Tryg A/s · OMXCOP:TRYG
Tryg A/s — Q2 2022 Earnings Presentation
59 slides from Tryg A/s's earnings presentation, Jul 14, 2022
Slide 1: Q2 2022 results
Q2 2022 results Investor presentation
Slide 2: Contents and disclaimer
Contents • Highlights Q2 2022 03 • Premiums and portfolio 08 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 histo
Slide 3: Financial highlights Q2 2022
1 | HIGHLIGHTS Q2 2022 Financial highlights Q2 2022 1 2 3 4 Strong technical result with first Investment income of DKK Q2 DPS of DKK 1.56, up 45% time consolidation of Codan Combined ratio of 79.7 -878m (DKK -757m) and solvency ratio 195 Norway and Trygg-Hansa Extraordinary dividend Ordinary divide
Slide 4: Customer highlights Q2 2022
1 | HIGHLIGHTS Q2 2022 Customer highlights Q2 2022 1 2 Customer satisfaction KPI TryghedsGruppen will pay out a member bonus 86,5 KPI result Q2 2022 • Customer satisfaction score increased from 84 to 85 in Q2 2022 86,0 +1 • In Denmark, the digital customer experience is being adjusted to 85,5 85 85
Slide 5: Private, Commercial, Corporate technical result
1 | HIGHLIGHTS Q2 2022 Higher technical result reflects growth, operational improvements and increased rates DKKm 1,200 1,016 Group technical result 1,902 Private Q2 2022 Q2 2021 pro-forma 1,567 Run-off Q2 2022: DKK 98m or 1.6% (DKK 79m or 1.4% pro-forma) DKKm 435 377 Commercial Q2 2022 Q2 2021 pro-
Slide 6: Status on RSA synergies as per Q2 2022
1 | HIGHLIGHTS Q2 2022 Status on RSA synergies as per Q2 2022 In Q2, Tryg realised synergies of DKK 92m in Targeted and realised synergies (DKKm) line with expectations Q2 2022 Q1 2022 Targeted synergies Targeted benefits 2021-2024 ~900 900 ~370 ~220 650 ~170 ~140 142 97 92 61 15 19 11 36 7 8 3 8 15
Slide 7: Shareholders' remuneration
1 | HIGHLIGHTS Q2 2022 Shareholders’ remuneration Shareholder remuneration since 2017 (DKK) Tryg is announcing a quarterly 3.31 1.65 Dividend up dividend per 45% vs Q2 2021 share (DPS) of Aim for a nominal stable 1.56 which is up some 45% increasing ordinary dividend 6.40 6.60 6.80 7.00 1.07 1.07 3.
Slide 8: Premiums and portfolio
Premiums and portfolio
Slide 9: Premiums up 6.8% compared to Q2 2021 pro-forma
2 | PREMIUMS AND PORTFOLIO Premiums up 6.8% compared to Q2 2021 pro-forma Gross earned premums development (local currencies) Local currencies pro- DKKm Q2 22 Q2 21 pro-forma forma growth (%) Q2 22 6.8 6.0 Private 6,020 5,650 6.8% Commercial 2,305 2,174 6.5% Q2 2022 pro- Q2 2022 pro-forma Corporate
Slide 10: Private & Commercial - average prices moving slightly upwards
2 | PREMIUMS AND PORTFOLIO Private & Commercial - average prices moving slightly upwards House insurance 115 DK NO SE NO DK: General price increases of 4.3% (Q1 0.9%) but also price reductions in few selected highly profitable 110 partner agreements SE SE: 1.5% (Q1 1.4%) increase mainly explained by
Slide 11: Customer retention is generally improving
2 | PREMIUMS AND PORTFOLIO Customer retention is generally improving Private 96 95 DK NO SE 94 DK: Retention increased to 90.7% in Q2 (90.1 in 93 Q2-21) - retention was 91.2% excluding Nordea. 92 Nordea churn more than offset by new sales to 91 DK Danske Bank customers 90 89 NO SE: Almost unchanged
Slide 12: Claims and expenses
Claims and expenses
Slide 13: Underlying claims ratio improving 80 basis points for the Group
3 | CLAIMS AND EXPENSES Underlying claims ratio1 improving 80 basis points for the Group Pro-forma -80bps Group underlying claims 68.2 67.4 ratio at 67.4, 80bps Group better than Q2 2021 pro- underlying forma claims ratio Private underlying claims Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 ratio at 68.6, slightl
