Tryg A/s · OMXCOP:TRYG
Tryg A/s — TrygVesta — Q3 2008 Earnings Presentation
42 slides from Tryg A/s's earnings presentation, November 2008
Slide 1: Investor presentation November 2008
1 Investor presentation Investor presentation November 2008
Slide 2: Disclaimer
Disclaimer 2 Investor presentation 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 historical fact) regarding our future resul
Slide 3: Facts about TrygVesta
Facts about TrygVesta 3 Investor presentation Shares outstanding 65m •Focused Nordic, non-life insurance Market cap DKK 22.3bn (USD 3.8bn) company Shareholder structure Q1 2008 •Vision: To be perceived Smaller as the leading Danish institutions “peace of mind” supplier 18% in the Nordic 18% region N
Slide 4: Overall financial performance of TrygVesta
4 Investor presentation Overall financial performance of TrygVesta
Slide 5: Highlights – 9M 2008
Highlights – 9M 2008 5 Investor presentation 4.8% premium growth (5.3% in DKK) and above market growth • Technical result of DKK 1,867m down from DKK 2,099m • Combined ratio of 88.7 compared with 86.0 in same period 2007 • Gross investment return of 1.1% or DKK 407m and after transfer of technical i
Slide 6: Key performance indicators – 9M 2008
Key performance indicators – 9M 2008 6 Investor presentation Gross premium income Combined ratio DKKm 92 12,996 87.2 86.1 86.0 88.7 88 2.9 2.5 12,338 2.4 84 3.3 12,036 11,744 84.7 85.8 80 83.7 82.7 76 YTD 05 YTD 06 YTD 07 YTD 08 YTD 05 YTD 06 YTD 07 YTD 08 CR excl. large claims Large claims Claims r
Slide 7: Key performance indicators
Key performance indicators 7 Investor presentation Gross premium Combined ratio DKKm 4,425 4.0 4,338 1.4 5.1 4,268 4,233 1.2 1.4 4,232 2.2 1.4 5.1 4,107 1.9 2.1 4,071 6.2 4,005 3,985 3,999 3,960 88.2 88.0 86.5 86.0 85.1 85.8 81.1 82.3 81.6 81.1 78.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2
Slide 8: Average price development
Average price development 8 Investor presentation Price increases implemented on main products • Danish house insurance prices to be increased by 11% in 2009 due to claims inflation • Norwegian insurance prices, in general, have increased 5-8% since mid 2007 and further price initiatives are planned
Slide 9: Frequency and average claims
9 Q Q 80 100 120 140 80 100 120 140 10 10 5 5 Q Q 20 20 5 5 Q Q 30 30 5 5 Q Q 40 40 5 5 Q Q 10 10 6 6 Q Q 20 20 6 6 Q Q Frequency Denmark 30 30 6 6 Q Q Investor presentation 40 40 6 6 Average claims Denmark Q Q 10 10 7 7 Q Q 20 20 7 7 Q Q 30 30 7 7 Q Q 40 40 7 7 Q Q 10 10 8 8 Q Q 20 20 8 8 Q Q Frequ
Slide 10: Gross premiums 9M 2008
Gross premiums 9M 2008 10 Investor presentation Gross premiums grew 4.8% (5.3% in DKK) to DKK 12,996m • Growth driven by all business areas with Corporate and P&C Norway as the biggest growth contributors • Growth from New Markets (Finland & Sweden) becomes more and more visible • Number of insuranc
Slide 11: Technical result
Technical result 11 Investor presentation Technical result of DKK 1,867m down from DKK 2,099m • 2008 impacted by higher claims in housing, accident, healthcare and Norwegian motor • Q3 2008 had DKK 163m more large claims than anticipated and technical result was DKK 275m lower to DKK 546m Technical
Slide 12: Claims
12 Investor presentation Claims
Slide 13: Claims ratio
Claims ratio 13 Investor presentation Claims ratio has increased due to Claims ratio these segments 72.0 • Danish housing and property 70.2 69.3 69.3 • Norwegian motor • Accident claims YTD 05 YTD 06 YTD 07 YTD 08 • Health care
Slide 14: Large claims and weather related claims
Large claims and weather related claims 14 Investor presentation • A mild winter and a relatively dry summer resulted in fewer weather related claims. • Large claims of DKK 288m gross in Q3 2008 versus DKK 195m gross in Q3 2007 and expected DKK 125m. Large claims Weather related claims, gross DKKm D
