Tryg A/s · OMXCOP:TRYG
Tryg A/s — Q3 2014 Earnings Presentation
39 slides from Tryg A/s's earnings presentation, Oct 10, 2014
Slide 1: Q3 2014 results Investor presentation
Q3 2014 results Investor presentation Follow us on Twitter: @TrygIR
Slide 2: Contents
Contents  Highlights Q3 2014 3  Premiums and portfolio 9  Claims and expenses 14  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 and inf
Slide 3: Highlights Q3 2014
Highlights Q3 2014 - Strong result despite cloudbursts. Topline trend improving. Pre-tax profit D KKm 1,200 • Pre-tax profit of DKK 782m (DKK 907m) impacted 1,000 907 782 by lower investment return. 800 600 400 • Technical result of DKK 793m (DKK 766m). 200 0 Q3 2014 Q3 2013 • Combined ratio improve
Slide 4: Important news in Q3 2014
Important news in Q3 2014 • Heavy cloudbursts – however, implemented claims initiatives reduced claims costs. • Tryg acquires Securator and strengthens its position in the Nordic Market for product and extended warranty insurance for electronics. • Continued development of new price differentiated p
Slide 5: Strategic initiatives 2014
Strategic initiatives 2014 Increased price differentiation Customer journey & success culture Expenses/claims reductions IT operational stability 5
Slide 6: Key figures Q3/9M 2013/14
Key figures Q3/9M 2013/14 93 2014 932013 2! QF Ql Qs 2014 2013 Claims, net of reinsurance -2,957 -3,121 -8,998 -9,823 Technical result 793 766 2,257 1,950 Profit/loss before tax 782 907 2,534 2,354 Claims ratio, net of reinsurance Combined ratio 83.7 84.8 84.5 87.3
Slide 7: 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 85.5 85.4 85 81.5 82.4 85 82.3 80.8 81.1 79.0 80 80 75 75 Q3 2014 Q3 2013 9M 2014 9M 2013 Q3 2014 Q3 2013 9M 2014 9M 2013 Group CR Q3 2014: 83.7 Q3 2013: 84.8 Com
Slide 8: Follow up on efficiency programme
Follow up on efficiency programme • Savings of DKK 835m achieved so far. • DKK 95m achieved in Q3 2014. DKKm Targeted and achieved savings on claims • DKK 30m reduction in expenses 1,200 1,000 • DKK 65m reduction in claims 1,000 835 800 700 • Claims initiatives – Craft Network, Scalepoint 615 600 an
Slide 9: Premiums and portfolio
Premiums and portfolio
Slide 10: Topline and technical result
Topline and technical result Gross earned premiums reduced 0.8% (-3.4%) related to: • Continued high retention level in Private and even improved retention level in Commercial. • Higher sales level in general in Private compared to last year. • Commercial – improved retention but sales lower than ex
Slide 11: Private - average premiums
Private - average premiums House insurance – average premium (index 2008 = 100) 150 Average premiums increase Y/Y 140 0.0% 2.2% 130 (Q2 0.5%) (Q2 2.6%) 120 110 100 90 08 09 10 11 12 13 14 20 20 20 20 20 20 20 Motor insurance – average premium (index 2008 = 100) 140 Average premiums increase Y/Y -0.9
Slide 12: Customer retention
12 Q Q 1 82% 84% 86% 88% 90% 92% 1 82% 84% 86% 88% 90% 92% 10 1 Q 0 Private Q 2 2 10 1 Q Q 0 3 3 Commercial 10 1 Q Q 0 4 4 10 1 Q Q 0 1 1 11 1 Q Q 1 2 2 11 1 Q Q 1 3 3 11 1 Q Q 1 4 4 11 1 Q Q 1 1 1 12 1 Q Q 2 2 2 12 1 Q Q 2 3 3 12 1 Q Q 2 4 4 12 1 Q Q 2 1 1 Customer retention Q 13 1 2 Q 3 2 13 1 Q Q
Slide 13: Private Sweden – CR and customer retention
13 Q 80 85 90 95 100 105 110 115 120 125 130 1- 10 Q 50% 60% 70% Q 80% 1- 1 125 2- 10 1 Q Q 2- 103 3- 10 1 Q 1 Q 99 4- 3- 10 1 Q 1 1- Q 11 4- 1 Q 1 Q 102 103 2- 11 1- Q 1 2 99 3- Q 11 2- Q 1 97 4- 11 Q 2 Q 3- 1 114 1- 12 2 Q Q 4- 1 110 2- 12 Q 2 Q 95 3- 1- 12 1 3 Q Q 91 4- 2- 12 1 Q Q 3 88 Customer
