Alm. Brand is a Danish non-life (P&C) insurer, substantially enlarged by the acquisition of Codan's Danish business, making it a leading Danish P&C player. It earns an ~11% return on equity, with the combined ratio and Codan integration synergies the key earnings drivers.
On the ROE/P-B frame the equity is fully valued — 1.86× book against a Gordon-justified ~1.22× (ROE 11%, COE ~9.5%, g 3%), at ~17× earnings. The premium prices successful Codan synergies and combined-ratio improvement; on current returns it is rich.
Gordon fair P/B = (11%−3%)/(9.5%−3%) ≈ 1.22×, versus the current 1.86× — i.e. the market prices Codan synergies lifting ROE/combined-ratio. Fully valued on current returns, with the synergy delivery the swing factor.
Base DKK 14.5 (−3%); bull DKK 18 (Codan synergies + combined-ratio improvement lift ROE); bear DKK 11 (underwriting deterioration, a catastrophe year, or synergy disappointment).
The operating reverse-DCF (NOPAT / invested capital / WACC) does not apply to a balance-sheet business — leverage is the raw material and "net debt" is not meaningful. The equity is valued on residual income: book equity plus the present value of returns above the cost of equity, discounted at Ke; the single-stage lens is the Gordon fair price-to-book, (ROE−g)/(Ke−g). The market prices in a sustainable ROE of 14.7% vs 9.9% currently earned; at a sustained 9.9% ROE the warranted P/B is 1.06× (DKK 9/sh, -41%).
| Scenario | 24m target | Impl. ROE | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | DKK 18 | 17% | +17% | 30% | Codan synergies + combined-ratio improvement lift ROE |
| Base | DKK 14 | 14% | -6% | 45% | Full: prices synergies/ROE uplift |
| Bear | DKK 11 | 11% | -29% | 25% | Underwriting deterioration / catastrophe / synergy miss |
| Prob-weighted | DKK 15 | — | -5% | 100% | Scenario-weighted expected value |
| Ke \ ROE | 10% | 14% | 18% | 22% | 26% | 30% | 34% |
|---|---|---|---|---|---|---|---|
| 8.00% | 12 | 19 | 26 | 32 | 39 | 46 | 53 |
| 8.75% | 10 | 16 | 22 | 28 | 34 | 40 | 46 |
| 9.50% (base) | 9 | 14 | 20 | 25 | 30 | 35 | 41 |
| 10.25% | 8 | 13 | 18 | 22 | 27 | 32 | 37 |
| 11.00% | 7 | 12 | 16 | 20 | 25 | 29 | 33 |
Green = fair value above the current price of DKK 15.42. For a financial the surface is dominated by cost of equity and sustainable ROE — not unit growth.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
Scale in Danish non-life insurance post-Codan, with pricing/underwriting data advantages.
Integration cost/revenue synergies are the core earnings-uplift driver — the bull case.
Underwriting discipline driving a better combined ratio lifts ROE.
P&C cash generation funds a high dividend (13% free-cash yield).
A focused Danish franchise with disciplined underwriting.
Alm. Brand is a leading Danish P&C insurer at a full 1.86× book, pricing Codan synergies and a combined-ratio improvement. HOLD, medium conviction; base target DKK 14.5 (−3%).
Synergy delivery and combined-ratio improvement are the upside; the rich valuation on current returns and underwriting/catastrophe risk are the cautions.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Source reports archived locally.
NOPAT adjustments: Not available from structured data
Company add-backs we reject: Not available without footnote extraction
Pages read — FY: — · Q: —
How the mttssn view has evolved — each prior dated note is preserved.