q3 2020 results - tryg.com · customers with 29% in q3 2020. tryg expects to see a positive...
TRANSCRIPT
Q3 2020 results
Investor presentation
Contents
2
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, financial condition, cash flows, business strategy, plans and future objectives
can generally be identified by terminology such as “targets”, “believes”, “expects”, “aims”,
“intends”, “plans”, “seeks”, “will”, “may”, ”anticipates”, “continues” or similar expressions.
A number of different factors may cause the actual performance to deviate significantly
from the forward-looking statements in this presentation including but not limited to
general economic developments, changes in the competitive environment, developments in
the financial markets, extraordinary events such as natural disasters or terrorist attacks,
changes in legislation or case law and reinsurance.
We urge you to read our annual report available on tryg.com for a discussion of some of
the factors that could affect our future performance and the industry in which we operate.
Should one or more of these risks or uncertainties materialise or should any underlying
assumptions prove to be incorrect, our actual financial condition or results of operations
could materially differ from that described herein as anticipated, believed, estimated or
expected.
We are not under any duty to update any of the forward-looking statements or to conform
such statements to actual results, except as may be required by law.
• Highlights Q3 2020 3
• Premiums and portfolio 9
• Claims and expenses 13
• Investment, capital and targets 19
• Roadshows & Conferences 28
• Background material 29
• Appendix 47
•Technical result of DKK 980m driven by good top-line development and improved core business
•Investment income of DKK 237m characterized by highly positive equity markets and narrowing credit spreads
•Solvency ratio of 214 at the end of Q3, strong organic capital generation drives the move from 193 in Q2
Pre-tax profit of DKK 1,150m (DKK 779m) driven by:
•Weather claims at 1.1%, large claims at 1.6%, run-off result at 4.7%
•Private underlying claims ratio 20bps better than Q3 19, Group underlying claims ratio 60bps better than Q3 19
•Expense ratio of 14.1 (13.9) - guidance for 2020 unchanged
•“FY 2020 underlying claims ratio expected to be better than 2019”
Technical result of DKK 980m (DKK 870m)
• Positive investment result as a result of highly positive equity markets and narrowing credit spreads
•Free portfolio and Match portfolio both reported a good performance
Investment income of DKK 237m (DKK -29m)
•In September 2020, TryghedsGruppen paid out a member bonus for the fifth consecutive year. The bonus corresponds to 8%
of premiums paid for 2019 as per previous years.
TryghedsGruppen approved members’ bonus for 2020
Financial highlights Q3 2020
3
- Higher technical result of DKK 980m, good top line development and improved core business- Investment income of DKK 237m driven by positive equity markets and narrowing credit spreads- Solvency ratio of 214, as mentioned on March 27 FY dividend decision as opposed to quarterly in 2020
Pre-tax profit (DKKm)
Combined ratio
Expense ratio
1,150
Q3 2020 Q3 2019
Q3 2020 Q3 2019
84.482.7
13.914.1
Q3 2020 Q3 2019
4
• Transactional Net Promoter Score (TNPS) of 71 (67)
• Number of products per customer increased
• In September, TryghedsGruppen paid out the member
bonus for the fifth year in a row
• Awareness of the member bonus was unchanged for non-
customers with 29% in Q3 2020. Tryg expects to see a
positive awareness of the member bonus in Q4 following the
payment of the member bonus in the Autumn
Number of products per customer
TNPS
Customer highlights Q3 2020
4.0
Q3 2020 Q3 2019 Target 2020
3.9
3.8
Q3 2019Q3 2020 Target 2020
Group (DKKm)
Technical result higher than Q3 2019
5
Q3 2020 Q3 2019
Private, DK & NO (DKKm) Commercial, DK & NO (DKKm)
Corporate (DKKm) Sweden (DKKm)
• Private – Run-off Q3 2020: DKK 31m or 1.0% (DKK 14m or 0.5%)
• Commercial – Run-off Q3 2020: DKK 69m or 6.2% (DKK 93m or 8.6%)
• Corporate – Run-off Q3 2020: DKK 114m or 11.6% (DKK 123m or 11.9%)
