Tryg A/s · OMXCOP:TRYG
Tryg A/s — Tryg A/S Ord New — Q4 2023 Earnings Presentation
59 slides from Tryg A/s's earnings presentation, Jan 25, 2024
Slide 1: Q4 2023 results
Q4 2023 results Investor presentation 1
Slide 2: Contents and disclaimer
Contents • Highlights Q4 2023 03 • Insurance revenue and portfolio 07 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made • Claims developments 11 by and information currently available to the management. Forward-looking statement
Slide 3: Financial highlights Q4 2023
1 | HIGHLIGHTS Q4 2023 Financial highlights Q4 2023 Q4 DPS of DKK 1.85 is an increase of Insurance service result Combined ratio of 82.4 Investment income of DKK 146M 16 % and solvency ratio at 197 Ordinary dividend Extraordinary dividend Claims ratio Expense ratio 1,654 549 8.45 1,472 84.0 82.4 7.4
Slide 4: Customer highlights Q4 2023
1 | HIGHLIGHTS Q4 2023 Customer highlights Q4 2023 Customer satisfaction KPI TryghedsGruppen has paid out a member bonus Group Group Q4 2022 +1 percentage point Q4 2023 85 86 92 92 92 92 91 • On the 10th of October 2023, TryghedsGruppen pays out a 90 bonus of DKK 950m to around 1.5 million customers
Slide 5: Higher insurance service result driven by improved underlying performance
1 | HIGHLIGHTS Q4 2023 Higher insurance service result primarily driven by an improved underlying performance and tight cost control Private Insurance service result Group insurance service result DKKm DKKm 1,027 991 1,654 1,472 Q4 2022 Q4 2023 Run-off Q4 2023: DKK 87m or 1.4% (Q4 2022 : DKK 73m or
Slide 6: Status on RSA synergies per Q4 2023
1 | HIGHLIGHTS Q4 2023 Status on RSA synergies per Q4 2023 DKK 84m of synergies in Q4 and DKK 711m for the FY 2023 vs DKK 650m target Realised synergies according to plan • Main synergy drivers are procurement, claims and commercials which resulted in 84m Accumulated synergy realisation vs. original
Slide 7: Insurance revenue and portfolio
Insurance revenue and portfolio 26-09-2023 7
Slide 8: Insurance revenue up 6.3% in local currencies
2 | REVENUE AND PORTFOLIO Insurance revenue up 6.3% in local currencies compared to Q4 2022 Insurance revenue growth by segment Q4 2023 (local currencies) Local currencies DKKm Q4 2022 Q4 2023 growth (%) Q4 2023 Private 6,010 6,203 7.7 7.7 6.3 Commercial 2,306 2,315 4.2 4.2 2.5 Corporate 904 879 2.5
Slide 9: 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 5.0% (Q3 23 3.5%). The price level continues to increase, and particularly so in recent quarters DK NO SE 140
Slide 10: Customer retention is broadly stable
2 | REVENUE AND PORTFOLIO Customer retention is broadly stable Private retention 90 90 88 87 88 88 DK NO SE 94 92 90 88 86 DK NO SE 84 Q3 2023 Q4 2023 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Commercial retention 88 87 89 90 89 89 DK NO SE 94 92
Slide 11: Claims developments
Claims developments
Slide 12: Underlying claims ratio improved 50 basis points for the Group
3 | CLAIMS DEVELOPMENTS Underlying claims ratio1 improved 50 basis points for the Group Group underlying claims ratio Underlying claims ratio improved in Group but slightly deteriorated in Private • Group underlying claims ratio at 69.5, 50 bps improved compared to Q4 2022 -50bps 70.0 72.8 69.5 67.1
Slide 13: Claims inflation, pricing and frequencies
3 | CLAIMS DEVELOPMENTS Claims inflation, pricing and frequencies Claims inflation and pricing Motor claims frequency • Claims inflation differs from CPI, as insurance spend is less impacted by some volatile items present in the CPI • Motor claims inflation comes from three sources: increases in ave
Slide 14: Large claims, weather claims, discounting and run-off
3 | CLAIMS DEVELOPMENTS Large claims, weather claims, discounting and run-off Large claims, net DKKm Weather claims, net DKKm DKKm DKKm Expected annual 1,142 * Expected annual 1,200 1,400 1,274 level 800m DKK 1,001 level 800m DKK 1,200 318 1,000 291 1,000 800 800 206 600 455 500 428 600 457 145 415
Slide 15: Weather claims & Large claims historical net development
