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Q3 2015 resultsInvestor presentation Follow us on Twitter: @TrygIR
Contents
2
Highlights Q3 2015 3
Premiums and portfolio 9
Claims 14
Investment, capital and targets 17
For new investors 22
Appendix 30
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 Q3 2015- Satisfactory technical result, planned one-off costs and a drop of 9% in equityindex (MSCI) result in 6.1% return on equity. Improved development in premium income.
3
244
782
Q3 2015 Q3 2014
Pre-tax profit (DKKm)
83.5
83.72.6
Q3 2015 Q3 2014
86.1
Combined ratio
14.6
15.11.7
Q3 2015 Q3 2014
16.3
Expense ratio
One-off costs
• Pre-tax profit of DKK 244m (DKK 782m) impacted by:
• Planned and communicated one-off costs of DKK 120m related to efficiency programme of DKK 750m
• Negative investment result of DKK 383m (DKK -1m) impacted by MSCI equity index down 9%
• Technical result of DKK 647m (DKK 793m)
• An improvement before one-off costs, lower interest rate and currency effects
• Improved premium development with a growth of 0.6% in local currencies (-0.8%)
• Strengthened market position with acquisition of Swedish child insurance portfolio. This acquisition implies a DKK 400m capital loading
• ROE of 6.1% (21.7%) p.a. after tax
• Fulfilment of 2015 ROE target of 20% - depends on Q4
investment return.
Customer highlights Q3 2015- General positive development i customer key figures
4
• New car insurance product launched in Sweden.
• Tryg’s DNA marking initiative showed a preventive effect. Burglaries in Sønderborg declined by 50% for the 90 properties using the DNA marking and 26% in general in the area. A similar experiment was launched in Norway in Q3.
• Tryg required agricultural customers to fit their combine harvester with a fire trace. The fire trace saves the customers unnecessary material and consequential losses and Tryg reduces the number of farm machinery fire claims.
• TryghedsGruppen’s members’ bonus scheme was approved by the Danish Business Authority.
11
2022
CMD 2014 Q3 2015 Target 2017
NPS
56.3 56.761.3
CMD 2014 Q3 2015 Target 2017
Customers with ≥3 products (%)
87.9 88.1 88.9
CMD 2014 Q3 2015 Target 2017
Retention rate
Key figures Q3/Q1-Q3 2014/2015
5
DKKm Q3 2015 Q3 2014Q1-Q3
2015Q1-Q3
20142014
Gross premium income 4,583 4,712 13,584 14,006 18,652
Claims, net of reinsurance -2,923 -2,956 -8,784 -8,998 -11,977
Gross expenses -739 -704 -2,105 -2,005 -2,689
Technical result 647 793 1,901 2,257 3,032
Return on investment aftertechnical interest
-383 -1 -206 347 360
Profit/loss before tax 244 782 1,623 2,534 3,302
Profit/loss 155 593 1,260 1,917 2,557
Claims ratio, net of reinsurance
69.8 68.6 70.6 70.0 69.6
Gross expense ratio 16.3 15.1 15.7 14.5 14.6
Combined ratio 86.1 83.7 86.3 84.5 84.2
80.4
87.5
Q3 2015 Q3 2014
83,5
83.72.6
Q3 2015 Q3 2014
86.1
Combined ratio with underlying improvement
6
Commercial, DK & NO
82.1 80.8
Q3 2015 Q3 2014
Group
86.9
82.3
Q3 2015 Q3 2014
Corporate
Private, DK & NO
89.592.5
Q3 2015 Q3 2014
Sweden
One-off costs
Efficiency programme, DKK 45m achieved in Q3
7
• Programme deliver as planned with target to
achieve savings of DKK 750m over the next
3 years.
• Planned and communicated one-off costs of
DKK 120m in Q3
• Lower expected 2015 savings than in 2014.
• Claims initiatives:
• Tryg Building network Norway
• Competence team in Health care reduces disability to work
• Expense initiatives:
• IT sourcing
• Restructuring Commercial
• Digital communication
Efficiency programme up until 2017 (DKKm)
150
73
225
375
175
388 395
45
2012 2013 2014 2015 Q1-Q32015
2016 2017
Achieved Target
Old programme New programme
Q3
H1
118
Expense ratio improved before one-off
8
• Expense ratio improved 0.5 pp. to 14.6 before one-off costs.
