Tryg A/s · OMXCOP:TRYG
Tryg A/s — KBW European Financials Conference 2012
21 slides from Tryg A/s's conference presentation, Sep 19, 2012
Slide 1: KBW European Financials Conference
KBW European Financials Conference London, 19 September 2012 Tor Magne Lønnum - CFO Download presentation on 1 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 Gross premium split by products - 2011 13.7 Motor - TPL 23.6 Motor - casco • Tryg goes back to 18th century 9.0 Workers' comp. • The current Tryg was formed in Health & accident 2002 by sale of Nordea’s non-life 4.4 Liability 12.5 activities – with a continuing Fire & property - p
Slide 4: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Denmark Norway DKK 47.8bn/ EUR 6.4bn (Q2 11) NOK 46.5 bn/ EUR 6.0bn (Q1 12) Other 27.4 Tryg 16.1 Other 19.6 If 5.8 Gjensdige 5.7 Tryg 20.7 Sparebank1 Percent Percent 11.3 Alm. Brand Nordic If 25 9.8 EUR 21.6bn (Q4 10) Topdanmark Other 38.5 Gjensidige C odan
Slide 5: Short term results - Q2 2012
Q2 2012 1 Wn a= =) "9 oO = = = oO pas) WW = e) pos Cp)
Slide 6: Highlights Q2 2012 - Pre-tax profit up by 45% and technical result up by 65%
Highlights Q2 2012 - Pre-tax profit up by 45% and technical result up by 65% D KKm Pre-tax profit • Pre-tax profit of DKK 708m (DKK 487m). Technical 1,500 1,429 result of DKK 835m (DKK 507m). Positive impact from 1,200 weather and large claims and reinsurance. 848 900 708 600 487 • CR improvement of
Slide 7: Moderate premium growth – better balanced technical result
Moderate premium growth – better balanced technical result • Moderate growth as expected of 0.3% in local currency (1.3% in DKK). Positive impact from price increases - negative impacted from a reduction in Commercial portfolio. • Private up 1.6% in local currency (2.9% in DKK). Positive impact from
Slide 8: Large claims, weather claims and run-off
Large claims, weather claims and run-off - Run-off impacted by extraordinary reinsurance recovery Large claims, gross DKKm Weather claims, DKKm 1,800 1,000 858 800 1,400 600 1,000 Expected full year level 2012 400 353 Expected full year level 2012 600 226 187 200 152 200 0 2011 H1 11 H1 12 -200 2011
Slide 9: Longer term development
Longer term development 9
Slide 10: 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 11: Retention remains high and average premiums going up
Retention remains high and average premiums going up Private - retention rate Car insurance – average premium (index 2005 = 100) 120 Average premium growth in past 12 months 92% 0% 6.3% 110 90% 88% 100 86% 90 84% 82% 80 2005 2006 2007 2008 2009 2010 2011 2012 05 06 07 07 08 09 10 10 11 12 3 2 1 4 3
Slide 12: Combined ratio performance
Combined ratio performance Annual impact 110 from price Premium Premium increases hikes hikes 105 2012 DKK ~1.0bn 100 95 Smaller adjustments 90 85 80 11 12 * 00 01 07 02 03 04 05 06 08 09 10 11 04 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 1 1 H H • 2002-2004 price increases of DKK 2.1bn implement
Slide 13: Follow up on cost reduction programme - Q2 2012
Follow up on cost reduction programme - Q2 2012 - Next level sourcing starting to deliver No. of employees Targeted and achieved savings in expenses 5,000 DKKm 4,310 4,291 4,318 4,255 25 From FTE reductions in Group Finance 4,065 194 197 249 225 4,000 105 154 425 414 423 440 300 125 3,000 1,450 1,39
Slide 14: Assets allocation
Assets allocation Total assets – Q2 2012 2 4 11 5 Equities Real estate 7 C ov. Bonds Percentage Govt. Bonds Bank deposits/bonds 71 High yield Free portfolio – Q2 2012 Match portfolio – Q2 2012 32 Equities 12 Real estate 8 C ov. Bonds Bank deposits/bonds 22 Percentage Percentage Govt. 12 Govt. Bonds
Slide 15: Capitalisation
Capitalisation S&P model IS model D KKm 12,000 • Capital buffer based on S&P’s capital model 13% buffer increased to 13% (Q1: 9%) and impacted 10,000 by: 8,000 37% buffer • Strong Q2 2012 result 6,000 TAC S&P A-level Available IS capital requirement • Strengthening of pension obligation in S&P A-lev
Slide 16: Growth consumes capital
Growth consumes capital DKKm Gross earned premiums 21,000 20,000 19,000 18,000 17,000 16,000 15,000 2005 2006 2007 2008 2009 2010 2011 DKKm Capital 11,000 10,000 9,000 8,000 2005 2006 2007 2008 2009 2010 2011 16
Slide 17: Combined ratio target
17 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 < 90 it i 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 ta H 11 xe 1 s. Combined
Slide 18: Discounting effect lower in Q2 12 vs. Q2 11
Discounting effect lower in Q2 12 vs. Q2 11 % 6.0 5.0 4.0 3.0 2.0 1.0 2006 2007 2008 2009 2010 2011 2012 1% increase in interest rate level will: • Increase pre-tax result by around DKK 300m. • Improve combined ratio by approx. 1 pp. • Lower NO pension obligation affecting capital base by around DKK
Slide 19: Payout model - transparent but unstable
Payout model - transparent but unstable • Tryg’s payout model has been transparent, but has also been vulnerable to: • Fluctuations in technical and investment result • Change in interest rates (effect on Norwegian pension scheme) Shareholder remuneration 40 Average 2006-2011 35 Payout DKK 1.3bn Pay
Slide 20: Summary
Summary • From growth to profitability focus • Claims costs - Reductions of DKK 700m and claims ratio target, net <75% • Expenses – Reductions of DKK 300m and expense ratio target <15% in 2015 • Combined ratio at 90 or below from Q3 2013 • Strong capital position • Aiming for a more stable payout mo
Slide 21: Q&A
Q&A Follow us on Twitter: @TrygIR