Tryg A/s · OMXCOP:TRYG
Tryg A/s — Tryg A/S Ord New — Q1 2023 Earnings Presentation
57 slides from Tryg A/s's earnings presentation, Apr 20, 2023
Slide 1: Q1 2023 results
Q1 2023 results Investor presentation 1
Slide 2: Contents and disclaimer
Contents • Highlights Q1 2023 04 • Premiums and portfolio 10 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 histor
Slide 3: Executive Summary: a new world of IFRS 17
1 | HIGHLIGHTS Q1 2023 Executive Summary a new world of IFRS 17 Introduction to new accounting standard, IFRS 17 Background • IFRS 17 came into effect on 1 January 2023: “IFRS 17: Insurance Contracts” came into effect on 1 January 2023, changing the financial reporting of insurance companies. For Tr
Slide 4: Financial highlights Q1 2023
1 | HIGHLIGHTS Q1 2023 Financial highlights Q1 2023 Q1 DPS of DKK 1.85 up 19% and Insurance service result Combined ratio of 84 Investment income of DKK 167M solvency ratio at 200 Extraordinary dividend Ordinary dividend Expense ratio Claims ratio 1,474 94.6 167 88.9 161 13.3 84.0 13.7 1.65 13.3 6.2
Slide 5: Customer highlights Q1 2023
1 | HIGHLIGHTS Q1 2023 Customer highlights Q1 2023 Customer satisfaction KPI TryghedsGruppen has paid out a member bonus CMD Target 2024 88 Customer satisfaction improved to 86 driven by slightly improvement across all areas • Private Denmark increased focus on e-mail inbox handling time. 67% (20 bp
Slide 6: Insurance service result comparison
1 | HIGHLIGHTS Q1 2023 Insurance service result comparison Insurance service result comparison Full year Insurance service result split by geography Norway Denmark 29% 1,474 2021 9% Sweden 62% 1,014 Norway Denmark 23% 358 38% 1) 2022 39% Q1 2022 (IFRS 17) Pro-forma (IFRS 17) Actual (IFRS 17) Sweden
Slide 7: Higher insurance service result reflects higher interest rates and lower claims
1 | HIGHLIGHTS Q1 2023 Higher insurance service result reflects primarily higher interest rates and lower than normal large & weather claims Private Insurance service result Group insurance service result walk DKKm DKKm 795 828 1,474 370 Q1 2022 (IFRS 17) Q1 2022 pro-forma Q1 2023 Run-off Q1 2023: D
Slide 8: Status on RSA synergies per Q1 2023
1 | HIGHLIGHTS Q1 2023 Status on RSA synergies per Q1 2023 In Q1, Tryg realised synergies of DKK 64m bringing to an acc. total to DKK 470m Realised synergies according to plan • In Q1, synergies of DKK 22m stems from administration & distribution, DKK Accumulated synergy realisation vs. original bas
Slide 9: Insurance revenue and portfolio
Insurance revenue and portfolio 9 20-04-2023
Slide 10: Insurance revenue up 4.6% compared to Q1 2022 pro-forma
2 | REVENUE AND PORTFOLIO Insurance revenue up 4.6% compared to Q1 2022 pro-forma Local currencies Insurance revenue growth by segment Q1 2023 (pro-forma growth %) DKKm Q1 22 pro-forma Q1 23 reported pro-forma growth (%) Q1 23 8.8 Private 5,941 6,002 4.9 4.9 4.6 Commercial 2,317 2,273 2.3 2.3 Corpor
Slide 11: House and motor insurance - average prices moving upwards
2 | REVENUE AND PORTFOLIO House and motor insurance - average prices moving upwards House insurance, average earned premium, index development Price in House insurance DK: Price increases of 6.6% (Q4 22 6.3%) reflecting 125 price adjustments to mitigate inflation 120 NO SE: Price increased of 3.0% (
Slide 12: Customer retention is slightly deteriorated
2 | REVENUE AND PORTFOLIO Customer retention is slightly deteriorated Private Private retention 94 DK: Retention deteriorated to 90.0 in Q1 (90.8 in Q1 22) 92 reflecting reaction to price increases and with one product customers having a lower retention 90 DK SE: Retention slightly deteriorated to 8