3 | CLAIMS DEVELOPMENTS Weather claims & Large claims historical net development 1,500 Expected annual level 800m DKK 1,250 1,000 750 Large claims, 500 net (DKKm) 250 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Tryg stand-alone Enlarged Tryg1 1,500 Expected annual le
Slide 16: Reinsurance update 2024
3 | CLAIMS DEVELOPMENTS Reinsurance update 2024 Catastrophe (storm and weather claims) retention, DKKm Large claims retention, DKKm 300 300 200* 200 150 150 2022 2023 2024 2022 2023 2024 *First large claim retention DKK 200m, thereafter DKK 135m • Property lines reinsurance market continues hardeing
Slide 17: Investment activities
Investment activities - - tes $dey
Slide 18: Investments – split in match and free portfolio
4 | INVESTMENTS ACTIVITIES Investments – split in match and free portfolio Match portfolio split, DKK 46bn Free portfolio split, DKK 18bn 22 7.2 15 3.5 9 2.4 1.1 1.1 1.5 0.7 Denmark Sweden Norway Government and Investment grade Emerging market High-yield bonds Diversifying Equity Real Estate Covered
Slide 19: Tryg investment return – low risk remains key
4 | INVESTMENTS ACTIVITIES Tryg investment return – low risk remains key Key figures investments (DKKm) Q4 2023 Q4 2022 Equity investments, DKK 2.4bn, split by sectors (%) Free portfolio 397 205 30 Match portfolio 34 232 11 11 11 12 Other financial income and expenses -285 130 8 6 5 3 2 1 Income fro
Slide 20: Solvency & Expenses
Solvency & Expenses
Slide 21: Solvency position Q4 2023
4 | SOLVENCY AND EXPENSES Solvency position Q4 2023 Solvency position Own funds walk 1,314 14,884 86 14,998 • Solvency ratio based on the Partial Internal Model is 197 (Q3 2023: 194). 3,144 -1,174 -111 3,106 1,811 1,674 • Own Funds (OF) are primarily impacted by • Operating earnings and dividends 9,
Slide 22: Solvency ratio historical development
4 | SOLVENCY AND EXPENSES Solvency ratio historical development Solvency ratio historical development Both 9M dividends (announced in November) and Q4 dividend 899 (announced with FY results) are deducted from the FY Own funds Adjusted for the rights issue, the solvency was 180 in Q1-21 Approval of
Slide 23: Solvency ratio sensitivities
4 | SOLVENCY AND EXPENSES Solvency ratio sensitivities Solvency ratio sensitivities: 197 197 197 198 196 201 200 209 199 196 197 196 197 201 191 193 184 194 193 Q4 + 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% -
Slide 24: Expense ratio of 13.5 influenced by topline growth, cost control and RSA synergies
4 | SOLVENCY AND EXPENSES Expense ratio of 13.5 influenced by good topline growth, tight cost control and RSA synergies Comments on expense ratio Expense ratio1 • Expense ratio of 13.5% helped by good top line growth and positive impact from the RSA 15 Scandinavia synergies • Investments in business
Slide 25: Financial targets
Financial targets
Slide 26: Insurance service result target updated for IFRS 17
4 | COSTS AND SOLVENCY Insurance service result target updated for IFRS 17 Insurance service result target for 2024 in January 2024 Volatile macroeconomic factors Expense ratio and Combined ratio targets for 2024 • The actual Insurance service result (within the DKK 7.2-7.6 bn target for 2024) may b
Slide 27: Important things to remember in 2024
4 | COSTS AND SOLVENCY Important things to remember in 2024 Important key points for 2024 1 2 Other income and costs includes an approximate DKK 250m Synergies from the acquisition of RSA Scandinavia were quarterly intangibles amortization (Codan Norway and Trygg-Hansa and Alka), around DKK 50-60m o
Slide 28: 2024 strategy and targets will ensure highly attractive shareholders' returns
4 | COSTS AND SOLVENCY Financial targets for 2024, updated for IFRS 17 2024 strategy and targets will ensure highly attractive shareholders’ returns 28
Slide 29: It is important to know your investment case
4 | COSTS AND SOLVENCY 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: Q4 2023 roadshows & conferences
7 | ROADSHOWS & CONFERENCES Q4 2023 roadshows & conferences Date Event Participants from Tryg Arranged by Johan Kirstein Brammer, CEO Allan Kragh Thaysen, CFO 25/01/2024 Copenhagen roadshow SEB Mikael Kärrsten, CTO Investor Relations Johan Kirstein Brammer, CEO 26/01/2024 London roadshow Citi Peter
