Tryg A/s · OMXCOP:TRYG
Tryg A/s — Q4 2021 Earnings Presentation
62 slides from Tryg A/s's earnings presentation, January 2022
Slide 1: Q4 2021 results
Q4 2021 results Investor presentation
Slide 2: Contents and Disclaimer
Contents • Highlights Q4 2021 03 Disclaimer • Premiums and portfolio 11 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 histo
Slide 3: Financial highlights Q4 2021
1 | HIGHLIGHTS Q4 2021 Financial highlights Q4 2021 1 2 3 4 Pre-tax profit of DKK 1,596m Investment income of DKK Solvency ratio of 188 and Q4 86.2% Combined ratio (DKK 1,223m) 941m (DKK 513m) DPS of DKK 1.07 Income from RSA Scandinavia Extraordinary dividend 1,596 86.2 86.3 Stand alone investment r
Slide 4: Customer highlights Q4 2021
1 | HIGHLIGHTS Q4 2021 Customer highlights Q4 2021 1 2 New customer satisfaction KPI TryghedsGruppen will pay out a member bonus 87 KPI result Q4 2021 +1 • Changing methodology from TNPS to a 0- 86 85 85 • For the sixth year in a row, TryghedsGruppen paid 100 scale, encompassing data from the 85 85
Slide 5: Highest Q4 technical result ever at DKK 826m driven by a COR of 86.2%
1 | HIGHLIGHTS Q4 2021 Highest Q4 technical result ever at DKK 826m driven by a COR of 86.2% Group (DKKm) Private, DK & NO (DKKm) Commercial, DK & NO (DKKm) 606 826 537 780 179 109 Q4 2021 Q4 2020 Q4 2021 Q4 2020 Corporate (DKKm) Sweden (DKKm) 36 96 74 -32 Q4 2021 Q4 2020 Q4 2021 Q4 2020 • Private –
Slide 6: Alka synergies of DKK 333m, 10% higher than FY2021 target
1 | HIGHLIGHTS Q4 2021 Alka synergies of DKK 333m, 10% higher than FY2021 target Targeted benefits 2019-2021 (DKKm) • Full run rate synergies realised impact in 2021 of DKK 333m Realised synergies Targeted synergies 2021 • Realised synergies of DKK 90m in 2019, DKK 176m in 2020 and 333 finally DKK 3
Slide 7: Q4 financial performance of Codan Norway and Trygg-Hansa
1 | HIGHLIGHTS Q4 2021 Q4 financial performance of Codan Norway and Trygg-Hansa Trygg-Hansa reported an adjusted growth of ~5% Technical result of DKK 552m driven by Trygg-Hansa reported a Q4 Combined ratio benefitting from Private Motor especially from online positive topline growth, less weather c
Slide 8: Full year financial performance of Codan Norway and Trygg-Hansa
1 | HIGHLIGHTS Q4 2021 Full year financial performance of Codan Norway and Trygg-Hansa Full year performance of Trygg-Hansa and Codan Norway Synergy target over time and across categories Gross earned premiums Estimated pre-tax synergies split by function and year, DKKm 10,665 Trygg-Hansa reported a
Slide 9: RSA synergies status as per Q4
1 | HIGHLIGHTS Q4 2021 RSA synergies status as per Q4 RSA synergies (DKKm) • Q4 2021 synergies are related to cost reductions primarily driven by savings from terminated RSA Group services including successful Realised synergies in 2021 separation, staff cost reductions due to natural attrition and
Slide 10: Shareholders' remuneration
1 | HIGHLIGHTS Q4 2021 Shareholders’ remuneration Shareholder remuneration since 2012 Strong focus on shareholders’ remuneration Extraordinary dividend Tryg technical result 8.45 Extraordinary buy back 3.50 3.50 3.31 Ordinary dividend ~ 7.0-7.4 3.40 1.65 7.00 3.20 6.60 Tryg aims to pay DKK 2.60 ~12-
Slide 11: Premiums and portfolio
Premiums and portfolio
Slide 12: Premiums up 2.6% in Q4, or 5.1% adjusted for bonus and premium rebates
2 | PREMIUMS AND PORTFOLIO Premiums up 2.6% in Q4, or 5.1% adjusted for bonus and premium rebates Gross earned premums development (local currencies) DKKm Q4 2021 Q4 2020 Local currencies Local currencies Q4 2021 Q4 2020 7.4 Private 3,433 3,245 3.1% 9.0% 5.1 Commercial 1,352 1,261 5.1% 6.5% 2.6 Corp
Slide 13: Bonus and premium rebates impacted growth significantly in 2021
