Alm. Brand Forsikring A/S Nordic Insurance Seminar 1
Alm. Brand Forsikring A/S Non-life Since 1792 Main business activity in financial group 4th largest non-life company in DK 400,000 customers* 200,000 Plus customers* Strong on 1. Agriculture (30% market share) 2. Private (12% market share) 3. SME (6% market share) Very strong on buildings * Number of households/units 2 We take care of our customers Alm. Brand Bank Banking operations Holding company Alm. Brand A/S Alm. Brand Liv og Pension Life and Pension operations Alm. Brand Forsikring Non-life operations
Alm. Brand Forsikring A/S Highlights Q1 2010 Performance: Loss of DKK 250m Extraordinary winter claims of DKK 350m Total premiums: DKK 1.2bn Growth: 0.5%-points CR: 125.1 Increased by 26.9%-points Expense ratio: 19.5% Decreased by 0.4%-points 3
DKKm 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Alm. Brand Forsikring A/S Gross premiums 4,578 2,206 2,372 4,769 2,361 2,408 4 4,714 2,276 2,438 1,165 567 1,172 558 598 614 2007 2008 2009 Q1 2009 Q1 2010 Private customers Premium growth of 0.5% Private: 2.5% Lower premiums from SME Economic recession Reduction of risk Loss of portfolio Commercial customers
Bankruptcies, foreclosures & unemployment 600 6 500 5 400 300 200 4 3 2 100 0 2005M01 2005M02 2005M03 2005M04 2005M05 2005M06 2005M07 2005M08 2005M09 2005M10 2005M11 2005M12 2006M01 2006M02 2006M03 2006M04 2006M05 2006M06 2006M07 2006M08 2006M09 2006M10 2006M11 2006M12 2007M01 2007M02 2007M03 2007M04 2007M05 2007M06 2007M07 2007M08 2007M09 2007M10 2007M11 2007M12 2008M01 2008M02 2008M03 2008M04 2008M05 2008M06 2008M07 2008M08 2008M09 2008M10 2008M11 2008M12 2009M01 2009M02 2009M03 2009M04 2009M05 2009M06 2009M07 2009M08 2009M09 2009M10 2009M11 2009M12 2010M01 2010M02 2010M03 Bankruptcies & foreclosures Unemployment rate 1 0 Bankruptcies Foreclosures Unemployment rate www.statistikbanken.dk: TVANG1, KONK2, AUS01 5
DKKm 500 450 400 350 300 250 200 150 100 50 0 Alm. Brand Forsikring A/S Expenses for major claims* 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010 Expense (2010-prices) Anticipated expense * Claims in excess of DKK 1m Only few fires during winter 6
DKKm 400 350 300 250 200 150 100 50 0 Alm. Brand Forsikring A/S Weather claims Anatol DKK 2,2bn Erwin DKK 860m 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010 Expense (2010-prices) Expense (Anatol and Erwin) Anticipated expense Snow load Accident Motor 7
Alm. Brand Forsikring A/S Excessive snow loads 8
Alm. Brand Forsikring A/S Excessive snow loads Number of claims related to excessive snow loads 600 500 400 300 200 100 0 49 50 51 52 53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 2009 2010 Week 9
Alm. Brand Forsikring A/S Excessive snow loads Number of claims by segment Claims expenses by segment Agricultural Private Commercial Agricultural Private Commercial 10
+ Lower costs + Lower major claims + Stabilisation of other claims + Increased premiums in private + Increase in premiums in SME and agriculture in 2010 - Extraordinary winter claims - Discounting effect: 0.8% higher claims ratio - Weaker growth because of economic recession and premium increases Alm. Brand Forsikring A/S Impact on performance Pct. 140 120 100 80 60 40 20 0 11 Combined ratio 91.4 96.5 98.0 98.2 3.6 3.1 4.8 2.8 19.0 18.5 19.9 19.6 69.0 73.9 76.4 73.5 125.1 4.3 19.5 101.3 2007 2008 2009 Q1 2009 Q1 2010 Claims Operating expenses Net reinsurance
Combined ratio ex weather claims and major claims Alm. Brand Forsikring A/S Combined ratio 2007 2008 2009 Q1 2009 Q1 2010 81.6 84.3 87.4 87.4 87.9 Major claims 7.4 9.6 9.2 10.1 6.4 Weather claims 4.3 1.9 3.1 0.4 29.9 Run-off result* -1.9 0.7-1.7 0.3 0.9 Combined ratio 91.4 96.5 98.0 98.2 125.1 * A negative run-off result equals a run-off gain 12
Alm. Brand Forsikring A/S Any specific reasons for premiums increases? here are some headlines 13
Theft & Burglary 95.000 90.000 85.000 80.000 y = 1.543,5x + 71090 75.000 70.000 65.000 60.000 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 14
