Tryg A/s · OMXCOP:TRYG

Tryg A/s — Q1 2017 Earnings Presentation

55 slides from Tryg A/s's earnings presentation, 2017

  1. Slide 1: Q1 2017 results

    Q1 2017 results Follow us on Twitter: @TrygIR Investor presentation

  2. Slide 2: Contents

    Contents  Highlights Q1 2017 3  Premiums and portfolio 6  Claims and expenses 10  Investment, capital and targets 15  Roadshows & Conferences 24  Background material 25  Appendix 45 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assump

  3. Slide 3: Financial highlights Q1 2017

    Financial highlights Q1 2017 - Slightly improved technical result, strong investment income, pre-tax result improved by more than 35% - Q1 dividend of DKK 1.60 per share and solvency ratio of 202% Pre-tax profit (DKKm) • Pre-tax profit of DKK 779m (DKK 563m) driven by: 779 • Slightly higher technica

  4. Slide 4: Customer highlights Q1 2017

    Customer highlights Q1 2017 - New customer concept introduced in Private Denmark NPS • NPS of 23 and Transactional Net Promoter Score (TNPS) of 57 23 22 21 • New customer concept ‘peace of mind’ packages in Private Denmark, supportive of Tryg’s +3 customer target. • First fully digitalised travel in

  5. Slide 5: Slightly improved technical result driven by Private segment

    Slightly improved technical result driven by Private segment Group (DKKm) Private, DK & NO (DKKm) Commercial, DK & NO (DKKm) 268 215 198 183 Q1 2017 Q1 2016 Q1 2017 Q1 2016 568 562 Corporate (DKKm) Sweden (DKKm) 79 139 38 10 Q1 2017 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Q1 2016 5

  6. Slide 6: Premiums and portfolio

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  7. Slide 7: Group premiums up 1.6% in Q1

    Group premiums up 1.6% in Q1 Group premiums were up 1.6% in local currencies, Private lines DK and of Skandia child book key drivers Danish premiums up more than 2% while Norwegian premiums still declining Private lines increased 0.6% in particular driven by a positive development in Private Denmark

  8. Slide 8: Private - average prices

    Private - average prices House insurance – average price (index 2011 = 100) Average price development Y/Y 125 1.2% 1.6% NO 120 (Q4 0.4%) (Q4 0.7%) • DK: 1.2% positive development 115 reflects both price increases and 110 Average price: conversion 105 DK 5,000 5,700 100 95 • NO: 1.6% positive develop

  9. Slide 9: Customer retention broadly stable

    Customer retention broadly stable Private 92% DK 90% • DK: customer retention at 89.8% (90.0%) remaining constant at 88% very high levels 86% 84% NO • NO: customer retention at 86.1% 82% (86.5%) slightly down driven by price increases Commercial 92% 90% • DK: customer retention at 87.0% NO 88% (87.4

  10. Slide 10: Claims and expenses

    Claims and expenses

  11. Slide 11: Underlying claims ratio at same level than Q1 2016

    Underlying claims ratio at same level than Q1 2016 Group underlying Claims ratio at 77.0% in line with Q1 2016 Claims ratio, net (Commercial DK & NO) Private underlying Claims ratio at 75.5% also in line with Q1 2016 75 Corporate & Sweden underlying claims ratio developed favourably 70 65 “Expected

  12. Slide 12: Motor insurance, not all claims are coming down

    Motor insurance, not all claims are coming down Number of accidents Jan-Feb. Bumpers, price increases in % from 2011-2016 65,000 Ford Focus Nissan Qashqai 60,000 58,437 58,136 20000 12000 53,953 54,634 54,850 10000 116% 55,000 15000 19,378 242% DKK 8000 50,000 17% 10000 6000 45,000 15% 4000 5000 6,6

  13. Slide 13: 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 2017: DKK 550m level 2017: DKK 500m 574 613 620 614 447 407 391 351 143 42 51 101 2013 2014 2015 2016 Q1 2016 Q1 2017 2013 2014 2015 2016 Q1 2016 Q1 2017 Claims reserves dis

  14. Slide 14: On track to meet the 2017 expense ratio target

    On track to meet the 2017 expense ratio target Efficiency programme up until 2017 (DKKm) Expense ratio 395 388 15.7 15.6 15.3 15.3 125 15.1 14.8 14.9 14.4 14.6 175 75 65 50 60 250 150 2013 2014 2015 2016 Q1 2016 Q1 2017 145 100 105 25 As reported Adjusted for one-offs 45 2012 2013 2014 Target 2015 T

