Tryg A/s · OMXCOP:TRYG
Tryg A/s — Tryg Forsikring — Debt Investor Presentation (April 2018)
29 slides from Tryg A/s's debt investor presentation, April 2018
Slide 1: Tryg forsikring A/S Tier 1 issue company presentation
Tryg forsikring A/S Tier 1 issue Company presentation April, 2018
Slide 2: Contents
Contents Tryg at a glance 3 Business model 5 Claims and expenses 9 Investments 11 Solvency & Capital 13 Targets & Outlook 18 Background material 19 Appendix 25 Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by
Slide 3: Tryg at a glance (I)
Tryg at a glance (I) A leading Nordic non-life insurance company • Tryg’s history dates back to the 18th century Norway • Non-life insurer in Denmark, Norway and Sweden Market position: #3 Market share: 13.2% • Retail (Private & SME) is approx. 80% of total premiums CR in Q1 18: 93.9 % • Motor, Prop
Slide 4: Tryg at a glance (II)
Tryg at a glance (II) Strong value propositions High insurance penetration in the Nordics Premiums per capita (USD), 2016 A leading Scandinavian non-life insurer with strong I presence in Denmark and Norway (most profitable markets) Strong and stable earnings and high returns on capital II employed
Slide 5: Resilient business model through cycles
Resilient business model through cycles Technical result and Return on Equity • Non-life earnings relatively insensitive to DKKm ROE economic developments/cycles • Differently from banking there is only a modest relation between non-life earnings and economic cycles • Highly attractive profitability
Slide 6: Reinsurance used as stabilizing earnings factor
Reinsurance used as stabilizing earnings factor • Our maximum net exposure for weather claims is DKK 150m per Weather claims, net DKKm event. The upper limit of the programme is DKK 5.75bn, which is statistically sufficient to cover at least a 250-year event. Expected annual Tryg has bought an addit
Slide 7: Customer retention amongst highest in the industry
Customer retention amongst highest in the industry • High customer retention level at 86-91% Private – Customer retention • Recent quarters showing an improving trend • Normally retention falls only in period of relatively high DK price increases otherwise it remains very stable • Retention is a key
Slide 8: Insurers' perception DKK vs other EU countries
Insurers’ perception DKK vs other EU countries Danish customers completely and strongly agree • Overall I am very satisfied with the services of my insurance company • My insurance agent only sold me insurance coverage that I really needed • My present insurance coverage offers me enough flexibility
Slide 9: Underlying claims ratio improving
Underlying claims ratio improving Claims ratio, net (Commercial DK & NO) Group underlying claims ratio at 76.6, 40bps better than adjusted Q1 2017 Private underlying claims ratio at 75.0, 50bps better than Q1 2017 Corporate profitability remains under pressure “Expected FY 2018 underlying claims rat
Slide 10: Expense ratio of 14 - lower than Q1 2017
Expense ratio of 14 - lower than Q1 2017 Expense ratio • Efficiency Initiatives in 2017 brought down overall costs • Investments in digitalisation will somewhat offset further efficiency gains • Expense ratio target for 2020 around 14% • Number of employees increased slightly due to in-sourcing of I
Slide 11: Conservative asset allocation and low volatility
Conservative asset allocation and low volatility Key comments Market risk as % of total investments, YE 17 • Low risk approach to investments Market risk as % of total investments well below peers • Investments split in a match portfolio (matching the insurance reserves) & free portfolio (capital of
Slide 12: Nordic insurers' investment return interval
Nordic insurers’ investment return interval Return Min Max 5.0% 2.5% 0.0% -2.5% -5.0% Topdk Alm.Br. If Gjensidige Sparebank1 Tryg • Data are based on quarterly observations starting in 2007 til Q3 2017 • Tryg, clearly below peers investment risk, results in a more stable investment return with a rel
Slide 13: Solvency ratio Tryg Group vs Tryg Forsikring
Solvency ratio Tryg Group vs Tryg Forsikring • Tryg Forsikring AS (the issuer) and Tryg AS (group consolidated) have had virtually the same solvency position since the implementation of Solvency 2 • The Alka acquisition in Q4 2017 changed the reported picture as the new money (new equity of DKK4bn)
Slide 14: Solvency position Q1 2018