• One-off provisioning of DKK 80m in Q3 related to efficiency programme
• Efficiency programme delivered savings of DKK 15m related to:
• Outsourcing within Finance and IT• Commercial reorganisation
• Reduction in FTE by 174 since Q4 2014.
FTE - Development
15.1
16.316.6 16.4
15.6
15.3
14.6 14.6
2011 2012 2013 2014 Q3 2014 Q3 2015
Expense ratio
Adjusted for one-off effects
Nominal costs in business areas
326
170
10459
346
183
11560
Private Commercial Corporate Sweden
Q3 2015 Q3 2014
4,077
3,914
3,703
3,599
3,425
2011 2012 2013 2014 Q3 2015
Premiums and portfolio
0.6
-0.8
Q3 2015 Q3 2014
Positive topline development
10
Gross earned premiums development
(Local currencies) DKKm Q3 2015 Q3 2014Local currencies
Q3 2015Local currencies
Q3 2014
Private 2,211 2,289 0.3% 0.5%
Commercial 1,022 1,045 0.2% -1.6%
Corporate 984 999 2.6% 0.5%
Sweden 373 386 -1.4% -8.4%
Group 4,583 4,712 0.6% -0.8%
Gross earned premiums increased by 0.6% (-0.8%) driven by:
• Private impacted by the competitive situation. Retention was unchanged in Denmark but decreased slightly in
Norway
• Commercial helped by one-off regulations on a large account and improved retention level in Denmark.
• Corporate impacted by positive development in Denmark and Sweden, but slightly negative in Norway.
3830
Q3 2015 Q3 2014
195
130
Q3 2015 Q3 2014
647
793
120
Q3 2015 Q3 2014
767
Satisfactory technical result before one-off.
11
136
188
Q3 2015 Q3 2014
Commercial, DK & NO (DKKm)
Sweden (DKKm)
398 445
Q3 2015 Q3 2014
Group (DKKm)
Corporate (DKKm)
Private, DK & NO (DKKm)
One-off costs
90
95
100
105
110
115
DK
NO
12
Motor insurance – average premium (index 2011 = 100)
Private - average premiums- DK profitability strong but competition increasing
90
95
100
105
110
115
DK
NO
House insurance – average premium (index 2011 = 100)
Average premiums increase Y/Y
-2.6% 0.5%
(Q2-2.4%) (Q2 0.4%)
Average premiums increase Y/Y
-1.0% 0.9%
(Q2 -0.8%) (Q2 1.2%)
• NO: price increases from July
• DK: changed selection reducesaverage price
• DK –2.6% decrease y/y driven by:• smaller cars• competitive situation
• Higher price on new motor tariffDK will somewhat mitigatenegative development
• Profitability very strong on motor
Customer retention
13
82%
84%
86%
88%
90%
92%
DK
NO
Commercial
82%
84%
86%
88%
90%
92%DK
NO
Private
• Slightly increasing customerretention in Denmark
• Slight decrease in Norway
• Customer retention increasedin Denmark
• Retention decreased in Norwayimpacted by changed distribution set-up and competition
Front page slide
Claims
71.9 71.3
Q3 2015 Q3 2014
Slight increase in underlying claims ratio, net
15
72.7
69.3
Q3 2015 Q3 2014
Commercial (DK & NO)
76.7
80.2
Q3 2015 Q3 2014
Sweden
68.8 68.2
Q3 2015 Q3 2014
Group
76.8 77.1
Q3 2015 Q3 2014
Corporate
Private (DK & NO)
Underlying development is adjusted for large claims, weather claims, run-off and interest.
