Tryg A/s · OMXCOP:TRYG
Tryg A/s — Investor Day (June 2018)
52 slides from Tryg A/s's investor day presentation, Jun 13, 2018
Slide 1: Tryg Norway Analyst Day
Tryg Norway Analyst Day Bergen, 13 June 2018 1
Slide 2: Agenda
Agenda 14:45 Welcome by Group CEO, Morten Hübbe 15:00 Understanding Norway and Tryg Norway, SVP and Head of Norway, Espen Opedal 15:15 Retail and Corporate Norway - Operational and Financial review, SVP and Head of Norway, Espen Opedal and SVP Commercial Norway Director, Espen Strømme 16:00 Digitali
Slide 3: Welcome by Group CEO, Morten Hubbe
Welcome by Group CEO, Morten Hubbe
Slide 4: Why are we here today?
Why are we here today? Organisation chart Executive Board • Organizational change in February 2016 CEO Morten Hübbe CCO CFO COO Johan • Country based organization, closer to Christian Baltzer Lars Bonde Kirstein Brammer local markets • Enabling a more agile decision making Private DK Private Sweden
Slide 5: Tryg Norway key numbers
Tryg Norway key numbers Gross premium by products 2017 Norway, Combined ratio 2013 - 2017 • Norway reported DKK 6.3bn of premiums income at end of 2017 or approximately 35% of Group premiums • Motor & Property key products, Accident & Health and Liability to follow • In the last five years the repor
Slide 6: Bolt-on acquisitions in Private/Commercial & Rates increases in Corporate
Bolt-on acquisitions in Private/Commercial & Rates increases in Corporate Norway Corporate rates* under pressure OBOS Forsikring 10% 8% • Portfolio of 170mNOK 6% • 10 years old company, 35 employees 4% 2% • 10.000 private customers, 1050 housing associations 0% • One owner – OBOS BBL -2% 2015 2016 2
Slide 7: Tryg's equity story – a leading Scandinavian non-life insurer
Tryg’s equity story – a leading Scandinavian non-life insurer Tryg 2018 – 2020: Product & Service Claims Excellence Strengthening the core, while embracing the future Innovation DKK 600m in claims cost reduction +DKK 1bn in new Financial targets 2020 a) Customer targets 2020 products by 2020+ • Tech
Slide 8: Understanding Norway
Understanding Norway
Slide 9: Macroeconomics Norway
Macroeconomics Norway Macroeconomics Population projections % 2018 2019 GDP Growth (mainland) 2.5 2.2 Inflation 1.7 1.6 Unemployment 3.7 3.2 Current account balance in % of GDP 7.2 7.1 Budget balance in % of GDP 2.5 2.7 Public debt in % of GDP 0.0 0.0 Source: Economic Outlook, Nordea Markets, Januar
Slide 10: NOK more correlated to USD dollar than EUR
NOK more correlated to USD dollar than EUR 10
Slide 11: Key indicators for the Norwegian insurance market
Key indicators for the Norwegian insurance market 102 95 87 • A sustainable claims ratio for the industry 78 68 Claims ratio • Solid cost control and efficiency driven by the 24 19 Expense ratio Stable profit main players in the market. 2016* 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20
Slide 12: Tryg Norway
Tryg Norway 12
Slide 13: Tryg Norway in brief
Tryg Norway in brief Tryg Norway Geography • Market share 13.3% Tromsø • 1.050 employees + ~ 400 franchise sales Harstad • Premium income 8,1 billion NOK Bodø • 3rd largest in general insurance Norway Ålesund Trondheim • 2 brands (Tryg & Enter) Førde Bergen Hamar Oslo Tønsberg • Part of Tryg group H
Slide 14: Tryg Norway - Operational and Financial highlights
Tryg Norway - Operational and Financial highlights Distribution channels 2017 Gross premium by products 2017 Percentage Private Commercial Corporate Portfolio split 2017 Combined ratio 2013 - 2017 mNOK 5,000 4,000 3,000 2,000 1,000 0 Private Commercial Corporate 14
Slide 15: Norway – Combined ratio
Norway – Combined ratio Retail (Private & Commercial) Corporate 140 140.0 130 130.0 120 120.0 110 110.0 100 100.0 90 90.0 80 80.0 70 70.0 60 60.0 50 50.0 40 40.0 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 Retail COR as reported Trendline Linear (Retail (Retail CO
Slide 16: Seasonal variance in CR higher in Norway
Seasonal variance in CR higher in Norway 107 Index (FY=100) (2015-2017) 106 101 100 100 98 97 91 Q1 Q2 Q3 Q4 Denmark Norway 16
Slide 17: Driving costs down – focusing on continuous improvement