• Sweden – Run-off Q3 2020: DKK 56m or 12.5% (DKK 49m or 11.5%)
Q3 2020 Q3 2019 Q3 2020 Q3 2019
Q3 2019Q3 2020 Q3 2019Q3 2020
MotorTravel Property
+23.9%
+1.5%
-8.5%
Number of claims NO (‘000) Financial impact Q1-Q3 2020 Number of claims DK (‘000)
COVID-19, helicopter viewTra
vel in
sura
nce
Moto
r, C
onte
nt,
accid
ent
etc
Gro
ss i
mp
act
Rein
sura
nce
Expenses
Investm
ent
Net
technic
al re
sult im
pact
To
tal C
OV
ID
-19
im
pact
6
1 2 43
Total negative COVID-19 YTD impact including investments losses and large impact from travel expenses especially in Q1
Very high level of customer contacts with high customer satisfaction
High level of travel claims to some degree offset by lower frequencies for other business lines
After summer holidays, COVID-19 cases increased both in Denmark and Norway
PropertyTravel Motor
+92.7%
+3.3%
+10.9%
2019
2020
2019
2020
Targeted benefits 2019-2021
• Full run rate synergies impact in 2021 of DKK 300m
• 50% impact expected in 2020
• DKK 45m achieved in Q3 2020
• DKK 19m from “lower” claims using Tryg procurement for Alka
• DKK 16m from cost benefits especially related to staff functions
• DKK 10m revenue synergies through cross selling to Alka customers using Tryg agent model
7
Claims Revenue optimisation
and commercial best
practice
Cost optimisation Total
Realised benefits and targeted benefits 2021 (DKKm)Alka merger benefits by category 2021 (DKKm)
2019 2020 2021
Alka synergies status update
35 30 20
85
Claims Total synergiesRevenueCost
4654
30
130
Realised synergies Q3 2020
Realised synergies Q1-Q2 2020
Targeted synergies 2020
Targeted synergies 2021
Value of Tryg since IPO
Strong focus on shareholders’ remuneration
8
Aim for a nominal stable increasing ordinary dividend (annual)
High profitability and low growth implies limited increase in capital requirement
Shareholders’ remuneration
Shareholder remuneration since 2012
Share price performance since IPO
Dividend and buy
back since IPO
October 2005 (IPO) Value of Tryg today
Tryg moves to FY dividend decision
for 2020
8.45
2.60
20132012
6.205.20
3.20
5.40 5.80
3.503.40
2014
3.50
6.00
2015 2016
3.30
2017
6.40
2018
1.65
6.80
2019
6.60
Extraordinary dividend
Extraordinary buy back
Ordinary dividend
-100,00
0,00
100,00
200,00
300,00
400,00
500,00
600,00
700,00
800,00
900,00
Tryg Euro insurance index
Premiums and portfolio
10
DKKm Q3 2020 Q3 2019Local currencies
Q3 2020Local currencies
Q3 2019
Private 3,167 3,055 6.7% 8.6%*
Commercial 1,118 1,083 5.6% 4.8%*
Corporate 990 1,032 -0.9% 4.5%
Sweden 443 422 2.1% 5.1%
Group 5,719 5,583 4.9% 6.8%
Group premiums up 4.9% in Q3
4.9
Q3 2020
6.8
Q3 2019 ex Alka
Gross earned premums development (local currencies)
Group premiums reported a 4.9% growth in local currencies
Private lines reported a 6.7% growth, impacted by strong partner agreements and independent agents
Commercial lines
reported a 5.6%
impacted by strong
organic growth in
Denmark and price
initiatives for larger
Commercial clients in
Norway
Corporate growth -0.9% - high acceptance of price hikes (avg. 10%) in Denmark while top-line fall in Norway due to price hikes (avg. 12%)
Sweden increased by 2.1% partly driven by price adjustments for motor insurance
* Excluding Alka
11
• DK: 2.7% (Q2 2.6%) positive development reflects price adjustments and some change in vehicle mix towards larger cars
• NO: 2.5% (Q2 1.9%) positive development reflects underlying price adjustments. Avg Motor price is higher in Norway primarily reflecting different type of cars
• DK: 2.8% (Q2 2.6%) positive development reflects price adjustments
• NO: 0.8% (Q2 0.5%) partly reflected in large partner agreements negotiation
Private - average prices
Q3
19
Q3
15
Q3
14
Q2
11
Q4
11
Q1
20
Q1
13
Q2
12
Q1
15
Q3
13
Q3
16
Q1
14
Q1
16
Q1
17
Q3
17
Q1
18
Q3
18
Q1
19
Q3
20
Average price Denmark Norway
House insurance 5,300 6,100
Q3
12
Q3
14
Q1
11
Q1
15
Q1
14
Q3
11
Q1
12
Q1
13
Q3
13
Q1
16
Q3
15
Q3
16
Q1
17
Q3
17
Q1
18
Q3
18
Q3
20
Q1
19
Q3
19
Q1
20
DK NO
NODK
Mo
tor i
nsu
ran
ce
Ho
use i
nsu
ran
ce
Average price (index 2011 = 100)
Average price Denmark Norway
Motor insurance 4,700 6,200
Average price (index 2011 = 100)
