financial results fy 2012 - alm. brand
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1
Alm. Brand
Financial results FY 2012 Webcast presentation 26 February 2013
2
Highlights of FY 2012
Pre-tax profit of DKK 860m before and DKK 380m after losses and writedowns
Non-life Insurance:
Strong underlying business
Strong CR of 83.3 and 82.1 in Q4
Few weather-related and major claims
Positive run-off result
Banking:
Lower net interest and fee income; Reduced loan book and lower interest rate level
Losses and writedowns; Down to DKK 480m from DKK 994m in 2011
Loan book reduced by DKK 1.3bn net of losses and writedowns
Life and Pension:
25% growth in pension premiums
Good investment results - collective bonus potential of 5.8% up by 1.3ppts
Outlook for 2013
Profit of DKK 440m before losses and writedowns
Losses and writedowns estimated at DKK 300-400m given the current economic
environment
DKK 700m injected into Alm. Brand Bank to repay DKK 430m of hybrid capital
G R O U P
3
Non-life Insurance - Financial highlights in brief Results FY 2012
Profit of DKK 853m
Premiums up by 2%
CR improved:
Premiums
Underlying business
Weather-related and major claims
Run-off gains (4.9ppts of CR)
÷ Discounting effect
Results Q4
Profit of DKK 247m
Premiums up by 2.6%
CR improved:
Premiums
Weather-related and major claims
Run-off gains (6.2ppts of CR)
÷ Expenses
N O N - L I F E I N S U R A N C E
Key figures/ratios (DKKm) Q4 FY
2012 2011 2012 2011
Gross premiums 1,236 1,205 4,866 4,772
Investment income 2 5 13 40
Claims expenses -710 -947 -3,180 -3,851
Expenses -220 -196 -790 -757
Reinsurance -86 60 -86 207
Technical result 222 127 823 411
Investments return after
technical interest 25 50 30 49
Profit before tax 247 177 853 460
Combined Ratio 82.1 89.9 83.3 92.3
Underlying
Combined Ratio 81.5 77.0 79.7 80.2
66.2%
DKK
4.8bn
4
Premium income
N O N - L I F E I N S U R A N C E
Trend in premium income
Premiums FY 2012 up by 2.0% y/y
Private premiums up by 1.5%
(2.5% adjusted for non-recurring income
in 2011)
Commercial premiums up by 2.5%
Premiums up by 2.6% in Q4
Private premiums up by 2.5%
Commercial premiums up by 2.7%
Premium growth
Customer defection rate declined
2,504 2,540 2,579
641 657
2,258 2,232 2,287
564 579
4,762 4,772 4,866
1,205 1,236
2010 2011 2012 Q4 2011 Q4 2012
Gro
ss p
rem
ium
s (
DK
Km
)
Private Commercial
5
Positive trend in underlying business
N O N - L I F E I N S U R A N C E
Underlying CR continues to develop
favourably
Limited snowfall caused motor
claims to decline
Fewer burglaries
Good development in private
property insurances
÷ Commercial property insurances
still underperforming
Fewer claims
Development with fewer claims
continued in 2012
Average claims decreased for the
year
Higher average claims in Q4
primarily related to property
Note: Excluding workers’ compensation
80
85
90
95
100
105
110
115
2008 2009 2010 2011 2012 2011 2012
Q4
Number (index) Avg. claim (index) Claims (index)
84.8
88.8
85.5
80.2 79.7
2008 2009 2010 2011 2012
6
Positive trend in major claims
Note: Major claims are defined as claims in excess of DKK 1m
N O N - L I F E I N S U R A N C E
Major claims lower than
expected
Major claims have remained low
in all quarters of 2012
Fewer claims but higher average
claims in 2012
Average claims impacted
by a few major events
Preventive measures
Risk reduction team
Fixed-sum insurance
Always a matter of chance
9.1
7.8 7.1 6.8
6.2 7.1
4.7
6.6 6.5
8.0
FY FY FY FY FY Q1 Q2 Q3 Q4
2008 2009 2010 2011 2012 2012
Major claims ratio Average expectation
0
20
40
60
80
100
120
140
160
2009 2010 2011 2012 Q4 2011 Q4 2012
Number (index) Avg. claim (index) Claims (index)
7
Weather-related claims
N O N - L I F E I N S U R A N C E
Note: Figures stated net of reinsurance recoveries
Weather-related claims below expected
level
Significantly lower than in 2010 and 2011
Very few weather-related claims
