Tryg A/s · OMXCOP:TRYG
Tryg A/s — FY2014 Earnings Presentation
39 slides from Tryg A/s's earnings presentation, Feb 16, 2015
Slide 1: 2014 results Investor presentation
2014 results Investor presentation
Slide 2: Contents
Contents Highlights Q4 2014 3 Highlights 2014 4 Premiums and portfolio 11 Claims 16 Investment, capital and financial targets 20 For new investors 24 Appendix 32 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by
Slide 3: Highlights Q4 2014 - Best quarterly result since IPO
Highlights Q4 2014 - Best quarterly result since IPO Pre-tax profit • Pre-tax profit of DKK 768m (DKK 639m). D KKm 1,200 • Technical result increased 42% to DKK 775m 1,000 768 helped by efficiency programme and lower level 800 639 of weather claims. 600 400 Q4 2014 Q4 2013 • Combined ratio of 83.7 c
Slide 4: Highlights 2014 - Improved result driven by efficiency programme
Highlights 2014 - Improved result driven by efficiency programme Pre-tax profit D KKm 3,600 3,302 • Proposed dividend per share of DKK 29. 3,200 2,993 2,800 • Return on equity of 23.0% (21.5%) after tax. 2,400 2,000 2014 2013 • Share split 1:5 in 2015 – subject to AGM approval. Combined ratio 95 87.
Slide 5: Important news in Q4 2014
Important news in Q4 2014 • CMD - new financial targets and customer targets for 2017 announced. • 4 new price-differentiated products launched. • Efficiency programme of DKK 1bn for 2015 almost completed by DKK 950m. • Share buy back of DKK 1bn completed and similar programme initiated in 2015. • I
Slide 6: Strategic initiatives 2015
Strategic initiatives 2015 2014 2015 Increased price differentiation Next level pricing Customer journey & success culture Customer journey & success culture Expenses/claims reductions Leading in efficiency IT operational stability IT operational stability & digitisation 6
Slide 7: Q4 results 2014
Q4 results 2014 Key figures Q4/year 2013/14 7
Slide 8: Combined ratio development in business areas
Combined ratio development in business areas Combined ratio – Private (DK & NO) Combined ratio – Commercial (DK & NO) 100 100 95 95 90 90 87.7 85.8 85.4 86.0 85 85 82.4 82.5 79.4 80 80 74.5 75 75 70 Q4 2014 Q4 2013 2014 2013 Group CR Q4 2014 Q4 2013 2014 2013 Q4 2014: 83.7 Q4 2013: 89.1 2014: 84.2 C
Slide 9: Follow up on efficiency programme
Follow up on efficiency programme • Savings of DKK 952m achieved. • DKK 117m achieved in Q4 2014. • DKK 30m reduction in expenses DKKm Targeted and achieved savings on claims 1,200 • DKK 87m reduction in claims 1,000 1,000 952 • Claims initiatives – continued development in 800 700 702 395 property
Slide 10: Expense ratio development
Expense ratio development • Expense ratio improved from 15.4 in Q4 2013 to Expense ratio 14.9 in Q4 2014 - an improvement of 0.5 pp. • Nominal expenses on Group level reduced 16.6 16.7 16.6 16.4 significantly in Q4 2014. 15.4 15.6 14.9 14.6 • Efficiency programme • Reduction in FTE by 161 (excl. Sec
Slide 11: Premiums and portfolio
Premiums and portfolio
Slide 12: Topline and technical result
Topline and technical result Gross earned premiums, DKKm Technical result, DKKm Local currency 18,652 19,504 20,000 3,500 1,587 Group: -1.1 (-2.7) 3,032 2,496 1,399 3,000 118 16,000 4,158 427 4,033 -7.4 (-4.9) 2,500 149 12,000 358 4,190 4,411 1.1 (-2.9) 2,000 875 654 1,500 8,000 -3.0 (-2.9) 1,000 9,
Slide 13: Private - average premiums
Private - average premiums House insurance – average premium (index 2008 = 100) 150 Average premiums increase Y/Y 140 -0.6% 1.8% 130 (Q3 0.0%) (Q3 2.2%) 120 110 100 90 08 09 10 11 12 13 14 20 20 20 20 20 20 20 MOTOR DK • Smaller and safer cars. • Discount compensates for outdated tariff. Motor insur