Tryg calculate the increases as the average price last four quarters divided by average prices previous four quarters
Customer retention remains at very high levels
12
• DK: customer retention stable at 88.4% (88.6%)
• NO: customer retention at 89.3% (88.7%) showing a significant improved trend
• DK: Retention fell to 90.5% (91.7%) driven by outflow of customers from the Nordea agreement - retention was 91.5% excluding Nordea
• Nordea churn more than offset by new sales to Danske Bank customers
• NO: customer retention up to 88.0% (87.1%) highest level in 10 years
Q3
17
Q1
16
Q1
13
Q3
15
Q3
13
Q3
16
Q1
14
Q3
14
Q1
15
Q1
17
Q1
18
Q3
18
Q1
19
Q3
19
Q1
20
Q3
20
DK NO
Q3
18
Q1
13
Q3
17
Q1
14
Q3
13
Q3
14
Q1
15
Q3
15
Q1
16
Q3
16
Q1
17
Q1
18
Q1
19
Q3
19
Q1
20
Q3
20
DK NO
Priv
ate
Com
mercia
l
Claims and expenses
Claims ratio, net (Sweden)
Claims ratio, net (Corporate)
Claims ratio, net (Commercial DK & NO)
Group underlying claims ratio at 72.1, 60bps better than Q3 2019
Private underlying claims ratio at 68.9, 20bps better than Q3 2019
“Expected FY 2020 underlying claims ratio better than FY 2019”
Going forward a slightly lower improvement in Private is expected because of strong
growth offset by more improvements in particular in the Corporate segment
14 * Underlying development is adjusted for large claims, weather claims, run-off, interest and COVID-19 impacts.Due to some rounding there may be slight differences in the reported underlying claims ratio
Underlying claims ratio improving
Group underlying claims ratio
Private underlying claims ratio
Q2
18
Q1
18
Q3
17
Q3
16
Q4
16
Q1
17
Q4
17
Q2
17
Q3
18
Q4
18
Q1
19
Q2
19
Q3
19
Q4
19
Q1
20
Q2
20
Q3
20
Q3
18
Q3
16
Q2
18
Q3
17
Q4
16
Q1
18
Q2
17
Q1
17
Q4
17
Q4
18
Q1
19
Q2
19
Q3
19
Q4
19
Q1
20
Q2
20
Q3
20
72.7
Q3 19 Q4 19
72.1
Q1 20 Q2 20 Q3 20
Q4 19Q3 19 Q1 20 Q3 20Q2 20
68.969.1
Q1
17
Q3
16
Q2
19
Q4
16
Q2
18
Q2
17
Q1
18
Q4
17
Q3
17
Q3
18
Q4
18
Q1
19
Q3
19
Q4
19
Q1
20
Q2
20
Q3
20
COVID-19 cases and recent development in DK and NO
• Ban on gatherings of > 50 people
• Restaurants and bars must close by 22:00
• Wear face masks on public transportation
• Working from home is encouraged
On 15th September, Denmark tightened its restrictions
to limit the spread of COVID-19 in 17 municipalities in
the Copenhagen area. Few days later, it was decided to
apply the restrictions nationwide.
COVID-19 restrictions in DK
• Ban on events of > 200 people
• Ban on private gatherings of > 20 people
• Ban on serving alcohol after midnight
• Working from home is encouraged
Norway tightened its restrictions to limit the spread
of COVID-19 on 7th August
* Local restrictions in Bergen and Oslo: Private gatherings of max
10 people, restaurants and bars are encouraged to register guests
and wearing face mask on public transportation is advised
COVID-19 restrictions in NO
COVID-19 restrictions due to fear of ‘second wave’ in DK and NO
Sources: Danish Ministry of Health (ssi.dk), Norwegian Institute of Public health (fhi.no) and the Norwegian Directorate of Health (helsedirektoratet.no)15
COVID-19 cases per day in Norway
COVID-19 cases per day in Denmark
COVID-19 financial impact
Gross Q1 Q2 Q3 YTD
Group
Travel -255 10 64 -181
Motor 35 33 10 78
Property 15 11 14 40
Accident 15 19 7 41
Other 10 21 -23 8
Gross Insurance impact -180 95 72 -13
Reinsurance
Travel 140 140
Technical result impact beforeexpenses
-40 95 72 127
COVID-19 related expenses* -20 -18 0 -38
Investment result -980 541 237 -202
Total impact from COVID- 19 -1.040 618 309 -113
• The impact is calculated by comparing to a normalised level of frequency
and average claims level for specific lines of business
• The Q3 net impact was a positive DKK 72m primarily driven by lower
claims frequencies in different lines of businesses.
• After summer holidays, the number of COVID-19 cases increased both in
Denmark and Norway. In order to avoid this development, Public
authorities took a number of measures to reduce social contact in the
public domain
• Financial markets have been severely affected by the breakout of COVID-
19 in 2020. Q1 was characterized by severe losses while financial
markets rebounded in Q2 and Q3.
