Tryg A/s · OMXCOP:TRYG
Tryg A/s — Q4 2022 Earnings Presentation
55 slides from Tryg A/s's earnings presentation, February 2023
Slide 1: Q4 2022 results - Investor presentation
Q4 2022 results Investor presentation
Slide 2: Contents and Disclaimer
Contents • Highlights Q4 2022 03 • Premiums and portfolio 08 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 histo
Slide 3: Financial highlights Q4 2022
1 | HIGHLIGHTS Q4 2022 Financial highlights Q4 2022 Investment income of Q4 DPS of DKK 1.60, up 49% Strong technical result Combined ratio of 82.1 DKK 317m and solvency ratio 201 Tryg investment result Income from RSA Scadinavia Extraordinary dividend Ordinary dividend 803 Dividend up 49% vs 1,689 8
Slide 4: Customer highlights Q4 2022
1 | HIGHLIGHTS Q4 2022 Customer highlights Q4 2022 Customer satisfaction KPI TryghedsGruppen has paid out a member bonus CMD Target 2024 88 • Customer satisfaction unchanged at 85 86,5 • ‘Front offices’ witnessed an improvement reaching a level of 92, driven 86,0 0% • For the seventh year in a row,
Slide 5: Full-year technical result comparison
Full-year technical result comparison Split by business in mDKK Technical result split by geography Split by business +15% Norway Denmark 26% 627 6,804 6,177 2021 2,182 5,891 8% Sweden 66% 3,709 Norway Denmark 19% 39% 2022 Technical Result 2021 RSA Scandinavia 2021 Proforma 2021 Technical Result 202
Slide 6: Higher technical result reflects growth, operational improvements and increased rates
1 | HIGHLIGHTS Q4 2022 Higher technical result reflects growth, operational improvements and increased rates Private Group technical result 1,073 997 DKKm DKKm 681 1,689 Q4 2021 reported Q4 2021 pro-forma 1) Q4 2022 1,380 Commercial DKKm 452 347 < 826 109 Q4 2021 reported Q4 2021 pro-forma 1) Q4 202
Slide 7: Status on RSA synergies per Q4 2022
1 | HIGHLIGHTS Q4 2022 Status on RSA synergies per Q4 2022 In Q4, Tryg realised synergies of 104 DKKm bringing the total to 406 Realised synergies above 2022 target with DKK 406m synergy savings DKKm for 2022 Accumulated synergy realisation vs. original baseline (DKKm) • In Q4, synergies of DKK 49m
Slide 8: Shareholders’ remuneration
1 | HIGHLIGHTS Q4 2022 Shareholders’ remuneration Shareholders’ remuneration Shareholder remuneration since 2017 (DKK) and Buyback 5.000 • Tryg is announcing a quarterly dividend per share (DPS) of 1.60 Extraordinary dividend Ordinary dividend which is up some 49% compared to Q4 2021 Dividend up 49%
Slide 9: Premiums and portfolio
Premiums and portfolio
Slide 10: Premiums up 6.7% compared to Q4 2021 pro-forma
2 | PREMIUMS AND PORTFOLIO Premiums up 6.7% compared to Q4 2021 pro-forma Local currencies Gross earned premiums development (local currencies) DKKm Q4 21 pro-forma Q4 22 pro-forma growth (%) Q4 22 6.7 Private 5,622 5,847 7.4% 4.0 Commercial 2,264 2,292 4.1% Corporate 850 903 9.2% Q4 2022 pro- Q4 20
Slide 11: Private & Commercial - average prices moving upwards
2 | PREMIUMS AND PORTFOLIO Private & Commercial - average prices moving upwards House Insurance DK: General price increases of 6.3% (Q3 22 5.4%) 125 reflecting price adjustments to mitigate inflation 120 SE: 1.3% (Q3 22 1.5%) increase mainly explained by NO renewal rate increases 115 110 SE NO: 7.8%
Slide 12: Customer retention is broadly stable