2 | PREMIUMS AND PORTFOLIO Bonus and premium rebates impacted growth significantly in 2021 Premium growth, Group 7.4 7.0 6.7 6.3 6.4 6.4 6.1 4.9 Bonus & premium rebates (B&P) are primarily connected to partner agreements in Denmark relating to profit sharing 2018 2019 (ex Alka) 2020 2021 Premium gro
Slide 14: Partnership agreements provides leads to profitable customers
2 | PREMIUMS AND PORTFOLIO Partnership agreements provides leads to profitable customers Average partner figures, Private DK+NO, 2020 Premium income, different partner agreements 2,000 4.5 ~12 years # products Customer lifetime per customer ~12% ~85% 0 Expense ratio Combined ratio Partner 1 Partner
Slide 15: Private & Commercial - average prices moving slightly upwards
2 | PREMIUMS AND PORTFOLIO Private & Commercial - average prices moving slightly upwards House insurance 135 DK NO 130 • DK: 1.0% (Q3 1.6%) reflecting price 125 adjustments and value-adding preventive services. Adjusting for one big partner 120 agreement the increase would be ~2% 115 110 • NO: 2.6%
Slide 16: Customer retention is generally improved
2 | PREMIUMS AND PORTFOLIO Customer retention is generally improved Private 95 94 DK NO 93 92 • DK: Increase in retention to 90.5% 91 (90.1%) despite the churn from the 90 89 Nordea agreement 88 87 • NO: customer retention slightly up 86 to 88.5% (88.4%) showing a 85 normalised trend 84 83 82 81 Q2
Slide 17: Claims and expenses
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Slide 18: Underlying claims ratio improving 80bps in Q4
3 | CLAIMS AND EXPENSES Underlying claims ratio improving 80bps in Q4 Claims ratio, net (Commercial DK & NO) Group underlying claims ratio at 72.0, 80bps better than Q4 2020 120 100 Improvements in Group underlying profitability primarily driven by the Commercial 80 and Corporate segment 60 40 Priva
Slide 19: Large claims, weather claims and run-off
3 | CLAIMS AND EXPENSES Large claims, weather claims and run-off Large claims, net DKKm Weather claims, net DKKm Expected annual Expected annual 800 level 2022: DKK 550m 1.200 level 2022: DKK 600m 700 1.000 600 550 500 800 400 600 600 300 201 400 200 162 200 148 122 100 0 0 2010 2011 2012 2013 2014
Slide 20: Q4 expense ratio of 14.0
3 | CLAIMS AND EXPENSES Q4 expense ratio of 14.0 Expense ratio • Investments in digitalisation will partly be financed through efficiency gains 25 • Alka synergies of DKK 12m helped overall costs level 20 • Tryg has guided for an expense ratio ~14 also in 2024 14.0 14.4 14.2 14.1 14.1 15 14.0 14.0 •
Slide 21: Investment, capital and targets
Investment, capital and targets
Slide 22: Investments – split in match & free portfolio
4 |INVESTMENT, CAPITAL AND TARGETS Investments – split in match & free portfolio Splitting up the portfolio ‘risk-wise’ Match portfolio split, Free portfolio split DKKbn 16 Emerging markets Inflation linked bonds Investment grade 5% 1% 6% Equities High yield 21% 11% 9 5 Total investments DKK 42.9bn
Slide 23: Tryg stand-alone investment return – low risk remains key
4 | INVESTMENT, CAPITAL AND TARGETS Tryg stand-alone investment return – low risk remains key Key figures investments Q4 2021 Q4 2020 2021 2020 • Tryg’s stand alone investment result of DKK 373m (DKKm) • Free portfolio benefited from a strong return from equities and properties Free portfolio 413 51
Slide 24: Solvency position Q4 2021
4 |INVESTMENT, CAPITAL AND TARGETS Solvency position Q4 2021 Own funds walk • Solvency ratio based on the Partial Internal Model is 188 (Q3 2021: 179). 164 18.559 Tier 2 17.725 1.370 700 • Own Funds (OF) is primarily impacted by 3.551 Additional Tier 1 3.511 1.831 Core Equity Tier 1 1.828 • Strong Q
Slide 25: Tier 1 & Tier 2 instruments
