Tryg A/s · OMXCOP:TRYG
Tryg A/s — Q3 2013 Earnings Presentation
38 slides from Tryg A/s's earnings presentation, Oct 10, 2013
Slide 1: Q3 results 2013
Q3 results 2013 Investor presentation Follow us on Twitter: @TrygIR
Slide 2: Contents
Contents Highlights Q3 2013 3 Premiums and portfolio 9 Claims 14 Investment and capitalisation 18 For new investors 23 Appendix 33 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and information currently availa
Slide 3: Consistent improvement in results achieved through efficiency programme and cost cuts
Consistent improvement in results achieved through efficiency programme and cost cuts Pre-tax profit Highlights Q3 2013 D KKm 3,000 2,379 2,354 • Pre-tax profit of DKK 907m (DKK 976m). 2,000 Technical result improved 17% to DKK 766m 976 907 1,000 (DKK 652m). 0 • Combined ratio 84.8 compared to 87.7.
Slide 4: Important news in Q3 2013
Important news in Q3 2013 • Updated financial targets. • CR target of 90 or lower from Q3 2013 delivered as promised. • Efficiency programme on track. • Combined ratio below 90 for Sweden. • Tryg Pluss - new customer concept introduced in Norway. • New car insurance in Norway with coverage for parki
Slide 5: Key figures Q3/9M 2012/13
Q3 results 2013 Key figures Q3/9M 2012/13 Q1 - Q3 Q1 - Q3 DKKm Q3 2012 Q3 2013 2012 2013 Gross premium income 5,196 4,867 15,238 14,767 Claims, net of reinsurance -3,431 -3,121 -10,205 -9,823 Gross expenses -844 -745 -2,476 -2,290 Technical result 652 766 1,844 1,950 Return on investment after 338 1
Slide 6: 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 87.9 95 90 85.5 90 83.9 86.4 85 81.5 84.2 85 80 79.2 79.9 80 75 75 70 Q3 2012 Q3 2013 Q1-Q3 2012 Q1-Q3 2013 70 Q3 2012 Q3 2013 Q1-Q3 2012 Q1-Q3 2013 Group CR Q3 2013: 84.8
Slide 7: Follow up on efficiency programme
Health & Travel, 15% Follow up on efficiency programme Motor, 35% Distribution of savings on claims Contents, 25% Building, • Savings of DKK 445m achieved so far. 25% DKKm Targeted and achieved savings on claims • DKK 110m achieved in Q3 2013. 210 100 120 • Increased benefit from use of Scalepoint.
Slide 8: Expense ratio development
Expense ratio development • Expense ratio improved from 16.4 in Q3 2012 to 15.5 in Q3 2013. Expense ratio • Nominal costs on group level reduced from DKK 844m in Q3 2013 to DKK 745m in Q3 2013. • Q3 2012 impacted by restructuring costs of DKK 60m. 16.6 16.7 16.6 • Number of manager reduced by 10%. 1
Slide 9: Premiums and portfolio
Premiums and portfolio
Slide 10: Topline and technical result
Topline and technical result Gross earned premiums, DKKm Technical result, DKKm 6,000 900 766 5,196 4,867 800 652 5,000 477 700 48 54 442 95 95 600 4,000 1,311 177 1,241 500 193 3,000 400 931 859 300 2,000 200 404 440 2,478 100 1,000 2,329 0 -88 0 -100 Q3 2012 Q3 2013 Q3 2012 Q3 2013 Private C ommer
Slide 11: Customer retention
Customer retention Private 92% 90% 88% 86% 84% 82% Q3 08 Q3 09 Q 3 10 Q 3 11 Q 3 12 Q 3 13 Commercial 92% 90% 88% 86% 84% 82% Q3 08 Q3 09 Q 3 10 Q 3 11 Q 3 12 Q 3 13 11
Slide 12: Private – average premiums
Private – average premiums House insurance – average premium (index 2008 = 100) 150 Average premiums increase Y/Y 1.5% 2.8% 140 130 120 110 100 90 2008 2009 2010 2011 2012 2013 Motor insurance – average premium (index 2008 = 100) Average premiums increase Y/Y 140 0% 3.0% 130 120 110 100 90 2008 2009
Slide 13: Private Sweden – CR and customer retention
Private Sweden – CR and customer retention Private - retention rate 74% 73% 72% 71% 70% 69% Q3-08 Q3-09 Q3-10 Q3-11 Q3-12 Q3-13 130 125 125 120 114 115 110 110 105 103 103 102 99 99 100 97 95 95 94 95 91 90 88 88 85 80 Q1-10 Q3-10 Q1-11 Q3-11 Q1-12 Q3-12 Q1-13 Q3-13 13
