tryg norway · 2018-09-04 · tryg norway key numbers 5 gross premium by products 2017 norway,...
TRANSCRIPT
1
Tryg Norway
Analyst Day
Bergen, 13 June 2018
2
Agenda
14:45 Welcome by Group CEO, Morten Hübbe
15:00 Understanding Norway and Tryg Norway, SVP and Head of Norway, Espen Opedal
15:15 Retail and Corporate Norway - Operational and Financial review,
SVP and Head of Norway, Espen Opedal and SVP Commercial Norway Director, Espen Strømme
16:00 Digitalization & Claims Management, Espen Opedal & Espen Strømme
16:30 OBOS and Troll integrations and opportunities, Espen Opedal
16:45 Q&A
Welcome by Group CEO, Morten Hubbe
4
Why are we here today?
Organisation chart
• Organizational change in February 2016
• Country based organization, closer to local markets
• Enabling a more agile decision making
• Empowered organization with increasedaccountability
CFOChristian Baltzer
CEOMorten Hübbe
COOLars Bonde
CCOJohan
Kirstein Brammer
Executive Board
Private DK
Commercial DK
Corporate DK & Tryg Garanti
Claims DK
Private NO
Commercial NO
CorporateNO
ClaimsNO
Sweden Private & Affinity
Corporate SE
Tryg Norway key numbers
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Gross premium by products 2017 Norway, Combined ratio 2013 - 2017
• Norway reported DKK 6.3bn of premiums income at end of 2017 or approximately 35% of Group premiums
• Motor & Property key products, Accident & Health and Liability to follow
• In the last five years the reported Combined ratio for the Norwegian business averaged approx 85%
• Norwegian Expense ratio moved from 15.3% in 2013 to 14.7% (including Obos) in 2017 driven by increased efficiency
and a reduced number of employees (from 1,199 in 2013 to 1,042 in 2017)
Bolt-on acquisitions in Private/Commercial & Rates increases in Corporate
6
Norway Corporate rates* under pressure
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
2015 2016 2017 2018 (Q1)
Motor Property Sickness etc. Workers' compensation Health
Source: FNO statistics, average premium development
Tryg Corporate Norway price increases implemented, Q1 2018
Motor 6.1%
Property 5.3%
Fish farming 23.1%
Health 13.5%
Sickness 7.1%
Workers’ Comp 4.3 % 7%
• Portfolio of 170mNOK
• 10 years old company, 35 employees
• 10.000 private customers, 1050 housing associations
• One owner – OBOS BBL
• 5 year exclusive distribution agreement – private
members
• Portfolio expected to produce returns in line with
“Retail” Norway in a couple of years
OBOS Forsikring
• Portfolio of 120mNOK
• Portfolio is 40% Oslo/Akershus
• 12.000 customers – private only
• Distribution through web and inbound
• Purchase price NOK 72m, including a year-end 2017 equity of
NOK 44m and a tax asset of NOK 40m (i.e. no goodwill)
Troll Forsikring
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 futureProduct & Service
Innovation
+DKK 1bn in new products by 2020+
Distribution Efficiency
DKK 150m in technical result impact
Financial targets 2020 a)
• 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 increasing dividend
• Extraordinary dividend to further adjust the capital structure
Long term profitable growth and attractive shareholder value creation
Tryg’s equity story – a leading Scandinavian non-life insurer
a) The targets are conditional upon the authorities’ approval of the Alka acquisition
7
Understanding Norway
Macroeconomics Norway
Map as watermark, Nordic
Macroeconomics
% 2018 2019
GDP Growth (mainland) 2.5 2.2
Inflation 1.7 1.6
Unemployment 3.7 3.2
Current account balance in % of GDP 7.2 7.1
Budget balance in % of GDP 2.5 2.7
Public debt in % of GDP 0.0 0.0
Source: Economic Outlook, Nordea Markets, January 2018
Population projections
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Source: SSB, June 2016
NOK more correlated to USD dollar than EUR
10
11
Key indicators for the Norwegian insurance market
Stable profitmargins
2013
102
2002
2003
87
2015
2014
2005
2016*
2006
2007
2010
95
2009
2004
24 Expense ratio
78
2012
2011
Claims ratio
2008
68
19
• A sustainable claims ratio for the industry
• Solid cost control and efficiency driven by themain players in the market.
