Tryg A/s · OMXCOP:TRYG
Tryg A/s — Q2 2014 Earnings Presentation
38 slides from Tryg A/s's earnings presentation, Jul 9, 2014
Slide 1: Q2 and H1 2014 results Investor presentation
Q2 and H1 2014 results Investor presentation Follow us on Twitter: @TrygIR
Slide 2: Contents
Contents Highlights Q2 2014 3 Premiums and portfolio 9 Claims 14 Investment and capitalisation 19 For new investors 23 Appendix 31 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and information currently availa
Slide 3: Highlights Q2 2014
Highlights Q2 2014 - Improved results and positive trend in premium income. Pre-tax profit D KKm 1,150 1,200 • Pre-tax profit of DKK 1,150m (DKK 688m). 1,000 800 688 600 • Technical result of DKK 941m (DKK 684m). 400 200 0 • Combined ratio improved by 6.0 pp. to 80.7 Q2 2013 Q2 2014 (86.7). Combined
Slide 4: Important news in Q2 2014
Important news in Q2 2014 • Many customer focused initiatives initiated • Customer SMS measuring with strong results • Extended opening hours • 3 new price differentiated products in Norway. • Regular inspection by Danish FSA confirmed satisfactory view on risk control, reserve and capital position.
Slide 5: Strategic initiatives 2014
Strategic initiatives 2014 Increased price differentiation Customer journey & success culture Expenses/claims reductions IT operational stability 5
Slide 6: Key figures Q2/H1 2013/14
Key figures Q2/H1 2013/14 DKKm Q2 2014 Q2 2013 H1 2014 H1 2013 Gross premium income 4,711 4,962 9,294 9,900 Claims, net of reinsurance -2,955 -3,277 -6,041 -6,702 Gross expenses -582 -764 -1,301 -1,545 Technical result 941 684 1,464 1,184 Return on investment after technical 259 13 348 282 interest
Slide 7: Combined ratio development in business areas
Combined ratio development in business areas Combined ratio – Private (DK & NO) Combined ratio – Commercial (DK & NO) 100 100 95 95 90 87.4 90 88.4 86.7 84.9 85 83.3 85 80.4 78.8 79.1 80 80 75 75 Q2 2013 Q2 2014 H1 2013 H1 2014 Q2 2013 Q2 2014 H1 2013 H1 2014 Group CR Q2 2014: 80.7 Q2 2013: 86.7 Com
Slide 8: Follow up on efficiency programme
Follow up on efficiency programme • Savings of DKK 740m achieved so far. • DKK 93m achieved in Q2 2014. DKKm Targeted and achieved savings on claims • DKK 28m reduction in expenses 1,200 1,000 • DKK 65m reduction in claims 1,000 800 700 740 • Increased benefit from Buildings and Content 550 600 init
Slide 9: Premiums and portfolio
Premiums and portfolio
Slide 10: Topline and technical result
Topline and technical result Gross earned premiums reduced 1.2% (-2.6%) related to: • Continued high retention level in Private and even improved retention level in Commercial. • Higher sales level in general in Private compared to last year. • Commercial – improved retention but sales lower than ex
Slide 11: Private - average premiums
Private - average premiums House insurance – average premium (index 2008 = 100) 150 Average premiums increase Y/Y 140 0.5% 2.6% 130 (Q1 0.6%) (Q1 2.9%) 120 110 100 90 08 09 10 11 12 13 14 20 20 20 20 20 20 20 Motor insurance – average premium (index 2008 = 100) 140 Average premiums increase Y/Y 130
Slide 12: Customer retention
12 Q Q 1 1 82% 84% 86% 88% 90% 92% 82% 84% 86% 88% 90% 92% Q 10 Q 10 2 2 Q 10 3 Q 10 3 Private Q 10 Q 10 Commercial 4 4 Q 10 Q 10 1 1 Q 11 Q 11 2 2 Q 11 Q 11 3 3 Q 11 Q 11 4 4 Q 11 Q 11 1 1 Q 12 Q 12 2 2 Q 12 Q 12 3 3 Q 12 Q 12 4 4 Q 12 Q 12 1 1 Q 13 Q 13 2 2 Q 13 Q 13 3 3 Q 13 Q 13 4 4 Q 13 Custome
Slide 13: Private Sweden – CR and customer retention
13 80 85 90 95 100 105 110 115 120 125 130 Q 1- 10 Q Q 60% 69% 1- 78% 125 2- 10 1 Q 0 Q 2- 103 3- 10 10 Q 3- Q 1 99 4- Q 0 10 4- Q 1 1- Q 0 11 1- 11 Q Q 102 103 2- 2- 11 1 Q Q 1 99 3- 3- 11 11 Q Q 4- 97 4- 1 11 Q 1 1- Q 12 114 1- 12 Q 2- Q 1 Q 2 110 2- 3- 12 1 Q Q 2 95 3- 4- 12 12 Q Q 91 1- 4- 1 Cus
