Tryg A/s · OMXCOP:TRYG
Tryg A/s — FY2012 Earnings Presentation
39 slides from Tryg A/s's earnings presentation, 2013
Slide 1: 2012 results Investor presentation
2012 results Investor presentation 1 Follow us on Twitter: @TrygIR
Slide 2: Contents
Contents Page Highlights Q4 and 2012 3 Premiums and portfolio 10 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 curren
Slide 3: Highlights Q4 2012
Highlights Q4 2012 - Result favoured by a strong insurance result Pre-tax profit • Pretax profit of DKK 638m (DKK 467m). D KKm 800 Technical result of DKK 648m (DKK 310m) 638 600 467 400 • Combined ratio of 87.4 compared with 94.5. 200 0 • Gross claims ratio of 70.2 (78.5) affected by Q4 2011 Q4 201
Slide 4: Highlights 2012
Highlights 2012 - Result favoured by initiatives, weather, large claims and high investment result Pre-tax profit D KKm 3,017 • Pre-tax profit of DKK 3,017m (DKK 3,200 2,800 2,400 1.603m). Technical result of DKK 2,491m 2,000 1,603 1,600 (DKK 1,572m). 1,200 800 400 • Proposed dividend per share of D
Slide 5: Major initiatives in 2012
Major initiatives in 2012 • Updated financial targets. • CR at 90 or below from Q3 2013 • Expense ratio below 15 in 2015 • Roe at 20% post tax • Savings program of DKK 1bn launched. • New partnership with Nordea. • Tryg Finland sold to If. • New house content product introduced. • New dividend polic
Slide 6: Combined ratio development in Business areas
Combined ratio development in Business areas - Significant improvement in all business areas Combined ratio – Private (DK & NO) Combined ratio – Commercial (DK & NO) % % 105 105 100 100 95 92.6 92.7 95 92.1 90 86.8 87.7 90 85.7 82.6 83.7 85 85 80 80 75 75 Q4 2011 Q4 2012 2011 2012 Q4 2011 Q4 2012 20
Slide 7: Result improvement paves the way for a combined ratio below 90
Result improvement paves the way for a combined ratio steadily below 90 from Q3 2013 Key figures Q4/YTD 2012 DKKm Q4 2011 Q4 2012 2011 2012 Gross earned premiums 4,950 5,076 19,948 20,314 Claims, net of reinsurance -3,588 -3,375 -14,288 -13,580 Gross expenses -829 -819 -3,271 -3,295 Technical result
Slide 8: Follow up on savings programme – 2012
Follow up on savings programme – 2012 Total Savings programme Targeted and achieved savings on claims Total reduction 300 120 in expenses 40 Q4 2012 DKK 400m 100 80 Q1-Q3 2012 700 100 Transfer to 250 Claims 250 Claims Claims 600 100 DKK 600m Total 2012 Achieved 2013 2014 2015 savings on Target claim
Slide 9: Combined ratio target
9 CR % ta r 0% 10% 20% 30% 40% 20 Ex ge 03 p en t Q 80 82 84 86 88 90 92 se 3 20 /c 20 04 la 13 Cl im ai s 20 m in 05 s it i < 90 in at 20 fla iv t io es 06 W n ea ab 20 th ov 07 er e Le an CP 20 gi d I 08 sl la at rg io e 20 n cl et ai 09 c m (W s 20 C, 10 ROE after tax ta xe 20 s. Combined ratio t
Slide 10: Premiums and portfolio
Premiums and portfolio 10
Slide 11: Low premium growth – better balanced technical result
Low premium growth – better balanced technical result Gross earned premiums, DKKm Gross earned premiums, DKKm 6,000 21,000 19,948 20,314 4,950 5,076 1654 5,000 1586 370 399 17,000 5,259 5,258 4,000 1,308 1,330 13,000 3,000 916 906 3,687 3,715 2,000 9,000 2,373 2,449 1,000 5,000 9,425 9,733 0 1,000 Q
Slide 12: Customer retention and average premium development
Customer retention and average premium development Car insurance – average premium (index 2008 = 100) Private - retention rate Average premiums increase YoY 140 92% -0.2% 5.8% 130 90% 120 88% 110 86% 100 84% 90 82% 2008 2009 2010 2011 2012 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12
