Tryg A/s · OMXCOP:TRYG
Tryg A/s — Q1 2016 Earnings Presentation
46 slides from Tryg A/s's earnings presentation, 2016
Slide 1: Q1 2016 results
Q1 2016 results Investor presentation Follow us on Twitter: @TrygIR
Slide 2: Contents
Contents Highlights Q1 2016 3 Premiums and portfolio 8 Claims 14 Investment, capital and targets 17 Background material 25 Appendix 39 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and information currently av
Slide 3: Financial highlights Q1 2016
Financial highlights Q1 2016 - Higher technical result and lower investment return • Pre-tax profit of DKK 563m (DKK 665m) impacted by: Pre-tax profit (DKKm) • Higher technical result of DKK 562m (DKK 429m) impacted by relatively low weather and large claims and 665 high run-offs 563 • Low investmen
Slide 4: Customer highlights Q1 2016
Customer highlights Q1 2016 - Many new digital self-service and claims solutions launched • New workers’ compensation and motorcycle insurance products NPS launched in Norway 21 22 16 • 35,000 Danish customers upgraded to new house product • Moderna, Sweden launched an insurance app Q1 2015 Q1 2016
Slide 5: Key figures Q1/FY
Key figures Q1/FY DKKm Q1 2016 Q1 2015 FY 2015 Gross premium income 4,310 4,451 17,977 Gross claims -2,858 -3,204 -13,562 Gross expenses -642 -685 -2,720 Technical result 562 429 2,423 Return on investment after technical 17 261 -22 interest Profit/loss before tax 563 665 2,310 Profit/loss 445 525 1
Slide 6: Efficiency programme, DKK 45m achieved in Q1
Efficiency programme, DKK 45m achieved in Q1 • Programme proceeds as planned, target to Efficiency programme up until 2017 (DKKm) achieve savings of DKK 750m over 3 years. Old programme New programme • Higher savings in 2015 compared to 2014. 395 388 125 • Claims initiatives: • Increased collection
Slide 7: Expense ratio continues to improve
Expense ratio continues to improve • Expense ratio improved 0.5 pp. to 15.1 in Q1 16 (15.6) Expense ratio • Efficiency programme lowered costs by DKK 15m for Q1 mainly related to: 16.4 15.6 15.6 15.3 15.3 • Outsourcing within Finance and IT 15.1 • Commercial reorganisation 14.9 14.6 • Digital commun
Slide 8: Premiums and portfolio
Premiums and portfolio
Slide 9: Positive topline development in Private
Positive topline development in Private Gross premiums down by 0.5% (-0.4%) in local currencies, Private lines up, Commercial and mostly Corporate down • Positive Private lines trend especially considering that avg. Motor price in Denmark was down 2.6% • Commercial trend reflects a structural challe
Slide 10: Higher technical result helped by low large & weather claims
Higher technical result helped by low large & weather claims Group (DKKm) Private, DK & NO (DKKm) Commercial, DK & NO (DKKm) 215 155 198 181 562 Q1 2016 Q1 2015 Q1 2016 Q1 2015 429 Corporate (DKKm) Sweden (DKKm) 139 70 23 10 Q1 2016 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Q1 2015 10
Slide 11: Private - average prices
Private - average prices House insurance – average price (index 2011 = 100) Average price development Y/Y • DK: changed selection reduces NO average price, price increases 115 -0.9% 0.3% starting 2016 to offset high 110 (Q4 -1.0%) (Q4 0.6%) claims inflation 105 Average price: DK 100 4,800 5,500 • NO
Slide 12: Customer retention
Customer retention Private 92% DK • Customer retention at 90.0 in 90% Denmark, highest level since 88% Q3 2013 86% NO 84% • Stable development in Norway 82% Commercial • Modest fall in Denmark mostly 92% driven by price increases 90% DK 88% • Retention broadly stable in 86% Norway NO 84% 82% 12
Slide 13: Claims
Claims
Slide 14: Increase in underlying claims ratio, net
Increase in underlying claims ratio, net Group Private (DK & NO) Commercial (DK & NO) 75.5 74.6 70.0 67.2 77.0 74.9 Q1 2016 Q1 2015 Q1 2016 Q1 2015 Corporate Sweden 85.7 83.2 84.0 74.3 Q1 2016 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Q1 2015 Underlying development is adjusted for large claims, weather claims
Slide 15: Large claims, weather claims and run-off
Large claims, weather claims and run-off Large claims, net DKKm Expected annual Weather claims, net DKKm Expected annual level 2016: DKK 550m level 2016: DKK 500m 574 615 620 614 471 407 447 356 242 154 143 42 2012 2013 2014 2015 Q1 2015 Q1 2016 2012 2013 2014 2015 Q1 2015 Q1 2016 Claims reserves di