High retention
• Customer loyalty is higher within insurance than many comparable industries, despite a slight decline the last3-4 years.
• Smaller players have increased pressure on price in the market over the last 3-4 years, but due to their current poor financial performance we expect this to ease.
Mature market
• Stable market over time, while now entering a phaseof faster changes, digitalization and innovation
• Expected market and population growth.
• Demographic challenges might give new opportunitiesin insurance
12
Tryg Norway
13
• Market share 13.3%
• 1.050 employees + ~ 400 franchise sales
• Premium income 8,1 billion NOK
• 3rd largest in general insurance Norway
• 2 brands (Tryg & Enter)
• Part of Tryg group
Tryg Norway in brief
Geography
Trondheim
Haugesund
Tromsø
Bergen
Bodø
Oslo TønsbergDrammen
Fredrikstad
Førde
Hamar
Harstad
Kristiansand
Stavanger
Ålesund
Tryg Norway
Tryg Norway is an ambitious player in the Norwegian insurance market with it’sNorwegian head office located in Bergen, and wide geographical presence.
Claims handling and Customer Service located in Bergen and Tønsberg.Strong sales- and underwriting presence for the Commercial- and Corporate market in Oslo and Bergen.
Tryg Norway- Operational and Financial highlights
Gross premium by products 2017
PercentagePrivate Commercial Corporate
Distribution channels 2017
0
1,000
2,000
3,000
4,000
5,000
Private Commercial Corporate
Portfolio split 2017 Combined ratio 2013 - 2017mNOK
14
15
40.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
120.0
130.0
140.0
2010 2011 2012 2013 2014 2015 2016 2017
Corporate
Corporate COR as reported Linear (Corporate COR as reported)
40
50
60
70
80
90
100
110
120
130
140
2010 2011 2012 2013 2014 2015 2016 2017
Retail(Private & Commercial)
Retail COR as reported Linear (Retail COR as reported)
Norway – Combined ratio
Trendline (Retail COR as reported) Trendline (Corporate COR as reported)
Seasonal variance in CR higher in Norway
100
Q2
91
Q4
106
101
Q3
97
98
Q1
107
100
Norway
Denmark
Index (FY=100) (2015-2017)
16
15.3
14.7
2013 2017 *
Driving costs down – focusing on continuous improvement
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Expense Ratio, Tryg Norway
• Staff reductions of 100FTE in 2016.
• Sourcing agreements with low cost partners.
• Automate processes, utilizing robotics, application development and new solutions
• Procurement processes
Cost Reduction Programme
* Including Obos
Tryg Norway contribution to Group results
50.9%38.5%
10.6%
Average % of Group Premiums* 2010 - 2017
DK NO SE
55.7%40.7%
3.6%
Average % of Group Technical result* 2010 - 2017
DK NO SE
* Currency: DKK * Currency: DKK
18
4.7%
4.4%
3.0%
3.4%
2.6%
2.9%
2.0%
2.4%
4.3%
0%
1%
1%
2%
2%
3%
3%
4%
4%
5%
5%
Market share Norwegian Insurance Market
25.6%
21.2%
13.0%
10.5%
29.7%
0%
5%
10%
15%
20%
25%
30%
Gjensidige If Tryg SpareBank 1 Other
Market share traditional players Market share smaller competitors
19
Front page slide
Retail and Corporate Norway
- Operational and Financial review
Retail - Private
Private
22
Market position #3 Direct v. Partner Balance Key Strengths
Split by Products
1. A healthy, profitable
Business
2. Strong multichannel
distribution
3. Strong partner distribution
4. Two brands
50%Partner
15%
Nordea8%
27%Direct
Enter
2%
Fire & Contents
6%
Other
Travel
30%
Accident & Health
Motor
7%
Group Life
6%
49%
A strong multichannel distribution- Both push and pull
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32%
25%
22%
9%
6%6%
Car channel
Online
Outbound
Bank
Inbound
Franchise
With a pricing diversification strategy
CAR CHANNEL
ONLINE
BANK
PARTNER
FRANCHISE
INBOUND
OUTBOUND
Online sales at ~20% if initiated sales from
online/web to inbound is included
The future of insurance is digitalFranchise -Our most important distribution
channel
Distribution Efficiency – Both push and pull
24
Digital Sales and Self service
Digital contact ~70% in 2020Digital Sales 150 MNOK in 2020*
“My Page” log-in: 2016-2018
Months
Tryg NO has already more
digital touchpoints than analogue* Fully automated, non-assisted sales
25
Strong Partner Distribution
Large and growing partner business Success criteria
Strong relations and common goals
Relevant and unique products
Strong distribution network locally
Tailored web solutions
Higher customer life time value (CLTV)
Strong marketing push by Tryg & Partner
Examples;
26
Two Brands, strong presence within new car sales
27
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Enter Enter/Tryg IF Gjensidige Spb 1 Andre