Mild winter
No significant storms
Very few water damage claims in
spite of wet summer
Claims in Q4 significantly below 2011
2011 impacted by storms in
November and adjusted estimate
of July cloudburst
Weather related claims
0
100
200
300
400
2008 2009 2010 2011 2012 Q4 2011 Q4 2012
Number (index) Avg. claim (index) Claims (index)
950
1.9 3.1
8.5 6.9
2.1 2.9 2.1 2.9 0.5
4.0
FY FY FY FY FY Q1 Q2 Q3 Q4
2008 2009 2010 2011 2012 2012
Weather-related claims ratio Average expectation
8
Expense ratio target for 2012 reached
N O N - L I F E I N S U R A N C E
Expense ratio at the lower end of the targeted range
16.2 in 2012
Higher expenses in Q4 due to
Acquisition costs
Expenses for system development due to the non-life insurance tax
Bonuses
19.0%
18.5%
17.6%
15.9%
16.2%
12%
14%
16%
18%
20%
2008 2009 2010 2011 2012
Target 2009 to 2012
9
A very favourable year - but not a new normal
N O N - L I F E I N S U R A N C E
Normal expectation
Zero in run-offs
4ppts in weather-related claims
8ppts in major claims
83.3
91.9
4.9
1.9
1.8
Combined Ratio FY 2012
Run-offs compared to expectations
Weather-related claims compared to expectations
Major claims compared to expectations
Normalised Combined Ratio
10
2009
Note: Combined and Expense Ratios are stated at group level. Codan figures include Danish business only
N O N - L I F E I N S U R A N C E
Alm. Brand among top performers - Peer group comparison
Exp
en
se R
ati
o
Co
mb
ined
Rati
o
2010
2011
2012
98.0 91.1 92.2
99.5 98.2 93.3
98.8 101.4 92.3 90.3 93.5
102.3
83.3 88.2
18.5
14.9
17.2
20.4
17.6
15.4 17.0
20.3
15.9 15.7 16.8
21.3
16.2 16.4
11
Alm. Brand Bank - Financial highlights
B A N K I N G
Results 2012
Loss of DKK 39m before losses and writedowns
Lower funding
Value adjustments of bonds and shares
÷ Lower interest rate level
÷ Reduction of loan book
Loan book 2012
Loan reductions of DKK 1.3bn adjusted for
losses and writedowns
Losses and writedowns still high, mainly due to
Agriculture – deteriorated economic
conditions for dairy farmers
Mortgage deeds and commercial lending
due to commercial property vacancies
Key figures/ratios (DKKm) Q1 Q2 Q3 Q4 FY FY
2012 2012 2012 2012 2011 2012
Interest receivable 200 179 177 164 867 720
Net interest and fee income 104 92 105 92 493 393
Value adjustments* 10 24 -11 14 -173 37
Losses and writedowns* -85 -81 -166 -148 -994 -480
Profit/loss before tax -90 -107 -176 -146 -1,154 -519
Profit/loss before tax and
excl. losses and
writedowns -5 -26 -10 2 -160 -39
Interest margin 1.4% 1.3% 1.6% 1.4% 1.6% 1.4%
*Credit related value adjustments included under
losses and writedowns
11.6%
DKK
852m
12
Deposits and lending
B A N K I N G
Reduction of loans and advances
Increased deposits
Deposit surplus of DKK 2.6bn, up
from a deficit of DKK 2.4bn
Deposit surplus
12.1 11.6 11.2 10.4 10.2
9.6 9.2 8.7 8.0 7.9 7.7 8.0
10.1 10.5 10.6 11.3
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2011 2012
DK
Kb
n
Loans and advances Deposits
-4.1 -3.7 -3.5
-2.4
-0.1
0.9 1.4
2.6
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2011 2012
DK
Kb
n
13
B A N K I N G
Net interest and fee income
Interest income lower due to
Low interest rates
Reduction of loan book
Interest expenses in 2012 down due
to repayment of funding
Partly offset by interests on
new deposits
Lower customer activity reduced net
fees in Financial Markets
Interest margin target
Margin to be increased towards
2016 by 1ppt from 2012 level by
Repaying of hybrid capital
Reducing costs for deposits
Improving average loan quality
2.2% 2.5% 2.4%
2.2% 1.9%
1.7% 1.7%
1.3% 1.4% 1.3% 1.6%
1.4%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2010 2011 2012
Interest margin
226 221 222
198 200
179 177 164
120 125 131 130 128 118
102 104
39 35 28 30 32 31 30 32
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2011 2012
DK
Km
Interest receivable Interest payable Net fees and commissions etc.
