Alm. Brand A/S - Interim report for the first half of 2008

The half-year at a glance 

•	Profit of DKK 105m was not satisfactory
•	
•	Sustained satisfactory growth

•	Substantial capital losses on securities

•	Impaired claims experience

•	Progress in the settlement of reinsurance activities

•	Full-year profit guidance downgraded to DKK 400m
 
Highlights of the Alm. Brand Group's interim report for the first half of 2008
(before tax and minority interests): 

•	The consolidated profit was DKK 105m.

The consolidated profit was DKK 105m against DKK 508m in H1 2007. The DKK 403m
difference was attributable to capital losses on securities of approximately
DKK 300m, including a lack of risk premium from the life group. The remaining
decline of DKK 110m was due to higher claims expenses from private and
agricultural lines, inflation adjustment of workers' compensation and
write-downs in the banking operations. 

•	Non-life operations reported a less-than-satisfactory profit of DKK 170m.

The performance was positively influenced by continued growth in premium income
of 5% and by low weather-related expenses, but adversely affected by capital
losses. In addition, the reporting period saw a higher frequency of and more
expensive claims from private policyholders and a greater number of and more
expensive major claims from agricultural policyholders. Finally, the
inflationary trend entailed higher provisions for workers' compensation claims. 

In order to improve the performance, initiatives have been launched to ensure a
better correlation between price and risk, and increased attention will be
given to achieving cost savings internally as well as by obtaining the best
possible procurement prices. 

•	The bank posted a loss of DKK 98m, which was not satisfactory.
 
The performance was positively influenced by growth in the bank and by higher
interest income as a result of efforts initiated to increase the interest
margin. The interest margin rose from 1.6% in the first quarter of 2008 to 2.0%
in the second quarter. 

The performance was adversely affected by substantial capital losses on the
portfolio of securities, a significant part of which was attributable to the
portfolio of mortgage bonds and mortgage deeds. In addition, the bank's hedging
of external risks from its listed subsidiaries was not satisfactory. Finally,
the reporting period was impacted by increasing albeit limited provisions for
bad and doubtful debts. 

 In a move to increase its earnings, the bank has launched a number of
efficiency-enhancing activities. Finally, the bank's exposure to market risks
in the two subsidiaries has been reduced. 

•	The group's life insurance operations reported a profit of DKK 4m, while DKK
30m was transferred to the shadow account. It is not expected that the amount
charged to the shadow account can be recognised in 2008. The performance was
not satisfactory. 

Pension scheme contributions in the group rose by 8%. 

The investment return on customer funds equalled minus 2.7%, which was not
satisfactory and attributable to losses on equities and capital losses on the
company‘s portfolio of mortgage bonds in particular. Part of this loss is
expected to be off-set in the coming years as a result of a higher level of
interest rates. 

•	Neither the bank nor the rest of the group is in any way exposed to the
sub-prime market. 

•	The consolidated revenue totalled DKK 4bn.

•	As a result of the substantial capital losses, a higher claims frequency and
higher average claims in some non-life insurance lines, increased albeit
limited provisions for bad and doubtful debts and a lacking risk premium from
the life group, the full-year guidance for consolidated profit is downgraded by
DKK 350m to DKK 400m. 

As a result of the downgrade, the group's expected share buyback programme is
reduced from DKK 600m to DKK 350m. The total share buyback programme equals a
pay-out ratio of 12%. 

Please direct any questions regarding this announcement to Søren Boe Mortensen,
Chief Executive, on tel. +45 35 47 47 47. 


Yours sincerely,

Alm. Brand A/S

Søren Boe Mortensen	
Chief Executive