Q1 results 2014
22
ndMay 2014
Highlights Q1 - Vardia ASA
§ Experienced a first quarter with all-time-high sales
§ Strong growth in gross written premiums
§ Successful renewal of reinsurance programs at improved terms
§ Listed on Oslo Stock Exchange 8thApril
§ Expects to report a profit towards the end of the year
Financial highlights Q1 – Vardia
§ New sales at a total of NOK 250.1 million, an increase of
22.0% percent
§ Gross revenue in the first quarter was NOK 411.9 million,
an increase of 62.0%
§ Gross written premiums of NOK 280.8 million, an increase
of 108.0%
§ Earned premiums f.o.a. of NOK 45.9 million, an increase of
210.9%
§ Net combined ratio of 140.4%, compared to 162.7% for the
full year 2013
§ Improved gross loss ratio from 95.4% to 83.9%
§ Renewal rate in first quarter is above 85%
+62%
254
412 Gross revenue Vardia
Q1 - 13 Q1 - 14
+108%
135
281 Gross premiums written Vardia
New Sales
– All-time high
New sales in first quarter
§ Total 250.1 MNOK (205.0)
§ Norway 137.2 MNOK (113.7)
§ Sweden 112.9 MNOK (91.3)
An average of NOK 83.4 (68.3) million per month
New sales in April was NOK 75.1 (67.7) million
§ Sales in April 2014 affected by Easter
holiday
Vardia will publish monthly new sales on or around the 10th each month
4 23 29 47 56 41 80 59 66 68 62 60 36 51 57 66 63 62 80 83 87 75 0 10 20 30 40 50 60 70 80 90 100
Aug 12 Oct 12 Dec 12 Feb 13 Apr 13 Jun 13 Aug 13 Oct 13 Dec 13 Feb 14 Apr 14
NOK million
Gross Loss ratio
– Improving and on schedule
§ The gross loss ratio in the first
quarter was 83.9%, a strong improvement from 95.4% for the first quarter in 2013
§ Continued maturity of Vardias’
portfolio will give positive effect on loss ratio development
95,40% 94,30% 90,10% 86,50% 83,90% 78% 80% 82% 84% 86% 88% 90% 92% 94% 96% 98% 3m 2013 6m 2013 9m 2013 Full year 2013 3m 2014
Gross Loss Ratio
Highlights Q1 – Vardia Norway
6
Average new sales at NOK 45.7 million (37.9) per month § An increase of 20.7% compared to first quarter 2013
§ The successful integration of Saga and Rein Forsikring had positive impact on the new sales in Norway
New partnership signed with Verdibanken and Flytteportalen § Portfolio from Verdibanken fully implemented
§ Deal with Flytteportalen is signed and will have full effect from second quarter
Measures initiated in Q1
§ Launched new products: Individual risk life, Disability and Healthcare § Tariff adjustments has been implemented in order to increase
profitability
New partnership agreements:
Awarded among the best travel insurers in the market by Norsk Familieøkonomi and VG in April
Highlights Q1 – Vardia Sweden
Average new sales at NOK 37.6 million (30.4) per month§ An increase of 23.7% compared to same quarter last year
New partnership signed with Kundkraft, Meca and Bostadrätterna
§ The Kundkraft partnership is already showing very good figures
§ Deal with Meca, part of Mekonomen, is signed and the first step was launched in first quarter
§ Bostadsrätterna will launch in second quarter, which also includes a conversion of home & content policies for approximately NOK 10 million in GWP
Measures initiated in Q1
§ Tariff adjustments has been implemented in order to increase profitability
New partnership agreements:
Awarded “Best future employer in the insurance market” at the annual Insurance Awards in Sweden
Highlights Q1 – Vardia Denmark
8
Sales started in February
§ NOK 1 million in April
New partnership signed with OK
§ “White label” co-operation
§ OK is a Danish cooperative owned by more than 17 000 customers and dealers, and is Denmark's best selling
petrol brand. OK have over 670 filling stations. Most of the filling stations are located at cooperative stores and
supermarkets
Next steps for Vardia Denmark
§ Implementing full scale product portfolio (private lines) § Expanding outbound call-centre capacity
Promoting “OK Bilforsikring“ at Denmark’s National Stadium “PARKEN”
Reinsurance – Improved terms for Vardia
Highly rated reinsurers Low risk on single claims
Led by Munich Re (AA-) and SCOR (A+). Expanded with 5 new players with (AA-/A+) rating
The reinsurance program limits Vardias’ single claim exposure to SEK 2.5 million within motor Sweden, NOK/DKK 1.25 million within motor Norway and Denmark, and NOK/SEK/DKK 625 000 within property in Sweden, Norway and Denmark
Quota shares
XL
75 % 25 %
Own risk
§ New reinsurance program signed, led by Munich RE and SCOR
§ Significant oversubscription of ceded share in all programs
§ Improved terms and cover compared to previous programs
§ Lower financial risk
Norwegian Insurance market – Customer dynamics
§ 56% has not been contacted by their
insurance company during the last year
§ Only 15% has been contacted last
year
§ Vardia has a pro-active approach,
contacting the most profitable segments
§ Vardia contacts each customer at
first renewal
Source: Norsk Finansbarometer 2014 – The Norwegian insurance market.
