Tryg A/s · OMXCOP:TRYG
Tryg A/s — FY2015 Earnings Presentation
41 slides from Tryg A/s's earnings presentation, 2016
Slide 1: 2015 Annual results Investor presentation
2015 Annual results Investor presentation Follow us on Twitter: @TrygIR
Slide 2: Contents
Contents Highlights 2015 3 Premiums and portfolio 9 Claims 14 Investment, capital and targets 17 For new investors 23 Appendix 34 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and information currently availab
Slide 3: Financial highlights 2015
Financial highlights 2015 • DPS of 6.0 for the FY and buy backs of DKK 1bn in 2016 • DPS growth in line with our aim Dividend, buy back & total yield • Extraordinary buy backs of DKK 1bn in 2016 10% DKK 15 • Total yield approx. 7% on share price end of 2015 12 8% 6% • Solvency II ratio (int. model)
Slide 4: Financial highlights Q4 2015
Financial highlights Q4 2015 - Less satisfactory technical result • Pre-tax profit of DKK 704m (DKK 768m) impacted by: Pre-tax profit (DKKm) • Lower technical result of DKK 522m (DKK 775m) impacted by high weather claims and negative currencies 704 768 movements. • Positive investment result of DKK
Slide 5: Customer highlights Q4 2015
Customer highlights Q4 2015 - NPS doubled since CMD, 2017 target already met • New health care insurance launched in Denmark including a NPS prevention app ‘TrygHealth’. The app provides access to a medical hotline via mobile video conferencing. 22 22 11 • New car product ‘Moderna Smart’ launched in
Slide 6: Key figures Q4/FY
Key figures Q4/FY DKKm Q4 2015 Q4 2014 FY 2015 FY 2014 Gross premium income 4,393 4,646 17,977 18,652 Gross claims -2,988 -2,976 -13,562 -12,650 Gross expenses -615 -684 -2,720 -2,689 Technical result 522 775 2,423 3,032 Return on investment after 201 13 -5 360 technical interest Profit/loss before
Slide 7: Efficiency programme, DKK 47m achieved in Q4
Efficiency programme, DKK 47m achieved in Q4 • Programme deliver as planned with target to Efficiency programme up until 2017 (DKKm) achieve savings of DKK 750m over 3 years. Old programme New programme • Lower 2015 savings than in 2014. • Claims initiatives: • Increased collection from third partie
Slide 8: Expense ratio improved before one-off
Expense ratio improved before one-off • Expense ratio improved 0.7 pp. to 14.2 in Q4 and Expense ratio reached 14.9% for the FY excluding Q3 one-off costs. • One-off provisioning of DKK 120m in Q3 related to 16.4 efficiency programme. 15.6 15.3 15.3 14.9 • Efficiency programme delivered savings of 1
Slide 9: Premiums and portfolio
Premiums and portfolio
Slide 10: Positive topline development in Private
Positive topline development in Private Gross earned premiums decreased by 1.6% (-0.1%) in local currencies driven by: • Private trend helped by lower rebates but also improved growth and retention in Denmark. • Commercial trend reflects a structural challenge with too low sales compared to current
Slide 11: Less satisfactory technical result
Less satisfactory technical result Group (DKKm) Private, DK & NO (DKKm) Commercial, DK & NO (DKKm) 270 400 285 147 775 Q4 2015 Q4 2014 Q4 2015 Q4 2014 522 Corporate (DKKm) Sweden (DKKm) 85 98 5 7 Q4 2015 Q4 2014 Q4 2015 Q4 2014 Q4 2015 Q4 2014 11
Slide 12: Private - average premiums
Private - average premiums - DK profitability strong but competition increasing House insurance – average premium (index 2011 = 100) Average premiums increase Y/Y NO • NO: price increases from July 115 -1.0% 0.6% (Q3 -1.0%) (Q3 0.9%) 110 • DK: changed selection reduces 105 DK average price, price in
Slide 13: Customer retention