Slide 13: Retention, average premiums and CR - Sweden
Retention, average premiums and CR - Sweden Private - retention rate House insurance – average premium (index 2008 = 100) Average premiums increase YoY 10.6% 74% 140 72% 130 70% 120 68% 110 66% 100 64% 90 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 08 09 10 11 12 1- 2- 3- 4- 1- 2- 3-
Slide 14: Claims
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Slide 15: Claims ratios Q4 and 2011 / 2012
Claims ratios Q4 and 2011 / 2012 Underlying claims ratio 2011 / 2012 Underlying claims ratio Q4 2011 / Q4 2012 88.9 85.7 81.3 82.6 78.5 79.7 78.1 74.6 76 75.6 74.4 73.8 73.8 72.7 70.7 70.6 71.1 68.9 64.9 61.4 2011 2012 Q4 2011 Q4 2012 Group Private C ommercial C orporate Sweden Group Private C ommer
Slide 16: Large and weather claims and run-off
Large and weather claims and run-off - High level of large claims offset by lower level of weather claims Large claims, gross DKKm Weather claims, DKKm Expected annual 1756 1,800 Expected annual 1,000 level 2012: DKK 550m 857 level 2012: DKK 600m 1,400 800 714 398 1,000 600 318 721 400 600 323 356 2
Slide 17: Interest sensitivity
Interest sensitivity Claims reserves - discounting rate % 1% increase in interest rate level 6.0 will: 5.0 4.0 3.0 • Increase pre-tax result by 2.0 2.4 around DKK 300m. 1.6 1.0 • Improve combined ratio by approx. 1 pp. Pension scheme Norway - discounting rate % 5.0 • Lower NO pension obligation 4.4
Slide 18: Investment and capitalisation
Investment and capitalisation 18
Slide 19: Investment result Q4 and full year 2012
Investment result Q4 and full year 2012 Assets Return Q4 2012 Return 2012 Assets Gross investment return Gross investment return Return DKKm Return DKKm Bonds (1.0%) 381 Bonds (4.5%) 1,770 DKK Equities (2.8%) 67 Equities (13.%) 269 32.2 mia. 35bn DKK Real estate (2.0%) 43 Real estate (9.7%) 204 Tota
Slide 20: Assets allocation
Assets allocation Total assets – Q4 2012 • The proportion of covered bonds increased in 2012 2 5 10 5 Equities (5) • Sold Norwegian goverment bonds due to low liquidity 3 Real estate (5) C ov. Bonds (57) • Reduced proportion of bank bonds in 2012 Percentage Govt. Bonds (17) • Deliberate decision to
Slide 21: Optimisation of capital structure and extraordinary buyback
Optimisation of capital structure and extraordinary buyback • Capital buffer based on Individual Solvency Capital buffer 60% increased to 38% (2011: 23%) and impacted 50% by: • Strong 2012 result 40% • Ordinary dividend payout 30% • Stable increase in the capital requirement 20% due to a limited gro
Slide 22: New dividend policy
New 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 dist
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 DKK Gross expenses -3,271 -3,295 25.2bn (Jan 13). Insurance result
Slide 25: Tryg – at a glance
Tryg – at a glance 250 Share performance since IPO 225 200 • Tryg goes back to 18th century 175 150 • The current Tryg was formed in 125 2002 by sale of Nordea’s non-life 100 activities – with a continuing 75 strategic partnership 50 25 • Non-life insurance in Denmark, 0 5 06 06 06 6 07 07 7 7 08 08
Slide 26: Structure of the Nordic insurance markets
