Tryg A/s · OMXCOP:TRYG
Tryg A/s — Investor Day (November 2017)
44 slides from Tryg A/s's investor day presentation, Nov 20, 2017
Slide 1: Tryg – Strengthening the Core, while Embracing the Future
Tryg – Strengthening the Core, while Embracing the Future Capital Markets Day London, 20 November 2017
Slide 2: Agenda
Agenda 09:30-11:30 Targets and initiatives • Follow-up on CMD targets and initiatives 2015 – 2017 3 • Targets and initiatives 2018 – 2020 9 Tryg – Strengthening the Core, while Embracing the Future 11 • Claims Excellence 14 • Digital Empowerment of Customers 19 • Product & Service Innovation 24 • Di
Slide 3: Follow-up on CMD targets and initiatives 2015 - 2017
Follow-up on CMD targets and initiatives 2015 - 2017
Slide 4: Tryg 2015 – 2017: Aiming for world class
Tryg 2015 – 2017: Aiming for world class Target picture 2015 - 2017: Simultaneously providing Target drivers 2015 - 2017 world class earnings and customer experiences 1 2 Next Level Leading in Pricing Efficiency Earnings 3 Customer 4 Customers Low Risk, Care worth High Return • Utilising the mutual
Slide 5: Delivering on 2017 targets
Delivering on 2017 targets Targets presented on Capital Markets Day, 5 November 2014 Category Key Performance Indicators Targets 2017 Q1-Q3 2017 Comments Combined ratio ≤ 87 83.8 Delivered as promised Expense ratio ≤ 14 14.1 Delivered as promised Return on equity ≥ 21% 30.9% Delivered as promised Ea
Slide 6: Solid performance across all core businesses
Solid performance across all core businesses Combined ratio - Private (DK & NO) 49% of Combined ratio - Commercial (DK & NO) 23% of premium premium 90.0 90.0 85.4 85.0 83.8 85.0 83.6 82.5 82.2 82.1 81.6 79.4 80.0 80.0 75.0 75.0 70.0 70.0 2014 2015 2016 Q1-Q3 2017 2014 2015 2016 Q1-Q3 2017 Combined r
Slide 7: World class achieved on earnings
World class achieved on earnings Combined ratio: Strong Nordic performance Expense ratio: Best in class International peers Nordic peers International peers Nordic peers 100% 30% 95% 25% 90% 20% 15% 85% 10% 80% 5% 75% 0% 2013 Q1-Q3 2017 2013 Q1-Q3 2017 Likewise a strong performance on ROE – benchmar
Slide 8: Number of products drives value
Number of products drives value Customer targets put into perspective (case: Private Denmark) Net Promoter Score (NPS) Avg. customer lifetime (years) Lifetime value following number of products 45 13.8 12.9 8.3 21 14 4.8 3.7 1.0 1 product 2 products ≥3 products 1 product 2 products ≥3 products 1 pro
Slide 9: Targets and initiatives 2018-2020
Targets and initiatives 2018-2020
Slide 10: Introducing a new guiding purpose for Tryg
Introducing a new guiding purpose for Tryg Purpose “Tryg(hed)” Clarity, unity, differentiation = Value creation Feeling protected and cared for ”As the world changes, we make it easier to be tryg” Grasping opportunities to develop Adjusting to customer Staying relevant to maximise rather than defend
Slide 11: Tryg 2018 – 2020: Strengthening the core, while embracing the future
Tryg 2018 – 2020: Strengthening the core, while embracing the future Target picture 2018 - 2020: Continuously aiming for Targets 2020 a healthy balance between earnings and customers Earnings Tryg 2018 - 2020 Technical result DKK 2.8bn Combined ratio ≤ 87 Tryg 2015 - 2017 Expense ratio ~14 reaffirme
Slide 12: Targeting the highest technical result before run-off ever
Targeting the highest technical result before run-off ever Technical result: Historical performance vs. 2020 target DKKbn 3.0 2.8* 2.8 2.4 2.5 2.5 2.4 2.4 • Highest technical result 2.5 2.0 1.7 before run-off ever! 1.6 1.5 2008-2016 average technical 1.0 result before run-off 0.5 0.5 - *DKK 2.8bn ad
Slide 13: Strategic target drivers & key performance indicators
Strategic target drivers & key performance indicators 1 2 Digital Empowerment of Customers Claims Excellence KPI: Straight through processing level of 50% on claims KPI: DKK 600m in claims cost reduction KPI: Self-service level of 70% on all contacts 3 Product & Service Innovation 4 Distribution Eff
Slide 14: Strategic Theme: Claims Excellence
Strategic Theme: Claims Excellence
Slide 15: Why is claims excellence important?
