q1 2020 resultstryg.com/sites/tryg.com/files/2020-06/q1_2020_investor...• sweden –run-off q1...
TRANSCRIPT
Q1 2020 results
Investor presentation
Contents
2
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.
• Highlights Q1 2020 3
• Premiums and portfolio 9
• Claims and expenses 13
• Investment, capital and targets 19
• Roadshows & Conferences 27
• Background material 28
• Appendix 46
•Technical result of DKK 672m including a net negative of DKK -40m from COVID 19
•Investment income of DKK -980m, losses on both free and match portfolio following unprecedented capital markets
turbulence in March
•Solvency ratio of 159 at the end of Q1 while FSA has approved new internal model on April 20
Pre-tax profit of DKK -372m (DKK 930m) driven by:
•Covid-19 travel insurance claims totaled DKK -115m, partly offset by lower frequencies in other lines, net negative -40m
•Weather claims below normal at 2.0%, large claims at 2.4% (normal level), run-off result at 6.4%
•Private underlying claims ratio 40bps better than Q1 19, Group underlying claims ratio 50bps better than Q1 19
•Expense ratio of 14.1 (14.0) - guidance for 2020 unchanged
•“FY 2020 underlying claims ratio expected to be better than 2019”
Technical result of DKK 672m (DKK 626m)
•Q1 investment result characterised by extreme volatility and highly negative financial markets following Covid-19 outbreak
•Free portfolio returned approx -7% in the quarter, match portfolio also reported a loss
Investment income of DKK -980m (DKK 353m)
•Tryghedsgruppen Board of Representatives recently approved the member bonus for the fifth consecutive year. The bonus
corresponds to 8% of premiums paid for 2019 as per previous years.
TryghedsGruppen approved members’ bonus for 2020
Financial highlights Q1 2020
3
- Technical result of DKK 672m including a net negative impact of DKK -40m from COVID-19- Investment income of DKK -980m, unprecedented capital markets turmoil in March following COVID-19 outbreak- As mentioned on March 27, Tryg moves to FY dividend decision (as opposed to quarterly), Solvency ratio of 159
Pre-tax profit (DKKm)
Combined ratio
Expense ratio
-372
930
Q1 2020 Q1 2019
Q1 2020 Q1 2019
88.0 88.0
Q1 2019Q1 2020
14.1 14.0
4
• Transactional Net Promoter Score (TNPS) of 69 (67)
• Retention improved in general
• Number of products per customer increased
• TryghedsGruppen has approved the payment of an 8% member bonus for the fifth year in a row
• Awareness of Customer Bonus improved, especially for non-customers, it was 30% against 20% in Q1 2019
Number of products per customer
TNPS
Customer highlights Q1 2020
3.8
Q1 2019Q1 2020
4.0
Target 2020
3.9
69
67
70
Target 2020Q1 2020 Q1 2019
Group (DKKm)
Technical result higher than Q1 2019
5
Q1 2020 Q1 2019
Q1 2020 Q1 2019 Q1 2019Q1 2020
Q1 2020 Q1 2019
Private, DK & NO (DKKm)* Commercial, DK & NO (DKKm)*
Corporate (DKKm)* Sweden (DKKm)*
Q1 2020 Q1 2019
• Private – Run-off Q1 2020: DKK 32m or 1.0% (DKK 107m or 3.7%)
• Commercial – Run-off Q1 2020: DKK 96m or 8.6% (DKK 95m or 9.0%)
• Corporate – Run-off Q1 2020: DKK 177m or 18.3% (DKK 140m or 14.5%)
• Sweden – Run-off Q1 2020: DKK 53m or 15.1% (DKK 36m or 10.5%)
Customers Employees Travel Claims frequencies
COVID-19, helicopter view
Handling more than 30.000 travel claims related to COVID-19
6
15%
35%
20%15-20%
HealthMotor Contents Accident
Danish business, March 2020
Increased customer satisfaction during COVID-19 and high level of customer contacts
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
Other COVID-1997
98
99
100
101
102
103
104
105
106
107
108
109
110
MarchFebruary April
Claims DK
Claims NO
Travel insurance development from January – March 2020 on a daily basis
Decreasing claims frequency in different lines of business due to lock-down and lower economic activity
Targeted benefits 2019-2021
• Full run rate synergies impact in 2021 of DKK 300m
• 25% impact expected in 2019, 50% impact in 2020
• DKK 42m achieved in Q1 2020
• DKK 17m from “lower” claims using Tryg procurement for Alka
