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%