Slide 14: Customer retention
14 Q Q 82% 84% 86% 88% 90% 92% 82% 84% 86% 88% 90% 92% 1 1 11 11 Private Q Q 2 2 11 11 Commercial Q Q 3 3 11 11 Q Q 4 4 11 11 Q Q 1 1 12 12 Q Q 2 2 12 12 Q Q 3 3 12 12 Q Q 4 4 12 12 Q Q 1 1 13 13 Q Q 2 2 13 13 Q Q 3 3 Customer retention 13 13 Q Q 4 4 13 13 Q Q 1 1 14 14 Q Q 2- 14 2 14 Q Q 3- 14 3 14
Slide 15: Private Sweden – CR and customer retention
15 Q 80 85 90 95 100 105 110 115 120 125 130 1- 10 Q 50% 60% 70% 80% Q 1 125 2- -1 10 1 Q Q 3- 2 103 10 -1 Q 1 Q 99 4- 10 3 -1 Q 1 1- 11 Q 4 Q -1 2- 1 102 103 11 Q Q 1 99 3- -1 11 2 Q Q 2 97 4- -1 11 2 Q Q 1- 3 114 12 -1 Q 2 2- Q 110 12 4 Q -1 2 95 3- 12 Q 1 Q -1 91 4- 12 3 Q Q 2 88 1- -1 13 3 Custo
Slide 16: Claims
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Slide 17: CR and claims ratios Q4 2013-14
CR and claims ratios Q4 2013-14 • Underlying development is adjusted for: Underlying claims, net Q4 2013/2014 • Large claims • Weather claims • Run-off and interest • Improved underlying development on Group level driven by efficiency improvements Claims ratio development - Group 95 90 85 80 75 70 6
Slide 18: 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 2014: DKK 550m level 2014: DKK 500m 700 600 600 500 500 400 400 300 574 300 620 418 200 407 200 447 100 200 100 119 51 0 0 Q4 2014 Q4 2013 2014 2013 Q4 2014 Q4 2013 2014 201
Slide 19: Interest sensitivity
Interest sensitivity Claims reserves - discounting rate % 6.0 5.0 1% increase in interest rate level will: 4.0 3.0 • Increase pre-tax result by around 2.0 DKK 300m. 1.0 1.0 0.0 • Improve combined ratio by approx. 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 pp. • Impact NO pension obligation by Pe
Slide 20: Investment, capital and financial targets
Investment, capital and financial targets
Slide 21: Investment result Q4 2014
Investment result Q4 2014 Investment return Free portfolio – Q4 2014 (DKK 12.4 bn) DKKm 3 Equities (22) Free investment 154 42 Investment property (15) Match regulatory deviation 31 Bank deposits/bonds (17) 20 Percentage Match performance 8 Govt. Bonds (1) High yield (6) Other financials -180 C ov.
Slide 22: Capital structure
Capital structure DKKm Capital – Q4 2014 • Capital buffer based on Individual Solvency 12.000 increased to 51% (2013 Q4: 50%) and was impacted by: • Result 2014 3,378 Excess capital • Executed share buy back 2014 8.000 • Proposed cash dividend 2014 Buffer • Depreciation of the Norwegian Capital requ
Slide 23: Financial targets
Financial targets Target Target 2015 2017 ROE after tax = 20% ≥ 21% Combined ratio ≤ 90 ≤ 87 Expense ratio < 15 ≤ 14 ROE after tax 40% 30% 20% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 23
Slide 24: For new investors
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Slide 25: Tryg – at a glance I
Tryg – at a glance I • Tryg goes back to 18th century. Gross premium split by products • Very strong brand position especially in Denmark. 14 Motor 24 • Non-life insurance in Denmark, Norway and Sweden. 10 Workers' comp. Health & accident • Approx. 80% retail business. Liability 5 Fire & property -
Slide 26: Tryg – at a glance II
Low risk investment portfolio Standard deviation 2011-2013 Tryg – at a glance II • Tryg’s ownership structure supports Tryg’s brand value. • Low risk investment portfolio supporting insurance business. • Shareholder friendly dividend policy. • Strong reserving and capital position. Share performance
Slide 27: Tryg’s equity story
Tryg’s equity story Leading Scandinavian insurer with strong track record Financial Targets 2017 Customer Targets 2017 Low risk and high • ROE: ≥21% • NPS +100% Customer care worth returns recommending • Combined ratio: ≤87% • Retention rate +1 pp • Expense ratio: ≤14% • ≥ 3 products +5 pp • Matchin
