Results 9M 2019

November 5, 2019

Non-Life│ Life │ Banking

Financial highlightsThird quarter 2019

Pre-tax profit of DKK 162m driven by satisfactory development across the Group

ALM. BRAND 2019-9M 2

Non-LifePre-tax profit: DKK 139m• Combined ratio: 90.2• Expense ratio: 16.3• Growth in premiums: 1.6%

LifePre-tax profit: DKK 21m• Growth in regular premiums: 6.9%• Bonus rate: 11.4%

BankingPre-tax profit: DKK 14m• Growth in total business volume• Continued inflow of new customers

Group

CommentsNine months ending September 30, 2019

ALM. BRAND 2019-9M 3

Satisfactory performance overall

Group profit before tax of DKK 532m� All business segments developed as expected� Low interest rate environment affects business adverselyTotal income of DKK 6,313m� Initiatives to strengthen performance include new products, price

adjustments, and charging of negative interest ratesReturn on Equity of 15% p.a.� Above strategic targetSignificant cash returns to shareholders� Current share buy-back programme of DKK 200m is well on track

Profit before tax, 9 monthsBreak-down on business segments

Non-life DKK 456mLife DKK 71mBanking DKK 40mOther activities DKK -40m

Group

Strategic 2022 goals

Alm Brand for the customer

Progress in meeting strategic goals

� Digitisation continues to drive efficiencies and customer service

� RoE at 15.3 % - well above target� Continued growth in new Group customers, >45,000� Positive trend in NPS and high retention rate� Initiatives to strengthen total growth

ALM. BRAND 2019-9M 4

Group

Non-life insurance

Satisfactory and in line with expectations

Profit before tax of DKK 139mTechnical result of DKK 132m� Positive impact from improved underlying performance and run-off

results� Major claims and weather-related claims within normal range� Lower discount rate affects business significantlyPremium income growth of 1.6%� Product digitisation initiatives and changes in pricing to improve

performance

Profit before taxDKKm

Non-life

ALM. BRAND 2019-9M 5

294 277

195132

16 43

10

7

310 320

205

139

2016 2017 2018 2019Q3

Investment return after interest on provisionsTechnical result

Combined ratio

Improvement of underlying combined ratio to 81.7 (-70 bp)� Improvement partly reduced by negative effect of lower

discount rate� Expense ratio at 16.3% - as expectedCombined ratio at 90.2� Weather-related claims at 4.0% and major claims at 7.2%

- both within expected rangeRun-off gains at 2.6% -> DKK 35m � Recalibration of provisioning model expected to lead to

further reduction of run-off gains

Combined ratio

Underlying combined ratio

76.7 78.7 85.4 90.2

11.3 7.94.7 2.688.0 86.6 90.1

92.8

2016 2017 2018 2019Q3

Run-off, claims Combined ratio

61.3 61.4 66.4 65.4

16.1 15.916.0 16.3

77.4 77.382.4 81.7

2016 2017 2018 2019Q3

Gross expense ratioUnderlying claims ratio incl. reinsurance

ALM. BRAND 2019-9M 6

Non-life

Major and weather-related claims

Major claims within “normal” range, but higher than last year� DKK 98m (DKK 79m in Q3/2018)Weather-related claims in high end of “normal” range � DKK 54m (DKK 29m in Q3/2018)� Cloudbursts in August and SeptemberMajor and weather-related claims accounted for DKK 152m in total � Increase of DKK 44m on exceptionally low 2018 level

Major claims ratio

Weather-related claims ratio

8.4%

5.7% 5.9%7.2%

2016 2017 2018 2019Q3

Major claims ratioAverage expectation (7-8%)

1.9%3.1%

2.2%

4.0%

-0.1%

2016 2017 2018 2019Q3

ReinstatementWeather-related claims ratioAverage expectation (3-4%)

ALM. BRAND 2019-9M 7

Non-life

Growth in premiums

Development slightly short of expectations, but continued high retention rate

Premium income increased by 1.6%� Private customer segment up by 1.3% to DKK 684m� Commercial customer segment up by 1.8% to DKK 673m� Adverse impact from negative discount rate

Premium incomeDKKm

ALM. BRAND 2019-9M 8

609 636 661 673

658 665 675 684

1,267 1,301 1,336 1,357

2016 2017 2018 2019Q3

Private Commercial

Non-life

� Combined ratio at 85.2% - satisfactory level� Claims ratio, net of reinsurance at 66.9% � Lower claims ratio on several key insurance products� Run-off gains of 4.5%

� Expense ratio at 18.3% - slightly higher than expected� Technical result of DKK 101m