• As disclosed in Tryg's newsletter (August 2019), the annual investment
return is expected to be between DKK 0-200m annually
16
* COVID-19 expenses are related to IT, admin and facility costs
Large claims, net DKKm Weather claims, net DKKm
Claims reserves discounting rate
17
Expected annual
level 2020: DKK 600m
Expected annual
level 2020: DKK 550m
2014 20162015 2017 2018 2019 Q3 2020Q3 2019
550
2014 Q3 2020Q3 20192015 2016 2017 2018 2019
600
2.5
1.0
0.0
0.5
2.0
1.5
3.0
Q3 2019
1.0
2015
0.9
Q3 20202016
1.0
2017
1.1
2018
0.7
2019
0.5
0.2
6.55.4
Q3 202020182016
6.7 7.0
2015 2017
5.5
2019 Q3 2019
5.0 4.7
Large claims, weather claims and run-off
Run-off net, effect on combined ratio
18
• Efficiency initiatives in 2017 brought down overall costs
• Investments in digitalisation will partly be financed through efficiency gains
• Expense ratio target for 2020 around 14%
• Alka synergies of DKK 16m helped overall costs level
• Number of employees increased
• Increase in business volume
• Increase in distribution power in general
• Guarantee expansion in Europe
Expense ratio of 14.1 in line with 2020 target
16.517.3
CommercialPrivate
13.9
Corporate Sweden
14.1
8.910.3
16.5 16.6
Q3 2019
Q3 2020
2011 20162014 20152012 2013 201920182017 Q3 2020
4,0763,913
3,703 3,5993,359 3,264 3,373
4,0274,151
4,309
15.314.4
2015 2018
15.7
20172016
14.0 14.2
2019 Q3 2019 Q3 2020
13.9 14.1
Expense ratio by business areas FTE development
Expense ratio
Investment, capital and targets
Free portfolio split
Total investments
DKK 41.2bn
Match portfolio
DKK 30.1bn
Free portfolio
DKK 11.1bn
Splitting up the portfolio ‘risk-wise’DKKm
Denmark Norway
Investments – split in match & free portfolio
20
Match portfolio split
Inflation linked bonds
Bonds
Equities
Inv. Property
Emerging markets
High yield
Investment grade
Equity portfolio split by sectorsCorporate bonds portfolio (DKK 3.0 bn) rating split*
Investment return – low risk remains key
21
Key figures investments (DKKm) Q3 2020 Q3 2019 2019
Free portfolio 266 97 857
Match portfolio 40 -69 -42
Other financial income and expenses -69 -57 -236
Total investment return 237 -29 579
2%
2%
1%2%3%
OTHER
HEALTH CARE
INFORMATION TECHNOLOGY
ENERGY
FINANCIALS
CONSUMER DISCRETIONARY
INDUSTRIALS
CONSUMER STAPLES
COMMUNICATION SERVICES
MATERIALS
REAL ESTATE
UTILITIES
AAA
A
AA
BB
BBB
B
CCC
Other
Group fixed income portfolio rating split
2%2%
2%
1%
A
AAA
BB
BBB
AA
B or lower
* Credit bonds in the quarterly report are shown as DKK 2.2bn but there is anapproximately additional DKK 800m split between bonds and diversified alternatives
• Total net investment result of DKK 237m in Q3, driven by a strong free
portfolio return
• Free portfolio returned approximately 2.4% with equities returning 6.6%
and high-yield bonds returning 4.1%
• Match portfolio benefitted primarily by narrowing Nordic covered bonds
spreads
• Other financial income and expenses at DKK -69m
Solvency position Q3 2020
22
• Solvency ratio based on the Partial Internal Model is 214 (Q2 2020: 193).
• Own Funds (OF) is primarily impacted by
• Strong Q3 organic capital generation of DKK 930m
• “Other” primarily pertains to small decrease in intangibles
Solvency capital requirement (SCR) is primarily impacted by
• Very small increase in insurance risk
• Increased equities exposure neutralized by using options.
• Solvency II Standard Formula SCR is DKK 6,353m at the end of Q3 while the solvency ratio is 156 (Q2 2020: 143)
• As mentioned on March 27 Tryg has decided to move to a full-year dividend decision for 2020. There is no accruals of dividends in the own funds on a quarterly basis
• The Danish FSA has explained that a ratio lower than 125 (partial internal model) would result in increased surveillance
• Tryg’s solvency ratio is mostly a function of net profits (+) and dividends (-). Underlying development should remain pretty stable
Own funds walk
Solvency capital requirement walk
8,800
Profit
2,277
1,044
9,774
5,479
2,282
Own Funds
Q2´20
Other Own Funds
Q3´20
1,030
6,462
44
Tier 2
Additional Tier 1
Core Equity Tier 1
-3
SCR Q2´20 Market Other
14
SCR Q3´20
4.5534.565
• 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
Core Equity Tier 1. Tryg has DKK 1,030m of Tier 1 funds so
currently the company has a “capacity” of DKK 586m for Tier 1
instruments.
• Tryg has DKK 2,444m (including DKK 800m of Norwegian Natural
perils Pool) of Tier 2 funds so currently some DKK 161m can not
be counted in the company’s own funds as it exceeds the limit of
50% of the SCR.
• The postponement of the dividend decision means that “all else
being equal” the Core Equity Tier 1 increases as it includes the
profit without the dividend payment.