Slide 14: Claims and expenses
Claims and expenses
Slide 15: CR and claims ratios Q3 2013-14
CR and claims ratios Q3 2013-14 • Underlying development is adjusted for: Underlying claims, net Q3 2013/2014 • Large claims 87.3 • Weather claims 75.0 79.4 72.6 75.1 • Run-off and interest 70.1 67.8 67.2 68.5 66.9 • Improved underlying development on Group level driven by: • one-off effects Q3 2014
Slide 16: 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 350 400 350 300 300 250 250 200 200 150 328 373 356 150 100 202 100 147 50 50 80 83 2 0 0 Q3 2014 Q3 2013 9M 2014 9M 2013 Q3 2014 Q3 2013
Slide 17: Tivoli cloudburst claims 2011 vs. 2014
Tivoli cloudburst claims 2011 vs. 2014 ’Flood Barrier’ • Volume of water twice as massive in 2014 as in 2011. • Claims costs in 2014 were only 1/3 of the costs in 2011. Changes since 2011 • Tivoli now has a contingency plan for cloudburst. • Investments in protection initiatives (pumps, Before: Wood
Slide 18: Expense ratio development
Expense ratio development Expense ratio • Expense improved from 15.5 in Q3 2013 to 15.1 in Q3 2014 - an improvement of 0.4 point. 16.6 16.7 16.6 16.4 • Nominal expenses on Group level reduced 15.1 15.5 significantly in Q3 2014. 15.6 • Efficiency programme • Reduction in FTE by 127 (excl. Securator)
Slide 19: Interest sensitivity
Interest sensitivity Claims reserves - discounting rate % 6.0 5.0 1% increase in interest rate level will: 4.0 • Increase pre-tax result by around 3.0 DKK 300m. 2.0 1.2 1.0 • Improve combined ratio by approx. 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 pp. • Impact NO pension obligation by Pensio
Slide 20: Investment, capital and financial targets
Investment, capital and financial targets
Slide 21: Investment result Q3 2014
Investment result Q3 2014 Investment return Free portfolio – Q3 2014 (DKK 12.8bn) DKKm 38 2 Equities (22) Free investment 21 Investment property (15) Match regulatory deviation 0 Bank deposits/bonds (15) Percentage 23 Match performance 16 Govt. Bonds (3) High yield (6) Other financials -38 C ov. Bon
Slide 22: Capital structure and status on share buy back
Capital structure and status on share buy back DKKm Capital – Q3 2014 12,000 • Capital buffer based on Individual Solvency increased to 64% (2013 Q4: 50%) and was impacted by: 4,297 • 9M result 2014 Excess capital 8,000 • Share buy back deducted in buffer Buffer Capital requirement • Based on Solven
Slide 23: Financial targets
Financial targets ROE after tax of 20% to be achieved by delivering a full year combined ratio of 90 or lower. Expense ratio <15 in 2015 ROE after tax 40% 30% ROE target 20% 10% 0% 14 05 06 07 08 09 10 11 12 13 14 15 20 20 20 20 20 20 20 20 20 20 20 20 1 H 23
Slide 24: For new investors
For new investors
Slide 25: Tryg - quick overview
Tryg - quick overview Tryg is a non-life insurance company present DKKm 2012 2013 in Denmark (No. 1), Norway (No. 3) and Sweden (No. 5). Gross earned premium 20,314 19,504 Gross claims -14,675 -14,411 58.8m shares and a market cap of Gross expenses -3,295 -3,008 DKK 34bn (June 2014). Insurance resul
Slide 26: Tryg – at a glance
