation (7-8%)
Growth in premiums
Premium income up by 1.6% Y/YBelow growth expectations - Affected by negative discount rate and very competitive
market- Continued high retention rate in both segments in Q2 2019
Private up by 0.6%
Commercial up by 2.6%
Premium incomeDKKm
8
N O N - L I F E
601 620 649 665
646 658 668 67 2
1,247 1,278 1,317 1,337
2016 2017 2018 2019Q2
Private Commercial
Private Combined ratio of 89.5Outperformed expectations+ 3.5 ppts below Q2 2018+ Lower level of expenses for major claims and positive claims
experience for household comprehensive, accident and motor insurance
Weather-related claimsImpacted CR by 1.9 ppts – as expected although higher than in Q2 2018Major claims Impacted CR by 2.2 ppts- Claims expenses lower than expected
Run-off gains Improved CR by 3.1 ppts (excl. run-off gains on risk margin) Expense ratio of 20.2%• Slightly better than expected with high level of investments in
digitalisation
N O N - L I F E
Combined ratio, private
9
67 .0 67 .0 7 3 .0 69.3
1 8.7 20.020.0 20.2
85.7 87 .093.0 89.5
2016 2017 2018 2019Q2
Gross expense ratio Claims experience
Combined ratio of 90.4In line with expectations+ Few major and minor claims+ Lower run-off gains than in Q2 2018 and affected by extremely low
interest level
Weather-related claims• Impacted CR by 3.6 ppts
- Higher than in Q2 2018- Slightly higher than expected
Major claims• Impacted CR by 11.4 ppts
- Slightly higher number of claims than expected – but lower total claims
Run-off gains • Improved CR by 3.6 ppts (excl. run-off gains on risk margin)
- Lower run-off gains from workers’ compensation as expected
Expense ratio of 16.5%• Slightly higher than expected
Combined ratio, commercial
10
Commercial
N O N - L I F E
7 0.6 63 .9 68.5 7 3.9
1 6.11 6.6 1 5.2
1 6.586.7
80.5 83.790.4
2016 2017 2018 2019Q2
Gross expense ratio Claims experience
LIFE INSURANCEResults in line with expectations
11
Pre-tax profitDKKm
Pre-tax profit of DKK 21mIn line with expectations
Satisfactory underwriting profit Although lower than in Q2 2018
Return on investments allocated to equityNegative by DKK 1m
Bonus rate of 13.7%Down by 4.6 ppts YTD• Affected by extremely low interest rate level and development
in VA premium• Development in Q3 results in bonus rate of above 10%
Rate on policyholders’ savings in 2019: 3.5% • Continued competitive rate on guaranteed products
L I F E
24 25 25 22
2
-1 -1
26 24 2521
2016 2017 2018 2019Q2
Return on investments allocated to equityProfit before tax
Pension contributions
Pension premiums down by 11.6% Y/Y• Regular premiums up by 2.8%• Single payments down by 20.3% against very high level in
Q2 2018- Up by 35% when compared to Q2 2017
• Portfolio growth of 6.5%
Market schemes• Payments up by 17% Y/Y
- Growth driven especially by commercial segment• Customers’ savings up by 80% Y/Y to DKK 7.4bn
L I F E
Total pension contributionsDKKm
12
Insurance provisionsDKKm
152 151 168 172161 164
27 6 220108 114
232187421 429
676579
2016 2017 2018 2019Q2
Pension schemes in banking Single Premiums Regular Premiums
12,535
13,385
14,165
15,701
2016 2017 2018 2019Q2
Insurance provisions
Profit split
Expense, risk and group life results• Expense result positive, improved by DKK 1m
Y/Y• Risk result of DKK 9m, down by DKK 7m Y/Y• Group life result of DKK 3m, improved by DKK
1m Y/Y
Interest rate result of DKK 7m• Risk allowance 20 bps• Increased life insurance provisions
Result of portfolios without bonus entitlement- Improved by 1m Y/Y
Return on investments allocated to equityImpacted by low interest rate environment
13
Profit splitDKKm