Slide 14: Large claims, weather claims and run-off
3 | CLAIMS AND EXPENSES Large claims, weather claims and run-off Large claims1, net DKKm Weather claims1, net DKKm New expected annual level 2022: DKK 800m New expected annual level 2022: DKK 800m 1.200 800 287 196 700 1.000 600 800 500 400 600 125 86 300 400 200 200 100 0 0 Pro-forma Q2 2022 Pro-fo
Slide 15: Expense ratio of 13.9 influenced by good topline growth and tight cost control
3 | CLAIMS AND EXPENSES Expense ratio of 13.9 influenced by good topline growth and tight cost control Expense ratio1 • Investments in digitalisation will partly be financed through 25 efficiency gains 20 • The overall development in expense ratio is likely to remain 15.7 14.0 14.4 14.2 14.1 14.1 14
Slide 16: Investment, capital and targets
Investment, capital and targets
Slide 17: Investments – split in match & free portfolio for the enlarged Group
4 | INVESTMENT, CAPITAL AND TARGETS Investments – split in match & free portfolio for the enlarged Group Splitting up the portfolio ‘risk-wise’ Match portfolio split, DKKbn Free portfolio split, % 21 21 35 24 19 9 Total investments 11 DKK 68.9bn 6 4 1 Denmark Sweden Norway Bonds Inv. Equities High I
Slide 18: New assets have been integrated and aligned to Tryg's approach
4 | INVESTMENT, CAPITAL AND TARGETS New assets have been integrated and aligned to Tryg’s approach Successful conversion and alignment of new assets to Match and Free portfolio split by country our Match and Free portfolio strategy Match portfolio 21 21 Match Q1 communication: “80% already aligned t
Slide 19: Tryg investment return – low risk remains key
4 | INVESTMENT, CAPITAL AND TARGETS Tryg investment return – low risk remains key Key figures investments Q2 2022 Q2 2021 2021 (DKKm) 92 % Free portfolio -944 312 869 Group fixed income Match portfolio -168 19 134 portfolio Income from RSA Scandinavia rating split 3 1 1 1 2 (including cost of curren
Slide 20: Tryg has a well-diversified real estate strategy
4 | INVESTMENT, CAPITAL AND TARGETS Tryg has a well-diversified real estate strategy Direct vs indirect Geography (%) Sector (%) investments (%) Real estate in Denmark and Norway are 35 50 owned directly whereas remaining part are owned through property funds 25 25 80 25 20 10 20 5 5 Denmark EU USA
Slide 21: Solvency position 2022 Q2
4 | INVESTMENT, CAPITAL AND TARGETS Solvency position 2022 Q2 Own funds walk • Solvency ratio based on the Partial Internal Model is 195 (2022 Q1: 184). Tier 2 Additional Tier 1 • Own Funds (OF) is primarily impacted by 17.733 Core Equity Tier 1 430 1.021 3.604 15.902 • Difference between profits an
Slide 22: Tier 1 & Tier 2 instruments
4 | INVESTMENT, CAPITAL AND TARGETS Tier 1 & Tier 2 instruments Tier 1 funds can be maximum 25% of Core Equity Tier 1 • The maximum capacity of additional Tier 1 instruments is a function of the Core Equity Tier 1, which can be up to 25% of the 10,715 Core Equity Tier 1. Tryg has DKK 1,754m of Tier
Slide 23: Solvency position 2022 Q2
4 | INVESTMENT, CAPITAL AND TARGETS Solvency position 2022 Q2 Solvency Capital Requirement build up • The SCR at the end of Q2 was DKK 8,171m 1.692 2.182 95 • Tryg uses a partial internal model where only the insurance risk is modelled internally (that is the non-life and health 4.536 4.393 modules
Slide 24: Solvency ratio historical development
4 | INVESTMENT, CAPITAL AND TARGETS Solvency ratio historical development Both 9M dividends (announced in November) Approval of new partial and Q4 dividend internal model, very (announced with FY strong Q2 result and 899 results) are deducted from dividend decision for Own funds and the FY Own funds
Slide 25: Solvency ratio sensitivities