Driving costs down – focusing on continuous improvement Expense Ratio, Tryg Norway Cost Reduction Programme 15.3 • Staff reductions of 100FTE in 14.7 2016. • Sourcing agreements with low cost partners. • Automate processes, utilizing robotics, application development and new solutions • Procurement
Slide 18: Tryg Norway contribution to Group results
Tryg Norway contribution to Group results Average % of Group Premiums* 2010 - 2017 Average % of Group Technical result* 2010 - 2017 3.6% 10.6% 40.7% 55.7% 50.9% 38.5% * Currency: DKK * Currency: DKK DK NO SE DK NO SE 18
Slide 19: Market share Norwegian Insurance Market
Market share Norwegian Insurance Market Market share traditional players Market share smaller competitors 30% 29.7% 5% 4.7% 4.4% 25.6% 5% 4.3% 25% 4% 21.2% 3.4% 4% 20% 3.0% 2.9% 3% 2.6% 15% 2.4% 3% 13.0% 2.0% 10.5% 2% 10% 2% 1% 5% 1% 0% 0% Gjensidige If Tryg SpareBank 1 Other 19
Slide 20: Retail and Corporate Norway - Operational and Financial review
Retail and Corporate Norway - Operational and Financial review
Slide 21: Retail - Private
Retail - Private
Slide 22: Private
Private Market position #3 Direct v. Partner Balance Key Strengths 27% Direct 1. A healthy, profitable Business Partner 50% 8% Nordea 2. Strong multichannel distribution 15% Enter 3. Strong partner distribution Split by Products 4. Two brands Group Life Other Travel 6% 7% 2% Accident & Health 6% 49%
Slide 23: A strong multichannel distribution - Both push and pull
A strong multichannel distribution - Both push and pull CAR CHANNEL BANK FRANCHISE 6% PARTNER OUTBOUND 6% Franchise 9% Inbound INBOUND 32% ONLINE Car channel 22% Outbound Bank Online 25% Online sales at ~20% if initiated sales from online/web to inbound is included With a pricing diversification str
Slide 24: Distribution Efficiency – Both push and pull
Distribution Efficiency – Both push and pull Franchise - The future of insurance is digital Our most important distribution channel 24
Slide 25: Digital Sales and Self service
Digital Sales and Self service Digital Sales 150 MNOK in 2020* Digital contact ~70% in 2020 “My Page” log-in: 2016-2018 Months Tryg NO has already more * Fully automated, non-assisted sales digital touchpoints than analogue 25
Slide 26: Strong Partner Distribution
Strong Partner Distribution Large and growing partner business Success criteria Examples; Strong relations and common goals Relevant and unique products Strong distribution network locally Tailored web solutions Higher customer life time value (CLTV) Strong marketing push by Tryg & Partn
Slide 27: Two Brands, strong presence within new car sales
Two Brands, strong presence within new car sales Forhandlersalg vs portefølje Share of new car Personbil privat sales insurance vs marketshare 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Enter Enter/Tryg IF Gjensidige Spb 1 Andre 2017 Portfolio 27
Slide 28: Motor-insurance – Cost of claims
Motor-insurance – Cost of claims 4.0% 4% 1.0% 1% 3.0% 3% Inflation 2018 Technology Repair costs 28
Slide 29: Retail - Commercial
Retail - Commercial
Slide 30: Commercial Norway
Commercial Norway Portfolio Product mix Q1 2018 3% Property Portfolio development 9% Workers comp and 34% Health • Growth in Property due to the acquisition of OBOS Forsikring Motor • 16% YoY growth in Health insurance last three years 25% • Decline in Motor insurance driven by portfolio pruning Lia
Slide 31: Segmentation and Analytics as profitability driver
Segmentation and Analytics as profitability driver Segmentation Churn • Profitability varies between products, but the variation is • Through Machine Learning we are able to predict 70% bigger between different commercial segments of customer churn, allowing us to focus our retention efforts on a sm
Slide 32: Outlook for Commercial Norway
Outlook for Commercial Norway GDP growth (onshore) Business Area development 3 • Better market due to economic recovery 2.5 • New product offerings 2 • Greater distribution power 1.5 • Sharing economy 1 0.5 0 2015 2016 2017 2018e 2019e 2020e +1,197 +1,075 -23 +706 Growth 31,812 34,767 Managed growth