14
Losses and writedowns still high
B A N K I N G
Large writedowns on agriculture
Dairy farmers hit by deteriorated
contribution margins in Q3
Commercial lending impacted by large non-
recuring writedowns
Commercial property vacancies impacted
commercial lending and mortgage deeds
10 7
20 20
29 30
78
19
-1
0 0 0
19
-5
27 32
0 1
-2
2
28 32
43
75
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Continuing portfolio Agriculture Car finance Commercial lending
Property development
projects
Total mortgage deeds
DKKm
15
Loan book reductions - Excl. losses and writedowns
B A N K I N G
371
418
27
38
40
176
113
47
-7
-16
Continuing portfolio
Agriculture
Car finance
Commercial lending
Property development projects
Mortgage deed financing
Mortgage deeds
Total, loan book
Reversals and intra-group transactions
Total, group
DKKm
1,289
1,357
279
189
382
176
267
69
68
-73
Continuing portfolio
Agriculture
Car finance
Commercial lending
Property development projects
Mortgage deed financing
Mortgage deeds
Total, loan book
Reversals and intra-group transactions
Total, group
DKKm
FY 2012 Q4 2012 Total loan book reduction of
DKK 1.3bn in 2012
Decrease in continuing portfolio
due to savings and loan
repayment
Funding to agriculture
Necessary investments and
operations
Declined by DKK 38m in Q4
Successful winding-up of
commercial loans
Net mortgage deeds declined by
DKK 336m (DKK 97m in Q4)
Equal to repayment of
approx. 9% p.a.
16
Loan portfolio and credit losses
B A N K I N G
Loans Losses and writedowns
31.12 30.09 31.12 Share of FY Q1 Q2 Q3 Q4 FY Loss
DKKm 2011 2012 2012 portfolio 2011 2012 2012 2012 2012 2012 ratio
Continuing portfolio 2,983 2,694 2,647 30.5% 105 10 7 20 20 57 2.0%
Lending to private customers 2,848 2,493 2,442 28.1% 104 10 7 19 21 57 2.2%
Other loans and advances 135 201 205 2.4% 1 0 0 1 -1 0 0.0%
Winding-up portfolio 7,059 6,114 5,642 64.8% 888 75 74 146 128 423 6.7%
Agriculture 1,038 1,012 955 11.0% 227 29 30 78 19 156 15.7%
Car finance 418 270 230 2.6% 2 -1 0 0 0 -1 -0.3%
Commercial lending 1,613 1,366 1,158 13.3% 308 19 -5 27 32 73 5.3%
Property development projects 431 249 254 2.9% 13 0 1 -2 2 1 0.3%
Mortgage deed financing 405 226 115 1.3% 112 8 5 12 -2 23 8.8%
Mortgage deeds 3,154 2,991 2,930 33.7% 226 20 27 31 77 155 5.1%
Equities 0 0 0 0.0% 0 0 16 0 0 16 0.0%
Bank packages etc. 0 0 0 - 1 0 0 0 0 0 -
Total - excl. reverse transactions 10,042 8,808 8,289 95.3% 994 85 81 166 148 480 5.2%
Reverse transactions including
intra-group transactions 175 154 107 1.2% 0 0 0 0 0 0 -
Total, group lending 10,217 8,962 8,396 96.5% 994 85 81 166 148 480 5.2%
Minority interests 176 207 302 3.5% 0 0 0 0 0 0 -
Total, pro rata 10,393 9,169 8,698 100.0% 994 85 81 166 148 480 5.0%
17
CAPITAL RESERVATION 31.12.2012 31.12.2011
DKKm
Gross
loans
Book
value
Accum.