Solvency position Q1 2018 Own funds walk • Solvency ratio based on the Partial Internal Model 13,900 is 283 (Q4 2017: 281) or 197 adjusted for the 13,700 426 -499 Alka capital increase. 13,500 13,300 -47 68 13,100 • Own Funds (OF) is primarily impacted by 12,900 12,700 13,162 13,110 12,500 • Result
Slide 15: Capital and solvency ratio development
Capital and solvency ratio development Capital Tiers as % of SCR • Tier 2 capacity fully utilised after issue of SEK 1bn subordinated debt 19 May 2016. 2,313 50% 619 13% • The Danish FSA has explained that a ratio lower than 125 would result in increased surveillance CETier 1 • Once the Alka deal is
Slide 16: Solvency ratio sensitivities
Solvency ratio sensitivities 300% 295% 289% 289% 290% 286% 286% 286% 283% 285% 285% 281% 282% 282% 281% 280% 279% 280% 278% 272% 270% 260% 2018 Equity Property Interest Spread Spread Spread NOK/DKK SEK/DKK (Covered) (Corporate) (Government) • The Solvency II ratio shows the highest sensitivity to sp
Slide 17: Lower currencies sensitivities driven by a SEK issue
Lower currencies sensitivities driven by a SEK issue Sensitivities before and after new Tier1 loan Key comments • Tryg’s presence in the three Nordic countries means exposure SEK/DKK to fluctuations in the local currencies NOK and SEK in regards to both financial results and solvency ratio • Tryg ha
Slide 18: Targets and outlook
Targets and outlook Efficiency programme concluded, new 2018 topline growth between 0-2% financial targets announced 2018 expected tax rate 22-23% Members’ bonus of 8% in June 2018. Alka acquisition will result in annual depreciation of customer relations of approximately DKK100-150m Pri
Slide 19: Background material
Background material
Slide 20: Strong A1 rating with stable outlook from Moody's
Strong A1 rating with stable outlook from Moody’s …reflecting our leading position, strong profitability, strong asset quality & low leverage Rating and underlying rationale Key comments •Moody’s affirmed (post the Alka transaction) an “A1” Insurance Financial Strength Rating (IFSR) rating with a st
Slide 21: Scandinavia vs the rest of the world
Scandinavia vs the rest of the world Corruption Index Cost High insurance penetration in the Nordics 1. New Zealand Premiums per capita (USD), 2015 2. Denmark 3. Norway Euro Area 3. Finland 3. Switzerland GDP Per Capita, PPP: USD 38,235 6. Sweden 6. Singapore Average salary: EUR 1,508 8. Canada 8. N
Slide 22: Restricted Perpetual Tier 1 Capital Notes
Restricted Perpetual Tier 1 Capital Notes Non-binding summary of key terms from Preliminary Prospectus dated 12 April 2018 Issuer: Tryg Forsikring A/S Tier 1 Own Funds of the Issuer and the Group under Solvency II. Direct, unsecured and subordinated Status of the Notes obligations of the Issuer, ran
Slide 23: Key investment considerations
Key investment considerations Nordic footprint | Lean operations | High profitability | Strong capitalization Focused Nordic non-life insurance company, with proven operations and favourable outlook, diversified across both 1 countries and products Operates in mature markets, with high entry barrier
Slide 24: Appendix
Appendix
Slide 25: Distribution of new sales 2017
Distribution of new sales 2017 Private DK NO SE Commercial DK NO Corporate DK NO SE 25
Slide 26: Established ownership structure
Established ownership structure 60% owned by TryghedsGruppen (foundation) and 40% free float TOP 10 shareholders Free float - geographical distribution (2017) TryghedsGruppen SMBA 60.00 % Tryg A/S 2.63 % Nordea Bank AB 2.19% Blackrock 1.87% Norges Bank Investment Management 1.54 % Free float is excl
Slide 27: Corporate Social Responsibility in Tryg
Corporate Social Responsibility in Tryg Strategic areas: • Peace of mind in society: The essence of Tryg’s purpose is to ensure peace of mind in a world that is changing. To increase and ensure peace of mind, we are actively working to develop and offer insurance products that meet demands in a chan
Slide 28: Economic key figures
Economic key figures Denmark Sweden % 2018 2019 % 2018 2019 GDP Growth 1.9 1.7 GDP Growth 2.6 2.0 Inflation 1.2 1.5 Inflation 1.8 1.8 Unemployment 4.0 3.7 Unemployment 6.6 6.5 Current account balance in Current account balance in 8.1 7.5 4.8 5.5 % of GDP % of GDP Budget balance in % of GDP -0.4 -0.2
Slide 29: Tryg Forsikring A/S contact details
Tryg Forsikring A/S | Klausdalsbrovej 601 | 2750 Ballerup | Denmark | Tel: +4570112020
Tryg Forsikring — Debt Investor Presentation (April 2018) on 6ix