Tryg A/s · OMXCOP:TRYG
Tryg A/s — Investor Day (June 2017)
61 slides from Tryg A/s's investor day presentation, Jun 19, 2017
Slide 1: Analyst Day
Analyst Day 19 June 2017 Follow us on Twitter: @TrygIR
Slide 2: Agenda
Agenda Introduction: Morten Hübbe, CEO Recent financial development: Christian Baltzer, CFO Cyber insurance: Ulrik Andersson, Special Risk Director Innovation/The Camp: Lars Bonde, COO and Christian Visti Larsen, CEO of NewBanking Tryg Garanti: Mads Løgstrup, Managing Director Tryg Garanti Concludin
Slide 3: Recent financial development
Recent financial development Christian Baltzer, CFO
Slide 4: Underlying claims ratio at same level as Q1 2016
Underlying claims ratio at same level as Q1 2016 Claims ratio, net (Commercial DK & NO) Group underlying Claims ratio at 77.0% in line with Q1 2016 75 Private underlying Claims ratio at 75.5% also in line with Q1 2016 70 65 Corporate & Sweden underlying claims ratio developed favourably 60 “Expected
Slide 5: On track to meet the 2017 expense ratio target
On track to meet the 2017 expense ratio target Efficiency programme up until 2017 (DKKm) Expense ratio 395 388 15.7 15.6 15.3 15.3 125 15.1 14.8 14.9 14.4 14.6 175 75 65 50 60 250 150 2013 2014 2015 2016 Q1 2016 Q1 2017 145 100 105 25 As reported Adjusted for one-offs 45 2012 2013 2014 Target 2015 T
Slide 6: Solvency position Q1 2017
Solvency position Q1 2017 Solvency capital requirement walk • Solvency ratio based on the Partial Internal Model is 202 (Q4 2016: 194). 5,200 5,150 • Own Funds (OF) is primarily impacted by -120 5,100 5,050 46 0 -14 • Result Q1 2017 of DKK 605m -1 -12 5,000 -26 26 • Dividends of DKK 452m (Q1 2017) 4
Slide 7: Tryg is an income stock
Tryg is an income stock Shareholder remuneration since 2012 Shareholder breakdown 2016 DKK 10 9 13 8 3.5 3.5 3.4 7 3.2 2.6 Danish 6 15 institutional 5 Percentage Non-Danish 4 institutional 60 3 6.0 6.2 5.2 5.4 5.8 Smaller 12 2 shareholders 1 1.6 0 2012 2013 2014 2015 2016 Q1 2017 Ordinary dividend E
Slide 8: It is important to know your investment case
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 8
Slide 9: Cyber insurance
Cyber insurance Ulrik Andersson, Special Risk Director
Slide 10: Agenda
Agenda 1. Cyber risk – sign of the times 2. The criminals are going digital 3. Data breaches – regulatory development 4. Cyber Insurance and Tryg’s approach 5. Where will it go?
Slide 11: Cyber Risk - sign of the times
Cyber Risk - sign of the times 11
Slide 12: Cyber Risk - sign of the times
Cyber Risk - sign of the times • Globalisation fueled by technology • Dramatic increases in flows of goods and capital • Fully automated and digitalised Telegeography.com production processes • Connected devices • Generation and hoarding of data Opportunities and vulnerabilities 12
Slide 13: Cyber Risk - sign of the times
Cyber Risk - sign of the times Threat from cyber crime against Danish authorities and businesses is Very High. In 2016 victims of cyber related crime reported to the Police incurred losses of more than DKK 180m 13
Slide 14: From security to Risk management
From security to Risk management 14
Slide 15: Connected world
Connected world DATACENTER 1 Outsourced DATACENTER 2 develpoment 15
Slide 16: Cyber threats 2017
Cyber threats 2017 Advanced Crimeware persistent Cyber CaaS threats Data breaches terrorism Knowingly /unknowingly EU-GDPR Phishing Drive by Ransomware CEO Fraud attacks Virus Denial of Spear Trojans Service Internet Phishing Malware (Ddos) of Things 16
Slide 17: Criminals are going digital....