Forhandlersalg vs porteføljePersonbil privat
2017 Portfolio
Share of new car sales insurance vs marketshare
Motor-insurance – Cost of claims
28
3.0%1.0%
4.0%
Inflation 2018 Repair costsTechnology
3%
4%
1%
Retail - Commercial
Commercial Norway
Barriers to entry
Being a full-service insurance carrier for SME’s requires: • A large product offering • Knowledge• …and a lot of data
Estimated market share by industry
Construction 25%
Retail 18%
Transportation 13%
Manufacturing 20%
…
34%
29%
25%
9%
3%Property
Workers comp and
HealthMotor
Liability
Other
Portfolio Product mix Q1 2018
Portfolio development
• Growth in Property due to the acquisition of OBOS Forsikring• 16% YoY growth in Health insurance last three years• Decline in Motor insurance driven by portfolio pruning
Market position
• Third in Norway• Estimated market share of ~10%• Big in Construction and Manufacturing, low on Professional Services and
Commercial Property• Strong position in Hordaland (Bergen) and the Southern region, largest
remaining potential is in big cities (Oslo, Trondheim and Stavanger)30
Segmentation and Analytics as profitability driver
Segmentation• Profitability varies between products, but the variation is
bigger between different commercial segments
• By identifying customer characteristics that predict customer lifetime value we are targeting “the right” customers to attract and retain
Case in point:
Churn• Through Machine Learning we are able to predict 70%
of customer churn, allowing us to focus our retention efforts on a smaller customer base
• Retention YTD is up by 0.8%
Cross-sales• External registries and internal customer data helps us
to identify existing customers with the highest cross-sales potential
• By some measures our share of wallet is only 50%
Prize optimization• Price sensitivity models helps us to find the optimal
balance between price increases and retention• Which segments are outliers?
31
Outlook for Commercial Norway
Business Area development• Better market due to economic recovery• New product offerings• Greater distribution power• Sharing economy
0
0.5
1
1.5
2
2.5
3
2015 2016 2017 2018e 2019e 2020e
GDP growth (onshore)
GrowthManaged growth in carefully selected segments• Low-risk industries• Partnerships• And better leads management
Profitability and Efficiency• Lower cost of sales (mainly through online sales and self service
solutions)• Claims reduction, with a particular focus on
• Fraud• Large claims management• Risk prevention• Automated claims processes
The digital small business customer journey
31,812 34,767
+706 +1,197 +1,075-23
CB 2016 2016 2017 organic 2017 OBOS 2018 YTD CB 2018(May)
# of customers
32
33
Corporate
Corporate Norway
Distribution broker / direct
57/43 Main competitors
Other important players
34
Corporate Norway
Market rates* under pressureCompetitors now increase rates
Source: FNO statistics, average premium development
Tryg Corp. NO price increases
implemented, Q1 2018
Motor 6,1%
Property 5,3%
Fish farming 23,1%
Health 13,5%
Sickness 7,1%
Workers’ Comp 4,3 %
7%
35
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
2015 2016 2017 2018 (Q1)
Motor Property Sickness etc. Workers' compensation Health
Front page slide
Digital Empowerment of Customers - Digitalization & Analytics
IT investment supporting 2020 target
37
Investment supporting infrastructure, digitalization and data analytics
CORE
Modularized set-up
The Digital Future of Insurance
38
ANALYTICS & BIG DATA
CHANGING CUSTOMER
PREFERENCES
INTERNET OF THINGS
Customer increasingly request- Convenience- Transparency- Empowerment
That’s why Tryg Developed «My Page» based on
consumer testing, eye tracking and customer analytics
Have more digital touchpoints vs. analogue
Customer increasingly request- Tailored solutions- Relevance- Better pricing
That’s why Tryg Create individual actions for each
customer based on data from customer behavior, market segmentation and predictive analytics
Customer increasingly request- More temporary solutions or a
more sophisticated bundle of products (all-in-one)
That’s why Tryg Offer a new car product,
SideKick to young customers Focus from insurance to
gamification
Customer Analytics - Tryg invest heavily in data analytics and machine learning
39
Proactive holdback
Up-sale in specific customer segments
Segment specific up-sale
Increase hit rate
New customer prospecting
Increase number of 3+ customers
Cross-sell prospecting
“Baby churn”
Successful onboarding
Market segmentation
Managing prospects
Claims Excellence
DKK 600m
25%
25%
What will improve claims excellence?