• DKK 15m from cost benefits especially related to staff functions
• DKK 10m revenue synergies through cross selling to Alka customers using Tryg agent model
7
Claims Revenue optimisation
and commercial best
practice
Cost optimisation Label
Realised benefits and targeted benefits 2021 (DKKm)Alka merger benefits by category 2021 (DKKm)
2019 2020 2021
Alka synergies status update
39
Claims Cost Total synergiesRevenue
62
31
132
10
Realised synergies FY2019
Realised synergies Q1 2020
Targeted synergies 2021
Value of Tryg since IPO
Strong focus on shareholders’ remuneration
8
Aim for a nominal stable increasing ordinary dividend (annual)
High profitability and low growth implies limited increase in capital requirement
Shareholders’ remuneration
Shareholder remuneration since 2012
Share price performance since IPO
October 2005 (IPO) Value of Tryg today Dividend and buy
back since IPO
Tryg moves to FY dividend decision
for 2020
-200,00
-100,00
0,00
100,00
200,00
300,00
400,00
500,00
600,00
700,00
800,00
900,00
Tryg Euro insurance index
2.60
5.20
20192014
3.20
8.45
2012
3.40
5.40
2013
3.50
5.80
3.50
6.00
2015
6.20
1.65
2016
6.40
3.30
2017 2018
6.80
Extraordinary dividend
Extraordinary buy back
Ordinary dividend
Premiums and portfolio
• Group premiums were up 8.9% in local
currencies
• Private lines reported a 10.4% growth,
impacted by much higher portfolio start 2020
than start 2019, cross selling, strong partner
agreements and independent agents
• Commercial growth was 6.8% impacted by
price initiatives for larger commercial clients
• Corporate growth 4.9% - high acceptance of
price hikes (avg. 10%) in Denmark while top-
line fall in Norway due to price hikes (avg.
12%)
• Sweden increased by 4.9% partly driven by
price adjustments for motor insurance
10
DKKm Q1 2020 Q1 2019Local currencies
Q1 2020Local currencies
Q1 2019
Private 3,162 2,897 10.4% 30.9%
Commercial 1.112 1,050 6.8% 10.3%
Corporate 968 966 4.9% 0.5%
Sweden 353 343 4.9% 10.2%
Group 5,595 5,228 8.9% 19.2%
Group premiums up 8.9% in Q1
Q1 2020 Q1 2019 ex Alka
Gross earned premums development (local currencies)
11
• DK: 2.4% (Q4 2.3%) positive development reflects price adjustments
• NO: 1.5% (Q4 1.6%) positive development reflects underlying price adjustments. Avg Motor price is higher in Norway primarily reflecting different type of cars
• DK: 2.1% (Q4 1.6%) positive developmentreflects price adjustments
• NO: 2.0% (Q4 2.4%) positive developmentreflects primarily price adjustments
Private - average prices
Q1
15
Q1
11
Q3
11
Q3
14
Q1
14
Q1
13
Q1
12
Q3
12
Q3
13
Q1
18
Q3
15
Q1
16
Q3
16
Q1
17
Q3
17
Q3
18
Q1
19
Q3
19
Q1
20
Average price Denmark Norway
House insurance 5,200 6,200
Q1
11
Q3
11
Q1
12
Q3
12
Q1
13
Q3
13
Q1
20
Q1
14
Q1
15
Q3
14
Q3
15
Q1
16
Q1
19
Q3
16
Q1
17
Q3
17
Q1
18
Q3
18
Q3
19
DK NO
DK NO
Mo
tor in
su
ran
ce
Ho
use in
su
ran
ce
Average price (index 2011 = 100)
Average price Denmark Norway
Motor insurance 4,700 6,000
Average price (index 2011 = 100)
Customer retention in general improved
12
• DK: customer retention at 88.5% (88.2%) highest level in last two years
• NO: customer retention at 89.2% (87.9%) showing an improved trend
• DK: customer retention stable at 91.4% (91.4%)
• NO: customer retention up to 87.2% (86.7%) showing an improved trend
Q3
13
Q1
13
Q1
17
Q1
14
Q3
14
Q1
20
Q3
17
Q1
15
Q3
15
Q1
16
Q3
16
Q1
18
Q3
18
Q1
19
Q3
19
DK NO
Q1
13
Q3
13
Q1
14
Q3
14
Q3
17
Q1
15
Q3
15
Q1
16
Q1
17
Q3
16
Q3
19
Q1
18
Q3
18
Q1
19
Q1
20
DK NO
Priv
ate
Co
mm
ercia
l
Claims and expenses
Claims ratio, net (Sweden)
Claims ratio, net (Corporate)
Claims ratio, net (Commercial DK & NO)
Group underlying claims ratio at 75.5, 50bps better than Q1 2019
Private underlying claims ratio at 73.9, 40bps better than Q1 2019
“Expected FY 2020 underlying claims ratio better than FY 2020”
Going forward it is expected a slightly lower improvement in Private offset by
more improvements in particular in the Corporate segment
14* Underlying development is adjusted for large claims, weather claims, run-off and interest.
