REPORT for 3 QUARTER 2014 CONSOLIDATED

Transcription

1 REPORT for 3 QUARTER 2014 CONSOLIDATED

2 VARDIA INSURANCE GROUP ASA - CONSOLIDATED HIGHLIGHTS Vardia ASA continue to perform well, with all-time-high sales and a strong growth during the 3rd quarter Gross revenue in the 3rd quarter 2014 were NOK million, an increase of 101% compared to the 3rd quarter 2013 Gross written premiums in the 3rd quarter 2014 were NOK million, an increase of 110% compared to the 3rd quarter 2013 Average new sales per month NOK 84.6 million in 3rd quarter 2014, an increase of 75.9% from 3rd quarter 2013 The Group s gross loss ratio for 3rd quarter 2014 was 81.3%, and the loss ratio for own account was 74.1%. Comparable figures for 3rd quarter 2013 were 84.9% and 87.1%. The loss ratios are on plan for the Group The cost ratio f.o.a. for the Group was 45.6% for the 3rd quarter 2014 down from 62.6% for the 3rd quarter 2013 which is according to plan. The Company continues to make significant investments in organization and systems in order to facilitate growth Net loss for the 3rd quarter 2014 was NOK 6,3 million compared with a net loss of NOK 14.4 million for 3rd quarter 2013 The Board of Directors is satisfied with the performance of the Group during the quarter. The Board expects Vardia to report a net loss for the year, in accordance with the Business Plan. However, it is still expected that Vardia will become profitable towards the end of the year. KEY FIGURES (consolidated) (NOK 1,000) Q Q Gross revenue Gross premiums written Gross premiums earned Premiums earned f.o.a Gross Incurred claims Incurred claims f.o.a Operating expenses for own account Other income/expenses Techn. result before changes in sec.reserves * Net financial income Operating result Changes in security reserves etc Profit/Loss before tax Total profit/lo ss for the year (after tax) * figures are ex. allocated return on investment transferred from the non-technical account Gross loss ratio 81,3 84,9 79,7 90,1 86,5 Gross cost ratio 22,9 30,4 27,7 28,3 31,9 Gross combined ratio 104,3 115,2 107,4 118,4 118,4 Loss ratio f.o.a. 74,1 87,1 77,2 95,2 93,6 Cost ratio f.o.a. 45,6 62,6 53,5 54,7 69,1 Combined ratio f.o.a. 119,8 149,7 130,6 150,0 162,7 Solvency capital Capital adequacy 34 % 38 % 28 % Solvency margin 186 % 217 % 156 % Profit/Loss after tax per share -0,19-0,69-0,99-1,69-2,74 Profit/Loss after tax per share diluted -0,18-0,67-0,94-1,63-2,68