Have you the last 12 months contacted or been contacted?
7 10 10 10 11 10 7 8 6 45 49 52 52 52 53 55 55 56 16 17 13 18 16 14 12 15 15 36 26 25 21 24 25 27 24 25 0 10 20 30 40 50 60 70 80 90 100 2006 2007 2008 2009 2010 2011 2012 2013 2014 % Can't remember No
Yes, has been contacted Yes, has contacted
Norwegian Insurance market – Customer loyalty
12 1 5 33 12 22 14 12 4 34 15 23 12 11 6 35 14 22 12 11 1 4 35 15 22 12 10 0 20 40 60 80 100 Unanswered Don't remember 10 years or more 6-9 years 3-5 years 1-2 years Less than a year2014
2013
2012
2011
§ Customers rarely change insurance
company
§ 50% have been at their insurance
company more than six years
§ 3 out of 5 customers are not aware
that they can change insurance company with one month notice
§ Unique opportunity for Vardia to gain
foothold in an attractive market
Source: Norsk Finansbarometer 2014 – The Norwegian insurance market.
http://www.fno.no/Hoved/Aktuelt/Sporreundersokelser/Finansbarometeret1/finansbarometeret-2014/finansbarometeret-2014/
Norwegian Insurance market – Claims handling
§ The insurance sector takes care of their
customers
§ Claims handling is important for the
customer and correlates to the renewal rate
§ Vardia use Crawford as claims handler,
one of the largest and best claim handlers in the market
§ Dedicated Vardia team
§ Renewal rate in Vardia is above 85%
Source: Norsk Finansbarometer 2014 – The Norwegian insurance market. 0 4 6 25 45 20 4 7 25 47 16 0 4 6 23 46 20 0 4 6 25 46 19 0 20 40 60 80 100 Unaswered Don't know Dissatisfied Less satisfied Satisfied Very satisfied Extremely satisfied % 2014 2013 2012 2011
Results Q1 – Strong premium growth
NOK thousands 31.03.2014 31.03.2013 31.12.2013
Gross revenue 411 906 253 599 717 776
Gross premiums written 280 788 134 985 571 729
Gross premiums earned 185 559 60 291 393 734
Premiums earned f.o.a. 45 854 14 750 98 058
Incurred claims f.o.a. (37 121) (15 581) (91 742)
Operating expenses for own account (27 278) 890 (67 791)
Other income/expenses 7 744 (634) 1 955
Technical result (10 801) (574) (59 520)
Net financial income 611 (243) 404
Operating result (10 189) (817) (59 116)
Changes in security reserves etc. (3 305) (1 698) (10 893)
Profit/Loss before tax (13 494) (2 515) (70 009)
Profit/Loss after tax (9 897) (1 621) (49 963)
Gross loss ratio 83,9 95,4 86,5
Gross cost ratio 32,8 14,6 31,9
Gross Combined ratio 116,6 110,0 118,4
Loss ratio f.o.a. 81,0 105,6 93,6
Cost ratio f.o.a. 59,5 -6,0 69,1
§ Vardia continues to achieve strong
and consistent growth
§ Other income is fee and commission
income from agency business e.g. Vardia Agencies
§ Private insurance accounted for 73%
and commercial insurance of 27%
§ The development in loss ratios is
declining and on schedule
§ The high cost ratio is in line with plans
and reflects the fact that the Group is in an early stage, where large initial investments have been taken to prepare the Group for the expected growth
Balance sheet Q1 – Solid capital structure
NOK millions 31.03.2014 31.03.2013 31.12.2013
Various Assets 163.0 46.1 139.9
Bank deposits 83.1 26.4 131.1
Reinsurers share of gross technical reserves 546.9 186.0 330.8
Receivables direct insurance and reinsurance 348.8 152.9 231.2
Other Assets 377.3 164.3 184.4
Total Assets 1,519.1 575.7 1,017.4
Total Equity 411.4 135.3 249.1