Underlying claims ratio improving
Group underlying claims ratio
Private underlying claims ratio
Q1
19
Q3
16
Q1
16
Q3
19
Q3
17
Q1
17
Q2
16
Q4
17
Q4
16
Q3
18
Q1
18
Q2
17
Q2
18
Q4
18
Q2
19
Q4
19
Q1
20
Q1
16
Q2
16
Q2
17
Q3
16
Q4
16
Q3
17
Q1
17
Q4
17
Q1
18
Q2
18
Q3
18
Q4
18
Q1
19
Q2
19
Q3
19
Q4
19
Q1
20
Q4 19Q1 19 Q2 19 Q3 19 Q1 20
0.5
Q1 19 Q2 19 Q3 19 Q4 19 Q1 20
0.4
Q4
17
Q3
18
Q1
16
Q2
16
Q2
17
Q3
16
Q3
19
Q3
17
Q2
19
Q4
16
Q1
17
Q1
18
Q2
18
Q4
18
Q1
19
Q4
19
Q1
20
COVID-19 from a claims perspective
Travel insurance
• Travel insurance premiums were DKK 889m at end of 2019
• Covid-19 related travel claims were DKK 255m gross in Q1 and DKK 115m net after reinsurance.
• Tryg’s own retention for future possible Covid-19 outbreak is well below the DKK100m. Coverage would be provided only after Nordic authorities change travel recommendation (Nordic authorities currently have the entire world on high alert due to Covid-19)
• Death coverage for employees in Norwegian companies. In Alka the coverage is connected to union membership (former owners of Alka). Coverage is only for customers in working age.
• Covid-19 mortality rates are relatively low so far in Denmark and Norway in general and the impact on Tryg has been very low.
15
• Credit & Surety business in the Nordic market and in five European countries. More than 80% of premiums from Scandinavia, this becomes more than 90% while including Finland.
• Business model can be impacted by rapid changes in the economic cycle. This is the reason why this business is heavily reinsured.
• On average reinsurance covers approximately 80% of the exposures but in some of the largest exposure (DKK 500m +) reinsurance is more than 90%
• During the financial crisis Tryg Garanti reported a COR of 100 only in 2011, otherwise the COR was always well below that
• Tryg Garanti has unlimited reinsurance coverage
Group life
Tryg Garanti
Business interruption
• Business interruption coverage offered as part of Commercial Property
• A physical damage is required to trigger a claim
• Epidemics cover in Denmark and Norway is not part of standard coverage, a physical damage is needed to trigger a claim. In Sweden epidemics coverage is more standard in the policies but Tryg’s exposure is low.
• Reinsurance coverage implies a standard net retention of DKK 100m per large claim
COVID-19 from a claims perspective
• Lock-down since mid March in Scandinavia (firstly in Denmark and Norway) has driven a significant reduction in frequencies.
• The reduction in frequencies has happened gradually meaning that the impact was higher in the second week of lock-down compared to first week of lock-down.
• Motor frequencies in Denmark down 15% in March
• Contrary to other European countries no “hard” restrictions on movements have been ordered.
• Gradual re-opening of societies in DK and NOK already after Easter.