4 |INVESTMENT, CAPITAL AND TARGETS Tier 1 & Tier 2 instruments Tier 1 funds can be maximum 25% of Core Equity Tier 1 • The maximum capacity of additional Tier 1 instruments is a function of the Core Equity Tier 1, which can be up to 25% of the 13,177 Core Equity Tier 1. Tryg has DKK 1,831m of Tier 1
Slide 26: Solvency capital requirement build-up Q4 2021
4 |INVESTMENT, CAPITAL AND TARGETS Solvency capital requirement build-up Q4 2021 Tryg stand-alone Solvency Capital Requirement build up • Tryg’s stand-alone SCR at the end of Q4 was DKK 5,389m 5 884 1.373 • Tryg uses a partial internal model where only the insurance risk is 3.705 2.852 modelled inte
Slide 27: Solvency ratio historical development
4 |INVESTMENT, CAPITAL AND TARGETS Solvency ratio historical development 899 Approval of new Both 9M dividends Adjusted for partial internal model, (announced in Final approval of the rights Own funds very strong Q2 result November) and Q4 the Alka acquisition issue, the and SCR and dividend decisio
Slide 28: Solvency ratio sensitivities
4 |INVESTMENT, CAPITAL AND TARGETS Solvency ratio sensitivities 206 191 189 194 198 190 189 192 188 189 186 187 189 187 189 187 184 178 170 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% - 20% 2021 Equity Equit
Slide 29: Important things to remember in 2022
4 | INVESTMENT, CAPITAL AND TARGETS Important things to remember in 2022 Full consolidation of Codan Norway and Trygg-Hansa Tryg has guided (at its November 2021 CMD) for a solvency ratio between 195 and 205 as per H1 2022, (post the demerger of Codan Norway and Trygg- that guidance is completely un
Slide 30: Financial targets for 2024
4 | INVESTMENT, CAPITAL AND TARGETS Financial targets for 2024 Technical result DKK 7.0-7.4bn Combined ratio ≤82% Expense ratio ~14% reaffirmed 2024 strategy and targets Return on Own Funds ≥25% will ensure highly attractive Synergy realisation DKK 900m shareholders’ returns Ordinary dividends and D
Slide 31: It is important to know your investment case
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 31
Slide 32: Q4 2021 roadshows & conferences
5 | ROADSHOWS AND CONFERENCES Q4 2021 roadshows & conferences Date Event Participants from Tryg Arranged by Morten Hübbe, CEO 25/01/2022 Copenhagen Roadshow Barbara Plucnar Jensen, CFO SEB Investor Relations Barbara Plucnar Jensen, CFO 26/01/2022 London Roadshow Berenberg Investor Relations 03/02/20
Slide 33: Background material
Background material
Slide 34: Why invest in Tryg?
6 | BACKGROUND MATERIAL Why invest in Tryg? High insurance penetration in the Nordics Pre-tax result by division (YE 2020 data) Premiums per capita (USD), 2019 1,712 1,627 1,333 1,306 Non-life Life Banking Other Tryg Topdanmark Alm. Brand Sampo Gjensidige Storebrand Denmark Norway Germany France UK
Slide 35: Tryg at a glance
6 | BACKGROUND MATERIAL Tryg at a glance Gross premium split by products 2021 • Tryg goes back to 18th century. • Very strong brand position especially in Denmark. Motor 10% Workers’ comp • Non-life insurance in Denmark, Norway and Sweden. 12% 31% Health & accident Liability • Approx. 80% retail bus
Slide 36: Premiums and reserves by lines of business
6 | BACKGROUND MATERIAL Premiums and reserves by lines of business Gross premium by products 2021 Gross claims reserve by products 2021 10% 7% 14% 5% Motor Motor 12% 31% 7% Workers’ comp Workers’ comp Health & accident Health & accident Liability 11% Liability Fire & property - private Fire & proper
Slide 37: Gross premium split by geography
6 | BACKGROUND MATERIAL Gross premium split by geography DK: Gross premium by products 2021 SE: Gross premium by products 2021 3% Motor 2.0% Motor 4% Workers comp 11.0% Health and accident 11% 29% Health and accident 28.0% Liability Liability Fire & property - private Fire & property - private Fire