Gross Premium Reserve 454.8 199.8 309.0
Gross claims reserve 258.2 53.3 143.7
Other technical provisions 20.0 7.5 16.9
Pension liabilities 4.2 2.9 4.2
Financial liabilities 370.5 176.8 294.8
Total liabilities 1,107.6 440.4 768.3
Total equity and liabilities 1,519.1 575.7 1,017.4
16
§ The Group’s total assets increased
from NOK 1,017.4 million to NOK 1,519.1 million. The increase is explained by the growth of the
insurance portfolio and equity capital issues
§ Net proceeds from the equity capital
placing, NOK 162 million, is included in the reported equity
§ Vardia pursues a conservative
investment policy, with all liquid assets deposited in selected local banks at attractive deposit rates
Capital & Solvency II
Well prepared for the future:
§ The net proceeds of the equity Offering ensure that the company is fully financed for organic growth in the
next years
§ Regarding Pilar 2, the final ORSA report has been adopted by the Board in May 2014
§ Reinsurance is an important vehicle in order to reduce Vardia’s own Solvency II requirement. Vardia has
presently reinsurers with an average rating of S&P’s AA-/A+.
Capitalization (Group) 31.03.2014 31.03.2013 31.12.2013
Solvency Capital (MNOK) 431.4 142.8 265.8
Primary Capital (MNOK) 238.8 85.7 101.4
Capital Ratio 37 % 32 % 28 %
Top 20 shareholders – 21st May 2014
18
Sharholder’s name No. of Shares Percent
Skandinaviska Enskilda Banken AB (Nominee Account) 4 914 142 15.29% Aakvik Holding AS 1 674 733 5.21% Bnp Paribas Sec. Services S.C.A (Nominee Account) 1 557 203 4.84% Canica AS 1 377 208 4.28% Norway Marine Insurance AS 1 363 342 4.24% BLS Holding AS 1 286 226 4.00% Imagine Capital AS 1 075 423 3.35% Busebakk AS 1 033 124 3.21% Nilvama AS 921 508 2.87% PLV Holding AS 800 810 2.49% Vikna Eiendom AS 736 333 2.29% Nordnet Bank AS (Nominee Account) 690 831 2.15% JP Morgan Chase Bank, Na (Nominee Account) 666 666 2.07% Villenik AS 649 723 2.02% Svenska Handelsbanken AB (Nominee Account) 570 558 1.78% Gyljandi AS 550 000 1.71%
Gaya AS 499 224 1.55%
Hetlands Gecco Management AS 464 954 1.45% AHJ Holding Ltd 443 789 1.38%
Høie Karl 437 741 1.36%
Others 10 430 597 32.47%
Total 32 144 135 100.0%
§ Shareholdings:
§ Managements’ direct and indirect
shareholding totals 17.33%
§ The Board of Directors has a direct and
indirect shareholding of 10.55%
§ Total holdings for Board and
Managements is 27.88%
§ Geographical split:
§ Norway 64,6 %
§ Sweden 22,7 %
§ Other 12,7%
Subsequent events & Outlook
§ New sales in April of 75.1 MNOK, up 11,1% compared to April 2013
§ New sales in April affected by Easter holiday
§ Successful renewal of reinsurance programs at improved terms and conditions
§ Vardia Insurance Group listed on Oslo Stock Exchange 8thApril
20
§ Vardia expects to report a profit towards the end of the year
§ The new sales is strong and second quarter is expected to be at the same levels as first quarter
§ Expects to announce new and significant partnership agreements in second quarter
§ The loss and cost ratio is declining as the portfolio is growing and maturing
Financial ambitions 2016 – On schedule
Net Combined Ratio
˂80%
Solvency Margin ratio
>200% Return on equity ̴25% Turnover ̴̴NOK 3 billion Renewal rate >85%
Gross Cost Ratio
˂20%
• All-time-high sales and strong growth in gross written premiums
• Renewal rate in first quarter is above 85%