• Contents insurance premiums approximately DKK 825m in the Private segment
• Content frequencies in Denmark down 15% in March
• Burglaries clearly down but at the same time electronics claims have been higher as customers are using all IT gadgets more (PC, Ipads, Iphones etc.)
Motor insurance
• Accident insurance premiums approximately DKK 2.3bn at end of 2019
• Accident frequencies in Denmark down 20% in March driven mainly by customer driven movements
• Less sports related injuries and general injuries as well.
16
Accident insurance Content insurance
Large claims, net DKKm Weather claims, net DKKm
Claims reserves discounting rate
17
Expected annual
level 2019: DKK 600m
Expected annual
level 2019: DKK 550m
201820172014 Q1 20192015 2016 Q1 20202019
550
20192016 Q1 2020
600
2014 20172015 2018 Q1 2019
Q1 2019201920172015 2016 2018 Q1 2020 Q1 201920162015 Q1 20202017 20192018
Large claims, weather claims and run-off
Run-off net, effect on combined ratio
18
• Efficiency initiatives in 2017 brought down overall costs
• Investments in digitalisation will somewhat offset further efficiency gains
• Expense ratio target for 2020 around 14%
• Alka synergies of DKK 15m helped overall costs level
• Number of employees increased
• Increase in distribution power in general
• Guarantee expansion in Europe
Expense ratio of 14.1 in line with 2020 target
Private Commercial Corporate Sweden
Q1 2020
Q1 2019
2011 2012 2017201620142013 2015 2018 2019 Q1 2020
2015 2016 2017 2018 2019 Q1 2019 Q1 2020
Expense ratio by business areas FTE development
Expense ratio
Investment, capital and targets
Total investments
DKK 37.7bn
Match portfolio
DKK 27.2bn
Freeportfolio
DKK 10.5bn
Splitting up the portfolio ‘risk-wise’
Denmark
DKKm
Norway Sweden
Match portfolio split Free portfolio split
High yield
Inv. Property
Inflation linked bonds
Equities
Emerging markets
Bonds
Investment grade
Investments – split in match & free portfolio
20
Equity portfolio split by sectorsCorporate bonds portfolio (DKK 3.2 bn) rating split
Investment return – low risk remains key
21
Key figures investments (DKKm) Q1 2020 Q1 2019 2019
Free portfolio -713 373 857
Match portfolio -203 51 -42
Other financial income and expenses-64 -71 -236
Total investment return -980 353 579
2%
0%
COMMUNICATION SERVICES
INDUSTRIALS
REAL ESTATE
INFORMATION TECHNOLOGY
HEALTH CARE
FINANCIALS
CONSUMER DISCRETIONARY
CONSUMER STAPLES
MATERIALS
ENERGY
UTILITIES
OTHER
AAA
AA
BB
BBB
A
B
CCC
Other
• Total net investment result of DKK -980m in Q1 at the end of probably the most turbulent quarter in history.
• The free portfolio returned approximately -7% dragged down by equities (-20%) but also losses on nearly all assets classes leaving aside covered bonds
• Match portfolio also reported an unusual loss of DKK -203m driven both by the regulatory deviation and the performance part. The regulatory deviation was impacted by the rate hike from the Danish central bank not mirrored by a similar move in the discounting curve while the performance was impacted by widening Nordic covered bonds spreads
Group fixed income portfolio rating split
1%2%
AAA
AA
A
BBB
BB
B or lower
Solvency position Q1 2020
22
6.500
8.500
7.500
7.000
8.000
Results
Q1 2020
Intangible
assets
Own funds
Q1 2020
Own funds
Q4 2019
-442-291
Subordinated
debt
-89
Miscellaneous
7.506
8.119
5.500
5.000
2.500
3.000
3.500
4.500
4.000
SCR Q4 2019 Other
-254
Market
-48
4.719
SCR Q1 2020
5.021
• Solvency ratio based on the Partial Internal Model is 159 (Q4 2019: 162).
• Own Funds (OF) is primarily impacted by
• Result Q1 2020 of DKK -442m
• Lower subordinated loans (in DKK) following sharp currencies drop (both NOK and SEK)
SCR is primarily impacted by
• Lower capital charge for equities following large fall in equity markets at Q1
• Currency moves also drive a lower SCR
• Based on Solvency II Standard Formula the solvency ratio is 125 (Q4 2019: 131).
