Tryg A/s · OMXCOP:TRYG
Tryg A/s — Investor Day (June 2024)
37 slides from Tryg A/s's investor day presentation, Jun 6, 2024
Slide 1: Analyst day
Analyst day 06 June 2024, Copenhagen
Slide 2: Agenda
Agenda 1 Introduction by CEO Johan Kirstein Brammer, CEO (14:10-14:20) 2 Update on Norway Mikael Kärrsten, CTO (14:20 – 15:00) 3 Guidewire (a new claims handling system) Frederik Sjørslev Søgaard, CIO (15:00 – 15:30) Coffee break (15:30 – 15:45) 4 AI strategy Alexandra Bastkær Winther, CCO & Maria P
Slide 3: First year as a CEO
1 | Introduction by CEO Preparing for CMD 2027 Internal Motor frequency roadshows First year as a Performance in Norway Meeting investors and analysts CEO Weather & large claims Organisational changes Fighting inflation 3
Slide 4: 2. Update on Norway
2. Update on Norway
Slide 5: Tryg Norway at a glance
2 | Update on Norway Tryg Norway at a glance Tryg Norway makes up 22% of Tryg’s Revenue … … Private Lines constituting the largest part 100 Norway 22% NOK 8,400m Portfolio Private Lines 465.000 Customers Sweden 32% NOK 4,100m Portfolio 46% Commercial Lines 44.000 Customers Denmark Tryg Norway 5
Slide 6: Overview of Insurance revenue and Insurance service result in Norway
2 | Update on Norway Overview of Insurance revenue and Insurance service result in Norway Private Lines challenged by harsh weather condition in recent quarters Insurance revenue Insurance service result (average by 5 full year) (average by 5 full year) Combined ratio Private Lines 64% ~5 ~3 Private
Slide 7: The merging of a new Commercial Lines builds on strong progress in old Commercial and Corporate
2 | Update on Norway The merging of a new Commercial Lines builds on strong progress in old “Commercial” and “Corporate” Underlying Claims ratio, Commercial Lines Profitability initiatives Rebalancing portfolio ~75 Larger global Larger European Smaller local ~65 Commercial ~55 ~3% ~3% • Focus on tar
Slide 8: Customer groups with high stickiness have been a key driver to growth in Private Norway
2 | Update on Norway Customer groups with high ‘stickiness’ have been a key driver to growth in Private Norway High retention and strong distribution makes partners attractive Focus on high ‘stickiness’ customer groups driving portfolio growth NOKm 10,000 Unions 7,500 Commercial partners Ecosystem 5
Slide 9: Rate increase in Motor, Private Norway
2 | Update on Norway Rate increase in Motor, Private Norway 20% 2022 2023 Q1 2024 Planned Price initiatives 15% • Higher price increases both on renewals and new sales, and more frequent price 10% adjustments 5% • Intensified investments in improved tariffs with capacity for more frequent redesigns
Slide 10: 3. Guidewire
3. Guidewire a new claims handling system
Slide 11: STP is the rule, manual handling the exception
3 | Guidewire “STP is the rule, manual handling the exception” A new approach to claims ensuring high volume automatisation #1 1.5 percentage point 40% Customer satisfaction, reduction in claims of total automatisation derived from reduced leakage driven by STP “No touch customer journey time claims
Slide 12: Shifting from old legacy to a modern system supporting process optimisation and automatisation
3 | Guidewire Shifting from old legacy to a modern system supporting process optimisation and automatisation was necessary to deliver the vision of “STP is the rule” TOSCA is a lot of screens with input data Guidewire supporting the claim process 12
Slide 13: A new approach to claims ensuring volume automatisation
3 | Guidewire A new approach to claims ensuring volume automatisation … Guidewire enabled us to atomize and optimise … showing great results per Q1 2024 ahead of effectively across the entire process ... time Claims handling process STP and part automatisation impact 1 Scale (1-5) First notice of lo
Slide 14: Fast customer journey is a key contributor to high customer satisfaction
3 | Guidewire Fast customer journey is a key contributor to high customer satisfaction… … and automatisation is a key contributor to fast customer journey Customer satisfaction as a function of customer journey time in days Customer satisfaction as a function of automatisation SWC 4.66 4.58 4.47 5.0
Slide 15: STP is main focus, but we also invest in automatisation of partial claims processes
3 | Guidewire STP is main focus, but we also invest in automatisation of partial claims processes that do not become STP but the best results come from STP because the human factor is taken out. Rules in Guidewire enables a systematic Validation & Recovery is never forgotten Recovery and First notic
Slide 16: Half the calls to claims handlers in an ongoing claim can be avoided
3 | Guidewire Half the calls to claims handlers in an ongoing claim can be avoided Digital customer engagement is a prerequisite for a high degree of STP 16
Slide 17: Claims Handling at the Customer's Fingertips
3 | Guidewire Claims Handling at the Customer’s Fingertips Engaging customers digitally Reduced the amount of call per claim -31% 1.3 0.9 +80% of all claims 90% of all chats handled by My Claim reported digitally our chatbot Mia engages customers Q1 2021 Q1 2024 Call per claim 17
Slide 18: Coffee break
Coffee break (to be continued in 15 minutes)
Slide 19: 4. AI strategy
4. AI strategy
Slide 20: Tryg has been working with automation and classic AI across the organisation for many years
4 | AI strategy Tryg has been working with automation and classic AI across the organisation for many years – with clear focus on financial benefits Customer facing Internal Nudging by Churn models Fraud Detection chatbots digital assistants personalisation AI based chatbot as first line of Assistin
