Tryg A/s · OMXCOP:TRYG
Tryg A/s — TrygVesta — FY2008 Earnings Presentation
50 slides from Tryg A/s's earnings presentation, March 2009
Slide 1: Investor presentation March 2009
1 Investor presentation Investor presentation March 2009 For further information: www.trygvesta.com
Slide 2: Disclaimer
Disclaimer 2 Investor presentation 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 resul
Slide 3: Facts about TrygVesta
Facts about TrygVesta 3 Investor presentation Shareholder structure D a nis h • Focused Nordic, non-life insurance company ins t it ut io ns 16 % • Vision: To be perceived as the leading “peace of mind” provider in the Nordic region N o n- D a nis h ins t it ut io ns 7% • Strong brand and market pos
Slide 4: Overall financial performance of TrygVesta
4 Investor presentation Overall financial performance of TrygVesta
Slide 5: Highlights 2008 results and Outlook 2009; Acquisition of Moderna
Highlights 5 Investor presentation 2008 results and Outlook 2009 • 4.9% premium growth (4.3% in DKK) in line with outlook • Combined ratio of 89.1 compared with 86.1 in 2007 • Pre-tax result was DKK 1,347m compared with DKK 3,109m in 2007 due to lower investment income • Dividend for 2008 suggested
Slide 6: Highlights Q4 2008
Highlights Q4 2008 6 Investor presentation 5.2% premium growth (1.4% in DKK) and above market growth • A strong Q4 with claims ratio of 66.4 against 68.6 in Q4 2007 • Technical result of DKK 517m, which includes expenses to “The Living House” of DKK 133m • Combined ratio of 90.3 compared with 86.2 i
Slide 7: Key performance indicators – 2008
Key performance indicators – 2008 7 Investor presentation Gross premium income Combined ratio DKKm 17,323 92 88.2 86.4 86.1 89.1 88.3 0.8 16,606 88 1.7 2.8 2.8 16,021 2.1 15,705 84 3.8 86.5 85.5 85.5 80 84.3 82.3 76 2005 2006 2007 2008 2008* 2005 2006 2007 2008 CR excl. large claims Large claims "Th
Slide 8: Key performance indicators
Key performance indicators 8 Investor presentation Gross premium Combined ratio DKKm 92.0 83.0 83.7 87.2 89.6 84.8 83.7 86.2 87.9 87.3 90.9 90.3 87.2 4.0 4,425 1.4 5.1 3.1 4,338 4,327 1.2 1.4 2.2 2.5 2.5 4,268 4,233 4,232 5.1 1.4 2.6 1.9 6.2 4,107 4,071 4,005 3,985 3,999 88.0 88.2 86.5 85.1 85.8 84.
Slide 9: Average price development
Average price development 9 Investor presentation Price increases implemented on main products • House insurance will increase in average by: • 11% in Denmark from 2009 due to claims inflation • 7.5% in Norway from 2009 due to claims inflation and general needs in market to improve results • Danish
Slide 10: Frequency and average claims
Frequency and average claims 10 Investor presentation Frequency Denmark Frequency Norway 120 105 103 110 100 100 98 90 95 2005 2006 2007 2008 2005 2006 2007 2008 Quarterly performance Average claims Denmark 140 Average claims Norway 120 130 100 140 07 08 08 08 08 4 1 2 3 4 Q Q Q Q Q 120 120 110 100
Slide 11: Gross premiums grew 4.9% (4.3% in DKK) or DKK 717m
Gross premiums 2008 11 Investor presentation Gross premiums grew 4.9% (4.3% in DKK) or DKK 717m • Growth driven by all business areas with Corporate and P&C Norway as the biggest growth contributors • Growth from Finland & Sweden contributed DKK 234m of the DKK 717m • Positive development in renewal
Slide 12: Technical result down to DKK 2,384m from DKK 2,820m
Technical result 12 Investor presentation Technical result down to DKK 2,384m from DKK 2,820m • 2008 impacted by “DLH”, higher claims inflation and underlying claims inflation • Technical result before run-off was DKK 1,591m or DKK 486m lower than 2007 • Q4 2008 was DKK 204m lower than Q4 2007 mainl
Slide 13: Nordic groups
Nordic groups 13 Investor presentation Premium growth in % Combined ratio 14 Gjensidige Codan "CR" Gjensidige 96 10 Codan Operating Codan ratio if… 6 TrygVesta 92 2 if… 88 -2 TrygVesta -6 84 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 - Gjensidige adjusted for acquisitions in 2007 Codan: Combi
Slide 14: Claims
14 Investor presentation Claims
Slide 15: Claims ratio
Claims ratio 15 Investor presentation Claims ratio - net Claims ratio has increased due to these segments 71.8 71.2 • Danish housing and property 69.6 69.4 • Norwegian motor • Accident claims • Health care 2005 2006 2007 2008
Slide 16: Large claims and weather related claims
Large claims and weather related claims 16 Investor presentation • Weather related claims of DKK 22m in Q4 2008 against DKK 80m in Q4 2007. • Large claims of DKK 109m gross in Q4 2008 versus DKK 372m gross in Q4 2007 and expected DKK 125m. Large claims Weather related claims, gross DKKm DKKm 911 1,0
Slide 17: Run-off and changes in reserves
Run-off and changes in reserves 17 Investor presentation Run-off in 2008 of DKK 868m gross and DKK 793m net. • Impact on combined ratio of 4.6% in 2008 versus 4.5% in 2007 • Positive run-off results on Motor and Workers’ Compensation whilst Private Building needed extra reserves Run-off net Technica
Slide 18: Expenses
18 Investor presentation Expenses
Slide 19: Expense management and cost ratio
Expense management and cost ratio 19 Investor presentation Gradual decline in cost ratio due to a combination of improved efficiency in Denmark and Norway and counterbalanced by expansion in Finland and Sweden 17.2 16.7 16.6 16.8 17.2 16.8 16.1 16.6 16.9 17.1 16.0 19.4 2.7 0.4 0.7 1.1 1.5 1.9 0.7 1.