• Standard Formula SCR DKK 6,026m
• On April 20 the Danish FSA approved Tryg’s updated partial internal model. The model now incorporates the Swedish segment and therefore it has a higher diversification benefit, additionally some model refinement has led to marginally lower capital charges for the non-life risks. The SCR is expected to be approximately DKK 400m lower compared to Q1.
Own funds walk
Solvency capital requirement walk
Capital Tiers as % of SCR
Solvency ratio development
Capital and solvency ratio development
23
• Tier 1 and Tier 2 capacity virtually fully utilized (leaving aside
potential quarterly swings)
• The Danish FSA has explained that a ratio lower than
125 (partially internal model) would result in increased
surveillance.
• Solvency ratio development mostly a function of net profits
(+) and dividends (-). Underlying development should remain
pretty stable.
• The move to FY dividend decision for 2020 (as opposed to
quarterly) should drive an increase in the solvency ratio at Q2
and Q3 (assuming normal business and capital markets
development) before the full-year dividend decision
2.335
4.179
Q1 2020 DKKm
Tier 2
ATier 1
CETier 1
Q1 2020 % of SCR
49%
89%
21%
Q4 2019Q2 2019Q1 2019 Q3 2019 Q1 2020
Solvency ratio sensitivities
24
• The Solvency II ratio shows the highest sensitivity to spread risk for covered bonds
• 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.)
• Biggest spreads sensitivity (by far) in the fixed income area is towards covered bonds. Corporate and Government bonds sensitivities are low as exposure to these assets classes is low
• Interest rate risk is very low as function of our matching strategy
159%162%
153%
163%
150%
167%
151%
158%160%
147%
171%
158% 160% 159% 160% 162%
156% 157%161%
130%
140%
150%
160%
170%
180%
2020 Equity Equity Property Interest Spread
(Cov.)
Spread
(Corp.)
Spread
(Gov.)
NOK/DKK SEK/DKK
Targets and outlook
25
✓ New financial targets announced at 2017 CMD
✓ Members’ bonus of 8% in June 2019.
✓ Price increases to offset claims inflation
Customer targets, 2020
TNPS 70
No. of products per customer +10 %
ROE after tax (%)
✓ 2020 topline growth above GDP level
✓ 2020 normalised tax rate 22-23%
✓ Alka acquisition will result in annual depreciation of customer relations
of DKK127m within a 5 to 7 years period. Solvency position (hence
dividend capacity) not impacted by the P&L charge
ROE as reported
Technical resultDKK 3.3bn
Combined ratio≤ 86
Expense ratio
~ 14
ROE after tax
≥ 21%
Financial targets, 2020
Target post Alka acquisition
* ROE target ≥ 21% suspended for the FY2020 due to extremely negative capital markets development in Q1
*
26
”Do you know the only thing that gives me pleasure?
It’s to see my dividends coming in.”
John D. Rockefeller
It is important to know your investment case
Date Place Participants from Tryg Arranged by
21/04/2020 US virtual roadshowJohan Kirstein Brammer, CCO
Gianandrea Roberti, IRODanske Markets
23/04/2020 London virtual roadshowBarbara Plucnar Jensen, CFO
Gianandrea Roberti, IROAutonomous
05/05/2020 Frankfurt virtual roadshowBarbara Plucnar Jensen, CFO
Gianandrea Roberti, IROSEB
07/05/2020 Paris virtual roadshowBarbara Plucnar Jensen, CFO
Peter Brondt, IR ManagerSEB
14/05/2020 Bergen virtual roadshowEspen Opedal, Head of Tryg Norway
Peter Brondt, IR ManagerDNB
27/05/2020 Toronto virtual roadshowLars Bonde, COO
Peter Brondt, IR ManagerExane BNP Paribas
28/05/2020 Montreal virtual roadshow Lars Bonde, COO
Peter Brondt, IR Manager
DNB
27
Q1 roadshows & conferences
Background material
Claims Excellence
DKK 600m in claims cost reduction
Digital Empowerment
of Customers
DKK 100mSTP on claims: 50%Self-service: 70%
Tryg 2018 – 2020:
Strengthening the core, while embracing the future Product & Service
Innovation
+DKK 1bn in new products by 2020+
Distribution Efficiency
DKK 150m in technical result impact
Financial targets 2020
• Technical result: DKK 3.3bn
• Combined ratio: ≤86
• Expense ratio: ~14
• ROE: ≥21%
Customer targets 2020
• TNPS: 70
• Number of products per customer: +10%
Dividend policy
• Targeting a nominal, stable and increasing dividend
• Extraordinary dividend to further adjust the capital structure
Long term profitable growth and attractive shareholder value creation
29
Alka acquisition
DKK 300m in synergies with full run-rate impact in 2021
Tryg’s equity story – a leading non-life insurer
Why invest in Tryg?