Slide 38: The run-off cycle
6 | BACKGROUND MATERIAL The run-off cycle Run-off development • Initial assessment of the claims was DKK 18,000 but Tryg reserved for DKK 20,000 adding some 3 years conservatism to best estimate 2,000 Run-off: +2,000 • At the time of setting up the claims reserves and Claims estimate: -18,000 18,000
Slide 39: Combined ratio development since IPO
6 | BACKGROUND MATERIAL Combined ratio development since IPO 98.8 92.2 93.2 89.0 88.2 88.2 87.7 87.6 85.9 86.8 86.7 85.1 85.1 85.7 84.4 84.2 84.4 84.5 84.5 84.7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Since 10Y 5Y avg. IPO avg. 39
Slide 40: Structure of the Scandinavian insurance market
6 | BACKGROUND MATERIAL Structure of the Scandinavian insurance market Scandinavia (EUR 23.4bn as at Q4 2020) Denmark (DKK 61.5bn/EUR 8.2bn as at Q4 2020) Tryg Tryg 18.5% Topdanmark Topdanmark 23.1% 22.7% If If Gjensidige Gjensidige 39.8% 5.6% Länsforsikringar Alm. Brand Other Percentage3.8% LB Fors
Slide 41: Distribution of new sales 2021
6 | BACKGROUND MATERIAL Distribution of new sales 2021 Private 6% 8% Customer services 0% 23% Franchise Outbound 11% Customer service Own sales Online DK 26% 38% 44% Outbound 42% Web and external sales DK Affinity NO SE Atlantica/Bil sport/MC Enter Sales agents Other 16% Web 6% Other 39% 10% 7% 25%
Slide 42: Things that you may not know
6 | BACKGROUND MATERIAL Things that you may not know • Motor insurance prices relatively similar in DK and the UK but cost of the insured good (the car) substantially higher in DK driven by the registration tax for passenger cars (100%-150% of taxable value on new vehicles approx.). • Motor insuranc
Slide 43: Things that you may not remember
6 | BACKGROUND MATERIAL Things that you may not remember • Our maximum annual net exposure to a single large Property claim is DKK 100m which falls to DKK 75m in case of a second event and DKK 50m in case of a third/fourth event, maximum exposure is DKK 25m thereafter. This is based on our general r
Slide 44: 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 F 43 UK 33 services of my insurance company DE 50 DK 72 F 43 My insurance agent only sold me UK 20 insurance coverage that I really neede
Slide 45: Population growth (2000-2021)
6 | BACKGROUND MATERIAL Population growth (2000-2021) Population development in Denmark in ‘1,000 DK 9.6% Population development in Norway in ‘1,000 NO 20% 45
Slide 46: TryghedsGruppen and its members' bonus
6 | BACKGROUND MATERIAL TryghedsGruppen and its members’ bonus Denmark's ‘biggest’ family Bonus has a positive effect on retention ‘I expect to be in Tryg next year’ 1 (Largest shareholder) Have heard about Customer bonus 90% Have not heard about Customer Bonus 79% Premiums Retention rate increase b
Slide 47: Organisational and remuneration structure
6 | BACKGROUND MATERIAL Organisational and remuneration structure Organisation chart Remuneration structure CEO Morten Hübbe The Executive Board are remunerated according to Tryg’s remuneration policy: CFO CCO • Base salary COO Barbara Plucnar Johan Kirstein Lars Bonde Jensen Brammer o A fixed car a
Slide 48: Corporate Responsibility governance
Corporate Responsibility governance Corporate Responsibility Board The Board’s responsibilities includes: • Supporting Executive Board to make Corporate Responsibility-related decisions • Defining the Corporate Responsibility strategy • Defining relevant KPIs and evaluate performances • Anchoring ex
Slide 49: Corporate Responsibility strategy 2024
Corporate Responsibility 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 business. Sustainable Responsible Gree
