Tryg A/s · OMXCOP:TRYG
Tryg A/s — Investor Day (June 2023)
46 slides from Tryg A/s's investor day presentation, Jun 6, 2023
Slide 1: Analyst Day 06 June 2023
Analyst Day 06 June 2023
Slide 2: 5 and a half days as CEO
5 and a half days as CEO Analyst Day | June 6th 2023, Copenhagen | CEO, Johan Kirstein Brammer
Slide 3: 5 and a half days in the job as CEO
5 and a half days in the job as CEO OPPORTUNITIES CHALLENGES AREAS FOR DEVELOPMENT Several scale benefits to harvest Continuing high inflation Boost technical excellence Automation for efficiency Macroeconomic uncertainty Growing the personal insurance space Investing in customer centricity Recruiti
Slide 4: Corporate Denmark Strategy
Corporate Denmark Strategy Analyst Day | June 6th 2023, Copenhagen | Head of Corporate DK, Michael Rødbroe Kolbæk
Slide 5: Michael Rødbroe Kolbæk, Head of Corporate Denmark
Michael Head of Corporate Denmark 2020 - current Rødbroe Kolbæk Head of Strategy and M&A 2018-2020 Head of Bus. Dev. & M&A 2016-2017 VP Corp. Dev. & HR 2012-2015 Associate Principal 2007-2012 MSc, Economics and business 2001-2007 5
Slide 6: At CMD 2021, we offered specific targets on Corporate
At CMD 2021, we offered specific targets on Corporate. Today we will deepdive on the logic and actions taken …and by 2024 will have significantly Corporate business historically … we are raising rates, focusing improved profitability and a much unprofitable and volatile (particularly exposure and bu
Slide 7: What characterizes the typical Corporate customer?
What characterizes the typical Corporate customer? Corporate customers are different… … and require a different process The largest individual customers ~50-80 Sale mDKK premiums ▪ Direct sales (with long lead times) ▪ Heavy use of Broker/tenders Geographically dispersed Pricing / underwriting ▪ Ind
Slide 8: Corporate market is more challenging than Private / Commercial
In general, the Corporate market is more challenging than Private / Commercial, and our historic performance is far from satisfactory CMD material: Average COR (excl. run-off), 2016-2020 Tryg Private 86% Large clients Presence of High exposure to with greater global insurers large claims bargaining
Slide 9: Three root causes that are in our control
However, we have also identified three root causes that are in our control Strengthened Technical Focus on Focus – not competencies in profitability trying to behave underwriting in order to please everyone Dated organization and culture
Slide 10: We decided to focus where we have the chance to be best
LACK OF FOCUS Based on our key competitive advantages we decided to focus where we have the chance to be best Our key strength Core customer Great risk appetite Nordic focus in deep knowledge Core business of Danish and Nordic risks in particular Smaller local customers Grow DKK 0.1-1 Billion revenu
Slide 11: Significant steps to reduce our global exposures
LACK OF FOCUS We are taking significant steps to reduce our global exposures Significant reductions in risk exposure for property and Significant reductions in risk exposure for property and Rebalancing towards smaller local customer US heavy liability US heavy liability -27% -50% 2% Larger global 1
Slide 12: Tailored approach to the customers we exit
LACK OF FOCUS We take a tailored approach to the customers we exit to ensure they are treated fairly and our reputation remains intact DK example: Property outside Scandi, mDKK Realized exit Planned exit Accumulated departure 34 33 Early warning CMD ambition: 50% reduction 21 18 15 7 6 6 6 Programs
Slide 13: We have improved underwriting in several ways
TECHNICAL COMPETENCIES We have improved underwriting in several ways New tools with New skills and Improved processes stronger link to data profiles
Slide 14: Screenshots from our Underwriting-tool
TECHNICAL COMPETENCIES Screenshots from our Underwriting-tool
Slide 15: Focused risk selection and price increases drive profitability
INADEQUATELY FOCUS ON PROFITABILITY Focused risk selection and price increases drive profitability Underlying claims ratio 1 Rate increases, Corporate Nordic Small / medium sized claims ex C&F, Index 13% -21pp 11% 10% 7% 4% 2018 2022 2018 2019 2020 2021 2022 Note: 1. Presented at Q3 2022 results Inv
Slide 16: Updated organization and significant new talent
DATED ORGANIZATION We have updated the organization and brought in significant new talent Same roles New roles New hires Corporate DK Michael Kolbæk 108 102 Strategy, Customer service Finance & Sales Underwriting Transformation & Support Analytics & Compliance Leasing, Risk Pricing & Team 1 Team 2 B
Slide 17: By the end of 2024, we will have corporate business that is …
By the end of 2024, we will have corporate business that is … ▪ Clearly focused ▪ Adequately profitable ▪ Technically strong ▪ Offering synergies to rest of Tryg ▪ Nordic alignmement on future strategy ▪ Collaborating with Commercial on product development
Slide 18: Update on Tryg Garanti
Update on Tryg Garanti Analyst Day | June 6th 2023, Copenhagen | Head of Tryg Garanti, Mads Løgstrup
Slide 19: Agenda for today