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 Insurance revenue split by products Q4 2023 • Tryg goes back to 18th century. 9% 12% Motor • Very strong brand position especially in Denmark. 31% Workers' comp Health & accident Liability • Non-life insurance in Denmark, Norway and Sweden. Fire &
Slide 34: Insurance revenue split by geography
6 | BACKGROUND MATERIAL Insurance revenue split by geography DK: Insurance revenue by products 2023 SE: Insurance revenue by products 2023 8% 7% 11% 28% Motor 12% 31% Motor Workers comp Health and accident Health and accident Liability Liability Fire & property - private Fire & property - private 19
Slide 35: Reserves and run-off split by line of business
6 | BACKGROUND MATERIAL Reserves and run-off split by line of business Reserves by products 2023 Run-off net by products 2023, DKKm 5% 1,099 6% 24% 7% Motor Motor Workers comp 643 Workers comp 7% Health and accident Health and accident Liability Liability Fire & property - private Fire and property
Slide 36: 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 for DKK 20,000 adding some conservatism to best estimate. Run-off: 2,000+ 2,000 ◦ At the time of setting up the claims reserves and booking the cla
Slide 37: Combined ratio development, 2013 – 2023
6 | BACKGROUND MATERIAL Combined ratio development, 2013 – 2023 Combined ratio development 86.8 86.7 84.2 84.4 85.1 85.1 84.5 84.5 84.7 84.0 83.2 82.8 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 10Y avg. 5Y avg. IFRS 4 IFRS 4 IFRS 4 IFRS 4 IFRS 4 IFRS 4 IFRS 4 IFRS 4 IFRS 17 IFRS 17 37
Slide 38: Shareholder remuneration
6 | BACKGROUND MATERIAL Shareholder remuneration Dividend per share and total share buy-back (DKK) Tryg initiated a DKK 5bn buyback following the sale of Codan DK to Alm. Brand 1.7 Tryg initiated a DKK 1bn 5,000 buyback after Q3 2023 7.0 7.4 6.6 6.8 6.3 4.3 1,000 2018 2019 2020 2021* 2022 2023 2022/
Slide 39: Market share of the Scandinavian insurance market
6 | BACKGROUND MATERIAL Market share of the Scandinavian insurance market Scandinavia market share EUR 26,3 bn (as at Q4 2022) Denmark market share DKK 68,1 bn/EUR 9,2bn (as at Q4-2022) 18% 24% Tryg 23% Tryg Topdanmark 40% If If Topdanmark Gjensidige 15% 4% Länsforsikringar Alm. Brand Gjensidige 4%
Slide 40: Distribution of new sales 2023
6 | BACKGROUND MATERIAL Distribution of new sales 2023 Distribution in the Scandinavian market Private 1% 5% Distribution in the Scandinavian markets differs from 6% many other insurance markets. 15% 10% Franchise 28% Sales agents 33% 12% Agents Customer service 9% Customer Service Online 25% Outbou
Slide 41: 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 ind
Slide 42: 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 200m which falls to DKK 135m. This is based on our general reinsurance programme. • Our maximum net exposure for weather claims is DKK 300m per event. The u
Slide 43: 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 insurance company My insurance agent only sold me insurance coverage that I really needed My present insurance coverage of
Slide 44: TryghedsGruppen and its member bonus
6 | BACKGROUND MATERIAL TryghedsGruppen and its member bonus Tryghedsgruppen Bonus Bonus has a positive effect on retention ‘I expect to be in Tryg next year’ Denmark's ‘biggest’ family 8% 8% 6% Have heard about member bonus 90% 5% Have not heard about member Bonus 79% 2019 2020 2021 2022 TryghedsGr
Slide 45: Organisational and remuneration structure
6 | BACKGROUND MATERIAL Organisational and remuneration structure Remuneration structure The Executive Board are remunerated according to Tryg’s remuneration policy: • Base salary ◦ A fixed car allowance and other standard CEO benefits in addition to the base salary Johan Kirstein Brammer • Pension
Slide 46: Sustainability & ESG governance