4 | INVESTMENT, CAPITAL AND TARGETS Solvency ratio sensitivities 200 197 208 197 196 200 195 194 193 194 191 189 193 192 193 194 195 190 182 Q2 + 20% - 20% + 30% - 30% + 20% - 20% + 100 bps - 100 bps + 100 bps - 100 bps + 100 bps - 100 bps + 100 bps - 100 bps + 20% - 20% + 20% - 20% 2022 Equity Equi
Slide 26: Important things to remember in 2022
4 | INVESTMENT, CAPITAL AND TARGETS Important things to remember in 2022 Full consolidation of Codan Norway and Trygg-Hansa RSA Scandinavia intangibles amortization (referred to customer relations) has started in Q2 (as previously has started in Q2. Pro-forma figures published ahead mentioned), this
Slide 27: 2024 strategy and targets
4 | INVESTMENT, CAPITAL AND TARGETS Financial targets for 2024 Technical result DKK 7.0-7.4bn Combined ratio ≤82% Expense ratio ~14% reaffirmed 2024 strategy and targets Return on Own Funds ≥25% will ensure highly attractive RSA Scandinavia Synergies target DKK 900m shareholders’ returns Ordinary di
Slide 28: It is important to know your investment case
4 | INVESTMENT, CAPITAL AND TARGETS It is important to know your investment case ”Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” John D. Rockefeller 28
Slide 29: Q2 2022 roadshows & conferences
5 | ROADSHOWS & CONFERENCES Q2 2022 roadshows & conferences Date Event Participants from Tryg Arranged by Morten Hübbe, CEO 15/08/2022 Copenhagen Roadshow Barbara Plucnar Jensen, CFO Nordea Investor Relations Espen Opedal, Country Manager Norway 19/08/2022 Oslo Roadshow DNB Peter Brondt, IR Manager
Slide 30: Investor Relations
Investor Relations Gianandrea Roberti Peter Brondt Nikolaj Thalbitzer Anna Fricke Vice President, Investor Manager, Investor Relations Senior Analyst, Investor Relations Coordinator, Investor Relations Relations & External reporting +45 22 75 89 04 +45 20 60 57 84 +45 28 15 54 06 +45 20 18 82 67 Pet
Slide 31: Background material
Background material
Slide 32: Why invest in Tryg?
6 | BACKGROUND MATERIAL Why invest in Tryg? High insurance penetration in the Nordics Pre-tax result by division (YE 2020 data) Premiums per capita (USD), 2019 1,712 1,627 1,333 1,306 Non-life Life Banking Other Tryg Topdanmark Alm. Brand Sampo Gjensidige Storebrand Denmark Norway Germany France UK
Slide 33: Tryg at a glance
6 | BACKGROUND MATERIAL Tryg at a glance Gross premium split by products Q2 2022 • Tryg goes back to 18th century. • Very strong brand position especially in Denmark. Motor 11% Workers’ comp • Non-life insurance in Denmark, Norway and Sweden. 11% 33% Health & accident Liability • Approx. 80% retail
Slide 34: Premiums and reserves by lines of business
6 | BACKGROUND MATERIAL Premiums and reserves by lines of business Gross premium by products 2021 Gross claims reserve by products 2021 10% Motor 7% Motor 5% 14% Workers’ comp Workers’ comp 12% 31% 7% Health & accident Health & accident Liability Liability 11% Fire & property - private Fire & proper
Slide 35: Gross premium split by geography
6 | BACKGROUND MATERIAL Gross premium split by geography DK: Gross premium by products 2021 SE: Gross premium by products 2021 4% Motor 2% Motor 11% 3% Workers comp Health and accident 11% 29% 28% Health and accident Liability Liability Fire & property - private Fire & property - private Fire and pr
Slide 36: The run-off cycle
6 | BACKGROUND MATERIAL The run-off cycle Run-off development • Initial assessment of the claims was DKK 18,000 but Tryg reserved for DKK 20,000 adding some 3 years conservatism to best estimate. 2,000 Run-off: +2,000 • At the time of setting up the claims reserves and Claims estimate: -18,000 18,00
Slide 37: Combined ratio development since IPO