Agenda for today Introduction to Tryg Garanti and our 1 business model 2 Financial performance and reinsurance 3 Tryg Garanti expansion and strategy 4 Market potential 19
Slide 20: Our business model is all about counter party risk
Our business model is all about counter party risk Our business model is centered around As such the purpose of the products are to protect mitigating counterparty risk against losses in commercial relationships • Protects the client of a policyholder against non- Seller Buyer performance by the pol
Slide 21: We are on a solid premium growth trajectory
We are on a solid premium growth trajectory With a difficult claims environment in 2022 behind us, our growth and profitability potential remains intact Premiums (DKK m) 647 739 437 469 527 547 307 326 327 347 390 211 260 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 Technical result (DKK m) 2
Slide 22: Surety business is impacted by the macro-environment
The surety business is inherently impacted by the surrounding macro-environment 1 2 Prolonged high interest rates, inflation and geopolitical unrest Exposure The increasing interest rates, inflation and geopolitical unrest cause a When the market activity stagnates, natural stagnation in the level o
Slide 23: We use reinsurance to mitigate risk and reduce capital consumption
We use reinsurance to mitigate risk and reduce capital consumption The surety business is by nature volatile. The volatility Our reinsurance programme is robust is managed by reinsurance 300 250 ~80% the exposure of Tryg Garanti is covered by reinsurance 200 150 “Risk attaching” reinsurance means 10
Slide 24: Our growth journey throughout Europe started in 2006
Our growth journey throughout Europe started in 2006 In recent years we have expanded our footprint across Europe Focus is now to harvest from the Final countries in current plan are UK and Ireland expanded and strong foothold No. 1 surety provider in Denmark, Norway and Finland Finland. Runner up i
Slide 25: Organized in a matrix to gain benefit of scale
To support the international clients and gain benefit of scale, we are organized in a matrix Head of TGE & Central Functions P3 TEP BRCO HAK KIS PHH P1 NODAA SELEF The matrix organization FITEP allows benefit of scale by uniform processes DE_WRAK and client concepts Surety Client Relations Trade Cli
Slide 26: Three central focus areas for old and new markets
We aim to realize the profitable potential of the old and new markets with three central focus areas 1 2 3 Efficiency by Solid High customer Profitable digitisation underwriting satisfaction growth
Slide 27: Lifting sales through integrated solutions
An example of this is how we will lift sales through integrated solutions Tryg Garanti stands on a strong We plan to harness our unique ability and use that position to increase distribution digital foundation for both channels through integrated solutions products Tryg Garanti is focused on three c
Slide 28: New capital regulation in the banking sector provide tailwinds
New capital regulation in the banking sector provide tailwinds Across the markets we are in, banks are largest However, their interest is waning due to lower players profitability from new capital requirements - we aim to seize the opportunity 0% 20% 40% 60% 80% 100% Belgium 85% 15% Insurance Denmar
Slide 29: Capturing market share in an industry with large potential
Harnessing those tailwinds will allow us to capture market shares in an industry with strong historical performance and large potential Market growth and profitability potential is strong Surety – Premiums, Claims and Claims Ratios – ICISA Members (excl. Reinsurance Our aspirations remain ambitious
Slide 30: Coffee break
Coffee break – see you in 15 minutes ☺
Slide 31: Technical Excellence in Tryg
Technical Excellence in Tryg – raising the bar to achieve competitive advantage Analyst Day | June 6th 2023, Copenhagen | Mikael Kärrsten, CTO
Slide 32: Professional and personal background of Mikael Kärrsten
My professional and personal background Professional 2023 - • Chief Technical Officer Quick facts (CTO) 2022 • PPU Director • +20 years of Scandi insurance experience 2012-2022 • +15 years of UW management positions • Chief Underwriting Officer (CUO) RSA Scandi. • 10 years in RSA Scandi, last 4 as S
Slide 33: Tryg and Trygg-Hansa bring great value when joining forces
Both Tryg and Trygg-Hansa brings great value to the table when we join forces to develop our future capabilities From Tryg, we e.g. gain From TryggHansa, we e.g. gain Mandate close to customers, where Excellent, consistent governance and understanding is more granular operating rhythm across organiz
Slide 34: Trygg-Hansa historically performed stronger on CR than Tryg
Highly confidential Trygg-Hansa has historically performed stronger on CR than Tryg, partly driven by technical excellence focus Combined Ratios across Tryg and Trygg-Hansa Tryg historical CR (%) Trygg-Hansa historical CR (%) -2 p.p. 87 -5 p.p. 84 85 85 85 82 • Profitability delta partly driven 75 7
Slide 35: Why invest in PPU?
