Alm. Brand - Alm. Brand A/S – Annual Report 2011

Alm. Brand A/S – Annual Report 2011

February 28, 2012

Alm. Brand A/S

“Alm. Brand's non-life insurance activities reported a highly satisfactory full-year performance, and I believe our combined ratio of 92.3 and expense ratio of 15.9 will rank among the best in the industry. Our pension activities also performed strongly in a difficult market, recording a significant increase in pension contributions. We are extremely pleased with this performance,” underlines Chief Executive Søren Boe Mortensen and continues:

“However, we made substantial impairment writedowns on the bank's lending in the fourth quarter, most of which were due to a change of methodology. In addition, the deteriorating economic conditions also triggered writedowns.”

Alm. Brand A/S generated a profit before losses and writedowns of DKK 393 million, against an expected profit of DKK 325 million. After losses and writedowns in the bank, the company incurred a loss of DKK 601 million.

More than half of the loss for the year was due to a change in the methodology used to calculate Alm. Brand Bank's impairment writedowns.
The group's non-life insurance activities delivered a very strong performance, posting a higher-than-expected profit of DKK 460 million.

The combined ratio was 92.3, of which the expense ratio accounted for 15.9.
The pension activities produced a highly satisfactory and better than expected profit of DKK 137 million.

In spite of the very difficult conditions in the financial markets, the life insurance company generated a return of 9.0% on policyholders' funds and a bonus rate of 4.5%. Accordingly, there was no need to introduce a transfer and surrender charge.

Total payments into pension schemes managed by the group grew by 19.5%.
The banking activities were hit by the deteriorating economic conditions and turbulent financial markets, which led to substantial capital losses and writedowns.

Approximately DKK 400 million of the impairment writedowns made in the fourth quarter were, however, attributable to a changed methodology. The bank had already reserved capital in its solvency need with a view to countering this development and, as a result, this had a limited effect on the bank's overall capital. The method used is expected to comply with the Danish Financial Supervisory Authority’s future method of calculation.

The bank posted a highly unsatisfactory loss of DKK 160 million before losses and writedowns. Including losses and writedowns, the bank incurred a loss of DKK 1,154 million.
The Alm. Brand Group expects to generate a profit before losses and writedowns of DKK 450 million in 2012.

Other highlights

The underlying combined ratio of the non-life insurance company again developed very favourably, ending 2011 at 80.2, against 85.5 a year earlier.

Premiums rose by 0.2%, which was in line with expectations in a declining market.
The performance of Alm. Brand Liv og Pension was lifted by positive expense and risk results as well as by a strong investment return.

Due to the positive results, the rate of interest paid on policyholders' savings ranged between 3.65% and 5.30%, which is one of the best in the industry.

The bonus rate of the interest rate group in which new agreements are written was 6.9% at 1 January 2012.
In addition to the impact from losses and writedowns, the bank's performance was affected by high funding costs and capital losses as a result of the turmoil in the financial markets.

On a more positive note, the bank's costs continued to track a downward trend, declining by around 10% relative to 2010.

Please direct any questions regarding this announcement to Søren Boe Mortensen, Chief Executive, on tel. +45 35 47 79 07 or Susanne Biltoft, Head of Information and Investor Relations, on tel. +45 35 47 76 61.

Alm. Brand A/S will host a webcast and teleconference on Tuesday, 28 February 2012 at 10.00 a.m.

http://storm.zoomvisionmamato.com/player/almbrand/objects/2k0fs9xp/

Dial-in instructions for financial analysts: Danish analysts: +45 327 147 67, US analysts: +1 718 354 1226 and other international analysts: +44 (0) 207 509 5139.

Yours sincerely,

Alm. Brand A/S

Søren Boe Mortensen

Chief Executive

The annual report is attached in pdf-format.

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AS 1 2012 - Annual Report - Letter

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Alm. Brand A/S – Annual Report 2011

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