6 | BACKGROUND MATERIAL Combined ratio development since IPO 98.8 92.2 93.2 89.0 88.2 88.2 87.7 87.6 85.9 86.8 86.7 85.7 84.4 84.2 84.4 85.1 85.1 84.5 84.5 84.7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Since 10Y 5Y avg. IPO avg. 37
Slide 38: Shareholder remuneration since 2012 (DKK)
6 | BACKGROUND MATERIAL Shareholder remuneration since 2012 (DKK) 9.74 9.71 9.50 9.20 Extraordinary dividend 8.60 Extraordinary buy back 8.45 Ordinary dividend 7.80 3.54 3.31 3.50 1.65 3.40 3.20 2.60 4.281 1.07 6.80 7.00 6.40 6.60 6.00 6.20 5.80 5.20 5.40 1.07 1.56 1.07 1.55 1.07 2012 2013 2014 2015
Slide 39: Structure of the Scandinavian insurance market
6 | BACKGROUND MATERIAL Structure of the Scandinavian insurance market Scandinavia (EUR 23.2bn as at Q4 2020) Denmark (DKK 63.1bn/EUR 8.5bn as at Q2 2021) Tryg Tryg 18.5% If 22.4% Topdanmark 24.3% Topdanmark If 39.8% Länsforsikringar Gjensidige 14.5% Percentage Gjensidige 4.1% Alm. Brand 4.8% 15.7%
Slide 40: Distribution of new sales 2021
6 | BACKGROUND MATERIAL Distribution of new sales 2021 Private 6% 8% Customer services 0% 23% Franchise Outbound 11% Customer service Own sales Online DK 26% 38% 44% Outbound 42% Web and external sales DK Affinity NO SE Atlantica/Bil sport/MC Enter Sales agents Other 16% Web 6% Other 39% 10% 7% 25%
Slide 41: Things that you may not know
6 | BACKGROUND MATERIAL Things that you may not know • Motor insurance prices relatively similar in DK and the UK but cost of the insured good (the car) substantially higher in DK driven by the registration tax for passenger cars (100%-150% of taxable value on new vehicles approx.) • Motor insurance
Slide 42: Things that you may not remember
6 | BACKGROUND MATERIAL Things that you may not remember • Our maximum annual net exposure to a single large Property claim is DKK 100m which falls to DKK 75m in case of a second event and DKK 50m in case of a third/fourth event, maximum exposure is DKK 25m thereafter. This is based on our general r
Slide 43: IBM study from 2007, probably little has changed
6 | BACKGROUND MATERIAL IBM study from 2007, probably little has changed Danish customers either completely or strongly agree Overall I am very satisfied with the F 43 UK 33 services of my insurance company DE 50 DK 72 F 43 My insurance agent only sold me UK 20 insurance coverage that I really neede
Slide 44: Population growth (2000-2021)
6 | BACKGROUND MATERIAL Population growth (2000-2021) Population development in Denmark in ‘1,000 DK 10.1% Population development in Norway in ‘1,000 NO 21.1% 44
Slide 45: TryghedsGruppen and its members' bonus
6 | BACKGROUND MATERIAL TryghedsGruppen and its members’ bonus Denmark's ‘biggest’ family Bonus has a positive effect on retention ‘I expect to be in Tryg next year’ 1 (Largest shareholder) Have heard about Customer bonus 90% Have not heard about Customer Bonus 79% Premiums Retention rate increase b
Slide 46: Organisational and remuneration structure
6 | BACKGROUND MATERIAL Organisational and remuneration structure Organisation chart Remuneration structure CEO Morten Hübbe The Executive Board are remunerated according to Tryg’s remuneration policy: CFO CCO • Base salary COO Barbara Plucnar Johan Kirstein Lars Bonde Jensen Brammer o A fixed car a
Slide 47: Corporate Responsibility governance
6 | BACKGROUND MATERIAL Corporate Responsibility governance Corporate Responsibility Board The Board’s responsibilities includes: • Supporting Executive Board to make Corporate Responsibility-related decisions • Defining the Corporate Responsibility strategy • Defining relevant KPIs and evaluate per
Slide 48: Corporate Responsibility strategy 2024
