Tryg A/s · OMXCOP:TRYG
Tryg A/s — FY2010 Earnings Presentation
46 slides from Tryg A/s's earnings presentation, Feb 9, 2011
Slide 1: Annual results 2010 Investor presentation
Annual results 2010 Investor presentation 9 February 2011
Slide 2: Events in 2010
Events in 2010 2010 • Premium income of DKK 19.5bn and pre-tax income of DKK 941m • Solid growth, tight cost control and improving underlying performance • High claims expenses - including one-off events of DKK 1.4bn above a normal year • Strong investment return supported by higher equity markets.
Slide 3: One-off and extraordinary events 2010
One-off and extraordinary events 2010 One-off and extraordinary events (DKKm) 2500 2000 1500 One-off 1000 events DKK 2.2bn. Extraordinary 500 events DKK 1.4bn. 0 Large claims Winter Q4 Ruling workers compensation Cloudburst Winter Q1 3 9. februar 2011
Slide 4: Performance in 2010
Performance in 2010 Private Nordic - CR Commercial Nordic - CR Corporate Nordic - CR Weather impact 110 120 100 Weather impact Workers comp. ruling Weather impact 111.6 92.7 100 110 Workers comp. ruling 2.7 96.4 Large claims 7.1 90 92.8 2.4 5.6 101.2 1.5 90 1.0 100 2.5 5.9 0.9 93.2 80 87.6 80 91.3 9
Slide 5: Premium increases and tighter risk management improve underlying performance
Premium increases and tighter risk management improve underlying performance 95 90 85 81.6 81.3 80 77.9 75 71.3 70 65 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Private Nordic Commercial Nordic Underlying development adjusted for extraordinary winter claims. 5 9. februar
Slide 6: Discounting rate
Discounting rate % 6.0 5.0 4.0 3.0 2.0 2006 2007 2008 2009 2010 1% increase in interest level will: -increase pre-tax profit by around DKK 300m -improve combined ratio by approx. 1 %point 6 9. februar 2011
Slide 7: Reserves and run-off development
Reserves and run-off development Run-off net, DKKm Insurance provision, DKKm 30,000 6,819 6,208 800 5,183 5,403 792 824 5,173 5,100 683 20,000 561 24,883 283 21,261 21,104 22,470 10,000 20,410 19,715 0 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 Premium provisions Claims provisions R
Slide 8: Capitalisation
8 Q 6,000 7,000 8,000 9,000 10,000 11,000 12,000 1 DKKm 08 20 Q 2 9. februar 2011 08 08 be Q 20 f or 3 08 e 0 pa 8 af te you r Capitalisation pa t yo ut Capital requirement Q 1 09 20 Q 09 2 09 be Q 20 f or 3 0 9 e p 09 af ay te ou r pa t Buffer (5%) yo Q ut 1 20 Q 10 20 2 20 10 10 be Q3 20 f or 20 1
Slide 9: Suggested dividend
Suggested dividend Dividend policy: 40 • 50% of net earnings • share buy backs in addition 35 30 21 DKK per share 25 12.5 20 33 15 10 21 17 15.5 5 6.5 4 0 2005 2006 2007 2008 2009 E2010 Cash dividend Share buy-back 9 9. februar 2011
Slide 10: Outlook mid-term
Outlook mid-term ROE after tax 40% 30% Mid term target 20% x Mid-term 10% Medium term target is return on equity 0% of more than 20% after tax 03 04 05 06 07 08 09 10 11 12 13 14 20 20 20 20 20 20 20 20 20 20 20 20 This implies a combined ratio level of 90% including potential run-off and at current
Slide 11: Premium performance
Premium performance Annual results 2010 11 9. februar 2011
Slide 12: Premium increases visible in Private Nordic
Premium increases visible in Private Nordic • Private house in Denmark increased by 11.9 % and Norway by 10 % y-o-y2010 • Average price development within private cars in Denmark turned positive by 2.4% y-o-y • Private motor in Norway continued upwards with 5.2% y-o-y Average prices - Private cars A
Slide 13: Retention - Private and commercial customers
Retention - Private and commercial customers Private Commercial 92% 92% 90% 90% 88% 88% 86% 86% 84% 82% 84% 2005 2006 2007 2008 2009 2010 2008 2009 2010 • Retention rate relatively stable in Denmark • Retention rate stable and strong during 2010 despite up-pricing • Danish retention rate remains hig
Slide 14: Claims development
Claims development Annual results 2010
Slide 15: Claims ratio performance
Claims ratio performance Group Private Nordic (ex winter 2010) (ex winter 2010) 85 80 82.9 80 75 76.2 76.1 76.7 75 74.4 75.2 74.5 73.7 73.8 70 70 70.3 69.5 70.2 65 65 60 60 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 08 08 08 08 09 09 09 09 10 10 10 10 08 08 08 08 09 09 0
Slide 16: Improved development in claims ratio – House insurance and Finland
