03. October 2023

TM Insurance to be sold or listed

Following a strategic review at Kvika banki hf. ("Kvika" or "the bank"), the board of directors of Kvika has decided to initiate a process for the sale or listing of its insurance subsidiary TM tryggingar hf. ("TM").

The decision is in line with the bank's vision, where emphasis is placed on simplifying the group's operations and strengthening Kvika's traditional banking activities, in accordance with the bank's goal to increase competition and simplify its customers' finances.

Following the divestment of TM, Kvika's main operations will be focused on commercial- and investment banking, along with asset management.

It is expected that Kvika's capital base will grow significantly following the divestment of TM, enabling the bank to pursue internal growth opportunities across Kvika's business segments. Increased capital will, among other things, enable the bank to strengthen its market position, in both retail and corporate lending, and increase the risk diversification of its loan book.

Furthermore, it is expected that a considerable part of the sales proceeds will be paid to shareholders in the form of dividends and/or buyback of own shares.

In the coming weeks, the bank will appoint advisors and decide on the next steps. It is expected that the proposed sale or listing will be completed in the second half of next year.

A more detailed presentation of the bank's plans following the proposed divestment is expected to follow the bank's third quarter results, which are scheduled to be published on 2 November.

Ármann Þorvaldsson, CEO of Kvika:

"The sale or listing of TM will be an important stepping stone for Kvika and will create an opportunity for the bank to increase its market share in all business segments. The bank's operations and structure will be simplified, income generation more stable, profitability improved and growth opportunities greater.

Since the merger of Kvika, TM hf. and Lykill Fjármögnun hf. in 2021, the merged company has been successful in reducing operating- and funding costs, which has created significant shareholder value. A large part of the synergies achieved centered around the merger of the lending operations of Lykill with Kvika, while there have been limited revenue synergies between the group's insurance and banking operations. Therefore, it is the opinion of Kvika's management that it is in the interest of both Kvika and TM to separate TM from the group and significantly strengthen our banking operations.

At the same time, we are convinced that TM, an exceptionally well-run and valuable insurance company with fantastic people, will be able to grow and prosper even further under new ownership. It has been great to work with the strong team at TM who will surely be missed by their colleagues. However, we will continue to work together in the coming months."