Customer retention Private 92% DK • Customer retention in Denmark 90% at highest level since Q3 2013 88% 86% • Slight improvement in Norway NO 84% 82% Commercial • Modest fall in Denmark 92% 90% DK • Retention decreased in Norway 88% impacted by economic situation 86% NO 84% 82% 13
Slide 14: Claims
Claims
Slide 15: Increase in underlying claims ratio, net
Increase in underlying claims ratio, net Group Private (DK & NO) Commercial (DK & NO) 68.3 68.9 67.5 72.2 65,5 70.2 Q4 2015 Q4 2014 Q4 2015 Q4 2014 Corporate Sweden 85.0 79.4 76.1 71.9 Q4 2015 Q4 2014 Q4 2015 Q4 2014 Q4 2015 Q4 2014 Underlying development is adjusted for large claims, weather claims
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 2016: DKK 550m level 2016: DKK 500m 574 613 620 614 471 407 447 357 201 237 134 119 2012 2013 2014 2015 Q4 2015 Q4 2014 2012 2013 2014 2015 Q4 2015 Q4 2014 Claims reserves d
Slide 17: Investment, capital and targets
Investment, capital and targets
Slide 18: Investment return – low risk remains key
Investment return – low risk remains key Portfolio (DKK 38.9bn) Free portfolio return Q4 2015 (%) 4.5 3.5 Bonds/deposits 13.0% 1.8 1.5 0.3 Inv. Property 5.3% -0.5 EM 1.0% Free HY 2.2% 10.7bn 28% Equities 6.2% Match Bonds/deposits 28.1bn 3.3% 72% Geographical exposure (%) Cov. Bonds 69.0% 100 100 63
Slide 19: Solvency position Q4 2015
Solvency position Q4 2015 Capital – Q4 2015, DKKm • Solvency II internal model ratio was 154 at YE (Q3 2015: 159) and was impacted by: • Result Q4 2015 • Executed share buy back in Q4 2015 • Deduction of 60% of 2015 dividend 9,525 • Acquisition of Swedish child insurance portfolio implies an impact
Slide 20: Solvency II ratio @ 176 as per 1 Jan 2016
Solvency II ratio @ 176 as per 1 Jan 2016 Solvency II ratio development • Solvency II ratio (internal model) @ 176 as per 1 Jan 2016 up from 154 at year-end 2015, this includes the recent Skandia’s child insurance acquisition and the H2 2015 dividend. 176% 155% 159% 154% • The capital base benefits
Slide 21: Targets and outlook
Targets and outlook Efficiency programme proceeds as 2016 topline growth between 0%-2% (local currencies) planned. 2016 expected tax rate 21% Members’ bonus from spring 2016 Markets remain very competitive Price increases to offset claims inflation High focus on capital repatriation 20
Slide 22: 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 22
Slide 23: For new investors
For new investors
Slide 24: Why invest in Tryg?
Why invest in Tryg? Only pure non-life group (YE 2014 data) High insurance penetration in the Nordics Premiums per capita (USD), 2014 200% 2,000 1,722 1,716 1,617 150% 1,350 100% 1,185 50% 1,000 746 0% -50% 0 -100% Non-life Life Banking Other Motor combined ratios Nordics vs international Tryg is a
Slide 25: Tryg – at a glance I
Tryg – at a glance I Gross premium split by products 2014 • Tryg goes back to 18th century. 10 • Very strong brand position especially in Denmark. 31 Motor 14 Workers' comp • Non-life insurance in Denmark, Norway and Sweden. Health & accident Percentage • Approx. 80% retail business. Liability Norwa
Slide 26: Tryg – at a glance II
Tryg – at a glance II Shareholder performance since IPO Shareholder remuneration since IPO DKK 500 New dividend Tryg incl. dividend Euro Insurance index 10 450 policy 9 400 8 3.4 3.5 350 7 3.2 2.6 300 6 4.2 5 250 2.6 4 200 3 6.6 5.8 6.0 5.2 5.4 150 2 4.2 3.4 3.1 100 1 1.3 0.8 1.3 50 0 2005 2006 2007
Slide 27: Tryg's equity story
Tryg’s equity story Leading Scandinavian insurer with strong track record Financial targets 2017 Customer targets 2017 • ROE: ≥21% • NPS +100% Low risk and high Customer care worth returns • Combined ratio: ≤87% • Retention rate +1 pp recommending • Expense ratio: ≤14% • ≥ 3 products +5 pp • Matchin