Slide 28: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Nordic Denmark EUR 25.1bn (as at Q4-2013) DKK 50.7bn/ EUR 6.8bn (as at Q4-2013) 9.9 18.7 Tryg Tryg 29.7 Topdanmark 17.6 If C odan C odan 41.0 Alm. Brand Percentage Gjensidige Percentage 17.5 Gjensdige Länsförsäkringar If 9 Topdanmark 6.1 Other Other 6.0 12.3
Slide 29: Distribution of new sales 2014
Distribution of new sales 2014 Denmark Norway Nordea Nordea 13% 8% Ow n sales Affinity Affinity 45% 24% 32% Own sales 63% Car dealers 15% Sweden Corporate Atlantica/ Bilsport MC 14% Own sales ww w & 43% others Own sales Brokers 26% 56% 57% External partners 4% 29 16 februari 2015
Slide 30: Combined ratio performance
Combined ratio performance 110 Premium Premium Efficiency Customer and hikes hikes programme efficiency focus 105 100 Smaller 95 adjustments 90 85 80 * 00 01 02 03 20 4 05 06 07 08 09 10 11 12 13 14 15 16 17 04 0 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 2002-2004 price increases of DKK
Slide 31: Key figures 2011-14 and consensus 2014-17
Key figures 2011-14 and consensus 2014-17 Consensus DKKm 2011 2012 2013 2014 2014 2015 2016 2017 Gross premium income 19,948 20,314 19,504 18,652 18,674 18,446 18,689 18,952 Gross claims incurred -15,783 -14,675 -14,411 -12,650 Operating expenses -3,271 -3,295 -3,008 -2,689 Technical result 1,572 2,
Slide 32: Appendix
Appendix Follow us on Twitter: @TrygIR
Slide 33: Group
Group Gross premiums Combined ratio DKKm % 5,400 8 110 GEP (LHS) 5,200 105 4 100 5,000 95 4,800 90 0 85 4,600 Local currency (RHS) 80 4,400 -4 75 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 Q 10 Q 10 Q 10 Q 10 Q 11 Q 11 Q 11 Q 11 Q 12 Q 12 Q 12 Q 12 Q 13 Q 13 Q 13 Q 13 Q 14 Q 14 Q 14
Slide 34: Private
Private Gross premiums Combined ratio DKKm % 110 2,500 8 GEP (LHS) 105 100 2,300 4 95 Local currency 90 2,100 (RHS) 0 85 80 1,900 -4 75 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 Q 10 Q 10 Q 10 Q 10 Q 11 Q 11 Q 11 Q 11 Q 12 Q 12 Q 12 Q 12 Q 13 Q 13 Q 13 Q 13 Q 14 Q 14 Q 14 14 1 2 3
Slide 35: Commercial
Commercial Gross premiums Combined ratio DKKm % 125 1,200 GEP (LHS) 8 115 105 4 1,100 95 0 85 Local currency -4 75 (RHS) 1,000 -8 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 10 Q 10 Q 10 Q 10 Q 11 Q 11
Slide 36: Corporate
36 Q 1 Q 55 65 75 85 95 105 115 125 1 900 1,000 1,100 1,200 Q 10 DKKm 2 Q 10 Q 10 2 3 Q 10 3 Q 10 4 Q 10 4 Q 10 Q 10 1 1 Gross premium Q 11 Q 11 2 2 Q 11 Q 11 Gross claims ratio 3 3 Q 11 Q 11 4 4 Corporate Q 11 Q 11 1 1 Q 12 Q 12 2 2 Q 12 Q 12 3 3 Q 12 Q 12 4 4 Q 12 1 Q 12 1 Q 13 2 Q 13 Q 13 2 3 Q 1
Slide 37: Sweden (Private)
37 Q Q 1 250 300 350 400 450 500 1 60 70 80 90 100 Q 10 2 DKKm Q 10 2 Q 10 Q 10 3 3 Q 10 Q 10 4 4 Q 10 Q 10 1 1 Q 11 2 Gross premium Q 11 2 Q 11 3 Gross claims ratio Q 11 Q 11 3 4 Q 11 Q 11 4 1 Q 11 Q 12 1 2 Q 12 Q 12 2 3 Q 12 Q 12 3 4 (RHS) Q 12 Q 12 4 1 Q 13 Q 12 2 1 Q 13 3 Sweden (Private) Q 13 2
Slide 38: Geographical segments
Geographical segments sh Denmark i 4 Norway OK 4 2014 42013, FY 2014 FY 200s Q4 2014 Q4 2013 FY 2014 FY 2013 DKKm Q4 2014 QO4 2013 FY 2014 FY 2013 Gross premiums earned 2,346 2,364 9,361 9,534 Gross premiums earned 1,839 1,885 7,337 7,819 Technical result 651 128 1,510 1,202 Technical result 190 412
Slide 39: Economic key figures
Economic key figures Denmark Sweden % 2014 2015 % 2014 2015 GDP Growth 0.8 1.3 GDP Growth 2.0 2.3 Inflation 0.6 0.9 Inflation -0.2 0.3 Unemployment 5.1 5.1 Unemployment 7.9 7.7 Current account Current account 6.6 6.4 5.2 5.1 balance in % of GDP balance in % of GDP Budget balance in % of Budget balan