writedowns
Required
capital
Total
reservation
Reservation/
gross loans
Total
reservation
Reservation/
gross loans
Continuing portfolio 2,834 2,647 187 328 515 18% 426 14%
Winding-up portfolio 7,727 5,642 2,085 867 2,952 38% 3,439 37%
Bank packages etc. - - - - - - 23 -
Total - excl reverse transactions 10,561 8,289 2,272 1,195 3,467 33% 3,888 31%
Reverse transactions and intra-group
transactions 107 107 - 11 11 10% 28 16%
Total group 10,668 8,396 2,272 1,206 3,478 33% 3,916 31%
Capital reservations
B A N K I N G
Continuing portfolio up by 4ppts
More conservative approach to exposures
Winding-up portfolio up by 1ppt
Affected by writedowns in agriculture
18
Deposits DKK 11.3bn
Other debt DKK 1.1bn
Supplementary capital
DKK 0.4bn
Issued bonds DKK 2.0bn
Hybrid capital DKK 1.0bn
DKK 7.7bn repaid in 2012
DKK 2.5bn to be repaid in 2013
DKK 2.0bn in issued bonds
DKK 0.1bn in supplementary
capital
DKK 430m in hybrid capital
Funding developing according to
plan
Excess liquidity of
DKK 4.1bn
B A N K I N G
Funding - At 31 December 2012
Note: Hybrid capital of DKK 856m is perpetual. DKK 430m to be repaid in 2013
2,530
100
1,201
175
2013 2014 2015 2016
DK
Km
Interbank funding Issued bonds Supplementary capital
Hybrid capital Other debt
19
B A N K I N G
Individual solvency need
Credit risk reduced by DKK
220m
Total risk reduced by approx.
DKK 250m in 2012
Excess solvency
3.7ppts above solvency
need
Further strengthened by
DKK 270m in capital
injection
1,443 1,342 1,266 1,226 1,213
259 349 225 297 261
101 101
100 97 85
1,803 1,792
1,591 1,620 1,559
Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
DK
Km
Credit risk Market risk Operational and other risks
1.4%
3.5%
4.3%
3.6% 3.7%
Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
Excess solvency
20
Life and pension - Financial highlights and key ratios
Profit before tax of DKK 90m in line with
expectations
Investment result generating 8.6% return on
policyholders’ funds
Positive impact from value adjustments
Positive equity market
Collective bonus potential of 5.8%
Up 1.3ppts
Strong risk and expense results
Growth
25% in gross pension premiums
2.5% in regular premiums
14% in total pension contributions*
L I F E A N D P E N S I O N
* Including investment schemes in the bank
DKKm Q4
2010 2011 2012 2011 2012
Return on investments allocated
to equity 30 21 12 3 3
Result of portfolios without bonus
entitlement 13 24 -9 4 -1
Risk premium 54 11 11 3 3
Share of expense and risk
results 27 86 81 25 16
Calculated return on equity 124 142 95 35 21
Reversed from/transferred to
shadow account 57 -5 -5 3 -1
Profit before tax 181 137 90 38 20
Shadow account balance 0 5 10 5 10
12,3%
DKK
903m
21
L I F E A N D P E N S I O N
Premium income
Total pension contributions up by 14%
Premiums in Life and Pension up by
25%
Transfer of pension schemes of
new customers
Reduction in investment schemes
payments
Large single payments in 2011
Growth target for regular premiums
Lifted by 2.5% in 2012
Target of 12% increase on top of
inflation by 2016
Note: Investment schemes are reported in the banking segment
658 652 629 603 618
89 58 90 121
285
237
166 186
358
332 984
876 905
1,082
1,235
2008 2009 2010 2011 2012
DK
Km
Regular premiums Single premiums Investment schemes
22
L I F E A N D P E N S I O N
Results