Slide 14: Claims
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Slide 15: CR and claims ratios Q3 2012-13
CR and claims ratios Q3 2012-13 • Underlying development is adjusted for: Underlying claims, net Q3 2012 / Q3 2013 • Large claims 85.6 • Weather claims 74.5 74.2 74.2 75.1 72.2 70.9 70.8 67.9 69.3 • Run-off and interest • Increase in underlying claims ratio on group level and Corporate related to pr
Slide 16: Large claims, weather claims and run-off
Large claims, weather claims and run-off - Large claims gross impacted by claim within Tryg Garanti but without significant accounting effect. Large claims, net DKKm Weather claims, net DKKm Expected annual level 2013: DKK 450m 300 Expected annual level 2013: DKK 500m 300 250 250 200 200 3 56 150 15
Slide 17: Interest sensitivity
Interest sensitivity Claims reserves - discounting rate % 6,0 5,0 1% increase in interest rate level will: 4,0 • Increase pre-tax result by around DKK 3,0 300m. 2,0 1,6 1,0 • Improve combined ratio by approx. 1 2006 2007 2008 2009 2010 2011 2012 2013 pp. • Impact NO pension obligation by Pension sch
Slide 18: Investment, capital and financial targets
Investment, capital and financial targets 18 10 oktober 2013
Slide 19: Investment result Q3 2013
Investment result Q3 2013 Assets Return in Q3 2013 Assets Gross investment return Return DKKm Bonds (0.3%) 119 Match Equities (6,3%) 160 Real estate (1.1%) 23 DKK 31.6bn Total (0.7%) 302 Match Mismatch Q3 DKK -33m Free Free investment DKK Result DKK 243m Return 2.0% 12.3bn 19
Slide 20: Assets allocation
Assets allocation Total assets – Q3 2013 3 7 16 5 Equities (5) Real estate (5) C ov. Bonds (75) Percentage Govt. Bonds (3) Bank deposits/bonds (10) High yield (2) 78 Free portfolio – Q3 2013 Match portfolio – Q3 2013 Equities (24) 7 41 0 Real estate (20) C ov. Bonds (88) Bank deposits/bonds (14) 25
Slide 21: Capital structure and status on share buy back
Capital structure and status on share buy back Capital - Q3 2013 14000 • Capital buffer based on Individual Solvency increased 12000 to 81% (2013 Q2: 67%) and was impacted by: 4,347 • Q3 result 2013 10000 5,198 • Stable capital requirement 8000 • Off P/L item: Positive effect on equity due Buffer to
Slide 22: Financial targets
Financial targets % ai nty ert 92 c < 90 90 < 90 Un 88 86 84 ROE after tax of 20% to 82 be achieved by delivering 80 a full year combined ratio of 90 or lower. t 13 t s I ge es es .) CP m 20 s. iv r r ai te ta xe at e cl 3 ov In it i ta CR Q e ab in rg t C, Expense ratio <15 in ge la s (W n im r t i
Slide 23: For new investors
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Slide 24: Tryg - quick overview
Tryg - quick overview Tryg is a non-life insurance company present DKKm 2011 2012 in Denmark (No. 1), Norway (No. 3) and Sweden (No. 5). Gross earned premium 19,948 20,314 Gross claims -15,783 -14,675 60.5m shares and a market cap of Gross expenses -3,271 -3,295 DKK 30,0bn (1 October). Insurance res
Slide 25: Tryg – at a glance
Tryg – at a glance Share performance since IPO 300 275 • Tryg goes back to 18th century 250 Tryg Euro Insurance index • The current Tryg was formed in 2002 by 225 sale of Nordea’s non-life activities – 200 with a continuing strategic partnership 175 150 • Non-life insurance in Denmark, Norway and Sw
Slide 26: Dividend policy
Dividend policy - creating long-term value for our shareholders • Payout ratio of 60–90%. • Aiming for a nominal stable increasing dividend. • Ambitious ROE target of 20% after tax calls for disciplined capital approach. • Adjustment of the capital level can be made via share buy back. Total distrib