Tier 1 & Tier 2 instruments
23
Tier 2 funds can be maximum 50% of the SCR
Tier 1 funds can be maximum 25% of Core Equity Tier 1
SCR Q3´20 DifferenceTier 2 max
capacity
2,444
Tier 2 funds
4,565
2,282
-161
Additional Tier
1 max capacity
586
Difference
6,462
1,6151,030
Core Equity
Tier 1 Q3´20
Tier 1 funds
24
Q2
2017
Q1
2016
Q2
2016
Q1
2017
Q3
2016
Q4
2017
Q4
2016
Q1
2020
Q3
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019
281
Q2
2019
Q3
2019
Q4
2019
Q2
2020
Q3
2020
283292 291
Solvency ratio adjusted for the DKK 4bn to fund the Alka acquisition
Final approval of the Alka acquisition from the Danish authorities implying booking of goodwill
Solvency ratio historical development
196 197207 206
DKK 4bn raised for the Alka acquisition
Approval of new partial internal model, very strong Q2 result and dividend decision for 2020 moved to year-end as opposed to quarterly
Positive development driven by strong organic capital generation and roughly flat solvency capital requirement
Equity
Solvency ratio sensitivities
25
• The Solvency II ratio shows the highest sensitivity to spread risk for covered bonds
• Assumption is for a 100bps widening/narrowing of our entire fixed income book (Danish government bonds, Danish mortgage bonds, Norwegian government bonds, high yield etc.)
• Biggest spreads sensitivity (by far) in the fixed income area is towards covered bonds. Corporate and Government bonds sensitivities are low as exposure to these assets classes is low
• Interest rate risk is very low as function of our matching strategy
-20% +100 bps-20%Q3 +20%+20% -30%+30% -100 bps +100 bps -100 bps +100 bps -100 bps 100 bps -100 bps -20%+20% +20% -20%
2020 Equity Property Interest Spread(Covered)
Spread(Corporate)
Spread(Government)
NOK/DKK SEK/DKK
Targets and outlook
26
✓ New financial targets announced at 2017 CMD
✓ Members’ bonus of 8% in September 2020.
✓ Price increases to offset claims inflation
Customer targets, 2020
TNPS 70
No. of products per customer +10 %
ROE after tax (%)
✓ 2020 topline growth above GDP level
✓ 2020 normalised tax rate 22-23%
✓ Alka acquisition will result in annual depreciation of customer relations
of DKK127m within a 5 to 7 years period. Solvency position (hence
dividend capacity) not impacted by the P&L charge
ROE as reported
Technical resultDKK 3.3bn
Combined ratio≤ 86
Expense ratio
~ 14
ROE after tax
≥ 21%
Financial targets, 2020
Target post Alka acquisition
* ROE target ≥ 21% suspended for the FY2020 due to extremely negative capital markets development in Q1
27
”Do you know the only thing that gives me pleasure?
It’s to see my dividends coming in.”
John D. Rockefeller
It is important to know your investment case
Date Place Participants from Tryg Arranged by
09/10/2020 Copenhagen roadshow
Morten Hübbe, CEO
Barbara Plucnar Jensen, CFO
Investor Relations
SEB
20/10/2020 London virtual roadshowMorten Hübbe, CEO
Gianandrea Roberti, Head of Investor RelationsNordea
27/10/2020 Brussels virtual roadshow Gianandrea Roberti, Head of Investor Relations DNB
23/11/2020Credit Suisse Insurtech
conference
Barbara Plucnar Jensen, CFO
Peter Brondt, IR ManagerCredit Suisse
23/11/2020Carnegie Cyber Security
seminar
Hans Arnum, Head of Commercial DK
Investor RelationsCarnegie
02/12/2020 Copenhagen winter seminarMorten Hübbe, CEO
Peter Brondt, IR ManagerDanske Bank
28
Q3 roadshows & conferences
Background material
Claims Excellence
DKK 600m in claims cost reduction
Digital Empowerment
of Customers
DKK 100mSTP on claims: 50%Self-service: 70%
Tryg 2018 – 2020:
Strengthening the core, while embracing the future Product & Service
Innovation
+DKK 1bn in new products by 2020+
Distribution Efficiency
DKK 150m in technical result impact
Financial targets 2020
• Technical result: DKK 3.3bn
• Combined ratio: ≤86
• Expense ratio: ~14
• ROE: ≥21%
Customer targets 2020
• TNPS: 70
• Number of products per customer: +10%
Dividend policy
• Targeting a nominal, stable and increasing dividend
• Extraordinary dividend to further adjust the capital structure
Long term profitable growth and attractive shareholder value creation
30
Alka acquisition
DKK 300m in synergies with full run-rate impact in 2021
Tryg’s equity story – a leading Nordic non-life insurer
Why invest in Tryg?