Why is claims excellence important? Targets the bulk of our cost (Q1-Q3 2017) 69.7% 14.1% Claims ratio (2016 gross claims = DKK 11.6bn) Expense ratio A bulwark against claims inflation jumps Utilises scale Bumper prices 2011 – 2016, Ford Focus (DKK 1,000m) Avg. claim cost car – Tryg vs. others 25 12
Slide 16: What will improve claims excellence?
What will improve claims excellence? New efficiency programme 2018 – 2020: DKK 600m Procurement: Continuous leverage of scale 50% DKK 600m Fraud: Automating detection and broadening competences 25% Steering & Administration: Claims steering and administration of compensation 25% 16 Capital Markets D
Slide 17: How procurement supports claims excellence
How procurement supports claims excellence Concept: Targeting unaddressed spend Evidence: Savings of DKK 1.2bn realised 2012 – 2017: Harvesting the low-hanging fruits 500 1,200 DKKm ~10% Non-addressable • Renegotiating supplier network 40% Unaddressed 700 • Outsourcing • E-auction, Scalepoint 50% Ad
Slide 18: How fraud and claims steering supports claims excellence
How fraud and claims steering supports claims excellence Fraud Claims steering Concept: Broadening competences and introducing automation Concept: Better steering of claims to Tryg partners for lower cost Evidence: Improved steering of car glass claims Only ~20% of claims employees excel in fraud de
Slide 19: Strategic Theme: Digital Empowerment of Customers
Strategic Theme: Digital Empowerment of Customers
Slide 20: Why digital customer empowerment?
Why digital customer empowerment? Customers increasingly request… Growing interest in, and use of Tryg’s digital solutions 1,500 1,000 Convenience Logins My Page / 500 My Company +34% 0 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. No. of logins 2016 No. of logins 2017 40% 30% 20% Online claims 10% Tr
Slide 21: What are we doing to empower our customers?
What are we doing to empower our customers? Tryg’s digital journey Digital targets 2020 Digitalisation 2018 – 2020 50% Straight Through Processing on claims • Straight Through Processing • Automation / Robotics • Self-service 2015 – 2017 70% Self-service level • Buy online on all contacts • File cla
Slide 22: How to work with straight through processing
How to work with straight through processing Concept: STP if simple, automation if complex Evidence: Automation – Private Car, DK (high complexity) Distribution of claims (number) and claims handling cost = Automation level ~850k DKK 1.4bn 30% 0% 27% 80% 80% 65% 20% 80% Notification Coverage Estimat
Slide 23: How to work with self-service
How to work with self-service Concept: Empowerment & fewer non-value contacts Evidence: My Page / My Company Empowerment across functionalities 1,800 +34% 1,600 Sales Service Claims 1,400 1,200 1,000 800 600 • All products • Change mileage • Track ‘n Trace 400 • Adjust own risk • Web notification 20
Slide 24: Strategic Theme: Product & Service Innovation
Strategic Theme: Product & Service Innovation
Slide 25: Why is product and service innovation important?
Why is product and service innovation important? Transformation of traditional risk pools …and emergence of new ones Denmark: Premium development 2007 – 2016 (index: 2008)* Example: Health insurance market DK & NO 2008 - 2016 140% 2,000 1,856 120% 110% 100% 1,500 1,055 80% 90% 1,000 60% 40% 502 500
Slide 26: What will boost product and service innovation?
What will boost product and service innovation? Expanding existing business Development of new products Add-on services Child PaYG Health +55 Product Service ID theft Pet Sharing Eco. Strong traction in new growth products (index = 2014) Target 2020+: DKK 1bn in new products & services 1,000 176 Peo
Slide 27: How to expand existing business
How to expand existing business Concept: Expanding Tryg Garanti’s market Evidence: Cost ratio benchmark (2015) 35% • Offers surety contracts and trade credit insurance with very 30% 25% strong performance ratios (Q1-Q3 2017): 20% 15% 10% 5% 6.5 61 63 0% Expense Combined Net Promoter ratio ratio Scor
Slide 28: How to add new products and services
How to add new products and services Child insurance – Private DK SME cyber insurance, DK Concept: Child insurance packages (Minimum, Basic, Super) Concept: Cyber product in coop. with numerous domain experts Evidence: number of policies sold since launch Evidence: number of policies sold since laun
Slide 29: Strategic Theme: Distribution Efficiency
Strategic Theme: Distribution Efficiency
Slide 30: Why is distribution efficiency important?
