Tryg A/s · OMXCOP:TRYG
Tryg A/s — Berenberg European Conference 2012
21 slides from Tryg A/s's conference presentation, Dec 4, 2012
Slide 1: Berenberg conference
Berenberg conference Header Pennyhill, London 4. December 2012 CFO Tor Lønnum Presentation can be downloaded at Tryg.com
Slide 2: Disclaimer
Disclaimer 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 results of operations, financ
Slide 3: Tryg – at a glance
Tryg – at a glance 250 Share performance since IPO 200 • Tryg goes back to 18th century 150 • The current Tryg was formed in 100 2002 by sale of Nordea’s non-life activities – with a continuing 50 strategic partnership 0 05 06 07 08 09 10 11 06 07 08 09 10 11 12 • Non-life insurance in Denmark, 20 2
Slide 4: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Nordic Norway EUR 21.6bn (Q4 10) NOK 46.9 bn/ EUR 6.0nb (Q2 12) 11.4 15.8 Tryg 21.9 Tryg If If 17.4 C odan Gjensidige 38.9 Gjensidige Percent Sparebank1 Percent Länsförsäkringar 11.3 25.1 Other Topdanmark 9.5 Other 5.3 9.0 25.9 8.5 Sweden Denmark SEK 63.7bn/
Slide 5: Short term – Q3 2012
Short term – Q3 2012 5
Slide 6: Highlights Q3 - Result favoured by strong insurance and investment result
Highlights Q3 - Result favoured by strong insurance and investment result D KKm Pre-tax profit 2,379 2,400 • Technical result of DKK 652m (DKK 480m). YTD 2,000 technical result of DKK 1,844m (DKK 1,262m). 1,600 1,136 1,200 976 800 • Combined ratio of 87.7 compared to 91.5. 400 279 0 Q3 2011 Q3 2012
Slide 7: Improved technical result impacted by restructuring costs
Improved technical result impacted by restructuring costs • Technical result grew from DKK 480m to DKK 652m; positively impacted by price increases but negatively impacted by restructuring costs of DKK 88m. • Premium reduced by 1.4% in local currency (+1.2% in DKK). Positive impacted by price increa
Slide 8: Large claims and weather claims
Large claims and weather claims - High level of large claims offset by lower level of weather claims Large claims, gross DKKm Weather claims, DKKm Expected full year 1,800 1756 Expected full year 1,000 858 level 2012: 600 DKKm level 2012: 550 DKKm 1,400 800 600 1,000 459 721 396 400 107 600 497 244
Slide 9: Sale of Tryg Finland
Sale of Tryg Finland Cash flow effect of sale • Sale will both have an accounting and a Tryg Finland capital effect. Assets Liabilities Goodwill payment EUR 15m • Accounting effect slightly negative. • Write down on intangible assets Capital relief of ~ DKK 100m incl. goodwill Assets Capital ≈ DKK 2
Slide 10: Longer term development
Longer term development 10
Slide 11: New value drivers
New value drivers Premium increases Size/influence Cost reductions Premium increases Commercial initiatives New House Cost Insurance Premium increases reductions New House Commercial Insurance initiatives Next Level New Nordic Sourcing Contents Premium increases Next Level Sourcing 2009 2010 2011 20
Slide 12: Retention remains high and average premiums going up
Retention remains high and average premiums going up Private - retention rate Motor insurance – average premium (index 2005 = 100) 120 Average premiums in past 12 months 94% -0.4% 6.3% 90% 110 86% 100 82% 78% 90 74% 70% 80 2005 2006 2007 2008 2009 2010 2011 2012 05 06 06 07 07 08 08 09 09 10 10 11 1
Slide 13: Combined ratio performance
Combined ratio performance 110 Premium Premium Savings hikes hikes programme 105 100 95 Smaller adjustments 90 85 80 * 11 12 00 01 02 03 04 05 06 07 08 09 10 11 04 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 D D YT YT • 2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio from
Slide 14: Nordea partnership agreement renewed
Nordea partnership agreement renewed P/C insurance: • Continued partnership in Denmark and Norway • Partnership ends in Sweden and Finland P/C Distribution • Profit sharing and portfolio commission important incentives in new agreement • Multi channel strategy Life and Pension: • Denmark - new commi
Slide 15: Savings programme - Follow up on cost reduction programme
Savings programme -Follow up on cost reduction programme Total Savings programme Achieved savings in expenses year to date DKKm Total reduction 300 40 15 Q3 2012 in expenses 25 H1 2012 DKK 400m 300 125 100 Transfer to Claims 125 Claims 50 Claims 600 DKK 600m Total savings 2013 Achieved 2014 2015 exp
Slide 16: Savings programme - Follow up on claims
Savings programme -Follow up on claims Targeted and achieved savings on claims Distribution of claims savings on line of business 80 60m Q3 2012 20m 1H 2012 100 Other 700 15% 250 250 Building Motor 26% 59% 100 Total 2012 Achieved 2013 2014 2015 savings on claims Target Average repair price, private
Slide 17: Assets allocation
Assets allocation Total assets – Q3 2012 2 5 5 Equities (5) 11 6 Real estate (5) C ov. Bonds (57) Percentage Govt. Bonds (17) Bank deposits/bonds (14) 71 High yield (2) Free portfolio – Q3 2012 Match portfolio – Q3 2012 30 Equities (24) 10 Real estate (27) 7 C ov. Bonds (64) Bank deposits/bonds (5)
Slide 18: Capitalisation
Capitalisation S&P model IS model • Capital buffer based on S&P’s capital D KKm model increased to 18% (Q2: 13%) and 12,000 impacted by: 18% buffer 10,000 • Strong Q3 2012 result 8,000 51% buffer 6,000 • Strengthening of pension obligation in TAC S&P A-level Available IS capital requirement Norway o
Slide 19: Combined ratio target
19 CR % ta r 0% 10% 20% 30% 40% 20 Ex ge 03 p en t Q 80 82 84 86 88 90 92 20 se 3 /c 20 04 la 13 Cl im 20 ai s 05 m in s it i < 90 20 in at fla iv 06 t io es 20 W n ea ab 07 th ov er e 20 Le an CP 08 gi d I sl la 20 at rg io e 09 n cl et ai 20 c m 10 (W s C, 20 ROE after tax YT ta 11 xe D s. .) Comb
Slide 20: Summary
Summary • From growth to profitability focus • More price differentiation • 3 years savings program to cut claims and costs by a total of DKK 1bn. • Combined ratio at 90 or below from Q3 2013 and expense ratio < 15 in 2015 • ROE target of 20 % • Strong capital position • New dividend policy to be pu
Slide 21: Q&A
Q&A Follow us on Twitter: @TrygIR