Tryg A/s · OMXCOP:TRYG
Tryg A/s — Q3 2010 Earnings Presentation
57 slides from Tryg A/s's earnings presentation, Nov 30, 2010
Slide 1: Q3 2010 Investor presentation
Q3 2010 Investor presentation
Slide 2: Disclaimer
Disclaimer 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 results of operations, financ
Slide 3: Facts about Tryg
Facts about Tryg Gross premium split 9M 2010 Shareholder breakdown 3.0 9.1 12.9 Danish institutional Denmark Non-Danish 17.3 Norway institutional Percentage 49.3 Percentage Sweden Smaller Finland 60 shareholders TryghedsGruppen 38.6 9.8 Share performance since IPO (incl. dividends) • A true Nordic p
Slide 4: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Denmark Norway DKK 43.9bn/EUR 5.9bn NOK 39.2bn/EUR 4.6bn 18.2 19.6 20.8 Tryg 28.5 Tryg Alm. Brand Gjensidige If Sparebank1 Percentage Percentage Other Other 10.5 13.8 Alka If C odan 10 29.1 5 Topdanmark 14.2 3.5 26.8 Sweden Finland SEK 57.3bn/EUR 5.6bn EUR 3
Slide 5: Events in Q1-Q3 2010
Events in Q1-Q3 2010 9M 2010 • Claim expenses for weather and large claims of DKK 1.5bn, approx. DKK 1.0bn more than a normal year. In addition, a Supreme Court ruling caused an increase in reserves of DKK 0.2bn Q3 2010 • Premium increases work their way through – adjusted premium growth of 3.6%. Pr
Slide 6: Nordic peers
Nordic peers Premium growth in % 14 Gjensidige 11 Tryg 8 Tryg excl. If Moderna 5 Gjensidige excl. 2 Nykredit -1 -4 2004 2005 2006 2007 2008 2009 9M 2010 Combined ratio 106 102 98 Gjensidige 94 If… 90 Tryg 86 82 2004 2005 2006 2007 2008 2009 9M 2010 6
Slide 7: Performance drivers in Q3 2010
Performance drivers in Q3 2010 4,886 Premiums (DKKm gross premiums earned) 4,637 4,338 • Price hikes added DKK 250m to premiums • Volume and price growth in Sweden and Finland • Corporate premiums lower due to competition and lower volumes Q3 08 Q3 09 Q3 10 100 95 Claims (gross claims ratio) 90 85 8
Slide 8: Business unit performances – Q3 2010
Business unit performances – Q3 2010 Private Nordic - CR Commercial Nordic - CR Corporate Nordic - CR 110 120 120 Weather impact Weather impact Weather impact 107.1 100 110 90.0 88.0 92.6 Workers comp. ruling 0.6 110 105.7 Workers comp. ruling 99.4 106.8 100 12 90 3.9 1.1 2.6 90 100 4.7 80 86.9 88.7
Slide 9: Business unit performance – 9M 2010
Business unit performance – 9M 2010 Private Nordic - CR Commercial Nordic - CR Corporate Nordic - CR 110 120 110 Weather impact 115,7 96.9 Weather impact Weather impact 100 1.6 Workers comp. ruling 100 91.2 110 7.0 Workers comp. ruling 92.3 7.0 90 0.6 102.2 90 4 1.8 0.9 90.6 100 80 90.0 89.9 107.2 8
Slide 10: Recession impact on group
Recession impact on group Index % 160 74 72 120 70 68 80 66 64 40 62 0 60 2004 2005 2006 2007 2008 2009 Q3 2010 Building index ¤ Burglaries* Unemployment DK Group claims ratio (RHH) * Estimated FY 2010 ¤ Building index Q2 data Source: Danish National Statistics 10
Slide 11: Premium performance
Premium performance Q1-Q3 2010 results 11 30. november 2010
Slide 12: Premium performance
Premium performance Gross premium - Group Gross premium - Private DKKm DKKm 4,890 4,886 +3.6% +3.7% 4,637 4,611 4,650 4,497 4,425 2,562 2,574 4,338 4,327 4,233 2,425 2,378 2,391 4,117 2,294 2,044 2,068 2,022 1,988 1,987 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 08 08 08 08 09