Private customers

ALM. BRAND 2019-9M 9

Combined ratioPrivate clients segment

59.6 63.4 68.9 66.9

17.5 17.617.9 18.3

77.1 81.086.8 85.2

2016 2017 2018 2019Q3

Gross expense ratio Claims experience

Non-life

Commercial customers

ALM. BRAND 2019-9M 10

Combined ratioCommercial clients segment

� Combined ratio at 95.3% � Effect from lower discount rate approx. 2.5%-point

� Claims ratio, net of reinsurance at 81.1% � Increase in claim expenses on building insurance, especially concealed

pipework claims� Continued adjustments of conditions including prices and insurance

coverage� Expense ratio at 14.2%, unchanged year on year� Technical result of DKK 31m

61.8 62.1 69.881.1

14.5 14.214.1

14.276.3 76.3

83.9

95.3

2016 2017 2018 2019Q3

Gross expense ratio Claims experience

Non-life

Satisfactory and in line with expectations

Pre-tax profit of DKK 21m � Satisfactory development in expense and risk result� Return on investments allocated to equity impacted by low interest ratePolicyholders’ investment assets increased to DKK 17.0bn� Investment return of 3.3% in Q3, bringing YTD investment return to a

total of 10.6% before pension returns tax Total bonus rate at 11.4%, still at satisfactory level� Impact from general decline in interest rates

Life insurance

11

Profit before taxDKKm

ALM. BRAND 2019-9M

Life

21 20

3223

2 3

-2

23 23

31

21

2016 2017 2018 2019Q3

Return on investments allocated to equityProfit before tax

Pension contributionsTotal pension contributionsDKKm Continued strong growth

Premiums totalled DKK 413m in Life� Regular premiums increased by 6.9% fuelled by the corporate

customer segment � Single payments reduced by 11.8% from exceptionally high 2018

level, but still well above 2017� Contributions into pension schemes with the bank added DKK 187m,

bringing Group total pension contributions to DKK 600m in Q3

ALM. BRAND 2019-9M 12

Life

139 149 160 173134 140 272 24073 84

153 187346 373

585 600

2016 2017 2018 2019Q3

Pension schemes in bankingSingle PremiumsRegular Premiums

BankingProfit in line with expectations

Improved profitability, but still challenging interest rate environment� Strong growth in trading income from Financial Markets � Initiatives to strengthen core earnings � Adjustment of negative interest rates on deposits from

corporate clients� New account fees and negative interest for private customers

� Reversal of write-downs� Improved economic conditions among certain customers

� Investment portfolio loss due to negative interest rates

Profit before taxDKKm

ALM. BRAND 2019-9M

259 3

21

615

-9 -17

0

0

-8

-8

-16 -10

20

18

15

146

14

2016 2017 2018 2019Q3

WritedownsAmortization, customer relationshipsInvestment portfolio earningsCore earnings

13

Banking

Strong growth in business volume

� Continuous inflow of new customers, but temporary slow-down due to high remortgaging activity among existing customers

� Mortgage lending increase to new high� Positive trend in retail lending despite accelerated

repayment on loans

Business volume

ALM. BRAND 2019-9M 14

Business volumeDKKbn

2.7 2.8 4.9 5.1

7.2 8.2

15.0 16.5

0.81.0

1.00.9

10.612.0

20.922.5

Q3 2016 Q3 2017 Q3 2018 Q3 2019

Retail Lending Mortgage Leasing

Banking

Note: Numbers for 2018 and 2019 include loans and advances in the winding-up portfolio.

Capital modelFurther increase in excess capital

� Pre-tax profit added DKK 125m to total capital � Internal capital target of the group increased to DKK 4,971m

(H1 2019: DKK 4,871m) partly due to lower interest rates� Excess capital increased to DKK 411m

Development in excess capitalThird quarter 2019, DKKm

ALM. BRAND 2019-9M 15

Group

381

125 100 5

411

0

100

200

300

400

500

600

Excess capitalQ2

Profit after tax Change incapital target

Other Excess capitalQ3

Outlook 2019

� Alm. Brand maintained the guidance for FY 2019 of consolidated pre-tax profit of DKK 625-725m excl. run-off results for the rest of the year

� Guidance for pre-tax profit for the individual business segments:� Non-life: DKK 600m� Life: DKK 90m � Banking: DKK 50-70m� Other activities: loss of DKK 65m

ALM. BRAND 2019-9M 16

Group

Q & A

Non-Life│ Life │ Banking

Disclaimer

FORWARD LOOKING STATEMENTS

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.

ALM. BRAND 2019-9M 18