q2 2016 results - trygtryg.com/.../q2_2016_investor_presentation_12-42439.pdfq2 2016 results...
TRANSCRIPT
Q2 2016 results
Investor presentation Follow us on Twitter: @TrygIR
Contents
2
Highlights Q2 2016 3
Premiums and portfolio 6
Claims and expenses 11
Investment, capital and targets 17
Background material 25
Appendix 41
Disclaimer
Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and information currently available to the management. Forward-
looking statements (other than statements of historical fact) regarding our future results of operations, financial condition, cash flows, business strategy, plans and future objectives can
generally be identified by terminology such as “targets”, “believes”, “expects”, “aims”, “intends”, “plans”, “seeks”, “will”, “may”, ”anticipates”, “continues” or similar expressions.
A number of different factors may cause the actual performance to deviate significantly from the forward-looking statements in this presentation including but not limited to general
economic developments, changes in the competitive environment, developments in the financial markets, extraordinary events such as natural disasters or terrorist attacks, changes in
legislation or case law and reinsurance.
We urge you to read our annual report available on tryg.com for a discussion of some of the factors that could affect our future performance and the industry in which we operate.
Should one or more of these risks or uncertainties materialise or should any underlying assumptions prove to be incorrect, our actual financial condition or results of operations could
materially differ from that described herein as anticipated, believed, estimated or expected.
We are not under any duty to update any of the forward-looking statements or to conform such statements to actual results, except as may be required by law.
Financial highlights Q2 2016- Lower technical result and substantially higher investment return
3
934
714
Q2 2016 Q2 2015
Pre-tax profit (DKKm)
15.0 15.2
Q2 2016 Q2 2015
Combined ratio
Expense ratio
• H1 DPS of DKK 2.60 and solvency ratio of 206 or 193 adjusted for Skandia child insurance portfolio
• Dividend growth in line with stated policy
• Solvency ratio includes H1 dividends and FY buy backs
• Pre-tax profit of DKK 934m (DKK 714m) impacted by:
• Lower technical result of DKK 770m (DKK 825m)
• High investment result of DKK 181m (DKK -84m)
• Technical result of DKK 770m (DKK 825m)
• NOK/DKK adverse move, low weather claims but also a higher underlying claims ratio
• Price increases started but it will take few quarters to see meaningful P&L impact
• Expense ratio of 15.0 (15.2) and combined ratio of 82.6
(82.2)
• Investment income of DKK 181m (DKK -84m)
• Substantially above expectations, driven both by the free portfolio and the match portfolio
• Equities were flat but strong returns on high-yield bonds, emerging-markets debt and index-linked bonds
82.6 82.2
Q2 2016 Q2 2015
Customer highlights Q2 2016- Many new digital self-service and claims solutions launched
4
2320
22
Q2 2016 Q2 2015 Target 2017
NPS
56.9 56.661.3
Q2 2016 Q2 2015 Target 2017
Customers with ≥3 products (%)
88.1 88.0 88.9
Q2 2016 Q2 2015 Target 2017
Retention rate
• TryghedsGruppen paid its member bonus to Tryg’s Danish customers, corresponding to 8% of the premium paid in 2015.
• Digital self-service solutions for house, accident, pet and leisure house launched in Denmark.
• Moderna, Tryg’s Swedish branch, was named Best Insurance Company of the year for the fourth year running.
• New Commercial property insurance product in Denmark and Norway.
• 200,000 customers upgraded to new motor, accident and house products.