Slide 13: Premium hikes and stronger NOK impact premiums
Premium hikes and stronger NOK impact premiums Strong growth in Q3 - adjusted 3.6% in local currency • Premium increased in Q3 by 5.4% in DKK helped by the stronger NOK and SEK • Top line growth negatively impacted from additional premium reserves for change of ownership • High growth in Finland and
Slide 14: Premium increases visible in Private Nordic
Premium increases visible in Private Nordic • Private house in Denmark increased by 5 % and Norway by 10 % both y-o-y • Private motor in Denmark increased slightly during 2010 • Private motor in Norway continues upwards with 6.0% y-o-y Average prices in Denmark Average prices in Norway 5,000 5,000 4
Slide 15: Premium hikes and combined ratio relation
Premium hikes and combined ratio relation 110 Combined ratio Premium Premium 105 hikes hikes 100 New ruling workers comp. Smaller Extraordinary winter adjustments 95 90 85 80 2000 2001 2002 2003 2004 2004* 2005 2006 2007 2008 2009 9M 2010 2011 2012 2010 • 2002-2004 premium increases of DKK 2.1bn imp
Slide 16: Retention - Private customers
Retention - Private customers • Retention rate stable and strong • Danish retention rate remains high despite influence from premium increases • High retention support competitive strength and cost ratio Nordic retention since 2005 92% 90% 88% 86% 84% 82% Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 17: Claims development
Claims development 17
Slide 18: Claims development
Claims development Q3 Q3 9M 9M 2009 2010 2009 2010 90 Gross claims 71.5 82.1 71.3 81.2 ratio Large claims -2.1 -2.9 -2.7 -3.6 80 Weather claims -0.6 -5.8 -0.7 -7.2 70 Run-off 3.0 4.4 3.9 4.1 Interest rate 3.5 3.1 3.8 3.3 60 Underlying 75.3 80.9 75.6 77.8 claims ratio 50 Supreme court 0.0 4.1 0.0 1.4
Slide 19: Claims ratio performance
Claims ratio performance Claims ratio - Group Claims ratio -Private (ex winter 2010) (ex winter 2010) 85 82.9 80 80 10.2 75 8.7 75 70 79.8 78.3 77.3 70 78.4 75.4 75.0 75.7 76.2 76.1 73.3 74.4 73.7 73.8 75.2 71.8 71.4 72.7 65 68.7 65 70.3 69.5 70.2 68.1 60 60 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3
Slide 20: Q3 impacted by single events
Q3 impacted by single events Technical result drivers Q3 / Q3 (DKKm) Single events Forecasted Change in claim trends performance 397 135 250 120 200 70 125 74 74 Q3 2009 C loudburst High court Premium C laims Frequency C hg of Others Q3 2010 W.C . increases inflation workers ownership comp. 20
Slide 21: 2010 – a tough year
21 9 M 2 0 0 9 E xt . w 1,245 in te r C lo u d b u 700 H rs t ig Fr e h qu co e u n rt 135 cy W w .C o . rk er s co m 200 p . P 2010 – a tough year re m iu m 70 h ik es C la im s in 625 fla C ti o h n g o f o w ne 290 rs h ip Lo w er in 125 te re st H o u se /C 32 o n te n t Technical result drivers
Slide 22: Frequency and average claims
Frequency and average claims Average claims private cars Frequency private cars 130 120 120 110 110 100 100 90 80 90 2005 2006 2007 2008 2009 9M 2010 2005 2006 2007 2008 2009 9M 2010 Frequency private houses Average claims private houses 130 150 140 120 130 110 120 100 110 100 90 2005 2006 2007 2008