Criminals are going digital…. 17
Slide 18: Phishing
18 Phishing DARKReading “a.” blackhat Interop Authors _ Slid Video TechLibrary University Radio Calendar Black Hat ANALYTICS ATTACKS/ APPSEC CAREERS& CLOUD ENDPOINT oT MOBILE OPERATIONS BREACHES PEOPLE Tryg |© ENDPOINT 91% Of Cyberattacks Start With A Phishing Email Phishing remains the number one a
Slide 19: Physical phishing
Physical phishing ‘Mobil | 3 min. siden > te piel me a whose Eo fuser? iPhone 7 Sadan bliver de ventes at darligere end 6S Opdateret 26. sep. 2016 - ki. 00:33 fA & Opfindsomme hackere: Smider farlige USB-nggler foran firmaer Heine Jorgensen, techredaktor pa Ekstra Bladet Vestegnens Politi PO! Veer o
Slide 20: CEO fraud
CEO fraud From: Morten Hiibbe To: Christian Baltzer Date: 25-05-2016 07:57 Subject Re: Wire Hi Christian, Hope your day is going fine. I need you to process an international wire transfer for me this morning and what details would you need to get it done? I awaits your immediate response, Regards, M
Slide 21: Threats are real
Threats are real Tryg|©
Slide 22: Satan – a new business model
Satan – a new business model 22
Slide 23: Data breaches
Data breaches An emerging regulatory environment • Increased focus on data protection over last decade • Industry standards for payment cards including fines in case of breaches • Data Security Breach Notification Legislation in California 2003 – now in place in 48 US states • General Data Protectio
Slide 24: Cyber insurance market
Cyber insurance market Source AON Tryg estimates • US market frontrunner in development of cyber • A similar development in Europe and Scandinavia insurance is expected following both the GDPR and • Increase in market closely connected with Data development in criminal activity Breach Protection Leg
Slide 25: Cyber vs traditional insurance
Cyber vs traditional insurance Cyber insurance First party Third party Property damage Notification Business interruption Privacy liability Forensics Data restoration Media liability Credit monitoring Fraud Regulatory costs Extortion 25
Slide 26: Tryg Cyber insurance
Tryg Cyber insurance Nordic product Forensics Network damage Restoration of systems and data • Targets larger companies Costs associated with extortion • Launched in Sweden, Denmark and Loss of Data Legal assistance Norway in 2017 Third party liability • Claims handling by global loss Re
Slide 27: Tryg Cyber insurance
Tryg Cyber insurance Nordic Product • Coverage is provided from DKK 1m and up to DKK 20m • Tryg is providing cover in cooperation with international reinsurer and keeps 10% on a proportional basis • Standard pricing up to a turnover of DKK 500m otherwise referral on a case by case basis Local Produc
Slide 28: Where will it go ?
Where will it go ? Risk or Peril ? Wannacry outbreak map 28
Slide 29: Where will it go ?
Where will it go ? Stand alone or integration? Cyber insurance Third party First party Property Liability 29
Slide 30: Where will it go ?
Where will it go ? Risk Management never goes out of style..! Identify Monitor Evaluate Mitigate 30
Slide 31: Innovation Tryg
Innovation Tryg Lars Bonde, COO
Slide 32: Do we have a choice?
Do we have a choice? 32
Slide 33: The world is changing around us – our strategy needs to reflect this change
The world is changing around us – our strategy needs to reflect this change The emergence of InsurTech has been a key driver for innovation within the insurance industry Analysts predict that every third job in the industry will disappear and that the decisions that we take now will determine our fu
Slide 34: Striking the right balance between short-term, predictable growth and long-term bets
Striking the right balance between short-term, predictable growth and long-term bets Initiatives with sufficient scale potential are important considering future challenges Distribution of innovation focus 2016/2017 Changing and stronger competition High impact 10% Car and Home & Contents decline: d
Slide 35: Tryg a cautious entrepeneur
Tryg a cautious entrepeneur • Startup mentality • Exploring technology and new business models • Time to market is key By taking an entrepeneurial approach we • Build further on New Business & Customer Innovation abilities to bring new products to market, fast • Address the declining riskpools of cu
Slide 36: Innovation in Tryg
Innovation in Tryg Ung Sjåfør & We Drive 36 eProtect cyber insurance …?
Slide 37: Share economy – the next big thing?
Share economy – the next big thing? Share economy • Short term insurance • Development of insurance solutions in cooperation with share service companies • 13 partnerships in place • Security – crucial for the success of share economy? DKK 2,300bn expected global turnover in 2025 – and growth of 25%
Slide 38: Will the disruptive insurtech- or the insurance companies win?