Slide 15: Run-off and changes in reserves
Run-off and changes in reserves 15 Investor presentation Run-off in 2008 of DKK 612m gross and DKK 602m net. • Impact on combined ratio of 4.6% in 2008 versus 4.5% same period 2007 and 4.5% full year 2007 Run-off net Technical result DKKm 743 DKKm 2,820 2,512 Run-offs,555net of DKK 556 743m vs. DKK
Slide 16: Expenses
16 Investor presentation Expenses
Slide 17: Expense management and cost ratio
Expense management and cost ratio 17 Investor presentation Gradual decline in cost ratio due to a combination of improved efficiency in Denmark and Norway and counterbalanced by expansion in Finland and Sweden Expense ratio 17.2 16.7 16.6 16.8 17.2 16.8 16.1 16.6 16.9 17.1 16.0 0.4 0.7 1.1 1.5 1.9 0
Slide 18: Investments
18 Investor presentation Investments
Slide 19: Investment results – Q3 2008
Investment results – Q3 2008 19 Investor presentation Gross investment return of DKK 56m or 0.2%. Net investment result of DKK -331m due to decline in equity markets. • Investment portfolio of DKK 36.6bn • Performance in 2008 impacted by equity markets decline of approx. 22%, however… • …relatively
Slide 20: Portfolio structure – bonds and equities
Portfolio structure – bonds and equities 20 Investor presentation Conservative approach to the investment portfolio • Duration of bond portfolio is approximately 2 years • The equity portfolio is indexed and tracking leading MSCI indices Norwegian bonds and Bond portfolio Norwegian Geo split of equi
Slide 21: Capital and Outlook
21 Investor presentation Capital and Outlook
Slide 22: Outlook 2008
Outlook 2008 22 Investor presentation 2008 2008 2008 2008 * Negative Positive DKKm 2007 February May August November scenario scenario Premium growth 4% 5% 5% 5% 5% in local currency Technical result 2,077 2,200 2,200 2,200 1,600 1,450 1,750 before run-off Technical result 2,820 2,200 2,400 2,600 2,
Slide 23: Danish FSA change in discounting rates
Danish FSA change in discounting rates 23 Investor presentation Danish FSA stability package introduced 31 October 2008 • Provides better matching as mortgage bonds are now included in discounting rates • Positive impact on longer durations but negative on short durations due to the unusual movement
Slide 24: Capitalisation
Capitalisation 24 Investor presentation DKKm 12,000 11,000 10,000 9,000 8,000 7,000 6,000 2006 Q1 07 Q2 07 Q3 07 2007 2007 1Q 08 2Q 08 3Q 08 before after payout payout Target capital (A- level) Buffer (5%) Surplus capital A- corresponds to a capital (equity + hybrid and after dividend payout) to net
Slide 25: Business line performance
25 Investor presentation Business line performance
Slide 26: P&C Denmark
P&C Denmark 26 Investor presentation Price increase on house insurance implemented to offset heavy claims inflation • Premium growth pre-bonus of 2.1% in Q3 2008 and impacted by an increase of 36,000 insurances • Price increases in 2009 on house insurance of 11% and healthcare insurance of 15% • Com
Slide 27: P&C Denmark retention
P&C Denmark retention 27 Investor presentation 91% retention rate in Q3 2008 • Solid customer loyalty, satisfaction and innovation underlines competitive strength Retention since 2005 93.0% 92.0% 91.0% 90.0% 89.0% 88.0% Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 05 05 05 06 06 06 06 07 07 07 07 08 08
Slide 28: P&C Norway
P&C Norway 28 Investor presentation Accelerating premium growth and good momentum in sales and marketing initiatives • Premium growth of 5.5% in NOK (5.4% in DKK) in Q3 2008 driven by improved customer loyalty, better sales and price increases • Large claims hit P&C resulting in combined ratio of 95
Slide 29: P&C Norway retention
P&C Norway retention 29 Investor presentation Retention has improved since TrygVesta removed the introduction rebate for new customers and in return gave loyal customers better conditions Prices have been raised since mid-2007 and combined with market initiatives provide a good basis for further gro