Slide 23: Large claims and weather related claims
Large claims and weather related claims Large claims gross DKKm 400 Weather related claims* (gross) DKKm 300 1221 200 911 100 332 0 202 111 112 121 98 06 06 06 06 07 Q 07 Q 7 08 Q 8 Q 8 08 Q 9 09 Q 9 Q 9 Q 0 10 10 Q 7 0 0 0 0 0 0 1 0 1 2 3 4 1 2 4 1 2 3 4 1 2 3 4 1 2 3 3 Q Q Q Q Q Q Q Q Q Q 2004 200
Slide 24: Burglaries and thefts in Denmark
Burglaries and thefts in Denmark DKKm 165 191 223 268 286 Number of burglaries Danish market 300 16,000 250 200 12,000 150 8,000 100 50 4,000 0 0 9M 2006 9M 2007 9M 2008 9M 2009 9M 2010 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2007 2007 2008 2008 2009 2009 2010 2010 Theft of bikes Theft Burglaries Index Number of bu
Slide 25: Denmark – the challenge in a nutshell
Denmark – the challenge in a nutshell Bankruptcies 2007-2010 350 Index 2007 = 100 350 300 300 Denmark 250 250 200 Norway 200 150 150 100 100 Finland Sweden 50 50 0 0 2007 2008 2009 2010 Source: Danske Bank 25
Slide 26: Building cost index
20 100 105 110 115 120 125 130 05 2 0 Q1 26 05 2 0 Q2 05 2 0 Q3 05 2 0 Q4 06 2 0 Q1 06 2 0 Q2 06 Q 20 3 Residential buildings 06 2 0 Q4 07 2 0 Q1 07 2 0 Q2 07 2 0 Q3 07 2 0 Q4 08 2 0 Q1 08 One-family houses 2 0 Q2 08 Q 20 3 Building cost index 08 2 0 Q4 09 Denmark (Q1 2003=100) 2 0 Q1 09 2 0 Q2 09 2
Slide 27: Discounting rate
Discounting rate % 6.00 5.00 4.00 3.00 2.00 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2006 2007 2007 2008 2008 2009 2009 2010 2010 1% increase in interest level will: - increase pre-tax profit by approx. +DKK 300m - improve combined ratio by approx. 1 percentagepoint 27
Slide 28: Expenses
Expenses 28
Slide 29: Expense ratio
Expense ratio Continued focus on expenses drives expense ratio downwards by • streamlining the distribution platform • digital and paperless process handling • in-house rotation reduces need for external hiring • investments in branding (DKK 37m 9M 2010) and processes by new IT systems Expense ratio
Slide 30: Number of full time employees
Number of full time employees 4500 Since summer 2008 Moderna 4250 acquisition • Internal recruitment priority • Rotation 4000 • Efficiency programs 3750 => 3500 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 5% reduction in FTE’s in DK and NO Total Denmark
Slide 31: Investments
Investments 31
Slide 32: Match and free portfolio
Match and free portfolio DKKm Bonds, cash deposits, etc. Equities *! Real estate °) Total Value adjustment, changed discount rate Transferred to technical interest Total return, investment activities Other financial income and expenses, investment‘ Other financial income and expenses, non-investment
Slide 33: Investments
Investments DKKm Bonds, cash deposits, etc. Equities *) Real estate”! Total Value adjustment, changed discount rate Transferred to technical interest Total return, investment activities Other financial income and expenses, investment“ Other financial income and expenses, non-investment Return on inv
Slide 34: Assets allocation
Assets allocation Total assets allocation Assets allocation in the match portfolio 4 5 10 C ov. Bonds Equities 31 Govt. Percentage Real estate Percentage Deposits C ov. Bonds 64 Others 86 Assets allocation in the free portfolio 19 39 Equities Real estate Percentage Bonds 42 34