Key figures Q2/FY
5
DKKm Q2 2016 Q2 2015 FY 2015
Gross premium income 4,379 4,550 17,977
Gross claims -2,823 -3,858 -13,562
Gross expenses -649 -681 -2,720
Technical result 770 825 2,423
Return on investment after technicalinterest
181 -84 -22
Profit/loss before tax 934 714 2,310
Profit/loss 734 580 1,969
Claims ratio, net of reinsurance 67.6 67.0 71.5
Gross expense ratio 15.0 15.2 15.3
Combined ratio 82.6 82.2 86.8
Premiums and portfolio
-0.6
-1.4
Q2 2016 Q2 2015
Positive topline development in Private
7
Gross earned premiums development
(Local currencies) DKKm Q2 2016 Q2 2015Local currencies
Q2 2016Local currencies
Q2 2015
Private 2,148 2,226 0.3% -0.3%
Commercial 977 997 0.4% -4.3%
Corporate 921 993 -3.7% -1.4%
Sweden 338 342 -1.8% -1.8%
Group 4,379 4,550 -0.6% -1.4%
Gross premiums down by 0.6% (-1.4%) in local currencies, Private & Commercial lines up, Corporate down
Positive Private lines trend especially considering that avg. motor price in Denmark was down 2.1%
Danish premiums up 1.7%, Norwegian premiums down 3.5% (in local currencies) primarily impacted by the
Corporate segment
156
99
Q2 2016 Q2 2015
770
825
Q2 2016 Q2 2015
Lower technical result significantly impacted by currencies
8
Commercial, DK & NO (DKKm)
Sweden (DKKm)
393434
Q2 2016 Q2 2015
Group (DKKm)
Corporate (DKKm)
Private, DK & NO (DKKm)
49
72
Q2 2016 Q2 2015
172
220
Q2 2016 Q2 2015
90
95
100
105
110
115
DK
NO
90
95
100
105
110
115
DK
NO
9
Private - average prices
Average price
4,200 5,700
• DK: changed selection reducesaverage price, price increasesstarting 2016 to offset highclaims inflation
• NO: small positive development reflect underlyingprice increases
• DK –2.1% decrease y/y driven by:
• smaller cars• safer cars
• Competition remains strong in Motor DKK but also profitabilityvery high
• NO: small positive developmentreflects underlying price increases
Average price:
4,800 5,500
Motor insurance – average price (index 2011 = 100)
House insurance – average price (index 2011 = 100)
Average price development Y/Y
-2.1% 0.9%
(Q1 -2.5%) (Q1 1.0%)
Average price development Y/Y
-0.7% 0.1%
(Q1 -0.9%) (Q1 0.3%)
Customer retention
10
82%
84%
86%
88%
90%
92%
DK
NO
Commercial
82%
84%
86%
88%
90%
92%DK
NO
Private
• Customer retention at 90.0 in Denmark, highest level sinceQ3 2013
• Stable development in Norway
• Modest fall in Denmark mostlydriven by price increases
• Retention broadly stable in Norway
Front page slide
Claims and expenses
79.976.5
Q2 2016 Q2 2015
71.4
69.5
Q2 2016 Q2 2015
Increase in underlying claims ratio, net
12
65.463.6
Q2 2016 Q2 2015
Commercial (DK & NO)
82.5
75.6
Q2 2016 Q2 2015
Sweden
69.0 68.3
Q2 2016 Q2 2015
Group
Corporate
Private (DK & NO)
Underlying development is adjusted for large claims, weather claims, run-off and interest.
23%
15%
0%
5%
10%
15%
20%
25%
Ford Focus Nissan Qashqai
Motor insurance, not all claims are coming down
13
Bumpers
Wind shields (Glass)• Wind shields price increases are mostly
driven by the calibration of connected equipment and in general by different type of wind shields installed (2016 vs 2011)
• Prices show the cost of wind shields today, i.e. today’s price of a 2011 wind shield model vs today’s price of a 2016 wind shield model*
• Some manufactures have started offering more advanced technologies also on smaller cars, this means that the cost on replacing wind shields is increasing
Wind shields, price increases in % from 2011-2016
• Bumpers prices increases are seen across manufacturers and model ranges
• Price increases are driven by extra add ons such as radars*
• We expect this trend to continue as the extra equipment become more complex
Bumpers, price increases in % from 2011-2016
Sources:*FORSI/Autotakst, (Forsikring & Pension’s system for claims management and list prices)**Source: Statistics Denmark, Net price index - 07.2.1.2 Spare parts for personal transport equipment
0
2000
4000
6000
8000
10000
12000
2011 2016
Nissan Qashqai
Bumper Bumper incl. Radar (4043 ex. VAT)
0
5000
10000
15000
20000
2011 2016
Ford Focus
Bumper Bumper incl. Radar (10157 ex. VAT)
6,682DKK
5,668DKK
19,378DKK
116%
17%
242%
15%
11,426DKK
6,372DKK
5,296DKK
2011: 5,383 DKK
2016: 6,618 DKK 2011:
5,310 DKK
2016: 6,086 DKK
Large claims, weather claims and run-off
14
4.9
6.4
5.0 5.0
6.16.7
2012 2013 2014 2015 Q2 2015 Q2 2016
Run-off net, effect on combined ratio (%)
23 36
323
542
447
614
2012 2013 2014 2015 Q2 2015 Q2 2016
Weather claims, net DKKm
127 111
471407
574 615
2012 2013 2014 2015 Q2 2015 Q2 2016
Large claims, net DKKm Expected annual
level 2016: DKK 500m
Expected annual
level 2016: DKK 550m
Claims reserves discounting rate (%)
2.01.5
1.2Q2 2015
0.9Q2 2016
0.7
2012 2013 2014 2015 2016
Efficiency programme, DKK 51m achieved in Q2
15
• Programme proceeds as planned, target to
achieve savings of DKK 750m over 3 years.