6 | BACKGROUND MATERIAL Corporate Responsibility strategy 2024 Driving sustainable impact Tryg wants to contribute to a sustainable future and create long-term value for our customers, employees, shareholders and society. We want to to integrate sustainability into every corner of our business. Sust
Slide 49: Environmental, Social and Governance (ESG) data
6 | BACKGROUND MATERIAL Environmental, Social and Governance (ESG) data Climate and environmental data Unit 2021 2020 2019 2018 2017 Total direct and indirect carbon emissions (location-based) Tonnes CO2e 2,082 2,501 5,127 5,386 Tonnes CO2e Total direct and indirect carbon emissions (market-based) 1
Slide 50: Responsible investment
6 | BACKGROUND MATERIAL Responsible investment 2023 KPI 2030 milestone 2021 results All external asset managers are UN PRI signatories ESG is an integrated part of the Percentage of UN PRI signatories 100% investment process across all External managers External managers responsibility integration m
Slide 51: 2021 actual and Consensus 2022-2024
6 | BACKGROUND MATERIAL 2021 actual and Consensus 2022-2024 DKKm 2021 actual 2022 2023 2024 Gross premiums earned 24,137 33.527 37.380 38.636 Technical result 3,709 6.039 6.994 7.498 Investment income 1,008 -718 346 384 Other income and costs -624 -1.906 -1.121 -1.099 Pre-tax 4,093 3.352 6.259 6.811
Slide 52: Appendix
Appendix Follow us on Twitter: @TrygIR
Slide 53: Group
7 | APPENDIX 1 Group Gross premiums Gross premiums Combined ratio DKKm % 24,137 100 25,000 22,653 21,741 20,000 17,963 18,740 90 84.4 85.1 85.1 84.5 84.5 15,000 80 10,000 5,000 70 0 2017 2018 2019 2020 2021 60 2017 2018 2019 2020 2021 Claims ratio, net of reinsurance Expense % ratio % % 80 20 18 75
Slide 54: Private
7 | APPENDIX 1 Private Gross premiums Gross premiums Combined ratio DKKm % 20,000 100 15,386 15,000 13,542 14,347 90 83.0 82.2 83.9 83.8 83.7 10,285 10,937 10,000 80 70 5,000 60 0 2017 2018 2019 2020 2021 50 2017 2018 2019 2020 2021 Claims ratio, net of reinsurance Expense % ratio % % 90 20 80 18 68
Slide 55: Commercial
7 | APPENDIX 1 Commercial Gross premiums Gross(DKKm) premiums Combined ratio (%) 6,000 5,294 100 4,753 4,930 5,000 4,397 3,862 90 4,000 82.7 83.8 83.7 83.8 80 78.2 3,000 2,000 70 1,000 60 0 2017 2018 2019 2020 2021 50 2017 2018 2019 2020 2021 Claims ratio, net of reinsurance (%) Expense % ratio (%)
Slide 56: Corporate
7 | APPENDIX Corporate* Gross premiums Gross(DKKm) premiums Combined ratio (%) 6,000 110 5,000 100.1 100 3,852 90.0 91.8 4,000 3,471 3,500 3,376 3,457 88.0 89.4 90 3,000 80 2,000 70 1,000 0 60 2017 2018 2019 2020 2021 50 2017 2018 2019 2020 2021 Claims ratio, net of reinsurance (%) Expense % ratio (
Slide 57: Geographical combined ratio
7 | APPENDIX Geographical combined ratio Denmark % Sweden % % 100 100 95.2 92.0 90 90 88.5 88.3 85.1 81.3 82.7 80.7 80.0 80.4 80 80 70 70 60 60 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Norway % 100 93.1 92.7 90 87.9 87.7 87.2 80 70 60 2017 2018 2019 2020 2021 57
Slide 58: Tryg has a long and proud history
2018 Tryg has a long and proud history Tryg receives the final approval of 2005 the Alka TrygVesta is acquisition from the listed on the Danish authorities 1731 OMX Nordic Stock Kjøbenhavns Brand, the oldest component 1995 Exchange in of Tryg is established Tryg acquires Baltica, and operates under
Slide 59: Economic key figures
7 | APPENDIX Economic key figures Denmark Norway % 2020 2021 2022E 2023E % 2020 2021 2022E 2023E GDP growth -2.1 4.7 3.5 1.0 GDP growth -2.3 4.2 3.5 2.0 Inflation 0.4 1.9 5.0 2.4 Inflation 3.0 1.7 2.9 2.6 Unemployment 4.6 3.6 2.8 3.2 Unemployment 5.0 3.1 1.8 1.7 Current account Household balance in