Structure of the Nordic insurance markets Nordic Norway EUR 23.2bn (Q4 11) NOK 47.4 bn/ EUR 6.4bn (Q3 12) 11.5 15.6 Tryg 22.4 Tryg If If 17.4 C odan Gjensidige 39.8 Gjensidige Percent Sparebank1 Percent Länsförsäkringar 11.3 25.1 Other Topdanmark 9.0 Other 5.0 8.6 25.6 8.7 Sweden Denmark SEK 64.0bn/
Slide 27: Distribution of new sales 2012
Distribution of new sales 2012 Denmark Norway 11% 7% 27% 40% 31% 58% 26% Own sales Affinity Nordea Own sales Car dealers Franchise Nordea Sweden Corporate 6% 18% 38% 50% 62% 26% Call center Nordea External partners www Direct sales Brokers 27
Slide 28: Combined ratio performance
Combined ratio performance 110 Premium Premium Savings hikes hikes programme 105 100 Smaller 95 adjustments 90 85 80 * 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 • 2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio from 107 to 94 • 201
Slide 29: Executive Management
Executive Management: CEO Tryg A/S & Tryg Forsikring A/S Morten Hübbe Group Executive Management: Tryg Forsikring A/S Country Senior Executive Private Commercial Corporate SE Claims Group Finance People & Lars Bonde Nicklas Larsen* Truls Holm Olsen Per Fornander Birgitte Kartman Tor Magne Lønnum Rep
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: Transformation of Tryg
Transformation of Tryg - From high growth to global slow-down • Growth focus 2005-2009 • Profitability focus 2010- Growth Profitability Growth Profitability • Solidarity in prices • Price differentiation • Cost growth inline with premiums • Ambitious cost agenda • Peace of mind in claims handling •
Slide 32: Key figures 2009-12 and consensus for 2013-14
Key figures 2009-12 and consensus for 2013-14 Consensus In DKKm 2009 2010 2011 2012 2013 2014 Gross premium income 17,390 18,894 19,948 20,314 20,708 21,094 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 33: Appendix
Appendix Follow us on Twitter: @TrygIR
Slide 34: 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 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Slide 35: Commercial
Commercial 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 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Slide 36: Corporate
36 Q 1 50 60 70 80 90 100 Q 1 1,100 1,200 1,300 1,400 09 Q 09 2 Q 09 2 Q 09 3 Q 09 3 Q 09 4 Q 09 4 Q 09 1 Q 1 Gross claims ratio 10 Q 10 2 Q 10 2 Q Corporate 10 3 Gross premium, DKKm Q 10 3 Q 10 4 Q 10 4 Q Q 10 1 1 11 Q Q 11 2 2 11 Q Q 11 3 3 11 Q Q 11 4 4 11 Q Q 11 1 1 12 Q Q 12 2 2 12 Q Q 12 3 3 1
Slide 37: Sweden (Private)
37 Q Q 1 0 100 200 300 400 500 1 60 70 80 90 100 110 09 Q 09 Q 2 2 09 Q 09 Q 3 3 09 Q 09 Q 4 4 09 09 Q Q 1 1 Gross claims ratio 10 10 Q Q 2 2 10 10 Q Q 3 3 Gross premium, DKKm 10 10 Q Q 4 4 10 10 Q Q 1 1 11 11 Q Q 2 2 11 11 Q Q 3 3 Sweden (Private) 11 11 Q Q 4 4 11 Q Q 11 1 1 12 Q Q 12 2 2 12 Q Q 12
Slide 38: Geographical segments
Geographical segments D ri jm enmark oT Norway DKKm Q4 2011 Q4 2012 YTD 2011 YTD 2012 DKKm Q4 2011 Q4 2012 YTD 2011 YTD 2012 Gross premiums earned 2.488 2.456 10,019 9.910 Gross premiums earned 1.991 2,091 7.916 8.239 Technical result 273 536 1,033 1.441 Technical result 84 54 598 1,017 Key ratios K
Slide 39: Economic key figures in Denmark, Norway & Sweden
Economic key figures in Denmark, Norway & Sweden Denmark Sweden % 2012 2013 % 2012 2013 GDP Growth -0.5 1.5 GDP Growth 0.8 0.8 Inflation 2.5 1.7 Inflation 1.0 1.1 Unemployment 6.2 6.5 Unemployment 7.7 8.4 Current account Current account 5.7 4.8 6.4 6.7 balance in % of GDP balance in % of GDP Budget