• Higher savings in 2016 compared to 2015.
• Claims initiatives of DKK 36m in Q2:
• Focus on helping injured policyholders to get back to work quickly
• Cash settlements through In4mo system
• Total crash repair to reduce damage and re-sale cars as opposed to send it to car breakers
• Expense initiatives of DKK 15m in Q2:
• Outsourcing Accounting
• Reorganisation of Agriculture & Small Commercial division
• Digital communication
Efficiency programme up until 2017 (DKKm)
100 105150
66
250
175
388395
5060
75
30
125
2012 2013 2014 Target2015
2015 Target2016
H1 2016 Target2017
Expense Claims
Old programme New programme
Expense ratio continues to improve
16
• Expense ratio improved 0.2 pp. to 15.0 in Q2 16 (15.2)
• Efficiency programme lowered costs by DKK 15m for Q2 mainly related to:
• Outsourcing within Finance and IT• Commercial reorganisation• Digital communication
• Further reduction in employees since year-end• Important reduction in number of jobs in Norway (approx. 60 positions) which will mostly impact 2017 P&L
FTE - Development
15.215.0
16.4
15.6
14.6
15.315.3
14.9
2012 2013 2014 2015 Q2 2015 Q2 2016
Expense ratio
Adjusted for one-off effects
Nominal costs in business areas
312
172
10065
340
171109
61
Private Commercial Corporate Sweden
Q2 2016 Q2 2015
4,077
3,914
3,703
3,599
3,3593,299
2011 2012 2013 2014 2015 Q2 2016
Front page slide
Investment, capital and targets
0.3 (1.1)
2.8 (0.0)4.3 (-1.2)
1.1 (1.1) 0.84 (-0.1) 1.1 (0.3)
Cov. Bonds66.0% (67,5)Bonds/Deposits (match)
5.2% (3,1)
Equities 5.9% (6,3)
HY 1.7% (2,5)
EM* 1.0% (1,0)
IG 0.5% (0)
Inv. Property 5.2% (5,1)
Bonds/deposits (free) 14.5%
(14,5)
Investment return – low risk remains key
18
Free portfolio return Q2 2016 (%)
High-yield corporate bonds (DKK 0.7bn) H1 2016
Portfolio (DKK 40.6bn) H1 2016
Free11.7bn 29%
Match28.9bn 71%
Industrials77%
Energy (mostly oil)7%
Utilities3%
Other3%
Finance10%
* EM = Emerging markets (Sovereign bonds USD denominated)
99
7
100
1
21
2
57 61
15
37
Bonds Equity HY & EM Inv. Property
Nordics EU ex Nordics North America EM/Other
Geographical exposure (%)
93
61 0
74
50
21
89
61 4
AAA AA-A BBB-B Lower
Match Free Total
Rating (%)
Solvency position Q2 2016
19
• Solvency ratio based on the Partial Internal Model is 206 (Q1 2016: 212).
• Own Funds (OF) is primarily impacted by
• Result Q2 2016 of DKK 734m
• Proposed cash dividend based on H1 2016 results
• Upfront deduction of 2016 share buy back after decision by the Danish FSA
• Inclusion of SEK subordinated debt
• Based on Solvency II Standard Formula the solvency ratio is 169 (Q1 2016: 173).