  15. Slide 15: Investment, capital and targets

    Investment, capital and targets

  16. Slide 16: Investment – Asset allocation shows low risk

    Investment – Asset allocation shows low risk Total assets DKK 42.1bn Splitting up the portfolio Match portfolio “risk-wise” Free portfolio DKK 29.5bn DKK 12.6bn Inflation linked bonds 4% Sweden Emerging Markets 5% Equity 19% DKK 4.2bn Investment grade 6% Norway DKK 10.4bn High yield 7% Denmark DKK 1

  17. Slide 17: Investment return – low risk remains key

    Investment return – low risk remains key Key figures - Investments Market risk as % of total investments, YE 2016 14% DKKm Q1 2017 Q1 2016 2016 12% 12% Free portfolio 212 65 939 10% 8% Match portfolio 98 2 210 8% 6% 5% Other financial income and expenses -87 -50 - 162 4% 2% Total investment 223 17 9

  18. Slide 18: Solvency position Q1 2017

    Solvency position Q1 2017 Solvency capital requirement walk • Solvency ratio based on the Partial Internal Model is 202 (Q4 2016: 194). 5,200 5,150 • Own Funds (OF) is primarily impacted by -120 5,100 5,050 46 0 -14 • Result Q1 2017 of DKK 605m -1 -12 5,000 -26 26 • Dividends of DKK 452m (Q1 2017) 4

  19. Slide 19: Capital and solvency ratio development

    Capital and solvency ratio development Capital Tiers as % of SCR • Tier 2 capacity fully utilised after issue of SEK 1bn subordinated debt in May 2016. 2,488 50% • As per Q1 some DKK 242m of Tier 2 instruments are not included in the Own funds as they exceed the 650 13% 50% SCR cap. CETier 1 ATier 1

  20. Slide 20: Tier 2 instruments, Solvency II vs balance sheet

    Tier 2 instruments, Solvency II vs balance sheet Solvency II Balance sheet 3,000 3,000 2,500 2,500 2,000 2,000 DKKm DKKm 1,500 1,500 1,000 1,000 500 Cap 500 - Subordinated Subordinated Natural Perils Tier 2 before Cap Tier 2 after cap debt, NOK debt, SEK Pool cap 1,400m 1,000m - -500 Subordinated de

  21. Slide 21: Solvency ratio sensitivities

    Solvency ratio sensitivities 220% 215% 210% 206% 203% 204% 204% 202% 201% 202% 201% 199% 199% 201% 200% 197% 188% 190% 180% 170% Q1 +20% -20% +20% -20% +100 -100 +100 -100 +20% -20% +20% -20% -100 bps bps bps bps bps 2017 Equity Property Interest Spread NOK/DKK SEK/DKK UFR • The Solvency II ratio sh

  22. Slide 22: Targets and outlook

    Targets and outlook  Efficiency programme proceeds as  2017 topline growth between 0-2% planned.  2017 expected tax rate 22-23%  Members’ bonus of 8% in September 2017.  Markets remain very competitive  High focus on capital repatriation  Price increases to offset claims inflation. 2017 ROE a

  23. 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

  24. Slide 24: Q1 roadshows & conferences

    Q1 roadshows & conferences Date Place Participants from Tryg Arranged by Morten Hübbe, CEO 07/04/2017 Copenhagen Christian Baltzer, CFO Handelsbanken Investor Relations Morten Hübbe, CEO 19/04/2017 London Christian Baltzer, CFO Carnegie Investor Relations 04/05/2017 Geneva Peter Brondt, IR Manager G

  25. Slide 25: Background material

    Background material

  26. Slide 26: 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

  27. Slide 27: Why invest in Tryg?

    Why invest in Tryg? Pre-tax result by division (YE 2016 data) High insurance penetration in the Nordics Premiums per capita (USD), 2015 2,000 130% 1,401 1,330 1,380 100% 1,129 1,067 70% 1,000 40% 612 10% -20% 0 -50% Non-life Life Banking Other Motor combined ratios Nordics vs international Tryg is a

  28. Slide 28: Tryg – at a glance I

    Tryg – at a glance I Gross premium split by products 2016 • Tryg goes back to 18th century. 9 • Very strong brand position especially in Denmark. 30 Motor 14 Workers' comp • Non-life insurance in Denmark, Norway and Sweden. Health & accident Percentage • Approx. 80% retail business. Liability Norway