0.9 pp impact fromone-off costs
Large claims, weather claims and run-off
16
6.3
8.8
4.75.0
5.0
6.1
2011 2012 2013 2014 Q3 2014 Q3 2015
Run-off net, effect on combined ratio (%)
147 111
721
356
620
447
2011 2012 2013 2014 Q3 2014 Q3 2015
Weather claims, net DKKm
80
198
546471
407
574
2011 2012 2013 2014 Q3 2014 Q3 2015
Large claims, net DKKm Expected annual
level 2015: DKK 500m
Expected annual
level 2015: DKK 550m
Claims reserves discounting rate (%)
3.2
2.0
1.5
Q3 20141.2 Q3 2015
1.0
2011 2012 2013 2014 2015
Front page slide
Investment, capital and targets
Investment return – loss on equities
18
Cov. Bonds 68,6%
Bonds/deposits 4.2%
Equities 5.8%
HY 2.2%
EM 1.0%
Inv. Property 5.1%
Bonds/deposits 13.0%
-10.3
-2.8 -1.9
1.3
-0.9-2.6
Free portfolio return (%)
Portfolio (DKK 39.7bn)
100
8
100
21
4
5365
1731
Bonds Equity HY & EM Inv. Property
Nordics EU ex Nordics North America EM/Other
Geographical exposure (%)
93
5 2
66
1420
88
6 5
AAA AA-A BBB-B
Match Free Total
Rating (%)Free10.6bn 27%
Match29.0bn 73%
Investment return
DKKm Q3 2015 Q3 2014
Free portfolio -292 21
Match regulatorydeviation
8 0
Match performance -52 16
Other financials -47 -38
Total return -383 1
Capital structure
19
6,275
3,721
Q3 2015
Capital – Q3 2015, DKKm
9,23510,036
1,741
1,793
Q3 2015 Q2 2015
Equity Subordinated loan capital
Equity and subordinated loan, DKKm
Capitalrequirement
Excess capital
Buffer
• Capital buffer based on Individual Solvency increased to 59% (Q2 2015: 51%) and was impacted by:
• Result Q3 2015
• Executed share buy back of Q3 2015
• Decline in stock market
• Depreciation in the NOK / DKK rate of exchange.
• Based on Solvency II standard model the capital buffer was 26% (Q2 2015: 21%)
• Acquisition of Swedish child insurance portfolio implies a DKK 400m capital loading, but is not included in Q3.
Solvency II unsolved issues:
• Internal model expected to be approved by 31 December 2015 at the latest. Application has been submitted
• Inclusion of notional deferred tax and expected future surplus
Workers' Comp Liability Building Private Cars
20
Value creation through M&A
2015 – Skandia’s child insurance in Sweden
2014 - Securator
2014 – Tryg acquires pet insurance in Sweden
2014 – Renewal right for Codan’sagricultural portfolio
New business consumes capital (capital to premium)
Latest acquisitions• M/A to support marketdevelopment
• Strategically supportive
• Acquisitions should support financial targets over a 3 yearhorizon to reach 21% ROE
• Product / distribution enhancing
120-140%
90-110%
50-70%
25-35%
Financial and customer targets
21
Customer targets
Financial targets
Net Promoter Score (NPS) + 100%
Retention rate + 1 pp
Customers ≥ 3 products** + 5 pp
** Private (DK & NO)
2015 2017
ROE after tax = 20% ≥ 21%
Combined ratio ≤ 90 ≤ 87
Expense ratio < 15* ≤ 14
* Excl. One-off effects
0
10
20
30
40
ROE after (%)
For new investors
Tryg – at a glance I
23
• 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: 13.6%CR in 2014: 80.4
SwedenMarket position: #5Market share: 3.0%CR in 2014: 98.2
DenmarkMarket position: #1
Market share: 18.2%CR in 2014: 84.1
56
23
21
Private
Commercial