Own funds walk
Solvency capital requirement walk
10,449
-753
-1,000
734
660
14
10,794
8,600
9,100
9,600
10,100
10,600
11,100
11,600
Ow
n F
unds
Q1 '16
Results
Q2 '16
Pro
posed
cash d
ivid
end
H1 2
016
2016
share
buy
back
SEK
subord
inate
ddebt
Mis
cellaneous
Ow
n F
unds
Q2 '16
5,080
-19-4
-2720 5 7
5,098
4,900
4,950
5,000
5,050
5,100
5,150
5,200
SCR
Q1 '16
Mark
et
Defa
ult
Health
Non-L
ife
Opera
tional
Div
ers
i-fication
SCR
Q2 '16
Capital and solvency ratio development
20
• Tier 2 capacity fully utilised after issue of SEK 1bn subordinated debt 19 May 2016.
• Decrease in core equity Tier 1 (CETier1) due to proposed cash dividend H1 2016 and upfront deduction of DKK 1bn 2016 share buy back.
• On January 1, 2016 went live, the jump from a solvency ratio of 154 to 212 is primarily driven by two items:
• Expected future profits of approximately DKK 750m included in Own funds
• The loss absorbency of deferred tax reduces the Solvency Capital Requirement by some DKK 1.2bn
• The Danish FSA has explained that a ratio lower than 125 would result in increased surveillance.
Capital Tiers as % of SCR
Solvency ratio development
163%143%
12%
13%
37%50%
13%
Q1 '16 Q2 '16*
CETier 1 ATier 1 Tier 2 Tier 2 potential
155% 151%159% 154%
212%206%
Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16
S2 regimeOld regime
Solvency ratio sensitivities
21
• The Solvency II ratio shows the highest sensitivity to spread risk• Assumption is for a 100bps widening/narrowing of our entire fixed income book (Danish government bonds, Danish
mortgage bonds, Norwegian government bonds, high yield etc.)
• The Solvency II ratio is not highly sensitive to equity markets movements as most of the ‘Own funds’ hit from a sharp fall in equity markets would be offset by a lower capital requirement (lower market values combined with the effect of a reduced charge due to equity-dampener)
• Interest rate risk is very low as function of our matching strategy
• A change in the UFR (Ultimate Forward Curve) from 4.2% to 3.2% would reduce the solvency ratio from 206 to 205
206%
210%
202%
215%
197%
204%
207%
194%
217%
205%
180%
185%
190%
195%
200%
205%
210%
215%
220%
Q2 '16 +20% -20% +20% -20% +100 bps -100 bps +100 bps -100 bps -100 bps
2016 Equity Property Interest Spread UFR
Targets and outlook
22
Efficiency programme proceeds as
planned.
Members’ bonus of 8% on 1 June 2016
Price increases to offset claims inflation
2016 topline at the ‘lower end’ of 0%-2% including
Skandia child insurance portfolio
2016 expected tax rate 21
Markets remain very competitive
High focus on capital repatriation
Customer targets
Financial targets
Net Promoter Score (NPS) + 100%
Retention rate + 1 pp
Customers ≥ 3 products** + 5 pp
** Private (DK & NO)
2017
ROE after tax ≥ 21%
Combined ratio ≤ 87
Expense ratio ≤ 14
* Excl. One-off effects
0
10
20
30
40
ROE after tax (%)
It is important to know your investment case
23
”Do you know the only thing that gives me pleasure?
It’s to see my dividends coming in.”