30
Pre-tax result by division (YE 2018 data)
Tryg is a dividend stock (DKK)Motor combined ratios Nordics vs international
Total yield (dividend and buy backs / market cap) at year end
High insurance penetration in the Nordics
Premiums per capita (USD), 2017
1.519
Denmark Norway UKGermany France Italy
1.296
1.557
1.224
Alm. BrandTryg GjensidigeTopdanmark Sampo Storebrand
Other
Non-life
Life
Banking
20112010 20152012 20142013
UK
Norway
Germany
Italy
Denmark
201420132012
9.2%
6.6%
201820172015 2016 2019
4.5%
8.3%
7.6%
6.9%
6.2%
4.0%
Total yield
DPS (right axis)
Gross premium split by products 2019
Gross premium split by products 2019
Tryg at a glance
31
• 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.Norway
Market position: #3Market share: 13.3%
CR in Q1 2020: 101.4 %
SwedenMarket position: #5Market share: 3.3%
CR in Q1 2020: 84.8 %
DenmarkMarket position: #1Market share: 22.5%
CR in Q1 2020: 82.1 %
Retention rate - Private
Retention rate - Commercial
4.0%
5.0%
Workers’ comp
Motor
Liability
Health & accident
Fire & property - private
Fire & property - comm.
Other
7.0%
Sweden
Private
Commercial
Corporate
Q1
13
Q2
13
Q3
14
Q3
13
Q1
14
Q4
13
Q1
17
Q2
14
Q4
14
Q4
19
Q1
15
Q2
15
Q2
16
Q3
15
Q4
15
Q1
16
Q3
16
Q4
16
Q2
17
Q1
18
Q3
17
Q4
17
Q2
18
Q3
18
Q2
19
Q4
18
Q1
19
Q3
19
Q1
20
DK NO
Q4
14
Q1
13
Q2
14
Q1
14
Q2
13
Q3
13
Q4
13
Q3
14
Q1
15
Q3
15
Q2
15
Q4
15
Q1
16
Q2
16
Q3
18
Q3
16
Q4
16
Q1
17
Q2
17
Q3
17
Q4
17
Q1
18
Q2
18
Q4
18
Q1
19
Q2
19
Q3
19
Q4
19
Q1
20
NODK
Run-off net by products Q1 2020
Gross claims reserve by products 2019Gross premium by products 2019
Premiums and reserves by lines of business
32
4.0%
5.0%
Workers’ comp
Motor
Fire & property - private
Liability
Health & accident
Fire & property - comm.
Other
5.0%
Liability
Motor
Health & accident
Workers’ comp
Fire & property - private
Fire & property - comm.
Other
5.2%
2.0% Motor
Workers’ comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Other
Run-off net by products Q1 2019
-3.0%
Health & accident
Motor
Workers’ comp
Fire & property - private
Liability
Fire & property - comm.
Other
DK: Gross premium by products 2019
Gross premium split by geography
33
Liability
Motor
Workers comp
Fire & property - private
Health and accident
Other
Fire and property comm
Tourist assistance
SE: Gross premium by products 2019
Motor
Fire and property comm
Health and accident
Fire & property - private
Liability
Other
NO: Gross premium by products 2019 Run-off net by products 2019
3%
Motor
Liability
Fire & property - private
Health and accident
Workers comp
Tourist assistance
Fire and property comm
Other
1%
Motor
Fire & property - private
Workers comp
Health and accident
Liability
Fire and property comm
Other
The run-off cycle
34
• 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.