31
Pre-tax result by division (YE 2018 data)
Tryg is a dividend stock (DKK)Motor combined ratios Nordics vs international
Total yield (dividend and buy backs / market cap) at year end
High insurance penetration in the Nordics
Premiums per capita (USD), 2017
1.519
Denmark Norway UKGermany France Italy
1.296
1.557
1.224
Alm. BrandTryg GjensidigeTopdanmark Sampo Storebrand
Other
Non-life
Life
Banking
20122010 20152011 20142013
Norway
UK
Germany
Denmark
Italy
20192012 2016
4.5%
6.6
2013 2018
6.2%
2014 2015 2017
9.2%
5.2
8.3%
5.4
6.6%
5.8
6.9%
6.0
7.6%
6.2 6.4
4.0%
6.8
DPS (right axis)
Total yield
Gross premium split by products 2019
Gross premium split by products 2019
Tryg at a glance
32
• Tryg goes back to 18th century.
• Very strong brand position especially in Denmark.
• Non-life insurance in Denmark, Norway and Sweden.
• Approx. 80% retail business.Norway
Market position: #4Market share: 13.1%
CR in Q3 2020: 85.7 %
SwedenMarket position: #5Market share: 3.5%
CR in Q3 2020: 79.1 %
DenmarkMarket position: #1
Market share: 22.5%CR in Q3 2020: 81.9 %
Retention rate - Private
Retention rate - Commercial
31.0%
5.0%
4.0%
8.0%
13.0%
25.0%
14.0%
Workers’ comp
Motor
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Other
Private
Sweden
Corporate
Commercial
Q3
16
Q1
16
Q3
15
Q1
13
Q3
13
Q1
14
Q3
14
Q1
15
Q1
19
Q1
17
Q3
17
Q1
18
Q3
18
Q3
19
Q1
20
Q3
20
Q1
14
Q1
13
Q3
16
Q1
17
Q1
16
Q3
15
Q1
15
Q3
13
Q3
14
Q3
17
Q1
18
Q3
18
Q1
19
Q3
19
Q1
20
Q3
20
DK NO
Run-off net by products Q3 2020
Gross claims reserve by products 2019Gross premium by products 2019
Premiums and reserves by lines of business
33
31.0%
4.0%
5.0%
14.0%
25.0%
8.0%
13.0%
Liability
Motor
Fire & property - private
Workers’ comp
Health & accident
Fire & property - comm.
Other
36.0%
14.0%
22.0%
7.0%
7.0%
9.0%
5.0%Motor
Workers’ comp
Health & accident
Liability
Fire & property - private
Fire & property - comm.
Other
5.0%
16.0%
18.0%
31.0%
24.0%
-7.0%
13.0%Motor
Workers’ comp
Liability
Health & accident
Other
Fire & property - private
Fire & property - comm.
Run-off net by products Q3 2020
16.0%
32.0%
4.0%
15.0%6.0%
19.0%
8.0%
Motor
Workers’ comp
Liability
Health & accident
Fire & property - private
Fire & property - comm.
Other
DK: Gross premium by products 2019
Gross premium split by geography
34
Motor
Liability
Workers comp
Fire & property - private
Health and accident
Fire and property comm
Tourist assistance
Other
SE: Gross premium by products 2019
Motor
Fire & property - private
Health and accident
Fire and property comm
Liability
Other
NO: Gross premium by products 2019 Run-off net by products 2019
3%
Motor
Liability
Health and accident
Workers comp
Fire & property - private
Tourist assistance
Fire and property comm
Other
1%
Fire and property comm
Motor
Liability
Workers comp
Fire & property - private
Health and accident
Other
The run-off cycle
35
• Initial assessment of the claims was DKK 18,000 but
Tryg reserved for DKK 20,000 adding some
conservatism to best estimate.
• At the time of setting up the claims reserves and
booking the claims in the P&L the Loss ratio (hence the
combined ratio) is worse than what should be if our
initial assessment is correct.
• After three years (approx. and using average for Tryg
Group) the DKK 2,000 added for conservatism comes
back in the P&L as a positive run-off gain or reserves
releases. All the above assumes that initial assessment
was correct and nothing has changed in the three years
period.
• Figures in the example above are purely illustrative.
18.000
2.000
-20.000
3 years
Claims estimate: -18,000
Run-off: +2,000
Claims buffer: -2,000
Run-off development
We assessed the claimat DKK 18,000 but
reserve for DKK 20,000
36
2005 2008
86.8
20122006
88.2
20092007 2011 Since
IPO
2013
98.8
20162014 2015 2017 20182010 2019
92.2
85.9
10Y
avg.
89.0
5Y avg.