Slide 27: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Nordic Norway EUR 23.2bn (pr. Q4-11) NOK 49.0 bn/EUR 6.1bn (as at Q2-2013) 11.1 14.9 Tryg 24.1 Tryg If 17.8 If C odan 39.8 Gjensidige Gjensidige Länsförsäkringar Percentage Sparebank1 25.0 Topdanmark Other 10.6 9.0 Other 5.0 8.6 8.7 25.4 Sweden Denmark SEK 6
Slide 28: Distribution of new sales 2012
Distribution of new sales 2012 Denmark Norway 11% 8% 32% 31% 58% 45% 15% Own sales Affinity Nordea Ow n sales Car dealers Affinity Nordea Sweden Corporate 0% 26% 38% 50% 6% 62% 18% Call center External partners w ww Nordea Direct sales Brokers Slice 3 Slice 4 28 28 10 oktober 2013
Slide 29: Combined ratio performance
Combined ratio performance 110 Premium Premium Efficiency hikes hikes programme 105 100 95 Smaller adjustments 90 85 80 * 13 00 01 02 03 04 05 06 07 08 09 10 11 12 04 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 9M 2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio from 107 t
Slide 30: Strategic initiatives
Strategic initiatives - Value creation in mature markets Increased price differentiation Commercial back on track Building foundation in Sweden Expenses/claims reductions Simplification of products and systems 30
Slide 31: Key figures 2009-12 and consensus for 2013-15
Key figures 2009-12 and consensus for 2013-15 DKKm 2009 2010 2011 2012 2013 2014 2015 Gross premium income 17,390 18,894 19,948 20,314 19,955 20,117 20,452 Gross claims incurred -12,467 -15,111 -15,783 -14,675 Operating expenses -2,861 -3,136 -3,271 -3,295 Ceeded business -518 -311 507 86 Technical
Slide 32: Appendix
Appendix Follow us on Twitter: @TrygIR 32 32 10 oktober 2013
Slide 33: Private
Private Gross premiums, DKKm Combined ratio 110 2,500 105 2,350 100 2,200 95 90 2,050 85 1,900 80 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 Q 09 Q 09 Q 09 Q 09 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 13 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 1 2 3 4 1 2 3
Slide 34: Commercial
Commercial Gross premiums, DKKm Combined ratio 115 1,050 110 105 950 100 95 90 850 85 80 750 75 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 Q 09 Q 09 Q 09 Q 09 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 13 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 1 2 3 4 1 2 3 4
Slide 35: Corporate
35 Q 1 Q 50 60 70 80 90 100 110 120 1 1,100 1,200 1,300 1,400 Q 09 2 Q 09 Q 09 2 3 Q 09 Q 09 3 4 Q 09 Q 09 4 1 Q 09 Q 10 1 2 Q 10 2 Gross claims ratio Q 10 3 Q 10 Q 10 3 Corporate 4 Q 10 Gross premium, DKKm Q 10 4 1 Q 10 1 Q 11 2 Q 11 2 Q 11 3 Q 11 3 Q 11 4 Q 11 4 Q 11 1 Q 11 1 Q 12 2 Q 12 2 Q 12 Q
Slide 36: Sweden (Private)
36 Q Q 1 0 100 200 300 400 500 1 60 70 80 90 100 110 Q 09 Q 09 2 2 Q 09 Q 09 3 3 Q 09 Q 09 4 4 Q 09 Q 09 1 1 Q 10 Q 10 2 2 Gross claims ratio Q 10 Q 10 3 3 Q 10 Q 10 4 4 Gross premium, DKKm Q 10 Q 10 1 1 Q 11 Q 11 2 2 Q 11 Q 11 3 3 Q 11 Q 11 4 4 Q 11 Q 11 1 1 Sweden (Private) Q 12 Q 12 2 2 Q 12 Q 12
Slide 37: Geographical segments
Geographical segments ri Denmark wv DKKm Q3 2012 Q3 2013-93 20121-Q3 2013 YTD 2012 Norway DKKm Q3 2012 Q3 2013-93 20121-Q3 2013 YTD 2012 Gross premiums earned 2,475 2,365 7,454 7,170 9,910 Gross premiums earned 2,103 1,914 = 6,148 5,934 8,239 Technical result 239 399 905 1,074 1,441 Technical result
Slide 38: Economic key figures
Economic key figures Denmark Sweden % 2013 2014 % 2013 2014 GDP Growth 0,3 1,3 GDP Growth 1,3 2,5 Inflation 0,9 1,3 Inflation 0,1 1,3 Unemployment 5,9 5,9 Unemployment 8,0 7,8 Current account Current account 5,7 4,8 6,2 6,3 balance in % of GDP balance in % of GDP Budget balance in % Budget balance i