Post on 30-Mar-2018
Q3 Presentation 2015
10 November 2015
Espen Husstad, CEO
Terje Finholdt, CFO
Vardia – Executive Summary
2
� The business continued to put stress on solvency margin capital
� 20 % top line growth in Q3
� Adverse result driven by one-offs and large losses in Q3
� SII and the recent private placement
� A successful private placement was completed on 25 October
� This leaves the group sufficiently capitalized for the remainder of 2015
� The solvency capital margin ratio (SII) on Jan 1st 2016 is estimated at above 120%
� Restructuring
� The Group was restructured with effect from 10 August
� Distribution channels successfully implemented as independent companies
� New management team
� Stabilize the platform and capitalize on the start-up sales focus.
Q3 Highlights
New Sales – Continued growth at a lower rate
4
80
59
6668
62 60
36
51
57
6663 62
8083
87
75
83
92
58
89
107106105
79
93 92
100
85 84
89
51
64
78
85
0
20
40
60
80
100
120
Jan
13
Fe
b 1
3
Ma
r 13
Ap
r 13
Ma
y 1
3
Jun
13
Jul 1
3
Au
g 1
3
Se
p 1
3
Oct 1
3
No
v 1
3
De
c 13
Jan
14
Fe
b 1
4
Ma
r 14
Ap
r 14
Ma
y 1
4
Jun
e 1
4
July
14
Au
g 1
4
Se
p 1
4
Oct 1
4
No
v 1
4
De
c 14
Jan
15
Fe
b 1
5
Ma
r 15
Ap
r 15
Ma
y 1
5
Jun
e 1
5
July
15
Au
g 1
5
Se
p 1
5
Oct 1
5
Denmark Sweden Norway
NEW SALES (NOKm) NEW SALES Q3
NEW SALES (YTD October)
193
254
Q3 15
-24%
Q3 14
822861
-5%
YTD 14 YTD 15
Financial highlights Q3 – Premium growth continues
5
GWP PER QUARTER
315365379
341
263282281
+20%
Q3 2015Q2 2015Q1 2015Q4 2014Q3 2014Q2 2014Q1 2014
TOP LINE EXPECTATION Q4
GWP YEAR TO DATE
1 059
826
2015
+28%
2014
Q4 outlook
� We expect a higher GWP in Q4 compared to Q3, hence
show a similar “U-shaped” top line phasing as in 2014
* Please note – Q2 2015 adjusted from previously reported NOK 1.444mPORTFOLIO (NOKm)
1 4551 3971 3461 2601 111
921864
572501
Q3 15
+31%
Q2 15Q1 15Q4 14Q1 14Q4 13Q3 13 Q3 14Q2 14
* Please note – Q2 2015 adjusted from previously reported NOK 1.444m
Markets at a glance – Growth in all countries
6
Portfolio of NOK 810 m.
Market share per Q3 at 1.5 % (+ 0.1ppt
from Q2).
565480
2014 2015
+18%
YT
D G
WP
VARDIA NORWAY
Portfolio of NOK 605 m.
Q3 market share of approx. 1.4 %
(+0.1ppt from Q2).
Portfolio of NOK 40 m.