Why is distribution efficiency important? Constitute half of total cost Need for improving both cost and sale Distribution cost as a % of total cost: & Claims & admin. cost ~50% ~50% Distribution cost Lower cost … and more sale Distribution cost improved the least since 2012 A continuation of previo
Slide 31: What will increase distribution efficiency?
What will increase distribution efficiency? Focus areas Levers (examples) Target 2020 DKK 150m in technical Efficiency through • Digital integration to partners result impact technology • Analytics Product • Packaging simplification • Pay as you go 150 Exploring new • Integrating claims and sales ch
Slide 32: How to boost efficiency through technology
How to boost efficiency through technology Concept: Moving from push to pull through digital Evidence (case: large Norwegian partner): integration to partners 17 percentage points increase in pull distribution year 1 Total Nordic portfolio of large partners +17pp 63% = DKK 5bn 46% Utilising partners
Slide 33: How to simplify products and explore new channels
How to simplify products and explore new channels Concept: Packaging of products Concept: Sales & low complexity claims handling Evidence: Increase in avg. number of products sold Evidence: Win-rates improved 13pp on average 11% 50% 4.1 3.7 7% 23% 35% 22% 1.4 1.5 1.3 1.6 Tied agents Inbound Outbound
Slide 34: Financial impact of strategic initiatives
Financial impact of strategic initiatives
Slide 35: Total financial impact of strategic initiatives
Total financial impact of strategic initiatives DKK 2,800m Normalised Lower run-off Investment Claims Digital Empower. Growth and Product Distribution Technical result 2020 technical result 2017 Excellence of Customers & Service Innovation Efficiency * Normalised assumptions for weather claims and l
Slide 36: Balance sheet optimisation
Balance sheet optimisation
Slide 37: Shareholder return & balance sheet optimisation
Shareholder return & balance sheet optimisation Sustained focus on shareholder return Balance sheet optimisation remains core • Maintain ordinary dividend policy: Nominal stable growing dividend • New dividend policy • ROE target increased from 21% to 23% • Reduced investment volatility 2012 - 2014
Slide 38: SCR reduction, potential Tier 1 issue & IT investment
SCR reduction, potential Tier 1 issue & IT investment SCR reduction through model improvements IT investment supporting 2020 targets • SCR using partial internal model. Further optimisation = ~ -10% • Increased IT spend impact P&L within 14% expense ratio, DKK 0.5bn impact balance sheet. • Workers’
Slide 39: Pro-forma solvency ratio of 213 supports further shareholder returns
Pro-forma solvency ratio of 213 supports further shareholder returns 211% +0.5 -1.0 213% +0.5 -0.5 10,241 9,241 4,845 4,345 Solvency ratio SCR reduction of up Extraordinary dividend New Tier 1 issue of IT investments of Proforma solvency ratio Q3 2017 to DKK 0.5bn of DKK 1.0bn DKK 0.5bn DKK 0.5bn Q3
Slide 40: Portfolio rebalancing and M&A
Portfolio rebalancing and M&A Solvency ratio improvement via portfolio rebalancing Continuously considering M&A opportunities - Portfolio overview as of Q3 2017 Long history of M&A High Health & Private Accident Cars Return on equity Private Content 1999 2009 2014 2015 2017 Child Liability Comm. Car
Slide 41: Concluding remarks
Concluding remarks
Slide 42: Delivering on 2017 targets
Delivering on 2017 targets Targets presented on Capital Markets Day, 5 November 2014 Category Key Performance Indicators Targets 2017 Q1-Q3 2017 Comments Combined ratio ≤ 87 83.8 Delivered as promised Expense ratio ≤ 14 14.1 Delivered as promised Return on equity ≥ 21% 30.9% Delivered as promised Ea
Slide 43: Tryg’s equity story – a leading Scandinavian non-life insurer
Tryg’s equity story – a leading Scandinavian non-life insurer Tryg 2018 – 2020: Product & Service Claims Excellence Strengthening the core, while embracing the future Innovation DKK 600m in claims +DKK 1bn in new cost reduction Customer targets 2020 Financial targets 2020 products by 2020+ • Technic
Slide 44: Tryg: A dividend stock
Tryg: A dividend stock Tryg’s historical yield 2013 – 2016 Benchmark of combined ratio vs. volatility - Continuous and attractive shareholder remuneration - Leading combination of CR and volatility Avg. combined ratio 2012 – Q1-Q3 2017 9% 8.3% 90% 88% 86% 84% 82% 7.6% 1% 6.6% 6.9% Standard deviation