Tryg A/s · OMXCOP:TRYG
Tryg A/s — Q1 2015 Earnings Presentation
38 slides from Tryg A/s's earnings presentation, Apr 15, 2015
Slide 1: Q1 results 2015 – Investor presentation
Q1 results 2015 Investor presentation Follow us on Twitter: @TrygIR
Slide 2: Contents and disclaimer
Contents Highlights Q1 2015 3 Premiums and portfolio 11 Claims 15 Investment, capital and targets 20 For new investors 24 Appendix 32 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and information currently ava
Slide 3: Financial highlights Q1 2015
Financial highlights Q1 2015 - Satisfactory overall result driven by high investment return and a slightly weaker technical result impacted by weather claims and the low interest rate. Pre-tax profit • Pre-tax profit of DKK 665m (DKK 602m). DKKm 800 665 602 600 • Lower technical result of DKK 429m (
Slide 4: Customer highlights Q1 2015
Customer highlights Q1 2015 - The new customer initiatives were the key drivers of an improved Net Promoter Score (NPS). NPS 30 25 22 • Net promoter score (NPS) improved from 11 to 16. 20 16 15 11 10 • Number of customers with ≥ 3 products increased 5 from 56.3% to 56.5%. 0 CMD 2014 Q1 2015 Target 2
Slide 5: Important news in Q1 2015
Important news in Q1 2015 • Car – new price-differentiated product in Denmark. • Road assistance agreement with Viking extended to cover the Danish and Swedish markets. • AGM in March approved: • 2014 dividend of DKK 29 per share • 1:5 sharesplit – execution expected in May • Semi-annual dividend fr
Slide 6: Key figures Q1 2014/15
Key figures Q1 2014/15 DKKm Q1 2015 Q1 2014 2014 Gross premium income 4,451 4,583 18,652 Claims, net of reinsurance -3,075 -3,087 -12,650 Gross expenses -685 -719 -2,689 Technical result 429 523 3,032 Return on investment after 261 89 360 technical interest Profit/loss before tax 665 602 3,302 Profi
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 91.8 95 90 88.0 90 84.6 85 85 81.9 80 80 75 75 70 70 Q1 2015 Q1 2014 Q1 2015 Q1 2014 Group CR Q1 2015: 90.7 Q1 2014: 89.2 Combined ratio – Sweden Combined ratio – Corp
Slide 8: Follow up on efficiency programme 2015-2017
Follow up on efficiency programme 2015-2017 Efficiency programme up until 2017 • New efficiency programme started. Old programme New programme Planned to deliver DKK 750m savings in DKKm 450 the next 3 years. 400 350 300 250 • Lower expected 2015 savings than in 200 388 395 375 2014. 150 175 225 100
Slide 9: Expense ratio development
Expense ratio development • Expense ratio improved from 15.9 in Q1 2014 to 15.6 in Q1 2015 - an improvement of 0.3 pp. Expense ratio • 2015 will be impacted by one-off costs related to new efficiency programme. 16.6 16.7 16.6 15.9 16.4 15.6 15.6 • Efficiency programme delivered savings of 14.6 DKK 1
Slide 10: Premiums and portfolio
Premiums and portfolio
Slide 11: Topline and technical result
Topline and technical result Technical result impacted by high level of weather claims. Improved topline trend with 0.4% reduction (-2.0%) related to: • Positive development in Private driven by higher sales and stable retention in Denmark. • Commercial improved trend driven by high sales and improv
Slide 12: Private - average premiums
Private - average premiums DK - profitability strong but competition increasing House insurance – average premium (index 2008 = 100) 150 Average premiums increase Y/Y NO 140 -0.8% 1.4% 130 (Q4 -0.6%) (Q4 1.8%) DK 120 110 100 90 08 09 10 11 12 13 14 15 20 20 20 20 20 20 20 20 Motor insurance – averag
Slide 13: Customer retention
13 Q Q 82% 84% 86% 88% 90% 92% 1 82% 84% 86% 88% 90% 92% 1 11 11 Private Q Q 2 2 11 11 Q Q Commercial 3 3 11 11 Q Q 4 4 11 11 Q Q 1 1 12 12 Q Q 2 2 12 12 Q Q 3 3 12 12 Q Q 4 4 12 12 Q Q 1 1 13 13 Q Q 2 2 13 13 Q Q 3 3 13 13 Q Customer retention 4 Q 4 13 13 Q Q 1 1 14 14 Q Q 2- 14 2 14 Q Q 3- 14 3 14