VARDIA SWEDEN VARDIA DENMARK
458342
+34%
YT
D G
WP
20152014
36
4
2014 2015
+880%
YT
D G
WP
156153
2014 2015
+2%
Q3
GW
P
147
108
2014 2015
+36%
Q3
GW
P
13
2
2014 2015
+425%
Q3
GW
P
Loss ratio development – Q3 hit by large losses
7
� Q3 hit by five Large Losses (Losses > NOK 5m) – with a combined
adverse effect of NOK 59m (gross):
� 5.9ppt adverse effect on Loss Ratio (YTD)
� 16.9ppt adverse effect on Loss Ratio (in Q3)
LOSS RATIO TAKEAWAY
95,4 %94,3 %
90,1 %
86,5 %83,9 %
78,8 % 79,7 %
88,6 %
79,5 %
76,3 %
83,7 %
Q1 Q2 Q3 Q4
2013
2014
2015
GROSS LOSS RATIO (YTD)
NET LOSS RATIO (YTD)
105,6 %
102,0 %
95,2 %93,6 %
81,0 %78,9 %
77,2 %
82,6 %
82,3 %80,2 % 80,6 %
Q1 Q2 Q3 Q4
2013
2014
2015
LOSS RATIO BREAKDOWN
Loss R
atio
CH
E
YTD 15
83,7%
75,8%
7,9%
Q3 15
97,0%
89,6%
7,3%
Q2 15
73,3%
66,6%
6,7%
Q1 15
79,5%
71,6%
7,9%
Combined Ratio – Q3 influenced by large losses
and one-offs
8
COMBINED RATIO (GROSS)
Adverse effect on Combined Ratio in Q3 (25.4ppt vs. Q3 2014) driven by:
� Large Losses. Five losses > NOK 5m incurred in Q3. Currently
reserved at NOK 59m in total
(16.9ppt adverse effect on Combined Ratio)
� One-offs in Q3 related to restructuring of the company and write-
down on intangible assets and goodwill. In total NOK 36m
(10.3ppt adverse effect on Combined Ratio)
� YTD: 5.9 ppt adverse effect on Combined Ratio from Large Losses,
and 3.7ppt from one-offs
TAKEAWAY
79,7%
Q3 15
132,9%
35,9%
97,0%
Q3 14
107,5%
26,2%
81,3%
37,5%
83,7%
YTD 14
117,5%
37,7%
YTD 15
121,2%
Cost RatioLoss Ratio
COST SAVING PROGRAMME (NOKm)
-0,4
2,5 3,3
0,5 3,07,4
12,718,4
24,7
31,2
38,4
46,6
-0,22,6
6,712,3
21,0
28,0
Apr May Jun Jul Aug Sep Oct Nov Des
Actual vs. Target Target Actual
-56,0
-4,0
Adjusted
total loss
for Q3
CurrencyWrite-down
intangible
assets
19,0
Restructuring
costs
17,0
Total loss
for Q3
+52,0
3,0
Loss sales
of subs.
3,0
Net from
Large Losses
10,0
BREAKDOWN - TOTAL LOSS Q3
Main KPI for Q4: Solvency Margin Capital Ratio
9The estimated solvency position (based on the Solvency II standard formula) of Vardia includes ORSA add-ons and warranty provisions.
Private placement
� Gross proceeds of NOK 50m raised October 26th
� Set aside shareholders pre-emptive rights
� Time sensitive need to remedy the shortfall in solvency
margin capital
� Solvency II
� Positive effect on implementation
TAKEAWAY
145
86
After Private Placement
59
Before Private Placement
SOLVENCY I (30.09.15)
Before Private Placement
65,8%
45,4
After Private Placement
111,2%
Solvency Margin Capital
Solvency Margin
SOLVENCY II
Estimated Solvency Ratio 01.01.16
Above 120 %
Strategy
11
Strategic embryo and focus areas for Vardia going forward
1. Stabilize the platform and capitalize on the initial sales focus
3. Digitalization
2. New growth opportunities within segments & markets
12
Strategic embryo and focus areas for Vardia going forward
1. Stabilize the platform and capitalize on the initial sales focus
3. Digitalization
2. New growth opportunities within segments & markets
Stabilize the platform and capitalize on the
initial sales focus:
1. Underwriting excellence – enhanced
pricing and underwriting discipline
2. First-class retention – first-class
retention and up-sales strategies
3. Financial rightsizing – finding a
sustainable mix of growth,
underwriting, reinsurance, investments
and capital/dividend policies
13
Strategic embryo and focus areas for Vardia going forward
1. Stabilize the platform and capitalize on the initial sales focus
3. Digitalization
2. New growth opportunities within segments & markets
Digitalization areas
1. Understand customer
needs, behaviour and
associated risk
2. Customer self-service of
core processes
3. Utilize technology for
internal process efficiency
and quality
New growth opportunities
areas:
1. Segments, e.g. broker
business
2. Investigate regional and
country specific
opportunities
Stabilize the platform and capitalize on the first years of
portfolio build- up
Customers
Operations, agents and
out-sourcing partners
Reinsurers
Investment
Portfolio
Shareholders and Capital
markets
1) Underwriting
excellence
2) First-class
retention
3) Financial
rightsizing
Focus areas
Stakeholders
Key takeaways
Vardia – Key takeaways
16
� The business continued to put stress on solvency margin
capital during Q3
� The solvency 2 (SII) regime in force as of Jan 2016 will
improve the capital adequacy
� Through stabilizing the platform the group will capitalize on
the start-up sales focus.