John D. Rockefeller
Date Place Participants from Tryg Arranged by
12/07/2016 Copenhagen
Morten Hübbe, CEO
Christian Baltzer, CFO
Investor Relations
Nordea Markets
13/07/2016 London
Morten Hübbe, CEO
Christian Baltzer, CFO
Gianandrea Roberti, IR Officer
Peter Brondt, IR Manager
Autonomous
11/08/2016 OsloChristian Baltzer, CFO
Peter Brondt, IR ManagerDnBNOR
01/09/2016 ZürichLars Bonde, COO
Peter Brondt, IR ManagerBerenberg
01/09/2016 Dublin Gianandrea Roberti, IR Officer Mediobanca
02/09/2016 GenevaLars Bonde, COO
Peter Brondt, IR ManagerNordea Markets
08/09/2016 ParisChristian Baltzer, CFO
Gianandrea Roberti, IR OfficerDanske
18/08/2016 BergenEspen Opedal, Director Private NO
Peter Brondt, IR Manager
Hordaland on stock
exchange
13/09/2016 London Peter Brondt, IR Manager KBW Conference
13-14/09/2016 New YorkChristian Baltzer, CFO
Gianandrea Roberti, IR OfficerBarclays Conference
Upcoming roadshows
24
Background material
9.2%8.3%
6.6% 6.9%
5.25.4
5.86.0
3
4
5
6
7
8
0%
2%
4%
6%
8%
10%
2012 2013 2014 2015
Total yield DPS (right axis)
1,722 1,7161,617
1,3501,185
746
0
1,000
2,000
60%
70%
80%
90%
100%
110%
120%
2010 2011 2012 2013 2014
UK Germany Italy Denmark Norway
-100%
-50%
0%
50%
100%
150%
200%
Non-life Life Banking Other
Why invest in Tryg?
26
Pre-tax result by division (YE 2015 data) High insurance penetration in the Nordics
Tryg is a dividend stockMotor combined ratios Nordics vs international
Premiums per capita (USD), 2014
Total yield (dividend and buy backs / market cap) at year end
DKK
IBM study from 2007, probably little has changed
27
52%
57%
63%
64%
67%
72%
62%
62%
53%
62%
49%
50%
40%
36%
37%
39%
20%
33%
53%
46%
45%
42%
43%
43%
0% 10% 20% 30% 40% 50% 60% 70% 80%
F UK DE DK
• Overall I am very satisfied with the
services of my insurance company
• My insurance agent only sold me
insurance coverage that I really needed
• My present insurance coverage offers
me enough flexibility
• Claims: my insurance company in
uncomplicated and helpful way
• I have full confidence in my personal
insurance agent
• My insurance is more cost effective than
most other insurances
Danish customers completely and strongly agree
Source: IBM Institute for Business Value and I.VW University of St. Gallen 2007 Insurance Study
Tryg – at a glance I
28
• Tryg goes back to 18th century.
• Very strong brand position especially in Denmark.
• Non-life insurance in Denmark, Norway and Sweden.
• Approx. 80% retail business.
82%
84%
86%
88%
90%
92%
Retention rate - Private
DK
NO
82%
84%
86%
88%
90%
92%
Retention rate - Commercial
DK
NO
NorwayMarket position: #3
Market share: 13.4%CR in 2015: 87.9
SwedenMarket position: #5Market share: 2.9%CR in 2015: 82.7
DenmarkMarket position: #1
Market share: 18.1%CR in 2015: 85.2
56
22
22
Private
Commercial
Corporate
Business split 2015
31
5
115
24
14
10
Motor
Workers' comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Other
Gross premium split by products 2015
Percentage
Percentage
4.2
6.6
3.4
1.3
3.1
0.8 1.3
5.2 5.4 5.8 6.0
2.5 2.6
4.2
2.6
2.63.2
3.4 3.5
0
1
2
3
4
5
6
7
8
9
10
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1
2015
H1
2016
Cash dividend Ordinary buy back Extraordinary buy back
60
11
12
16
Danishinstitutional
Non-Danishinstitutional
Smallershareholders
Tryg – at a glance II
29
Shareholder breakdown 2015
Strengthening of brand value
Shareholder performance since IPO
New dividend policy
Shareholder remuneration since IPODKK
Percentage
Tryg – at a glance III
30
14
23
192
22
13
7
Motor
Workers' comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Other
Run-off net by products Q2 2015
Percentage
31
75
3
10
0
-33
15
Motor
Workers' comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Other
Run-off net by products Q2 2016
Percentage
16
33
14
8
8
14
7
Motor
Workers' comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Other
Gross claims reserve by products 2015
Percentage
31
5
11
5
24
14
10
Motor
Workers' comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Other
Gross premium split by products 2015
Percentage
Gross premium split by geography
31
14.5
20.1
4.2
6.7
38.6
13.7
0.3 2.0 Motor TPL
Motor Casco
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Tourist assistance
Other
SE: Gross premium split by products 2015
Percentage
11.5
12.6
64.4
13.8
-4.0
-5.4
0.45.4
1.4 Motor TPL