Slide 21: Generative AI unlocks a range of new possibilities for automation
4 | AI strategy Generative AI unlocks a range of new possibilities for automation A single Large Language Models can perform all of these functionalities Summarization Reasoning Conversation Knowledge retrieval Document generation Complex claims handling Chatbots Underwriting Virtual customer-facing
Slide 22: The main purpose of AI will be to lower costs and improve profitability
4 | AI strategy The main purpose of AI will be to lower costs and improve profitability The purpose with AI at Tryg is to underpin our general corporate strategy Focus efforts within AI to enhance productivity, support Cost & Efficiency excellence risk mgmt. and enable high customer Use AI to increa
Slide 23: We will both experiment broadly and invest in a few targeted use cases
4 | AI strategy We will both experiment broadly and invest in a few targeted use cases Scope for lighthouse areas and local use cases Lighthouse areas • A few, centrally endorsed prioritized cases with potential to really move us in GenAI Areas we expect to hold especially • Ensure to focus resource
Slide 24: Classic AI and advanced AI can be used in several places throughout the claims value-chain
4 | AI strategy Classic AI and advanced AI can be used in several places throughout the claims value-chain Internal processes Payment to Customer Claim validation Claim assessment customer file claim (if approved) • GenAI to online • GenAI validation model • Summary model • Automatic claims filing o
Slide 25: AI development within claims focusing on key capabilities
4 | AI strategy AI development within claims focusing on 4 key capabilities in order to secure scaling of AI Capabilities AI focus areas Benefits Summary Reduction off calls 1 of text Increased customer satisfaction improve retention Advanced STP through Gen AI Coverage 2 decision Reduced handling c
Slide 26: AI model on accident
4 | AI strategy AI model on accident Step 3: Step 4: Step 1: Step 2: Loss of amenity Advanced Coverage decision Summary model model STP 26
Slide 27: AI for motor collision
4 | AI strategy AI for motor collision • AI model is based on GenAI implemented for automatic allocation of liability for collision damage on Auto based on incident descriptions • First generation of AI implementation in Guidewire workflow 27
Slide 28: Pretoria – An AI prevention model
Pretoria – An AI prevention model • An AI prevention algorithm that identifies small and local claims trends useable for short horizon claims predictions • This is used for tailored customer interactions in specific geographical area in order to prevent claims 28
Slide 29: 5. Closing remarks by CFO
5. Closing remarks by CFO
Slide 30: Return on Own Funds (ROOF) an improved profitability measure introduced at CMD 2021
5 | Closing remarks by CFO Return on Own Funds (ROOF) an improved profitability measure introduced at CMD 2021 Expected Return on Own Funds development 2021 to 2024 target (%) Following the acquisition of Trygg- Hansa and Codan Norway, the ≥25 rerported RoE does not fully reflect profitability of th
Slide 31: The optimisation of ROOF ultimately comes down to allocated capital
5 | Closing remarks by CFO The optimisation of ROOF ultimately comes down to allocated capital ROOF is an important KPI to optimise to broaden the funnel… Allocated capital is an important driver of ROOF, naturally driven by insurance business Allocated capital, year-end 2023 (DKKm) 15,000…
Slide 32: ROOF, additional to COR, is an important measure for an insurance company
5 | Closing remarks by CFO ROOF, additional to COR, is an important measure for an insurance company Premium Earnings Dividends Solvency II regulation makes the funnel to dividend-payout longer Combined Ratio Capital Consumption Capital Consumption, under SII, is defining the size of dividends; henc
Slide 33: Business areas with higher risk have higher capital charges
5 | Closing remarks by CFO Business areas with higher risk have higher capital charges1) Capital charge (%) 50 Retail products are generally lower risk. Law of large numbers lowers the risk Smaller average claims sizes lowers the 25 risk on Private/SME Corporate bears the highest risk due to low vol
Slide 34: Level of capital charge depends on type of product
5 | Closing remarks by CFO Level of capital charge depends on type of product EXAMPLES OF PRODUCTS FOR EACH RISK TYPE Type of product risk Product examples Capital charge (%) 0 25 50 75 Long-tailed risk Workers • Due to the significant uncertainty Compensation of long-tailed products we need to Larg
Slide 35: Partner contracts usually have higher COR, but risk sharing can provide attractive ROOFs
5 | Closing remarks by CFO Partner contracts usually have higher COR, but risk sharing mechanisms can provide attractive ROOFs Distribution channel examples Combined Ratio (%) Capital charge (%) Return on Own Funds (%) • CoR and Premiums are shared evenly between Tryg and the Partner, Type 1 reducin
Slide 36: ROOF does not eliminate the importance of COR
5 | Closing remarks by CFO ROOF does not eliminate … both KPIs need to be considered to the importance of COR balance profits and dividend payout ROOF/COR tradeoff: High COR/ROOF cannot stand alone; balance between profitability and risk/return relationship is required Low COR ROOF = Risk/Return Rel
Slide 37: It is important to know your investment case
5 | Closing remarks by CFO 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 37