2 | PREMIUMS AND PORTFOLIO Customer retention is broadly stable Private 96 DK: Retention slightly deteriorated to 90.3 in Q4 (90.5 94 in Q4-21) reflecting reaction to price increases and higher churn on single product customers 92 SE: Somewhat unchanged retention rate at 87.6 in DK Q4 (87.6 in Q4-21
Slide 13: Claims and expenses
Claims and expenses
Slide 14: Underlying claims ratio improving 80 basis points for the Group
3 | CLAIMS AND EXPENSES Underlying claims ratio1 improving 80 basis points for the Group Group underlying claims ratio Pro-forma +80bps • Group underlying claims ratio at 69.3, 80bps better than Q4 70.1 73.0 69.3 2021 pro-forma 67.4 68.1 • Group underlying claims ratio supported by profitability ini
Slide 15: Claims inflation & pricing
3 | CLAIMS AND EXPENSES Claims inflation & pricing Claims inflation and pricing Claims inflation in 2023 • Headline inflation levels as measured by CPI were at highest levels in Inflation Price adjustment 10 the last 40 years in Scandinavia (and throughout the world) in 2022 but slightly lower towar
Slide 16: Large claims, weather claims and run-off
3 | CLAIMS AND EXPENSES Large claims, weather claims and run-off Large claims1, net DKKm Weather claims1, net DKKm Expected annual level: DKK 800m Expected annual level: DKK 800m 1.200 289 600 1.000 206 500 800 400 190 600 300 89 400 200 200 100 0 0 Pro-forma Q4 2022 Pro-forma Q4 2022 2016 2017 2018
Slide 17: Expense ratio of 14.3 influenced by good topline growth and tight cost control
3 | CLAIMS AND EXPENSES Expense ratio of 14.3 influenced by good topline growth and tight cost control Comments on expense ratio Expense ratio1 18 • Investments in business development and in digitalisation will partly be 17 15.7 financed through the cost synergies 16 14.6 14.3 15 14.0 14.4 • Q4 202
Slide 18: Investment, capital and targets
Investment, capital and targets
Slide 19: Investments – split in match & free portfolio
4 | INVESTMENT, CAPITAL AND TARGETS Investments – split in match & free portfolio Total invested assets of DKK 63bn split in a free and match portfolio Match portfolio split, DKK 45bn Free portfolio split, DKK 18bn Total investments, DKK 63bn 100% 20 6,1 72% 28% 16 10% 4,2 2% 1,5% 3,2 Match 1% Free
Slide 20: Tryg investment return – low risk remains key
4 | INVESTMENT, CAPITAL AND TARGETS Tryg investment return – low risk remains key Key figures investments Q4 2022 Q4 2021 2022 FY 2021 FY Equity portfolio split by sectors (DKKm) % 21 Free portfolio +205 +275 -945 +869 15 Match portfolio +168 +30 +58 +134 13 10 10 9 Income from RSA Scandinavia 7 (in
Slide 21: Solvency position 2022 Q4
4 | INVESTMENT, CAPITAL AND TARGETS Solvency position 2022 Q4 Solvency position Own funds walk • Tryg uses a partial internal model where only the insurance risk is modelled internally (that is the non-life and health modules in the 15.876 1.081 -1.047 16.012 200 chart to the right). All remaining p
Slide 22: Tier 1 & Tier 2 instruments
4 | INVESTMENT, CAPITAL AND TARGETS Tier 1 & Tier 2 instruments Tier 1 & Tier 2 instruments Tier 1 funds can be maximum 25% of Core Equity Tier 1 • The maximum capacity of additional Tier 1 instruments is a function 10,889 of the Core Equity Tier 1, which can be up to 25% of the Core Equity Tier 1.