Slide 13: Claims and expenses
Claims and expenses
Slide 14: Underlying claims ratio improving 70 basis points for the Group
3 | CLAIMS AND EXPENSES Underlying claims ratio1 improving 70 basis points for the Group Group underlying claims ratio Pro-forma -70bps • Group underlying claims ratio at 72.8, 70bps better than Q1 2022 pro-forma 73.5 72.8 67.7 68.0 70.0 • Group underlying claims ratio supported by profitability ini
Slide 15: Claims inflation & pricing
3 | CLAIMS AND EXPENSES Claims inflation & pricing Claims inflation and pricing Claims inflation in 2023 Inflation Price adjustment • Headline inflation levels as measured by CPI were at highest levels in the last 40 10 years in Scandinavia (and throughout the world) in 2022 but slightly lower 5 tow
Slide 16: Large claims, weather claims and run-off
3 | CLAIMS AND EXPENSES Large claims, weather claims and run-off Large claims1, net DKKm Weather claims1, net DKKm Expected annual level: DKK 800m Expected annual level: DKK 800m 1.200 245 600 1.000 247 500 800 400 154 158 600 300 400 200 200 100 0 0 2019 2020 2021 2022 Q1 2022 Q1 2023 2019 2020 202
Slide 17: New reinsurance programme from 2023
3 | CLAIMS AND EXPENSES New reinsurance programme from 2023 Catastrophe (storm and weather), DKKm Large claims, DKKm 2022 2023 2022 2023 ~40% 1) 150 150 300 ~15% 200 Price Retention Price Retention • Renewal of reinsurance program was challenging due to increase interest and reduced capital capacity
Slide 18: Expense ratio of 13.3 influenced by topline growth, cost control & RSA synergies
3 | CLAIMS AND EXPENSES Expense ratio of 13.3 influenced by good topline growth, tight cost control & RSA synergies Comments on expense ratio Expense ratio1 • Expense ratio of 13.3% helped by good top line growth and positive impact from the RSA 18 synergies. 17 13.7 13.3 • Investments in business d
Slide 19: Investment, capital and targets
Investment, capital and targets
Slide 20: Investments – split in match & free portfolio
4 | INVESTMENT, CAPITAL AND TARGETS Investments – split in match & free portfolio Match portfolio split, DKK 47bn Free portfolio split, DKK 17bn 20 5,7 19 4,0 3,4 8 1,2 1,2 1,1 0,8 Denmark Sweden Norway Government and Investment Emerging High-yield bonds Diversifying Equity Real Estate Covered Bonds
Slide 21: Tryg investment return – low risk remains key
4 | INVESTMENT, CAPITAL AND TARGETS Tryg investment return – low risk remains key Key figures investments (DKKm) Q1 2023 Q1 2022 Equity split by sectors 20 Free portfolio 151 27 15 14 Match portfolio 36 -86 11 10 8 6 6 5 Income from RSA Scandinavia 0 -160 3 2 Other financial income and expenses -20
Slide 22: Tryg has a well-diversified real estate strategy
4 | INVESTMENT, CAPITAL AND TARGETS Tryg has a well-diversified real estate strategy Geography (%) Real estate amounts to 6% of total investments 55 27 16 2 Denmark EU USA Other and Norway Direct vs indirect investments (%) Real estate in Denmark and Norway are owned directly whereas remaining part
Slide 23: Solvency position Q1 2023
4 | INVESTMENT, CAPITAL AND TARGETS Solvency position Q1 2023 Solvency position Own funds walk 885 • Solvency ratio based on the Partial Internal Model is 200 (Q4 2022: 201). 16.012 189 187 15.900 -1.211 -160 • Own Funds (OF) is primarily impacted by 3.420 3.223 • Operating earnings and dividends •
Slide 24: Solvency ratio historical development