  29. Slide 29: Tryg – at a glance II

    Tryg – at a glance II Shareholder remuneration since 2012 Shareholder breakdown 2016 DKK 10 9 13 8 3.5 3.5 3.4 7 3.2 2.6 Danish 6 15 institutional 5 Percentage Non-Danish 4 institutional 60 3 6.0 6.2 5.2 5.4 5.8 Smaller 12 2 shareholders 1 1.6 0 2012 2013 2014 2015 2016 Q1 2017 Ordinary dividend Ext

  30. Slide 30: Premiums and reserves by lines of business

    Premiums and reserves by lines of business Gross premium by products 2016 Gross claims reserve by products 2016 12 8 16 30 Motor Motor 9 Workers' comp Workers' comp 14 Health & accident 8 Health & accident Percentage Percentage Liability Liability Fire & property - private 8 Fire & property - privat

  31. Slide 31: Gross premium split by geography

    Gross premium split by geography DK: Gross premium by products 2016 SE: Gross premium by products 2016 6 7 Motor TPL 2 Motor TPL 4 Motor Casco 14 14 Motor Casco 19 Workers' comp 15 Health & accident Health & accident Percentage Liability Percentage Liability 21 Fire & property - private Fire & prope

  32. Slide 32: Claims inflation differs from core CPI

    Claims inflation differs from core CPI Annual Danish insurance gross claims increase vs CPI • Danish non-life insurance gross claims 9% development 2009-2015 7% 7% • Cloudburst hitting Copenhagen in 2011 6% 6% explains jump and fall of figures in 3% 2% 3% 1% 2% 1% 1% 1% 2011-2012 • Figures not adjus

  33. 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. •

  34. Slide 34: 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

  35. Slide 35: Structure of the Nordic insurance market

    Structure of the Nordic insurance market Nordic Denmark EUR 25.5bn (as at Q4 2015) DKK 52.2bn/EUR 7.0bn (as at Q1 2016) 9.1 4.7 17.9 Tryg Tryg 31.8 Topdanmark Topdanmark 43.1 If If Percentage 16.6 Codan Percentage 17.1 Codan Gjensidige Gjensidige Länsforsikringar Alm. Brand 8.7 Other 9.7 Other 5.7 9

  36. Slide 36: Distribution of new sales 2016

    Distribution of new sales 2016 Sales agents Atlantica/Bilsport/MC 12% 15% Affinity Enter 25% 26% Franchise Private 31% Own Sales 51% Nordea Nordea Customer 4% Online & 12% service others 32% Online 31% 3% Customer Online DK Outbound service 1% Outbound 11% 25% 18% Partners 3% Customer centre Sales a

  37. Slide 37: 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

  38. Slide 38: 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. •

  39. Slide 39: IBM study from 2007, probably little has changed

    IBM study from 2007, probably little has changed Danish customers completely and strongly agree • Overall I am very satisfied with the 43% 33% services of my insurance company 50% 72% • My insurance agent only sold me 43% 20% insurance coverage that I really needed 49% 67% • My present insurance cov

  40. Slide 40: 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

  41. Slide 41: TryghedsGruppen and its members’ bonus

    TryghedsGruppen and its members’ bonus Denmark's ‘biggest’ family Bonus positive effect on retention ‘I expect to be in Tryg next year’ Have heard about Customer bonus 93% Have not heard about Customer Bonus 81% Retention rate increase by 1% gives approx. DKK 50-150m reduction in expenses on group l

  42. Slide 42: Organisational and remuneration structure

    Organisational and remuneration structure Organisation chart Remuneration structure The Executive Board are remunerated according to Tryg’s remuneration policy: • Base salary • Pension o 25% of the base salary • Variable pay o Up to 50% of the base salary including pension o The variable pay element

  43. Slide 43: Corporate Social Responsibility in Tryg

    Corporate Social Responsibility in Tryg Focus areas: • Peace of mind: Tryg’s overall vision is to create peace of mind for our customers and for society as a whole. We contribute to peace of mind through a number of initiatives focusing on prevention. We believe there lies opportunities within preve

  44. Slide 44: Key figures 2016 and Consensus 2017-2019

    Key figures 2016 and Consensus 2017-2019 Consensus DKKm 2016 2017 2018 2019 Gross premium income 17,707 17,957 18,253 18,535 Technical result 2,390 2,673 2,698 2,711 Investment income, net 987 267 224 229 Pre-tax profit 3,220 2,865 2,848 2,865 Net income 2,471 2,231 2,215 2,227 Combined ratio 86.7%