84.4
93.2
88.2 87.784.2
86.784.4 85.1
88.0 88.085.685.1
Combined ratio development
37
Percentage
Nordic (EUR 26.3bn as at Q4 2018)
4.7%
10.2%
15.8%43.0%
8.1%
9.5%8.7%
If
Topdanmark
Tryg
Gjensidige
Codan
Länsforsikringar
Other
Denmark (DKK 57.8bn/EUR 7.8bn as at Q3 2019)
22.5%
16.2%
3.7%
5.5%
9.2%
9.7%
21.5%
5.0%
6.7%
Tryg
Topdanmark
If
Codan
Gjensidige
Alm. Brand
LB Forsikring
GF forsikring
Other
Sweden (SEK 90.4bn/EUR 8.5bn as at Q2 2020)
3.5%
30.1%
18.1%
16.2%
13.8%
1.9%
16.4%
Moderna (Tryg)
If
Länsforsikringar
Codan
Gjensidige
Folksam
Other
Norway (NOK 65.6bn/EUR 6.2bn as at Q2 2020)
13.1%
4.2%21.4%
25.9%
15.0%
3.3%2.1%
3.4%
2.2%
9.5%Tryg
If
Gjensidige
Fremtind
Eika
Protector
Storebrand
Frende
Codan
Other
Structure of the Nordic insurance market
38
DK
DK
NO
NO
SE
SE
4%
Sales agents
Customer services
Outbound
Affinity
Nordea
Online DK
Danske Bank9%
Web
Franchise
Enter
Customer service
Outbound
Nordea
7%
7%
Own sales
Atlantica/Bil sport/MC
Other
Web and external sales
NODK
Sales agents
Customer centre
Partner
Brokers
Customer centre
Sales agents
Franchises
Brokers
Own sales
Brokers Brokers
Own sales
100%
Brokers
Priv
ate
Com
mercia
lC
orp
orate
Distribution of new sales 2019
Things that you may not know
39
• 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 remains a highly attractive business in Scandinavia unlike many European
countries.
• In Oslo, it costs approx. NOK 5,000 per month to hire a dog walker for 5 weekly walks, each
walk is minimum 60 minutes.
• In Sweden it is illegal to leave a dog home alone more than six hours, the dog has to be out
at least every six hours during the day.
• Pet insurance premiums totalled SEK 3.3bn at the end of September 2015 in Sweden but that
includes horses as well.
• Tryg believes that Pet insurance remains an attractive growth segment.
• Child insurance is an important product in Sweden with total market premiums above SEK
2.5bn, the same product is virtually non-existent in Denmark and Norway. We believe this
will gradually change and plan to leverage on our Skandia child insurance acquisition.
• In 2014, Tryg bought Securator reinforcing its leading position in the Nordic market for
product and extended warranty insurance, a market which is estimated at more than DKK
2bn.
Things that you may not remember
40
• 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 reinsurance programme.
• Our maximum net exposure for weather claims is DKK 150m per event. The upper
limit of the programme is DKK 7.25bn, which is statistically sufficient to cover at least
a 250-year event.
• We have bought an additional ‘horizontal’ reinsurance programme which will cover any
weather claims in excess of DKK 300m up to DKK 600m. Weather claims have to be at
least DKK 20m to end in the ‘horizontal’ agreement.
• Local accounting rules driven by Danish FSA means that all assets are marked to
market. This is different from Nordic/International peers where many fixed income
portfolios are hold to maturity and/or the marked to market hits the NAV and not the
P&L. The unrealised gains and losses item does not show up in the P&L of some of our
Nordic peers (as most bonds are hold to maturity) or hits the NAV as opposed to the
P&L.
41
• 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
• Claims: my insurance company in
uncomplicated and helpful way
• I have full confidence in my personal
insurance agent
• My insurance is more cost effective than
most other insurances
Danish customers completely and strongly agree
Source: IBM Institute for Business Value and I.VW University of St. Gallen 2007 Insurance Study
IBM study from 2007, probably little has changed
Population development in Norway in ‘1,000
Population development in Denmark in ‘1,000
DK 9%
NO 19%
42
Population growth (2000-2019)
Organisational and remuneration structure
43
Organisation chart
Remuneration structure
The Executive Board are remunerated according to Tryg’s remuneration policy:
• Base salary
• Pensiono 25% of the base salary
• Variable pay
o Up to 50% of the base salary including pension
o The variable pay element is a Matching Shares
Programme:
The Executive Board may buy Tryg shares (so-called
investment shares) at market price for a predefined
amount. Four years after the purchase, Tryg will grant
one matching share per investment share free of charge.
Download Tryg’s statutory corporate governance report and remuneration policy on tryg.com
CEOMorten Hübbe
CFOBarbara Plucnar
Jensen
COOLars Bonde
CCOJohan Kirstein
Brammer
Private DK
Commercial DK
Corporate DK & Tryg Garanti
Claims DK
Private NO
Commercial NO
Corporate NO
Claims NO
Private SE & Affinity
Corporate SE
Corporate Responsibility in Tryg
44
Corporate Responsibility contributes to long-term value creation
Corporate Responsibility BoardChair: CFO, Barbara Plucnar Jensen
Procurement/ Sourcing HR Facilities Investments
Claims Private Commercial Corporate
Legal/ Compliance
Corporate Responsibility team
CommunicationsInvestor Relations
Tryg’s Corporate Responsibility 2020 strategy is aligned with our corporate strategy and purpose: As the world changes, we make it easier to be tryg*.