Private content ex. major claims Development in private content claims Private content claims - causes 2009 200 180 160 35 20% 15% 140 37 Index 120 100 80 60 40 22 61 30 79 101 118 Fire and allied perils Theft Other perils 20 0 17 21 22 26 2006 2007 2008 2009 65% Fire and allied perils Theft Other perils 15
Agricultural content ex. major claims Development in agricultural content claims Agricultural content claims - causes 2009 160 Index 140 120 100 80 60 40 20-34 27 31 36 48 61 29 33 40 38 53 48 2006 2007 2008 2009 20% 35% Fire and allied perils Theft Other perils Fire and allied perils Theft Other perils 45% 16
Commercial content ex. major claims Development in commercial content claims Commercial content claims - causes 2009 200 Index 180 160 140 120 100 80 60 40 11 0 59 23 0 65 31-97 36 0 110 20% 19% Fire and allied perils Theft Other perils 20-24 35 35 35 2006 2007 2008 2009 61% Fire and allied perils Theft Other perils 17
Private building ex. major claims Develpoment in private buildding claims Private building claims - causes 2009 140 Index 120 100 80 60 40 20 0 37 34 39 36 11 15 8 6 41 44 38 33 25 29 33 33 2006 2007 2008 2009 12% 27% 26% Fire and allied perils Burst pipes Theft Other perils Fire and allied perils Burst pipes Theft Other perils 35% 18
19 Motor Frequency - 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 January February Marts April May June July August September October November December 2006 2007 2008 2009 2010 Average claims 0 20 40 60 80 100 120 140 160 January February Marts April May June July August September October November December Indeks 2006= 100 2006 2007 2008 2009 2010
Alm. Brand Forsikring A/S Outlook 2010 Announced in Annual Report 2009 Profit of DKK 230m CR: 97 Revised guidance after winter claims Loss of DKK100m CR 104 Tendency towards lower average claims Premiums up Private (2009) SME and agriculture in 2010 New policy conditions Self risk Claims limiting activities 20
Alm. Brand Forsikring A/S Capital situation As per 31/12-2009 Owners Equity DKK 2.945bn Capital Base DKK 2.113bn Solvency requirement DKK 0.777bn Solvency ratio 2.7 Solvency ratio (31/3-2010) 2.4 21
Solvency II 22
1: Alm. Brand and Solvency II - Responsibility rests with top management The Risk Committee is responsible for the Solvency II Programme in Alm. Brand Group Areas of responsibility Capital requirement after Solvency 1½ Development of internal models Risk Appetite External risk reporting Risk committee Board of Directors Alm. Brand A/S Group Management Board Alm. Brand A/S Compliance (Management secretariat) Individual solvency Board of Directors Alm. Brand Bank Management Board Alm. Brand Bank Solvency II / Individual solvency Board of Directors Alm. Brand Forsikring Management Board Alm. Brand Forsikring Solvency II / Individual solvency Board of Directors Alm. Brand Liv & Pension Management Board Alm. Brand Liv & Pension Note: The figure above shows the group structure for risk management and compliance and does not reflect the legal structure of Alm. Brand A/S 23
1: Alm. Brand and Solvency II - Effects of Solvency II Current capital base in Alm. Brand Forsikring A/S Sufficient to meet future requirements Solvency II => Increased focus on active capital and risk management Asset allocation Limited impact on Alm. Brand, due to conservative investment profile New capital requirement of Mortgage Bonds looks expensive Concentration of risk on specific names => Might change investment profile ie. Government bonds, Swaps etc. Management of risk through internal risk models Will reduce capital requirements Considering use of partial internal model or specific parameters Active use of reassurance Several possibilities ie. large complex transactions, lower CAT thresholds etc. Price targets will be adjusted towards Solvency II risk based pricing => improvements in earnings 24
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. 25
Alm. Brand Forsikring A/S Nordic Insurance Seminar 26