Slide 28: Things that you may not know
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 approximately). • Motor insurance remains a highly
Slide 29: Things that you may not remember
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 reinsurance programme. •
Slide 30: Structure of the Nordic insurance market
Structure of the Nordic insurance market Nordic Denmark EUR 25.7bn (as at Q4-2014) DKK 52.0bn/EUR 7.0bn (as at Q3-2014) 9.3 18.0 4.8 Tryg Tryg 30.8 Topdanmark Topdanmark 42.2 If If Percentage 17.2 Codan Percentage Codan 17.5 Gjensidige Gjensidige Länsforsikringar Alm. Brand 8.7 Other Other 9.7 6.0 9
Slide 31: Distribution of new sales 2015
Distribution of new sales 2015 Denmark Norway 6 14 Own sales Own sales Car dealers Affinity 44 Percentage 57 Percentage 38 Affinity Nordea 29 Nordea 12 Sweden Corporate 15 Own sales External partners Own sales Percentage Percentage Online & others 55 Brokers 31 51 45 Atlantica/Bilsport MC 3 31
Slide 32: Combined ratio performance
Combined ratio performance 110 Premium Premium Efficiency Customer and hikes hikes programme efficiency focus 105 100 Smaller 95 adjustments 90 85 80 2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio from 107 to 94. 2011-2012 price increases will improve underlying combined
Slide 33: Key figures 2011-15 and consensus 2016-18
Key figures 2011-15 and consensus 2016-18 Consensus DKKm 2011 2012 2013 2014 2015 2016 2017 2018 Gross premium income 19,948 20,314 19,504 18,652 17,977 17,863 18,075 18,375 Technical result 1,572 2,492 2,496 3,032 2,423 2,642 2,825 2,855 Investment income, net 61 585 588 360 -5 1 178 172 Pre-tax pr
Slide 34: Appendix
Appendix Follow us on Twitter: @TrygIR
Slide 35: Group
Group Gross premiums Combined ratio DKKm % 21,000 GEP (LHS) Local currency (RHS) 4 100 20,000 3 95 2 19,000 1 90 18,000 0 -1 85 17,000 -2 16,000 80 -3 15,000 -4 75 Claims ratio, net of reinsurance Expense ratio 80 18 17 75 16 70 15 14 65 13 60 12 35
Slide 36: Private
Private Gross premiums Combined ratio DKKm % 10,500 GEP (LHS) Local currency (RHS) 7 100 10,000 6 5 95 9,500 4 9,000 3 90 2 8,500 1 85 8,000 0 -1 80 7,500 -2 7,000 -3 75 Claims ratio, net of reinsurance Expense ratio 80 18 17 75 16 70 15 14 65 13 60 12 36
Slide 37: Commercial
Commercial Gross premiums Combined ratio DKKm % 5,000 GEP (LHS) Local currency (RHS) 4 100 3 4,500 95 2 4,000 1 90 0 3,500 -1 85 -2 3,000 80 -3 2,500 -4 75 Claims ratio, net of reinsurance Expense ratio 75 20 19 70 18 65 17 16 60 15 55 14 37
Slide 38: Corporate
Corporate Gross premiums Combined ratio DKKm % 5,000 GEP (LHS) Local currency (RHS) 4 100 3 4,500 95 2 4,000 1 90 0 3,500 -1 85 -2 3,000 80 -3 2,500 -4 75 Claims ratio, net of reinsurance Expense ratio 85 15 14 80 13 75 12 70 11 65 10 38
Slide 39: Sweden
Sweden Gross premiums Combined ratio DKKm % 2,500 GEP (LHS) Local currency (RHS) 10 105 8 100 2,000 6 4 95 2 1,500 90 0 -2 85 1,000 -4 80 -6 500 -8 75 Claims ratio, net of reinsurance Expense ratio 85 20 80 19 75 18 70 17 65 16 60 15 39
Slide 40: Geographical segments
Geographical segments Denmark Sweden DKKm DKKm Q4 2015 Q4 2014 FY 2015 FY 2014 Q4 2015 Q4 2014 FY 2015 FY 2014 Gross premiums Gross premiums earned 2,330 2,346 9,346 9,361 earned 463 467 1,894 1,975 Technical result Technical result 289 651 1,371 1,510 109 -66 328 44 Key ratios: Key ratios: Gross cl
Slide 41: Economic key figures
Economic key figures Denmark Sweden % 2015 2016 % 2015 2016 GDP Growth 1.4 1.7 GDP Growth 3.5 3.5 Inflation 0.5 1.1 Inflation 0.9 1.6 Unemployment 4.6 4.0 Unemployment 7.4 6.8 Current account balance in Current account balance in 7.4 7.0 6.4 6.8 % of GDP % of GDP Budget balance in % of GDP -2.9 -2.7