Motor Casco
Workers' comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Tourist assistance
Other
Net run-off split by products 2015
Percentage
6.8
18.8
6.5
11.2
6.4
24.3
16
3.36.8 Motor TPL
Motor Casco
Workers' comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Tourist assistance
Other
DK: Gross premium split by products 2015
Percentage
15.6
21.3
4.2
7.53.5
20.1
10.7
4.4
12.5 Motor TPL
Motor Casco
Workers' comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Tourist assistance
Other
NO: Gross premium split by products 2015
Percentage
Tryg’s equity story
32
Long term profitable growth and attractive shareholder value creation
Financial targets 2017
• ROE: ≥21%
• Combined ratio: ≤87%
• Expense ratio: ≤14%
Customer targets 2017
• NPS +100%
• Retention rate +1 pp
• ≥ 3 products +5 pp
Dividend policy
• Aiming for a nominal stable increasing dividend
• Pay-out ratio of 60% to 90% (secondary)
• Extraordinary buybacks to further adjust the capital structure
• 90% first contact resolution
• Annual coverage check
• 25% of tariffs better than peers in 2017
• Differentiated product offering
• Efficiency programme of DKK 750m
• Claims procurement
• Reducing expense level
• Matching assets and liabilities
• Low risk investment portfolio
Low risk and high returns
Leading in efficiency
Leading Scandinavian insurer with strong
track record
Customer care worth recommending
Next level pricing
Things that you may not know
33
• Motor insurance prices relatively similar in DK and the UK but cost of the insured good
(the car) substantially higher in DK driven by the registration tax for passenger cars
(100%-150% of taxable value on new vehicles approx.).
• Motor insurance remains a highly attractive business in Scandinavia unlike many
European countries.
• In Oslo, it costs approx. NOK 5,000 per month to hire a dog walker for 5 weekly walks,
each walk is minimum 60 minutes.
• In Sweden it is illegal to leave a dog home alone more than six hours, the dog has to be
out at least every six hours during the day.
• Pet insurance premiums totalled SEK 3.3bn at the end of September 2015 in Sweden
but that includes horses as well.
• Tryg believes that Pet insurance remains an attractive growth segment.
• Child insurance is an important product in Sweden with total market premiums above
SEK 2.5bn, the same product is virtually non-existent in Denmark and Norway. We
believe this will gradually change and plan to leverage on our recent Skandia child
insurance acquisition.
• In 2014, Tryg bought Securator reinforcing its leading position in the Nordic market for
product and extended warranty insurance, a market which is estimated at more than
DKK 2bn and expected to continue the growth in coming years.
Things that you may not remember
• Our maximum annual net exposure to a single large Property claim is
DKK 100m which falls to DKK 75m in case of a second event and
DKK 50m in case of a third/fourth event, maximum exposure is DKK
25m thereafter. This is based on our general reinsurance programme.
• Our maximum net exposure for weather claims is DKK 150m per
event. The upper limit of the programme is DKK 5.75bn, which is
statistically sufficient to cover at least a 250-year event.
• We have bought an additional ‘horizontal’ reinsurance programme
which will cover any weather claims in excess of DKK 300m up to DKK
600m. Weather claims have to be at least DKK 20m to end in the
‘horizontal’ agreement.
• Local accounting rules driven by Danish FSA means that all assets are
marked to market. This is different from Nordic/International peers
where many fixed income portfolios are hold to maturity and/or the
marked to market hits the NAV and not the P&L. The unrealised gains
and losses item does not show up in the P&L of some of our Nordic
peers (as most bonds are hold to maturity) or hits the NAV as
opposed to the P&L.
2013 2014 2015
Other Unrealised gains and losses
Realised gains and losses Interest income and dividends
Gross investment return
774237
1,071
34
The run-off cycle
35
-18,000
-2,000
+2,000
Run-off development
3 years
Claims buffer:
Run-off:
Claims estimate:
We assessed the claim at DKK 18,000 but reserve for DKK 20,000
• Initial assessment of the claims was DKK 18,000 but Tryg reserved for
DKK 20,000 adding some conservatism to best estimate.