Slide 35: Split of investment portfolio
Split of investment portfolio 35
Slide 36: Matching – an illustration
Matching – an illustration 36
Slide 37: Outlook and capitalisation
Outlook and capitalisation 37 30. november 2010
Slide 38: Outlook 2010
Outlook 2010 Assumptions: Run-off expected at DKK 0 for the rest of the year, large claims at approx. DKK 125-150m in Q4 and weather claims at DKK 100m in Q4 Actual Outlook 2010 Outlook 2010 Outlook 2010 DKKm 2009 February August November Discouting rate 3.6% 2.9% 2.8% Premium growth in local curren
Slide 39: Reserves and run-off development
Reserves and run-off development Run-off net, DKKm Insurance provision, DKKm 30,000 7,833 6,208 5,183 5,403 793 5,173 5,100 743 683 20,000 555 538 493 25,034 21,261 21,104 22,470 10,000 20,410 19,715 283 0 2005 2006 2007 2008 2009 9M 09 9M 10 2005 2006 2007 2008 2009 9M 10 Premium provisions Claims
Slide 40: Capitalisation
Capitalisation DKKm 12,000 11,000 10,000 9,000 8,000 7,000 6,000 Q 7 07 re Q3 7 af p a 07 Q 8 08 ore Q3 8 af p a 08 Q 9 09 ore Q3 9 af p a 09 ) Q 6 0 Q 3 10 10 0 Q t Q t t pa t pa t pa t (* 0 0 0 0 0 0 0 Q 01 20 01 u u Q ou r ou r ou r ou 20 yo yo 20 1 2 1 2 1 2 y 2 2 te y te y te y 1 2 Q 3 o 20 ef
Slide 41: Q1 - Q3 2010 results
Q1 - Q3 2010 results Key figures In DKKm Q3 09 Q3 10 Change 9M 09 9M 10 Change Gross premium income 4,637 4,886 5.4% 13,253 14,426 8.9% Gross claims incurred -3,315 -4,009 20.9% -9,449 -11,717 24.0% Operating expenses -731 -796 8.9% -2,232 -2,433 9.0% Technical result 397 74 -81.4% 1,245 114 -90.8%
Slide 42: Key figures 2004-2009 and consensus
Key figures 2004-2009 and consensus Consensus after 3Q 2010 report In DKKm 2004 2005 2006 2007 2008 2009 2010 2011 2012 Gross premium income 15,266 15,705 16,021 16,606 17,323 17,862 19,368 20,100 20,839 Gross claims incurred -10,425 -11,159 -10,564 -11,175 -11,766 -12,882 Operating expenses -2,611
Slide 43: Questions?
Questions? Investor relations contacts Ole Søeberg Investor Relations director +45 40 30 00 04 ole.soeberg@tryg.dk Lars Møller Investor Relations Manager +45 22 66 66 05 lars.moeller@tryg.dk 43 30. november 2010
Slide 44: Appendix
Appendix 44 30. november 2010
Slide 45: Economic key figures in the Nordics
Economic key figures in the Nordics Denmark Sweden 2010 2011 2010 2011 GDP growth 2.0 2.3 GDP growth 4.4 2.6 Inflation 2.0 2.0 Inflation 1.8 1.9 Un-employment 4.2 4.7 Un-employment 8.2 8.2 Current account balance in % Current account balance in % 3.4 3.0 5.9 5.7 of GDP of GDP Budget balance in % of
Slide 46: Distribution of new sales in Q3 2010
Distribution of new sales in Q3 2010 Denmark Corporate Norway 7% 4% 17% 26% 47% 53% 54% 76% 16% Own sales Affinity Nordea Direct sales Brokers Own sales Cardealers Franchise Nordea Sweden Finland 1% 17% 25% 45% 54% 9% 2% 47% Call center Cardealers Netbank Nordea Tied agents Call center Nordea Netban
Slide 47: Nordic distribution platform
Nordic distribution platform Tryg’s distribution channels Customer center Call center Bancassurance* 323 124 313 325 Car dealers Insurance brokers Affinity groups E-business/Self-service Real estate agents Nordea online bank Franchise * Numbers reflect Nordea’s branches in each country. 47
