Danica Pension. Chief Executive Officer Henrik Ramlau-Hansen Danica. Capital Markets Day 4 December 2002

Transcription

1 Danica Pension Chief Executive Officer Henrik Ramlau-Hansen Danica Capital Markets Day 4 December 2002

2 Company Profile Danicas history in brief 1842 Livrente og forsørgelsesanstalten af Change of company name to Statsanstalten for Livsforsikring 1990 Statsanstalten privatised and bought by Baltica. The company name changed to Danica 1995 Danica acquired by Den Danske Bank 1998 Subsidiary in Sweden 1999 Non-life insurance sold to Topdanmark 2001 Acquisition of BG Pension 2002 Branch in Norway 2002 Danica Life in Luxembourg sold to Nationwide Global Holdings 2

3 Company Profile Largest life and pension companies Gross premiums (DKr m) in PFA Danica Tryg Codan Topdanmark AP Skandia 3

4 Italy Company Profile Unit-linked market in Europe Marketshare based on gross premiums for year % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 4 Denmark Germany Switzerland Norway Finland Europe France Spain Sweden UK Holland Belgium Source: Datamonitor Unit-linked Classic Share of gross premiums

5 Company Profile Group structure Danske Bank Forsikringsselskabet Danica Danica Pension Danica Pension I (Branch in Norway) Danica Liv III Danica Danica B II Fondförsäkring AB Danica's real estate Danica B III companies 5

6 Company Profile Danica Pensions vision Danica aims: to be Denmarks leading provider of employee benefits to be the market leader in terms of advice, service and product development to be accessible on the clients terms at cooperating closely with the other parts of Danske Bank Group at securing its clients and shareholders a high return to attract and keep competent and committed employees and managers 6

7 Company Profile Danica as part of Danske Bank Group Danica provides pension products for sale through Danske Bank and BG Bank Joint product development, Danica Link as an example Application of Danske Netbank Investment management through Danske Capital, and shared IT-development Danica refers customers to Danske Bank and BG Bank Collaboration with RD is under consideration Joint ventures in Norway and Sweden 7

8 Products & Distribution Danicas products Traditional life insurance products with guarantees of 1.5%, 2.5% and 4.5% Risk products Health insurance products Unit-linked with guarantees Unit-linked without guarantees 8

9 Products & Distribution Danicas distribution channels Brokers (16%)* Danica Major Clients (16%) Regional centres (42%) Danske Bank (14%) BG Bank (12%) Norway and Sweden * Share of domestic sales (single premiums weighted 1/10) 9

10 Financial Highlights Gross premiums DKr m As at Full year Full year Regular premiums, corporate business 3,937 4,724 3,983 Regular premiums, private individuals 1,887 2,970 2,384 Single premiums 2,587 2,754 1,006 Danish life insurers (total) 8,411 10,448 7,373 Foreign life insurers (total) Life group (total) 9,052 11,138 8,268 Non-life insurance, FD Danica Group (total) 9,124 11,208 8,331 - Danish unit-linked 1,

11 Financial Highlights Danica in Danske Banks accounts As at Full year Full year DKr m Core insurance income Funding costs, net Core earnings before provisions Earnings from investment portfolios Total Allocated capital 1) Core earnings before provisions as % p.a. of allocated capital 17% 18% 14% 1) Average solvency margin 11

12 Financial Highlights Total assets and solvency DKr m As at First half Full year Full year Life Group (total) Assets at market value 171, , , ,283 Shareholders' equity (less min. interests) 11,582 11,426 9,962 8,612 Solvency margin 6,503 6,268 6,186 5,427 Danica Pension Life insurance provisions 138, , , ,748 Bonus reserves 3,088 7,602 9,685 22,719 Bonus reserves (ratio 9) 1) 2.2% 5.7% 7.4% 19.5% 1) Calculation rate 3,71% at , 4.20% for the first half 2002, 3.75% for the full year 2001 and 4.25% for the full year

13 Financial Highlights Highlights as at Gross premiums totalled DKr9.1bn 34% of total gross premiums came from DB and BG Almost 20% increase in premiums for Danish companies against the same period in 2001 Premium growth of 20% in corporate business Danica Link premiums totalled DKr1,378m Investment income (before PAL tax) of 0.8% Bonus reserves of DKr3.1bn Share portfolio reduced by DKr8bn since