• At the time of setting up the claims reserves and booking the claims in the P&L the
Loss ratio (hence the combined ratio) is worse than what should be if our initial
assessment is correct.
• After three years (approx. and using average for Tryg group) the DKK 2,000 added
for conservatism comes back in the P&L as a positive run-off gain or reserves
releases. All the above assumes that initial assessment was correct and nothing
has changed in the three years period.
• Figures in the example above are purely illustrative.
5,000
5,200
5,400
5,600
5,800
6,000
Population growth (2000-2016)
4,000
4,400
4,800
5,200
5,600
DK 7%
NO 16% Growth 2000-2016:
0-17 years 7.1%
18+ years 19.3%
Total 16.4%
Growth 2000-2016:
0-17 years 1.9%
18+ years 8.5%
Total 7.1%
Population development in Norway in ‘1,000
Population development in Denmark in ‘1,000
36
Structure of the Nordic insurance market
37
Denmark
DKK 52.0bn/EUR 7.0bn (as at Q1-2015)
Sweden
SEK 73.0bn/EUR 7.9bn (as at Q4-2015)
Norway
NOK 55.8bn/EUR 6.2bn (as at Q4-2015)
Nordic
EUR 25.7bn (as at Q4-2014)
13.4
21.9
25.3
10.0
29.4 Tryg
If
Gjensidige
Sparebank1
Other
9.3
4.8
17.2
8.7
8.79.1
42.2
Tryg
Topdanmark
If
Codan
Gjensidige
Länsforsikringar
Other
18.1
17.4
5.8
11.36.5
9.7
31.2Tryg
Topdanmark
If
Codan
Gjensidige
Alm. Brand
Other
2.9
18.2
15.4
1.6
29.8
16.3
15.8
Moderna (Tryg)
If
Trygg-Hansa (Codan)
Gjensidige
Länsforsikringar
Folksam
Other
Percentage
PercentagePercentage
Percentage
51
3
31
15
Own sales
External partners
Online & others
Atlantica/Bilsport MC
57
29
14
Own sales
Affinity
Nordea
44
12
38
6
Own sales
Car dealers
Affinity
Nordea
4555
Own sales
Brokers
Distribution of new sales 2015
38
Norway
Corporate Sweden
Denmark
Percentage
PercentagePercentage
Percentage
80
85
90
95
100
105
110
Combined ratio development
39
Premium hikes
Premium hikes
Smaller adjustments
Efficiencyprogramme
Customer andefficiency focus
2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio from 107 to 94.
2011-2012 price increases will improve underlying combined ratio.
2012-2015 operational focus with target to cut expenses and claims costs by DKK 1bn in total.
2015-2017 New efficiency programme of DKK 750m launched.
*IFRS from 2004. Previous years are Danish GAAP.
Data before 2009 is not corrected for the sale of Marine Hull business, and Finland before 2008.