Improved development in claims ratio – House insurance and Finland 160 150 140 House DK* 130 120 110 100 90 80 70 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 110 100 House NO* 90 80 70 60 50 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 100 95 Fi
Slide 17: Large claims and weather related claims
Large claims and weather related claims Large claims gross Weather related claims* (gross) DKKm DKKm 1,000 1,200 813 1,000 800 800 878 597 600 600 537 466 491 400 200 400 202 332 291 0 112 121 2006 2007 2008 2009 2010 200 0 Extraordinary w inther claim s 2006 2007 2008 2009 2010 Expected level for 2
Slide 18: Burglaries and private house claims
Burglaries and private house claims Number of burglaries per year 150 130 110 90 70 50 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 DKKm Claims cost 2,000 1,600 1,200 800 400 0 2005 2006 2007 2008 2009 2010 House Content 18 9. februar 2011
Slide 19: Expenses
Expenses Annual results 2010 19 9. februar 2011
Slide 20: Expense ratio
Expense ratio Continued focus on expenses drives expense ratio downwards by • streamlining the distribution platform • digital and paperless process handling • in-house rotation reduces need for external hiring • investments in branding impacted expense ratio by 0.4 %-point in 2010 Expense ratio Bre
Slide 21: Key focus areas
Key focus areas Price Pricehikes hikes Claims Claimsinitiatives initiatives Cost Costreduction reduction Tryg TrygTransition Transition 21 9. februar 2011
Slide 22: Premium hikes and combined ratio relation
Premium hikes and combined ratio relation Annual impact from 110 Combined ratio price increases 2010 Premium Premium 105 hikes hikes DKK ~0.9bn 2011 100 DKK ~1.0bn Smaller New ruling workers’ comp. 2012 adjustments Extraordinary winter DKK ~0.6bn 95 90 85 80 2000 2001 2002 2003 2004 2004* 2005 2006
Slide 23: Major claims initiatives
Major claims initiatives Surveying Surveying Pruning Pruning Home Large Largeclaims Homecondition condition claims proces report report proces New Newcontents contents Craftsman coverage coverage Craftsmancontrolling controlling Documentation Documentation Windscreen Windscreencar carclaims claims 2
Slide 24: Stricter customer screening
Stricter customer screening u s c laims o Previ Red/Green Customer Examination rules e rs tom s cus viou Pre 24 9. februar 2011
Slide 25: Managing cloudburst risk
Managing cloudburst risk Visualization of cloudburst • Cloudburst is basicly a local phenomenon and often coincidental where it hits • Some places are more vulnerable to damage when it rains • Model to identify water risk of heavy rain established • Frequency for customers with basements app.10 time
Slide 26: Cost reductions
Cost reductions Sales employees - Direct Claim employees • Better customer service by • Focus on paperless processes more availability in call centers • Process improvements • Closure of sales offices in DK and NO • Increase in claims = higher productivity • Internet / self service focus Number of S
Slide 27: The future vision for cost in 2020
and the future vision for 10 in 20 2010 2015 2020 2025 Cost reductions Lower distribution and admin cost 17% 10% Head count reduction and increased market position Drivers to achieve the vision Tryg Transition Efficiency Markets Other cost reductions • Self service • New products • Meet profitabilit
Slide 28: Business areas
Business areas Annual results 2010 28 9. februar 2011
Slide 29: Private Nordic - Key performance indicators
Private Nordic - Key performance indicators Gross premium Combined ratio DKKm 11,000 100 10,000 9,000 90 8,000 7,000 80 2007 2008 2009 2010 2007 2008 2009 2010 Including extraordinary winter impact Claims ratio Cost ratio 90 20 80 18 70 60 16 50 2007 2008 2009 2010 14 2007 2008 2009 2010 Including e
Slide 30: Commercial Nordic - Key performance indicators
Commercial Nordic - Key performance indicators Gross premium Combined ratio DKKm 5,000 110 4,500 100 4,000 90 3,500 3,000 80 2007 2008 2009 2010 2007 2008 2009 2010 Including extraordinary winter impact Claims ratio Cost ratio 90 24 80 70 22 60 50 20 2007 2008 2009 2010 2007 2008 2009 2010 Including
Slide 31: Corporate Nordic - Key performance indicators
Corporate Nordic - Key performance indicators Gross premium Combined ratio DKKm 110 5,400 100 90 80 5,200 70 60 5,000 50 2007 2008 2009 2010 2007 2008 2009 2010 Including extraordinary winter impact Claims ratio Cost ratio 14 90 80 12 70 10 60 50 8 2007 2008 2009 2010 2007 2008 2009 2010 Including e
Slide 32: Corporate - Claims effects
