Alm. Brand - Alm. Brand A/S - Interim report Q2 2020

Alm. Brand A/S - Interim report Q2 2020

August 20, 2020

20 August 2020
Announcement no. 35/2020

Interim report Q2 2020

Very satisfactory financial performance in Q2 2020 with a pre-tax profit of DKK 371 million, against DKK 145 million in Q2 2019. Positive contributions from the individual business areas as well as from the group’s portfolio of investment assets.
Overall, Alm. Brand navigated the special situation caused by COVID-19 well and, on this basis, accelerated its development of digital customer interface solutions.
The implementation of the changes announced in connection with the release of the 2019 financial statements is progressing as planned, and the ambitious financial targets for growth and profitability defined for the period until 2022 are maintained.

CEO Rasmus Werner Nielsen:

“We delivered strong quarterly results. All three business units – Non-life Insurance, Life Insurance and Banking – performed well in a quarter that was impacted by the unusual situation brought on by the COVID-19 pandemic. Looking back at the past six months, the overall effect of COVID-19 on our group was neutral. Non-life Insurance benefitted from fewer and smaller claims, while Banking made a provision for a potential COVID-19-derived loss in the first quarter.”

“During this very special period, we made an extraordinary effort to help our many customers in need of assistance in connection with interrupted and cancelled holidays. At the same time, the new everyday routines of our customers during the lockdown period with distance working and less transport resulted in fewer motor and contents insurance claims. We expect the claims experience to normalise further in the coming months, and we have still not had any banking customers experiencing financial difficulties as a result of COVID-19. However, economic developments remain subject to great uncertainty.”

“Our strong interim financial statements show that the results of the initiatives we launched at the beginning of the year are starting to materialise. Our targeted execution continues according to plan – most recently with our new partnership with Denmark’s largest network of car dealerships in Semler Gruppen, which is a good example of initiatives that contribute to strengthening our position going forward. We will get the opportunity to provide motor insurance in a partnership based on deep digital integration, creating a completely new customer experience and generating new growth for Alm. Brand. We expect a lot from these types of partnership, and we consider them to be an important part of our future business model.”

Alm. Brand generated a pre-tax profit of DKK 371 million in Q2 2020, against a profit of DKK 145 million in the year-earlier period. The profit reflected highly satisfactory performances in all three business areas, including in particular Non-life Insurance. The Q2 financial performance was also lifted by growing confidence in economic recovery, supporting a favourable trend in the financial markets and resulting in gains on the group’s portfolio of investment assets.

Non-life Insurance reported a technical result of DKK 237 million in Q2 2020, against DKK 135 million in Q2 2019, reflecting a continued favourable trend in the underlying business, including a small positive effect from COVID-19 and the resulting lower level of claims reported, and a better-than-expected weather-related and major claims experience as well as a positive run-off result. Gross premium income was up 1.6% to a total of DKK 1,358 million, and the combined ratio excluding run-off gains was 85.3. The performance was highly satisfactory and better than expected.

Life Insurance generated a pre-tax profit of DKK 30 million in Q2 2020, against DKK 21 million in Q2 2019. Regular premium payments grew by 1.7% to DKK 175 million, while single payments fell by 15.7% to DKK 186 million. The performance was satisfactory and in line with expectations.

The bank’s core earnings amounted to DKK 43 million before tax in Q2 2020, against DKK 15 million in Q2 2019, supported by higher net interest and fee income and lower costs as a result of the income and cost initiatives implemented earlier this year. The bank’s pre-tax profit for Q2 2020 was also DKK 43 million, and the underlying business developed satisfactorily and in line with expectations.

Alm. Brand posted a consolidated profit of DKK 404 million in H1 2020, as compared with a DKK 370 million profit in H1 2019. The performance equalled a return on equity of 17.1% p.a. before tax, which was satisfactory and better than expected.

All three business areas have developed satisfactorily during the first six months of the year, a period that placed great demands on adaptability and execution. Non-life Insurance reported a pre-tax profit of DKK 334 million against DKK 317 million in H1 2019, Life Insurance generated a pre-tax profit of DKK 62 million against DKK 50 million in H1 2019, and Banking generated a pre-tax profit of DKK 35 million against DKK 31 million in H1 2019.

From an overall perspective, the changes implemented to unlock the full potential of Alm. Brand’s strategy are seen to contribute as expected.

Outlook for 2020

Alm. Brand expects to generate a pre-tax profit of DKK 750-850 million excluding run-off result in the next two quarters. This is unchanged from company announcement no. 32/2020 of 31 July 2020, in which the guidance was upgraded from the previously guided range of DKK 550-700 million.

The group reported a highly satisfactory profit for Q2 2020, which included the effects of the changes implemented to unlock the full potential of Alm. Brand’s strategy.

Accordingly, Alm. Brand revises its full-year guidance for Non-life Insurance to a pre-tax profit of about DKK 700 million excluding run-off result for H2 2020 against the previously guided pre-tax profit of DKK 500 million excluding run-off result. For Life Insurance the guidance for a pre-tax profit of about DKK 100 million is maintained, while the guidance for Banking is revised to a pre-tax profit of about DKK 90 million against a previously guided pre-tax profit of DKK 80 million. Other business activities are expected to report a loss of about DKK 60 million before tax. The full-year combined ratio is expected to be around 87-88.