Key figures 2011-15 and consensus 2016-18
40
Consensus
DKKm 2011 2012 2013 2014 2015 2016 2017 2018
Gross premium income 19,948 20,314 19,504 18,652 17,977 17,736 17,941 18,177
Technical result 1,572 2,492 2,496 3,032 2,423 2,613 2,751 2,767
Investment income, net 61 585 588 360 -22 143 182 189
Pre-tax profit 1,603 3,017 2,993 3,302 2,310 2,696 2,877 2,900
Net income 1,140 2,208 2,369 2,557 1,969 2,118 2,259 2,277
Combined ratio 93.2 88.2 87.7 84.2 86.8 85.3 84.7 84.8
Expense ratio 16.6 16.4 15.6 14.6(*) 15.3(**) 14.5 14.1 14.0
Earnings per share 3.8 7.3 7.9 8.7 6.9 7.6 8.3 8.6
Dividend per share 1.3 5.2 5.4 5.8 6.0 6.2 6.5 6.7
Share buy back 0 800 1,000 1,000 1,000 957 767 623
Based on 16 estimates ahead of Q2 2016 * 15.3 excluding one-off, ** 14.9 excluding one-off
AppendixFollow us on Twitter: @TrygIR
Group
42
12
13
14
15
16
17
18
Expense ratio
75
80
85
90
95
100
Combined ratio
60
65
70
75
80
Claims ratio, net of reinsurance
-4
-3
-2
-1
0
1
2
3
4
15,000
16,000
17,000
18,000
19,000
20,000
21,000
Gross premiums
%DKKm
GEP (LHS) Local currency (RHS)
Private
43
12
13
14
15
16
17
18
Expense ratio
75
80
85
90
95
100
Combined ratio
60
65
70
75
80
Claims ratio, net of reinsurance
-3-2-101234567
7,000
7,500
8,000
8,500
9,000
9,500
10,000
10,500
Gross premiums
%DKKm
GEP (LHS) Local currency (RHS)
Commercial*
44
14
15
16
17
18
19
20
Expense ratio
75
80
85
90
95
100
Combined ratio
55
60
65
70
75
Claims ratio, net of reinsurance
-4
-3
-2
-1
0
1
2
3
4
2,500
3,000
3,500
4,000
4,500
5,000
Gross premiums
%DKKm
GEP (LHS) Local currency (RHS)
* Less than 100 employees and less than DKK 100m turnover
Corporate*
45
10
11
12
13
14
15
Expense ratio
75
80
85
90
95
100
Combined ratio
65
70
75
80
85
Claims ratio, net of reinsurance
-4
-3
-2
-1
0
1
2
3
4
2,500
3,000
3,500
4,000
4,500
5,000
Gross premiums
%DKKm
GEP (LHS) Local currency (RHS)
* More than 100 employees or more than DKK 100m turnover
Sweden
46
15
16
17
18
19
20
Expense ratio
75
80
85
90
95
100
105
Combined ratio
60
65
70
75
80
85
Claims ratio, net of reinsurance
-8
-6
-4
-2
0
2
4
6
8
10
500
1,000
1,500
2,000
2,500
Gross premiums
%DKKm
GEP (LHS) Local currency (RHS)
Geographical segments
Norway
DKKmQ2 2016 Q2 2015 FY 2015
Gross premiums earned1,569 1,777 6,766
Technical result356 403 844
Key ratios:
Gross claims ratio58.8 62.3 70.9
Result of ceded business3.8 0.3 2.1
Gross expense ratio14.9 15.0 14.9
Combined ratio77.5 77.6 87.9
Sweden
DKKmQ2 2016 Q2 2015 FY 2015
Gross premiums earned478 482 1,894
Technical result21 93 328
Key ratios:
Gross claims ratio74.1 61.4 63.5
Result of ceded business2.9 2.1 1.7
Gross expense ratio18.2 17.2 17.5
Combined ratio95.2 80.7 82.7
Denmark
DKKmQ2 2016 Q2 2015 FY 2015
Gross premiums earned2,337 2,299 9,346
Technical result393 329 1,371
Key ratios:
Gross claims ratio66.1 107.1 80.5
Result of ceded business2.9 -35.8 -9.2
Gross expense ratio14.0 14.4 13.9
Combined ratio83.0 85.7 85.2
47
Norway
% 2016 2017
GDP Growth (mainland) 1.0 1.6
Inflation 2.6 1.5
Unemployment 4.8 4.9
Current account balance in % of GDP
7.0 7.6
Budget balance in % of GDP 5.7 6.3
Public debt in % of GDP 0.0 0.0
Sweden
% 2016 2017
GDP Growth 3.8 2.2
Inflation 1.3 1.6
Unemployment 6.8 6.9
Current account balance in % of GDP
6.4 5.9
Budget balance in % of GDP -0.9 -1.1
Public debt in % of GDP 43.1 43.2
Economic key figures
48
Source: Economic Outlook, Nordea Markets, February 2016
Denmark
% 2016 2017
GDP Growth 1.3 1.8
Inflation 0.6 1.2
Unemployment 4.2 3.9
Current account balance in % of GDP
7.3 6.8
Budget balance in % of GDP -2.7 -2.2
Public debt in % of GDP 40.9 42.6