Slide 16: Investment, capital and targets
Investment, capital and targets
Slide 17: Investment return – low risk remains key
Investment return – low risk remains key Portfolio (DKK 40.0bn) Free portfolio return Q1 2016 (%) 4.1 (2.3) Bonds/deposits 13.7% (14.0%) 1.4 (2.1) 1.5 (1.4) 0.8 (0.5) 0.4 (2.2) Inv. Property 5.2% (5.0%) EM* 1.1% (1.0%) -0.9 (7.7) Free HY 2.1% (2.5%) 11.3bn 29% Equities 6.2% (7.0%) Match 28.7bn Bonds
Slide 18: Solvency position Q1 2016
Solvency position Q1 2016 Solvency capital requirement Q4’15-Q1’16 • Solvency ratio based on internal model increased 7,000 from 154 at Q4 15 to 212 (199 adjusted for 232 6,000 1,163 130 Skandia’s child insurance portfolio) 5,000 34 4,000 3,000 6,193 5,098 • The SCR was primarily impacted by: 2,000
Slide 19: Solvency ratio development and capital
Solvency ratio development and capital Solvency ratio development Solvency II recent developments: SII model 212% • Based on an amendment to the legislation regarding the Norwegian Natural Perils Pool (NNP) published by 159% the Norwegian Ministry of Justice and Public Security, 155% 154% 151% the N
Slide 20: Solvency ratio sensitivities
Solvency ratio sensitivities 225% 223% 220% 220% 215% 215% 213% 212% 209% 210% 210% 211% 205% 203% 200% 200% 195% 190% 185% Q1 +20% -20% +20% -20% +100 -100 +100 -100 -100 bps bps bps bps bps 2016 Equity Property Interest Spread UFR • The Solvency II ratio shows the highest sensitivity to spread ris
Slide 21: Growth products
Growth products Portfolio • Tryg has a strong focus on growth DKKm products 700 600 • Child insurance 500 • Pet insurance 400 300 • Extended warranty insurance for 200 electronics 100 0 Child insurance Pet insurance Extended waranty (electronics) Q1 2015 Q1 2016 • Tryg has identified these products
Slide 22: Targets and outlook
Targets and outlook Efficiency programme proceeds as 2016 topline at the ‘lower end’ of 0%-2% including planned. Skandia’s Child insurance portfolio Members’ bonus of 8% on 1 June 2016 2016 expected tax rate 21 Markets remain very competitive Price increases to offset claims inflation
Slide 23: It is important to know your investment case
It is important to know your investment case ”Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” John D. Rockefeller 23
Slide 24: Upcoming roadshows
Upcoming roadshows Date Place Participants from Tryg Arranged by Morten Hübbe, CEO 12/04/2016 Copenhagen Lars Bonde, COO Carnegie Investor Relations Morten Hübbe, CEO 13-14/04/2016 London BNP Paribas Gianandrea Roberti, IR Officer 20/04/2016 Milan Gianandrea Roberti, IR Officer Barclays 26/04/2016 A
Slide 25: Background material
Background material
Slide 26: Why invest in Tryg?
Why invest in Tryg? Pre-tax result by division (YE 2014 data) High insurance penetration in the Nordics Premiums per capita (USD), 2014 200% 2,000 1,722 1,716 1,617 150% 1,350 100% 1,185 50% 1,000 746 0% -50% 0 -100% Non-life Life Banking Other Motor combined ratios Nordics vs international Tryg is
Slide 27: Tryg – at a glance I
Tryg – at a glance I Gross premium split by products 2015 • Tryg goes back to 18th century. 10 • Very strong brand position especially in Denmark. 31 Motor 14 Workers' comp • Non-life insurance in Denmark, Norway and Sweden. Health & accident Percentage • Approx. 80% retail business. Liability Norwa
Slide 28: Tryg – at a glance II
Tryg – at a glance II Shareholder remuneration since IPO Shareholder performance since IPO DKK 10 New dividend 500 policy Tryg incl. dividend Euro Insurance index 9 450 8 3.4 3.5 400 7 3.2 2.6 6 350 4.2 5 2.6 300 4 3 6.6 250 5.8 6.0 5.2 5.4 2 4.2 3.4 3.1 200 1 1.3 0.8 1.3 0 150 2005 2006 2007 2008 2
Slide 29: Tryg – at a glance III
Tryg – at a glance III Gross premium split by products 2015 Gross claims reserve by products 2015 10 7 16 31 Motor Motor 14 14 Workers' comp Workers' comp Health & accident Health & accident Percentage 8 Percentage Liability Liability Fire & property - private Fire & property - private 5 8 Fire & pr
Slide 30: Tryg’s equity story
Tryg’s equity story Leading Scandinavian insurer with strong track record Financial targets 2017 Customer targets 2017 • ROE: ≥21% • NPS +100% Low risk and high Customer care worth returns • Combined ratio: ≤87% • Retention rate +1 pp recommending • Expense ratio: ≤14% • ≥ 3 products +5 pp • Matchin
Slide 31: Things that you may not know