Financials
Results
18
* Figures are restated to reflect decreased deferral of incremental acquisition costs
** Figures are ex. allocated return on investment transferred from the non-technical account
NOK thousands Q3 2015 Q3 2014* 30.09.2015
Gross premiums written 315 391 263 313 1 059 045
Gross premiums earned 350 003 239 747 976 567
Premiums earned f.o.a. 88 177 56 600 252 614
Gross Incurred claims -339 342 -195 020 -817 125
Incurred claims f.o.a. -71 625 -41 963 -203 562
Operating expenses for own account -64 565 -33 573 -200 313
Other income/expenses 4 109 4 371 12 596
Techn. result before changes in sec.reserves** -43 904 -14 565 -138 666
Net financial income -5 412 2 869 -3 108
Operating result -49 316 -11 696 -141 774
Changes in security reserves etc. -3 000 -5 000 -9 026
Profit/Loss before tax -52 316 -16 696 -150 800
Profit/Loss after tax -55 692 -16 784 -154 602
Gross loss ratio 97,0 81,3 83,7
Gross cost ratio 35,9 26,2 37,5
Gross Combined ratio 132,9 107,5 121,2
Loss ratio f.o.a. 81,2 74,1 80,6
Cost ratio f.o.a. 73,2 59,3 79,3
Combined ratio f.o.a. 154,5 133,5 159,9
Balance sheet
19
� The Group’s total assets increased
from NOK 2,011m in Q2 to NOK
2,127m in Q3
� Vardia pursues a conservative
investment policy, with all liquid
assets deposited in banks and money
market fund
NOKm 30.09.2015 30.09.2014 31.12.2014
Various Assets 123 135 135
Bank deposits/Money market funds 347 218 185
Reinsurers share of gross technical reserves 981 659 792
Receivables direct insurance and reinsurance 482 349 400
Other Assets 194 104 121
Total Assets 2 127 1 464 1 633
Total Equity 213 113 27
Subordinated loan 74 0 0
Gross Premium Reserve 704 527 610
Gross claims reserve 592 335 431
Other technical provisions 41 30 32
Pension liabilities 8 6 8
Financial liabilities 495 454 524
Total liabilities 1 914 1 351 1 606
Total equity and liabilities 2 127 1 464 1 633
Top 20 shareholders – 8 November 2015
20
Sharholder’s name No. of Shares Percent
Avanza Bank AB (Broker account) 35 193 794 7,86 %
Carnegie Investment (Nominee) 33 563 944 7,49 %
Skandinaviska Enskilda Banken AB (Nominee) 32 904 154 7,35 %
Skandinaviska Enskilda Banken AB (Nominee) 18 663 196 4,17 %
Canica AS 18 515 666 4,13 %
Nordnet Bank AB (Nominee) 15 374 163 3,43 %
Norway Marine Insurance AS 13 863 342 3,10 %
Nilvama AS 11 775 529 2,63 %
Aakvik Holding AS 11 775 427 2,63 %
Busebakk AS 11 533 124 2,58 %
Gyljandi AS 7 759 776 1,73 %
Toluma Norden AS 7 296 737 1,63 %
Vikna Eiendom AS 7 168 955 1,60 %
BNP Paribas Sec. (Nominee) 6 966 702 1,56 %
Hetlands Gecco Management AS 6 777 964 1,51 %
AHJ Holdings Ltd 6 315 413 1,41 %
Høie, Karl 6 016 832 1,34 %
Saxo Bank (Nominee) 5 860 058 1,31 %
Slethei AS 5 557 563 1,24 %
Mays Holding II AS 4 950 000 1,11 %
Others 180 034 649 40,19 %
Total 447 866 988 100,00 %
Markets at a glance – Loss development
21
VARDIA NORWAY VARDIA SWEDEN VARDIA DENMARK
78,7%
3,7
2015
82,4%
2014
1,8
2015
83,5%
2014
81,7%86,1%
20,1
2015
106,2%
2014
12,1
2015
97,0%
2014
84,9% 75,4%
18,1
2015
93,5%
2014
68,7
2015
135,3%
2014
66,6%
Q3Q3 Q3
YTD YTD YTD
GR
OS
S C
LAIM
S R
AT
IO
97,0%76,7%
Q3 NetQ3 Gross Q3 Gross
93,5%78,0%
Q3 Net Q3 Net
134,5%
Q3 Gross
135,3%