3 The Company and its business Vardia ASA is a Norwegian insurance group serving the private and commercial market in the Scandinavian countries. The Company was established in 2009 and obtained its own insurance license in Vardia ASA started to write premiums for its own account in Sweden in 2011, Norway in 2012, and Denmark in The Company is still in an early stage of its development, making significant investments in organization and systems in order to establish a sustainable Scandinavian presence and facilitate further growth. Vardia has two main distribution channels for its private business: Direct sales through own agencies and through partners. For the commercial business, agents and brokers represent an important and growing supplement to Vardia s proprietary organization. By the end of the 3rd quarter 2014, the Group had more than 450 employees throughout the Scandinavian countries. In Norway, Vardia has offices in Oslo, Sortland, Hamar, Porsgrunn, Molde and Lysaker. In Sweden it has offices in Stockholm, Luleå, Skellefteå and Sundsvall. In Denmark, the company is established in Copenhagen. The Group s head office is in Oslo. Premium income Vardia ASA continues to achieve strong growth. In 3rd quarter 2014 gross premiums written was NOK million compared to NOK million in 3rd quarter last year, a growth rate of 110%. Gross earned premiums for the same period was NOK million, an increase of 104%. Premiums earned for own account for 3rd quarter 2014 aggregated NOK 56.6 million, which is a growth of 87%. Per 3rd quarter 2014 gross written premiums was NOK million compared to MNOK million per 3rd quarter 2013, an increase of 108%. Gross earned premiums for the same period was NOK million, an increase of 141%. Premiums earned for own account per 3rd quarter 2014 aggregated NOK million, a growth-rate of 131%. Gross premiums written during the quarter is divided between Norway with NOK million (58%), Sweden with NOK million (41%) and Denmark NOK 2.2 million (1%). During the quarter, the Company s average monthly new sales was NOK 84.6 million, an increase of about 75.9% compared to the same period last year. Customer satisfaction is important for Vardia, and the Company aims to maintain the renewal rate of better than 85% in the years to come. As at 30 September 2014, private insurance accounted for 75% and commercial insurance of 25% of premium income. The development of the commercial portfolio written through Vardia Eksterne Kanaler AS (previously Saga Forsikring AS) has been satisfactory and as expected. Both private insurance and commercial insurance are significant contributors to the portfolio growth during the quarter. At the end of September, Vardia has more than customers. Results and allocation Vardia ASA s operating result before changes in minimum-security reserve was a loss of NOK 4.0 in the 3rd quarter, compared to a loss of NOK 17.3 million during the same period last year. Per 3rd quarter 2014, the operating result was a loss of NOK 25.0 million against NOK 34.5 per 3 rd quarter The gross loss ratio in the 3rd quarter of 2014 was 81.3%, whilst the loss ratio for own account was 74.1%. This represents a significant and planned improvement over the 3rd quarter 2013, when the corresponding ratios were 84.9% and 87.1% respectively. The loss ratio in the 3rd quarter 2014 is affected by one large claim of MNOK 15 within the commercial property portfolio. The company has also per strengthened the loss reserve within certain lines of business to continue be in line with the FSA minimum requirements. Per 3rd quarter 2014, the gross loss ratio was 79.7% and for own account 77.2%. The corresponding figures per 3rd quarter 2013 were 90.1% and 95.2%. Gross loss reserve was NOK 335 million, of which NOK 145 million was IBNR-reserves calculated by the Group s actuary. The cost ratio f.o.a. for the 3rd quarter 2014 was 45.6%, compared to 62.6% for the 3rd quarter Per 3rd quarter 2014 the cost ratio f.o.a. was 53.5% against 54.7% per 3rd quarter The high cost ratio is in accordance with the Business plan, and reflects the fact that the Group needs to make up-front investments in organization and systems in order to facilitate growth. Net financial income during the 3rd quarter 2014 was NOK 2.9 million. Vardia ASA pursues a conservative investment policy, with all liquid assets deposited in local banks. Other income, mainly commission on agency agreements, was NOK 4.4 million in the 3rd quarter Security reserves have been increased by NOK 5.0 million during the 3rd quarter. Group result before tax for the 3rd quarter was a loss of NOK 9.0 million, and the result after tax was a loss of NOK 6.2 million. Total loss after components of comprehensive income for the 3rd quarter was NOK 6.3 million. Per 3rd quarter 2014, the total loss (after tax and components of comprehensive income) was a loss of NOK 28.9 million that has been allocated to equity. Vardia ASA, the holding company of the Group, reported a loss after tax and components of comprehensive income of NOK 22.4 million for the 3rd quarter 2014 and NOK 51.3 mill per 3rd quarter 2014.

4 Capital/cash flow Net cash flow from operational activities was NOK 9.8 million, and net cash flow from investment activities was negative NOK 11.8 million during the quarter. Net cash flow from capital issue was NOK 0.6 million. Cash and cash equivalents decreased during the quarter from NOK million to NOK million. The reinsurers share of gross technical reserves were NOK 659 million on September 30 th, 2014, compared to NOK 283,1 million on September 30th, The Company was listed on the Oslo Stock Exchange on April 8 th The number of shareholders by the end of October was in excess of On 30th September 2014, solvency capital for the Group was NOK million, and solvency margin was 185.8%. The Group s capital ratio was 33.7%. The minimum regulatory requirement for capital adequacy is 8%. Vardia ASA had a solvency margin of 255.7% and a capital ratio of 41.7% at the end of the 3rd quarter The subsidiaries Vardia Forsikring AS, Vardia Försäkring AB, Vardia Agencies AS, Vardia Forsikringsagentur A/S, Vardia Eksterne Kanaler AS (previously Saga Forsikring AS) and Rein Forsikring AS are all held in Vardia ASA s balance sheet at cost. During 3rd quarter 2014, the Group s total assets increased from NOK 1,642.3 million to NOK 1,668.2 million. The increase is due to the growth of the insurance portfolio. Preparations Solvency 2 Vardia ASA has, as part of its risk management system, conducted a self-assessment of risk and capital situation in line with the Solvency 2 Directive 2009/138/EC Article 45 (Own Risk and Solvency Assessment - ORSA process). The ORSA-report for 2014 was passed on to The Financial Supervisory Authority of Norway on the 4 th June The company has in the 3rd quarter continued with the preparations for the Pilar 3 reporting. Future developments Vardia ASA s financial performance during the 3rd quarter 2014 is as expected. The sales performance during the quarter, with average monthly sales of NOK 84.6 million, confirms earlier assumptions about the Group s ability to grow. A second important element of the growthplan is to build customer satisfaction to the extent that a renewal rate can be maintained at 85% or better. It is well known in the insurance industry that it takes some time for a new company to achieve a sustainable combined ratio. The current claims ratio for the Group is in line with the expectations. The Board of Directors is satisfied with the development of the business, and the execution of the current business plan. The Board expects Vardia to report a net loss for the year. However, it is expected that Vardia will become profitable towards the end of the year. Oslo,18 th November 2014 The Board of Directors of Vardia Insurance Group ASA