Slide 30: Corporate
Corporate 30 Investor presentation Corporate showing solid growth and good profitability • Premium growth of 5.3% in 2008 primarily due to intake of new customers in 2007 • Financial turmoil is expected to entail more rational price competition among some peers due to capital structure consideration
Slide 31: Finland
Finland 31 Investor presentation Accelerating sales and prudent risk selection • Broader sales platform since summer 2007 is showing its impact on sales in 2008 • An increase of 65,000 insurances in 2008 – full year sales targets fulfilled after 9M • Portfolio is now DKK 420m • Internet sales increa
Slide 32: New sales Finland - 2008
New sales Finland - 2008 32 Investor presentation Distribution in Finland Internet 4% Nordea 20% Car dealers 26% Own sales 50%
Slide 33: Sweden
Sweden 33 Investor presentation Focused sales effort and expanding organisation • Gross premium of DKK 64m and an increase of 92,000 insurances in 2008 • In Q3 alone, an increase of 27,000 insurances and portfolio reached DKK 280m • Claims ratio of 95.7 in 2008 is acceptable for a new portfolio. • T
Slide 34: Operating environment
34 Investor presentation Operating environment
Slide 35: The Danish non-life insurance market since 1996
The Danish non-life insurance market since 1996 35 Investor presentation Market size and profitability Market shares DKKm 60,000 50 4.8% CAGR 50,000 40 40,000 30 30,000 20 20,000 10,000 10 0 0 1995 1998 2001 2004 2007 -10,000 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 TrygVesta Topd
Slide 36: Earnings profile Danish market
Earnings profile Danish market 36 Investor presentation Technical- and investment result relative to premiums 25% Technical result Investment result 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% -35% -40% -45% -50% -55% Thisted Alka Aros Sønderjysk Topdanmark GF Lærerstanden Lokal Alm. Brand Himmer
Slide 37: The Norwegian non-life insurance market since 1996
The Norwegian non-life insurance market since 1996 37 Investor presentation Market size and profitability Market shares NOKm 40,000 3.8% CAGR 130 50 35,000 120 40 30,000 110 25,000 100 30 20,000 90 15,000 80 20 10,000 70 10 5,000 60 0 50 0 1996 1999 2002 2005 1994 1997 2000 2003 2006 Premiums (left)
Slide 38: The Nordic region- structure of the insurance market
The Nordic region- structure of the insurance market 38 Investor presentation Norway TrygVesta, EUR 4.7bn 17.8% Finland TrygVesta, Tapiola, EUR 3.2bn Pohjola, 1.4% 18.2% Gjensidige 27.3% 30.6% Top 4 Fennia, Top 4 88% 10.8% 82% IF, 29.3% Sparebank, Other, 9.9% 17.0% Other, 8.6% IF, 25.7% Sweden Denma
Slide 39: Distribution platform 2008
Distribution platform 2008 39 Investor presentation Vahinkovakuutus Distribution channel Denmark Norway Finland Sweden Customer center Local service center Call centre Franchise Bancassurance Nordea online bank E-business/Self-service Insurance brokers Car dealers Real estate agents Affinity groups
Slide 40: Questions
Questions 40 Investor presentation For further information, please visit www.trygvesta.com
Slide 41: Key financial figures 2004-2007
Key financial figures 2004-2007 41 Investor presentation In DKKm 2004 2005 2006 2007 Gross premium income 15,266 15,705 16,021 16,606 Gross claims incurred 10,425 11,159 10,654 11,175 Operating expenses 2,611 2,662 2,697 2,769 Ceeded business (708) (7) (591) (343) Technical interest, net 185 170 343
Slide 42: TrygVesta – debt and credit lines
TrygVesta – debt and credit lines 42 Investor presentation Subordinated debt Credit lines • When Tryg i Danmark • In 2005, the 3 earlier bilateral bank smba/TryghedsGruppen changed its loans totaling DKK 600m have been status from sole shareholder to major replaced by a syndicated credit facility sh