  45. Slide 45: Appendix

    Appendix Follow us on Twitter: @TrygIR

  46. Slide 46: Key figures Q1 2017

    Key figures Q1 2017 DKKm Q1 2017 Q1 2016 FY 2016 Gross premium income 4,458 4,310 17,707 Technical result 568 562 2,390 Return on investment after technical interest 223 17 987 Profit/loss before tax 779 563 3,220 Profit/loss 605 445 2,471 Claims ratio, net of reinsurance 72.9 72.0 71.0 Gross expens

  47. Slide 47: Group

    Group Gross premiums Combined ratio DKKm % % GEP (LHS) Local currency (RHS) 21,000 20,314 4 100 20,000 19,504 3 95 2 19,000 18,652 17,977 0.1 1 90 88.2 87.7 86.8 86.7 18,000 17,707 0 84.2 -0.1 -1 85 17,000 -1.1 -0.8 -2 16,000 80 -3 -2.7 15,000 -4 75 Claims ratio, net of reinsurance Expense ratio % %

  48. Slide 48: Private

    Private Gross premiums Combined ratio DKKm % 10,500 GEP (LHS) Local currency (RHS) 4 100 10,000 9,733 3 9,366 1.5 95 9,500 2 9,051 0.8 8,803 0.1 0.3 1 90 87.7 9,000 8,710 86.0 0 85.4 8,500 83.8 -1 85 82.5 8,000 -2 80 7,500 -2.2 -3 7,000 -4 75 Claims ratio, net of reinsurance Expense ratio 80 18 17 7

  49. Slide 49: Commercial

    Commercial* Gross premiums Combined ratio DKKm % 5,000 GEP (LHS) Local currency (RHS) 4 100 4,591 4,411 3 4,500 4,190 95 2 3,992 3,893 4,000 1 90 0 85.4 3,500 85 83.6 -1 81.3 82.1 -1.3 -2 79.4 3,000 -1.7 80 -3 2,500 -2.9 -3.0 -2.9 -4 75 Claims ratio, net of reinsurance Expense ratio 75 20 19.0 19 18

  50. Slide 50: Corporate

    Corporate* Gross premiums Combined ratio DKKm % 5,000 GEP (LHS) Local currency (RHS) 4 100 3 4,500 4,354 95 91.7 4,158 4,033 1.1 2 91.4 90.7 3,894 89.8 88.8 4,000 0.1 1 90 3,775 0 3,500 -1 85 -1.2 -2 3,000 80 -2.3 -3 2,500 -2.9 -4 75 Claims ratio, net of reinsurance Expense ratio 85 15 79.3 79.9 79.

  51. Slide 51: Sweden

    Sweden Gross premiums Combined ratio DKKm % 2,500 GEP (LHS) Local currency (RHS) 10 105 8 100 2,000 6 95.3 3.4 1,654 4 95 91.2 92.0 1,587 0.7 90.7 1,399 1,317 1,348 2 1,500 90 0 83.5 -2 85 1,000 -4 -3.1 80 -6 -4.9 500 -8 75 -7.4 Claims ratio, net of reinsurance Expense ratio 85 20 19.2 19.0 80 19 18

  52. Slide 52: Geographical segments

    Geographical segments Denmark Sweden DKKm DKKm Q1 2017 Q1 2016 FY 2016 Q1 2017 Q1 2016 FY 2016 Gross premiums earned Gross premiums earned 2,382 2,334 9,467 482 429 1,888 Technical result Technical result 349 387 1,587 67 24 40 Key ratios: Key ratios: Gross claims ratio Gross claims ratio 68.3 64.3

  53. Slide 53: Geographical Combined Ratio

    Geographical Combined Ratio Denmark Sweden 98.9 98.2 90 100 97.5 87.5 95.4 85.4 85.2 95 85 84.1 83.1 90 80 85 82.7 80 75 75 70 70 Norway 90 88.2 87.9 84.5 84.2 85 80.4 80 75 70 53

  54. Slide 54: Corporate history

    Corporate history • 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

  55. Slide 55: Economic key figures

    Economic key figures Denmark Sweden % 2017 2018 % 2017 2018 GDP Growth 1.6 1.7 GDP Growth 3.0 2.3 Inflation 1.4 1.9 Inflation 1.7 1.6 Unemployment 4.1 3.9 Unemployment 6.7 6.5 Current account balance in Current account balance in 8.1 7.6 5.5 5.4 % of GDP % of GDP Budget balance in % of GDP -1.2 -0.9

Tryg — Q1 2017 Earnings Presentation on 6ix