Tryg A/s · OMXCOP:TRYG
Tryg A/s — FY2013 Earnings Presentation
40 slides from Tryg A/s's earnings presentation, Jan 29, 2014
Slide 1: 2013 results Investor presentation
2013 results Investor presentation Follow us on Twitter: @TrygIR
Slide 2: Contents and Disclaimer
Contents Highlights Q4 2013 3 Highlights 2013 4 Premiums and portfolio 12 Claims 17 Investment and capitalisation 21 For new investors 26 Appendix 34 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and informa
Slide 3: Highlights Q4 2013
Highlights Q4 2013 - Result affected by storms and a strong investment result Pre-tax profit • Pre-tax profit of DKK 639m (DKK 638m). D KKm 800 Technical result declined 15.7% to DKK 546m 638 639 (DKK 648m). 600 400 • Combined ratio of 89.1 compared to 87.4 200 impacted by windstorms ~ 45,000 claims
Slide 4: Highlights 2013
Highlights 2013 - Result affected by efficiency initiatives, high level Pre-tax profit of weather claims and high investment result D KKm 3,200 3,017 2,993 2,800 2,400 • Proposed dividend per share of DKK 27. 2,000 1,600 1,200 800 • Return on equity of 21.5% (22.1%) after tax. 400 0 2012 2013 Combin
Slide 5: Important news in Q4 2013
Important news in Q4 2013 • Windstorms with more than 45,000 claims. Sideways coverage “in the money” in H1 2014. • New price differentiated products: • Van insurance in Denmark • House and car in Norway • Boat in Sweden • Efficiency programme progress as planned. DKK 112m reached in Q4. • New IT ag
Slide 6: Strategic initiatives 2013 and 2014
Strategic initiatives 2013 and 2014 2013 Fixing the engine room 2014 Customers, culture and continious improvements Increased price differentiation Increased price differentiation Commercial back on track Customer journey & success culture Building foundation in Sweden Expenses/claims reductions Exp
Slide 7: Important news in 2013
Important news in 2013 • New customer concepts in DK, NO and SE. • Efficiency programme progress as planned • DKK 382m reached in 2013. • DKK 557m since start of programme. • 12 new price differentiated products • 6 new in DK • 5 new in NO • 1 new in SE • Commercial and Sweden on track • Combined ra
Slide 8: Q4 results 2013
Q4 results 2013 Key figures Q4/year 2012/13 DKKm Q4 2012 Q4 2013 2012 2013 Gross premium income 5,076 4,737 20,314 19,504 Claims, net of reinsurance -3,375 -3,148 -13,580 -12,971 Gross expenses -819 -718 -3,295 -3,008 Technical result 648 546 2,492 2,496 Return on investment after 5 154 585 588 tech
Slide 9: 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 92.2 90 87.7 87.7 90 87.9 86.8 86.0 82.6 83.7 85 85 80 80 75 75 70 70 Q4 2012 Q4 2013 2012 2013 Q4 2012 Q4 2013 2012 2013 Group CR Q4 2013: 89.1 Q4 2012: 87.4 2013: 87.