4 | INVESTMENT, CAPITAL AND TARGETS Solvency ratio historical development Solvency ratio historical development Both 9M dividends (announced in November) and Q4 dividend (announced with FY results) are deducted from the FY Own funds 899 Approval of new partial internal model, very strong Q2 result a
Slide 25: Solvency ratio sensitivities
4 | INVESTMENT, CAPITAL AND TARGETS Solvency ratio sensitivities Solvency ratio sensitivities: 200 202 201 200 206 204 212 203 201 201 206 199 195 196 188 197 200 199 195 Q1 20% -20% 30% -30% 20% -20% + 100 bps - 100 bps + 100 bps - 100 bps + 100 bps - 100 bps + 100 bps - 100 bps + 20% -20% 20% -20%
Slide 26: Insurance service result target updated for IFRS 17
4 | INVESTMENT, CAPITAL AND TARGETS Insurance service result target updated for IFRS 17 Insurance service result target for 2024 in April 2023 Volatile macroeconomic factors ~200 ~7,200-7,600 ~7,000-7,400 CMD target Education and CMD target Higher interest rates Currencies impact Reinsurance price i
Slide 27: Important things to remember in 2023
4 | INVESTMENT, CAPITAL AND TARGETS Important things to remember in 2023 1 2 Other income and costs in 2023 will include an approximate DKK1bn of intangibles amortization (Codan Norway and In 2023 all quarters will show fully consolidated figures Trygg-Hansa and Alka), the remaining DKK 300m left of
Slide 28: Financial targets for 2024, updated for IFRS 17
4 | INVESTMENT, CAPITAL AND TARGETS Financial targets for 2024, updated for IFRS 17 Technical result DKK 7.2-7.6bn Combined ratio ≤82% Expense ratio ~13.5% 2024 strategy and targets will ensure Return on Own Funds ≥25% highly attractive shareholders’ RSA Scandinavia Synergies target DKK 900m returns
Slide 29: It is important to know your investment case
4 | INVESTMENT, CAPITAL AND TARGETS 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 29
Slide 30: Q1 2023 roadshows & conferences
5 | ROADSHOWS & CONFERENCES Q1 2023 roadshows & conferences Date Event Participants from Tryg Arranged by Morten Hübbe, CEO Johan Kirstein Brammer, CCO 20/04/2023 Copenhagen roadshow SEB Barbara Plucnar Jensen, CFO Investor Relations Barbara Plucnar Jensen, CFO 21/04/2023 London roadshow Danske Bank
Slide 31: Investor Relations
Investor Relations Gianandrea Roberti Peter Brondt Khoi Nguyen Ilze Karahona Tobias Andersen Vice President, Manager, Investor Relations Senior Analyst, Investor Relations Coordinator (maternity cover), Investor Analyst, Investor Relations Head of Investor Relations & External +45 22 75 89 04 +45 61
Slide 32: Background material
Background material
Slide 33: Tryg at a glance
6 | BACKGROUND MATERIAL Tryg at a glance About Tryg Gross premium split by products Q1 2023 • Tryg goes back to 18th century. Motor 8% Workers’ comp • Very strong brand position especially in Denmark. 12% 32% Health & accident Liability • Non-life insurance in Denmark, Norway and Sweden. Fire & prop
Slide 34: Gross premium split by geography
6 | BACKGROUND MATERIAL Gross premium split by geography DK: Gross premium by products 2022 SE: Gross premium by products 2022 8% Motor 1% Motor 12% Workers comp Health and accident 12% 28% Health and accident 33% Liability Liability Fire & property - private 22% Fire & property - private Fire and p
Slide 35: The run-off cycle
6 | BACKGROUND MATERIAL The run-off cycle Run-off cycle: Run-off development • Initial assessment of the claims was DKK 18,000 but Tryg reserved 3 years Run-off: +2,000 for DKK 20,000 adding some conservatism to best estimate. 2,000 • At the time of setting up the claims reserves and booking the cla
Slide 36: Combined ratio development, 2013 – 2022 (IFRS 4)