Why invest in PPU*? 1 Improve bottom line 2 Reduce volatility 3 Growth capabilities ❑ Technical insights to improve ❑ Use of KPIs as early indicators ❑ Profitable growth commercial decision making ❑ Best practice usage of ❑ Securing technical aspects of ❑ Operational rhythm exposure measures, growth
Slide 36: New PPU operating model: central and de-central collaboration
The new PPU operating model is based on a strong collaboration between the central and de-central environment 1 2 Central PPU environment De-central PPU environment Designing a best-in-class operating …in order to enable best-in-class technical rhythm, incl. processes, reporting, content, performanc
Slide 37: Four changes to strengthen technical excellence
Four changes implemented in order to strengthen technical excellence 1 2 3 4 Centralization of PPU De-centralization of Strengthening of Strengthening of Case Governance & Operating Pricing Portfolio Management UW Rhythm Responsibilities and Responsibilities for PPU Local efforts within Local effort
Slide 38: Minimum requirements and long-term ambitions for each PPU area
Minimum requirements and long-term ambitions have been defined for each PPU area, and are being executed • Standardized ”operational rhythm” Portfolio Management • Securing combination of capabilities, processes and tools • Best in class mindset • Risk pricing excellence Pricing • Pricing governance
Slide 39: Three technical excellence examples to drive competitive edge
Three technical excellence examples to drive competitive edge 1. Forward looking profitability steering Forward looking profitability steering is key for insurance companies due to the long-term nature of the business model. A structured and qualitative process, highly influenced by previous Trygg-H
Slide 40: Tryg's new Executive Board
Tryg’s new Executive Board 1. June reflects the different excellences Tryg’s Executive Board Johan Kirstein Brammer Chief Executive Officer (CEO) Barbara Plucnar Jensen Lars Bonde Chief Financial Officer (CFO) Chief Operational Officer (COO) Alexandra Bastkær Winther, Mikael Kärrsten, Chief Commerci
Slide 41: Financial update
Financial update Analyst Day | June 6th 2023, Copenhagen | CFO, Barbara Plucnar Jensen
Slide 42: Shareholder remuneration
Shareholder remuneration ce 2012 (DKK) Tryg|¢ 9.74 971 9.20 9.50 [extraordinary dividend . Extraordinary buy back a dinary buy b 5.60 8.45 [Hl ordinary dividend 7.80 6.29 000 Remaining 199 6.80 7.00 , 5.80 6.00 6.20 GLO Completed 5.20 5.40 : \ 17/05/2023, d — 2012 2013 2014 2015 2016 2017 2018 2019
Slide 43: Solvency ratio sensitivities
Solvency ratio sensitivities Tryg | Solvency ratio sensitivities: 20% -30% -20% | +100bps -100bps - ~100 bps Ez ~100 bps - "| +20% 20% 20% 2023, Equity Equity Property Interest (coe (conoeste (cornesen) NOK/DKK SEK/DKK Solvency ratio sensitivities: Interest rate risk is very low as function of our m
Slide 44: Currency development more important after RSA acquisition
Currencies development significantly more important after RSA acqui Tryg Group insurance service result walk Insurance service result split by geography 1m . te Norway Denmark 4 9% 4B Sweden 62% 1,014 | The acquisition of RSA Scandinavia creates a more Q12022 ‘Higher —«Laree& Growth _—mpactof insura
Slide 45: SEK/DKK and NOK/DKK
SEK/DKK and NOK/DKK • 0.8 0.78 0.76 0.74 0.72 • 0.7 0.68 0.66 0.64 0.62 0.6 • SEK/DKK NOK/DKK
Slide 46: It is important to know your investment case
It is important to know your investment case