Corporate
Business split 2014
31
5
115
24
14
10
Motor
Workers' comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Other
Gross premium split by products 2014
Percentage
Percentage
4.2
6.6
3.4
1.3
3.1
0.8 1.3
5.2 5.4 5.8
2.5
4.2
2.6
2.63.2
3.4
0
1
2
3
4
5
6
7
8
9
10
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1
2015
Cash dividend Ordinary buy back Extraordinary buy back
0%
10%
20%
30%
40%
50%
60%
60
9
14
17
Danishinstitutional
Non-Danishinstitutional
Smallershareholders
Tryg – at a glance II
24
Shareholder breakdown 2014
Strengthening of brand value
Shareholder performance since IPO
Low risk investment portfolio
New dividend policy
Shareholder remuneration since IPO
Standard deviation 2011-2013
DKK
Percentage
Latest acquisitions:
2015 – Skandia’s child insurance in Sweden
2014 - Securator
2014 – Tryg acquires pet insurance in Sweden
2014 – Renewal right for Codan’s agricultural portfolio
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
375
400
425
450
475
nove
mbe
r 05
mar
ts 0
6
augu
st 0
6
janu
ar 0
7
juni 07
nove
mbe
r 07
april 0
8
sept
embe
r 08
febr
uar 09
juli 09
dece
mbe
r 09
maj 1
0
okto
ber 10
mar
ts 1
1
augu
st 1
1
dece
mbe
r 11
maj 1
2
okto
ber 12
mar
ts 1
3
augu
st 1
3
janu
ar 1
4
juni 14
nove
mbe
r 14
april 1
5
sept
embe
r 15
Tryg incl. dividend Euro Insurance index
Tryg’s equity story
25
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
• Payout ratio of 60-90%
• Aiming for a nominal stable increasing dividend
• 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
Structure of the Nordic insurance market
9 October 201526
Denmark
DKK 51.3bn/EUR 6.9bn (as at Q3-2014)
Sweden
SEK 72.4bn/EUR 7.7bn (as at Q2-2015)
Norway
NOK 55.7bn/EUR 6.4bn (as at Q2-2015)
Nordic
EUR 25.1bn (as at Q4-2013)
13.5
22.3
25.1
10.0
29.1 Tryg
If
Gjensidige
Sparebank1
Other
9.9
4.7
17.6
9.0
8.69.2
41.0
Tryg
Topdanmark
If
Codan
Gjensidige
Länsforsikringar
Other
18.0
17.6
6.0
11.76.3
9.7
30.7Tryg
Topdanmark
If
Codan
Gjensidige
Alm. Brand
Other
3.0
18.1
15.5
1.5
29.9
16.5
15.5
Moderna (Tryg)
If
Trygg-Hansa (Codan)
Gjensidige
Länsforsikringar
Folksam
Other
Percentage
PercentagePercentage
Percentage
56
4
26
14
Own sales
External partners
Online & others
Atlantica/Bilsport MC
63
24
13
Own sales
Affinity
Nordea
45
15
32
8
Own sales
Car dealers
Affinity
Nordea
4357
Own sales
Brokers
Distribution of new sales 2014
27
Norway
Corporate Sweden
Denmark
Percentage
PercentagePercentage
Percentage
80
85
90
95
100
105
110
Combined ratio performance
28
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 2011-14 and consensus 2015-17
29
Consensus
DKKm 2011 2012 2013 2014 2015 2016 2017
Gross premium income 19,948 20,314 19,504 18,652 18,028 18,014 18,284
Technical result 1,572 2,492 2,496 3,032 2,623 2,748 2,887
Investment income, net 61 585 588 360 116 248 249
Pre-tax profit 1,603 3,017 2,993 3,302 2,644 2,930 3,070
Net income 1,140 2,208 2,369 2,557 2,044 2,260 2,367
Combined ratio 93.2 88.2 87.7 84.2 85.9 85.0 84.4
Expense ratio 16.6 16.4 15.6 14.6(*) 15.2 14.5 14.2
Total insurance provision 34,220 34,355 32,939 31,692
Shareholders’ equity 9,007 10,979 11,107 11,119