Slide 10: Follow up on efficiency programme
Follow up on efficiency programme • Savings of DKK 557m achieved so far. DKKm Targeted and achieved savings on claims • DKK 112m achieved in Q4 2013. 100 120 300 700 Q4: 90m • Increased benefit from use of Scalepoint. 250 Q1-q3: 210m • Agreements based on fixed prices on materials and repairs. 250 •
Slide 11: Expense ratio development
Expense ratio development • Significant reduction in expense ratio from 16.4 in 2012 to 15.6 in 2013. Expense ratio • Nominal costs on Group level reduced from DKK 3,295m in 2012 to DKK 3,008m in 2013. • Number of manager reduced by 10%. 16.6 16.7 16.6 16.4 • Reduced number of offices. • Outsourcing
Slide 12: Premiums and portfolio
Premiums and portfolio 12
Slide 13: Topline and technical result
Topline and technical result Gross earned premiums, DKKm Technical result, DKKm 22,000 20,314 2,492 19,504 2,900 2,496 20,000 1654 18,000 1587 102 2,400 149 16,000 5,258 5,041 650 573 14,000 1,900 12,000 3,687 604 439 3,528 1,400 10,000 8,000 6,000 900 9,733 9,366 1,233 1,335 4,000 400 2,000 0 -100
Slide 14: Customer retention
Customer retention Private 92% 90% 88% 86% 84% 82% Q1 09 Q4 09 Q 3 10 Q 2 11 Q 1 12 Q 4 12 Q 3 13 Commercial 92% 90% 88% 86% 84% 82% Q 1 09 Q 4 09 Q 3 10 Q 2 11 Q 1 12 Q 4 12 Q 3 13 14
Slide 15: Private – average premiums
Private – average premiums House insurance – average premium (index 2008 = 100) Average premiums increase Y/Y 150 1.2% 2.8% 140 130 120 110 100 90 2008 2009 2010 2011 2012 2013 Motor insurance – average premium (index 2008 = 100) Average premiums increase Y/Y 140 -0.7% 2.5% 130 120 110 100 90 2008 2
Slide 16: Private Sweden – CR and customer retention
Private Sweden – CR and customer retention Private - retention rate 74% 72% 70% 68% 66% Nordea portfolio 64% 62% 60% Q3-08 Q2-09 Q1-10 Q4-10 Q3-11 Q2-12 Q1-13 Q4-13 130 125 125 120 114 115 110 110 105 103 103 102 99 99 100 97 95 95 94 95 91 90 88 88 88 85 80 Q1-10 Q4-10 Q3-11 Q2-12 Q1-13 Q4-13 16
Slide 17: Claims
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Slide 18: CR and claims ratios 2012-13
CR and claims ratios 2012-13 • Underlying development is adjusted for: Underlying claims, net 2012 / 2013 • Large claims • Weather claims 80.1 79.9 73.7 75 73.4 74.9 • Run-off and interest 74.5 71.7 68.2 68.5 • Improved underlying claims ratio on Group level driven by efficiency programme. 2012 2013
Slide 19: Large claims, weather claims and run-off
Large claims, weather claims and run-off Large claims, net DKKm Weather claims, net DKKm Expected annual level 2013: DKK 450m 500 Expected annual level 2013: DKK 500m 600 400 300 400 4 71 620 200 407 4 18 200 3 56 2 16 100 51 112 0 0 Q4 2012 Q4 2013 2012 2013 Q4 2012 Q4 2013 2012 2013 Large claims –
Slide 20: 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 DKK 3.0 300m. 2.0 1.6 1.0 • Improve combined ratio by approx. 1 2006 2007 2008 2009 2010 2011 2012 2013 pp. • Impact NO pension obligation by Pension sch
Slide 21: Investment, capital and financial targets
Investment, capital and financial targets 21
Slide 22: Investment result 2013
Investment result 2013 Assets Return in 2013 Assets Gross investment return Return DKKm Bonds (1.2%) 472 Match Equities (23.4%) 564 Real estate (3.9%) 80 DKK 30.0bn Total (2.5%) 1,116 Match Mismatch DKK 40m Free Free investment DKK Result DKK 891m Return 7.5% 13.0bn 22
Slide 23: Assets allocation
Assets allocation Total assets – Q4 2013 3 7 9 Equities (5) 0 5 Real estate (5) C ov. Bonds (75) Percentage Govt. Bonds (3) Bank deposits/bonds (10) High yield (2) 76 Free portfolio – Q4 2013 Match portfolio – Q4 2013 6 36 Equities (24) Real estate (20) C ov. Bonds (88) 22 Bank deposits/bonds (14) P
Slide 24: Capital position and structure
Capital position and structure Capital development 2012 to 2013 12,000 2,369 1.656 33 • Strong capital position based on 800 10,000 800 2,162 Individual Solvency (IS) with buffer of 8,000 2,422 3,212 50% (2012: 38%) impacted by: 6,000 4,000 6,410 6,366 8,530 • Suggested cash dividend 2,000 0 • 2013