• The highly intensive investment period for Vardia is decreasing, and as premium income grows, the cost ratio will continue to fall
• The loss ratio is declining as the portfolio is growing and maturing
• Solvency margin ratio in first quarter is 265% • Vardia expects to report a profit towards the end of the year
Operations across Scandinavia
Vardia Insurance Group ASA
Saga Forsikring AS Vardia Agencies AS Rein Forsikring AS Vardia Forsikringsagentur A/S Vardia Försäkring AB Vardia Forsikring AS Sortland Molde Hamar Luleå Skellefteå Stockholm Copenhagen Porsgrunn Oslo Sundsvall
History
2009
2010
2011
2012
2013
2014
§Scandinavian Insurance Group AS established by Børge Leknes, Rune Arneberg and Pål Lauvrak §Scandinavian Insurance Group AS established as a sales agent §Hired 50 employees in Sortland from 1881 §Expanded management team, incl. Ole Erik Alnæs, Sigmund Romskoug and Ivar S. Williksen §Licence from Norwegian FSA to operate as an insurance company §Vardia Försäkring AB established in Stockholm §Capital increases of MNOK 76 §Started underwriting for own account in Sweden §Vardia Försäkring AB was awarded Swedish non-life insurance company of the year §Started underwriting for own account in Norway §Capital increases of MNOK 83.5 §Vardia Agencies AS established, Lloyds Binder §Changes name to Vardia Insurance Group ASA §Acquired Saga Forsikring AS §Capital increases of MNOK 203.5 §Started sales in Denmark §Acquired Rein Forsikring AS §Capital increases of MNOK 172.1 in connection with IPO §Listing at Oslo Stock Exchange, 8TH April 2014. 24
Experienced management
Ivar S. Williksen- President & CEO
27 years of experience from the insurance industry
Nemi ASA – CEO/CUO
Norway Marine Insurance – MD/co-founder Gjensidige Forsikring – Director
Rune O. Arneberg- Deputy CEO & COO
26 years of experience from the insurance industry
Moderna Norge – Project manager White Label Insurance – CEO/founder
Sigmund Romskoug - Senior Vice President
36 years of experience from the insurance industry
Nemi ASA – Deputy CEO/Director
Norway Marine Insurance – Partner/co-founder Marsh Marine & Energy – Director
Ivar K. Z. Pedersen - CFO
27 years of experience from the insurance industry
Nemi ASA – CEO/CFO Gjensidige Forsikring – Director
Pål Lauvrak- CMO
13 years of experience from the insurance industry
If… – Manager Concept development
Andreas Önstorp- CEO Vardia SE
14 years of experience from the insurance industry
Moderna Försäkringar AB – Director private Länsförsäkringar
Carsten Müller- CEO Vardia DK
9 years of experience from the insurance industry
If… Head of Alliances Eniro – Division Manager
Børge Leknes- CEO Vardia NO
14 years of experience from the insurance industry
Bodø Forsikringssenter – Owner/founder If…– Project manager
Aleksander Nordahl- IR / Com.Dir
7 years of experience from the communication sector
Gambit HK Strategies – Advisor E24 Norway – Financial journalist
Åge Korsvold- Chairman
Former CEO Orkla ASA, CEO Kistefos AS and Storebrand ASA
Karl Høie -Deputy Chairman
Partner in Quarz + Co, A.T. Kearney and Booz Allen
Line Sanderud Bakkevig- Member
Partner & Chairman RAW performance AS, Former Storebrand ASA
Nina Charlott Gullerud- Member
Former Director at Cisco Systems
Nils Aakvik- Member
CEO aakvik Holdning AS, Privat investor
Bjørn Mæhlum- Employee representative