6 | BACKGROUND MATERIAL Sustainability & ESG governance Sustainability & ESG Board Sustainability-related incentive scheme Members of the Executive Board are covered by a variable salary incentive programme (INP). Sustainability & ESG targets make up 15% of the total variable salary in 2023. It incl
Slide 47: Sustainability & ESG strategy 2024
6 | BACKGROUND MATERIAL Re a d- on ly Sustainability & ESG strategy 2024 Driving sustainable impact Tryg wants to contribute to a sustainable future and create long-term value for our customers, employees, shareholders and society. We want to to integrate sustainability into every corner of our busi
Slide 48: ESG performance on targets 2023
6 | BACKGROUND MATERIAL ESG performance on targets 2023 Sustainable insurance Responsible company Green workplace Prevention and claims handling Responsible procurement Responsible investment Diverse workplace Climate impact 2024 targets 2023 2024 targets 2023 2024 targets 2023 2024 targets 2023 • 8
Slide 49: Environmental, Social and Governance (ESG) data
6 | BACKGROUND MATERIAL Environmental, Social and Governance (ESG) data Climate and environmental data Unit 2023 2022 2019 Total direct and indirect carbon emissions (location-based) Tonnes CO2e 4,805 4,540 6,436 4,180 3,926 Total direct and indirect carbon emissions (market-based) Tonnes CO2e 9,376
Slide 50: Responsible investment
6 | BACKGROUND MATERIAL Responsible investment 2024 KPI 2030 milestone 2023 results All external asset managers are UN PRI signatories ESG is an integrated part of the investment process across all External managers Percentage of UN PRI signatories 100 % External managers responsibility integration
Slide 51: Q4 2023 actual and Consensus 2023-2025
6 | BACKGROUND MATERIAL Q4 2023 actual and Consensus 2023-2025 Q4 2023 reported 2023 reported 2024 consensus 2025 consensus Insurance revenue 9,396 37,135 38,716 40,194 Insurance service result 1,272 6,292 7,476 7,830 Investment return 146 631 601 642 Other income and costs -411 -644 -1,400 -1,384 P
Slide 52: Appendix
Appendix
Slide 53: Group
7 | APPENDIX Group Insurance revenue (DKKm) Gross premiums Combined ratio (%) 100.0 40,000 37,379* 37,135 86.8 84.4 84.3 83.2* 82.8 80.0 30,000 25,369 22,404 23,442 60.0 20,000 40.0 10,000 20.0 0.0 — 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Claims ratio, net of reinsurance (%) Expense % rat
Slide 54: Private
7 | APPENDIX Private Insurance revenue (DKKm) Gross premiums Combined ratio (%) 100 30,000 83.8 83.9 84.1 82.3 * 84.5 24,453* 24,455 80 20,000 60 16,554 14,154 15,096 40 10,000 20 0 — 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Claims ratio, net of reinsurance (%) Expense % ratio (%) 16.0 80 7
Slide 55: Commercial
7 | APPENDIX Commercial* Insurance revenue (DKKm) Gross premiums Combined ratio (%) 100 10,000 9,295 * 9,178 88.4 82.5 82.9 81.9 * 78.1 80 7,500 60 4,978 5,350 4,795 5,000 40 2,500 20 0 — 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Claims ratio, net of reinsurance (%) Expense % ratio (%) 20 80
Slide 56: Corporate
7 | APPENDIX Corporate* Insurance revenue (DKKm) Gross premiums Combined ratio (%) 120 4,000 3,508 3,631* 3,502 3,366 3,464 97.4 100 89.4 87.6 92.3* 83.2 3,000 80 60 2,000 40 1,000 20 0 — 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Claims ratio, net of reinsurance (%) Expense % ratio (%) 16 10
Slide 57: Geographical combined ratio
7 | APPENDIX Geographical combined ratio Denmark % (%) Sweden (%) 100 91.1 100.0 85.0 88.1 86.8 87.2 79.3 80.5 81.6 77.2 78.2 80 80.0 60 60.0 40 40.0 20 20.0 0 — 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Norway (%) 100.0 92.7 92.3 91.7 86.8 85.0 80.0 60.0 40.0 20.0 — 2019 2020 2021 2022 2023
Slide 58: 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 2018 DK, NO, SE 2005 TrygVesta is listed Tryg receives the final on the OMX Nordic approval of the Alka 1731 Stock Exch
Slide 59: Macroeconomic forecasts
7 | APPENDIX Macroeconomic forecasts Denmark Norway % 2022 2023 (forecast) 2024 (forecast) % 2022 2023 (forecast) 2024 (forecast) GDP growth 2.7 1.1 1.0 GDP growth 3.0 1.3 1.4 Private consumption -1.6 1.0 1.8 Private consumption 6.2 -1.0 1.2 Unemployment 2.5 2.8 3.1 Unemployment 1.8 1.9 2.3 Consumer