Earnings per share 3.8 7.3 7.9 8.7 7.2 8.1 8.7
Dividend per share 1.3 5.2 5.4 5.8 6.1 6.4 6.8
Share buy back 0 800 1,000 1,000 1,060 785 556
Based on 13 estimates * 15.3 excluding one-off
Appendix
Follow us on Twitter: @TrygIR
Group
31
12
13
14
15
16
17
18
Expense ratio
75
80
85
90
95
100
Combined ratio
60
65
70
75
80
85
90
95
Claims ratio, net of reinsurance
-4
-2
0
2
4
6
8
4,400
4,600
4,800
5,000
5,200
5,400
Gross premiums
%DKKm
GEP (LHS)
Local currency (RHS)
Private
32
12
13
14
15
16
17
18
Expense ratio
75
80
85
90
95
100
Combined ratio
60
65
70
75
80
85
90
95
Claims ratio, net of reinsurance
-4
0
4
8
1,900
2,100
2,300
2,500
Gross premiums
%DKKm
GEP (LHS)
Local currency (RHS)
Commercial
33
Expense ratio
70
75
80
85
90
95
100
Combined ratio
50
55
60
65
70
75
80
85
90
Claims ratio, net of reinsurance
-8
-4
0
4
8
950
1,000
1,050
1,100
1,150
1,200
Gross premiums
%DKKm
GEP (LHS)
Local currency (RHS)
12
13
14
15
16
17
18
19
20
21
Corporate
34
9
10
11
12
13
14
Expense ratio
75
80
85
90
95
100
105
Combined ratio
65
70
75
80
85
90
95
Claims ratio, net of reinsurance
-8
-4
0
4
8
900
1,000
1,100
1,200
Gross premiums
%DKKm
GEP (LHS)
Local currency (RHS)
Sweden
35
5
10
15
20
25
30
Expense ratio
75
90
105
120
Combined ratio
60
65
70
75
80
85
90
95
Claims ratio, net of reinsurance
-15-10-50510152025
250
300
350
400
450
500
Gross premiums
%DKKm
GEP (LHS)
Local currency (RHS)
Geographical segments
Norway
DKKmQ3 2015 Q3 2014
Q1-Q3 2015
Q1-Q3 2014 FY 2014
Gross premiums earned 1,687 1,845 5,155 5,498 7,337
Technical result262 444 720 1,288 1,478
Key ratios:
Gross claims ratio69.9 57.3 69.8 64.4 66.5
Result of ceded business 0.1 3.8 1.4 1.6 1.4
Gross expense ratio14.8 15.4 15.2 11.3 12.5
Combined ratio84.8 76.5 86.4 77.3 80.4
Sweden
DKKmQ3 2015 Q3 2014
Q1-Q3 2015
Q1-Q3 2014 FY 2014
Gross premiums earned 517 534 1,431 1,508 1,975
Technical result56 14 219 110 44
Key ratios:
Gross claims ratio72.0 80.3 66.4 74.0 77.6
Result of ceded business 1.5 2.2 1.3 1.7 2.2
Gross expense ratio15.5 15.2 17.0 17.4 18.4
Combined ratio89.0 97.7 84.7 93.1 98.2
Denmark
DKKmQ3 2015 Q3 2014
Q1-Q3 2015
Q1-Q3 2014 FY 2014
Gross premiums earned 2,386 2,340 7,016 7,015 9,361
Technical result449 335 1,082 859 1,510
Key ratios:
Gross claims ratio81.0 67.6 85.6 71.8 66.9
Result of ceded business -13.6 3.6 -15.3 0.1 2.1
Gross expense ratio13.8 14.5 14.2 16.0 15.1
Combined ratio81.2 85.7 84.5 87.9 84.1
36
Norway
% 2015 2016
GDP Growth (mainland) 1.2 1.3
Inflation 2.1 2.2
Unemployment 4.4 4.8
Current account balance in % of GDP
5.7 5.9
Budget balance in % of GDP 6.1 6.3
Public debt in % of GDP 0.0 0.0
Sweden
% 2015 2016
GDP Growth 2.8 2.8
Inflation 0.0 1.1
Unemployment 7.6 7.3
Current account balance in % of GDP
7.0 7.5
Budget balance in % of GDP -1.6 -1.1
Public debt in % of GDP 43.8 43.1
Economic key figures
37
Source: Economic Outlook, Nordea Markets, September 2015
Denmark
% 2015 2016
GDP Growth 1.5 2.0
Inflation 0.6 1.5
Unemployment 4.7 4.3
Current account balance in % of GDP
6.3 5.6
Budget balance in % of GDP -2.3 -1.9
Public debt in % of GDP 39.1 41.0
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