• Tryg has published an independent Corporate Responsibility report 2019 on tryg.com
• Our four strategic focus areas are: Actively creating peace of mind, Climate & environment, Responsible workplace and Business etchics.
• Tryg has established a Corporate Responsibility Board to ensure governance throughout the organisation.
45
Corporate Responsibility in TrygUN Sustainable Development Goals
Tryg has a direct and indirect impact on the 17 SDGs.
However, we have focused on SDGs where we have a direct impact and pinpointed two specific goals for which we have defined Key Performance Indicators (KPIs).
Strong opportunity
Low opportunity
Indirect impact
Direct impact
41% women in management positions in 2020
2%reduction in carbon emissions in 2020
Key figures 2019 and Consensus 2019-2021
DKKm 2019A 2020 2021 2022
Gross premium income 21,741 22,548 23,143 23,668
Technical result 3,237 3,456 3,489 3,604
Investment income, net 579 -171 150 150
Pre-tax profit 3,628 3,056 3,432 3,547
Net income 2,843 2,287 2,671 2,764
Combined ratio 85.1 84.6% 84.9% 84.7%
Expense ratio 14.2 14.1% 14.0% 14.0%
Ordinary dividend per share 6.8 7.0 7.2 7.4
Extraordinary dividend per share 1.65 0.2 1.6 1.7
46
Based on 17 estimates ahead of Q3 2020
Consensus
AppendixFollow us on Twitter: @TrygIR
Claims ratio, net of reinsurance
Combined ratio
Group
48
Gross premiums
%DKKm %
%
%
Gross premiums
Expense ratio
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Private
49
%DKKm
* Including two months Alka
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Commercial*
50
%DKKm
* Less than 100 employees or less than DKK 100m turnover
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Corporate*
51
%DKKm
* More than 100 employees or more than DKK 100m turnover
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Sweden
52
%DKKm
Norway
SwedenDenmark
53
Geographical combined ratio
Corporate history
54
• 1728, Copenhagen experienced what was later to be known as the Copenhagen Fire of 1728. The fire heightened public awareness of the need for insurance
• 1731, The oldest component of Tryg’s history was the Danish insurance company Kjøbenhavns Brand was established by Royal Decree as a result of the
Copenhagen Fire of 1728
• 1880, The Norwegian insurance company Vesta was established. The name Vesta derives from Roman mythology, Vesta is the goddess of hearth, home and
family
• 1911, The name Tryg emerged (Tryg means peace of mind in Danish)
• 1990, The mutual company Tryg demutualised and the ownership of the new limited company was placed in Tryg I Danmark
• 1994, Tryg acquired the Danish insurance operations of Winterthur
• 1995, Tryg acquired Baltica and continued operations under the name Tryg-Baltica
• 1996, Tryg-Baltica was listed on Copenhagen Stock Exchange. Tryg I Danmark retained a 60% ownership
• 1999, Tryg-Baltica merged with Denmark’s second largest banking group, Unidanmark whose general insurance activities were integrated with Tryg. Tryg-
Baltica de-listed
• At the end of 1999 the Norwegian insurance company Vesta was acquired from Skandia
• 2000, Tryg, Vesta and Unibank contributed to the formation of Nordea. Tryg I Danmark holds at this point a 6% stake in the Nordic banking group
• 2001, Tryg established a branch in Finland
• 2002, Tryg I Danmark acquired Nordea’s non life activities and forms TrygVesta
• 2005, TrygVesta was listed on the OMX Nordic Stock Exchange in Copenhagen on October 14
• 2006, TrygVesta launched a Swedish branch in June
• 2009, The acquisition of the Swedish insurance company, Moderna, was completed in April
• 2012, Tryg sells its Finnish business to Sampo/If….
• 2015, Tryg split its share 1:5, meaning each share with a nominal value of DKK 25 was replaced by 5 shares with a nominal value of DKK 5
• 2018, Tryg received the final approval of the Alka acquisition from the Danish authorities
Sweden
% 2020E 2021E
GDP Growth (mainland) -3.5 4.0
Inflation 0.5 1.1
Unemployment 8.5 8.5
Current account balance in % of GDP
4.5 3.5
Budget balance in % of GDP -4.3 -3.3
Public debt in % of GDP 42.0 43.8
Norway
% 2020E 2021E
GDP Growth -3.5 4.0
Inflation 3.1 2.5
Unemployment 5.0 3.3
Current account balance in % of GDP
4.1 5.2
Budget balance in % of GDP 2.0 4.0
Public debt in % of GDP 0.0 0.0
Economic key figures
55
Source: Economic Outlook, Nordea Markets, September 2020
Denmark
% 2020E 2021E
GDP Growth -4.5 3.0
Inflation 0.6 0.9
Unemployment 5.1 4.9
Current account balance in % of GDP
8.3 7.0
Budget balance in % of GDP -4.5 -2.6
Public debt in % of GDP 45.0 43.5