5 Consolidated income statement (NOK 1,000) Note Q Q Premium income 2 Gross premiums written Ceded reinsurance premiums Premiums written for own account Change in premium reserves gross Reinsurance share Premiums earned for own account Allocated return on investment transferred from the non-technical account Other insurance-related income Claims 2 Gross claims paid Reinsurance share Change in gross claims reserve Reinsurance share Claims incurred for own account Operating expenses Sales costs Insurance-related administration costs Commission received Total operating expenses for own account Technical result before changes in security reserve etc Change in security reserve etc. Change in security reserve Total change in security reserve etc Technical result Net financial income Interest income and dividends etc. on financial assets Interest costs Total financial income Allocated return on investment transferred to the technical account Non-technical result Profit before tax Tax Profit before components of comprehensive income Other income and expenses Revaluations Exchange rate differences Actuarial gains and losses on pensions Tax on other result components Total other income and expenses Profit for the year

6 Consolidated statement of financial position (NOK 1,000) Note Assets Goodwill Other intangible assets Deferred tax benefit Plant and equipment Financial assets Investments in shares and parts Reinsurance share of gross technical reserves Receivables in connection with direct insurance and reinsurance Other receivables Prepaid costs and earned income not received Cash and cash equivalents Total assets Equity and liabilities Share capital Subscribed but unregistered capital Share premium Other paid-in-equity Other equity Provision for Natural Perils Fund Provision for Guarantee scheme Total equity Provision for liabilities Gross premium reserve Gross claims reserve Other technical provisions Pension liabilities Financial liabilities Other liabilities Liability for current tax Liabilities in connection with direct insurance and reinsurance Accrued costs and received unearned income Total liabilities Total equity and liabilities Statement of cash flow - consolidated (NOK 1,000) Q Q Net cash flow from operational activities Net cash flow from investment activities Net cash flow from financial activities Net change in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Net cash flow for the period Specification of cash and cash equivalents Cash in hand and bank Total cash and cash equivalents

7 Statement of changes in equity - consolidated (NOK 1,000) Share capital Share premium Other equity Other earned equity Natural perils fund Guarantee scheme Total Equity as at 1st January Subscribed equity, paid 5th April Changes in provisions in Q Profit before OCI Foreign exchange gains/losses Equity as at 31st March Equity as at 1st April Increase in equity in Q Changes in provisions in Q Profit before OCI Foreign exchange gains/losses Equity as at 30th June Equity as at 1st July Subscribed equity, paid 4th Oct Changes in provisions in Q Profit before OCI Foreign exchange gains/losses Equity as at 30th Sept Equity as at 1st October Split of capital issue in Q3 at Change in par value per share Increase in equity in Q Changes in provisions in Q Profit before OCI Other result components (net after tax) Option expenses Other Equity as at 31st Dec Equity as at 1st January Increase in equity in Q Subscribed equity, paid. 3rd April 2014* Cost related to capital issue Changes in provisions in Q Profit before OCI Other result components (net after tax) Other Equity as at 31st March * is made up of share capital 467 (subscribed but not registered) and share premium Equity as at 1st April Increase in equity in Q Cost related to capital issue Changes in provisions in Q Profit before OCI Other result components (net after tax) Option expenses Other Equity as at 30th June Equity as at 1st July Subscribed equity, registered in Q4* Cost related to capital issue Changes in provisions in Q Profit before OCI Other result components (net after tax) Option expenses Foreign exchange gains/losses Equity as at 30th Sept * is made up of share capital 8 (subscribed but not registered) and share premium 1.237