Slide 14: Claims and expenses
Claims and expenses
Slide 15: CR and claims ratios Q2 2013-14
CR and claims ratios Q2 2013-14 • Underlying development is adjusted for: Underlying claims, net Q2 2013/2014 • Large claims • Weather claims 78.7 79.3 76.7 • Run-off and interest 72.3 72.1 70 68.8 72.8 65.6 62.8 • Improved underlying development on Group level driven by: • one-off effects Q2 2013 Q
Slide 16: Large claims, weather claims and run-off
Large claims, weather claims and run-off Large claims, net DKKm Expected annual Weather claims, net DKKm Expected annual level 2014: DKK 550m level 2014: DKK 500m 200 200 150 150 207 100 100 50 50 65 60 78 0 0 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Run-off, net DKKm Run-off net, effect on combined ratio 30
Slide 17: Interest sensitivity
Interest sensitivity Claims reserves - discounting rate % 6.0 5.0 1% increase in interest rate level will: 4.0 • Increase pre-tax result by around 3.0 DKK 300m. 2.0 1.4 1.0 • Improve combined ratio by approx. 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 pp. • Impact NO pension obligation by Pensio
Slide 18: Expense ratio development
Expense ratio development • Expense improved from 15.6 in Q2 2013 to 12.6 in Q2 2014. Expense ratio Q2: One-off effects of 2.8%-point • Excluding one-off effects, expense ratio was 15.4 - an improvement of 0.2 pp. 16.7 16.6 16.6 16.4 15.6 15.6 • Nominal expenses on Group level reduced significantly
Slide 19: Investment, capital and financial targets
Investment, capital and financial targets
Slide 20: Investment result Q2 2014
Investment result Q2 2014 Investment return Free portfolio – Q2 2014 (DKK 12.7bn) DKKm 3 Equities (22) Free investment 244 37 Investment property (15) Match regulatory deviation 49 Bank deposits/bonds (15) Percentage 24 Match performance 50 Govt. Bonds (3) High yield (6) Other financials -84 C ov. B
Slide 21: Capital structure and status on share buy back
Capital structure and status on share buy back Capital – Q2 2014 DKKm • Capital buffer based on Individual 12,000 Solvency increased to 63% (2013 Q4: 50%) and was impacted by: Excess capital • H1 result 2014 8,000 4,218 Buffer • H1 share buy back deducted in buffer. Capital requirement 4,000 6,734 •
Slide 22: Financial targets
Financial targets ROE after tax of 20% to be achieved by delivering a full year combined ratio of 90 or lower. Expense ratio <15 in 2015 ROE after tax 40% 30% ROE target 20% 10% 0% 14 05 06 07 08 09 10 11 12 13 14 15 20 20 20 20 20 20 20 20 20 20 20 20 1 H 22
Slide 23: For new investors
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Slide 24: Tryg - quick overview
Tryg - quick overview Tryg is a non-life insurance company present DKKm 2012 2013 in Denmark (No. 1), Norway (No. 3) and Sweden (No. 5). Gross earned premium 20,314 19,504 Gross claims -14,675 -14,411 58.8m shares and a market cap of Gross expenses -3,295 -3,008 DKK 34bn (June 2014). Insurance resul
Slide 25: Tryg – at a glance
Tryg – at a glance Share performance since IPO 320 300 Tryg incl. dividend Euro Insurance index 280 • Tryg goes back to 18th century 260 240 • The current Tryg was formed in 2002 by 220 sale of Nordea’s non-life activities – 200 with a continuing strategic partnership 180 160 • Non-life insurance in
Slide 26: Dividend policy
Dividend policy - creating long-term value for our shareholders • Payout ratio of 60–90%. • Aiming for a nominal stable increasing dividend. • Ambitious ROE target of 20% after tax calls for disciplined capital approach. • Adjustment of the capital level can be made via share buy back. Total distrib