Corporate - Claims effects Claims events (DKKm) 800 600 400 200 0 2008 2009 2010 Large claims Winter Workers comp. % Break down - Workers compenstaion claims in Denmark 100 80 60 40 20 0 Claims costs Number of claims Others Loss of dissability 32 9. februar 2011
Slide 33: Investments
Investments Annual results 2010 33 9. februar 2011
Slide 34: Division of the investment return
Division of the investment return Gross investment return Match Risk minimization – create a return close to tech inter- Bonds DKK 1,185m est rate and discounting Result DKK -5m Mismatch 0.02% +/- DKK 50m per quarter Equities DKK 261m Real estate DKK 300m Free investment Absolute return – creates th
Slide 35: Assets allocation
Assets allocation Total assets allocation Assets allocation in the match portfolio 5 2 5 5 1 10 22 Equities Real estate C ov. Bonds 31 Govt. C ov. Bonds Percentage Percentage Deposits Govt. 64 Others Deposits High yield 55 Assets allocation in the free portfolio 9 23 8 Equities Real estate C ov. Bon
Slide 36: Appendix
Appendix Annual results 2010 36 9. februar 2011
Slide 37: Key figures 2004-10 and consensus for 2011-12
Key figures 2004-10 and consensus for 2011-12 Consensus before 2010 report In DKKm 2004 2005 2006 2007 2008 2009 2010 2011 2012 Gross premium income 15,266 15,705 15,715 16,262 16,976 17,862 19,475 20,090 20,872 Gross claims incurred -10,425 -11,159 -10,292 -10,448 -11,473 -12,882 -15,617 Operating
Slide 38: Economic key figures in the Nordics
Economic key figures in the Nordics Denmark Sweden 2011 2012 2011 2012 GDP growth 1.8 1.9 GDP growth 4.5 2.8 Inflation 2.0 2.0 Inflation 2.7 3.0 Unemployment 4.2 3.8 Unemployment 7.3 6.8 Current account balance in % Current account balance in % 4.2 3.8 6.4 6.4 of GDP of GDP Budget balance in % of GD
Slide 39: Distribution of new sales in 2010
Distribution of new sales in 2010 Denmark Corporate Norway 10% 4% 28% 23% 47% 53% 54% 67% 14% Own sales Affinity Nordea Direct sales Brokers Own sales Cardealers Franchise Nordea Finland Sweden 16% 1% 22% 10% 47% 52% 3% 49% Call center Cardealers Netbank Nordea Tied agents Call center Nordea Netbank
Slide 40: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Denmark Norway DKK 46.6bn/EUR 6,3bn (pr. Q4-09) NOK 42,5bn/EUR 5,3bn (pr. Q3-10) 5.8 17.0 20.8 Tryg 26.2 Alm. Brand Tryg 18.6 If Gjensidige Other Percentage Sparebank1 Percentage 10.1 Other Alka C odan 28.1 If 10.7 13.9 5.0 Topdanmark 18.0 Gjensdige 3.5 22.3
Slide 41: Nordic peers
Nordic peers Premium growth in local currency (%) 14 Gjensidige 11 Tryg 8 Tryg excl. Moderna 5 2 If -1 Gjensidige excl. -4 Nykredit 2004 2005 2006 2007 2008 2009 2010 latest Combined ratio 106 102 98 Gjensidige 94 If… 90 86 Tryg 82 2004 2005 2006 2007 2008 2009 2010 latest 41 9. februar 2011
Slide 42: Peers in Denmark
Peers in Denmark Premium growth Combined ratio 110 8 105 4 100 95 0 90 -4 85 2004 2005 2006 2007 2008 2009 2010 80 latest 2006 2007 2008 2009 2010 latest Tryg Alm Brand Topdanmark * Tryg Topdanmark Alm. Brand Codan Market share in % 50 40 30 20 10 0 1995 1999 2003 2007 Tryg Topdanmark Codan Alm Bran
Slide 43: Peers in Norway
Peers in Norway Premium growth Combined ratio 100 8 95 4 90 0 85 -4 2004 2005 2006 2007 2008 2009 2010 80 latest 2006 2007 2008 2009 2010 latest if… Gjensidige Tryg Sparebank 1 Tryg Gjensidige SpareBank 1 If… Market share in % 50 40 30 20 10 0 1994 1998 2002 2006 If… Gjensidige Sparebank1 TrygVesta
Slide 44: Peers in Sweden
Peers in Sweden Premium growth Länsforsk. Combined ratio 16 160 150 Tryg (RHS) 140 11 Folksam 140 120 130 6 100 120 Codan 80 110 1 60 100 2004 2005 2006 2007 2008 2009 40 90 -4 80 20 If 70 -9 0 2006 2007 2008 2009 Tryg If Länsforsk. Codan Folksam Market share in % 35 30 25 20 15 10 5 0 -5 00 01 02 0
Slide 45: Peers in Finland
Peers in Finland Premium growth Combined ratio 16 Pohjola 60 130 14 50 120 12 Tryg (RHS) 110 10 Tapiola 40 8 100 Fennia 30 6 90 4 20 80 2 2006 2007 2008 2009 2010 If 10 0 latest -2 2004 2005 2006 2007 2008 2009 0 Tryg If Pohjola Tapiola Market share in % 40 35 30 25 20 15 10 5 0 -5 2000 2001 2002 20
Slide 46: Geografical development
Geografical development Technical result DKKm Gross premiums DKKm 3,500 20,000 3,000 2,362 579 1,591 202 341 2,500 1,374 16,000 831 7,009 6,750 7,490 2,000 1,217 6,654 6,816 12,000 1,500 618 8,000 1,000 9,105 9,393 9,636 1,805 1,727 8,862 9,525 4,000 1,406 1,178 500 389 0 166 0 2006 2007 2008 2009 2