6 | BACKGROUND MATERIAL Combined ratio development, 2013 – 2022 (IFRS 4) Combined ratio development (IFRS 4) 87.7 86.8 86.7 84.2 84.4 85.1 85.1 84.5 84.5 85.1 84.3 82.2 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 10Y avg. 5Y avg. 36
Slide 37: Shareholder remuneration since 2012 (DKK)
6 | BACKGROUND MATERIAL Shareholder remuneration since 2012 (DKK) Shareholder remuneration since 2012 (DKK) 9.74 9.71 9.50 9.20 Extraordinary dividend 8.60 Extraordinary buy back 8.45 Ordinary dividend 7.80 3.54 3.31 3.50 1.65 3.40 3.20 2.60 6.29 5.000 1.60 Remaining 641 13% 1.58 1.07 6.80 7.00 6.40
Slide 38: Market share of the Scandinavian insurance market
6 | BACKGROUND MATERIAL Market share of the Scandinavian insurance market Scandinavia market share EUR 25,5 bn (as at Q1 2022) Denmark market share DKK 65,5 bn/EUR 8,8bn (as at Q1-2022) Tryg Tryg 18.2% Topdanmark If 23.6% 23.1% If Topdanmark 40.0% Gjensidige Länsforsikringar 14.6% Percentage 4.2% Al
Slide 39: Distribution of new sales 2022
6 | BACKGROUND MATERIAL Distribution of new sales 2022 Distribution in the Scandinavian market Private Distribution in the Scandinavian markets differs from Sales agents 8% Franchise 8% Customer service 0% many other insurance markets. 28% Customer service Customer service 27% Outbound Outbound 35%
Slide 40: Things that you may not know
6 | BACKGROUND MATERIAL Things that you may not know Information: • Scandinavian economies have been performing better than most European countries for a long-time. The GDP growth y/y was approx. 2%, and unemployment rates remains much lower than European averages (2- 3% in DK and NO). Government in
Slide 41: Things that you may not remember
6 | BACKGROUND MATERIAL Things that you may not remember Information: • Our maximum annual net exposure to a single large Property claim is DKK 150m which falls to DKK 100m in case of a second event and all afterwards events at DKK 50m. This is based on our general reinsurance programme. • Our maxim
Slide 42: IBM study from 2007, probably little has changed
6 | BACKGROUND MATERIAL IBM study from 2007, probably little has changed Danish customers either completely or strongly agree Overall I am very satisfied with the services of my F 43 UK 33 insurance company DE 50 DK 72 F 43 My insurance agent only sold me insurance UK 20 coverage that I really neede
Slide 43: Population growth (2000-2022)
6 | BACKGROUND MATERIAL Population growth (2000-2022) Population development in Denmark in ‘1,000 DK 10.56% 6,000,000 5,900,000 5,800,000 5,700,000 5,600,000 5,500,000 5,400,000 5,300,000 5,200,000 5,100,000 5,000,000 Population development in Norway in ‘1,000 NO 20.54% 5,600,000 5,400,000 5,200,000
Slide 44: Every 4th Dane receives a bonus!
6 | BACKGROUND MATERIAL Denmark's ‘biggest’ family TryghedsGruppen and its member bonus Tryghedsgruppen Bonus Bonus has a positive effect on retention 6% 8% 5% 8% ‘I expect to be in Tryg next year’ Have heard about member bonus 90% Have not heard about member Bonus 79% 2022 2021 2020 2019 Dividends
Slide 45: Organisational and remuneration structure
6 | BACKGROUND MATERIAL Organisational and remuneration structure Organisation chart Remuneration structure Current CEO The Executive Board are remunerated according to Tryg’s remuneration policy: Morten Hübbe • Base salary o A fixed car allowance and other standard benefits in addition to the base
Slide 46: Sustainability & ESG governance
6 | BACKGROUND MATERIAL Sustainability & ESG governance Sustainability & ESG Board The Board’s responsibilities includes: • Supporting Executive Board to make Sustainability & ESG-related decisions • Defining the Sustainability & ESG strategy • Defining relevant KPIs and evaluate performances • Anch