Slide 48: Danish non-life insurance
Danish non-life insurance 4.8% CAGR Market size and profitability 60,000 10000 50,000 6000 40,000 2000 30,000 -2000 20,000 -6000 10,000 0 -10000 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net premiums Insurance result Market shares % 50 40 30 20 10 0 1995 1997 1999 2001 20
Slide 49: Norwegian non-life insurance
Norwegian non-life insurance Market size and profitability 6.9% CAGR 50,000 130 120 40,000 110 30,000 100 90 20,000 80 70 10,000 60 0 50 1996 1998 2000 2002 2004 2006 2008 Premiums Combined ratio Market shares % 40 30 20 10 0 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 19 19 19 19 19 19 20 20 20
Slide 50: Tryg in Denmark
Tryg in Denmark Premiums, DKKm Combined ratio 10,000 105 100 9,000 95 90 8,000 85 80 7,000 75 2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009 9M 10 Gross claims ratio Gross cost ratio 85 17 80 16 75 15 70 65 14 60 13 2004 2005 2006 2007 2008 2009 9M 10 2004 2005 2006 2007 2008 2009 9M 10
Slide 51: Tryg in Norway
Tryg in Norway Premiums, DKKm Combined ratio 8,000 100 95 7,000 90 85 6,000 80 5,000 75 2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009 9M 10 Gross claims ratio Gross cost ratio 80 18 76 17 72 16 68 64 15 60 14 2004 2005 2006 2007 2008 2009 9M 10 2004 2005 2006 2007 2008 2009 9M 10 51
Slide 52: Tryg in Sweden (Moderna)
Tryg in Sweden (Moderna) Premiums, DKKm Combined ratio 150 1,200 140 1,000 130 800 120 600 110 400 100 200 90 0 80 2004 2005 2006 2007 2008 2009 2008 2009 9M 10 Gross claims ratio Gross cost ratio 100 125 100 90 75 50 80 25 70 0 2007 2008 2009 9M 10 2007 2008 2009 9M 10 52
Slide 53: Tryg in Finland
Tryg in Finland Premiums, DKKm Combined ratio 500 160 150 400 140 300 130 200 120 100 110 0 100 2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009 9M 10 Gross claims ratio Gross cost ratio 90 100 85 75 80 75 50 70 25 65 60 0 2004 2005 2006 2007 2008 2009 9M 10 2004 2005 2006 2007 2008 2009
Slide 54: Peers in Denmark
Peers in Denmark Premium growth Combined ratio 110 8 105 4 100 95 0 90 -4 85 2004 2005 2006 2007 2008 2009 Latest 80 2006 2007 2008 2009 Latest Tryg Alm Brand Topdanmark * Tryg Topdanmark Alm. Brand Codan Market share in % Private consumption, % annual real changes 50 5 40 2.5 30 0 20 10 -2.5 0 -5 1
Slide 55: Peers in Norway
Peers in Norway Premium growth Combined ratio 100 8 Sparbank 95 4 90 0 85 -4 2004 2005 2006 2007 2008 2009 9M 10 80 2006 2007 2008 2009 9M 10 if… Gjensidige Tryg Sparebank 1 Tryg Gjensidige SpareBank 1 If… Market share in % Private consumption, % annual real changes 4 50 40 3 30 2 20 1 10 0 0 1994 1
Slide 56: Peers in Sweden
Peers in Sweden Premium growth Länsforsk. Combined ratio 16 160 150 Tryg (RHS) 140 11 Folksam 140 120 130 6 100 120 Codan 80 110 1 60 100 2004 2005 2006 2007 2008 2009 40 90 -4 80 20 If 70 -9 0 2006 2007 2008 2009 Tryg If Länsforsk. Codan Folksam Market share in % Private consumption, % annual real
Slide 57: Peers in Finland
Peers in Finland Premium growth Combined ratio 16 Pohjola 60 130 14 50 120 12 Tryg (RHS) 10 Tapiola 40 110 8 Fennia 30 100 6 4 20 90 2 80 If 10 0 2006 2007 2008 2009 Latest -2 2004 2005 2006 2007 2008 2009 0 Tryg If Pohjola Tapiola Market share in % Private consumption, % annual real changes 40 3 35