Slide 25: 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% 03 04 05 06 07 08 09 10 11 12 13 14 15 20 20 20 20 20 20 20 20 20 20 20 20 20 25
Slide 26: For new investors
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Slide 27: 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 59.4m shares and a market cap of Gross expenses -3,295 -3,008 DKK 31bn (January 2014). Insurance re
Slide 28: Tryg – at a glance
Tryg – at a glance Share performance since IPO 300 280 260 Tryg Euro Insurance index • Tryg goes back to 18th century 240 220 • The current Tryg was formed in 2002 by 200 sale of Nordea’s non-life activities – 180 with a continuing strategic partnership 160 140 • Non-life insurance in Denmark, Norwa
Slide 29: 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 30: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Nordic Norway EUR 24,5bn (as at Q4-2012) NOK 49,9 bn/EUR 6,7bn (as at Q3-2013) 10.5 14.8 Tryg If 24.8 Tryg 18.2 If C odan 40.0 Gjensidige Gjensidige Länsförsäkringar Percentage Sparebank1 24.5 Topdanmark Other 9.1 10.5 Other 4.8 8.5 8.9 25.4 Sweden Denmark S
Slide 31: 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 31 31 29 januari 2014
Slide 32: Combined ratio performance
Combined ratio performance 110 Premium Premium Efficiency hikes hikes programme 105 100 Smaller 95 adjustments 90 85 80 * 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 2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio from 107 to 9
Slide 33: Key figures 2010-13 and consensus for 2014-15
Key figures 2010-13 and consensus for 2014-15 Consensus DKKm 2010 2011 2012 2013 2014 2015 Gross premium income 18,894 19,948 20,314 19,504 19,449 19,753 Gross claims incurred -15,111 -15,783 -14,675 -14,411 Operating expenses -3,136 -3,271 -3,295 -3,008 Ceeded business -311 507 86 349 Technical int
Slide 34: Appendix
Appendix Follow us on Twitter: @TrygIR 34
Slide 35: Private
Private Gross premiums, DKKm Combined ratio 110 2,500 105 2,350 100 2,200 95 90 2,050 85 1,900 80 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 Q 09 Q 09 Q 09 Q 09 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 13 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
Slide 36: Commercial
Commercial Gross premiums, DKKm Combined ratio 115 1,050 110 105 950 100 95 90 850 85 80 750 75 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 Q 09 Q 09 Q 09 Q 09 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 13 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
Slide 37: Corporate
37 Q 1 Q 50 60 70 80 90 100 110 120 1 1,100 1,200 1,300 1,400 Q 09 2 Q 09 Q 09 2 3 Q 09 Q 09 3 4 Q 09 Q 09 4 1 Q 09 Q 10 1 2 Q 10 Q 10 2 Gross claims ratio 3 Q 10 Q 10 3 4 Q 10 Corporate 4 Gross premium, DKKm Q 10 1 Q 10 Q 11 1 2 Q 11 Q 11 2 3 Q 11 Q 11 3 4 Q 11 Q 11 4 1 Q 11 Q 12 1 2 Q 12 2 Q 12 3
Slide 38: Sweden (Private)
38 Q Q 1 1 0 100 200 300 400 500 60 70 80 90 100 110 Q 09 Q 09 2 2 Q 09 Q 09 3 3 Q 09 Q 09 4 4 Q 09 Q 09 1 1 Q 10 Q 10 2 2 Q 10 Q 10 Gross claims ratio 3 3 Q 10 Q 10 4 4 Gross premium, DKKm Q 10 Q 10 1 1 Q 11 Q 11 2 2 Q 11 Q 11 3 3 Q 11 Q 11 4 4 Q 11 Q 11 1 1 Q 12 Q 12 Sweden (Private) 2 2 Q 12 Q 12
Slide 39: Geographical segments
Geographical segments sh eS Denmark wr Norway "q Fag Q4 2012_Q4 2013 TD 2012 YTD 2013 Gross premiums earned 2456 2,364 9,910 9,534 Gross premiums earned 2.091 1,885 8,239 7.819 Technical result 536 1280 «1.441 1.202 Technical result 54 412 1.017 1.258 Key ratios Key ratios Grass claims ratio 62,6 86
Slide 40: Economic key figures
Economic key figures Denmark Sweden % 2013 2014 % 2013 2014 GDP Growth 0.3 1.3 GDP Growth 1.0 2.4 Inflation 0.8 1.4 Inflation 0.0 0.9 Unemployment 5.9 5.9 Unemployment 8.0 7.7 Current account Current account 6.5 5.8 6.0 5.8 balance in % of GDP balance in % of GDP Budget balance in % of Budget balanc