Slide 14: Claims and expenses
Claims and expenses 14
Slide 15: CR and claims ratios Q1 2014-15
CR and claims ratios Q1 2014-15 • Underlying development is adjusted for: Underlying claims, net Q1 2014/2015 • Large claims 83.2 81.8 • Weather claims 75.0 74.9 75.3 74.6 74.3 71.4 • Run-off and interest 69.0 67.2 • Underlying development on Group level impacted by efficiency improvements. Group Pr
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 2015: DKK 550m level 2015: DKK 500m 300 600 500 200 400 300 242 100 200 121 100 215 154 0 0 Q1 2015 Q1 2014 Q1 2015 Q1 2014 Run-off, net DKKm Run-off net, effect on combined
Slide 17: Weather claims affected by high number of house fires in Norway
Weather claims affected by high number of house fires in Norway NOKm • Weather claims in line with expectation. 900 800 • Storms in DK and NO for approx. 700 DKK 165m reduced to DKK 94m through 600 sideways cover. 500 400 300 • Winter claims affected by high number of 200 fire claims on house insura
Slide 18: Interest sensitivity
Interest sensitivity Claims reserves - discounting rate % 6.0 1% increase in interest rate level will: 5.0 • Increase pre-tax result by around 4.0 DKK 300m. 3.0 2.0 1.7 • Improve combined ratio by approx. 0.8 1.0 1 pp. 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 • Impact NO pension obligation b
Slide 19: Investment, capital and targets
Investment, capital and targets
Slide 20: Investment result Q1 2015
Investment result Q1 2015 7.7% Investment return Free portfolio - Return DKKm Q1 2015 Q1 2014 Free portfolio 282 129 2.3% Match regulatory deviation 30 -3 2.1% 2.2% 1.4% Match performance 26 30 0.5% Other financials -77 -67 s l y s EM Y ta it rt ie H os To pe t ui 261 89 ep o Eq Total return Pr D v.
Slide 21: Capital structure
Capital structure DKKm Capital – Q1 2015 12,000 • Capital buffer based on Individual Solvency increased to 55% (Q4 2014: 51%) and was Excess capital impacted by: • Result Q1 2015 8,000 3,701 Buffer • Executed share buy back of 2015 and cash dividend 2014 • Increases in stock market • Full inclusion
Slide 22: Financial and customer targets
Financial and customer targets Targets Targets 2015 2017 Financial targets: ROE after tax = 20% ≥ 21% Combined ratio ≤ 90 ≤ 87 Expense ratio < 15* ≤ 14 Customer targets: Net promoter score (NPS) +100% Retention rate +1 pp Customers ≥ 3 products** +5 pp * Excl. One-off effects ** Private (DK and NO)
Slide 23: For new investors
For new investors
Slide 24: Tryg – at a glance I
Tryg – at a glance I • Tryg goes back to 18th century. Gross premium split by products • Very strong brand position especially in Denmark. 14 Motor 24 • Non-life insurance in Denmark, Norway and Sweden. 10 Workers' comp. Health & accident • Approx. 80% retail business. Liability 5 Fire & property -
Slide 25: Tryg – at a glance II
Low risk investment portfolio Standard deviation 2011-2013 Tryg – at a glance II • Tryg’s ownership structure supports Tryg’s brand value. • Low risk investment portfolio supporting insurance business. • Shareholder friendly dividend policy. • Strong reserving and capital position. Share performance
Slide 26: Tryg’s equity story
Tryg’s equity story Leading Scandinavian insurer with strong track record Financial Targets 2017 Customer Targets 2017 Low risk and high • ROE: ≥21% • NPS +100% Customer care worth returns recommending • Combined ratio: ≤87% • Retention rate +1 pp • Expense ratio: ≤14% • ≥ 3 products +5 pp • Matchin
Slide 27: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Nordic Denmark EUR 25.1bn (as at Q4-2013) DKK 50.9 bn/EUR 6.8bn (as at Q1-2014) 9.9 18.2 Tryg Tryg If 30.4 Topdanmark 17.6 C odan C odan 41.0 Gjensidige Alm. Brand Percentage Percentage 17.6 Gjensdige Länsförsäkringar Topdanmark If 9.0 Other 6.0 Other 8.6 6.