18.000
2.000
2.000
-20.000
3 years
Claims estimate: -18,000
Run-off: +2,000
Claims buffer: -2,000
Run-off development
We assessed the claimat DKK 18,000 but
reserve for DKK 20,000
35
20102007 200920082005 20112006 2012 2013 2014 2015 2016 2017 2018 2019 Since
IPO
10Y
avg.
5Y avg.
Combined ratio development
36
Percentage
Nordic (EUR 26.3bn as at Q4 2018)
4.7%
Tryg
Topdanmark
If
Gjensidige
Codan
Other
Länsforsikringar
Denmark (DKK 56.7bn/EUR 7.6bn as at Q1 2019)
5.5%
Codan
Tryg
Gjensidige
If
Topdanmark
LB Forsikring
Alm. Brand
GF Forsikring
Other
Sweden (SEK 87.9bn/EUR 8.3bn as at Q4 2019)
3.3%
1.9%
30.2%
Moderna (Tryg)
Länsforsikringar
If
Codan
Gjensidige
Folksam
Other
Norway (NOK 62.8bn/EUR 6.4bn as at Q4 2019)
3.5%
15.9%
3.1%2.2%
2.6%
Tryg
Eika
IF
Gjensidige
Fremtind
Storebrand
Frende
Codan
Protector
Other
Fremtind excluding DnB Liv and Sparebank1 Liv = 14.1
Structure of the Nordic insurance market
37
DK
DK
NO
NO
SE
SE
4%
Customer services
Nordea
Affinity
Outbound
Online DK
Sales agents
Danske Bank9%
Web
Franchise
Customer service
Outbound
Enter
Nordea
7%
7%
Own sales
Web and external sales
Other
Atlantica/Bil sport/MCNODK
Brokers
Customer centre
Sales agents
Partner
Customer centre
Sales agents
Franchises
Brokers
Brokers
Own sales
Brokers
Own sales
100%
Brokers
Priv
ate
Co
mm
ercia
lC
orp
orate
Distribution of new sales 2019
Things that you may not know
38
• 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 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.
Things that you may not remember
39
• 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.
40
• 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
IBM study from 2007, probably little has changed
Population development in Norway in ‘1,000
Population development in Denmark in ‘1,000
DK 9%
NO 19%
41
Population growth (2000-2019)
Organisational and remuneration structure
42
Organisation chart
Remuneration structure
The Executive Board are remunerated according to Tryg’s remuneration policy:
• Base salary
• Pensiono 25% of the base salary
• Variable pay
o Up to 50% of the base salary including pension
o The variable pay element is a Matching Shares
Programme:
The Executive Board may buy Tryg shares (so-called
investment shares) at market price for a predefined
amount. Four years after the purchase, Tryg will grant
one matching share per investment share free of charge.
Download Tryg’s statutory corporate governance report and remuneration policy on tryg.com
CEOMorten Hübbe
CFOBarbara Plucnar
Jensen
COOLars Bonde
CCOJohan Kirstein
Brammer
Private DK
Commercial DK
Corporate DK & Tryg Garanti
Claims DK
Private NO
Commercial NO
Corporate NO
Claims NO
Private SE & Affinity
Corporate SE
Corporate Responsibility in Tryg
43
Corporate Responsibility contributes to long-term value creation
Corporate Responsibility BoardChair: CFO, Barbara Plucnar Jensen
Procurement/ Sourcing HR Facilities Investments
Claims Private Commercial Corporate
Legal/ Compliance
Corporate Responsibility team
CommunicationsInvestor Relations
Tryg’s Corporate Responsibility 2020 strategy is aligned with our corporate strategy and purpose: As the world changes, we make it easier to be tryg*.
• Tryg has published an independent Corporate Responsibility report 2019 on tryg.com
• Our four strategic focus areas are: Actively creating peace of mind, Climate & environment, Responsible workplace and Business etchics.
• Tryg has established a Corporate Responsibility Board to ensure governance throughout the organisation.
44
Corporate Responsibility in TrygUN Sustainable Development Goals
Tryg has a direct and indirect impact on the 17 SDGs.
However, we have focused on SDGs where we have a direct impact and pinpointed two specific goals for which we have defined Key Performance Indicators (KPIs).