Slide 33: Corporate
Corporate 33
Slide 34: Corporate Norway
Corporate Norway 57/43 Main competitors Other important players Distribution broker / direct 34
Slide 35: Corporate Norway
Corporate Norway Tryg Corp. NO price increases Competitors now increase rates implemented, Q1 2018 Market rates* under pressure 10% 8% 6% Motor 6,1% 4% 2% Property 5,3% 0% 2015 2016 2017 2018 (Q1) -2% Fish farming 23,1% -4% -6% Health 13,5% -8% -10% Sickness 7,1% -12% Motor Property Sickness etc. Wo
Slide 36: Digital Empowerment of Customers - Digitalization & Analytics
Digital Empowerment of Customers - Digitalization & Analytics
Slide 37: IT investment supporting 2020 target
IT investment supporting 2020 target CORE Investment supporting Modularized set-up infrastructure, digitalization and data analytics 37
Slide 38: The Digital Future of Insurance
The Digital Future of Insurance CHANGING CUSTOMER ANALYTICS & BIG INTERNET OF PREFERENCES DATA THINGS Customer increasingly request Customer increasingly request Customer increasingly request - Convenience - Tailored solutions - More temporary solutions or a - Transparency - Relevance more sophistic
Slide 39: Customer Analytics
Customer Analytics - Tryg invest heavily in data analytics and machine learning Up-sale in specific Increase hit rate customer segments Proactive holdback Segment specific up-sale New customer prospecting Increase number of 3+ “Baby churn” Market segmentation customers Cross-sell prospecting Success
Slide 40: Claims Excellence
> ae EW \\\\nss Beazer = fb
Slide 41: What will improve claims excellence?
What will improve claims excellence? New efficiency programme 2018 – 2020: DKK 600m Procurement: Continuous leverage of scale 50% DKK 600m Fraud: Automating detection and broadening competences 25% Steering & Administration: Claims steering and administration of compensation 25% 41
Slide 42: How fraud and claims steering supports claims excellence
How fraud and claims steering supports claims excellence Fraud Claims steering Concept: Broadening competences and introducing automation Concept: Better steering of claims to Tryg partners for lower cost Evidence: Improved steering of car glass claims Only ~20% of claims employees excel in fraud de
Slide 43: Fire in the ventilation at Tine's cheese factory in Sømna, Norway
Fire in the ventilation at Tine’s cheese factory in Sømna, Norway Cheese during maturation Tryg on site Cause of fire/smoke Production 43
Slide 44: Digital empowerment - Cost & Efficiency by claims management
Digital empowerment - Cost & Efficiency by claims management
Slide 45: Our customers' time is valuable …
Super fast claims handling - straight trough processing (STP) in 3 seconds Our customers' time is valuable … … therefore, we make it faster and easier to be a Tryg customer No. 1 in europe with claims handling STP 45
Slide 46: Status straight trough processing June 2018
Status straight trough processing June 2018 Travel insurance Digital target 2020 50 % straight trough processing on claims Total benefit 2020 = ~DKK 100m* Pet insurance * Tryg DK+NO+SE 46
Slide 47: OBOS and Troll integrations and opportunities
OBOS and Troll integrations and opportunities
Slide 48: Acquisition of OBOS Forsikring in 2017
Acquisition of OBOS Forsikring in 2017 OBOS Forsikring Partnership and growth • Portfolio of 170mNOK • 10 years old company, 35 employees • Very strong cooperation and relationship • 10.000 private customers, 1050 housing associations established between the two organizations • One owner – OBOS BBL
Slide 49: Acquisition of Troll Forsikring in 2018
Acquisition of Troll Forsikring in 2018 Favorable and speedy acquisition Troll Forsikring • Transaction finalized in April 2018 • Portfolio of 120mNOK • Portfolio is 40% Oslo/Akershus • Tryg purchase price 72 mNOK, incl. year- • 12.000 customers – private only end 2017 equity of 44 mNOK and tax asse
Slide 50: Consolidation in the Norwegian Insurance Industry?
Consolidation in the Norwegian Insurance Industry? 50
Slide 51: Dialogue & Questions
Dialogue & Questions
Slide 52: Thank you
Thank you