New efficiency programme 2018 – 2020: DKK 600m
50%
Procurement: Continuous leverage of scale
Fraud: Automating detection and broadening
competences
Steering & Administration: Claims steering
and administration of compensation
41
How fraud and claims steering supports claims excellence
Fraud
Only ~20% of claims employees excel in fraud detection
Potential: Targeted 2020 detection level
Concept: Broadening competences and introducing automation
Claims steering
Evidence: Employees generated improvement in fraud detection
Concept: Better steering of claims to Tryg partners for lower cost
Evidence: Improved steering of car glass claims
Potential: Targeted 2020 cost reductions
DKKm
DKK 300m; ∆ DKK 150m
Tryg
partner
Local
workshop
Repair 60%
of claims
Repair 18%
of claims
40%
cheaper!
2017:
DKK -5m
Claim
42
Fire in the ventilation at Tine’s cheese factory in Sømna, Norway
Production
Tryg on site Cause of fire/smoke
Cheese during maturation
43
Digital empowerment - Cost & Efficiency by claims management
Super fast claims handling - straight trough processing (STP) in 3 seconds
Our customers' time is valuable …… therefore, we make it faster and easier to be a Tryg customer
No. 1 in europe withclaims handling STP
45
Status straight trough processing June 2018
Digital target 2020
50 % straight trough processing on claims
Total benefit 2020 =~DKK 100m*
* Tryg DK+NO+SE
Travel insurance
Pet insurance
46
OBOS and Troll integrations and opportunities
Acquisition of OBOS Forsikring in 2017
• Portfolio of 170mNOK
• 10 years old company, 35 employees
• 10.000 private customers, 1050 housing associations
• One owner – OBOS BBL
• 5 year exclusive distribution agreement – private
members
• Portfolio expected to produce returns in line with Retail
Norway in a couple of years
OBOS Forsikring
Strengthen market position in central eastern Norway
400.000 private members, 200.000 managed “Andelsboliger”
Strong cooperation with strategic partner
$
Strategic rationale –Stronger Tryg in Norway
• Very strong cooperation and relationship established between the two organizations
• Privat portfolio nearly tripled since take-over
• Continuous development and looking at new opportunities, e.g. extension to Sweden
Partnership and growth
48
Acquisition of Troll Forsikring in 2018
• Portfolio of 120mNOK
• Portfolio is 40% Oslo/Akershus
• 12.000 customers – private only
• Distribution through web and inbound
• Purchase price NOK 72m, including a year-end 2017
equity of NOK 44m and a tax asset of NOK 40m (i.e.
no goodwill)
Troll Forsikring
Strengthen market position in central eastern Norway
Low acquisition cost vs value
Strategic rationale –Stronger Tryg in Norway
• Transaction finalized in April 2018
• Tryg purchase price 72 mNOK, incl. year-end 2017 equity of 44 mNOK and tax asset of 40 mNOK. Troll investors input ~ 250 mNOK.
• Good customer selection and risk profile but overproportioned cost for e.g. marketing and claims/claims handling
Favorable and speedy acquisition
49
Consolidation in the Norwegian Insurance Industry?
50
Dialogue & Questions
Thank you