Strong opportunity
Low opportunity
Indirect impact
Direct impact
41% women in management positions in 2020
2%reduction in carbon emissions in 2020
Key figures 2019 and Consensus 2019-2021
DKKm 2019A 2020 2021 2022
Gross premium income 21,741 22,148 22,610 23,073
Technical result 3,237 3,356 3,444 3,507
Investment income, net 579 -824 128 126
Pre-tax profit 3,628 2,358 3,403 3,453
Net income 2,843 1,757 2,648 2,690
Combined ratio 85.1 84.7% 84.8% 84.8%
Expense ratio 14.2 14.0% 14.0% 14.0%
Ordinary dividend per share 6.8 6.35 7.14 7.31
Extraordinary dividend per share 1.65 0.29 1.41 1.61
45
Based on 15 estimates ahead of Q1 2020
Consensus
AppendixFollow us on Twitter: @TrygIR
Claims ratio, net of reinsurance
Combined ratio
Group
47
Gross premiums
%DKKm %
%
%
Gross premiums
Expense ratio
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Private
48
%DKKm
* Including two months Alka
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Commercial*
49
%DKKm
* Less than 100 employees or less than DKK 100m turnover
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Corporate*
50
%DKKm
* More than 100 employees or more than DKK 100m turnover
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Sweden
51
%DKKm
Norway
SwedenDenmark
52
Geographical combined ratio
Corporate history
53
• 1728, Copenhagen experienced what was later to be known as the Copenhagen Fire of 1728. The fire heightened public awareness of the need for insurance
• 1731, The oldest component of Tryg’s history was the Danish insurance company Kjøbenhavns Brand was established by Royal Decree as a result of the
Copenhagen Fire of 1728
• 1880, The Norwegian insurance company Vesta was established. The name Vesta derives from Roman mythology, Vesta is the goddess of hearth, home and
family
• 1911, The name Tryg emerged (Tryg means peace of mind in Danish)
• 1990, The mutual company Tryg demutualised and the ownership of the new limited company was placed in Tryg I Danmark
• 1994, Tryg acquired the Danish insurance operations of Winterthur
• 1995, Tryg acquired Baltica and continued operations under the name Tryg-Baltica
• 1996, Tryg-Baltica was listed on Copenhagen Stock Exchange. Tryg I Danmark retained a 60% ownership
• 1999, Tryg-Baltica merged with Denmark’s second largest banking group, Unidanmark whose general insurance activities were integrated with Tryg. Tryg-
Baltica de-listed
• At the end of 1999 the Norwegian insurance company Vesta was acquired from Skandia
• 2000, Tryg, Vesta and Unibank contributed to the formation of Nordea. Tryg I Danmark holds at this point a 6% stake in the Nordic banking group
• 2001, Tryg established a branch in Finland
• 2002, Tryg I Danmark acquired Nordea’s non life activities and forms TrygVesta
• 2005, TrygVesta was listed on the OMX Nordic Stock Exchange in Copenhagen on October 14
• 2006, TrygVesta launched a Swedish branch in June
• 2009, The acquisition of the Swedish insurance company, Moderna, was completed in April
• 2012, Tryg sells its Finnish business to Sampo/If….
• 2015, Tryg split its share 1:5, meaning each share with a nominal value of DKK 25 was replaced by 5 shares with a nominal value of DKK 5
• 2018, Tryg received the final approval of the Alka acquisition from the Danish authorities
Sweden
% 2020E 2021E
GDP Growth (mainland) 0.8 1.8
Inflation 1.3 1.4
Unemployment 7.3 7.4
Current account balance in % of GDP
4.9 5.3
Budget balance in % of GDP -0.1 -0.4
Public debt in % of GDP 34.3 33.5
Norway
% 2020E 2021E
GDP Growth 1.8 1.6
Inflation 2.1 1.9
Unemployment 3.5 3.5
Current account balance in % of GDP
5.9 6.8
Budget balance in % of GDP 6.7 6.1
Public debt in % of GDP 0.0 0.0
Economic key figures
54
Source: Economic Outlook, Nordea Markets, January 2020
Denmark
% 2020E 2021E
GDP Growth 1.5 1.5
Inflation 1.2 1.4
Unemployment 3.8 3.9
Current account balance in % of GDP
8.8 8.1
Budget balance in % of GDP 0.6 -0.2
Public debt in % of GDP 33.7 33.6