Slide 20: Investments
20 Investor presentation Investments
Slide 21: Investment results – 2008
Investment results – 2008 21 Investor presentation Gross investment return of DKK 1.258m or 3.5% despite equity losses of DKK 887m • Performance in 2008 impacted by equity markets decline of 40-50%, however… • …equity cutback in 2007 and January 2008 prevented additional loss of DKK 1.2bn. • Assets/
Slide 22: Portfolio structure – bonds and equities
Portfolio structure – bonds and equities 22 Investor presentation Conservative approach to the investment portfolio • Duration of bond portfolio is approximately 2 years • The equity portfolio is indexed and tracking leading MSCI indices • Proportion of unrated bonds reduced from 15% to 5% during 20
Slide 23: Capital and Outlook
23 Investor presentation Capital and Outlook
Slide 24: Outlook 2009
Outlook 2009 24 Investor presentation Expected 2009 Realised Mid February Positive Negative DKKm 2008 2009 scenario scenario Interest rate level 3.93% Exchange rate DKK/NOK 0.85 Premium growth in local currency 4.9% 4% Technical result before run-off 1,591 1,500 Technical result after run-off 2,384
Slide 25: Capitalisation and proposed dividend for 2008
Capitalisation and proposed dividend for 2008 25 Investor presentation DKKm 12,000 Proposed 11,000 dividend: DKK 6.50 10,000 9,000 8,000 7,000 6,000 07 07 07 08 08 08 06 a ut t ut ut u n yo yo yo yo 20 er 1 2 3 1 2 3 Q Q Q Q Q Q pa pa od pa pa M re re r r te te r fo fo te af af be be af 07 08 07 08
Slide 26: Business line performance
26 Investor presentation Business line performance
Slide 27: P&C Denmark
P&C Denmark 27 Investor presentation Combined ratio remained strong - 86.1 in 2008 compared with 80.3 in 2007 • Premium growth of 1.9% (3.2% including bonus) in Q4 2008 • Price increases in 2009 on house insurance of 11% and health care insurance of 15% • Combined ratio of 87.0 in Q4 2008 versus 73.
Slide 28: P&C Denmark retention
P&C Denmark retention 28 Investor presentation Retention rate 2008 maintained on high level • Solid customer loyalty, satisfaction and innovation • Underlines competitive strength Retention since 2005 93% 92% 91% 90% 89% 88% Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 05 05 05 06 06 06 06 07 07 07
Slide 29: P&C Norway
P&C Norway 29 Investor presentation Strong year end with premiums up 5.4% in NOK in Q4 2008 • Premium growth of 4.8% in NOK (3.3% in DKK) in 2008 driven by improved customer loyalty, better sales and price increases • Combined ratio of 95.9 versus 88.6 in 2007 impacted negatively by lower run-off re
Slide 30: P&C Norway retention
P&C Norway retention 30 Investor presentation Retention has improved since TrygVesta removed the introduction rebate for new customers and in return gave loyal customers better conditions Prices have been raised since mid-2007 and combined with market initiatives provide a good basis for further gro
Slide 31: Finland
Finland 31 Investor presentation Accelerating sales and break-even on private segment with CR of 101.5 • 160,000 insurances sold in 2008. Up from 100,000 in 2007 • Portfolio grew 45% in 2008. Totalling DKK 432m end 2008 • Premium increases to be executed during 2009 • Internet sales increased to 6%
Slide 32: New sales Finland - 2008
New sales Finland - 2008 32 Investor presentation Distribution in Finland Internet 6% Car dealers Nordea 21% 33% Own sales 40%
Slide 33: Sweden
Sweden 33 Investor presentation Focused sales effort and expanding organisation • Gross premium of DKK 221m and an increase of 122,000 insurances in 2008 • In Q4 alone, an increase of 28,000 insurances and portfolio reached SEK 380m (DKK 259m) • Combined ratio of 143.9 in 2008 improved from 194.5 •
Slide 34: Corporate
Corporate 34 Investor presentation Corporate showing solid growth and good profitability • Premium growth of 4.3% in DKK in 2008 primarily due to intake of new customers in 2007. In Q4 growth of 4% in local currency (+1.4% in DKK) • Financial turmoil is expected to entail more rational price competi
Slide 35: Acquisition of Moderna
35 Investor presentation Acquisition of Moderna
Slide 36: Transaction details
Transaction details 36 Investor presentation • TrygVesta acquires Moderna’s non-life activities for DKK 427m in transaction goodwill and a total amount of SEK 1,256m (DKK 810m) • The acquisition provides TrygVesta with increased market power and growth opportunities • Moderna’s loans to the mother c