Will the disruptive insurtech- or the insurance companies win? 1. Awareness of the need for a change Adaptation to the new environment – Tryg new organisation 2. Desire to participate in and support the change Increased market and customer focus End-to-end responsibility and authority Speed 3. What
Slide 39: Tryg Garanti
Tryg Garanti Mads Løgstrup, Managing director, Tryg Garanti
Slide 40: Agenda
Agenda 1. Tryg Garanti at a glance 2. Financial Performance 3. Business Model and Strategy 4. Competitors and market 5. Organisation 6. Reinsurance 7. Tryg Garanti and The Camp
Slide 41: Tryg Garanti is about counterparty risk
Tryg Garanti is about counterparty risk “Tryg Garanti provides peace of mind when commercial contracts are entered into” 2% of Tryg gross earned premium 7% of technical result 41
Slide 42: Tryg Garanti at a glance
Tryg Garanti at a glance Tryg Garanti (TMG) is the largest provider of surety contract and supply bonds in the Nordic area and has a developing position in trade credit insurance. Clients and product lines Strength of TMG operation • The main product line is surety bonds • World class in: • Meeting
Slide 43: TMG Business model
TMG Business model Surety: Seller Contract Buyer TRADE SURETY Trade Credit: Reinsurance Tryg Commercial & Corporate 43
Slide 44: The story
The story The story: • Danish surety portfolio: +100 years old • Surety launched: Finland Norway • Norway in 2006 • Sweden in 2007 Sweden • Finland in 2008 • Trade credit launched: Denmark • Denmark in 2010 • Norway, Sweden and Finland in 2015 • TMG is now established as the #1 surety insurer in the
Slide 45: Strong financial performance
Strong financial performance “TMG business is highly profitable” Strong profitability across economic cycles 45
Slide 46: TMG - Surety and Trade Credit Insurance
TMG - Surety and Trade Credit Insurance Premium & technical result DKKm NO SE FI Trade,DK 400 300 200 100 Combined ratio 0 2005 2007 2009 2011 2013 2015 2016 2017F 100 Premium Tech. Result Cost ratio 0 2005 2007 2009 2011 2013 2015 2016 2017F 40% Years of financial crisis 30% 20% 10% 0% 2005 2009 20
Slide 47: Efficiency gains by employee
Efficiency gains by employee 47
Slide 48: Digitalised business model
Digitalised business model “Efficiency is core to client satisfaction and TMG profit” Further client process integration and development of clever 3rd party distribution 48
Slide 49: TMG Strategy
TMG Strategy How to create Critical obstacles: Must-win battles: more value: • Product development • Developing external • Trade Credit • Solutions allowing TMG distribution channels introduction product integration into for Nordic Trade Credit • Growth in Trade Credit is client processes and the pr
Slide 50: Strong competitors are few
Strong competitors are few “TMG has critical mass in a market where critical mass is difficult to obtain” Many but small competitors in surety Limited market size deter competition 50
Slide 51: Competitors and market
Competitors and market • Few but large competitors in Trade Credit • Many banks are competitors in Surety (but with little focus) • International specialist insurers are main challengers (but do not yet match TMG service offering or efficiency) 51
Slide 52: Expense ratio in Nordic banking and insurance
Expense ratio in Nordic banking and insurance Source: 2016 Annual Reports TMG advantage over competitors increased further in 2016. The advantage is a key explanation for the high profit potential of the portfolio. 52
Slide 53: Nordic surety market
Nordic surety market Overall Nordic market premium is EUR 300m, split between banking and insurance providers. Market share split by bank and insurance Market share split by insurance providers providers Rates are under pressure for large clients, whereas rates are stable for SME clients. For 2017,
Slide 54: Nordic trade credit market
Nordic trade credit market Overall Nordic market premium is EUR 150m. Market share split by insurance providers For 2017, an unchanged overall premium volume is expected as the benign macro economic environ- ment put pressure on rates due to lower claims levels. Also self insurance is an issue in a
Slide 55: International Surety and Trade Credit performance
International Surety and Trade Credit performance The ICISA organisation publishes market data from its members once a year. Latest available numbers are for 2015. Claims ratios remain very satisfactory for both Surety and Trade Credit Premium growth is strong in the surety line, whereas a flattenin
Slide 56: Surety Market Potential
Surety Market Potential • Internationally, surety is a banking product • Basel IV rules (capital floors) will improve competitive advantage of insurance companies Market split – banking and insurance 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Belgium 90% 10% Denmark 30% 70% Germany 70% 30% Ireland
Slide 57: Tryg Garanti is scalable
Tryg Garanti is scalable “Tryg organisation and infrastructure is scalable” Matrix organisation Digitalised processes 57
Slide 58: Risk management
Organisational chart The organisational chart CEO, Finance & central functions reflects a matrix where unit managers are responsible for guidelines across countries (how things are done) and HES NIE MIJ KIS MDL country managers are responsible for local DAA Client Relations, Trade credit allocation
Slide 59: A risk carrier or a risk broker ?
A risk carrier or a risk broker ? ”Tryg Garanti financial performance is leveraged by reinsurance – and risk reduced” Ceding +65% of gross premium Ceding +95% of peak risks 59
Slide 60: Managed peak risk and loss ratio
Managed peak risk and loss ratio Historic claims volatility is managed by reinsurance 300.0 250.0 200.0 150.0 100.0 50.0 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -50.0 -100.0 Gross claims ratio Net claims ratio after reinsurance Financial crisis 61
Slide 61: Tryg Garanti and The Camp
Tryg Garanti and The Camp The Camp provides new opportunities to Tryg Garanti product development: • NewBanking (blockchain) could transform traditional whole turnover trade credit policies into a single transaction market for privately funded receivables • UNICONTA could become first cloud based di