14 Financial Highlights Provisions Life insurance provisions, Danica Group As at As at (DKr m) Without guarantees 8,803 3,887 With guarantees off: 0% 1,894 1, % 10,782 4, % 28,313 23, % 85,093 84,605 8% - 20% 8,766 9,189 Total Life insurance provisions 143, ,644 14

15 Financial Highlights Asset allocation as at % 2% 3% 7% Bonds etc. Danish shares Foreign shares Property Financial instruments 79% 15

16 Accounting Principles New consolidation policy The Group has adopted a new consolidation policy for Danica in Danica is allowed to adjust equity capital to reflect the return that can be said to be due to it because the return on equity over a period of time has been low relative to the return generated on investments Essential principles in calculating profit + Return on investments + Risk premium determined by life insurance provisions + Unit Link including embedded value = Profit before tax 16

17 Accounting Principles New consolidation policy New consolidation policy - break-down in core earnings and investment portfolio income Core earnings Risk premium (up to 0.5% of life insurance provisions) + Unit Link including embedded value + Risk free interest income from allocated capital = Core earnings Earnings on investment portfolio + Actual return on investments - Risk free return on allocated capital - Correction for risk premium in periods where the contribution principle prohibits inclusion of risk premium + Add-back of risk premium in periods where the contribution principle allows for inclusion of risk premium = Profit before tax 17

18 Accounting Principles Market Value Accounting All assets valued at market value from January 1, Liabilities valued at market value at latest from Danica plans to apply market value for the accounting year Liabilities at market value: implies further investment buffers ensures a closer relation between assets and liabilities are restricted by guaranteed surrender values 18

19 Risk Management Financial Supervisory Requirements: Red and yellow light-test As at September 30, Danica Pension obey these rules % Red Yellow Interest rate risk on bonds Interest rate risk on life insurance provisions Risk on shares Currency-risk Risk on lands and buildings

20 Risk Management Risk management Danica Pension As at As at As at As at DKr bn Shareholders' equity Bonus reserves Shareholding Share buffer 25% 32% 34% 52% 20

21 Risk Management Actions taken to reduce risks Actions taken to reduce risks Reduced share portfolio (by DKr5bn after September 11, 2001 and again by DKr8bn in 2002) Adjustment of share portfolio in order to maintain a reasonable share buffer Investment in additional interest rate instruments to hedge the interest guarantee, value DKr1.7bn at the end of 2001 and DKr2.7bn as at September 30, 2002 Injection of capital to subsidiaries (now merged) from their parent company Danica Liv I 21

22 Risk Management More actions taken As of July, 2002 distinct assets (which primarily consists of bond and properties) have been allocated to the shareholders equity Merger of life companies approved in August 2002 Conditional bonus for the 4,5%-portfolio from January 1, 2001 Introduction of conditional bonus for the 2.5%- portfolio from January 1,

23 Risk Management Rating from Standard & Poors Danica has been assigned a rating from S&P Danicas rating is A+ The rating is an assessment of Danicas financial strength in meeting the obligations undertaken in relation to the customers A is defined as: An insurer rated A has STRONG financial security characteristics, but is somewhat more likely to be affected by adverse business conditions than are insures with higher ratings (AA or AAA) 23

24 Risk Management Rating from Standard & Poors The rating is based on assessment of the following: Industry risk Business review Management & corporate strategy Operating performance Investments Capital adequacy Liquidity Financial flexibility 24

25 Risk Management Rating from Standard & Poors Ratings for other Nordic life insurance companies Storebrand Livforsikring AS A- Folksam Mutual Life Insurance A Länsförsäkringer Wasa AB A Trygg-Hansa Försäkrings AB A- 25

26 Summary Summary for the year 2002 Premium income exceeding DKr12bn Focus on Danica Link and Health insurance products Sales activities well off in Norway New investment funds added to Danica Link New consolidation policy with dedicated assets 26

27 Summary Summary for the year 2002 One-off after-tax adjustment of shareholders equity of DKr1.4bn January 1, 2002 Merger of life insurance companies approved in august 2002 Market value accounting at the end of 2002 Asset-liability management continues 27