Topdanmark A/S

CSE:TOP

Earnings Call Transcript 2018-Q1

[Steffen Heegaard, Group Communications & IR Director]

Welcome to the presentation of Topdanmark's results for Q1 2018. Profits for Q1 was DKK 267 million, down from DKK 450 million in Q1 last year due to a lower investment return. The combined ratio improved to 85.2 compared to 85.8 in Q1 last year. Premiums increased 1.7% in nonlife and 18.6% in life. For full year, the assumed combined ratio has been improved from between 90 and 91 to between 88 and 89, excluding any run-off profits or losses in the last 3 quarters of the year. The profit forecast model for 2018 has been upgraded by DKK 100 million to between DKK 1,050,000,000 and DKK 1,150,000,000, excluding run-off profits in the remainder of the year. These are the main points in my presentation.Pretax earnings decreased DKK 190 million to DKK 344 million in Q1 2018. The technical nonlife profit increased DKK 19 million to DKK 336 million. The improvement was due to a low claims level on theft and motor, which more than compensated for the decline in run-off profits of DKK 10 million. The investment return in Q1 decreased DKK 166 million to minus DKK 45 million due to a lower investment return on equities and on Danish mortgage bonds. Profit in life insurance declined DKK 28 million to DKK 44 million in Q1, mainly due to a lower investment return. The claims trend improved 0.6 percentage points to 67.9% in Q1 this year. Adjusted for run-off profits, weather-related claims and large-scale claims, the claims trend improved by 1.4 percentage points to 70.2. The improved claims trend was primarily due to an improved trend in theft and in motor as well as a favorable impact of Topdanmark's efficiency improvement program.Premiums increased 1.7% in nonlife. The premium growth was split between a 0.4% increase in the Personal segment and a 3.4% increase in the SME segment. The trending premiums in the Personal segment in Q1 was affected by one-off effects, which affected the premium growth positively in Q1 2017. Adjusted for one-off effects, premium growth in the prior segment was 1.5% in Q1 2018. In Q1 this year, Topdanmark had a net inflow of customers in the personal, agricultural and the SME market. We continue to assume a positive premium growth for 2018. As stated, the combined ratio was 85.2 in Q1, down from 85.8 in Q1 last year. For full year, we've adjusted the assumed combined ratio from between 90 and 91 to between 88 and 89. This improvement is caused by run-off profits and no weather-related claims and the better-than-assumed level of large-scale claims in Q1. Finally, the underlying claims trend in Q1 was slightly better than assumed. Topdanmark has initiated an exclusive distribution agreement with Coop, the largest supermarket chain in Denmark. We have established an independent brand named Coop Forsikringer, a digital insurance solution for sales, service and claims handling. The purpose of Coop Forsikringer is to offer simple, modular, nonlife products for Coop's 1,750,000 customers, of which, approximately 800,000 customers use Coop's app actively. Coop Forsikringer was launched internally in beginning of April and is now an integrated part of the Coop app and Coop's bonus scheme for customers. As to the financial statement, the establishment of Coop Forsikringer is not expected to have any impact on premiums for 2018. Setup cost have been incorporated in the private forecast model for 2018. Private and life insurance decreased to DKK 28 million to DKK 44 million in Q1 2018, primarily due to a lower investment return and risk result. For 2018, the assumed profit in life insurance continues to be between DKK 240 million and DKK 270 million. The life company holds a good competitive position. This was reflected in an 18.6% increase in single premiums split between a 29.7% growth in single premiums and a 3.2% growth in regular premiums. The assumed growth in regular premiums for 2018 has improved from around minus 5% to now being slightly positive despite the termination of the distribution agreement with Sydbank. The investment return for the Topdanmark group, excluding life, was minus DKK 2 million. This includes the result of Topdanmark's asset management company of DKK 27 million. Based on a number of assumptions described in the Q1 report, the assumed posttax profit for 2018 has been upgraded by DKK 100 million to between DKK 1,050,000,000 and DKK 1,150,000,000, excluding run-off in the last 3 quarters of the year, representing earnings per share of DKK 12.8.Thank you for taking the time to watch this presentation of Topdanmark's Q1 report. If you want to learn more about Topdanmark, you are welcome to contact me. Following the announcement of the Q1 results, we will hold a number of investor meetings. Today, we'll be hosting a conference call at half past 3. You will find more information on our roadshow schedule in the events calendar on our website. Thank you, and goodbye.