Slide 50: Environmental, Social and Governance (ESG) data
Environmental, Social and Governance (ESG) data Climate and environmental data Unit 2021 2020 2019 2018 2017 Total direct and indirect carbon emissions (location-based) Tonnes CO2e 2,082 2,501 5,127 5,386 Tonnes CO2e Total direct and indirect carbon emissions (market-based) 1,506 4,287 7,732 7,583 C
Slide 51: ESG ratings 2021
ESG ratings 2021 Score 2021 Industry ranking 2021 51
Slide 52: Responsible investment
Responsible investment 2023 KPI 2030 milestone 2021 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 External managers External managers responsibility integration must be ”best practice” (
Slide 53: Key figures 2021 and Consensus 2021-2024
6 | BACKGROUND MATERIAL Key figures 2021 and Consensus 2021-2024 Consensus DKKm 2021A 2021 2022 2023 2024* Gross premium income 24,137 24,301 33,016 36,578 37,845 Technical result 3,709 3,734 5,704 6,700 7,201 Investment income, net 1,008 700 704 351 364 Pre-tax profit 4,093 3,789 4,459 6,043 6,559
Slide 54: Appendix
Appendix Follow us on Twitter: @TrygIR
Slide 55: Group
7 | APPENDIX Group Gross premiums Gross premiums Combined ratio DKKm % % 24,137 100 25,000 22,653 15 21,741 20,000 17,963 18,740 90 10 84.4 85.1 85.1 84.5 84.5 15,000 * 7.00 6.30 6.10 80 10,000 4.90 5 5,000 1.70 70 0 0 2017 2018 2019 2020 2021 60 2017 2018 2019 2020 2021 * Ex Alka Local currency Gro
Slide 56: Private
7 | APPENDIX Private Gross premiums Gross premiums Combined ratio DKKm % % 14,000 13,685 15 12,743 100 12,021 12,000 9,466 90 10,000 8,798 * 9.0 10 82.1 83.7 83.9 83.7 7.8 81.6 8,000 5.8 80 8.9 6,000 5 70 4,000 1.1 60 2,000 0 2017 2018 2019 2020 2021 50 * Ex Alka Local currency Gross earned premiums
Slide 57: Commercial
7 | APPENDIX Commercial* Gross premiums Gross premiums Combined ratio DKKm % % 6,000 5,294 30 100 4,753 4,930 5,000 4,397 3,862 20 90 4,000 82.6 83.8 83.7 83.8 9.5 80 78.2 3,000 6.1 6.1 10 3.7 2,000 -0.7 70 0 1,000 60 0 -10 2017 2018 2019 2020 2021 50 Local currency Gross earned premiums 2017 2018 2
Slide 58: Corporate
7 | APPENDIX Corporate* Gross premiums Gross premiums Combined ratio DKKm % % 6,000 30 110 5,000 100.1 20 100 3,852 90.0 91.8 4,000 3,471 3,500 3,376 3,457 88.0 89.4 90 3,000 10 4.0 80 2.1 0.5 0.8 2,000 0.3 0 70 1,000 0 -10 60 2017 2018 2019 2020 2021 50 Local currency Gross earned premiums 2017 201
Slide 59: Sweden
7 | APPENDIX Sweden Gross premiums Gross premiums Combined ratio DKKm % % 2,000 40 105 1,604 1,701 1,487 1,471 1,521 30 1,500 100 20 95 12.50 1,000 4.90 6.10 4.90* 10 90 88.1 2.70 86.0 84.8 500 85 83.2 83.6 0 0 -10 80 2017 2018 2019 2020 2021 75 Local currency Gross earned premiums 2017 2018 2019 20
Slide 60: Geographical combined ratio
7 | APPENDIX Geographical combined ratio Denmark % Sweden % % 100 100 95.2 92.0 90 90 88.5 88.3 85.1 81.3 82.7 80.7 80.0 80.4 80 80 70 70 60 60 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Norway % 100 93.1 92.7 90 87.9 87.7 87.2 80 70 60 2017 2018 2019 2020 2021 60
Slide 61: Corporate history
7 | APPENDIX Corporate history 1728 1731 1880 1911 1994 1995 1996 Copenhagen fire of 1728 Kjøbenhavns Brand, the The Norwegian The name Tryg acquires the Danish Tryg acquires Baltica, Tryg-Baltica is listed on increases awareness for oldest component of Tryg is insurance company, Tryg insurance oper
Slide 62: Economic key figures
7 | APPENDIX Economic key figures Denmark Norway % 2020 2021E 2022E 2023E % 2020 2021E 2022E 2023E GDP growth -2.1 3.3 2.7 2.2 GDP growth -2.5 3.9 3.9 1.3 Inflation 0.4 1.4 1.5 1.7 Inflation 3.0 1.6 1.8 2.0 Unemployment 4.6 3.9 3.2 2.8 Unemployment 4.6 3.6 2.4 2.3 Current account Household balance i