L I F E
18 18 19
14
5 6 6 7
1 1 0 1 2
-1
0
-1
2016
2017
2018
2019
2016
2017
2018
2019
2016
2017
2018
2019
2016
2017
2018
2019
Q2 Q2 Q2 Q2Expense, risk andgroup life results
Interest result Result of portfolioswithout bonus
entitlementReturn on investments
allocated to equity
BANKINGHigh growth in customers and profit as expected
Pre-tax profit of DKK 15m• Profit as expected – although composition was not
satisfactory• Reversal of writedowns of DKK 20m• Performance negatively affected by intense competition
and extremely low interest ratesCore earnings of DKK 15m, up by DKK 4m Y/YInvestment portfolio earnings loss DKK 12m• Affected by negative interest rate environment
14
Profit before taxDKKm
Income splitDKKm
B A N K I N G
1 9 1 3 1 1 1 56 4
-7 -1 2
00
-8 -8-1 0
1 5 25 2015
32 21 15
2016 2017 2018 2019Q2
WritedownsAmortization, customer relationshipsInvestment port folio earningsCore earnings
90
3618
30
-7
88
50
19 17
-12Net interest feeand fee income
Trading Leasing Other Investmentsportfolioearnings
Q2 2018 Q2 2019
Business volume
B A N K I N G
Business volumeDKKbn
15
Total business volume of DKK 21.9bnUp by DKK 0.8bn relative to 31 December 2018
General developments:• Growth in Pluskunder* of 7% YTD in the retail
bank – more than half referred from the group’s other business areas
• Totalkredit mortgage loans grew by DKK 500m• Growth and higher activity in Financial Markets • Growth and increased market share in
Commercial leasing* Customers who use Alm. Brand Bank as their main banker
*) including the winding-up portfolio
2.5 2.6 2.8 4.2 4.8 4.9
5.9 7 .0 8.0
14.816.2 15.3
0.60.7
1 .0
1 .00.9 1.0
9.010.3
11.7
20.021.9 21.2
Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 *) 2018 *)
Retail LendingMortgageLeasing
CAPITAL MODELG R O U P
16
Development in excess capitalDKKm
Excess capital of DKK 382m- Due to Q2 2019 earnings- Lower capital target- Intangible asset related to customer
relationships reduced by tax effect
Change in capital target• Life increased (DKK +36m) as a result of
higher provisions• Growth and interest rate level
• Non-life increased (DKK +20m) due to growth in premiums
• Banking decreased (DKK -96m) partly as a result of lower market risk exposure
1 61
382
123
44
16
40
-2
Q1 2019 excess capital
Q2 2019 profit
Profit and risk margin
Tax
Other
Change incapital target
Q2 2019 excess capital
17
Full-year outlook for 2019Up DKK 50m on guidance provided in Q1 2019 interim report
DKK 625-725mPre-tax profit excl. run-off result for the rest of the year
Non-lifePre-tax profit: DKK 600m• Up by DKK 50m• Combined ratio: Around 89 (89-90)• Expense ratio: About 17• Growth in premiums: Around 2% (2-3%)
LifePre-tax profit: DKK 90m• Growth in premiums: 7-8%
BankingPre-tax profit: DKK 50-70m• 3-5% (5-8%) growth in lending to retail
customers
Other activitiesPre-tax loss: DKK 65m
HighlightsSatisfactory Q2 results– although challenging interest rate environment affected all business areas
18
Non-life• Lower level of major and minor claims – satisfactory results• Lower than expected growth• Positive run-off resultsLife• Growth in regular premiums and profit as expected• Single payments down from very high Q2 2018 level• Bonus rate down – affected by extremely low interest levels –
bonus rate remained competitive Banking• Satisfactory customer growth and profit as expected• Favourably affected by reversal of writedownsOutlook 2019• FY pre-tax profit of DKK 625-725m*� Up DKK 50m on guidance provided in Q1 2019 interim report
* Excl. run-off result for the rest of the year
Webcast 20 August 2019