The guidance range is subject to greater-than-usual uncertainty due to the follow-on effects of COVID-19 on the investment result and impairment writedowns on loans in particular.

The group’s financial targets for 2022

In connection with the release of its 2019 financial statements, Alm. Brand introduced a number of financial targets for the period until 2022. Regardless of the current extraordinary situation caused by the macroeconomic effects of COVID-19, Alm. Brand maintains the financial targets announced. Accordingly, the ambition is to achieve:

growth in Non-life Insurance defined as an average annual increase in regular premium payments of 3%;
improved earnings in Non-life Insurance as expressed by a combined ratio of less than 90 and a gross expense ratio of about 16;
improved earnings in Banking as expressed by a return on equity of at least 10% before amortisation of customer relationships and tax;
annual growth in regular premium payments in Life Insurance of 7% on average.

In addition to the financial targets, Alm. Brand has defined non-financial targets in respect of customer and employee satisfaction. The target for customer satisfaction as expressed by the net promotor score is 70, while the target for employee satisfaction is a score of 80.

Webcast and conference call

Alm. Brand will host a conference call for investors and analysts today, Thursday 20 August 2020 at 2:30 p.m. The conference call and presentation will be available from Alm. Brand’s investor website: https://almbrand.eventcdn.net/2020h1/

Investors and analysts are invited to participate by phone: +45 7876 8490 (Denmark), +1 646 787 0157 (USA) and +44 203 769 6819 (other countries).

Contact

Please direct any questions regarding this announcement to:

Chief Executive Officer
Rasmus Werner Nielsen
Tel. +45 3547 7907

Investors and equity analysts:

First Vice President, Investor Relations
Lars Holm
Mobile no. +45 2510 4717

Senior Investor Relations Officer
Mikael Bo Larsen
Mobile no. +45 5143 8002

Press:

Chief Communication Officer
Claus Kappel Christensen
Mobile no. +45 2524 8993

Attachments

Categories: Press Releases

View all news

Disclaimer

The information contained in this section of Alm. Brand A/S (the "Company") web page that you are attempting to access is not intended for, and must not be accessed by, or distributed or disseminated, directly or indirectly, in whole or in part, to persons resident or physically present in the United States of America (including its territories and possessions, any state of the United States and the District of Columbia, together, the "United States"), Canada, Australia and Japan, or any jurisdiction where to do so might constitute a violation of the local securities laws or regulations of such jurisdiction, and does not constitute an offer to sell or the solicitation of an offer to buy or acquire, any shares or other securities of the Company in the United States, Canada, Australia, Japan or any jurisdiction where to do so might constitute a violation of the local securities laws or regulations of such jurisdiction.

The shares of the Company referred to herein and on the following web page (the "Shares") have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority under any applicable securities laws of any state, province, territory, county or jurisdiction of the United States or any other restricted jurisdiction. The Shares may not be offered, sold, resold, pledged, taken up, exercised, renounced, transferred, delivered or distributed, directly or indirectly, in or into the United States absent registration, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable state and other securities laws of the United States, or any other restricted jurisdiction. No public offering of the Shares is being, has been or will be made in the United States. Any Shares sold in the United States will be sold only to persons reasonably believed to be qualified institutional buyers (as defined in Rule 144A under the Securities Act) in reliance on Rule 144A under the Securities Act. The information contained herein and on the following web page does not constitute, and should not be construed as, an offer to sell or solicitation of an offer to buy any of the Shares in the United States, "general solicitation or general advertising" under Rule 502(c) of Regulation D under the Securities Act or "directed selling efforts" under Regulation S of the Securities Act.

The Shares have not been approved or disapproved by the U.S. Securities and Exchange Commission, any state securities commission in the United States or any other regulatory authority in the United States, nor have any of the foregoing authorities passed comment upon, or endorsed the merit of, the Shares or the accuracy or the adequacy of the information contained herein and on the following web page. Any representation to the contrary is a criminal offence in the United States.

The Shares have also not been, and will also not be, registered under the applicable securities laws of Canada, Australia or Japan and, subject to certain exemptions, may not be offered or sold in or into or for the account or benefit of any person having a registered address in, or located or resident in Canada, Australia or Japan.

Access to the information and documents contained on the following web page may be illegal in certain jurisdictions, and only certain categories of persons may be authorized to access such information and documents. All persons residing outside of Denmark who wish to have access to the documents contained on the following web page should first ensure that they are not subject to local laws or regulations that prohibit or restrict their right to access the following web page or require registration or approval for any acquisition of securities by them. No such registration or approval has been obtained outside Denmark. The Company assumes no responsibility if there is a violation of applicable law and regulations by any person.

No information included on the following web page should be used by investors in forming their investment decision as to an investment in the Shares.

By clicking on the [“Accept”] button below, you certify that (i) you have read and understood the foregoing and (ii) you are not restricted by the laws of your country of residence or any other law to which you are subject to access the following web page.

Accept Decline

Company Announcement Details

Alm. Brand A/S - Interim report Q2 2020

Disclaimer