Return on investments
impacted by low interest rate
level
DKKm Q4
2010 2011 2012 2011 2012
Return on investments allocated to
equity 30 21 12 3 3
Result of portfolios without bonus
entitlement 13 24 -9 4 -1
Risk premium 54 11 11 3 3
Share of expense and risk results 27 86 81 25 16
Calculated return on equity 124 142 95 35 21
Reversed from/transferred to shadow
account 57 -5 -5 3 -1
Profit before tax 181 137 90 38 20
Shadow account balance 0 5 10 5 10
23
L I F E A N D P E N S I O N
Provisions and bonus potential
Successful increase in bonus
potential
Competitive rate on policy-
holders’ funds
Technical provisions up
primarily due to falling interest
rate level
10,758 10,994 10,931 11,332 11,832
0 225 517 454
586 10,801 11,263 11,493 11,829
12,463
2008 2009 2010 2011 2012
DK
Km
Life insurance provisions Collective bonus potential Outstanding claims provisions
225
517
454
586
3.00%
3.50% 3.65%
3.00%
2009 2010 2011 2012
Bonus potential Interest group (new agreements)
24
Capital target
DKKm Target
31 Dec 2012
Non-life Insurance
(40% of premiums) 1,946
Life and Pension
(9% of provisions for insurance contracts) 1,065
Banking
(18.7% of risk-weighted assets)* 1,858
Alm. Brand Bank subsidiaries 40
Diversification effects -300
Total capital target 4,609
G R O U P
*Calculated as the individual solvency requirement as at 31 December 2012 plus 3 percentage points
New capital target of Non-life
Insurance
Using Alm. Brand's own
partial internal capital
model
Target reduced from 45%
to 40% of premiums
25
Capital model - Significant increase in excess capital
DKKm Capital base
31 Dec 2011
Capital base
30 Sep 2012
Capital base
31 Dec 2012
Consolidated equity 4,206 4,426 4,506
Tax assets -758 -692 -665
Supplementary capital 1,753 1,704 1,654
Total capital base for the group 5,201 5,438 5,495
Statutory capital requirement for the group, end
of period 3,376 3,041 3,085
Excess relative to statutory capital
requirement 1,825 2,397 2,410
Internal capital target 5,041 4,917 4,609
Excess relative to internal capital target 160 521 886
G R O U P
26
Outlook for 2013
G R O U P
Profit of DKK 400m
Assumptions CR of 92 Expense ratio of approx. 16.5 Growth of approx. 2% Low return on investments
Profit of DKK 75m
Assumptions Modest growth in continuing
pension premiums Low return on investments
allocated to equity
Profit of DKK 5m before losses and writedowns
Assumptions Repayment of DKK 430m
hybrid capital end Q1 2013 Loan reduction net of losses
and writedowns of DKK 0.6bn Losses and writedowns of
DKK 300-400m
Equity injection of DKK 700m
Non-life Insurance Life and Pension Banking
Full-year pre-tax profit of DKK 440m before losses and writedowns
Other activities Expected cost of DKK 40m
27
Alm. Brand
Highlights
Very strong year for Non-life Insurance
Good result and strong premium growth in Life and Pension
Weak core earnings in Banking
Repayment of DKK 430m of hybrid capital in 2013
Losses and writedowns still high
Outlook for 2013 of DKK 440m profit before losses and
writedowns
Losses and writedowns in 2013 estimated at DKK 300-400m
G R O U P
28
Disclaimer
“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.”
G R O U P
29
Alm. Brand
Financial results FY 2012 Webcast presentation 26 February 2013
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