Slide 23: Solvency ratio historical development
4 | INVESTMENT, CAPITAL AND TARGETS Solvency ratio historical development Solvency ratio historical development Both 9M dividends (announced in November) Approval of new partial and Q4 dividend internal model, very (announced with FY 899 strong Q2 result and results) are deducted from dividend decis
Slide 24: Solvency ratio sensitivities
3 | CLAIMS AND EXPENSES Solvency ratio sensitivities Solvency ratio sensitivities: 207 205 214 203 202 202 207 201 200 201 201 199 195 197 199 200 200 195 188 Q4 + 20% - 20% + 30% - 30% + 20% - 20% + 100 bps - 100 bps + 100 bps - 100 bps + 100 bps - 100 bps + 100 bps - 100 bps + 20% - 20% + 20% - 20
Slide 25: Important things to remember in 2023
4 | INVESTMENT, CAPITAL AND TARGETS Important things to remember in 2023 Full consolidation of Codan Norway and Trygg-Hansa Other income and costs in 2023 will include an has started in Q2 2022, all quarters in 2023 and approximate DKK1bn of intangibles amortization (Codan Norway and Trygg-Hansa and
Slide 26: Financial targets for 2024
4 | INVESTMENT, CAPITAL AND TARGETS Financial targets for 2024 Technical result DKK 7.0-7.4bn Combined ratio ≤82% Expense ratio ~14% reaffirmed 2024 strategy and targets Return on Own Funds ≥25% will ensure highly attractive RSA Scandinavia Synergies target DKK 900m shareholders’ returns Ordinary di
Slide 27: It is important to know your investment case
4 | INVESTMENT, CAPITAL AND TARGETS 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 27
Slide 28: Q4 2022 roadshows & conferences
5 | ROADSHOWS & CONFERENCES Q4 2022 roadshows & conferences Date Event Participants from Tryg Arranged by Morten Hübbe, CEO Barbara Plucnar Jensen, CFO 26/01/2023 Copenhagen roadshow Nordea Johan Kirstein Brammer, CCO Investor Relations Johan Kirstein Brammer, CCO 02/02/2023 London roadshow Barclays
Slide 29: Investor Relations
Investor Relations Gianandrea Roberti Peter Brondt Khoi Nguyen Anna Fricke Tobias Andersen Vice President, Head of Manager, Investor Senior Analyst, Investor Coordinator, Investor Analyst, Investor Investor Relations & Relations Relations Relations Relations External reporting +45 22 75 89 04 +45 61
Slide 30: Background material
Background material
Slide 31: Tryg at a glance
6 | BACKGROUND MATERIAL Tryg at a glance About Tryg Gross premium split by products Q4 2022 • Tryg goes back to 18th century. 9% Motor Workers’ comp 11% • Very strong brand position especially in Denmark. 32% Health & accident Liability • Non-life insurance in Denmark, Norway and Sweden. Fire & prop
Slide 32: Gross premium split by geography
6 | BACKGROUND MATERIAL Gross premium split by geography DK: Gross premium by products 2022 SE: Gross premium by products 2022 8% Motor 1% Motor 12% Workers comp Health and accident 12% 28% Health and accident 33% Liability Liability Fire & property - private 22% Fire & property - private Fire and p
Slide 33: The run-off cycle
6 | BACKGROUND MATERIAL The run-off cycle Run-off cycle: Run-off development • Initial assessment of the claims was DKK 18,000 but 3 years Run-off: +2,000 Tryg reserved for DKK 20,000 adding some 2,000 conservatism to best estimate. Claims estimate: -18,000 18,000 • At the time of setting up the cla
Slide 34: Combined ratio development, 2013 - 2022
6 | BACKGROUND MATERIAL Combined ratio development, 2013 - 2022 Combined ratio development 87.7 86.8 86.7 84.2 84.4 85.1 85.1 84.5 84.5 85.1 84.3 82.2 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 10Y avg. 5Y avg. 34