Slide 27: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Nordic Denmark EUR 24.5bn (as at Q4 2012) DKK 50.3bn/ EUR 6.8bn (as at Q2 2013) 10.5 19.0 Tryg Tryg 29.0 Topdanmark If 18.2 C odan C odan 40.0 Percentage Alm. Brand Gjensidige 17.5 Gjensdige Länsförsäkringar If Topdanmark 9.1 6.2 Other Other 6.0 9.9 12.4 4.8
Slide 28: Distribution of new sales 2013
Distribution of new sales 2013 Denmark Norway 12% 6% 46% 36% 30% 58% 12% Own sales Affinity Nordea Ow n sales Car dealers Affinity Nordea Sweden Corporate 18% 8% 52% 50% 50% 22% Ow n sales External partners Own sales Brokers w ww & others Atlantica/Bilsport MC 28 28 9 juli 2014
Slide 29: Combined ratio performance
Combined ratio performance 110 Premium Premium Efficiency hikes hikes programme 105 100 95 Smaller adjustments 90 85 80 14 * 00 01 02 03 04 05 06 07 08 09 10 11 12 13 04 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 1 H 2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio fro
Slide 30: Key figures 2010-13 and consensus for 2014-16
Key figures 2010-13 and consensus for 2014-16 Consensus DKKm 2010 2011 2012 2013 2014 2015 2016 Gross premium income 18,894 19,948 20,314 19,504 18,817 18,977 19,275 Gross claims incurred -15,111 -15,783 -14,675 -14,411 Operating expenses -3,136 -3,271 -3,295 -3,008 Ceeded business -311 507 86 349 T
Slide 31: Appendix
Appendix Follow us on Twitter: @TrygIR
Slide 32: Group
Group Gross premiums Combined ratio DKKm % 5,400 8 110 GEP (LHS) 5,200 105 4 100 5,000 95 4,800 90 0 85 4,600 80 Local currency (RHS) 4,400 -4 75 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 Q 10 Q 10 Q 10 Q 10 Q 11 Q 11 Q 11 Q 11 Q 12 Q 12 Q 12 Q 12 Q 13 Q 13 Q 13 Q 13 Q 14 14 12 3 4 1 2 3
Slide 33: Private
Private Gross premiums Combined ratio DKKm % 110 2,500 8 GEP (LHS) 105 100 2,300 4 95 Local currency 90 2,100 (RHS) 0 85 80 1,900 -4 75 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 Q 10 Q 10 Q 10 Q 10 Q 11 Q 11 Q 11 Q 11 Q 12 Q 12 Q 12 Q 12 Q 13 Q 13 Q 13 Q 13 Q 14 14 12 3 4 1 2 3 4 1 2 3 4
Slide 34: Commercial
Commercial Gross premiums Combined ratio DKKm % 125 1,200 GEP (LHS) 8 115 105 4 1,100 95 0 85 Local currency -4 75 (RHS) 1,000 -8 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 10 Q 10 Q 10 Q 10 Q 11 Q 11 Q 11 Q 11 Q 12
Slide 35: Corporate
35 Q 1 Q 55 65 75 85 95 105 115 125 1 900 1,000 1,100 1,200 Q 10 DKKm 2 Q 10 2 Q 10 Q 10 3 3 Q 10 Q 10 4 4 Q 10 Q 10 1 1 Gross premium Q 11 Q 11 2 2 Gross claims ratio Q 11 Q 11 3 3 Q 11 Corporate Q 11 4 4 Q 11 Q 11 1 1 Q 12 Q 12 2 2 Q 12 Q 12 3 3 Q 12 4 Q 12 4 Q 12 1 Q 12 Q 13 1 2 Q 13 (RHS) Q 13 2
Slide 36: Sweden (Private)
36 Q Q 1 250 300 350 400 450 500 1 60 70 80 90 100 Q 10 DKKm Q 10 2 2 Q 10 Q 10 3 3 Q 10 Q 10 4 4 Q 10 1 Q 10 Gross premium 1 Q 11 2 Q 11 Gross claims ratio 2 Q 11 3 Q 11 Q 11 3 4 Q 11 Q 11 4 1 Q 11 Q 12 1 2 Q 12 Q 12 2 3 (RHS) Q 12 Q 12 3 4 Q 12 Q 12 4 1 Sweden (Private) Q 12 Q 13 1 2 Local currenc
Slide 37: Geographical segments
Geographical segments Denmark rs] ia Norway > Q2 2014 Q2 2013 Hi 2014 Hi 2013 YTD 2013 Gross premiums earned 2,336 2,388 4,675 4,805 9,534 Gross premiums earned 1,872 2,013 3,653 4,020 7,819 Technical result 230 402 524 675 1,202 Technical result 652 246 844 481 1,258 Key ratios Key ratios Gross cla
Slide 38: Economic key figures
Economic key figures Denmark Sweden % 2014 2015 % 2014 2015 GDP Growth 1.3 1.7 GDP Growth 2.7 2.4 Inflation 0.9 1.6 Inflation -0.1 1.4 Unemployment 5.1 5.0 Unemployment 8.0 7.8 Current account Current account 5.3 4.2 6.2 6.5 balance in % of GDP balance in % of GDP Budget balance in % of Budget balan