Alm. Brand - Alm. Brand - Interim report 9M 2018

Alm. Brand - Interim report 9M 2018

November 15, 2018

15 November 2018
Announcement no. 68/2018

Alm. Brand – Interim report 9M 2018

Alm. Brand generated a highly satisfactory pre-tax profit of DKK 640 million in 9M 2018. The full-year guidance is raised from a profit of DKK 600-700 million to a profit of DKK 700-750 million.

I’m extremely pleased with the group’s overall financial performance: A strong profit exceeding our expectations and allowing us to lift our full-year profit guidance for 2018. Reporting a high and very satisfactory inflow of customers in all of the group’s business areas, and supported by our base of very satisfied and loyal customers, I’m really happy about the way Alm. Brand is developing, said Alm. Brand’s CEO Søren Boe Mortensen.
Our non-life insurance business continued its track record of strong performance, growth and customer onboarding. We have achieved this on the basis of increased customer loyalty driven by the fact that our customers are highly pleased with the services we provide, emphasised Søren Boe Mortensen. He continued:
The same trend is seen in the group’s life insurance business, which reported growth of 50% in the third quarter. In particular, we have recorded an increase in the number of companies choosing to place their pension schemes with us – a result of the targeted strategy we have pursued in recent years.
Our investments in onboarding customer advisers and improving our processes are expected to strengthen growth in the bank over the next couple of years. Although the bank continues to onboard customers – as a result of new customers choosing to place their business with us and the acquisition of the activities of the former Saxo Privatbank – our lending is not growing at the same rate due to the current trend of customers preferring to repay debt and convert bank loans into mortgage loans, explained Søren Boe Mortensen.

Q3 performance:

Non-life Insurance delivered a highly satisfactory pre-tax profit of DKK 205 million, which was better than expected.

The combined ratio was 85.4, supported by a lower-than-expected level of major claims and weather-related claims and by run-off gains.

Gross premiums amounted to DKK 1.3 billion, increasing by 2.7% relative to Q3 2017. Both the private customer segment and the commercial customer segment improved, reporting growth of 1.5% and 4.0%, respectively. Customer loyalty remained at a high level with an upward trend in both segments. Loyalty in the private customer segment is currently at the highest level in ten years.

Life Insurance generated a highly satisfactory pre-tax profit of DKK 31 million, which was better than expected, being lifted in particular by good risk and expense results.

Pension contributions were up by 50% year on year. Regular payments were up by 8%, while single payments increased by 94%.

Growth is driven in particular by the corporate customer segment. This should be seen in light of a number of strategic initiatives, including simplified access for customers via digitalisation in the underwriting process, more lenient requirements in respect of the provision of health statements and adjustment of the pricing of selected products.

The bonus rate was 21.0 at 30 September 2018. The high bonus rate level ensures that Alm. Brand Pension may offer one of the industry’s highest rates on policyholders’ savings for guaranteed products.

The bank generated an overall pre-tax profit of DKK 6 million in Q3 2018. Improved economic conditions contributed to a reversal of impairment writedowns, but turbulent investment markets and rising interest rates weighed on investment portfolio earnings. While in line with expectations, the performance was still not satisfactory.

The bank’s loans and advances amounted to DKK 4.4 billion, a 42% increase relative to 30 September 2017, whereas the total portfolio of Totalkredit loans was up by 83% to DKK 15.0 billion. The improvement was mainly driven by the addition of the Saxo Privatbank activities. Excluding this addition, the increase in Totalkredit loans was 17%.

The bank continues to experience strong growth in new lending. Since Q3 2017, the number of Pluskunder has grown by 9% not including customers acquired from Saxo Privatbank and retained during the period. The implementation of the strategic initiatives, including the onboarding of new sales advisers, is having a positive effect on the inflow of new customers.

Outlook

The full-year guidance is raised from a consolidated pre-tax profit of DKK 600-700 million to a consolidated pre-tax profit of DKK 700-750 million. The guidance for Non-life Insurance is lifted by DKK 60 million. Moreover, the guidance for Life Insurance and Banking is lifted by DKK 10 million each, while the guidance for Other activities is maintained. The outlook is exclusive of run-off gains for the rest of the year.
The group’s consolidated pre-tax profit for 2019 is expected to be in the DKK 500-600 million range. The outlook is exclusive of run-off gains.

Webcast and conference call
Alm. Brand will host a webcast and conference call on Thursday, 15 November 2018 at 3:00 p.m.

https://almbrand.eventcdn.net/20181115

Analysts are invited to participate by phone: Danish analysts: +45 3544 5583, US analysts: +1 855 269 2604, other international analysts: +44 (0) 203 194 0544.

Contact
Please direct any questions regarding this announcement to Søren Boe Mortensen, CEO, on tel. +45 35 47 79 07, or Susanne Biltoft, Director, Communications on tel. +45 35 47 76 61.

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Alm. Brand - Interim report 9M 2018

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