8 Note 1 Accounting principles The accounts and the report from the Board of Directors for 3rd quarter 2014 are prepared according to IAS 34. The consolidated accounts is prepared according to IFRS from Reference is made to the annual report for There are one change in accounting principles in 3rd quarter 2014.The part of the operating expenses for the period 1. January 2014 to 31. July 2014 in Denmark, which is related to IT- development and product development including testing, has in the 3rd quarter been capitalized according to IAS 38. The project phase in Denmark ended 31 July 2014 when the development of systems and products were finished and the company started to sell insurances in all main classes of business. NOTE 2 Segment information Norway (NOK 1,000) Q Q Gross premiums written Premiums earned f.o.a and other income Incurred claims and operating expenses f.o.a Technical result Sweden (NOK 1,000) Q Q Gross premiums written Premiums earned f.o.a and other income Incurred claims and operating expenses f.o.a Technical result Denmark (NOK 1,000) Q Q Gross premiums written Premiums earned f.o.a and other income Incurred claims and operating expenses f.o.a Technical result NOTE 3 Changes in equity The Company had a capital issue of NOK million in the second half of March This capital was subscribed 27 March 2014 and was included in the balance sheet per 31 March An adjustment of cost related to the capital issue of NOK 0.16 million has been made in the 3rd quarter Total cost related to the capital issue was NOK million. Vardia ASA has an incentive program for the management. In the 3rd quarter 2014, 4 directors have subscribed shares at a price of 12,72 per share. Total subscription amount was NOK 1.24 million, NOK 0.80 million was paid in September and NOK 0.44 million has been paid in October. The transaction will be registered in the Register of Business Enterprises in Brønnøysund Register Centre in the 4th quarter Reference is made to the statement of changes in equity. NOTE 4 Other intangible assets The Group has during 3rd quarter 2014 net investments in intangible assets and plant and equipment of NOK 9.6 million. This refers mainly to the development of the group s insurance systems. The Groups insurance system is written off over 7 years. 100% of the shares in Saga Forsikring AS was bought by the group in December The company finalized the allocation of real value of the acquisition in the 2 quarter In the 3rd quarter 2014, a reconsideration of the allocation has been made. This refers to booked value of an insurance system which has been allocated to goodwill. The amount is NOK 6.4 million. The part of the operating expenses for the period 1 January 2014 to 31 July 2014 in Denmark which is related to IT development and product development including testing, has per 30 September 2014 been capitalized according to IAS 38. Total amount capitalized was NOK 10.4 million.

9 Note 5 Earnings per share In NOK thousands a) Earnings per share Earnings per share is calculated by dividing the profit before components of comprehensive income on a weighted average of outstanding ordinary shares through the quarter, own shares deducted. Q Q Profit before OCI Earnings per share -0,19-0,69-0,99-1,69-2,74 b) Earnings per share, diluted By calculation of diluted earnings per share, a weighted average of total outstanding shares through the quarter is used adjusted for the effect of conversion of potential shares that can cause dilution. The company has one category of potential shares that can cause dilution: stock options. The number of shares is compared with the number of shares that would have been issued if all stock options were exercised. The difference is added in the calculation as issued shares without consideration. Q Q Profit before OCI Weighted average of ordinary shares (in 1000) Adjusted for stock options (in 1000) Earnings per share diluted -0,18-0,67-0,94-1,63-2,68

10 Vardia Insurance Group ASA - The Board of Directors and the CEO s statement The Board of Directors and the CEO has today discussed and approved the accounts and the report from the Board of Directors for 3rd quarter 2014 for Vardia Insurance Group ASA and consolidated. The report for 3rd quarter 2014 is prepared in agreement with the requirements in IAS 34 (interim financial reporting). We confirm, to the best of our knowledge, that the presented set of financial statements for the period 1 January to 30 September 2014 has been prepared in accordance with IAS 34 Interim Financial Reporting, and gives a true and fair view of the Company s assets, liabilities, financial position and profit and loss as a whole, We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the first nine months of the financial year and their impact on the presented set of financial statements, a description of the principal risks and uncertainties for the remaining three months of the financial year, and major related parties transactions. Oslo, 18 November 2014 The Board of Directors of Vardia Insurance Group ASA Åge Korsvold Chairman Karl Høie Vice Chairman Line Sanderud Bakkevig Nina Charlott Gullerud Nils Aakvik Bjørn Mæhlum Ivar S. Williksen President & CEO