Tryg – at a glance Share performance since IPO 340 320 Tryg incl. dividend Euro Insurance index 300 • Tryg goes back to 18th century 280 260 • The current Tryg was formed in 2002 by 240 sale of Nordea’s non-life activities – 220 with a continuing strategic partnership 200 180 • Non-life insurance in
Slide 27: Dividend policy
Dividend policy - creating long-term value for our shareholders • Payout ratio of 60–90%. • Aiming for a nominal stable increasing dividend. • Ambitious ROE target of 20% after tax calls for disciplined capital approach. • Adjustment of the capital level can be made via share buy back. Total distrib
Slide 28: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Nordic Denmark EUR 24,5bn (as at Q4-2012) DKK 50,9 bn/EUR 6,8bn (as at Q3-2013) 10.5 18.7 Tryg Tryg 29.9 Topdanmark If 18.2 C odan C odan 40.0 Alm. Brand Gjensidige Percentage Percentage 17.3 Gjensdige Länsförsäkringar Topdanmark If 9.1 Other 6.1 Other 5.9 1
Slide 29: Distribution of new sales 2013
Distribution of new sales 2013 Denmark Norway 12% 6% 46% 36% 30% 58% 12% Own sales Affinity Nordea Ow n sales Car dealers Affinity Nordea Sweden Corporate 18% 8% 52% 50% 50% 22% Ow n sales External partners Own sales Brokers w ww & others Atlantica/Bilsport MC 29 29 10 oktober 2014
Slide 30: Combined ratio performance
Combined ratio performance 110 Premium Premium Efficiency hikes hikes programme 105 100 95 Smaller adjustments 90 85 80 * 14 00 01 02 03 04 05 06 07 08 09 10 11 12 13 04 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 9M 2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio from
Slide 31: Key figures 2010-13 and consensus for 2014-16
Key figures 2010-13 and consensus for 2014-16 Consensus DKKm 2010 2011 2012 2013 2014 2015 2016 Gross premium income 18,894 19,948 20,314 19,504 18,687 18,773 19,014 Gross claims incurred -15,111 -15,783 -14,675 -14,411 Operating expenses -3,136 -3,271 -3,295 -3,008 Technical result 460 1,572 2,492
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 80 Local currency (RHS) 4,400 -4 75 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 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 14 12 3
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 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 14 12 3 4 1 2 3 4
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 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 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 Q 11 Q
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 Q 10 4 4 Q 10 Q 10 1 1 Gross premium Q 11 Q 11 2 2 Gross claims ratio Q 11 Q 11 3 3 Q 11 Q 11 4 Corporate 4 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 (RH
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 Gross premium 2 Q 11 Q 11 2 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 4 (RHS) 3 Q 12 Q 12 4 1 Q 12 Q 13 1 2 Sweden (Private) Q 13 Q 13 3 L
Slide 38: Geographical segments
Geographical segments Denmark 4 iy Norway Q3 2014 Q3 2013 Q1-Q3 2014 Q1-93 2013 i 4 Gross premiums earned 2,340 2,365 7,015 7,170 9534 Gross premiums earned 1,845 1,914 5,498 5,934 7,819 Technical result 335 399 859 1,074 1,202 Technical result 444 365 1,288 846 1,258 Key ratios Key ratios Gross cla
Slide 39: Economic key figures
Economic key figures Denmark Sweden % 2014 2015 % 2014 2015 GDP Growth 0.5 1.3 GDP Growth 2.0 2.3 Inflation 0.7 1.2 Inflation 0.0 1.1 Unemployment 5.1 5.1 Unemployment 7.9 7.6 Current account Current account 5.9 5.3 6.0 5.6 balance in % of GDP balance in % of GDP Budget balance in % of Budget balanc