Slide 35: Shareholder remuneration since 2012 (DKK)
6 | BACKGROUND MATERIAL Shareholder remuneration since 2012 (DKK) Shareholder remuneration since 2012 (DKK) 9.74 9.71 9.50 9.20 Extraordinary dividend 8.60 Extraordinary buy back 8.45 Ordinary dividend 7.80 3.54 3.31 3.50 1.65 3.40 3.20 2.60 6.29 5.000 1.60 Remaining 1.786 1.58 1.07 6.80 7.00 6.40 6
Slide 36: Market share of the Scandinavian insurance market
6 | BACKGROUND MATERIAL Market share of the Scandinavian insurance market Scandinavia market share EUR 25,3 bn (as at Q4 2021) Denmark market share DKK 65,1 bn/EUR 8,7bn (as at Q4-2021) Tryg Tryg 18.3% If 22.0% Topdanmark 24.6% Topdanmark If 40.0% Länsforsikringar Gjensidige 14.6% Percentage Gjensid
Slide 37: Distribution of new sales 2022
6 | BACKGROUND MATERIAL Distribution of new sales 2022 Distribution in the Scandinavian Private market Distribution in the Scandinavian markets Sales agents 8% Franchise 8% Customer service differs from many other insurance 0% Customer service Customer service 27% Outbound 28% markets. 38% Outbound
Slide 38: Things that you may not know
6 | BACKGROUND MATERIAL Things that you may not know Information: • Scandinavian economies have been performing better than most European countries for a long-time. The GDP growth y/y was approx. 2%, and unemployment rates remains much lower than European averages (2-3% in DK and NO). Government ind
Slide 39: Things that you may not remember
6 | BACKGROUND MATERIAL Things that you may not remember Information: • Our maximum annual net exposure to a single large Property claim is DKK 150m which falls to DKK 100m in case of a second event and all afterwards events at DKK 50m. This is based on our general reinsurance programme. • Our maxim
Slide 40: IBM study from 2007, probably little has changed
6 | BACKGROUND MATERIAL IBM study from 2007, probably little has changed Danish customers either completely or strongly agree Overall I am very satisfied with the F 43 UK 33 services of my insurance company DE 50 DK 72 F 43 My insurance agent only sold me UK 20 insurance coverage that I really neede
Slide 41: Population growth (2000-2022)
6 | BACKGROUND MATERIAL Population growth (2000-2022) Population development in Denmark in ‘1,000 DK 10.56% 6,000,000 5,900,000 5,800,000 5,700,000 5,600,000 5,500,000 5,400,000 5,300,000 5,200,000 5,100,000 5,000,000 Population development in Norway in ‘1,000 NO 20.54% 5,600,000 5,400,000 5,200,000
Slide 42: TryghedsGruppen and its member bonus
6 | BACKGROUND MATERIAL TryghedsGruppen and its member bonus Denmark's ‘biggest’ family Bonus has a positive effect on retention ‘I expect to be in Tryg next year’ 1 (Largest shareholder) Have heard about member bonus 90% Have not heard about member Bonus 79% Premiums Savings Member bonus (Danish cu
Slide 43: Organisational and remuneration structure
6 | BACKGROUND MATERIAL Organisational and remuneration structure Organisation chart Remuneration structure CEO Morten Hübbe The Executive Board are remunerated according to Tryg’s remuneration policy: CFO CCO • Base salary COO Barbara Plucnar Johan Kirstein Lars Bonde Jensen Brammer o A fixed car a
Slide 44: Sustainability & ESG governance
6 | BACKGROUND MATERIAL Sustainability & ESG governance Sustainability & ESG Board The Board’s responsibilities includes: • Supporting Executive Board to make Sustainability & ESG-related decisions • Defining the Sustainability & ESG strategy • Defining relevant KPIs and evaluate performances • Anch