Slide 37: Strategic rationale
Strategic rationale 37 Investor presentation TrygVesta’s acquisition of Moderna will: • support our peace of mind vision by expanding pan Nordic • strengthen our position in the large Swedish market • expand and strengthen our distribution network towards the private market in Sweden • improve our i
Slide 38: Synergies and EPS impact
Synergies and EPS impact 38 Investor presentation • current expansion plans in Sweden will be positively impacted by our acquisition of Moderna • pooling of reinsurance and risk diversification • investment and liquidity management • capital • tax • significant synergies in back-office functions • T
Slide 39: Capital
Capital 39 Investor presentation • TryghedsGruppen, which owns 60%, buys TrygVesta hybrid capital for EUR 65m. Overall terms are an interest rate of euribor plus 500 basis points (pt 6.8%), 23 years maturity and with an option for early redemption after 3 years. Final terms will be settled when the
Slide 40: TrygVesta’s presence in Sweden with Moderna
TrygVesta’s presence in Sweden with Moderna 40 Investor presentation Call centre in Luleå, established in 2007 30 employees Customer service centre in Ragunda, established in 2007 11 employees Local office in Göteborg 12 employees Head office in Stockholm 128 employees Local office in Vexjö (MF Bils
Slide 41: Distribution platform 2009
Distribution platform 2009 41 Investor presentation Vahinkovakuutus Distribution channel Denmark Norway Finland Sweden Customer centre Local service centre Call centre Franchise Bancassurance Nordea online bank E-business/Self-service Insurance brokers Car dealers Real estate agents Affinity groups
Slide 42: Moderna facts
Moderna facts 42 Investor presentation Key financial figures 1) In SEKm 2006 2007 2008 Gross premium income 830 980 1,190 Other Line of 21% Insurance technical result 152 152 179 business Yacht 17% Investment result, gross 192 27 -142 Pre-tax result 282 91 -34 Net income 203 90 -18 Motor 22% Combine
Slide 43: Thank you for your attention – questions?
43 Investor presentation Thank you for your attention – questions?
Slide 44: Key financial figures 2004-2008
Key financial figures 2004-2008 44 Investor presentation In DKKm 2004 2005 2006 2007 2008 Gross premium income 15,266 15,705 16,021 16,606 17,323 Gross claims incurred -10,425 -11,159 -10,564 -11,175 -11,766 Operating expenses -2,611 -2,662 -2,697 -2,769 -3,003 Ceeded business -708 -7 -591 -343 -669
Slide 45: The Danish non-life insurance market since 1996
The Danish non-life insurance market since 1996 45 Investor presentation Market size and profitability Market shares DKKm % 60,000 50 4.8% CAGR 50,000 40 40,000 30 30,000 20 20,000 10,000 10 0 0 1995 1997 1999 2001 2003 2005 2007 -10,000 TrygVesta Topdanmark Codan 96 97 98 99 00 01 02 03 04 05 06 07
Slide 46: The Norwegian non-life insurance market since 1996
The Norwegian non-life insurance market since 1996 46 Investor presentation Market size and profitability Market shares % NOKm 40 40,000 3.8% CAGR 130 35,000 120 30 30,000 110 25,000 100 20 20,000 90 15,000 80 10 10,000 70 5,000 60 0 50 0 1994 1996 1998 2000 2002 2004 2006 2008 1996 1998 2000 2002 2
Slide 47: The Nordic region- structure of the insurance market
The Nordic region- structure of the insurance market 47 Investor presentation Norway TrygVesta, EUR 4.7bn 17.8% Finland TrygVesta, EUR 3.2bn 1.4% Tapiola, Gjensidige Pohjola, 18.3% 30.1% 27.8% Top 4 Fennia, Top 4 87% 10.0% 82% If, 29.1% Sparebank, 9.8% Other, Other, 16.8% 13.2% If, 25.7% Sweden Denm
Slide 48: The current global crisis
The current global crisis 48 Investor presentation
Slide 49: From Wall Street to Main Street…
From Wall Street to Main Street… 49 Investor presentation The crisis in the financial market… …has expanded to the real economy Lower Credit crisis in Leverage crisis: investment Lower output US real estate securitization market Corporate credit crunch & cash flow/ liquidity crisis Lower demand Corp
Slide 50: Economic sensitivities for different industries
Economic sensitivities for different industries 50 Investor presentation High Airlines Automotive Materials and Leisure construction Banks Media Chemistry Demand evolution ‐ Volume Telecom Household goods ‐ Mix Retailing Food & beverage Raw materials P&C insurance Industrial goods and services Techn