Slide 28: Distribution of new sales 2014
Distribution of new sales 2014 Denmark Norway Nordea Nordea 13% 8% Ow n sales Affinity Affinity 45% 24% 32% Own sales 63% Car dealers 15% Sweden Corporate Atlantica/ Bilsport MC 14% Own sales ww w & 43% others Own sales Brokers 26% 56% 57% External partners 4% 28 15 april 2015
Slide 29: Combined ratio performance
Combined ratio performance 110 Premium Premium Efficiency Customer and hikes hikes programme efficiency focus 105 100 95 Smaller adjustments 90 85 80 * 15 00 01 02 03 20 4 05 06 07 08 09 10 11 12 13 Q 014 16 17 04 0 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 2 1 2002-2004 price increases of
Slide 30: Key figures 2011-14 and consensus 2015-17
Key figures 2011-14 and consensus 2015-17 Consensus DKKm 2011 2012 2013 2014 2015 2016 2017 Gross premium income 19,948 20,314 19,504 18,652 18,416 18,615 18,921 Technical result 1,572 2,492 2,496 3,032 2,853 2,900 3,028 Investment income, net 61 585 588 360 356 2711 276 Pre-tax profit 1,603 3,017 2
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 Local currency (RHS) 80 4,400 -4 75 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 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 Q 14 Q
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 14 14 15 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 Q 14 Q 14 Q 14 1
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 14 14 15 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 Q Q Q 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 1
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 Q 10 2 3 Q 10 3 Q 10 4 Q 10 4 Q 10 Q 10 1 1 Q 11 Q 11 Gross premium 2 2 Q 11 Q 11 3 3 Gross claims ratio Q 11 Q 11 4 4 Q 11 1 Corporate Q 11 1 Q 12 Q 12 2 2 Q 12 Q 12 3 3 Q 12 Q 12 4 4 Q 12 1 Q 12 1 Q 13 2 Q 13 Q 13 2 3 Q 1
Slide 36: Sweden (Private)
36 Q Q 1 250 300 350 400 450 500 1 60 70 80 90 100 Q 10 2 DKKm Q 10 2 Q 10 Q 10 3 3 Q 10 Q 10 4 4 Q 10 1 Q 10 1 Q 11 2 Gross premium Q 11 2 Q 11 3 Q 11 Gross claims ratio 3 Q 11 4 Q 11 Q 11 4 1 Q 11 Q 12 1 2 Q 12 Q 12 2 3 Q 12 Q 12 3 4 Q 12 Q 12 1 (RHS) 4 Q 13 Q 12 2 1 Q 13 Q 13 3 2 Q 13 Sweden (Pri
Slide 37: Geographical segments
Geographical segments 37 Norway DKKm Qi 2015 Qi 2014 FY 2014 Gross premiums earned 1.691 1.781 7.337 Technical result 55 192 1.478 Key ratios Gross claims ratio 77,5 73,9 66,5 Result of ceded business 3,8 -0,3 14 Gross expense ratio 15,9 16,2 12,5 Combined ratio 97,2 83.8 80,4 sh id Denmark DKKm Qi
Slide 38: Economic key figures
Economic key figures Denmark Sweden % 2015 2016 % 2015 2016 GDP Growth 1.5 1.9 GDP Growth 2.7 2.4 Inflation 0.3 1.2 Inflation 0.3 1.3 Unemployment 4.8 4.6 Unemployment 7.8 7.6 Current account Current account 5.8 5.2 6.0 6.2 balance in % of GDP balance in % of GDP Budget balance in % of Budget balanc