Slide 45: Environmental, Social and Governance (ESG) data
6 | BACKGROUND MATERIAL Environmental, Social and Governance (ESG) data Climate and environmental data Unit 2022 2021 2020 2019 2018 Total direct and indirect carbon emissions (location-based) Tonnes CO2e 4,538 2,082 2,501 6,436 5,386 3,924 Total direct and indirect carbon emissions (market-based) T
Slide 46: Responsible investment
6 | BACKGROUND MATERIAL Responsible investment 2024 KPI 2030 milestone 2022 results All external asset managers are UN PRI signatories ESG is an integrated part of the Percentage of UN PRI signatories 100% investment process across all External managers External managers responsibility integration m
Slide 47: 2021 actual and Consensus 2022-2024
6 | BACKGROUND MATERIAL 2021 actual and Consensus 2022-2024 DKKm 2021 actual 2022 2023 2024 Gross premiums earned 24,137 34,259 38,246 39,555 Technical result 3,709 6,139 7,222 7,699 Investment income 870 -1,333 355 395 Other income and costs -624 -1,899 -1,366 -1,150 Pre-tax 3,956 2,906 6,225 6,957
Slide 48: Appendix
Appendix Follow us on Twitter: @TrygIR
Slide 49: Group
7 | APPENDIX 1 Group Gross premiums Gross(DKKm) premiums Combined ratio (%) 100 40,000 33,938 30,000 90 24,137 84.4 85.1 85.1 84.5 84.5 21,741 22,653 82.2 20,000 17,963 18,740 80 10,000 70 0 2017 2018 2019 2020 2021 2022 60 2017 2018 2019 2020 2021 2022 Claims ratio, net of reinsurance (%) Expense %
Slide 50: Private
7 | APPENDIX 1 Private Gross premiums Gross(DKKm) premiums Combined ratio (%) 25,000 21,960 100 20,000 90 14,347 15,386 83.0 82.2 83.9 83.8 83.7 83.0 15,000 13,542 10,285 10,937 80 10,000 70 5,000 60 0 2017 2018 2019 2020 2021 2022 50 2017 2018 2019 2020 2021 2022 Claims ratio, net of reinsurance (%
Slide 51: Commercial
7 | APPENDIX 1 Commercial Gross premiums Gross(DKKm) premiums Combined ratio (%) 10,000 100 8,350 8,000 90 82.7 83.8 83.7 83.8 6,000 4,930 5,294 78.2 80.5 4,397 4,753 80 3,862 4,000 70 2,000 60 0 2017 2018 2019 2020 2021 2022 50 2017 2018 2019 2020 2021 2022 Claims ratio, net of reinsurance (%) Expe
Slide 52: Corporate
7 | APPENDIX Corporate* Gross premiums Gross(DKKm) premiums Combined ratio (%) 6,000 110 5,000 100.1 100 3,852 3,628 90.0 91.8 4,000 3,471 3,500 3,376 3,457 88.0 89.4 90 3,000 81.4 80 2,000 70 1,000 0 60 2017 2018 2019 2020 2021 2022 50 2017 2018 2019 2020 2021 2022 Claims ratio, net of reinsurance
Slide 53: Geographical combined ratio
7 | APPENDIX Geographical combined ratio Denmark % (%) Sweden (%) 100 100 95.2 92.0 90 90 88.5 88.3 85.1 81.3 82.7 83.1 80.7 80.0 80.4 80 80 77.7 70 70 60 60 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Norway (%) 100 93.1 92.7 90 87.9 87.7 87.2 85.5 80 70 60 2017 2018 2019 2020 2021
Slide 54: Tryg has a long and proud history
Tryg has a long and proud history, with the 2021 RSA acquisition pushing the boundaries even further 2022 Demerger 1 April Completed separation of RSA 2005 2018 Scandinavia into Tryg receives the DK, NO, SE TrygVesta is listed on the final approval of 1731 OMX Nordic the Alka Stock Exchange acquisit
Slide 55: Economic key figures
7 | APPENDIX Economic key figures Denmark Norway % 2020 2021 2022 2023E 2024E % 2020 2021 2022 2023E 2024E GDP growth GDP growth -2.0 4.9 3.0 -0.5 1.0 2.8 4.1 3.8 1.0 1.0 (Mainland) Consumer price 0.4 1.9 7.7 5.0 2.4 Consumer price 1.3 3.5 5.8 4.3 3.0 Unemployment 4.6 3.6 2.5 3.4 3.5 Unemployment 5.