Things that you may not know • 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 attra
Slide 32: Things that you may not remember
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. •
Slide 33: The run-off cycle
The run-off cycle We assessed the claim at DKK 18,000 but reserve for DKK 20,000 Run-off development Run-off: 3 years +2,000 Claims estimate: -18,000 Claims buffer: -2,000 • Initial assessment of the claims was DKK 18,000 but Tryg reserved for DKK 20,000 adding some conservatism to best estimate. •
Slide 34: Population growth (2000-2016)
Population growth (2000-2016) Population development in Denmark in ‘1,000 6,000 DK 7% Growth 2000-2016: 5,800 0-17 years 1.9% 5,600 18+ years 8.5% Total 7.1% 5,400 5,200 5,000 Population development in Norway in ‘1,000 5,600 NO 16% Growth 2000-2016: 0-17 years 7.1% 5,200 18+ years 19.3% 4,800 Total
Slide 35: Structure of the Nordic insurance market
Structure of the Nordic insurance market Nordic Denmark EUR 25.7bn (as at Q4-2014) DKK 52.0bn/EUR 7.0bn (as at Q1-2015) 9.3 18.1 4.8 Tryg Tryg 31.2 Topdanmark Topdanmark 42.2 If If Percentage 17.2 Codan Percentage Codan 17.4 Gjensidige Gjensidige Länsforsikringar Alm. Brand 8.7 Other Other 9.7 5.8 9
Slide 36: Distribution of new sales 2015
Distribution of new sales 2015 Denmark Norway 6 14 Own sales Own sales Car dealers Affinity 44 Percentage 57 Percentage 38 Affinity Nordea 29 Nordea 12 Sweden Corporate 15 Own sales External partners Own sales Percentage Percentage Online & others 55 Brokers 31 51 45 Atlantica/Bilsport MC 3 36
Slide 37: Combined ratio development
Combined ratio development 110 Premium Premium Efficiency Customer and hikes hikes programme efficiency focus 105 100 Smaller 95 adjustments 90 85 80 2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio from 107 to 94. 2011-2012 price increases will improve underlying combined
Slide 38: Key figures 2011-15 and consensus 2016-18
Key figures 2011-15 and consensus 2016-18 Consensus DKKm 2011 2012 2013 2014 2015 2016 2017 2018 Gross premium income 19,948 20,314 19,504 18,652 17,977 17,789 18,004 18,240 Technical result 1,572 2,492 2,496 3,032 2,423 2,623 2,798 2,768 Investment income, net 61 585 588 360 -22 96 192 204 Pre-tax
Slide 39: Appendix
Appendix Follow us on Twitter: @TrygIR
Slide 40: Group
Group Gross premiums Combined ratio DKKm % 21,000 GEP (LHS) Local currency (RHS) 4 100 20,000 3 95 2 19,000 1 90 18,000 0 -1 85 17,000 -2 16,000 80 -3 15,000 -4 75 Claims ratio, net of reinsurance Expense ratio 80 18 17 75 16 70 15 14 65 13 60 12 40
Slide 41: Private
Private Gross premiums Combined ratio DKKm % 10,500 GEP (LHS) Local currency (RHS) 7 100 10,000 6 5 95 9,500 4 9,000 3 90 2 8,500 1 85 8,000 0 -1 80 7,500 -2 7,000 -3 75 Claims ratio, net of reinsurance Expense ratio 80 18 17 75 16 70 15 14 65 13 60 12 41
Slide 42: Commercial
Commercial* Gross premiums Combined ratio DKKm % 5,000 GEP (LHS) Local currency (RHS) 4 100 3 4,500 95 2 4,000 1 90 0 3,500 -1 85 -2 3,000 80 -3 2,500 -4 75 Claims ratio, net of reinsurance Expense ratio 75 20 19 70 18 65 17 16 60 15 55 14 * Less than 100 employees and less than DKK 100m turnover 42
Slide 43: Corporate
Corporate* Gross premiums Combined ratio DKKm % 5,000 GEP (LHS) Local currency (RHS) 4 100 3 4,500 95 2 4,000 1 90 0 3,500 -1 85 -2 3,000 80 -3 2,500 -4 75 Claims ratio, net of reinsurance Expense ratio 85 15 14 80 13 75 12 70 11 65 10 * More than 100 employees or more than DKK 100m turnover 43
Slide 44: Sweden
Sweden Gross premiums Combined ratio DKKm % 2,500 GEP (LHS) Local currency (RHS) 10 105 8 100 2,000 6 4 95 2 1,500 90 0 -2 85 1,000 -4 80 -6 500 -8 75 Claims ratio, net of reinsurance Expense ratio 85 20 80 19 75 18 70 17 65 16 60 15 44
Slide 45: Geographical segments
Geographical segments Denmark Sweden DKKm DKKm Q1 2016 Q1 2015 FY 2015 Q1 2016 Q1 2015 FY 2015 Gross premiums earned Gross premiums earned 2,334 2,331 9,346 429 432 1,894 Technical result Technical result 387 304 1,371 24 70 328 Key ratios: Key ratios: Gross claims ratio Gross claims ratio 64.3 69.2
Slide 46: Economic key figures
Economic key figures Denmark Sweden % 2016 2017 % 2016 2017 GDP Growth 1.3 1.8 GDP Growth 3.8 2.2 Inflation 0.6 1.2 Inflation 1.3 1.6 Unemployment 4.2 3.9 Unemployment 6.8 6.9 Current account balance in Current account balance in 7.3 6.8 6.4 5.9 % of GDP % of GDP Budget balance in % of GDP -2.7 -2.2