Slide 47: Environmental, Social and Governance (ESG) data
6 | BACKGROUND MATERIAL Environmental, Social and Governance (ESG) data Climate and environmental data Unit 2022 2021 2020 2019 2018 Total direct and indirect carbon emissions (location-based) Tonnes CO2e 4,538 2,082 2,501 6,436 5,386 3,924 Total direct and indirect carbon emissions (market-based) T
Slide 48: Responsible investment
6 | BACKGROUND MATERIAL Responsible investment 2024 KPI 2030 milestone 2022 results All external asset managers are UN PRI signatories ESG is an integrated part of the Percentage of UN PRI signatories 100% investment process across all asset External managers External managers responsibility integra
Slide 49: 2021 actual and Consensus 2022-2024
6 | BACKGROUND MATERIAL 2021 actual and Consensus 2022-2024 DKKm Q1 2023 actual 2023 2024 2025 Gross premiums earned 9,189 38,380 39,730 41,058 Technical result 1,474 7,254 7,643 7,959 Investment income 167 493 559 578 Other income and costs -455 -1,554 -1,236 -1,205 Pre-tax 1,187 6,111 6,892 7,257
Slide 50: Appendix
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Slide 51: Group (IFRS 17)
7 | APPENDIX Group1 (IFRS 17) Insurance revenue (DKKm) Gross premiums Combined ratio (%) 100 40,000 34,814 30,000 90 86.8 23,442 25,369 84.4 84.3 83.8 22,404 20,000 80 10,000 70 0 2019 2020 2021 2022 60 2019 2020 2021 2022 Claims ratio, net of reinsurance (%) Expense % ratio (%) 80 20 18 75 73.8 16
Slide 52: Private (IFRS 17)
7 | APPENDIX 1 Private (IFRS 17) Insurance revenue (DKKm) Gross premiums Combined ratio (%) 25,000 22,776 100 20,000 16,554 90 84.1 14,154 15,096 83.8 83.9 82.9 15,000 80 10,000 70 5,000 60 0 2019 2020 2021 2022 50 2019 2020 2021 2022 Claims ratio, net of reinsurance (%) Expense % ratio (%) 90 20 80
Slide 53: Commercial (IFRS 17)
7 | APPENDIX 1 Commercial (IFRS 17) Insurance revenue (DKKm) Gross premiums Combined ratio (%) 10,000 100 8,407 8,000 88.4 90 82.5 82.9 82.7 6,000 4,978 5,350 4,795 80 4,000 70 2,000 60 0 2019 2020 2021 2022 50 2019 2020 2021 2022 Claims ratio, net of reinsurance (%) Expense % ratio (%) 100 20 19 80
Slide 54: Corporate (IFRS 17)
7 | APPENDIX Corporate* (IFRS 17) Insurance revenue (DKKm) Gross premiums Combined ratio (%) 6,000 110 5,000 97.4 100 3,631 92.3 4,000 3,508 3,366 3,464 89.4 87.6 90 3,000 80 2,000 70 1,000 0 60 2019 2020 2021 2022 50 2019 2020 2021 2022 Claims ratio, net of reinsurance (%) Expense % ratio (%) 100 2
Slide 55: Geographical combined ratio (IFRS 17)
7 | APPENDIX Geographical combined ratio (IFRS 17) Denmark % (%) Sweden (%) 100 95 91.1 90 88.1 90 86.8 87.2 85.0 85 79.3 80.5 80 77.2 80 75 70 70 65 60 60 2019 2020 2021 2022 2019 2020 2021 2022 Norway (%) 100 92.7 92.3 90 86.8 85.0 80 70 60 2019 2020 2021 2022 56
Slide 56: Tryg has a long and proud history
7 | APPENDIX Tryg has a long and proud history, with the 2021 RSA acquisition pushing the 2022 boundaries even further Demerger 1 April Completed separation of RSA Scandinavia into 2005 2018 DK, NO, SE TrygVesta is listed Tryg receives the final on the OMX Nordic approval of the Alka 1731 Stock Exch
Slide 57: Economic key figures
7 | APPENDIX Economic key figures Denmark Norway % 2020 2021 2022 2023E 2024E % 2020 2021 2022 2023E 2024E GDP growth GDP growth -2.0 4.9 3.0 -0.5 1.0 2.8 4.1 3.8 1.0 1.0 (Mainland) Consumer price 0.4 1.9 7.7 5.0 2.4 Consumer price 1.3 3.5 5.8 4.3 3.0 Unemployment 4.6 3.6 2.5 3.4 3.5 Unemployment 5.